Heath Care Costs

The Guaranteed Medical Payment System (NOT Healthcare) and Your Welfare

This article is about the mislabeling of the United States Guaranteed Medical Payment System, as a Healthcare System, and the cost to you built into every product and service you buy with your now mandatory insurance premiums. There are three necessary elements to a valued healthcare system:

  1. Environment (food, air, water)
  2. Lifestyle (accidents, exercise, anxiety)
  3. Repair and Resolution (medical, drugs)

Our current system addresses payment for repair and resolution, which can hardly be called a healthcare system. We need to be crystal clear on definitions and understand that it benefits massive organizations for you to believe that what we are calling Healthcare is actually that. It is not.

health·care

ˈhelTHker/

noun

the maintenance and improvement of physical and mental health, especially through the provision of medical services.

The definition of healthcare does not mention the payment system.

Obamacare

[oh-bah-muh-kair]

noun

a federal law providing for a fundamental reform of the U.S.healthcare and health insurance system, signed by President BarackObama in 2010: formally called Affordable Care Act or PatientProtection and Affordable Care Act.

Here are the specifics as to the major functional goals of Obamacare:

Definition: Obamacare is the Patient Protection and Affordable Care Act of 2010. It mandates health insurance for all. It expands subsidies for middle- income families, and taxes healthcare providers and higher-income earners. It’s the most comprehensive piece of legislation since the Social Security Act of 1935. It’s named after President Barack Obama, who has championed healthcare reform since running for office in 2008.

To enforce the mandate, a 2.6 percent extra income tax is levied on those without insurance. Find out if you are exempt.

To pay for the subsidies, those making $200,000 a year ($250,000 for married couples) pay higher income and investment taxes. Many businesses pay more taxes as well. For more, see Obamacare Taxes.

Obamacare enacted other changes to health insurance:

Insurance companies can’t exclude those with pre-existing conditions. They also can’t drop anyone when they get sick.

Parents can put their adult children, up to age 26, on their plans

The Medicare “donut hole” gap in prescription drug coverage will be subsidized, then eliminated by 2020.

The goal of Obamacare is to lower healthcare costs overall. It includes more, healthier young people who will be paying premiums but not using services. It allows people who now use expensive hospital emergency room visits to get treated by a doctor before it becomes a crisis.

Obamacare, Trumpcare, or any care system does not address healthcare, it addresses health insurance which turns out to be a guaranteed medical care payment system. The bill itself claims that it includes more, healthier young people who pay premiums for those using the service. Unfortunately for all of us, the demographics of the young are dwindling while the demographics of the old are increasing. The result of this is a greater and greater burden on the young ransoming their youth to pay for seniors. This hardly seems like an objective that promotes the future welfare of our country.

Paul Sisson wrote an excellent article for the San Diego Union Tribune called Why our health care costs so much — and why fixes aren’t likely that spells out the reasons for high healthcare costs in the United States:

  • US dollars spent on procedures and drugs are more than double the next closest cost rival
  • Non standard opaque pricing
  • Lack of cost-benefit analysis
  • Excessive incongruent regulation
  • Overuse of ineffective technology
  • $750 billion a year in waste and fraud (least of all concerns)

The fact is, any guaranteed payment system breaks the demand and supply equilibrium.

The picture in Figure 4.15 “Total Spending for Physician Office Visits” misses a crucial feature of the market. Most people in the United States have health insurance, provided either by private firms, by private purchases, or by the government. With health insurance, people agree to pay a fixed amount to the insurer in exchange for the insurer’s agreement to pay for most of the health-care expenses they incur. While insurance plans differ in their specific provisions, let us suppose that all individuals have plans that require them to pay $10 for an office visit; the insurance company will pay the rest.

How will this insurance affect the market for physician office visits? If it costs only $10 for a visit instead of $30, people will visit their doctors more often. The quantity of office visits demanded will increase. In Figure 4.16 “Total Spending for Physician Office Visits Covered by Insurance”, this is shown as a movement along the demand curve. Think about your own choices. When you get a cold, do you go to the doctor? Probably not, if it is a minor cold. But if you feel like you are dying, or wish you were, you probably head for the doctor. Clearly, there are lots of colds in between these two extremes. Whether you drag yourself to the doctor will depend on the severity of your cold and what you will pay for a visit. At a lower price, you are more likely to go to the doctor; at a higher price, you are less likely to go.

Under the section The Demand and Supply for Health Care in the Creative Commons for BYU there is a great explanation on the effect of insurance on prices, demand, and supply of health services.

KEY TAKEAWAYS

  • The rising share of the output of the United States devoted to health care represents a rising opportunity cost. More spending on health care means less spending on other goods and services, compared to what would have transpired had health-care spending not risen so much.
  • The model of demand and supply can be used to show the effect of third-party payers on total spending. With third-party payers (for example, health insurers), the quantity of services consumed rises, as does spending.

The result of Obamacare, for that matter any system that guarantees payments, increases demand and increases the cost to society for services. Our healthcare system in no way improves the quality or extent of care. The current average dollars spent over a lifetime for healthcare is $430,000 per individual. Compare the average wages earned over a lifetime by people with degrees of $1,000,000 and the cost of healthcare for college graduates. 43% of college graduate entire lifetime income is being spent on healthcare. For the vast majority of Americans it is much more than that.

REAL SOLUTIONS: INCREASE AND IMPROVE SUPPLY, REFORM TORT LAW, REEVALUATE END OF LIFE TREATMENTS

The real solution to healthcare has nothing to do with insurance, it has everything to do with:

  • Increase the supply of medical professionals
  • Lower the cost of new drugs
  • Increase the number of potential drugs
  • Improve the food supply
  • Lower anxiety in US life
  • Improve sleep
  • Decrease our reliance on expensive machines
  • Change our perspective on end of life treatments

INCREASE THE SUPPLY OF MEDICAL PROFESSIONALS

An increase in supply of medical professionals and drug companies increases demand and lowers the price. There is a clear simple solution reducing the cost of healthcare and it is to increase the number of medical professionals. This be done at an extremely low cost by establishing more medical schools and lowering the cost of tuition. By offering scholarships based on working in specific medical areas for a specific number years we can ensure that graduating medical professionals keep their prices low. There is one difficult obstacle that must be addressed to ensure low payments on standard medical visits and procedures, a change to the laws regarding tort law in the United States. We cannot sustain a system that imposes financial obligations on graduating medical professionals to pay 5.2% to 19.1% of their gross revenue for insurance per year.

The supply of medical professionals and drugs are artificially restricted by government regulations controlled by influential lobbies such as the AMA and large multinational Pharmaceutical companies. If we assume that the cost of drugs and medical professionals follows standard demand and supply side economics then an increase in the supply of medical professionals and drug companies will result in the following chart.

THE PASSING OF A FRIEND

I spent Mother’s Day weekend in Reno Nevada visiting, for the last time, a friend of my significant other lying in a bed in ICU on a ventilator. A fiercely independent 81 year old self made man, was checked into the Reno Renown Regional Medical Center and immediately admitted for emergency surgery to staunch the bleeding in his brain. Although the details are sketchy, it appears he was in an auto accident between Truckee and Reno and taken by ambulance to the emergency room. Upon arriving he told a lucid story of how he saw two headlights coming at him on the freeway and swerved to avoid hitting them colliding with a tow truck in the lane next to his. His view of hospitals and the medical system were represented by not having seen a doctor for 20 years. During and immediately after the admitting process his mental faculties deteriorated rapidly.

Renown did exactly what they were supposed to do in ER, checked for head pain, dizziness, lack of vision, and awareness. Robert failed on all counts and was admitted, diagnosed and sent for emergency surgery. The surgery itself was very high risk as Robert had congestive heart failure pumping only 25% of the necessary blood through his system to provide oxygen to his brain, clense his kidneys, and sustain his life. We drove from San Francisco to Reno on Friday after hearing from an ex girl friend of Robert’s that he was in the hospital. We arrived Friday night at 10pm and saw him for the first time. The staff at the hospital were amazing, kind, considerate, attentative and generous of spirit. They were angels. Robert was a John Doe with a name. He was an only child, never married, and an intellectual inspiration to us all. He checked in with a wallet, an old cell phone with no names, just numbers, and a story that was not consistent.

He lie in bed, gaunt, on a respirator, with an incision that circled the upper right portion of his skull where they had removed a large portion his skull to fix the bleeding. He was unconscience. The nurse explained to us that they wake him up every couple of hours to check his awareness. She said he was doing well and that when instructed he would wiggle his toes and tighten his grip on her fingers. She said that prior to us arriving he had become agitated and that they put him back under.

I am unclear on how the first person, his ex girl friend, got contacted but know from watching the staff they very much wanted to have Robert connected to his family before dying. The nurse on staff on Saturday said she was very concerned about Robert and that having a DNC (do not resussitate) would greately improve the quality of his life and death. She asked, “Do you know any direct relatives that can make that call?”

It is absolutely best that Robert never awake. His kidneys will soon fail. His heart is not pumping hard enough to push fluids through them and clean the toxins in his blood. With a hurculean effort he might be able to recover mobility and have a percentage of his cognitive skills. His heart is unrecoverable and will continue to expand like a dying star until it fails him completely. Robert was a strong independent proud man who lived the kind of life all of us should aspire to. He did not rely on the government to sustain him. He was physically and finanancially indepedent. He was the, “Just let me die,” kind of guy.

By the time medical staff understood the dimensions of Robert’s crisis he was unable to makea decision for himself, so they had to make it. They decided to save his life, as all of us would based on our understanding of life and it’s value. From Robert’s perspective, what should have been done? Can we know? If they knew his history of independence and reviewed his heart condition, mandatory before surgery, would the medical staff’s decision been to preclude him from surgery. Was the correct call was to relieve the pressure on his brain by drilling a hole and allowing the blood to drain, making Robert comfortable, and letting him die the way he lived, independently? How could they know what Robert wanted, and how could they in our moral and legal climate make that call?

We have arrived at the intersection of morality, probabilities, and the law. This intersection is littered with our dead and redistributes countless dollars from the working class into the pockets of the wealthy. At a minimum Robert’s surgery will cost either him, his family or the public well over $150,000. The average cost to be in ICU on ventilation is $10,794 a day. That bill so far over $50,000. The cost for rehabilitation after a stroke is averaging more than $17,000 for the first year in the United States.

General recovery guidelines show:

  • 10% of stroke survivors recover almost completely
  • 25% recover with minor impairments
  • 40% experience moderate to severe impairments requiring special care
  • 10% require care in a nursing home or other long-term care facility
  • 15% die shortly after the stroke

It is easy to argue that the cost is insignificant compared to the value of life. This argument does not take into account the perspective of the person who has undergone the life changing events that Robert has. How do we reconcile Robert’s desire to live and die independently of the system when the natural system by which we die is to error. His misfortune was to error on the highway in a public setting with services readily available to secure his life at any cost.

If DNR instigation was a number like 911 or a one button smart app would Robert be lying comatose in the hospital today?

CHANGE OUR PERSPECTIVE ON END OF LIFE TREATMENTS

My business, as the CEO of Zanthion, is to ensure a high quality of life for seniors with unobtrusive monitoring and crowdsourced resolution, the exact mechanism that intervened to ensure that Robert survived beyond his accident. Since I was 19 years old a group of friends and I have repeated the phrase, “Live fast, die young, leave a good looking corpse.” This phrase, although crude, captures an innate desire, to live with dignity, die rapidly, not be a burden to others, and die as we lived, with joy. Of course, now that I am older, the die young part is not so appealing. A more appropriate saying in line with my current life is, “Live well, die fast, leave a better world.” The DNR (DO NOT RESUSCITATE) in our culture allows us to choose to die as we lived, with value to others? Unfortunately, it must be planned, implemented, and carried on a person and readily available on a person at all times. A better solution is an instantaneous directive issued by a person from their cell phone either by dialing a three digit number or with a single push of a button that implements the directive with ease.

For those whose deaths are not accident based there are serious issues with how we administer healthcare to people who are terminal. There are arguments purporting that at a minimum we spend 10% of our total healthcare expenditures in the last year of life. What is misleading about the reference article is the arbitrary choice of last year of life in which we only find 2.5 million people a year in the United States. A more appropriate boundary would be the last years of life identified by terminal illness in which case according to the very same article falls into the chronic illness category responsible for 84% of all medical expenditures. Putting this in perspective, the National Health Expenditure (NHE) was $3.2 trillion dollars in 2015 or $9,990 per person. Given a demographic doubling of seniors in next 10 years the annual expenditure for senior medical care will be $16,780 or 32% of the average family income. In other words the young are giving up 32% of all hours working to support the last few years of their parent’s lives. Our system of health is preying on the young to save the those who cannot be saved, not because they are unscrupulous but because, by moral code and government law, they must do what they do, and maybe, just maybe, the one they save will be one of the miracles.

We can achieve healthy lives with rapid failure without the healthcare system. Contrary to prior remarks the United States Healthcare System is no health system at all and the residents of the country are to blame for their health problems. 75% of all health related costs are spent on 12% of our population, the old. 33% of an entire life’s expenditure on medical expenses occur in the last 2 years of life. The vast majority of health issues are due to diet and exercise. The current obesity rate in the US is 35.7%. 21% of our annual medical spending goes towards problems directly related to obesity, a staggering $190 billion a year.

PREDATORY OPERATIONS AND INTERVENTION

My father had two operations performed on him in the last 3 months of life totaling over $120,000 to hopefully stop the spread of cancer and to limit pain. In both cases his quality of life was severely impacted and he suffered rapid disimprovement in critical care units away from his loving family. His cancer was far beyond any surgical solution. My family’s story is similar to millions of other stories characterised by what are claimed necessary procedures on people in their last months of life. These stories would not occur if a guaranteed payment was not waiting in the wings. On the medical bills for my father’s hospital stay and surgery were amazing charges. I do not have his bill but wish to offer up this online example of a bill instead.

On this bill is a Palonosetron hcl injection to prevent nasea from the effects of anesthesia whose typical dose is .25mg. A 10mg bottle can be purchased for $60.

The COGS of the Palonosetron HCL injection is $2.50. That means that the calculation of amount (a chart lookup), the loading up of the syringe, the nurse, and the actual injection which may have taken 2 minutes, plus overhead and profit were charged at a rate of $1,054.75.

PREDATORS, OUR FOOD SUPPLY, DRUG COMPANIES, AND HEALTH

It appears that by solving the cost of drugs issue many problems would be solved but that is not the case. Our health is a complex system trained for millions of years to survive by our environment. The environmental training for our health is impacted by three major environmental factors; beginning of life habits, the food supply, and fight or flight responses.

Beginning of life habits stimulate and train our immune system through expression passed to us through the umbilical cord and our mother’s milk. Our immune system requires critical full cycle nurturing and normal interaction with the physical environmental like such things as birth, dirt, pollen, and other people.

Our bodies have been trained by the environment to maximize the utility of the food supply. Modern predatory policies by food supply companies to increase revenue by supplementing food with fillers that are addictive and harmful such as sugar, high fructose corn syrup, hydrogenated soy bean oil, palm oil, monosodium glutamate, high salt content, and artificial colors is a multi trillion dollar cross industry platform for pharmaceuticals, healthcare, equipment manufacturers, government agencies, and legal council.

Here is a great fact sheet on sugar drinks which are responsible for 9% of the total caloric intake in the United States per year. Sugar drinks are the tip of the iceberg. Each American consumes approximately 36 pounds of high fructose corn syrup every year proven by Princeton Neuroscience Studies to cause weight gain and fat deposition.

LOWER THE MARKET ENTRY COST FOR NEW DRUGS

Pharmaceutical companies claim, and rightly so due to onerous FDA approval requirements, that creating new drugs requires usury pricing in order to recoup losses on failures. But, what about prices in the rest of the world? If what they said was true, wouldn’t pricing be the same in other first world countries? US drug prices are 4x the price of their European counterparts sold by the exact same company. Foreign competitors with our drug companies have lucrative businesses. There is something wrong with the explanation and the economic model. Could insurance be a part of the problem?

It is shocking to research the most expensive drugs in the United States. Imagine paying $79,200 for a single bottle of pills you take after meals for Hepatitis C. Here is a table on the increases to Valeant Drugs over the last couple of years.

The reasons this problem exists:

  1. Ridiculous patent laws that protect the wealthy
  2. Barriers to entry based on FDA approval
  3. Pharmaceutical Lobbies holding their high ground

The solutions are not insurmountable. Change patent laws for drugs, remove the onerous FDA approval process or fund small innovation with stimulated approval, remove all lobbies from any input into our political system.

THE AMERICAN LIFESTYLE IS CANCER

The United States does is barely above the mean in average hours worked per year. The average includes part-time workers so is not indicative of anxiety or actual demand from employers. Full time employees work an average of 47 hours per week in the United States. 1 in 5 workers work more than 60 hours per week. 1 in 5 US citizens provide more than 20 hours a week of caregiving for seniors or the disabled in the United States. No matter how you slice and dice it, a growing number of our population is spending 80 hours a week working or taking care of someone else. These numbers will not improve with a demographic shift in a growing number of our population aging. We will become like Korea or Japan with fewer numbers working more hours. The end product of this lifestyle is anxiety, lack of sleep, and obesity.

The previous paragraph does not mention the anxiety resulting from child care, incongruous school schedules, and two parents working and single parent homes. We have literally designed our society for failure which in turn puts enormous pressure on a failing guaranteed medical payment system.

CONCLUSION

There are many systemic issues causing large scale societal problems in America. Our focus on healthcare as one of the leading causes of failure is an accurate assessment of where the costs are. However, we the people, have been misguided in believing that our healthcare system is designed to benefit all of us and ensure our health. It is not. It is a 3.2 trillion dollar industry. Our healthcare system is a poorly designed bandaid for payment of medical professionals and big pharmaceuticals. It does not address solutions for health which are:

  1. Prevention
  2. Policies
  3. Food Supply
  4. Pharmaceutical Supply
  5. Medical Professional Supply
  6. Emergency Services
  7. Payments

This is a conversation for all of us about the future of our parents, ourselves, and our children.

QUALITY OF LIFE FOR EVERYONE

zanthion.com

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