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Please, can we now re-structure health care, too?

I respectfully disagree with my friends and colleagues who believe that the recent financial crises will make it more difficult to reform health care. In fact, now that we’re socializing large chunks of the financial system, we may find it a lot easier to socialize health service delivery assets, too. You’ll know a federal health system bailout is around the corner when you hear someone say, "The hospital is simply too large to allow it to fail."

Let me explain.

In the past three weeks we’ve all become regulators. Amazing. Almost overnight the federal government, we the taxpayers, have taken ownership of Freddie Mac and Fannie Mae, financial organizations that own about half of the mortgage debt in this country. We’ve nationalized AIG, one of the world’s largest insurance companies, and we are now owners of a large share of several of the country’s biggest commercial and financial banking institutions, with much more government transfers anticipated in the coming weeks and months.

We’re doing this in order to restore balance to an economy that has been ravaged by unproductive, wasteful investments made by a hand full of powerful, unscrupulous people who have acted under the banner of the "free market," claiming it as the best way to secure economic growth and well being for the country and our population.   Exposed now as a rogue ideology, its policies linked to the steady deterioration of the physical infrastructure of the country — our roadways, bridges, water systems, sewage plants, and so on — the mood of the country has dramatically changed and people are saying "Enough!"

The speed of this shift from tolerance of reckless and unregulated investment, to demand for close public supervision, is a signal that the game has changed and a new era has begun. In this new era, there could be spillover to other areas of the commonweal; people’s attitudes about how best to run health care could change quickly, too.

The parallels are obvious. We have a allowed a small cartel of wealthy and wealth-seeking individuals and organizations to invest enormously and in an unregulated manner in hospital, medical device, pharmaceutical, tertiary care, and sub-specialist work force expansions, at the very time when the basic health status and well-being of the country — the "infrastructure" not of concrete and steel, but of mind and tissue — has rotted away before our very eyes. We all know the drill: We spend twice as much on health care, but have half the quality, and a quarter of the well-being, of many other countries. Over a third of our population is obese, and most of the top ten causes of death and disease are related to killer lifestyles, the equivalent biologically of credit default swap derivatives.

The health care crisis is simply another man-made and unsustainable bubble.

Health plans have sold us risky and inflated paper, while the government has looked the other way, in effect leading us all to make bets on exotic and often counter-productive efforts to keep people alive at any cost. Private companies have in turn bet on the harvesting of disease via treatments that are expensive, risky, and often not even proven to be effective; or they have been allowed to skip past regulatory approval processes meant to assure safety. Read "Overtreated" by Shannon Brownlee if you have any doubt about the lack of value of much of the expenditures on medical research and care each year in the US.

In a manner that can only be described as awesome, the recent collapse of the financial system and the government’s response has proven there is nothing sacred about free market capitalism run by an army of greedy and windfall profiteering financiers. Neither is there anything sacrosanct or pre-ordained about a health care system that treats sickness as a source of profit and sick people as complex annuities that assure the wealth of health plan executives, procedural specialists, hospitals, and drug companies.

There is nothing, in short, written in stone that says we, the people, can’t decide to invest our health resources in primary care, in health promotion, and in wellness.  It can and should be done.  In fact, it makes no more sense to abide with a completely de-regulated health care system than it does to put up with a "free market"  financial system. Both are bound to bring us to our knees sooner or later.

Will people see it this way?  Will they act on this perspective?  One thing is certain.  We have seen the rules of the game change very quickly with respect to the financial industry.  The reaction by the majority of the US population has been disbelief, anger, and fear, followed by new understanding of how we were all duped.  Certainly, part of the anger is that of the drinker looking in the mirror the morning after with a bad hang-over: We’re all complicit and we must share in the blame. But the party’s over.

Let’s get on with the hard work of change that will be productive of reform our health care system. Our children’s health is too important to let ourselves fail.

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Michael StephensNoahBill S.Easy To Insure MeDavid C. Kibbe, MD MBA Recent comment authors
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Michael Stephens
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The most basic reform should be directed to primary care, particularly general internal medicine. With an aging population and only 10%-20% of those completing internal medicine residencies choosing to practice general medicine, medical care cannot be transformed without a sufficient number of general internists available to treat the chronically-ill.
For more of this crisis see my series of blogs on the subject at the URL above.

Noah
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Noah

I propose that we use the consumerism model being employed by most health insurance companies as a basis for real universal healthcare. We can use this model to institute a true single payer national healthcare system without losing the benefits of a competitive free market. All preventative healthcare such as physicals etc. would be covered 100% as well as all families under the poverty level would be 100% covered. All families above the poverty line would be required to meet a yearly deductible via the proliferation of HSA’s (we could potentially explore the possibility of letting people access their 401k’s… Read more »

David C. Kibbe, MD MBA
Guest

Dear Bill S: I am working on a new blog post with Brian Klepper that will examine the possibility that health care is a speculative bubble about to burst. As you say, exposure of the riskiness of our health care investments may occur as a result of the credit markets’ instability spilling over into health care, especially hospitals using debt financing and endowment shrinkages due to the Dow’s plunge. I think there’s a lot of evidence that health care as a sector of the economy is not “recession proof” and we may see some sudden collapses. I share your concern… Read more »

Bill S.
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Bill S.

Some of the financial instability has spilled over into the health care sector, as hospitals lose access to debt financing and investment losses on endowments are tallied up. The “bricks and mortar” segment of health care will be particularly challenged by economic turmoil. Questionable business decisions (e.g., community hospitals going after high cost/high margin specialty lines and competing head-to-head with academic medical centers) by non-profit institutions with “insulated” executives are now being challenged. Regulators are viewing financial distress as a rationale for direct intervention in their governance, using licensure as the “stick” to drive change. Just as in the financial… Read more »

David C. Kibbe, MD MBA
Guest

Dear Easy: I wondering out loud now, but what will happen if due to financial instability large hospitals and medical staff groups are taken over by a city, a state, or even by the federal government, e.g. by CMS. Seems pretty far fetched right now, but so did nationalization of AIG a few weeks ago. I’m not at all sure that the normal insurance schemes as structured in the US right now would remain intact in such a situation. Or, let me put it another way, suppose the tax payers were more directly responsible for health care costs for nearly… Read more »

Peter
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Peter

“the government still cannot afford to cover everybody.”
Who did you have in mind to leave out?

Easy To Insure Me
Guest

It is amazing how quickly these bailouts and take overs have been performed by our government. And yes you are correct with these large chunks already being taken over it would be much easier right now. However, the government still cannot afford to cover everybody. Just look at the medicare issues set forth this week alone.
http://www.EasyToInsureME.com

Peter
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Peter

tcoyote, you might be interested to know that Tom Delay was active at the Republican Convention hoasting an entertainment event with HIS new lobbying company. As Tom Delay would like to say, “The reports of my death are greatly exaggerated.” As for multi-party states, I agree that too many creates chaos, but a couple of extra does keep the main parties in check. Not to extoll Canada’s system too much, but there they have a mainly three party system with the Green party nipping at the edges. It produces minority governments from time to time which forces co-operation and consensus.… Read more »

tcoyote
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tcoyote

To Peter, note well the fate of Newt Gingrich and Tom DeLay. Eventually the demagogues overplay their hands and end up being ground up for dogfood. There are those who would “serve” the labor unions and plaintiffs’ bar, so it isn’t just corporations who buy influence. Their time will come if the Democrats get enough votes. The two Congressional parties are like warring mafia families fighting over tens of billions in spoils. When either is ascendant, they get greedy and then you can purge them. It is tempting to advocate multi-party government until one thinks of Italy and Israel, whose… Read more »

David C. Kibbe, MD MBA
Guest

Great comments, all. Ideas are very powerful, and what I’m trying to say is that the idea that leaving social good to the un-regulated “free market” is now dead. It is dead because we now realize that it leads to increasing inequality and injustice. And that is self-contradictory in a democracy. I’m also saying that we are likely to see the rise of a new idea, namely that capitalism can only work when leaders put in place and monitor rules that fairly reward the middle classes upon whose working shoulders the economy rests. And that there’s a reason “health” and… Read more »

Peter
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Peter

Well ray, if you watched 60 Minutes last night you’d see is WAS because of the unregulated “free” market, and if there was any regulation there was no oversight to apply the regulations. Investement “insurance” was sold as “swaps” instead as insurance – why, because insurance is regulated and swaps are not. No one even knows the size of this (Shadow) market, but apparently it is about $60 Trillion. How much of a dent do you think a $1 Trillion bailout will have? Who do you trust now? You can get an idea of how stupid, incompetent and dishonest Wall… Read more »

Deron S.
Guest

I have to agree with Ray on this one. Who is this “free market” that deserves so much blame? The free market is us. While it sounds good on paper and in a political campaign ad, we can’t chalk all of our problems up to greedy hospitals, insurance companies, etc. To do so would be a continuation of a distraction that has been delaying real reform for a very long time.

tcoyote
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tcoyote

I’m sort of with David McM and ray, David K. Believing in “free markets” is no more a rogue ideology than believing in “socialism”. We’re not all Swedes now, because our financial sector got out of control and we’re not all Democrats either. We’re Americans, a breed given to bizarre enthusiasms, frequently naive optimism and tolerant of a far higher level of inequality than other societies. What’s broken down here is the middle, that breed of pragmatic “solve the problem” politicians and voters who create solutions to our problems. I was not persuaded by your first essay into unsustainable metaphorism… Read more »

David McMahon
Guest

Pure capitalism, like pure socialism, is not a workable model. The notion that everyone should just get their own health insurance because its their own personal “responsibility” is a bit naive. At the end of May, I suddenly lost my job unexpectedly. I was unemployed for several months, so unable to obtain health insurance. I finally found a job but it was a “consultant” type position that paid well but requires me to obtain my own individual health insurance plan. I was planning to do so next month when I got my first paycheck, but guess what? I got sick… Read more »

ray
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ray

Your argument depends on the premise that the financial system collapsed because of the free market. But in reality the financial market was not a free market, but a mix between capitalism and socialism. There was government regulation in many forms, most notably in the federal reserve system, which is a non-free-market institution.
So if we want to figure out what actually happened to the financial system and why, we need to stop this reflexive blaming of the free market, and look at the details.
THAT’s the real hard work that people need to be doing.