Jack Lohman is a retired business owner from Wisconsin and founder of Throw the Rascals Out. He’s become a frequent commenter on THCB, oddly enough as a Republican voter who is in favor of single payer, and I thought that his opinions on health care were interesting enough to merit an opinion piece no the main page. Jack can be reached at email@example.com.
Let’s take a time out.
As the nation struggles with how to pay for health care costs that are spiraling at an annual rate of 17%, five times the rate of inflation, we are virtually ignoring the reasons behind the escalating costs in the first place. We are engrossed in payment methods rather than cost containment, all while the industry seeks innovative ways of taking home a bigger piece of the national pie. Some see the “free-market” as our savior, when in fact, the slow conversion to a free market system that began a decade ago is the reason we are in trouble today. And it will get worse.
Years ago it was considered fraudulent for hospitals to hire their own physicians, for physicians to own an interest in a hospital to which they referred patients, and for physicians to refer patients to an outside laboratory in which they had a financial interest. We also had a certificate of need program that prohibited hospitals from leap-frogging the hospital down the street, thus churning expensive high-tech imaging systems.
morThanks to $100 million in annual campaign contributions from the
health care industry to politicians, all of these cost-containment
rules that protected the system from excesses have been eliminated, and
the ensuing free-for-all began and thrives today. But this maneuvering
also promises to backfire and become the undoing of a once-proud
The only competition that resulted is between hospitals and clinics
as physicians move expensive and profitable testing into their clinics.
Hospitals that once used time-shared mobile MRI services — and then
bought their own in-house system because volumes justified it — are
now finding their local clinics adding the mobile MRI service and
leaving them without patient volumes to pay for their system. In the
meantime patient testing volumes are increasing in the clinic because
of the added profit incentives.
Is anybody watching the growth of these cash cows? Are we totally
blinded by the conflicts of interest that a free-market system demands?
Don’t get me wrong. Physicians should be paid extremely well, just
not on the basis of how many tests they order or surgeries they
perform. Doctors should have the freedom to refer their patients to any
hospital or independent lab for expensive tests, as long as they or
their clinic do not have a financial interest in the service. Hospitals
should be prohibited from employing their own physicians and physicians
should be prohibited from referring patients to a hospital in which
they have a financial interest. What’s not to understand about these
There is one rule that has held for centuries: “He who has the gold,
rules.” Currently that gold is held by the business leaders who provide
employee health care and who are losing sales to products that are made
in countries that have universal health care systems. Their competitors
do not have to add health costs to their product price, thus some
American companies are moving jobs offshore while others are preparing
to take over the health care system.
Physicians should look at how the dominoes will eventually fall. The
current system is unsustainable and will eventually be taken over by
the MBAs and CEOs and shareholders. If left alone the current system
will transition to corporately-controlled HMOs and independent
physicians will be a thing of the past.
We have two sustainable options: A Medicare-for-all system, like
that in Canada, or a socialized system, like that in Britain and our
own VA and armed services systems. The latter uses salaried physicians
while the former still leaves room for fraud and overuse. In the end,
health care can be either a social service or a market commodity, but
But make no mistake about it. Regardless of the system we choose,
the public will bear the final costs. The important question is: How
long will it take us to fix it the right way? We can fiddle with costly
workarounds and ultimately settle on one of the above. Or we can fix it
without delay and move on to other national policies that are critical
to our nation.