heathcare … Obama … inflation … Roubini

These days, whenever I hear the word ‘healthcare’ I reach for my revolver.
…

Well, maybe that is a bit outrageous; whenever I hear the word healthcare I recall the famous dictum of Milton Friedman: “inflation is always and everywhere a monetary phenomenon!”

Because the problem with healthcare in the US – and in other industrial countries – is rising costs with no end to be seen. Inflation, in other words.

In America, healthcare is another bubble, or bobble as Nouriel Roubini calls it.

First of all, being a ‘bobble’ the healthcare asset value is overpriced for services rendered and will deflate at some point. It is ever thus with ‘bobbles’. As the cash tide that sustains them retreats, the costs of the ‘bobble’ are marooned. In healthcare, money will run out the door as businesses fold and their healthcare plans fold along with them. Cost conscious companies will simply abandon their plans and their employees’ coverage. The sick will gain what care they can then walk away from any ‘obligations’. Since the ‘Niewe Amerikan Business Plan’ involves treating customers as unwitting victims to be pillaged, it is unsurprising that customers feel no compunction against treating businesses the same way.

To the healthcare industry, the business plan means putting customers into bankruptcy. This is not a good business plan!

The second factor invisible in the heathcare debate is the vote that one half of the system – the insurance part – makes on the other half – the care part.

As Taunter sez:

But … that’s not what the insurance industry DOES. A pre- existing condition or a serious claim – something more than a hangnail – are reasons to deny coverage by insurance or to retroactively cancel the policy. By doing so, the insurance company is indicating that treatment for the condition will not allow for a future payment stream sufficient to defray the cost of treatment.

In other words, if an individual policy premium is $7,000 a year and the person becomes seriously ill in the amount of, say … $50k, the policy will be canceled – or ‘rescinded’. Why? Because the insurance company knows that the patient won’t live long enough to be able to repay the $50k by means of ordinary premiums, in this case, seven years.

In the matter of a pre- existing condition, the same ‘Pas de deux’ ensues, the insurance company understands that the condition has deteriorated to a point where treatment has become necessary. Treatment will not allow the insurance company to recover the treatment’s costs. In fact, the treatment may kill the patient just the same as the condition itself might. So the insurance company demurs.

This is the only possible reason for the insurance industry to refuse coverage and this reason is based on statistical or actuarial studies of the ‘care’ side … by the insurance side. If the ‘care’ side provided adequate care, the patient would be able to repay the insurance company over time; that company would simply be ‘fronting’ or financing care intermediate to the stream of payments before and after the treatment, as Taunter suggests.

This is why I tell people never to go to a hospital unless there is a knife sticking out of their chest. Doctors are greedy, bloodsucking hacks, with the gimlet eye for the bottom line, the industrial model healthcare system is a) corrupt and b) incompetent. Just like the automobile- industrial system, the real estate- industrial system, the educational- industrial system … all the industrial systems!

Including the economic- industrial system.

Getting back to Friedman, what the current Obama strategy aims to accomplish is to gain a new batch of suckers – taxpayers along with those who are now unensured – and new, additional money for the system. This includes those who either have no need for insurance or completely distrust the current methodology. A mandated buy- in is supposed to average down costs.

This is complete folly; adding to the healthcare money supply will have the opposite effect and drive costs higher. It will be more dollars chasing the same or less services. It will wind up with more fraud as more and more seek to either avoid the money trap at the front end of the system or flee it as soon as they are able to. Providers will figure out more sophisticated means to ‘game’ the new system and skim cash off the top. The final outcome will be a further discredit for the hapless and feckless Obama, who hasn’t met a big- business crook he cannot bond with in some profound way.

There are two ways this mess will resolve itself; one is when the economy finally goes down the toilet and nobody will spend any cash unless absolutely necessary. If doctors want to eat, they will have to do their work cheaply. If individuals need a doctor, they will have to have some cash.

Welcome to the ‘Good Ol Days’. This is how I remember it as a child, Mom and Dad going to the doctor and paying cash. No labs, no endless tests, no bullshit. The doctor knew his job. A working person could afford to go to the doctor and the doctor would spend time with the patient. The doctor’s interest was keeping his patient alive not driving him to ruin or leaving him a destitute invalid living on the street.

The new ‘Good Ol Days’ will be better. Doctoring is an art. MD’s will have to learn how to doctor rather than depend on pharma tricks and diagnostic tech overkill. Most doctors will make the jump and the rest will be unable to compete. There will be more emphasis on primary care, and public health, which cost comparatively little. With the (hopeful) end of autos and junk food – and accompanying pesticides – there will be fewer ‘lifestyle’ diseases. Ending cars will also remove thousands of annual unnecessary injuries and deaths.

As for pharma and technology … the inventors and producers of such get sick and die and have families that get sick and die. There will continue to be pharma and technology; call it nature’s blackmail. The current practice of the system milking the last resources from the elderly will also end. The families won’t allow it and the government will not be able to afford to substitute itself for the families.

At bottom, the only policy choice is one that ‘starves the beast’ and drives out insurance and industrial players. The government can accomplish this by becoming a coordinator rather than a giant checkbook. The government can become a clearinghouse for medical resources that can be identified for users. It can emphasize prevention and public health.

Since the weight of further economic unwinding will fall most heavily on government, they will probably not have much choice.