Healthcare Debate Gets it All Wrong by Jim Ley

In my former career, I administered the acquisition of healthcare coverage for more than 5,000 employees at a cost of more than $30 million annually. It was one of the fastest growing components of our budget and competed directly with our ability to provide raises to our employees. So I dug into the associated dynamics, looking for strategic leverage to keep some downward pressure on cost growth.

I have some educated sense for this issue. And the problem is not what political leaders have been talking about.

Obamacare or Trumpcare? I don’t care what you call it; only the naïve or those afflicted with partisan bias believe that either has anything to do with better healthcare. Whether it is the Democratic approach or the putative Republican attempt, there is one thing that is so clear that it is hard for me to understand why it is not talked about more.

Insurance is not healthcare

This 10-year conversation is about the movement of money to the benefit of one interest group or another – it is definitively not about my healthcare.

Both “solutions” are nothing more than attempts to increase the amount of federal influence over the movement of money within one sixth of the U.S. economy, the maintenance of the status quo as to how that money flows (at best) and efforts on behalf of a variety of interests to advance the status quo — that is, the flow of money — on their behalf.

If this were about actual healthcare, the patient and the service provider would be the chief interest being served and talked about. That is the system that would be targeted for reforming to the best results. But they are rarely discussed except in some rhetorical fashion that suits the politics of the blabbering head that spews the rhetoric.

Special interests drive the healthcare laws

The real interests that gain from the healthcare laws, in their rough order of influence, are as follows:

The health insurance industry
The pharmaceutical industry
Trial lawyers
Congress
The hospital industry
Medical equipment manufacturers
The federal health system (Medicare and Medicaid)
(With Obamacare) the State Medicare oligarchy
Health experts
Those elevated to the status of poor by Obamacare’s Medicare expansion

The interests that are hurt by the healthcare laws, from least to most:

Doctors
Safety net Medicare patients
The employed but uninsured public dependent on the private market
Workers insured through their employer

Limited space keeps me from commenting on each of these interests so I’ll just pick a few as examples.

At the top of the heap sits the insurance industry, hiding behind their self-produced rhetoric of risk associated with instability in the system. Not only did they benefit from Obamacare’s requirement that everyone must buy insurance, but in 2009 their industry lobbying arm created enough fear in the political realm that they leveraged a $165 billion subsidy from the Obama administration. No appropriation was ever made by Congress, and to date, this administrative act of appropriation has been declared illegal by the courts.

Note that all you hear on TV is “instability” in the system and the need to maintain an insurance industry subsidy — working hard to include in law what is currently judged illegal. Their talking points, emanating from the mouths of Congressmen and Senators, once again lead the debate and harken for the need for the feds to further mine the taxpayer wallet and remove risk from insurance companies; making them the big winners.

After all it is easier to “sell” you a product with less concern as to a buyer’s normal demand for quality for his/her dollar spent, when someone else, in this case the federal government, creates a product and demands its use without ever having to pay for it. The only worse situation would be if the feds actually paid for a product — with other people’s money in the form of taxes — that they would never use themselves as a consumer. In economic transactional terms, that is called a third party system, but we would know it as the single-payer proposal.

The most value laden economic transaction is when you buy something for yourself with your own dollar. In that way you consciously make the decision between the quality of the purchase and the dollar spent. These third-party purchasing transactions, read as “single payer,” always produce the least value for the highest cost in any economic transaction. But they do produce some degree of certainty for those interests capable of positioning themselves correctly within the flow of cash.

Broken Medicaid is the example of single payer

Another lunacy created by Obamacare, and now wanting to be protected jealously by state governors who hungrily ate the poison apple, is the expansion of Medicaid.

Here you have what is supposed to be a safety net system, which is indeed structured as a safety net system, trying to become a system of normal healthcare access for an expanded group of consumers who have now been declared “in need.”

The craziness is that — aside from the taxpayer who is paying for this system out of general revenues, unlike Medicare which is supported by a specific tax — the person getting hurt the most is the truly indigent patient who has no other recourse than to use Medicaid.

Medicaid is such a broken system that over half of the doctors in the country will not take Medicaid patients. Adding more patients to an already broken system only ensures that those most in need will be those most hurt. All that the Medicaid bureaucrats can be glad for is that there is another broken federal healthcare system, the Veterans Administration, which sucks up all of the outrage oxygen when it comes to poor patient treatment.

Despite this track record, the Medicaid budget for the U.S has risen from 2% of the federal budget in the early 90s to almost 10% today — a 400% rise. It is often suggested that Medicare works well, and is a good example of a single payer system. Proponents of single payer don’t want to admit that the real model would be Medicaid.

How to know when it is about healthcare

You will know when there is a serious healthcare discussion when patent protection and generic drug time-to-market is seriously discussed. When tort reform is seriously advanced as a necessary component of healthcare reform.

When Medicaid decision making is granted to the states — where healthcare is most efficient and most constitutionally accomplished. When efforts like Health Savings and Health Savings Retirement Accounts are supported by tax credits. When healthcare benefits provided by employers are taxed if tax credits are not given for the Health Savings Accounts. When the days of the $300 aspirin disappear because more first-party purchase transactions keep the system transparent.

Why do you think that it costs dramatically less in inflation adjusted dollars for cosmetic services or veterinary services than it did 30 years ago? Simple, because they cannot hide behind the market-killing fog of second- and third-party transactions as means of obfuscating the corruption in the healthcare pricing system.

When those with preexisting conditions are supported by all of us, through risk pools managed by the states, possibly funded by taxes on employer provided healthcare benefits, you’ll know we’re really talking about healthcare for Americans.

The more that we move toward a direct relationship between the doctor and patient, the better the system will be.

The rhetoric and fear mongering that you hear screaming at you from your TV, radio and newspaper are nothing more than talking points from special interests seeking to prop up their position in this complex system. They are fighting tooth and nail to maintain themselves — not you — as a winner in the movement of almost $3 trillion.

ABOUT JIM LEY

Jim Ley has more than 35 years in public service, the last 25 of which were in top level administrative positions in two of the more dynamic counties in the U.S. Jim served two terms as President of the National Association of County administrators and was a leading “small government” voice in the profession. His administrative focus has been on financial sustainability and accountability to the taxpayer.

Related Healthcare Articles in The Revolutionary Act

Both Parties Want Federal Government Control of Healthcare

A True American Healthcare System

EXPLAINED: Government Healthcare is not Christian

HEALTHCARE REFORM: Freedom Is Its Own Indispensable Goal

EDITORS NOTE: This column originally appeared in The Revolutionary Act.