Monday, August 14, 2017
The diagnosis is good but the Prognosis is far from realistic
ELISABETH ROSENTHAL – AN AMERICAN SICKNESS, HOW HEALTHCARE BECAME BIG
BUSINESS AND HOW YOU CAN TAKE IT BACK – 2017
This
book is essential to understand the total and final dead end the USA find
themselves in, right now, with their ambition to repeal and replace Obamacare.
But first the simple summary of the author given right at the beginning, the
ten rules that negate the simple logic of a free and open capitalist market
economy to replace it with totally manipulated and perverted monopolistic
cannibalistic economic looting.
How Economic Incentives Have Created Our
Dysfunctional US Medical Market
Real life examples from patients (and
readers!) that inspired my list of 10 Economic Rules
Elisabeth Rosenthal
1.
More
treatment is always better. Default to the most expensive option.
2.
A lifetime of
treatment is preferable to a cure.
3.
Amenities and
marketing matter more than good care.
4.
As technologies
age, prices can rise rather than fall.
5.
There is no
free choice. Patients are stuck. And they’re stuck buying American.
6.
More
competitors vying for business doesn’t mean better prices; it can drive prices
up, not down.
7.
Economies of
scale don’t translate to lower prices.
8.
There is no
such thing as a fixed price for a procedure or test. And the uninsured pay the
highest prices of all.
9.
There are no
standards for billing. There’s money to be made in billing for anything and
everything.
10. Prices will rise to whatever the market will
bear. The mother of all rules!
What does this mean?
In Noam Chomsky’s
words in his Requiem for the American
Dream the political stalemate of America and the West comes from the fact
that we do not have any capitalism any more right now in our societies because
the private corporations with the support of the political institutions and
politicians have completely taken the control of the market that is no longer
free and open but entirely monopolistic with the only cannibalistic ambition to
devour the public, to make them pay as much as this corporate greed can
imagine.
The objective of
these corporations in their economic management is not to satisfy the demand
with an affordable offer but it is to make as much profit as possible, even if
they have to kill the free market.
The author gives a
full demonstration of how pharmaceutical companies, hospitals, doctors and
insurance companies have coordinated their efforts to build a monopolistic
healthcare business model in which all is calculated to make maximum profit.
The principle is
simple: Build a hierarchical business
model in which each tier calculates its profit separately and exponentially and
projects its own calculations onto the next tiers. Let’s take the case of a
hospital.
1-
The hospital as a catering real estate
institution will bill its profit separately on the basis of something like a
three- or four-star hotel price list. COST A + 30% (or more). Two mistakes:
the real estate value of the hospital is overvalued instead of being realistically
valued and stretched over twenty years for financial coverage. The second
mistake is that a hospital is not a real estate business and its real estate
investment does not have to make a profit. Even the food they serve has to make
a profit, be it outsourced or not.
2-
The personnel, non-medical and even
medical up to nurses, will be billed not as a cost but as an investment that
has to bring in a profit. COST B + 30%
(or more). What’s more the whole personnel of the hospital is taken into
account for every single patient which means the cost for each patient is by
far over-valued. Each patient has to pay for every member of the personnel no
matter whether these members have been used or not by the patient.
3-
The medical personnel will all bill
their services separately, be they members of the permanent staff of the
hospital as an institution or independent outsourced organizations or
individuals. COST C + 30% (or more).
The outsourcing brings even more speculation because one doctor for example of
any specialty can via Internet connections follow three or even more surgical
intervention or patients. That on-line at-a-distance intervention is billed for
each patient, who is yet simultaneously treated and followed with two or more
other patients, as if the doctor had operated for him alone. In other words,
for a one-hour intervention, the doctor will bill three or more times the full
fee and will thus multiply his income and create cost and billing inflation to
his sole profit.
4-
The laboratories will work the same way
either as part of the hospital as an institution or as outside, outsourced,
autonomous labs. COST D + 30% (or
more). All current costs for the lab to just open and function are counted for
all tests accumulatively and what’s more each parameter in a blood test for
example will be billed as a full separate test though the machine does many of
these parameters simultaneously on the same blood sample. Instead of billing
one blood test as a whole, it may bill ten to twelve different tests all at
full price as if they had been done separately. And of course the analysis of
the results by a doctor employed by the lab will be billed on its own as a fully
separate expertise intervention.
Shall we go on? We
could of course see that #1 that is billed on its own will nevertheless be
taken into account at all the other levels as part of the billing at those other
levels. You end up paying for stepping into the hospital and staying there for
treatment two, three or four times. That’s what they call the “facility fee”
and it is counted at every single level with in a lab for instance a facility
fee for having spent fifteen minutes sitting on a chair while the nurse or
doctor or technician was performing the particular test he had been prescribed
to perform.
And that is not all.
The billing is going to change according to the insurance status each patient
has. If they are insured, the billing will depend on the agreement between the
hospital and the particular insurance company they are dealing with and each
insurance company has its particular agreement with each hospital and its
particular network of medical institutions, doctors and labs they work with and
cover for every particular patient. If the patient is on Medicare then normally
the hospital should only bill the amount Medicare has negotiated with the
particular hospital and that is what Medicare considers as the normal price,
often defined as positioned between a minimum and a maximum. If you are not
insured be sure the price will skyrocket into the clouds.
But that’s not all. You
have to take into account the deductibles, generally a certain amount of expenses
that have to be paid fully by the patient before the insurance company starts
paying what they have to pay by contract. Then you have the co-payments which
can be important and are the parts of all expenses that are not covered by the
insurance company (within the covered price accepted by the insurance but there
might be extra-billing on the side of the hospitals or doctors or labs).
Pharmaceutical drugs can be so expensive that the pharmaceutical companies
accept to cover the co-payment after insurance payment, which proves that this
amount of money they turn into a discount for the patient does not leave them
profitless. Far from it since the profit is incredibly higher than in any
economic field. They call this procedure “copay assistance.” But Medicare
patients are banned from this system by Medicare itself meaning that a Medicare
patient who is financially less wealthy or simply poorer will not benefit from
this clause and will pay more than a normal privately-insured person.
And yet that is not
all. There is then the “donut hole.” That’s the most vicious element in this healthcare
system. But let me quote Elisabeth Rosenthal (‘page 233):
“In 2015, for example, the patient paid the first $270 as a deductible
and then a 25 percent co-payment on up to $2,960 in retail costs for drugs. If
costs exceeded $2,960 in a year, patients hit what is known as the “donut
hole,” when they had to pay 100 percent of the cost, making them think twice
about taking very expensive medicines they might not really need. Once their
outlays hit a retail cost limit of $4,700 for their medicines, Medicare kicked
in again, paying 95 percent.”
That’s what is called
Medicare Part D supposedly to prevent over-prescribing or over-use of drugs.
You end up in that system
with a three-tier situation.
1-
At the top the insured patients who can
benefit from no-pay assistance. They are those who pay least.
2-
Medicare patients are supposed to pay
less but they cannot have no-pay assistance and they have the donut hole with
deductibles and co-payment. They end up paying more or getting less medical
treatment.
3-
The uninsured are worst off. They pay
the highest prices and they have no coverage whatsoever. Among those you have
the young healthy people who do not need treatment because they are not sick or
have perfect vision and perfect teeth. How long, and when will the next accident
happen in their health like a heart attack or hepatitis, a flu epidemic or tuberculosis,
not to speak of some STDs, like AIDS? But among these you also have those who
do not have insurance because they can’t afford it in a way or another even
with the Affordable Care Act. For example, because they are illegal immigrants,
non-documented workers or residents, and of course their children are the same.
We are speaking of about 20 million uninsured Americans to which you have to
add the estimated 11 million illegal immigrants or residents. Those pay the
most and if they cannot pay too bad for them, isn’t it? They can always turn the
other cheek.
And they will tell
you that is the perfect illustration of Matthew 5:38-40 (New testament,
New International Version, NIV): Eye for Eye 38 “You have heard
that it was said, ‘Eye for eye, and tooth for tooth.’ 39 But I
tell you, do not resist an evil person. If anyone slaps you on the right cheek,
turn to them the other cheek also. 40 And if anyone wants
to sue you and take your shirt, hand over your coat as well.” Diseases and
sicknesses are the bad guys in this Healthcare fable and what’s more they all
come from God and we have to accept God’s will, don’t we? Insurance is going
against this divine guidance, isn’t it?
This system is by
definition unequal and unjust. This is no longer capitalism. This is the
exploitation of the market as a milch cow. That explains why the French company
Sanofi’s drugs are sold in France and the US in the proportion of 1 to 3 or 1
to 4 as for prices. The health insurance of all people in France negotiate the
prices and the drugs cannot be sold but at the agreed prices. In the US the
very same drugs are sold at a free price, so three or four times higher, and
generic drugs are in all ways restricted in their access to the market and are
not encouraged, whereas in France the patients who take a brand name drug when
a generic exists will be penalized, including financially. It is the
responsibility of the pharmacist to implement this rule.
This situation leads
some people like Dean Baker of the Center for Economic and Policy Research
(CEPR) in Washington DC to demand the repeal and replace of all patents (and
copyrights), hence all protection of intellectual property because it is abused
by some industrialists particularly in the field of pharmaceutical drugs and
school text books.
The present book is
full of examples of abuse and misuse of such constitutional provisions to
protect and encourage intellectual property and invention or creativity. A fair
protection has been turned by some industrialists into a means to exploit and
even loot the market for profit.
But the book is short
about what can be done. In fact, little is proposed to improve the Affordable
Care Act. Most of the suggestions are unrealistic for most people, like doing
research to find the prices and costs of hospitals, or various medical
operations. First of all, most people cannot, I mean do not know how to, do
this. Second a lot of data in the field of real costs of medical acts is not
available. You would need to be a hacker to penetrate the computer and
databases of these institutions. Third who has the time to do it, if they work
on a regular full time daily basis?
It is good for a patient
to ask his or her doctor, dentist or eye doctor how much his or her tests,
dentures or eyeglasses are going to cost. But it should be an absolute and
legal obligation for various medical personnel to provide the patient with such
estimations and for insurance companies to say before the acts within a short
delay how much they will cover and how much the patient will have to pay.
What’s more patents
should be only to cover R&D expenses, and as soon as these expenses are
covered the price should be reduced and generic drugs should be authorized.
This has to be federal legislation since patents are in the US constitution.
Finally, all medical drugs,
equipment and procedures should have to be negotiated as for their prices with
all the stake holders, and patients as well as the federal state and the fifty
states should represent at least 50% of the decision makers.
The free and open market
is real capitalism, as Noam Chomsky would say, when the cost of a goods or
service is calculated honestly and when the profit margin is decent and enables
the public to get the goods and the service at a reasonable affordable price.
That means the cost of the goods and service at every step has to be calculated
so that it is lean and it brings in economies of scale that have to be
automatically transferred to the customers, the patients in this case.
Final cost of goods
at the end of the production cycle.
$100 + producer’s profit 12% = $112
Transportation and
wholesale distribution
$112 + cost of service: $25-$50 + profit 12% = $137 + 12% = $153.44
$162
= 12% = $181.44
Retailing
$153.44 + cost of service $25-$50 + profit 12% = $178.44 + 12% = $199.85
$203.44
+ 12% = $227.85
$181.44 + cost of service $25-$50 + profit 12% = $206.44 + 12% = $231.21
$231.44
+ 12% = $259.21
We come up to the
final range of the public price between $199.65 and $259.21. In other words,
the full cost of production is multiplied by between 2 and 2.5 times or so. At
most you may have to add the sales tax when it applies. And this sales tax
should apply only at the very last step and if paid at previous levels it
should be recuperated in a way or another. All economies of scale are supposed
to reduce the productive cost or the cost of service at all levels. These figures
are purely arbitrary but the system proposed here is the only sustainable
economic model possible. If the market is really free and open prices should
tend to go down and not up. Provided competition is guaranteed and protected.
The last element is
that there should be absolutely no advertising for prescription drugs and
medical institutions. No lobbying either. Simple transparent honest procedures
to certify drugs and to bring information – and only true information – to the
professionals of the medical profession and to the public. Moreover, all information
about the patients should be available in open access to all professionals of
the medical profession under the security of passwords. Along that line the new
IT technology should be used to have all medical information concerning
patients available in two or three clicks for any doctor or certified medical
institution in only one simple and single compiled file. That should generate
enormous economies of scale in clerical work and in medical time. But all that
has to be ruled, regulated and managed by some legal procedure under the
authority of lawmakers.
In other words, the
diagnosis in this book is excellent but the prescription and the treatment are
far from satisfactory. The US will have to see its life expectancy drop and its
opioid addiction crisis worsen for politicians to understand healthcare has to
be available at a very affordable cost to everyone RESIDING in the country,
permanently or temporarily, national or foreign, legal or not.
We are still far from
even the consciousness of the urgency of the problem. Trump finds it easier to
flex his tongue muscle on a rostrum or his finger muscles on a twitter keyboard
about North Korea than to tackle the healthcare problem. In fact, he does not
care about public health since for him healthcare is not a public need but private
choice, like the type of shoes you wear or the color of socks you display.
As
Russell Conwell said in his “Acres of Diamonds”: “To sympathize with a man whom
God has punished for his sins, thus to help him when God would still continue a
just punishment, is to do wrong, no doubt about it, and we do that more than we
help those who are deserving. While we should sympathize with God’s poor–that is, those who cannot help themselves–let us
remember that there is not a poor person in the United States who was not made
poor by his own shortcomings, or by the shortcomings of someone else. It is all
wrong to be poor, anyhow.” (http://www.americanrhetoric.com/speeches/rconwellacresofdiamonds.htm)
And
one punishment from God to the poor is that they will die younger than the rich
because they do not have any serious health insurance. How do the Social
Darwinists say: “Let the fitter survive”? In my dictionary that is called
eugenics. But as the Britannica Encyclopedia says: “However, [eugenics]
ultimately failed as a science in the 1930s and ’40s, when the assumptions of
eugenicists became heavily criticized and the Nazis used eugenics to support
the extermination of entire races.” (https://www.britannica.com/science/eugenics-genetics)
To let the poor die early with diseases whose treatments they cannot pay for is
a soft option that can easily replace the Nazi methods of euthanasia, genocide,
extermination and incineration.
Dr.
Jacques COULARDEAU
# posted by Dr. Jacques COULARDEAU @ 5:48 AM 
