Forget ObamaCare, RyanCare, and any Future ReformCare–the Healthcare System Is Completely Broken

As with many other complex, opaque systems in the U.S., only those toiling in the murky depths of the healthcare system know just how broken the entire system is. Only those dealing daily with the perverse incentives, the Kafkaesque procedures, the endlessly negative unintended consequences, the soul-deadening paper-shuffling, the myriad forms of fraud, the recalcitrant patients who don’t follow recommendations but demand to be magically returned to health anyway, and of course the hopelessness of the financial future of a system with runaway costs, a rapidly aging populace and profiteering cartels focused on maintaining their rackets regardless of the cost to the nation or the health of its people.

Ask any doctor or nurse, and you will hear first-hand how broken the system is, and how minor policy tweaks and reforms cannot possibly save the system from imploding. Based on my own first-hand experience and first-hand reports by physicians, here are a few of the hundreds of reasons why the system cannot be reformed or saved.

Say 6-year old Carlos gets a tummy-ache at school. To avoid liability, the school doesn’t allow teachers to provide any care whatsoever. The school nurse (assuming the school has one) doesn’t have the diagnostic tools on hand to absolutely rule out the possibility that Carlos has some serious condition, so the parents are called and told to take Carlos to their own doctor.

Their pediatrician is already booked, so Carlos ends up waiting in the ER (emergency room). Neither the school nurse nor the parents see the symptoms as worrisome or dangerous, but here they are in ER, where standards of care require a CT scan and bloodwork.

Hours later, Carlos is released and some entity somewhere gets an $8,000 bill–for a tummy-ache that went away on its own without any treatment at all.

Since the Kafkaesque billing system rewards quick turn-arounds, observation is frowned upon unless it can be billed. So if observation is deemed necessary (to avoid any liability, of course), Carlos might be wheeled into an “observation room” filled with other people, where a nurse pops in every once in a while. This adds $3,000 to the bill.

(Never mind the stress on Carlos being in such unfamiliar surroundings; he might have felt better if he hadn’t been subjected to the anxieties that come with being enmeshed in the healthcare system’s straight-jacket of standards of care.)

If Carlos doesn’t feel better after all this, then the bill is set to balloon bigtime because an overnight stay in the hospital is the next step–and if there isn’t a 100% certainty that there is no chance of his stomach-ache becoming something serious, then the system will insist on overnight observation as the only legally defensible option.

There are other ways to increase the fees without actually providing additional care; was Carlos receiving “critical care”? Of course he was, because, well, it pays better, and by definition any ER visit is critical care.

This example is just the tip of the iceberg, but you get the point: all institutional care decisions ultimately revolve around thwarting future liability claims and maximizing the billing value of each interaction or procedure.

You’ve probably seen some of the racketeering that passes for “business as usual” in the pharmaceutical arm of the “healthcare” industry. A pharma company that spent $500,000 trying to keep pot illegal just got DEA approval for synthetic marijuana (via Chad D.)

Pinworm prescription jumps from $3 to up to $600 a pill (via John F.)

Off-patent medications double or triple in cost, and then double or triple again with a few years, without any justification. To extend expiring patents, Big Pharma corporations petition the FDA to change the target audience for the med, and this trivial administrative change awards the corporation years more of lucrative patent protection.

The scams are endless, the skims are endless, the fraud is endless, the waste is endless, the fortunes expended to limit “winner take all” liability claims are endless, the paperwork churn is endless and the perverse incentives and negative unintended consequences are endless.

Everyone knows the system is unsustainable, perverse and insane, but they are powerless to change it within the system as it is. The usual sort of political horsetrading that passes for “reform” yielded ObamaCare, which did essentially zero to limit costs or cartel rackets.

A system based on parasitic predation by all the cartel players cannot be reformed or saved from its own perverse incentives and skyrocketing costs. The foundations of U.S. healthcare are rotten to the core. “Reform” is an appealing delusion, but the rot is so deep and so pervasive it is embedded in the society and the culture, beyond the reach of legislative overhauls, no matter how well-meaning.

This chart-fest reflects the trends that cannot be reversed by policy tweaks and tucks: The U.S. spends more than twice as much per person than our advanced competitors such as Japan and France.

The U.S. spends 2.5 times more per person than the OECD (i.e. the industrialized nations) average:

Wages have risen 16%, GDP rose 168%, and healthcare soared 818%. Do you reckon wage earners might have a hard time paying for healthcare nowadays?

If healthcare had risen only as much as official inflation, each household would be saving $10,000 per year–$100,000 each decade. $100K here and $100K there, and pretty soon you’re talking real money in a conventional wage-earner household budget.

Projections of skyrocketing Medicare and Medicaid program costs guarantee national bankruptcy. The projection of 90 million Medicare enrollees is predictable, but there is no reason to believe costs will be limited to $20,000 per enrollee annually.

U.S. healthcare costs more in every category than other healthcare systems.Tweaking policy in one slice does nothing to limit the staggering increases being logged in all the other tranches of the system.

America’s healthcare system is the perfection of the fraud triangle: the pressure to increase billings, fees and profits is immense, the rationalizations are unlimited (it’s within the legal guidelines, etc.) and the opportunities for fraud are equally unlimited.

Individual caregivers and administrators want a different, better role and a better outcome, but each is trapped in the system as it is–and reform is impossible given the systemic foundations, incentives and legal framework.

It’s time to start planning for what we’ll do when the current system implodes.We might start by considering The “Impossible” Healthcare Solution: Go Back to Cash(2009).

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  • WillDippel

    As shown in this article, America’s spending on health care is very high compared to other developed nations and the health outcomes are far worse:

    Americans have a long tradition of paying far more for their health care and getting much less in return, an issue that Washington pretty much ignores.

  • diogenes

    One key chart that is missing here is a comparison of the public health rates achieved by America’s predatory absentee investor suction system as compared with other countries, which will show that American rates of infant mortality, for instance, are lower than Turkey’s and Cuba’s and 20 other countries, and that life expectancy in America is similarly dismal in comparison with other countries.

    Not only are American forced by a corrupt and criminal system to pay vastly more — for vastly more Americans get vastly less.

    Canada can, Italy can, Germany can, France can, Slovenia can, Denmark can … so can 20 other countries. Why can’t America? Because America is under the control of a tiny oligarchy, the capos and henchmen of 160 thousand families among 320 MILLION of us, who place their own greed far far far above allegiance to our country or even the ability to survive of American infants.

  • Carl_Herman

    Thanks, Charles, this is excellent.

    Yes, like so much connected to money, “We the People” suffer from outrageous and fundamental fraud that costs us, in this case, ~$600 billion each year in additional costs to “health” “care” companies and Big Pharma compared with single-payer covering everyone.

    This is criminal fraud from legislators with legal fiduciary responsibility to accurately and comprehensively communicate costs and benefits. Until Americans demand .01% arrests for being looted and constantly lied to, this is all we’ll receive.

    Documentation and analysis:

  • Kansas_Voter

    One thing that rarely gets mentioned is that single payer or Medicare For All would most likely eliminate the need for the majority of trial lawyers, because most of them are personal injury attorneys and most of their business revolves around getting insurance companies to pay for medical treatment (very few people get money for “pain and suffering” or from lost future wages). If there are no insurance companies saying “no” and if people can get medical treatment when they need it, then they won’t need to hire lawyers to sue their insurance company.

    • Nexusfast123

      It would and all the bankruptcies that occur that are related to ill health. A national procurement program with respect to drug purchases would eliminate tens if not hundreds of billions as would the elimination of all the utterly useless insurance companies.

  • nlightn

    It appears one of the matters that is not entering the MSM (the puppets they are) nor the alternative press except for a very few writers is this fact,….Enforce the law(s) of this country that were put in place for exactly the type of corruption that we citizens of this country are under with this healthcare blight. —

    Specifically, 15 USC and State Consumer Protection. More specifically the Sherman-Clayton Act and Robinson-Patman Act. These are laws that have been ignored with Pythagorean accuracy by our elected politicians.

    Every US Senator and US Congressman should be required to read these acts and then asked why they will not uphold the Sherman-Clayton Act and the Robinson-Patman Act ?

    All that needs to be done,…it’s just one simple (and it’s a law) requirement to be initiated and then followed up and enforced against every medical provider of any kind: Everyone,… every company, every corporation, every insurance company, every pharmaceutical, every biotech, etc,… must post a price and everyone purchasing their product (prescription drug, insurance coverage, etc) pays the same price; any sort or type of hiding, any form of collusion, any attempt at cost-shifting or similar unlawful and manipulative action is met with indictments, prosecution and prison for consumer fraud and racketeering along with violations of the Sherman, Clayton and Robinson-Patman acts.

    I mention this because we, the U.S.A., are a country of laws,… so that means that insurance companies are not immune nor exempt from anti-trust laws. They apply to all entities. When they “negotiate” and make backroom deals behind closed doors with providers,…like you have stated “Who does this benefit ?” Well we know it is not the common citizen. This blight we are under is taking 37% of this countrys GDP. It’s a simple matter of settled law; I submit they, insurance companies and providers, attempted to run the claim that they were immune under McCarran-Ferguson in the 1970s and lost at the US Supreme Court.

    Where has the intelligence gone in this country ? or has that also been bought and paid for by corrupt money also.

  • Shiggity

    You’re missing the charts describing the pay levels of the CEO’s who run the US hospitals, insurance companies, and medical supply companies.

    Record profit, after record profit, after record profit.

    Record yearly pay, after record yearly pay, after record yearly pay.

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  • jadan

    Smith, you’re addicted to the impossible dream of free market, non-government solutions. Cash for service is a ridiculous idea. Doctors don’t take a chicken or a dozen eggs for an office visit. A CT scan is not affordable unless the cost is subsidized. Health care, like any service that contributes to the general welfare, is the justification for having a government in the first place. The problem is not government, it is the failure of government to be democratic, transparent, & accountable. People like you are the problem with health care and any public service you snidely refer to a an entitlement. Your solutions are not relevant for a mass society. You simply do not understand the context in which you live.

    • animalogic

      “Health care, like any service that contributes to the general welfare, is the justification for having a government in the first place.”
      My word, that’s hitting the nail on the head !
      Other than being a huge part of the disease of US democracy itself, US health care is symptomatic of the vicious US ruling Oligarchy. Such a NAKED case of legitimised fraud & predation, in an area of such obvious importance as health care points to irredeemable corruption — not merely systemic, but as “essence”. Nothing short of a systematic purging of the 0.01% (& their willing dogs) & the institution of communal de-centered forms of socialist organisation will begin to solve this issue.

      • jadan

        Agree. Bernie’s democratic socialism is the key. Americans have not outgrown their ancient Calvinist disposition. Some are chosen. Many more are fucked by order of an angry deity. This is Smith’s moral compass.

        • Nexusfast123

          Its not a socialist system that is required. It is one that should be based on cost minimisation. The UK created the NHS after WW2 not because it was socialist. It was because the country was broke and private health care was a costly failure. After they introduced national health insurance coverage was massively increased at a reduced cost. The psychopathic politicians keep trying to introduce profit so they can steal of the taxpayer and feed their corporate mates. The US is the only nation with such a failed system which will get worse as the population ages.

          • jadan

            This country is broke and private health care is a costly failure. All government mandated public health care systems are socialist. Social security is socialist. Public highways & other infrastructure programs are socialist. When people use their government to provide for the common interest, or “general welfare”, as our Constitution phrases it, this is socialism. “Democratic” is appended to the term to emphasize that the activity of the state is ideally transparent, accountable, and subject to popular control. We do not have democracy in the US. Sad! We have oligarchy and a blowhard landlord oligarch for president. Sad!. We do not have decent health care or any true conception of the “public interest” because loonies like Smith reject such a conception as a socialist character flaw. We’ve got bupkiss. And there you have it. Bob’s your uncle.

    • Nexusfast123

      You have little understanding. Other countries operate systems that are based on cost minimisation not on profit maximisation. You cannot create a health market. Kenneth J Arrow a free market economist in the early 60s modeled this extensively and his findings/assumptions have not changed. His paper and model can be downloaded. The US health system was based on a cost minimisation model up until the early 70’s. Then it was changed to a profit driven approach so hence the mess you now have in the US.

  • paul

    A predatory economy…

    • Nexusfast123

      In many ways – health, pharma, prisons, military, energy, retail, agriculture, etc. All operating on extracting excessive rents and subsidies from the US Consumer/Taxpayer.

  • Nexusfast123

    Once national health system is profit driven it is doomed. The incentive is to do all the things highlighted in the article and there is zero incentive to reduce costs. Other countries have cost driven systems in the sense the objective there is to manage and mimimise costs. Tinkering reform is not possible in any way.