Wednesday, July 7, 2021

Medical Care and the Something-for-Nothing Mentality

People want health insurance to be cheap, but at the same time to pay for everything including their aspirins.  You can't have both - pick one (hint:  Cheap is probably the best choice!).

NOTE:  This is an older draft that I just finished today.

I got a lot of negative feedback about my sleep disorder posting.   I hope everyone was outraged enough to post a link to that in the sleep apnea "let's feel sorry for ourselves" discussion group, along with a note about what a heartless bastard I am, so they all click on the story and I get some of that juicy Google AdSense revenue (UPDATE:  My blog is no longer monetized).   Hell, the Fibromyalgia people have basically funded my retirement by now, one outrage at a time.

I am just kidding, of course - or am I?  That is the weird thing about the Internet, in that once you monetize a blog, you are incentivized to post content that generates clicks - either positive or negative, it doesn't matter, so long as the plebes on Facebook keep linking to the story and you generate ad revenue.   Fake News and Pizzagate made hundreds of thousands of dollars for wily "content providers" even though the content was crap.

But getting back to the topic, my main beef with a lot of this modern medicine is that it sets out to cure trivial things, all in the name of making money.   Yes, snoring is probably not "healthy" but giving it a trendy name (Sleep Apnea) and calling it a "disease" and then prescribing an expensive machine (CPAP) might not be the answer to anything.   Years ago - in fact not too many years ago, this nonsense didn't exist, and somehow mankind managed to survive and flourish.  Today, what was in the past the subject of jokes and humor is now considered a serious and expensive illness to treat - and modern medicine, fueled by insurance money - is there to cure even the smallest malady you may be subject to.

Assuming this is a real disease and real science and not just the crappy pseudo-science that it really smells like, the question is, can we afford to pay for all of this, or more importantly, should we?

(UPDATE: All of my friends who have CPAP machines have one thing in common - they are obese or even morbidly obese.  That's why they have trouble sleeping and "stop breathing" at night.  Funny thing, but I used to do that, too.  But I shed 30 pounds and I sleep a lot better now.  Funny how that works.  Patient, heal thyself!)

The problem with heath insurance is the same problem with most government spending and government programs.  People start to think, "Gee, wouldn't it be nice if we could.....?" and you fill in the blank about what nice thing it would be if we could whatever.   Feed the homeless, make college free, provide health insurance to every man, woman, and child, and so forth.

These are all noble things, of course.  And some of them are things we should no doubt do.  But there comes a point where someone has to write a check for all of this, and at that point, the law of scarcity raises its ugly head.  Can we really afford to provide million-dollar sex change surgery for free and is it really medically necessary?

You see, the amount of money and wealth in the world is not infinite.  You spend a dollar on this, you can't spend a dollar on that - unless you are willing to tax other people more and more. And there reaches a law of diminishing returns there rather quickly, as if tax rates are raised too high, and "free stuff" gets too large, the best choice any citizen can make is to stop working entirely and then live off free stuff.

But before that point is reached, we also have the problem of efficiency.  One problem with government programs is that they can be remarkably inefficient in most cases.  When you set up a program that provides X benefits if you have Y qualifications, you may help the people you intended to help and it may work very well.   But a number of people will look at your program and figure out how to game the system.  "Gee, if I work under the table and have unreported income, I can qualify for food stamps and a free Obamaphone!" some might argue.   And indeed, that sort of thing does happen. 

The explosion in Social Security disability claims is another example.   Find a compliant doctor willing to certify you are disabled (and maybe hire a lawyer) and pretty soon, you have a perpetual paycheck from Uncle Sugar, from age 30 onward.  And yes, these people exist, I know more than one, some are even family members.

A friend of mine actually used to investigate this type of fraud, and as he put it, it is maddeningly difficult to weed out.  The man on "full disability" for a bad back is caught, on camera, weight-lifting in his back yard.  An investigation that took months to complete and cost thousands of dollars - and it is all thrown out in court, because an "expert" says that a bad back can be like that - good one day and bad the next (it is something that can be impossible to prove or disprove).  Worse yet, a "jury of your peers" is likely to award swag as they want a taste of it too, when their turn comes along.  Irony alert, my friend who used to diagnose disability claims is, himself, on disability for "mental health" reasons.  Free medical marijuana, too!

On the health insurance side, the problem is that once government or insurance companies say they will pay for everything, doctors start finding ways to charge government or insurance companies.   I related before how my dentist wanted to do over $10,000 of unnecessary dental work because she thought I had dental insurance.   Once I told her I did not - the "need" for this work evaporated.

And again, it is not that doctors are necessarily crooked (although some are, and go to jail with regularity, in Medicare and Medicaid fraud cases) but they are more likely to prescribe optional treatments if the treatments are free or subsidized.

Take these CPAP machines.  If you had to pay for one yourself, would you write out a check for it - if it cost $1000 or more?  Odds are, you might reconsider this treatment and maybe just change your sleep habits - or live with snoring as our ancestors did for thousands of years.   But if it was free, maybe your opinion would change.

"It would be nice..." if we could cover every malady in the book, but in medicine they have something called triage - the initial screening of patients to allocate scarce resources appropriately. Under Obamacare and indeed many other government medical programs, we no longer have triage.  Serious illnesses such as cancer are on a level playing field with sleep apnea or gender reassignment sex change surgery.  We pay for everything, and the cost is staggering.

Obamacare was created with the best of intentions, no doubt.   Wouldn't it be nice.... if we could pay for mental health care, pre-existing conditions, sex-change surgery, abortions, contraceptives, and a whole host of other treatments that may or may not be necessary for the survival of the patient?  Wouldn't it be nice if we could pay for preventative care, doctor's visits, all prescription and non-prescription drugs, and so forth?   Yes it would be nice, but who pays for it?

Compounding this is the lack of cost controls once the government or an insurance company agrees to a blank-check approach to health care.  Much ink was spilled about how "evil" Martin Shkreli was, but in reality he was just a product of the system we created.   What pissed us off about him was in addition to milking the system for all it was worth, he was so in your face about it, gloating that he was screwing everyone in America just to make a few bucks for himself.

I have bad news for you, though.  First of all, while he has been arrested and is under intense scrutiny, it appears he is going to get away with it, as what he did was, for the most part, not illegal.   (UPDATE:  Thankfully, he didn't.)  Second, while he made a name for himself by gloating so publicly, there are dozens, if not hundreds of people and companies like his who are doing the same thing, but being smarter and keeping out of the limelight.

In his Senate testimony, Shkreli outlined how he got away with such a scam - a legal scam.  Since the cost of medications is merely passed on to the policyholders in the form of increased premiums, he could find obscure medicines that no one else bothered to make, buy the company (which was making marginal profits) jack the prices 5000% and make a killing, and then sell out before someone else tools up to make the drug in question.   We set up an environment where you could do this, he merely took advantage of it.

Yes, he is still evil, of course.  But understanding what he did and why is instructive.   In a way, he did us a favor by exposing this to the public.   He was very up-front about what he did, much as professional wrestling is up-front with its fakery - if you ask them directly. What Shkreli did, the big pharmaceutical companies are also doing, with everything from epi-pens to oxycontin.   You raise the price, charge the insurance companies.  Since almost everyone has insurance, no patients really complain.  The few that do, you toss a "coupon" to, to get a discount or the "generic" version (as in the epi-pen) to quiet the outrage.  Everyone goes home happy - or so they think, until their insurance premiums come due - or their tax bill.

In response to this sort of scam, people call for more regulation to fix the problem.   We should have the government tell the drug companies what they can charge for drugs and regulate their profits.   The drug companies argue that if this is done, no one will be incentivized to research new drugs.  People argue that regulating drug prices works, in small countries like Canada. The problem with that argument is, of course, is that drug companies don't rely on profits from small countries to pay for research - they rely on the profits from our massive health care system in the US to pay the bills.

Somewhere along the way, there has to be cost controls.  And how to go about this is difficult, to say the least. Maybe controlling drug prices is the answer - or part of it. Republicans are not above setting wages and prices, at least in the past.  Nixon tried this to squelch inflation in the 1970's when the price of oil went through the roof.

Others favor a more market-based approach - putting the patient in the loop to keep costs down.  Republicans are favoring a "Medical Savings Account" approach to medicine, where people will have X pre-tax dollars to spend on medical care, in addition to a high-deductible catastrophic medical insurance plan to cover the really big bills.  The patient can thus decide whether they want to spend money on a CPAP machine or a night guard or cosmetic dentistry or a sex change operation - or leave that money in the bank.

When your own money is on the line, it is surprising how your opinion about medical care changes.  You do tend to do what is necessary and maybe opt out of what is not.  Moreover, you may be incentivized to seek out lower-cost alternatives.  You actually shop around on price, rather than merely take whatever services are offered (whose price is never disclosed).

Before the days of Obamacare, I knew a fellow (who had no health insurance) who flew to South America to spend two weeks vacation in a cottage on the beach, while his wife had a gall bladder removed.  It was a one-day operation (endoscopic outpatient surgery) and then they lay on the beach and recovered.  He said it cost 1/4 of what he would have paid to have the procedure done in a US hospital.   When his own money was on the table, he shopped on price, even for a life-saving procedure.

Now granted, the fact he had to fly overseas to get medical care is not a positive thing, but a shameful thing and a sign that our medical care system is highly flawed.  And the problem back then - and made worse today - was back then, most people had health insurance which meant that most of us didn't bother to shop on price for procedures and services. There was, in effect, no cost controls on medical procedures, other than limits that insurance companies put on procedures which ironically meant that cash customers paid the highest amounts for services.

So what is the answer to all of this?   There are a number of approaches, and the thing to bear in mind is none of them are going to be perfect.

Socialized medicine, such as they have in the UK and Canada is sometimes referred to as "single payer" as the government foots all the bills for medical care.   The advantage to this system is that as a citizen, you never need worry about the cost of medical care (directly at least) and whether or not you can afford a doctor.

Critics maintain that such care is "rationed care" in that the system triages who needs essential care and who does not.  Elective surgery as a result can take months of waiting.  On the other hand, isn't that how medicine is supposed to work?   Those who need treatment the most should receive it first.  Costs in this system are controlled, but are still increasing annually.   And since the user doesn't pay, it can result in a lot of people with trivial medical complaints (and they do exist) using up a lot of doctor time.

The main problem with socialized medicine is that it just isn't going to fly in the United States in the near future.  So while it is an interesting alternative, with its own faults, it is just not on the table.

The Free-Market model is what we had before Obamacare and it was a mixed-bag. For those working for a big company with big benefits, it meant that you got cradle-to-grave medical care, provided it was not a pre-existing condition. Of course, most elective procedures were not covered.  And as costs escalated, more and more companies found ways to limit coverage, drop dental and vision, increase co-pays, or just fire everyone and re-hire them as contractors and part-time workers to avoid the costs involved.

And the big problem was if you got sick they would not renew you if you had an individual plan.  It was really a shitty "don't get sick" plan and if you did get sick (or older) if they didn't drop you outright, your premiums went up to the point where for every dollar paid out, you paid more than a dollar in.  It wasn't so much insurance as a way of paying $1.10 for $1 of medical services.

And another big problem was that since so many had no coverage at all, they were ruined financially by medical bills if they got sick, and when those bills were not paid, the costs were passed on to the rest of us who had medical insurance. Nothing is free in this world, and everything has an associated cost.  Under the pre-Obamacare system, these costs were folded into the overhead of medical care, which in turn drove up costs.

Obamacare was an attempt to bridge the free market with socialized medicine and provided the worst of both worlds.  While Obamacare was successful in getting more people covered, it raised costs for everyone involved.   Those below 4X the poverty line got free or heavily subsidized policies, but at the cost of enormous tax credits that were paid by Uncle Sam. If you were about 4X the poverty line (about $63,000 for a married couple) you had to pay the whole amount which could be $15,000 a year or more - a lot of money for someone whose pre-tax income was only $63,000 a year.

Not many people understand Obamacare as few people are on it - maybe 10% of the country and of those, most get a subsidy.   For a few unfortunate people, Obamacare was far worse than the free-market model plans they had before.  Many were forced to drop health coverage entirely and "pay the fine" instead. (UPDATE: Since the "fine" portion of Obamacare was zeroed-out, those making over $63,000  year have the choice of opting-out and seeking non-ACA coverage).

And since Obamacare allowed you to sign up for coverage with "pre-existing conditions" many chose to pay the modest fine and then sign up for coverage when they got sick.  Since there were many exemptions as to when and how you could sign up, this became a feasible model for many folks.

The big problem with Obamacare is that it failed to rein in costs. In the Socialized model, the government can set prices for services and directly control costs.  The downside to this model is that if they cut prices far enough, no one will want to perform the services and shortages would develop.  Just because a government can set prices does not mean they can set them arbitrarily.

The free-market model allowed for price control in that insurance companies pre-negotiated prices for certain services with care providers, and thus could try to limit costs in this way.  They also did not cover elective procedures, such as "gender reassignment surgery" or mental health care - at least in most instances.

Obamacare seemed to provide no real price checks that either socialized medicine or the free-market solutions provided.  Set your prices, submit the bills and get paid seemed to be the model, particularly for the pharmaceutical industry, who seems quite content with Obamacare as it is.

Which of course is the real issue with "health care reform" - there are players in every field who make a ton of money doing things, whether it is providing cable television, medical care, infrastructure construction, or whatnot. Government regulations and laws can affect whether they make a little money, or a lot - and these industries can afford to lobby for rules that work in their favor.

Do you really think the medical industry is going to sit by while the GOP "reforms" Obamacare in such a manner that it would cut into their profits?   I sincerely doubt it, anyway.

So what is the ultimate solution?  It would be easier to structure a peace plan for the Middle East that to address this nightmare, yet former president Trump (feels so good to say that) and the GOP-lead Congress seem to think it will be a piece of cake.   This could backfire in a big way.

One proposal that the GOP has been batting around is medical savings accounts - a way of allowing patients to use pre-tax dollars to cover minor medical costs, and relying on high-deductible "catastrophic" insurance plans to cover major costs.   It is an idea with merit, provided you have enough income to make a deduction worthwhile.   To someone making $15,000 a year, it is a sad joke, as is most plans which rely on tax deductions as incentives.  The IRA or mortgage interest tax deductions are sops to the middle-class and cruel jokes to the very poor.   You'd have to structure a tax credit - like the investment tax credit - to make it worthwhile for the very poor to participate.   And that smacks of welfare and you know how the GOP feels about that!

From my personal perspective, I am not interested in cradle-to-grave coverage, but rather just catastrophic coverage.   I can swing a few grand for minor medical treatments.  It is the $100,000 hospital bill or $14,000 "Life Flight" (don't get me started on that!) that is more worrying.   Don't sweat the small stuff, worry about the big things.

I realize I am alone in this regard.  Most people look at insurance as a Chinese menu - they want to file a claim from column A and another from column B.   Their kid breaks a window and they want their homeowner's policy to cover it, instead of just paying $100 to get it fixed.  People want something-for-nothing.

And ultimately, that is the real problem with health care.