Medicaid, Medicare and Frivolous Lawsuits make the Best Health Care System in the World more Expensive

Posted by PITHOCRATES - November 23rd, 2013

Week in Review

The American left loves Canada.  In particular their single-payer health care system.  This is what they wanted in the US.  Not Obamacare.  But they settled for Obamacare.  Until they get what Canada has one day.  Because it’s better.  At least, according to a chart.  That shows how wonderful Canadian health care is and how horrible American health care is (see The U.S. Health Care System Is Terrible, In 1 Enraging Chart by Mark Gongloff posted 11/22/2013 on the Huffington Post).

Yes, among this group of big countries, the U.S. spends far and away more on health care than any other. And yet it has among the lowest life expectancies of any developed country. People live longer in pretty much every country in Europe, including Greece, where the economy has been wracked by austerity for years…

Why is our system so terrible? Largely because it is built for profit. Unlike many other countries, the government has no role in either providing care or setting prices, and so prices skyrocket. It’s also too complex, which is one reason the Affordable Care Act, President Obama’s signature reform law, has gotten off to such a bad start.

The health care law is supposed to help with the cost problem somewhat. But it is built on the existing privatized system, which means it will probably not make a significant difference. A public option, also known as a “single payer” plan, would help. But that still seems like a pipe dream — although maybe Obamacare’s clumsy rollout will bring it closer to reality.

First of all it should be noted that Canada has one of the finest private health care networks in the world.  Outside of their single-payer system.  Which is something they share with all nations that have some form of national health care.  A private health care network for those who want and can pay for it.  And why is Canada’s private health care network the best in the world?  Perhaps you can guess why when you hear the name of it.  The Untied States health care system.  Just south of the border.

That’s right, for those with the means don’t wait in line for less than the best of health care.  They spend their own money to go to the front of the line to get the best health care available.  In the United States.  Often administered by Canadians.  Because the US pays the best doctors and nurses more than they can get in Canada.  So Canadian doctors and nurses, too, travel south across the border.

The US is one of the only countries where their poor suffer from obesity.  Because of generous food assistance programs.  Also, because we are a for-profit nation our food industry has figured out to give us more food for less.  Our beverage sizes have gotten so big giving us so much value for the money that Mayor Bloomberg tried to limit the size of beverages in New York.  And all American restaurants give us free refills.  Because they can.  While some European countries will charge extra for a package of ketchup.  All of this more food for less has led to our obesity problem.  Giving Americans heart disease and diabetes.  Shortening life expectancies.

US doctors are dropping out of Medicaid.  And Medicare.  More so now that the Affordable Care Act (Obamacare) is rolling out.  Why?  Because the government pays for these nonprofit programs.  And they are constantly trying to reduce their reimbursements.  Because the aging population is straining the Medicaid and Medicare programs.  And the government has addressed this problem by ‘discounting’ Medicaid and Medicare billings.  For years doctors and hospitals have tried to recover these shortfalls by charging more.  Especially insurance companies.  Greatly increasing the cost of health care and health insurance.  But the discounting grew so great that many health care providers just dropped these programs.  Because they couldn’t pay their people, their lab costs, their overhead, etc.  Especially since Obamacare has taken money from Medicare.  And ‘forced’ states to expand their Medicaid rolls.  But these discounted reimbursements aren’t the only thing raising health care costs.

While most of Europe has loser-pay laws to curtail frivolous lawsuits the United States doesn’t.  Because of the trial lawyers.  Who get quite wealthy suing doctors, hospitals and pharmaceuticals.  Exploding the cost of malpractice and liability insurance.  Which increase the cost of doctors, hospitals and pharmaceuticals.  Forcing them to raise their prices to recover these costs.  Making American health care more costly.

These are the reasons why the US spends more per capita on health care than all other nations.  Because they have the best health care system in the world.  And the best costs more.  While the government forcing health care providers to work below costs (Medicare and Medicaid) and the cost of frivolous lawsuits raise these costs even more.

The American health-care system is not terrible.  Single-payer systems are.  Because they all have a private health care network.  Which they wouldn’t have if single-payer systems were the best systems.  Just ask the Canadians who use their private network.  The US health care system.  Who will probably be the second greatest losers under the Affordable Care Act.  After the Americans.

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People attack Pharmaceuticals and can’t Understand why they Get Out of the Drug-Making Business

Posted by PITHOCRATES - April 21st, 2013

Week in Review

Everyone hates the pharmaceuticals.  Because they don’t make life-saving drugs cheap enough.  And they don’t bring them to market quickly enough.  But when people need a new antibiotic that can take on a superbug who do they come running to?  Those evil and vile pharmaceuticals.  And they beg them to do what no one else can.  Save lives by bringing new drugs to market.  Of course when they do rush a drug to market and it hurts some people then everyone hates the pharmaceuticals.  For not taking the time to make sure the drug was safe before rushing it to market.  Just to make a buck.

Pharmaceuticals just can’t win.  They’re damned if they do.  And damned if they don’t.  It’s a wonder any of them stay in the business (see Antibiotic progress on superbugs called ‘alarmingly slow’ posted 4/21/2013 on CBC News).

Both biological and economic factors hinder the development of new antibiotics, Murray said. Yet new drugs are needed for resistant infections that continue to increase in frequency, causing significant illness and mortality, the society noted…

Wright’s team has some promising leads on potential antibiotics, but they can’t find a drug company willing to spend the money to get the drugs to market.

“Funding is the challenging thing,” Wright lamented.

The infectious disease society found that most of the large drug companies have left the antibiotic business. The group has proposed tax credits to encourage the remaining pharmaceutical companies to conduct the expensive clinical trials needed to test antibiotic candidates…

“One would like to think that the pharmaceutical industry has motives in mind that are to benefit health care and human kind in general. Sadly, I think their bottom line is a business,” said Simor, who has no shares or interest in the pharmaceutical industry.

Expensive clinical trials?  What, you mean they weren’t lying when they say it takes a lot of money to bring a new drug to market?  If so why are we always accusing them of charging too much for their drugs?  I mean, someone has to pay for all of those lawsuits.  As well as those clinical trials.  And there is only one thing that can.  The price per pill.

Yes, they are more concerned about their bottom line than benefitting human kind.  Because they can’t force their highly skilled people to work for free.  Most countries have labor laws against that sort of thing.  And because they have to pay for these people years before they can sell any drugs they are working on someone has to pay them in the mean time.  And these people are investors.  Who take the risk of paying people for years of work even though what they’re working on may be nothing but a dead-end that produces no revenue.  Which happens a lot.  So the drugs that actually make it to market have to pay for themselves.  And all of those dead-ends.

Capitalism makes those miracle drugs possible.  And the proof of that is that they need these drug companies to bring these drugs to market.  For the state cannot.  Because the state doesn’t know anything about risk taking.  The only thing they know is how to raise taxes to pay for an inefficient bureaucracy.  While a private drug company knows how to get an investor to pay for an efficient business plan.  Capitalism brings new drugs to market.  And when you attack capitalism too much (higher taxes, more regulations, no relief from frivolous lawsuits, etc.) those who wish to make a profit may get out of the drug-making business.

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FT91: We vilify doctors, hospitals, pharmaceuticals and insurance companies for rising health care costs but we don’t vilify professors or universities responsible for rising tuition costs.

Posted by PITHOCRATES - November 11th, 2011

Fundamental Truth

Greedy Taxpayers are Blamed for the High Cost of Higher Education

Both health care and tuition costs are rising.  They’re out of control.  Both are crises.  We hear about it all the time.  And we’re doing something about it.  Interestingly, though, we’re trying to solve these crises differently.

We’ve identified villains in the health care industry.  Doctors who order unnecessary procedures.  Hospitals that carry out unnecessary procedures.  Greedy pharmaceutical companies that make seniors choose between food and medicine.  And greedy insurance companies who keep raising their premiums while aggressively denying claims.  All who contribute to the rising cost of health care.

So we know who wears the black hats in the health care crisis.  It’s a little different in the tuition crisis.  Do you know who the villains are there?  We are.  The greedy taxpayers.  Who have nothing to do with the rising cost of tuition.  No.  Our crime is our opposition to ever higher taxes.  So we can subsidize ever more of the high cost of higher education.

The Rich Fat Cats above the Professors live like Wall Street Fat Cats

So why are costs so high?  And why aren’t we blaming those who make these costs so high?  Like we blame doctors, hospitals, pharmaceutical companies and insurance companies?

Universities are awash in cash.  From tuition.  From the state.  From corporations.  From benefactors.  From alumni.  And, of course, from college sports.  A multibillion dollar industry.  That doesn’t pay a dime to the athletes that generate all that cash.  So universities have a lot of cash.  Yet tuition costs keep going up.  Why?

What are the costs of a higher education?  There are classrooms.  But these are long-term fixed assets.  That last decades without any improvements.  There are textbooks.  They’re very expensive.  Rarely less than $100.  Which is odd.  Because it’s rare to find a book at Barnes and Nobel for more than $100.  So that’s a profitable enterprise.  Textbook publishing.  While all other publishing is bleeding red and going out of business.  And there are, of course, faculty.

The life of a university professor is pretty sweet.  You get to hide from the real world on campus.  You have great working hours.  You get a lot of time off.  Sometimes all summer.  And have graduate students do all of your busy work.  It’s a charmed life.  And students pay them well for it.  And once they get tenure they can pretty much do whatever they want.  And no one will ever fire them.  No matter how many of their graduates can’t find a job.

And then you have all the rich fat cats above the professors who do even less.  Who drive the same kind of cars the Wall Street fat cats do.  And live in the same kind of houses the Wall Street fat cats live in.  But no one protests these rich fat cats.  Who got rich by ripping off students.  Via the ever rising costs of higher education.

Getting into the University System is like being Knighted in the Old World

The university system is a microcosm of Old World aristocracy.  Getting into the system is like being knighted in the Old World.  And university life is like the Old World.  Where no one challenges your privilege.  Because that wouldn’t be proper behavior.  And lacking the respect due to the privileged class.

Of course this isn’t a problem when you produce great doctors, scientists and engineers who make the world a better place.  We thank those professors who work tirelessly for the betterment of society.  But to those who sucker kids into worthless degree programs?  Where there’s no math?  Only ‘no right or wrong’ essay questions?  And no jobs waiting for them in the private sector?  Well, we’re not quite as enamored with these professors.

Because we’re left to clean up their mess.  From students defaulting on their student loan debt.  Because they can’t get a job.  To the mess they make while protesting Wall Street greed.  Because they can’t get a job.  All the while those responsible for their plights are preparing to raise tuition costs yet again.  As they always have.  And always will do.  Free from blame.  Even though they are more blameworthy than those on Wall Street.

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FUNDAMENTAL TRUTH #21: “The reason why health insurance is so expensive is because it is not insurance.” -Old Pithy

Posted by PITHOCRATES - July 6th, 2010

YOU CAME IN with a grand ‘to lose’ but have been riding a hot streak.  You’re up 5 grand.  And feeling luckier still.  You came in with a grand, you think, so you can just as well leave with a grand.  So you bet 5 grand.  Cause those cards have been so good to you tonight.  And there it is.  Blackjack!  And just as you’re about to shout to the heavens you see the dealer throw an ace on his down card.  The dealer asks, “Insurance?”   

You don’t want to but you just KNOW what’s under that ace.  All of a sudden you’re not so cavalier about losing 5 grand.  Too many friends have told you the same story.  “I was up 5 grand until that last hand.”   You could cry.  You don’t buy insurance.  Only suckers buy insurance.  That’s what you’ve always said.  But when you’ve got 5 grand on the table, the dealer can’t have anything but blackjack.  You know it.  He knows it.  And your wife knows it even though she’s off playing the slots somewhere.  You pull out $2,500 from your ‘do not touch’ money and buy the insurance.  (Let’s end this on a happy note.  The down card was a queen.  You walk away as if that last hand never happened, $5,000 richer.  Less taxes, of course.)

LIFE’S BEEN GOOD.  You’re making good money.  You have a beautiful wife and 3 great kids.  You just sold that small house and moved into that big house you always wanted for the holidays.  Cost a pretty penny.  But you had $75,000 in equity in the old home.  And cashed in a CD to furnish the new one with some nice new toys.  After all, life has been good.

The mortgage stings a little, but not too much.  You’ll get by.  You got all the big things you’ve wanted.  Now you can settle in and live modestly in your new home.  And you bought insurance up the wazoo.  If there is fire, flood, theft or death, no worries.  Well, there’ll be some worry, but you won’t financially ruin your family.  They’ll keep the house.  And there will be college for the kids.  Because you were responsible.  You protected the greatest investment of your life.  Yes, things have been good.  But not good enough to pay for everything twice.

TRADE EXPLODED IN the 17th century as little wooden ships crossed the oceans.  Storms and rough seas, though, toss around little wooden ships.  A lot of them sank.  With their cargoes.  But they didn’t all sink.  So owners insured their ships and cargoes.  For a nominal fee, they protected their investment.  For those that didn’t sink, the insurance wasn’t much of an added expense.  For those that did sink, it paid to replace the lost ship and cargo. 

YOU’VE ALWAYS WANTED to open a restaurant.  And your dream finally came true.  You saved for years.  You scrimped on vacations.  Didn’t by a new car.  Expensive toys.  No.  Your years of denying yourself the little pleasures in life saved up enough money to buy that restaurant.  To put enough money down to borrow to fit out the kitchen and dining area.  To stock your fridge, freezer and pantry.  You maxed out your credit and sunk your life savings into your dream.  And you’re loving it.  But you don’t want to lose it.  So you have all the insurances.  Fire.  Property.  Workers’ comp.  Liability.  So in case of fire, celebrating students (who trash the town after winning the championship), a strained employee back or an E. coli outbreak (because an employee didn’t wash his hands after using the toilet), you’re protected.  Your business may suffer, as they are wont to do after an E. coli outbreak, but the lawsuits won’t leave you destitute.

BEING IN THE NFL is a dream come true to many athletes.  But it can be a brutal occupation.  Compared to other professional sports, it has a short season.  Why?  Attrition.  Concussions, broken bones, torn ligaments and contusions take their toll.  The short season allows a longer healing period.  And time for surgeries.

Players can make obscene amounts of money.  But they can also suffer a career-ending injury in the first year of a multi-year contract. Great playing potential means great earning potential.  If you stay healthy and play.  Of course, if injured, all gone.  Some players insure against a career-ending injury.  Lloyd’s of London will insure an athlete.  For a price.  It ain’t cheap.  But if it keeps you from losing, say, 20 million in earnings, it could turn out to be quite the bargain.  If you’ve got huge potential.

THE MOST PRECIOUS gift we all have is our life.  So we take care of it.  We watch what we eat, don’t drink, don’t smoke, don’t take drugs, don’t speed in our cars or while on our motorcycles, don’t drink and drive, don’t drive around flashing railroad crossing barriers, don’t binge drink, don’t have unprotected sex, don’t play with matches or run with scissors and don’t do that thing where you jump up on a railing with a skateboard and fall, crushing your testicles on the railing and hitting your head on the concrete step.  No, we exercise, go to bed early and eat a lot of bran. 

All right, we probably don’t eat as much bran as we should.  And maybe we do a risky thing or two.  But we understand that those risky things we DO do can cost us.  Could wipe us out financially.  So we buy insurance to protect our life savings in the event of a catastrophic event that could be medically very expensive.

Or do we?

EVERYONE THAT HAS ever bought blackjack insurance didn’t get a winning blackjack hand.  Everyone that has ever bought homeowner’s insurance didn’t get a new home with their policy.  Everyone that has ever bought mariner’s insurance didn’t get a ship and a cargo of goodies with their premium payment.  Everyone that has ever bought business insurance didn’t get a business with their payment.  And an NFL player doesn’t get a dime from Lloyd’s of London until something pretty horrible happens first.  No.  These purchases were ‘just in case’.  Most people will never get anything for their payments (other than peace of mind).  Only those who suffer a loss will.  And those that do will have mitigated their financial losses with the insurance they so wisely purchased.  And they will get on with their lives.

This is insurance.   We use it to protect our wealth.  It takes a lot of time to accrue it.  So when we have it, we tend to protect it.  We do risky things.  And insurance manages that risk.  So we don’t lose everything we have because of a catastrophic event. 

We don’t think like this when it comes to health insurance, though.  We don’t think of health insurance as a way to manage our risk.  We look at it as a free ride.  If we have it, we expect free health care.  We want everything.  But we don’t want to pay for anything.  Free mammograms.  Those blue pills for the old johnson.  Heart valves.  Prenatal care.  Child vaccination.  Etc.

The problem is, these things cost.  A lot.  And if anybody can have them, those who actually pay for insurance have to pay for them.  And they’ll be paying for things they aren’t using.  All those things listed above mean nothing to a young single male.  But he’s helping to pay for that stuff.  Either by his premium contribution.  Or in lost wages.  Because an employer can’t afford such quality health insurance AND high wages.

Health insurance has become nothing more than a wealth transfer.  It’s like a Ponzi scheme.  A large and ‘growing’ group of healthy young people pay into the system and collect few benefits.  The ‘fewer’, older, sicker people pay little into the system but consume the lion’s share of the benefits.  At least in theory.  But like social security, and all Ponzi schemes, the theory doesn’t work in practice.

AMERICA HAS THE best health care in the world.  If you judge by where the affluent go for their health care.  They go to America.  And the best is never cheap.  You get what you pay for.  And if you want the best, expect to pay.  A lot.

All right, we have the best and some of the most expensive health care in the world.  Add to that an aging population.  What do you get?  A shrinking group of people (the young and healthy) paying for a growing group of people (the old and sick).  That means the burden on those paying into the system has to what?  It has to keep getting bigger.

But it can’t.  The young and healthy will just opt out.  Eventually.  When it gets to the point that it’s a car payment or a health insurance payment, what do you think they’ll choose?  Their annual health care expenses for an entire year may not equal one premium payment.  So they’ll say screw that.  And do.  A lot of young do not have health insurance because they choose not.  It’s just too fricking expensive.  And this just shrinks the shrinking group more.  Which increases the amount those with insurance pay.  And so it goes.

AND YOU DON’T fix this problem by nationalizing health care.  That doesn’t address the problem.  You have to tie the cost to the benefit.  People only chose to pay for things they get.  Those receiving the benefit, then, need to pay its cost.  Like we do with every other thing in our lives.  You want a TV you pay for a TV.  You don’t pay for one so your neighbor can have one.  TV prices are very reasonable, too.  They keep coming down.  The quality is fantastic.  And so it would be in health care.

Single payer health care insurance ain’t the answer either.  Because it’s not insurance.  It’s a wealth transfer.  That means it’s political.  It will serve political ends.  Not make good health care.  First of all, they’ll force the young and healthy to pay for insurance under penalty of law.  Or they’ll raise taxes until it hurts.  Then they’ll cut costs.  First by limiting what doctors can earn.  Then they’ll limit the profits the pharmaceuticals can make.  Then the medical device makers will have their turn.  Soon, people won’t want to be doctors any more.  Or make new and life saving drugs.  Or make medical devices.  So when the supply of these things falls, rationing must follow.  And if you really want to cut costs, there’s really only one place to do it.  The really sick and the really old.  These people, after all, consume the lion’s share of health care services. 

We don’t have a health care problem.  People are living longer than ever.  We have a dependency problem.  The current system has made us dependent on others for our health care.  And dependency kills.  It cowers a people.  Takes away their dignity.  Makes them subservient.  People live in fear.  Of what they may lose.  Nationalizing health care will only make us more dependent.  It’s not the answer.  Unless you want to conquer and subjugate a people.  I mean, how many of you have stayed at job you absolutely hated because of the health insurance?  If that ain’t subjugated, I don’t know what is.  As bad as that was, at least you got something for it.  Good health care.  If you think you’re going to get that under a national system, think again.  Or ask those people with a national system that come to this country for better care.

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