If you want to know why fixing "health care" is so difficult
you need only read this article.
From Akron to Youngstown and Canton to Cleveland, as in cities and towns across the country, workers who once walked out of factories at the end of each shift now stream out of hospitals.
While manufacturing employment has fallen nearly 40 percent in northeastern Ohio since 2000, the number of health care jobs in the region has jumped more than 30 percent over the same period. In Akron, the onetime rubber capital of the world, only one of the city’s 10 largest employers still makes tires. Three are hospitals.
If these were
doctors and nurses that might be understandable. But they're not.
They're nearly all paper-pushers who contribute exactly
zero to actual consumer care.
The problem is that all of these people draw salaries
and thus drive up the cost of medical care by ridiculous amounts. In fact
last month some 20,000 people were added to the "health care" employment rolls and nearly all of them will never provide one second of actual care to an actual person -- but every one of them has and will massively drive up your health care costs. In fact if the average "administrator" in that group makes $40,000
in the last month alone a whopping
$800 million per year before their health insurance and employment tax cost was added to
your medical bills and yet
not one single person got
one minute of additional actual care out of that expense.
Next month there will be
another $800 million added on
which you will be forced to pay.
The next, and at least as-large problem is found in the continual bleating of hospitals and similar that "
Medicare doesn't pay what X costs" as their justification to gouge private parties. But this claim is false; if you look at many of the so-called "non-profits" you can find myriad examples of this being a flat-out lie, and nowhere is it easier to find than in the hospitals' lab sections.
Direct operating costs are usually about 10% of the revenue amounts!
In other words the hospitals are making
1,000% profit in their labs, net-net including
all expenses, on balance. That is, Medicare and Medicaid, when you look at the
actual operating cost of these labs,
is paying a price that approximates cost plus a bit. And oh by the way
that's what the law governing Medicare and Medicaid requires. If private parties paid 10% more that would be a rational profit margin.
1,000% more is a******job.
This is why alleged "non-profit" hospital administrators frequently get seven-figure salaries
even when they're associated with a university system where the head of said
school makes 1/5th to 1/10th as much.
No
competitive business can maintain 1,000%
net profit margins in any segment of their business for any length of time at all, because as soon as someone figures out that you're making that sort of profit they come in and open a competing business. It will happen every time, simply because the new entrant can undercut the other guy by
half on price and
still make 500%! There will be
dozens of new business entrants within days.
The only way to keep that from happening is to do anti-competitive things, such as conspire with others to fix prices or form "networks" that
forcibly lock out competitors.
All of those acts are illegal under law that has stood for more than 100 years yet both State and Federal governments refuse to enforce said laws.
We can solve the "Health Insurance" problem in a literal
day by enforcing those laws against
everyone in that sector of the economy. But if we do so then the 1,000% profit margins collapse by at
least 90%
in an afternoon and along with the screwing on the billing end goes a lot of jobs. Health care collapses as a share of the economy from over 19% today back to about 3-4%
and this is recognized as the mother and father of all recessions -- because it will be.
That recession won't last long though because with the amount of money that now remains in consumer pockets
instead of being stolen through extortionate "health insurance" schemes America becomes
the most-competitive place to run a business in the Western World. We would see an
enormous influx of firms to the United States
beginning within days and it would not be long at all before all of the jobs displaced would be recovered and then some.
If you want an example of what this would look like from the economic point of view have a look at 1920-21.
They scare you with
knowingly false claims that you'd have no doctors, nurses or hospitals, and thus would die.
This is trivially seen to be a bald-faced lie when one simply looks at the growth of administrators .vs. physicians in medical practice -- the latter actually diagnose and treat persons, the former do not and if nearly
all of them disappeared tomorrow there would not be
any impact on the number of physicians and nurses -- and thus there would be
zero impact on the ability to deliver medical services either.
If you get the force, fraud and extortion out of the medical system at all levels from pharmaceuticals to hospitals to the local imaging center and testing company you'd find that most of those administrators would lose their jobs -- under a
competitive market they would produce far less in value than they cost.
Indeed, you only need to look at the quarterly filings for
virtually any public company that operates in a competitive market and you will find that SG&A (that's sales, general and administrative expenses) typically runs about 10% of revenue and
most of that is G&A.
Businesses in a competitive market can't spend more because if they do someone will come in, compete with said firm and destroy it by undercutting their prices.
Really competitive business (e.g. Amazon) have G&A costs of ~
2% of revenue!
That's how they hammer their competition and how you get better prices -- they keep their costs
down.
Now look at
any of the health care public firms.
Aetna, for example. Their G&A is 23% of revenue, and the only reason they get away with it is that
they are protected from competition. In other words they blow
2 and a half times what a business in a competitive market does, and
10 times what Amazon does on
administration as a percentage of revenue without fear -- because they
can without having their head cut off by a competitor. And oh, by the way, there's plenty of creative accounting too; health-related firms have
every reason to understate their actual G&A expense lest the pitchforks and torches come out.
We will
never get health care under control
nor will it
ever be affordable until and unless the underlying issue -- cost -- is addressed. Cost is only addressed through
market forces, and that means
enforcing the law by hammering every single anti-competitive agreement and practice that these companies engage in.
If we do that the cost of medical care will drop like a
stone -- 80 to 90%. There will no longer
be a "pre-existing condition" problem because for virtually every situation you will be able to pay
cash. For the few where people literally cannot because even when the $90,000 annual cost of treatment is $500 (as is the case for many MS patient drugs
if you buy them outside the United States) our "social safety net"
can afford $500 -- but not the $90,000 tab today that escalates at 10% or more a year. In the case of people with Type II diabetes
the cost of treatment for most of them would drop to an actual zero were they to stop eating carbohydrates other than green vegetables. That sounds like a hard sell given how many people like pasta and pizza
unless you explain to the 250 (or 400!) lb diabetic that
if they do this not only do they spend zero on meds in
addition all their extra weight will come off
without being hungry or exercising to death
and they won't have a heart attack, stroke or destroy their hips by trying to carry an extra 100+ lbs around either.
What will said Type II diabetic choose if the options are (1) pay for testing strips and medication
out of his pocket (albeit at a much lower cost than today) while eating pizza
or (2) pay
zero for testing strips and drugs because you no longer need either
but don't eat pizza? The obvious choice is to eat the steak, forego the pizza
and as a result drop both the medication and the extra 100+ lbs while keeping the money you used to spend on meds and testing supplies in your pocket.
