As the world absorbs the news of the bankruptcy of Lehman Brothers investment bank and the rushed sale of Merrill Lynch on the tails of the Bear Sterns, Freddie Mac and Fannie Mae bailouts, we see the collapse of a system that permitted and promoted housing to those who could not afford it.
The sub prime mortgage mess was born of a change in banking rules that permitted more and more people to "quality" for mortgages, even though their incomes didn't change. Initially, things went well. The mortgage banking community profited handsomely from the increased business and by creating new, lucrative debt deals in the "derivatives" market. It was so good, in fact, that the rules were broadened to even more homeowners. So more people piled on more debt than they could afford, comfortable in the fact that interest rates would stay low, and balloon payments renegotiated for another, similarly low-rate mortgage when the time came. Unfortunately, things did change and so did the rules for lending, and these high risk homeowners were left holding the proverbial financial bag as their homes were foreclosed. The middle manager boys never once questioned the Top Dogs' laxity, the assuredness, the hubris of gambling money on such a high stakes game (people’s homes). And the government let them do it. Suddenly, when people could no longer pay, the Big Boys realized they were up the creek without a paddle and ran for cover in bankruptcy proceedings.
I wonder how any health care system, much like the foregone housing market, can sustain itself with our current similar mindset of universal, limitless healthcare for all. It will be bigger, better, the party never ends, and the money never runs out. Piñata-like, we grab as much as we can as fast as we can. This undisciplined, unregulated, lack of self-control or discretion money rush across multiple sectors of the healthcare business is exactly what happened in the mortgage crisis. Like the current housing debacle, opportunism reigns over social responsibility.
We’re now seeing what happens when the Big Boys and the government worked their Ponzi schemes for keeping the housing bubble inflated. We (the little guys) are seeing what happens to financial markets, the security of our 401Ks and investments, and the economy as a whole after the Big Boys have dropped the ball.
But there is little questioning of the effects of gambling on another high stakes game: people’s health and our nation's economy. Health care is our financial life preserver right now – it is the engine driving the economic survival of towns decimated by manufacturing losses. It is the leading employer for many communities as people fight to re-tool their labor skills into healthcare skills. It is generating a colossal 2.3 trillion dollars of revenue a year: much more than any investment bank – and the philosophy right now? It can’t go under. It will only grow. The future is limitless.
And like homes, we buy it.
So what’s the problem? The problem is there are tremors that the our healthcare bubble is going to burst. A bubble by definition is an artificial inflation based on spending money we don’t have. Healthcare has become so expensive that patients are having trouble paying for it. Employers, too, are having trouble paying for it. Insurers are having trouble paying for it. So guess what, the government is going to have trouble paying for it.
The tremors of an impending healthcare bubble, are like those of our current housing bubble, if we cared to listen: the escalating co-pays, pharmacy, and hospitalization costs. We see the rules change behind the curtain as the Big Boys, ever eager to earn your trust, add millions to our national debt through Medicare drug coverages. We see the employers and insurers in fierce battles for profits as they negotiate plans with hospitals as people are stuck with increasingly larger shares of their bills. And woe to the uninsured, already caught empty-handed in a time of crisis, who suddenly realize their payments exceed those of the more fortunate insured. The once expected mandates for healthcare, too, are beginning to find themselves unfunded and political promises left undelivered. We see the people of Massachusetts in their "New Big Dig" of healthcare, finding that $869 million won't pay their healthcare bill in 2009. And yet we see all this even as the new buildings are going up, even as the spas and Starbucks go into shiny marble lobbies – even now - as we continue to build our healthcare Hindenburg.
Then what happens? Well, Medicare fails. I know, I know. This seems no more possible than the idea that people would ever lose their homes - no way no how.
But when it does happen, then what does the inevitable government bailout look like?
It looks like a national healthcare structure that “comes to our rescue” in ways that no one would have voluntarily chosen. Now we are in crisis. There is no choice in crisis. You must do as we say.
Perhaps this is the set up all along by those who believe unfettered capitalism and health care cannot coexist. Let it fail. Let it stumble down a drunken, sated, undisciplined path until it reaches in its pockets and the money is gone.
But, who might exercise enough discipline to keep us from careening into a bureaucratic system that “saves us from ourselves?"
Would it be the hospital administrators? They have to compete.
Would it be the builders? They are just trying to win a bid – it’s the American Way.
Would it be the politicians? Talking frankly to their constituents about not spending money the state doesn’t have. (Hmmm.)
Would it be the journalists? Telling the public the truth about how health care is running out of money instead of doing a Nightline special on the next top dollar technology?
Would it be the pharmaceutical or device industry who cannot survive without designing the next unproven bell or whistle and cannot step out of the box to develop a new system to ensure their survival (i.e. lower profit to more people)
Would it be the consumer? Who figures the Big Boys will "figure out how to pay for it somehow" and just wants junior/grandma/husband to have the best health care out there?
The answer remains to be seen, but the first step remains admitting there's a problem. And the problem isn't the way it's being stated on Nightline. Like the 12-step program for Gambler's Anonymous, we must first acknowledge we have a problem and are addicted to shiny objects, the opulent, and the whizbang. Only then can we start to recover from our healthcare spending orgy earmarked by excessive testing, excessive building, excessive bureaucracy, and excessive expectations. This is the first and greatest requirement, and the others are like unto it: cost transparency, removing employers as insurance providers, health savings accounts, catastrophic coverage, and insurance policies that can be purchased across state lines are just a few of the steps needed to break our addiction to entitlement programs.
I am convinced that the American people are fully capable of marshaling the resources to address these complex issues. But we must first really acknowledge they exist and that fixing it matters. Only then will we land our healthcare Hindenburg before she crashes and burns us all.
Image reference: Wikimedia Commons