If you want to know why fixing “health care” is so difficult you need only read this article.
From Akron to Youngstown and Canton to Cleveland, as in cities and towns across the country, workers who once walked out of factories at the end of each shift now stream out of hospitals.
While manufacturing employment has fallen nearly 40 percent in northeastern Ohio since 2000, the number of health care jobs in the region has jumped more than 30 percent over the same period. In Akron, the onetime rubber capital of the world, only one of the city’s 10 largest employers still makes tires. Three are hospitals.
If these were doctors and nurses that might be understandable. But they’re not.
They’re nearly all paper-pushers who contribute exactly zero to actual consumer care.
The problem is that all of these people draw salaries and thus drive up the cost of medical care by ridiculous amounts. In fact last month some 20,000 people were added to the “health care” employment rolls and nearly all of them will never provide one second of actual care to an actual person — but every one of them has and will massively drive up your health care costs. In fact if the average “administrator” in that group makes $40,000 in the last month alone a whopping $800 million per year before their health insurance and employment tax cost was added to your medical bills and yet not one single person got one minute of additional actual care out of that expense.
Next month there will be another $800 million added on which you will be forced to pay.
The next, and at least as-large problem is found in the continual bleating of hospitals and similar that “Medicare doesn’t pay what X costs” as their justification to gouge private parties. But this claim is false; if you look at many of the so-called “non-profits” you can find myriad examples of this being a flat-out lie, and nowhere is it easier to find than in the hospitals’ lab sections.
Direct operating costs are usually about 10% of the revenue amounts!
In other words the hospitals are making 1,000% profit in their labs, net-net including all expenses, on balance. That is, Medicare and Medicaid, when you look at the actual operating cost of these labs, is paying a price that approximates cost plus a bit. And oh by the way that’s what the law governing Medicare and Medicaid requires. If private parties paid 10% more that would be a rational profit margin.
1,000% more is a******job.
This is why alleged “non-profit” hospital administrators frequently get seven-figure salaries even when they’re associated with a university system where the head of said school makes 1/5th to 1/10th as much.
No competitive business can maintain 1,000% net profit margins in any segment of their business for any length of time at all, because as soon as someone figures out that you’re making that sort of profit they come in and open a competing business. It will happen every time, simply because the new entrant can undercut the other guy by half on price and still make 500%! There will be dozens of new business entrants within days.
The only way to keep that from happening is to do anti-competitive things, such as conspire with others to fix prices or form “networks” that forcibly lock out competitors.
All of those acts are illegal under law that has stood for more than 100 years yet both State and Federal governments refuse to enforce said laws.
We can solve the “Health Insurance” problem in a literal day by enforcing those laws against everyone in that sector of the economy. But if we do so then the 1,000% profit margins collapse by at least 90% in an afternoon and along with the screwing on the billing end goes a lot of jobs. Health care collapses as a share of the economy from over 19% today back to about 3-4% and this is recognized as the mother and father of all recessions — because it will be.
That recession won’t last long though because with the amount of money that now remains in consumer pockets instead of being stolen through extortionate “health insurance” schemes America becomes the most-competitive place to run a business in the Western World. We would see an enormous influx of firms to the United States beginning within days and it would not be long at all before all of the jobs displaced would be recovered and then some.
If you want an example of what this would look like from the economic point of view have a look at 1920-21.
But the fact of the matter is that those who would lose during that transition whine big, they whine loud, and they lie.
They scare you with knowingly false claims that you’d have no doctors, nurses or hospitals, and thus would die. This is trivially seen to be a bald-faced lie when one simply looks at the growth of administrators .vs. physicians in medical practice — the latter actually diagnose and treat persons, the former do not and if nearly all of them disappeared tomorrow there would not be any impact on the number of physicians and nurses — and thus there would be zero impact on the ability to deliver medical services either.
If you get the force, fraud and extortion out of the medical system at all levels from pharmaceuticals to hospitals to the local imaging center and testing company you’d find that most of those administrators would lose their jobs — under a competitive market they would produce far less in value than they cost.
Indeed, you only need to look at the quarterly filings for virtually any public company that operates in a competitive market and you will find that SG&A (that’s sales, general and administrative expenses) typically runs about 10% of revenue and most of that is G&A. Businesses in a competitive market can’t spend more because if they do someone will come in, compete with said firm and destroy it by undercutting their prices.
Really competitive business (e.g. Amazon) have G&A costs of ~2% of revenue! That’s how they hammer their competition and how you get better prices — they keep their costs down.
Now look at any of the health care public firms. Aetna, for example. Their G&A is 23% of revenue, and the only reason they get away with it is that they are protected from competition. In other words they blow 2 and a half times what a business in a competitive market does, and 10 times what Amazon does on administration as a percentage of revenue without fear — because they can without having their head cut off by a competitor. And oh, by the way, there’s plenty of creative accounting too; health-related firms have every reason to understate their actual G&A expense lest the pitchforks and torches come out.
We will never get health care under control nor will it ever be affordable until and unless the underlying issue — cost — is addressed. Cost is only addressed through market forces, and that means enforcing the law by hammering every single anti-competitive agreement and practice that these companies engage in.
If we do that the cost of medical care will drop like a stone — 80 to 90%. There will no longer be a “pre-existing condition” problem because for virtually every situation you will be able to pay cash. For the few where people literally cannot because even when the $90,000 annual cost of treatment is $500 (as is the case for many MS patient drugs if you buy them outside the United States) our “social safety net” can afford $500 — but not the $90,000 tab today that escalates at 10% or more a year. In the case of people with Type II diabetes the cost of treatment for most of them would drop to an actual zero were they to stop eating carbohydrates other than green vegetables. That sounds like a hard sell given how many people like pasta and pizza unless you explain to the 250 (or 400!) lb diabetic that if they do this not only do they spend zero on meds in addition all their extra weight will come off without being hungry or exercising to death and they won’t have a heart attack, stroke or destroy their hips by trying to carry an extra 100+ lbs around either.
What will said Type II diabetic choose if the options are (1) pay for testing strips and medication out of his pocket (albeit at a much lower cost than today) while eating pizza or (2) pay zero for testing strips and drugs because you no longer need either but don’t eat pizza? The obvious choice is to eat the steak, forego the pizza and as a result drop both the medication and the extra 100+ lbs while keeping the money you used to spend on meds and testing supplies in your pocket.
Those who are screaming about “pre-existing conditions” and similar have a choice to make.
You can either continue to support the blatant rip-off of the current medical system in this country which thus compels you to argue for stealing from others or you can argue for putting the monopolists and extortionists in prison using existing, 100+ year old law which will collapse the cost of your medical care by 90% or more in an afternoon.
Oh, and one of those choices can’t work because there simply isn’t enough money to continue doing it no matter who you steal it from, while the other both can work and will, after the adjustment in the economy takes place, lead to much higher productivity employment throughout America.
That choice, if you take it and demand that it happen right here, right now, today means your wages will go up, your cost of living will go down and your life will dramatically improve.
If you take the other choice — to either sit on your hands or make more and more demands for “single payer” and cost shifting instead of collapsing the monopolies and extortion rackets you will not only fail to obtain the health care you desire you will cause the collapse of our Federal Government, State budgets and the nation’s economic future.
Story courtesy of Market Ticker.