Author Topic: Threat of Economic Collapse Because of Medical Monopolies  (Read 227 times)

Offline mooreupp

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Threat of Economic Collapse Because of Medical Monopolies
« on: April 17, 2017, 08:43:27 PM »
I am visiting this board from the Tickerforums.  It’s a primarily economic blog/message board and a few of us have decided to go venturing out to other boards because of something we think is a very large threat to our economy in the short to medium term and which very few talk about.  What we hope to do is get the medical reform proposed by Karl Denninger put in place before things get out of control (https://market-ticker.org/akcs-www?post=231949 ).  More than that though, we trying to get President Trump to follow through with promises he made on the campaign trail that he has since backed away from.  I personally voted for him in both the primary and the general for this one issue and he has since seemed to abandon his promises here, and I am hoping we can get him back on board.

This will take a few minutes to read through, but I ask that you do and promise the threat here is real.  First, I would ask that you just take a moment and look at this graph from the world bank.  It shows the percent of America's GDP that is going into medical care.



Now I want to point out that where the graph starts (around 13% on medical care) is already higher than almost every other developed country in the world (can see them all at  http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS?end=2014&locations=US&start=2000  ) and was high for the United States in 2000 by historic standards.  Most those other developed countries today have socialist type systems for health care which should have naturally higher costs.   The trend is also not changing (the graph is a few years old).  Last year we went past 17.8% of GDP on just healthcare which is insane by any historic or international standard (https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nationalhealthaccountshistorical.html).

Now let me ask two questions.  1.  Do you think your income is increasing at the same rate as medical expenses?  2.  Do you think this is a trend that can continue without major consequences? 

What is Causing it?

Our basic problem is that the medical industry is treated completely differently than every other industry by the federal government.  While other industries are all subject to anti-trust laws which force competition (and thus lower prices), the medical industry has not been subject to those same laws for a long time.  It is not that those laws have been repealed, they simply have not been enforced on it in decades.

Let’s compare experiences.  If you have a major purchase decision, like say a car, you look at multiple dealers or online.  You look at what you are getting for your money and make the best decision.  Since car dealers know you are looking between them, they try to keep the price of their cars down and make business decisions that allow them to charge less.  Even if you don’t do that great of research, you probably end up spending less simply because the dealer must keep the price down as he or she knows many others are comparing and a reputation for high prices will hurt even among customers who do not look at closely.

Now let’s compare that to a hospital experience.  Let’s say you are healthy right now and don’t need anything?  Is there any easy way for you to go look up the difference prices for hospitals?  Maybe Hospital A charges a little less for everything or Hospital B overcharges on many expenses.  Of course, it is even more complicated than that because the hospitals have agreements with different insurance companies to charge different prices.  What the hospital charges with one might be several times more than what charges it for someone on a different insurance or what is charges someone with none at all. 

Now let’s say you get sick.  You go to the hospital, they tell you everything you need, and you only get a final bill after everything is done.  Now maybe Hospital A and Hospital B weren’t that different in cost, but maybe they were.  Even if they weren’t, if they had to publish exactly what everything cost beforehand, they would have had far bigger incentives to keep prices down that they do now.   

To put this in perspective, a women in Arizona was charged $83,046 for anti-venom at a hospital while it costs just $100 a dose in Mexico (http://www.nydailynews.com/news/national/arizona-woman-feeling-pain-83-046-bill-anti-venom-drug-seeking-medical-treatment-scorpion-sting-article-1.1152754) .  While this is an extreme example, it’s indicative of our whole medical system.

I don’t want to get more into this here as I know this post is already getting long, but you see similar issues throughout the medical industry.

What Can You Do?

What we want to do is spread the word on things that would help our system.  Karl Denninger has posted the following proposal https://market-ticker.org/akcs-www?post=231949 .  What we are hoping for is that we can get this trending and force a new discussion away from the Obamacare/Republican Replacement plans, both of which are useless for addressing our issues. 

One Final Thought:  The Federal Debt Bomb

I would like to end with a series of graphs showing how this problem is effecting government spending.  The only thing that these graphs show is what the Centers for Medicare and Medicaid Services spends each year and come straight from the Treasury (you can see the most recent full year on page 10 at https://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/mts0916.pdf if you want to).  Look at its growth over 16 years vs. the entire rest of the federal budget (which has also grown a lot).  Note: After making these graphs I realized total government spending is somewhat higher than the number I used here as the federal government subtracts somethings along the way rather than putting everything it brings in as revenue and considers some things off budget (which effectively is used to distort true spending and debt).  None the less, the graphs show the trend well enough and at most are just moderately ahead of where we are. 

 



 


 
 
From these charts, I think we can very clearly tell one thing.  The federal government cannot continue to afford ever increasing medical expenses.  If we add in the interest paid on the debt every year to the expenses from the Centers for Medicare and Medicaid we are close to 4 out of every 10 dollars of the federal budget accounted for.  That is leaving an increasingly smaller percentage for absolutely everything else the federal government pays for.  The net result of that is that the federal government continues to borrow large sums of money to continue all the programs it wishes to (which means it can no more afford these prices than companies or individuals can).

To put it another way, the average increase in cost for the Centers for Medicare and Medicaid this millennium is over 7% a year with the only significant down tick being a single year of transition when Obamacare started.  If we continue to follow that, that means we go from $1.4 trillion spent on it today, to close to $2 trillion by 2020 and given how exponents works, every years increase is worse than the last.   

Remember, that the federal government is also spending ever increasing amount of money on just interest on the debt.  Right now, that interest is very light, but given the huge debt, is still hundreds of billions of dollars a year.  Even a small increase in worry that the federal government will not pay back all its obligations will result in interest rates getting much higher much quicker (which means the federal government would have to borrow even more to keep up).  In other countries where we have seen that happen and unless there is outside intervention (and there wouldn’t be anyone big enough outside to help the United States), interest rates on government debt go from relatively low to unaffordablely high in a very short period.  At that time, it becomes virtually impossible for a government to borrow money.  A change that massive would leave the United States instantly in the worst depression we have ever experienced.  That is a future I do not see us having any chance of avoiding when we have medical costs going up at their current rates almost every year.

That is the future we are hoping to avoid.  Please help us get Karl Denninger’s proposal trending.
« Last Edit: April 17, 2017, 11:21:29 PM by admin »



Offline topside

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Re: Threat of Economic Collapse Because of Medical Monopolies
« Reply #1 on: April 18, 2017, 07:00:14 AM »
I took a scan of the pseudo-bill and some of the posts that followed.

There is a lot of value to the idea of published prices to help control costs. There are places where the auto repair bill and health care follow but it also breaks down at points; e.g., you can always stop and talk to a customer about another issue found during a repair but you cannot always do this during surgery. But I'm currently under the opinion that the analogy holds up well enough - the times when things go so wrong that you have substantial deviation from the plan are outliers; most surgeries go near to plan. Published prices is a good idea.

In fact, some portions of health care already do it and are making money. You can get most types of scans (x-ray, MRI, etc.) under a fixed price. It has brought the price down.

Hospitals are the worst with respect to providing costs. Example - I needed an MRI with contrast and the doctor pointed me to the hospital. I called the hospital for a quote and they said $700 for the MRI. I called some "aftermarket" places and the prices were about $150 less. But my doc was at that hospital and the info flow would go better so I went with the hospital. My bill was about $1200 in the end; there was an extra charge for a technician to run the machine and a charge for use of the machine. I disputed the bill with the hospital to no avail - they indicated that the verbal quote was not binding and that they aren't responsible for other charges that are part of the process. I was in total disbelief. Now, if they can't quote an MRI more accurately than that, how do you think a quote on a heart surgery would go.

This is a good area to work. Not sure the government has to get involved though. Hospitals who adopt the practice would become more popular and the market would move their way. Maybe the government could motivate them toward such constructs ... but government mandates usually just foul up the systems worse.

I mighty look at the psuedo-bill in more detail. We'll see.


Offline Ms.Independence

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Re: Threat of Economic Collapse Because of Medical Monopolies
« Reply #2 on: April 18, 2017, 08:07:26 AM »
A huge part of rising costs are those receiving medical benefits who have never paid into the system.  The impact of illegals drawing on Medicaid benefits is very significant.

IMHO I think publishing prices isn't the answer.  Take for instance in my area, ALL hospitals in my county are owned by the same entity and I live in a county with a population of over 650,000 people.  They have absolutely no reason to outbid each other or lower costs.  The hospitals(s) are all non-profit anyways, but they have in the past relied heavily on Medicaid and Medicare and a lot of private donations.  For many people going out of the area to the next county - 50 -75- 100 miles isn't an option.  It costs to travel and if a loved one has to be in the hospital for any length of time (even a couple of days) the family has to pay for food, lodging and gas in addition to medical expenses. Also a lot of insurance companies won't pay for a facility outside your area unless it's deemed to be a medical emergency.

Secondly, the way the system is set up now; in order for a hospital or a physician to bill an insurance company, they must select from a national standard list of medical codes (ICD); if the bill is not coded properly for the service performed the insurance company has the right to reject payment.  The system of codes coincides with privacy rights under HIPAA which was set forth by Clinton.  The costs that the insurance company will pay are also a factor. 

The solution isn't simple, but  STOP giving medical treatment for non-citizens who won't pay would certainly help and secondly open up the insurance industry to allow them to cover costs at any registered medical facility, even across state lines...yes...then we may have some true competition, but the problem still exists that people may not be able to afford to travel in order to access cheaper medical facilities and doctors.

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another...Governments are instituted among Men, deriving their just powers from the consent of the governed...

Offline Hoofer

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Re: Threat of Economic Collapse Because of Medical Monopolies
« Reply #3 on: April 18, 2017, 04:57:38 PM »
I think this belongs in the Financial thread.   At least in there, it'll be around for more than a couple of days.
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Online Solar

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Re: Threat of Economic Collapse Because of Medical Monopolies
« Reply #4 on: April 18, 2017, 05:33:21 PM »
I think this belongs in the Financial thread.   At least in there, it'll be around for more than a couple of days.
Aw crap! That means I moved something, somewhere, if this is still here. :lol:

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Offline walkstall

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Re: Threat of Economic Collapse Because of Medical Monopolies
« Reply #5 on: April 18, 2017, 06:35:31 PM »
Aw crap! That means I moved something, somewhere, if this is still here. :lol:

Walks, yo want to do the honors? Thanks.

You just removed a sticky.  Done.
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Online Solar

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Re: Threat of Economic Collapse Because of Medical Monopolies
« Reply #6 on: April 18, 2017, 08:43:34 PM »
You just removed a sticky.  Done.
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Offline mooreupp

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Re: Threat of Economic Collapse Because of Medical Monopolies
« Reply #7 on: April 18, 2017, 09:17:17 PM »
Thanks for moving.  Probably should have put this here in the first place.  Few notes:

1.  The plan does address the illegal issue in that treatment is not required if you cannot pay and the government does not pick up the tab for them as it does for others.

2.  If every hospital in a large area is owned by a single group, I would think enforcing anti-trust provisions would mean separating them as you would in many other industries (you don't see a single grocery store chain or the like for this reason). 

3.  Opening up across states lines is not bad, but will have a fairly limited impact if we cannot get a much fuller picture of prices before treatment.  Prices are too obscured now to get any good sense of how different places charge.  Without a good sense of how prices vary, there are very limited incentives for any doctor/hospital/etc not to raise prices a few percent every year (which can be then used to either give raises, put money into less profitable areas, or pocketed as profit).  You add the competition though and making decisions that are good businesses ones becomes a bigger concern and we see prices start to drop quickly.

 

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