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logo    The American Healthcare System-A Disaster in the Making


The collapse of the American Health Care Delivery System becomes more and more evident as each day passes.  Consider what we know:

1.  Americans pay more per capita for health care than the residents of any other nation and get less for it than the residents of many other nations. (These numbers are regularly published in the Economist.)

2. A recent study published in the New England Journal of Medicine reports that U.S. patients receive proper medical care from doctors and nurses only 55 percent of the time, regardless of their race, income, education or insurance status.

The upshot is that Americans are getting their pockets picked for inadequate health care. How the American medical profession can be complacent about this is difficult to understand. One would think that the AMA and other medical groups would be engulfed in shame and howling like coyotes baying at the moon. But except for an isolated voice here and there, the group is mostly silent.

This collapse of the health care system has been in progress for some time. Its continuous degradation has been fairly obvious; yet no major influential group seems to want to do anything about it. Politicians can't because they are too easily influenced and beholden to heavy contributing special interest groups and fall prey to their lobbyists. The insurers won't because their businesses are at risk if the system changes, but why the medical profession isn't is a mystery.

What's worse, however, is that the ideas that have been put forth as way to improve the system have all been spurious.

An article recently published in the Dallas Morning News (Sunday March 26, 2006) states that "In recent years insurance, government and employer groups have praised health plans that transfer more of the costs to patients. The theory is that if consumers have financial skin in the game, they'll make better health care choices that ultimately will decrease overall costs to employers and the government." And John Goodman, President and founder of the National Center for Policy Analysis claims that "When people are managing their own health dollars, they cut down on unnecessary doctor visits, reduce unnecessary purchases of drugs and switch to generic drugs. In short people make common sense adjustments when they get to enjoy the rewards from more efficient purchasing of health care."

Now I don't know what evidence Mr. Goodman has to support this view; I suspect he has none, because I know that people do not act as he suggests when they purchase automobiles or groceries. Although it has often been proven that store brands are as good as and sometimes better than brand named items, a situation that is exactly analogous to brand named and generic drugs, most people buy brand named products. Why would anyone expect people to act differently when it comes to medical care?

But even if they were willing to act as Mr. Goodman suggests, few patients have the option of selecting the kind of medical care they receive. Physicians decide what drugs to prescribe, and most have been prescribing generics for some time now. Physicians also decide what tests to have performed. And has anyone ever seen a price list posted in a physician's office or hospital, so that people could make comparisons?

And what's this stuff about unnecessary visits to the doctor? The only people I know who do this are hypochondriacs, and they are not likely to change their practices under any conditions. Most of the people I know hate going to the doctor, often put it off far too long when ill, and attempt to carry on their ordinary lives while spewing germs in the faces of everyone they meet, a practice which I am certain sends more people to physicians than having gone to the doctor in a timely manner would have.

But there is one class of unnecessary trips to physicians that Mr. Goodman seems to be unaware of. It is an absolutely wasteful category that is imposed by medical insurers. People with chronic conditions who are apt to have to take the same or similar drugs for the rest of their lives are required to visit their physicians at least four times a year to get prescription refills, regardless of whether they have some other ailment that needs attention, for these prescriptions are written for three month periods only. These are the only unnecessary trips to the doctor that I am aware of.

So this whole idea of patients making their own medical choices is not only a red herring, it is a rancid one.

The other idea in the article mentioned above, the idea that insurance, government and employer groups have praised health plans that transfer more of the costs to patients is even more insidious.

Patients and their cohorts in group medical plans have always not only paid all of their health costs, they have in fact paid more, for they have financed the overhead and profits of insurers. It is true that physicians and hospitals do provide some pro bono care, but they provide it to those indigent patients who have no insurance and little income. This care is not provided to insured persons or persons who can partially pay. Neither hospitals, physicians, nor insurers have a charitable fund from which patients can draw the difference between what they can pay and what is charged. Employers have no such fund either. The idea that employers help employees pay their health care bills has no foundation whatsoever. Yes, employers do make contributions to their employee's health care plans, but it is not charity. An employer's benefits package is part of an employee's compensation package that the employee earns. Some companies regularly send employees summaries of what their true compensation is when the benefits they receive is converted into dollars. So how can one transfer more to those who already pay all unless you are out to pick their pockets?

Certainly, employers would like to reduce these contributions, but not out of a desire to improve medical care. These employers will jump at any opportunity to reduce employee compensation whether it involves healthcare or not.

Mr. Goodman and others suggest that as employers reduce their contributions to benefit plans, they have more to spend on wages. Mr. Goodman says, the employer is likely to pay more in wages and let employees buy their own insurance, for instance.

But this makes no sense. If an employer reduces has contributions to a benefit plan by so many dollars and then increases wages commensurately, the employer's costs are a wash. All that has taken place is a bookkeeping change. Of course, this then belies Mr. Goodman's claim that the employer is likely to pay more in wages. What in the world would make it more likely? The employer's costs are the same either way.

There is one more spurious idea, which, as I understand it, is Mr. Goodman's own bad seed brainchild--the Healthcare Spending Account. He says, "We developed the concept because many families live paycheck to paycheck and do not have extra money to pay a doctor." True enough! Perhaps too true! But if these families do not have any extra money to pay a doctor, where do they get the money to put into a Healthcare Spending Account? Mr. Goodman doesn't seem to see this contradiction. He then says that "HSAs make sure the funds are there when the need arises." But how does it ensure this? How much money would a person have to have in a HSA to ensure that he could always cover his/her medical expenses? How long would it take a person to accumulate that amount? And what does he/she use to pay medical expenses in the meantime. I don't know what the answer is; I don't believe anyone does. As a matter of fact, I don't believe that there is such a sum.

I recently read, although I cannot put my finger on the source at this moment, that a person aged 65 would need $600,000 in such an account to ensure his/her ability to pay his medical bills. If one assumes that a person begins such an account at age 25, he/she has exactly 40 years in which to accumulate that amount. That comes to a monthly contribution of $1,250 a month. Of course, someone will point out that I am ignoring growth in the fund, which is true, but I'm also ignoring the fact that over these 40 years the person will have to make withdrawals from this fund for the medical expenses he/she has to cope with in the interim.  How many people can afford to make such a contribution, which I would point out is in addition to retirement account investments, medical insurance premiums, and many others. How would those who live from paycheck to paycheck ever be expected to accumulate enough in an HSA to make sure "the funds are there when the need arises," to use Mr. Goodman's own words? I do not believe it is possible and if I am correct, Mr. Goodman's concept is a stillbirth when it comes to ameliorating the faults of the American healthcare delivery system. It's a non-starter that will benefit no one who now has a hard time paying for medical care.

How can anyone with a brain larger than a gnat advocate such an idea? There are only two possible answers. Either the person is incredibly stupid or he is utterly dishonest intellectually.

Mr. Goodman rightly says that "There is enormous waste in our system," but he is wrong in attributing it to patients. The system eats up money without providing any return to patients just as pandas eat bamboo. Insurance company profits and overhead, cumbersome and wasteful claims processing and payment systems, ridiculous salaries for company executives, and perhaps the most scurrilous the massive funds spent on lobbying--this is where the bulk of the waste is, except people like Mr. Goodman won't admit it because it does not fit their predilections.

Someone has suggested that some new ideas are needed. But that's the problem. There are no new ideas that will fix the system, and the longer we delay while seeking new ideas, the worse the system becomes.

There is only one solution to adequately financing the healthcare system. A way must be found to reduce its costs. No patchwork way of trying to find ways to pay current and future costs will ever fix the system, because costs grow faster than patient income. How to fix the problem of poor quality is another matter. But both of these problems can only be solved by the medical profession, and it seems reluctant to tackle the issue, (as a look at the AMAs web site demonstrates) and I believe I know why.

Once upon a time, business, and medicine in America is a business, was motivated by a maxim. Build a better mousetrap and the world will flock to your door. Somewhere along the way, businessmen discovered that they could get the same result by merely making people think they had built a better mousetrap. People in America no longer go into business to provide a product or service; they go into business to make money. The product or service is merely a means, and once people discover that they can make as much money by pretending to provide a product and service, the motive to degrade the quality of both is evident.

This mania afflicts much more in America that the healthcare system. It is the reason we cannot manufacture anything anyone else in the world wants to buy, anything that even many Americans want to buy. It is the reason for our unbalanced balance of payments, for the decline of great American manufacturing companies such as our automobile industry, and the great decline has just begun. What passes as a culture in America can best be described as a vulture.

You see, I am not optimistic. I don't believe that we will fix the healthcare system any better than we have been able to fix the problems of illegal immigration or illegal drugs and many others. We won't fix any of these because the problems are not what concern the groups that can bring about a fix; only making money does. Just as illegal immigration and illegal drugs make a lot of money for a lot of people, so too does the current healthcare system. The system does not exist for patients; we only pretend that it does.

Jesus said, Ye cannot serve both God and mammon. But the truth is, serving mammon precludes serving anything else. (3/27/2006)

2006 John Kozy