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2018-03-18 07:00 by Karl Denninger
in Health Reform , 198 references
[Comments enabled]  

This is the sort of article that leads one to wish for the authors and editor to go swimming in the ocean -- and get eaten by a shark.

The U.S. spends about twice what other high-income nations do on health care but has the lowest life expectancy and the highest infant mortality rates, a new study suggests.


"There's no doubt that administrative complexity and higher drug prices both matter - as do higher prices for pretty much everything in U.S. healthcare," said lead study author Irene Papanicolas of the London School of Economics and the Harvard T.H. Chan School of Public Health in Boston.

"These inefficiencies are likely the product of a number of factors including a reliance on fee-for-service reimbursement, the administrative complexity of the U.S. health care system and the lack of price transparency across the system," Papanicolas said by email.

Ok, let's look at this.

Drug prices can't be materially higher in the US .vs. other nations without illegal price restraints, some of which have been made "law" by Congress over the years.   Why?  Because without said laws a lot of people would simply hop on a plane, fill a suitcase with the drug in another nation and get back on board for the return trip, selling the drug here. 

This very thing happens with processors, TVs, cellphones and similar -- but without the need for people to get on the plane, because businesses do this immediately to take advantage of the arbitrage.  That in turn collapses the arbitrage almost immediately to mere pennies.

15 USC Chapter 1 says that preventing that by restraining trade or forming monopolies is illegal.  So the drug companies went to Congress and through the FDA and various other acts in both law and the CFRs got laws and regulations passed so if you attempt this you will go to prison.

The same is true for "administrative complexity."  Why would not some physician or hospital eschew that, take only cash, sell directly and undercut everyone else by at least 50%?

The only means to stop this is through either laws passed (e.g. CON laws, etc) or to break the law by restraining trade and forming monopolies -- for example, by hospitals buying up physician practices to effectively eliminate competition.

All of this is a felony under 100+ year old law.

But it's very profitable for everyone involved though and produces "jobs" -- roughly 300,000 of them a year -- as I have been pointing out for quite some time.  If you start arresting people for breaking the law and thus make clear that restraining trade, forming monopolies and price-fixing will result in incarceration then the immediate effect will be that people will come into the market without those inefficiencies (since they cannot be stomped on by the industry, backed up by the guns of the federal government) and 3/4 or more of those people who were hired, who I remind you would over the last decade be about 3 million jobs will disappear overnight.

They won't stay gone for long, nor will the GDP impact (which would be about 15%incidentally) as the result would also be a monstrous decrease in the cost of doing business in the United States, and quickly lead to a huge economic boom in response.  In fact I expect the adjustment and resulting economic boom would take somewhere around 6-12 months to occur, and the permanent and positive economic impacts would be clear within a year.

But, in the interim there would be an extremely severe recession with concurrent job loss, those in the industry and their lobbyists would blame the politicians for throwing Granny down the stairs, the "feels" people would get all up in arms and wave signs and some politicians would lose their jobs.

So instead of enforcing the damned law we have ever-greater amounts of fraud and felony with you getting hammered by it both in your wallet and by literally dying earlier and more-often.

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In the end this is up to you folks.

You're going to have to revolt.  Peacefully and lawfully, hopefully.  But you're going to have to in order to fix the health care scam that causes you to pay ten times what others pay in other parts of the world for drugs, surgeries and other services.

Have a look at this folks.  Health care never lost employmenteven during the recession.

Now consider that at least 10 administrators and other non-care-givers are hired for each doctor or nurse.  Some estimates place the number at 30:1.

Technology always reduces cost and improves efficiency over time in a free market.  The concept of a 24" computer display that can be had for a couple hundred bucks was fantasy 10 or 20 years ago.  Such a display was a CRT and cost thousands.  I know because I owned one -- exactly one, in my office, that was used for graphic arts work.  Nobody else had them on their desk because they cost too much money!

You can buy a 65" TV right now and hang on it on your wall, with 4k resolution, for under a thousand dollars.  That was unthinkable a few years ago.  In 1999 after I sold MCSNet I bought a rear projection TV -- a Mitsubishi -- that was one of the first 1080 sets on the market.  It cost eight grand, consumed five times or more the power of the set I have on my wall now, was several times the weight and roughly eight times the cost yet had a fraction of the resolution and image quality.

We all walk around with a computer in our pocket that cost a few hundred bucks -- and is thousands of times more powerful than the desktop computer that I paid over $2,500 for.  It not only has thousands of times the RAM and storage it runs all day on a tiny little battery where mine required 120V AC power to operate at all.

Health care, as it has become more technologically-based, should have gotten dramatically cheaper.  A simple example is the X-rays in your dental office.  They used to require actual film; you took the image and then had to develop the film.  The film and chemicals to run it cost money and were disposable items; you used them and they were used up.  Today those X-rays are taken with a machine that uses a solid-state imager placed in your mouth (much like the sensor in a digital camera) that lasts effectively forever; the only "consumable" is a plastic-bag like cover placed over it for sterility reasons. The images it produces are higher resolution and the image sensor requires much lower power (meaning less radiation you absorb, but also far cheaper to make the X-ray emitter too.)  Yet the cost of those X-rays has not come down at all -- if anything it has gone up!

Crowns and such used to be made by hand.  Now they're done on a small 5-axis CNC machine that sits in the back room of the dentist's office; they take a picture of your tooth and the computer digitizes that and makes an exact fitting crown from same that requires very little trimming -- if any -- when put in your mouth.  That thing can make a crown in minutes from a solid block of material, and does.  Only the monopoly games the industry plays make that crown cost hundreds or even a thousand dollars instead of the five bucks worth of material and consumption of tooling (which does eventually occur); while the machines are moderately expensive over their useful life the cost-per-crown-made is literally in the single-digit dollar range.  With competition the cost of a crown would be in the tens of dollars (that's still a profit margin of well over 100%!) and another couple hundred worth of work by a dentist to have it put in.  And in fact it is, if you get on a plane and go somewhere all the monopolists cannot set up shop.

The government has all the tools it needs to break all those monopolies right now.  15 USC Chapter 1 makes clear that such actions are illegal.  Not only are they illegal they're felonies, not just civil offenses.  Yet nobody -- literally nobody, whether at the state or federal level will take this on.

The reason is in that chart.  If you put a stop to the monopolies in health care then employment in that sector contracts instantly and by a monstrous amount -- probably by as much as 90%!

The resulting layoffs and recession -- although it would be very short lived as the cost decrease to households and business flowed through the economy and all that money was redirected into productive pursuits -- is why nobody will touch this.

They know that 9 out of 10, or more, of the people employed in "health care" never provide a single second of care to a single person during their entire career.  They are all overhead, those "jobs" are created by the illegal monopolist actions of those in the industry, they could never exist in a free market because someone would employ only the people needed for care and actual cash collection, and thus would destroy the competitors with 10x as many overhead employees in a single day.

As I pointed out in Leverage the first economic principle is that the lowest-cost transaction is always the simplest.  If you want a loan the cheapest way to obtain one with proper price for risk is for you to find someone with money and borrow it from them.  If you want some form of health care the cheapest way to obtain it at an actual fair price for whatever is wrong is to find a person who knows how to fix whatever is wrong with you and pay them in cash.

This is always true because nobody works for free.  The more people who are involved in the transaction the more it costs, always and without exception.  Anyone who claims otherwise is either lying or stealing from someone else.

The politicians are never going to voluntarily contract this -- or any other -- segment of the economy, even when it is 10x the size of what it should be due to outright fraud and monopoly behavior that is against the law.  They know that this will immediately cause a very deep and nasty recession if they do, and they'll be blamed for it.

As a result it comes down to you.

Either you -- that is, everyone -- forces this issue and revolts, whether it be through a refusal to earn money and pay taxes, political process or otherwise, or the exponential increase in cost and parasitic employment that helps nobody other than those who draw the checks will continue until the Federal and State governments are unable to fund themselves at which point they will either ration care and if you are dependent on same you will likely die or said governments will collapse.

That point in time, incidentally, is now quite close to being upon us.

Which choice do you make?

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Only free-standing ERs?

Lawmakers at the state Capitol appear poised to require free-standing emergency rooms to provide more information to patients regarding costs.

A bill by State Sen. John Kefalos, a Democrat, and State Sen. Jim Smallwood, a Republican, advanced Tuesday in the State Senate Finance Committee.


They also would require the sites to tell the patients the costs of their top 25 most common procedures before going ahead with treatment unless it is classified as a severe emergency.

This would be in Colorado.

So why isn't every medical and other practice required to tell you up front what the treatment and procedure cost will be?

Aren't you required to be given an estimate before the garage works on your car?  You are.

Aren't you required to be given an estimate before the computer guy works on your computer?  You are.

Aren't you required to be given an estimate before your roof is fixed?  You are.

So why not here?

And further, why hasn't the Colorado Hospital Association backed this in a full-throated fashion?

Simple: They are not interested in being unable to rip you off.

That, by the way, should get them -- and all the hospitals and doctors -- charged with Racketeering.

And if they aren't, and if the lawmakers will not fix this and the cops will not enforce said laws then exactly why should you pay any taxes, why should you obey any laws, and why should you so much as be willing to sell such a lawmaker or cop a single gallon of gasoline, a pound of hamburger or a single orange?

The schemes in this space steal over three trillion a year from Americans.

Why do you allow it to continue, America?

Isn't it as simple as "you must post a price, and everyone gets charged the same price"?

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2017-11-01 12:14 by Karl Denninger
in Health Reform , 499 references
[Comments enabled]  

Ok, so I have the APTC for a single person who has reduced income to right near $20,000 a year for 2018.

In Florida it is now $760/month, or $9,120 a year.

This is wildly up from $446 for last year; in fact it's up 70%.

This means I can now have a Silver plan for about $15/month, as opposed to a very low-level Bronze plan for under a buck.  I can also choose virtually all the Bronze plans for zero (since the cost is lower than the APTC), but that would be insane since I'd be leaving a huge amount of your money on the table.

The actuarial value of a "Silver" plan is wildly better than any of the Bronze plans.

There is one "gotcha", which is hospitalization co-insurance that does exist on the Silver plan but not on the Bronze.  But the Silver plan in question has a zero deductible, so even with 20% "coinsurance" you'd have to run a hell of a bill to lose that bet especially considering that you get the insurance-company racketeering-deduction price.

Folks, you have to be flat-out nuts to work harder and run into the subsidy phase-out, especially if you have a spouse, even if you do need routine medical services since you can now buy zero-deductible Silver plans for less than the cost of a burger-and-beer in your local pub!


No, you probably can't do this in high-cost-of-living areas without living in a slum.  Yes, you can make it work perfectly-well in lower-cost-of-living areas and be perfectly fine.  I'm doing it and you can too.  Yes, it means you have to change your lifestyle but I'll be double-******ned if I'm going to go out and earn a six-figure income and then have government thieves not only tax more than half of it away (which they will) but then double-monkey-**** me by extracting approximately $10,000 in after tax money in addition from me for "insurance" that, unless I have some sort of medical catastrophe in the next 12 months in fact provides zero value to me.

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Here it is:

"Notwithstanding any other provision in state or federal law, a person who presents themselves while uninsured to any provider of a medical good or service shall not be charged a price greater than that which Medicare pays for the same drug, device, service or combination thereof."

That's it.

One sentence.

If you want to add a penalty clause with it I propose the following:

"Any bill rendered to a person in excess of said amounts shall (1) be deemed void, with all services and goods provided as a gift without charge or taxable consequence to said consumer but not deductible by said physician or facility from any income or occupational tax and (2) is immediately due to the customer in the exact amount presented as liquidated damages for the fraud so-attempted."

It ends the "Chargemaster" ripoff game.

It ends the $150,000 snake bite or the $80,000 scorpion sting.

It ends the $500,000 cancer treatment.

It ends all of that, immediately and instantly.

I remind you that Medicare is required to set pay rates by law at a level that in fact are profitable -- that is, above cost by a modest amount -- for everything it covers.  Further, those pay rates are audited regularly to prove that they in fact are above cost.

Does this solve every problem?  No, and in fact that would leave alone the existing monopolistic pricing systems that many medical providers, whether they be drug makers, device makers, service providers or otherwise have in place.  It would do exactly nothing to get rid of the 10 paper pushers hired for every doctor or nurse, none of whom ever provide one second of care to an actual person through their entire time of employment.

But it would instantly end walking into an emergency room and getting hammered with a $50,000 bill for something that Medicare will pay $5,000 for.

I remind you that even quite poor people can manage to come up with $5,000 in a life-threatening emergency.  Sure, they might wind up paying 25% interest on the credit card, they might have to stop smoking their $5 pack/day cigs, and it might take them three or five years to pay it off, but they can probably do it.

It's not an answer to the problems the mediscam imposes on society, but it would sure as hell bring down costs for people instantly and permanently, and would make the decision to not carry insurance one that people could opt for while having a rational shot at paying cash -- at least for those in the middle class or better, for whom a $5,000 surprise would be bad, but bearable.

More to the point with the crazy deductibles today the $5,000 would actually buy care and eviscerate the insurance ripoff at the same time, because today you get to pay the $5,000 plus another $10k/year in "premiums" -- for exactly nothing.

This matters because most of the argument for so-called "health insurance" is actually about extortion -- either buy the product or be ruined with charges that are 5, 10 or even 100x what someone who has bought the product will pay.

Ending that will force health insurance companies to actually provide a product that is affordable and provides a reasonable set of benefits -- or people can simply stick up the finger and pay cash.

Pass that, which should take no more than 30 seconds to introduce and put on the floor of both the House and Senate and then we can debate this as a permanent solution.

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