So between Bernadine Healy’s recent article in U.S. News and World Report (“Is healthcare Armageddon next?”) and Bob Ehrlich’s response to that article (“The health bubble“) in DTC Perspectives, could it be possible that we are finally deciding to grasp the viscious health care cost nettle that is set to sting us all if we continue to do nothing?
Perhaps we actually have something to thank the financial “gurus” for! If they hadn’t made such a mess of the long-term value of the investment marketplace, we might not have received the kick in the pants that we certainly need to address the the health care problem.
The two issues have long been driven by the same underlying “biology:” it’s called greed!
For those who haven’t been paying attention for the past 30 years, something changed in the 1970s. We got really, really good at developing new health care technologies: pharmaceuticals, CT scanners, MRI machines, stents, insulin pumps, heart pacemakers, you name it. Because they were hard to develop, these early new products were expensive. And in the beginning, when there were just a few of them, we could afford them (just as in the beginning a few people could afford a newly built 6,000 square foot home on 2 acres in suburbia).
Then we got even better at developing these technologies. A new drug and a new device started to appear every year, then every 6 months, then … And the price expectations had been set. So of course all these products were expensive. Whole industries (the biotech industry; the medical diagnostics industry; now the stem cell industry) came into being, funded by our friends on Wall Street, who wanted a good return on their investment.
In the meantime, the salaries of hospital CEOs and specialty physicians needed to keep pace with those of their peers in other parts of the health care industry. So a good cardiologist needed to make several hundred thousand dollars a year (or more) and a major hospital CEO needed to make at least that. So not only did the costs of the technology go up. The costs of delivering care using that technology went up too. (And that’s before we even worry about all the marketing and sales costs associated with all those medical device companies, and hospitals, and pharmaceutical companies, etc.)
Where did all this money come from? Primarily from the government (Medicare, Medicaid, the VA, etc.) and from employers via the health care insurance industry. This is why we ended up with things like HMOs and PPOs and MCOs and other ways to “limit” the costs of health care. It had become an expensive, high-tech “right” instead of a cost-effective and reasonable expectation. And this is why the government and private payers needed you and me (well, those of us who actually have health care insurance, anyway) to pay more of the bill.
What has to happen? We all need to have what I shall from now on refer to as an “expectation cut.”
For some, that expectation cut needs to come in the form of lower financial remuneration. Administrators who do a “decent” job shouldn’t be earning millions of dollars a year, and nor should doctors who obtain certain specialty qualifications unless they are very, very good at what they do.
For others (you and me), that expectation cut should come via the understanding that we are not entitled to live in perfect health for ever and ever. We are all going to get sick at least occasionally, most of us will get old, and we are all going to die. We should be allowed (and indeed helped) to do these things with dignity, but we should also appreciate that perhaps as much as 50 percent of what is currently being done to us medically is a waste of time and money. As just one example, most of the money being spent on a product like Botox is merely feeding the vanity of the recipient, the pockets of the physicians who inject it, and the pockets of those who manufacture it or invest in the company that manufactures it. I’d be surprised if more than 5 percent of the people who get treated with this product gain any definable health benefit.
What else needs to happen? There should be standardized costs for every medical product and procedure. This is not about “government-run health care.” It is about cost management. These should be the fixed costs that your insurer (government or private) will pay as “basic” health care. Should you choose to go and get your health care at a center that wants to charge more for delivery of those products or procedures, no one should stop you. You should be able to obtain supplementary insurance coverage or pay the difference out of your pocket, but we should all be starting from the same place, and we should provide coverage for every American starting at that basic level. It might not be beautiful, but it should be “enough.” And it should be delivered with care and dignity for all (as opposed to the current access to “socialized” medicine that we offer people through Medicaid).
It’s time to grasp the nettle folks. If we don’t, we’d better start planning for a multi-trillion dollar bail out of the American health care system.
Filed under: Business strategy, Health and drug costs, health economics
