Cash Health Plans Save 50% In Medical Costs

http://blog.riskmanagers.us/?p=7253

Healthcare Solution: Go Back to Cash

The expansion of health insurance and government entitlements created “free money” and thus the explosion of healthcare costs. The solution is simple and “impossible”: we all pay cash.

Here’s why healthcare (a.k.a. sick-care) costs cannot be reduced; the
entire system is based on vast pools of “free money”:
The
corporate-America or union/government employee who goes to the doctor pays a few
dollars for a visit and drugs; the “real cost” is of no concern. Ditto the “real
costs” charged to Medicare and Medicaid.

The link between the “consumer” of healthcare and the provider has
been broken for decades.
There is no “free market” in healthcare–there
isn’t any market at all. We live in a Kafka-esque nightmare system in which
“some are more equal than others” and hundreds of thousands of dollars are
lavished on worthless tests, procedures and medications for two reasons:

1. Because there’s “free money” to pay the bills

2. So-called “defensive medicine” in which worthless tests are administered
to stave off random (sometimes valid, sometimes nuisance) malpractice
lawsuits.

There is a solution so simple and so radical that it is “impossible”
(and of course you’re reading it here):
shut down insurance and all
government entitlements, and return to the “golden era” of the 1950s when
everyone paid cash for healthcare. Here are the costs of childbirth as of 1952
at one of the finest hospitals on the West Coast, The Santa Monica Hospital:

And here are the obstetrical rates:

Having a baby cost $30, which is today’s dollars is $244. A private
deluxe room cost $23 or $187 in today’s dollars
. According to the
Bureau of Labor Statistic’s inflation
calculator
, $1 in 1952 is $8.14 in 2009 dollars.

What does it cost to have a baby now? $10,000? Or is it $25,000? Who even
knows?

I know all the reasons why “costs had to skyrocket”: we’re
getting so much better care now, right?
Actually, as measured by death
rates and any other metric you want to select, there is simply no way to justify
a 40-fold increase (or is it 100-fold?) in medical care costs. The returns on
all the “miracles of modern medicine” are in fact exceedingly marginal– but
nobody wants to talk about that.

In 1952, if something awful happened and a patient died, here was the
response: “We’re very sorry.” Families weren’t outraged; they expected people to
die and interventions were not expected to be miraculous every single time.
Doctor Kildaire and all his imitators on TV had not brainwashed the public into
reckoning that if someone died, a mistake had been made. They also hadn’t been
brainwashed by the mental disorder known as “the American Legal System” into
thinking that in every possible circumstance in life, there is liability, and
the only question is where to pin it for the big bucks jackpot.

Stories about people suing doctors and hospitals for 5 times the value of a
house ($1 million in today’s money would have been $120,000 in 1952, when you
could buy a nice house for $20,000) simply did not exist in the 1950s. The
cultural mindset that someone somewhere must be at fault and it’s a “right” to
go after them did not exist. Since insurance was limited, there was no “free
money jackpot” to go after, either.

I know you’re probably outraged at the suggestion that “modern safety nets”
of insurance and entitlements are the cause of our ills, but follow this idea
through:

With no insurance or government program to bill vast sums, then every clinic,
doctor and hospital in the U.S. would instantly go broke. Someone would pick up
the pieces for $1 or whatever the auction price happened to be and start
charging people $50 for a visit to the doctor–not a “co-pay” which was
accompanied by a bill for $500 or $1,500 or $15,000 to an insurance company or
the government, but $50 cash–that would be the total cost. People might decide
they did not need to see the doctor every time they got the sniffles. They might
ask the doctor if an MRI was really going to help diagnose their problem or if
it was gilding the lily.

As for malpractice, maybe the clinics/hospitals would be non-profits. Go
ahead and sue the bejabbers out of them–they have no insurance and no cash. Go
ahead and win a huge settlement: you’ll never collect because there’s simply no
money. The non-profit folds and another one buys the clinic for $1. With no
giant pot of “free money” to pillage, the pillaging goes away. Hospitals which
sought stupendous profits would presumably charge more, and hence would have
fewer customers. It would be up to the consumer.

The solution to malpractice is information, not lawsuits.
Based on my conversations with the M.D.’s who frequent this site, here are some
simple policy/regulatory steps which would have very low end costs:

1. License all M.D.’s nationally so they don’t need to go through the absurd
waste of time and money being licensed in multiple states.

2. Make all information on clinics, hospitals, surgeries, etc. public on the
Web. Those doctors willing to take on the very ill will have more patients die
than those who avoid the risky cases; it will be up to consumers to sort out the
track record of the people who they choose to hire to attend to their
health.

Something magical would happen to prices: they would drop to what
people could afford to pay cash.
Yes, those wonderful folks in the
pharmaceutical industry could list their drugs for $10,000 a dose, but few would
be buyers. Just as in other countries with no “free money” to tap, the price of
that drug would quickly drop to $50. That, or the pharmaceutical companies can
go bankrupt and let others fill the vacuum.

What would happen is simple: marginal care would vanish because few
would be willing to pay for it.
The cost of an MRI in China is a tiny
percentage of the cost of an MRI in the U.S., and the machine and training of
the technicians is the same; so why does it cost 25 times more for an MRI here?
Because there’s a pot of “free money” available to tap.

If the entire system collapsed and everyone paid cash, the cost of an MRI
would be $100 or so, regardless of any other conditions. Or, the owners of the
MRI machines could declare bankruptcy, sell the machines at auction and let
someone else provide the service to those who decided it was worth the
expense.

But what about the “poor people” who can’t afford medical care now? Well
right now they have to stand in line at emergency rooms–the most wasteful,
inefficient system possible. Even “poor people” can afford a few dollars–there’s
endless excuses provided yet how many “poor people” have cell phones, eat costly
fast food, do costly illegal drugs, etc. etc. Everybody has choices; we’re not
all deranged, and for those who are deranged, then clearly the government will
have a role in their care when it exceeds the capacity of their family or if
they have no family.

Everybody’s got an excuse in our current system, and perhaps that’s why it is
morally and financially bankrupt. The U.S. (and certainly not Santa Monica) was
not a Third World nation in 1952; people did not feel their healthcare was
deficient or poor. There was simply no money to pursue marginal returns except
perhaps for a few millionaires seeking exotic treatments. Fine, it’s their
money; most died right along with the rest of us and at about the same
lifespan.

As for “overall health” of the populace: what with the
“diabesity” epidemic out of control due entirely to lifestyle changes, it’s hard
to say we’ve gotten 50 times healthier as a result of our healthcare costs
rising 50-fold.

When it comes right down to it, the current system is based on this premise:
the average American is too dumb to figure out healthcare for themselves and so
we need a gigantic structure of “experts” to figure out what should be done and
what it should cost. It’s not even really “insurance” because everyone gets old,
ill and then dies.

This has resulted in the most brutally inefficient and even cruel system
possible, one in which the very elderly are milked for hundreds of thousands of
dollars of “healthcare” in the last days or weeks of their lives while tens of
millions get no care at all except at the emergency room. Since no one takes
responsibility for their own health or healthcare costs, then people take poor
care of themselves and thus many of our ills are self-inflicted. People save
little to nothing for emergencies because they’ve learned to expect someone,
somewhere, to pay for their healthcare. (It’s a “right.” Really? At whose
expense? The Chinese who buy our debt?)

I know, I know–going to a market/cash system is “impossible.” But the irony
is that’s where we’ll be in a few years, regardless of what anyone thinks or
wants: “healthcare” in its present incarnation will bankrupt the nation just as
surely as the sun rises.

Regards,
Charles Hugh Smith

Editor’s Note: You can get Charles Hugh Smith’s new e-book
Resistance, Revolution, Liberation: A Model for Positive Change here.

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