Are Profit and Healthcare Incompatible?

As I have been noting for a decade, the broken U.S. healthcare system will bankrupt the nation all by itself. We all know the basic facts: the system delivers uneven results in terms of improving health and life expectancy while costing two or three times more per person compared to our advanced-economy global competitors.

U.S. Lifestyle + “Healthcare” = Bankruptcy (June 19, 2008)

Sickcare Will Bankrupt the Nation–And Soon (March 21, 2011)

How Healthcare Is Dooming the U.S. Economy (Three Charts) (May 2015)

You Want to Fix the Economy? Then First Fix Healthcare (September 29, 2016)

This chart says it all: the global outlier in low life expectancy and exorbitant cost is the U.S.

The profit motive is supposed to lower costs, not increase them. In the idealized model of a completely free market, the profit motive is supposed to lower costs as customers are free to choose the best product/service for the lowest price.

In U.S. healthcare, the profits are stupendous, yet the costs are even more stupendous. Rather than lower costs, the U.S. system of for-profit healthcare has sent costs spiraling into the stratosphere, to the point that the system’s costs are threatening to bankrupt the government and the nation.

Why is this so? Karl Marx provided the answer in the 19th century. In the idealized model of free-market capitalism, those who provide superior services for the lowest price reap more profit than their less agile/productive competitors.

But as Marx observed, in real-world capitalism, open competition drives profits to zero. Every attempt to gain a competitive advantage in price increases supply and further commoditizes the product/service. This dynamic pushes prices down to the point that nobody can make a profit until competitors are driven out of business and a cartel or monopoly secures the market and controls supply, price and profit.

The most profitable structures in real-world capitalism are monopolies or cartels– which is precisely what characterizes U.S. healthcare. The only way to maximize profits is to ruthlessly eliminate competition in the marketplace–which is exactly how the U.S. healthcare system operates: the pharmaceutical industry is a cartel, hospital chains are a cartel, insurance companies are a cartel, and so on.

In the real world of state-cartel-capitalism, competition is eliminated so cartels can maximize profits.

Do-gooders are always claiming that the system could be fixed by re-introducing competition– this was the core idea behind Obamacare’s insurance exchanges–but the do-gooders are blind to the core dynamic of state-cartel-capitalism, which is cartels own the machinery of governance via lobbying and campaign contributions. The state creates and protects the cartels, period.

In state-cartel-capitalism, there is no way to maintain real competition, as the cartels instruct the state to protect their monopolies/cartels. State reformers can try all sorts of complex reform schemes (ObamaCare) but they fail to lower costs because they all leave the cartel structure and cartel ownership of governance intact.

In the good old days of the 1950s and 1960s, U.S. healthcare was more localized, and the central state (federal government) wasn’t the Sugar Daddy for the cartels. Hospitals were community hospitals (what a quaint idea in today’s hyper-cartelized system) managed by physicians and administrators who saw their role as serving the community rather than arranging for $20 million annual salaries and millions of dollars in stock options.

This is why the cartels love Medicare For All proposals: the federal government–protector and funder of the cartels–will give the cartels a blank check not just for the 120 million people currently drawing benefits from Medicare/Medicaid but for all 325 million Americans.

Fast facts on Medicare and Medicaid (Center for Medicare and Medicaid Services)

Medicare Beneficiaries: 57.7 million 
Medicaid Beneficiaries: 72.3 million 
estimated dual Beneficiaries (drawing benefits from both programs): 10 million

Total Beneficiaries: 120 million

Medicare/Medicaid budget, 2015: $1.2 trillion

Total U.S. healthcare costs: $3.2 trillion, 18% of GDP

Department of Defense budget, 2015: $575 billion 
source

Are profit and healthcare incompatible? In the real world of state-cartel-capitalism, the answer is yes: a profit-maximizing system fails to deliver prevention while pushing costs higher, eventually bankrupting the Sugar Daddy government and the nation.

Prevention, like a bag of carrots, is intrinsically low-profit. Illness, especially chronic illness, is highly profitable because the profits flow continuously from treatments, medications, procedures, tests, visits, hospitalization, home care, a constant churn of billing, etc.

The only way to systemically lower costs is to make prevention and transparency the top priorities. Prevention, community ownership of healthcare services, transparency and unfettered competition kill profits, period. Yet these are the only way to lower costs to be in line with our competitors.

You can reconfigure the system any way you want, but you have to eliminate cartels, cartel ownership of governance, opaque pricing, government blank checks and incentives for profiteering from chronic illness. If you don’t eliminate all these, you’ve fixed nothing.

 

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  • ZARTAN

    The US government can print money to infinity, so it can fund to Infinity social programs like Medicare, which is raped by the medical industry, for profit, while leaving everyone else uninsured. Only in Ameirca is Epinephrine ( a cheap life saving drug) marketed for $1,000.-dollars, this is Crime at its Best!

    In other countries, the responsible social government uses its market share ( universal non-discriminatory coverage) to lower prices. In America, medicare is raped by GAY LOBBY and only the Highest Prices are Paid.

    One can expect such RAPE- in a Nation that is so perverted- that they have the YOUNG working to provide healthcare for the old, while they go without. Discrimination at its finest!

  • ZARTAN

    US will never go bankrupt, because the world is its hostage!

    Who will downgrade the USG and risk Nuclear War? Nobody. THEY OBEY, OR ELSE?

    If Americans had brains they would know this and demand better! You either get benefits or your government plays MEGA-TRILLION DOLLAR GI JOE on your Dime!

    Wake up and Smell the Coffee!

  • ZARTAN

    Oh, and you better check your stats, 3.2 Trillion is Way off for Healthcare. Perhaps, over many Years. However, things are so bad that I have to add … You`re being “AXX FKED” America, if those numebrs are Correct?

    Sorry, but that is the only “proper description” in the human vernacular.

  • diogenes

    The answer is yes. Thank you. This is on the mark.

  • ZARTAN

    1/2 Trillion on Medicare Spending, which is less than military spending, 3/4 of a Trillion. http://www.usgovernmentspending.com/medicare_spending_by_year

    You are taking Entire Healthcare Spending, including “private and self-pay,” which is not paid by government.

    There are too many criminals running things and you want to do what? Cancel all Government insurance and make people self-pay? I would love to allow you to do that, and then, You would end up like Benito Moussolini!

    • ZARTAN

      Oh, and to put that in perspective ” above” at least the US tax allocated to healthcare took care of a hundred million, or so, seniors. However, the Military? WTF have they accomplished? Shooting Million Dollar Holes in the Sand … Murdering Millions of Innocent People … And, it took them 10 GD YEARS to find BIN LADEN? I will go on Record, as saying: ” THE US MILITARY IS AN ETERNAL ABOMINATION.”

      All the Greats of History will Agree with me. I bet GOD agrees, too!

      So … America, “CUT THE MILITARY” and Take Care of Your People, Fools! Learn how to use numbers to lower healthcare costs, and stop the LOBBIES!

  • kimyo

    it’s also important to note that medicare is always portrayed as a handout, draining money from the treasury and putting it into the hands of seniors.

    however, much of this ‘free cash’ actually goes directly into the coffers of the pharmaceutical companies. it is they who are the ‘freeloaders’, not the seniors.

    • Sarahjsmith


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  • RobinDatta

    The insurance paradigm is totally inappropriate for healthcare, where degeneration and disease are intrinsic to aging, with a corresponding increase in costs. Health care is applicable in youth; with aging comes disease care which is quite different from health care. Profit making institutions should be completely excluded from all aspects of health care.

  • Todd millions

    Watch the Canadian stats. Health Canada is superb in lies and corruption.
    They have for instance being screwing around with the cancer stats for decades-I caught the last round and was able to discuss them with someone very mage in that area. It was worse than I had figured . Health, environment, workplace standards ect-all on the profit as we kill you model you describe.
    The solution is the same in the health care case however. As J. Verne pointed out in a Le Petit journal article a century ago. He predited 200 year plus spans of youth and health mainly by adopting-“The Chinese Model”. Sic-When you are well, you owe yer doctor 50$ per week.
    When you get sick or injured-
    “You Stop paying them till you are well again”.
    I expect no drug company nor posioneering biowennies could survive 6 months of this conversion whether they are headed in Germany Switzerland China or Darkest Yankydum.
    I may be wrong on that point-these are the same firms tied very intimately with the “painkiller” rackets-and the arms/security mafia attendent thereunto.

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  • ZARTAN

    And, in this “world of Insanity” that tries to make ALL insane … I have to constantly repeat: ” For Decades, it has been bemoaned, lamented, and cried from the rooftops … The US government will go Broke!”

    Has it ever Happened?

    Did the “20-TRILLION DOLLAR BANKER GRAB BAG” even slow it down? NO.

    Simply, all of you bean counters MISS the MASSIVE of the Entire POWER STRUCTURE ( AND YES, IT APPLIES) If the US government goes down, it all GOES DOWN. So, nobody will ever allow it to Happen. Money will be printed, until JESUS returns, and DOW will keep breaking NEW ALL TIME HIGHS!

    WAKE UP AND SMELL THE COFFEE!!!

    Math is GOOD, but you better know your other Subjects too, because they all apply!
    You are all extremely myopic and miss the big picture! He who controls the Worlds Most Powerful Military Controls all Markets.

  • diogenes

    Ten years ago 2/3s of Americans supported single-payer universal health care. We still do. It’s the obvious solution, which is why two dozen developed civilized countries use version of it, and all of them have drastically higher public health rates than America — our abysmal and dmaning life expectancy and infant mortality rates, for instance.

    • Snow Monkey

      single payer is waiting in line to die.

      • Zartan

        No, having no healthcare is waiting in line to die. Germany and France do not have any problem, nor do the Scandanvian Countries. Every Country that has Universal Care is Glad they Have it, because the alternatie of being American and paying for OLD Geezers, while you die without is some sort of SICK PRISON CAMP OPTION!

        Americans need healthcare, not Trillion dollar Illegal Wars, and TRILLIONS for BANKER PARTIES! The Money Belongs to the PEOPLE not the MIC.

        • diogenes

          neither does France, or Italy, or Slovenia, or Spain. Even Cuba and Turkey have public health rates — including infant mortality — much higher than America’s — because Wall Street isn’t sucking their blood from so close.

          • Zartan

            Yes, and I still cannot understand how in such a Bias, Upset and Concerned “America,” they all miss how the Young are made to Slave, so that The Old ( Wall Streets Meal Ticket) can have healthcare. Age Discrimination is Just as Wrong as any other form of Discrimination.

            Healthcare in America is run for Profit, nobody can afford it, but Wall Street is Buying Government so until the people FIGHT BACK, well they better learn that the Hospital Will put a Lien on thier Property and Any Assets if they cannot pay. Health Insurance is Very Important. All Civilized Societies provide their people with Health Insurance. America is nothing but a Concentration Camp.

            And, the funny part … If I start hearing voices “FROM GOD” telling me to do Evil things to Wall Street; well, I cannot get help because I have no health insurance! Americans are so lost that it is actually, Funny!

  • This a trick question?

    Only adequate healthcare and obscene profits for carriers are incompatible.

  • folktruther

    The life expectancy of Japan is longer than the US, but its medical care per capita costs less than half as much.

    • Zartan

      Because Japanese Practitioners are not trying to make OBSCENE PROFIT off of Medical Care. IN America, many Open Heart Surgeries ( BIG MONEY) are performend that are not needed but pushed for profit. This is universal with all SX in America.

      Healthcare Companies have lobbied Washington to make Grants, Entitlements –and Medicare– for themselves at the peoples expense. Nobody is looking out for the patient only profits.

  • burnie

    And the reason for profit and healthcare intertwined is explained by doing truthful research into the history of healthcare in the U.S. – AKA Rockefeller Medicine. It explains everything still firmly in place today.