Monday, September 15, 2008

Our Healthcare Hindenburg

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. PiƱata-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


Anonymous said...

Finance world is very crazy... i can't believe a big company as Lehman is dead !... poor capitalism...

Anonymous said...

You make more sense in these paragraphs than all of the financial papers put together!!
If I can add one thought, in fact, just one word....greed!!!
If all of those involved weren't chasing the almighty buck, most of this would never have happened. Capitalism is the only system that works, but it must be tempered with common sense and virtues.

Margaret Polaneczky, MD (aka TBTAM) said...

The only comnforting thought I have in response is that when it all blows, the ones left standing will be the docs, the nurses and the patients. And we will rebuild what we have lost.

Because in the end, that is the relationship that endures. The rest is just business folks trying to capitalize on that relationship.

Anonymous said...

It also rests upon medical professionals to work to stop all of the health policies, insurance mandates and clinical guidelines that are not based on good science, but have been bought and paid for by vested interests. Those cost the public by wasting limited healthcare resources and jeopardize the future of healthcare for us all.

Anonymous said...

You forgot to mention tort reform and reasonable malpractice premiums (based on tort reform).

Anonymous said...

"reasonable" malpractice premiums? We going to let the government decide what is reasonable? I think they already have given that the CME considers your rates when they set prices and apparently finds your cries overblown.

However, in Dr. Wes' lists of "would it bes" he left out one group. Physicians, whose only solution of late is basically pay us more. Pay for performance - they reject. Universal healthcare - they reject. Embracing economic efficiencies like EMR - they reject.

They, the people on the front lines, have no more creative solution than pay us more (and of course give our liability carriers some immunity so they might, maybe pass some savings on to us).

Where is the concerted lobbying effort by physicians for any fundamental reform that doesn't involve legal immunity? Where is the massive shift in physicians' business practices to reflect this economic reality? Where are the brochures in the waiting room about how we need to change how they are paid and how Medicare works like we saw the tort "reform" brochures? Where are the physicians marching on state and federal capitols for themselves like they did their insurance carriers?

Why, oh why, don't the people who stand to gain and lose the most, who have the income to hire lobbyists, and who have the ear of every one of their patients, do something to help stop or divert this freight train?

Anonymous said...

Wait - so we already have "universal, limitless care"? And that's the opposite of "social responsibility"?
And they let you teach medicine?

Also - anonymous @ 11:02 makes some good points. Docs have a lot to do with our current system, but I don't see a smidgen of introspection in this post.

Anonymous said...

Well, the failure of Lehman and AIG is due to speculation with dollars that didn't actually exist, whereas the health care crisis is based overconsumption of real resources. So, while the points you raise are good ones, the link to the current financial crisis is somewhat loose.

DrWes said...

anony 8:49-


anony 11:02 -

I would concur that the physicians have been woefully ineffective at organizing on a national level to counteract our current situation. We have been just as emphatic about running to Medicare and preserving the broken system as anyone (as evidenced by the recent national push to prevent physician Medicare paycuts). But as one prominent physician blogger recently pointed out, when the junkyard dog has you by the balls and starts squeezing, you'll do whatever they want just to cope. Had the cuts gone though, we probably WOULD have been on Capital Hill en masse. But instead, we keep doing the coding, the unnecessary and repetetive documentation, more and more procedures, the quality initiatives, the hoop-jumping, just to minimize our income loss year to year. We profit little compared to other industries in medicine (it is both a blessing and a curse that we are not better trained in the ways of business). As such, our lobbying voice is muted compared to other more financially endowed forces on the Hill. I suspect most doctors (especially independent ones) would welcome the EMR, if they could figure out how to afford it and if it could really be used to transfer information across hospital systems nationwide, rather than being used as leverage to grow independent hospital system competitors comprised of huge, threatening, physician groups aligned against them. And yes, the list goes on and on. Oh, long ago, there was the AMA, a "voice" for doctors on policy issues. But when that voice caved to government entitlement programs' requirements for payments, the cat was out of the bag. Doctors became disenfranchised and bailed - in effect for the very reason we're in the current situation we're in now. Regretably, the AMA now represents a mere 20% or so of physicians.


As you know, the government is not like any other business, because when they run out of money they do not go bankrupt, they print more money which causes our nation to go into debt. While this money is real, as you point out, it is devalued in the world market, leaving Americans with significantly less purchasing power.

Anonymous said...

physicians: overworked, not-unionized (due to unacceptability politically), taken advantage of in their altruism (versus insurance and Gov't who play by capitalist rules - brutal efficiency), and now (40% of payment from medicare) addicted to the lopsided bastardized payment system we now have (triple taxation = Medicare payments (forced charity) + income taxes (despite physicians already paying taxes by accepting Medicare payments which are FAR below market value for the services + relinquishing the 20% profit margin that insurance companies take which is directly due to the woefully low medicare payment level (socializing force in market creates "wedge" between supply and demand driving up profit margin of supplier and inflating cost for consumer))


Government: buying votes in the short-term by promising to subjugate the industry of healthcare and force the services to be provided for free. A form of "lowest common denominator politics."

Might work in short-term, until talent is drained from medicine and we begin buying our medical innovations and drugs from China. (to understand this point, you must really look down the road, and I understand I will have lost many readers at this point).

pigdog67 said...

Me and my wife were happy to recently (2 months ago) have our second baby at a famous medical institution. The 3 of us and the other 10 people in the room. Last year this institution decided that it would raise its fees by 5% above inflation. This goes on year after year in the healthcare industry, with many years it being above 8%. Imagine an automotive company attempting that. Right near where I live (within a 10 mile radius) I have 8 different auto dealerships I can go to.
This is the real issue, that there are no cost controls within the industry. Also there is essentially a monopoly. When you get sick are you going to drive 50 miles or jump on a plane?
This is one area where government control is required. It works very well relative to our solution in all the other advanced countries. Because of a pretty dumb ideology people keep saying it cannot be done. Well France does it, at 60% of the cost in America, and much better than America does it. Maybe its the wine?
Canada does it at half the cost in America. It works. But doctors will have to cut back on their lifestyles, and so will trial lawyers. In Canada settlements are predefined. Lost an arm, this is the amount of money. So no big 20 million dollar law suit is needed.
American's are going to have to learn to live within their means. And that includes corporate executives (95% overpaid), doctors and everyone else.

Anonymous said...

From George Will:
In the 43 years since America decided that health care for the elderly would be paid for by people still working, the ratio of workers to seniors has steadily declined. And the number of seniors living long enough to have five or more chronic conditions -- 23 percent of Medicare beneficiaries -- has increased. Many of those conditions could be prevented or managed by better decisions about eating, exercising and smoking. The 20 percent of Americans who still smoke are a much larger percentage of the 23 percent who consume 67 percent of Medicare spending. Furthermore, nearly 30 percent of Medicare spending pays for care in the final year of patients' lives.

and thats the problem.

Anonymous said...

"Canada does it at half the cost in America."

Yeah and we all know that Canada does such a grand job of providing (rationing) healthcare that many come to the U.S. Where are we gonna go? Mexico?