Time To Wake Up

by Karl Denninger, Market Ticker:

Let’s face it — Ryan and Trump are not going to do anything to actually address the health care mess.

Health care is not about “coverage” or “insurance.” It’s about price.

Therefore any discussion about “coverage”, “insurance” or similar is an intentional deception until and unless price has been addressed.

The facts are that the federal government spent $1,417 billion dollars last fiscal year between Medicare and Medicaid. In 1998 the federal government spent $379.95 billion dollars on the same programs. That approaches a quadrupling of said spending over that time period, and an increase from 23% to 37% of the total. If you believe the bleating from hospitals and doctors about how Medicare and Medicaid “don’t cover their costs” then private spending must have gone up at an even-faster rate than spending by the government.

The facts are that we spend twice as much as a percentage of GDP (and per-person, roughly) as virtually the entire industrialized world — and nearly all of those nations have socialized systems.

Let me remind you that socialism always loses to capitalism, and the reason it loses is simple: There is no profit motive in a socialist system and therefore there is never an incentive to pound your competitor down the street over the head with a Clue-by-4 in the form of price.

Technology is responsible, in the main, for what is called productivity growth. That’s a very simple thing when you get all the wonky economist talk out of it: Productivity growth means doing more while expending less, whether the “less” is money, labor, time or material cost.

If you want to boil it down to what used to be MCSNet’s slogan, it’s this:

Better, faster, cheaper.

The usual chestnut adds “pick any two”, but ours finished with “you don’t have to choose.”

Only true competition produces you don’t have to choose. Without it technology is a horrifying thing because it can be — and will be — used to obscure facts and screw you.

We live in a nation of alleged laws. Our government has a duty to enforce those laws, and in the context of Health Care that means prosecuting all those entities that collude or screw consumers. The very existence of an “Explanation of Benefits” statement that shows a “price” of $10,000, a “negotiated discount” of 80% and then some tiny amount you’re expected to pay is proof of collusive action that is intended to and does screw you and, I’d argue, Racketeering.

Why? Because you were never given a price or any way to negotiate it before you had the procedure. Your “discount” is based on what insurance you have and is concealed from you until after you have already incurred the expense, which is an effective agent of extortion (“either buy this good insurance or get hosed with a smaller discount or no discount at all!”) It is further an attempt to force a tied sale for something that, absent the collusion, you might not have wanted to buy at all (in this case health “insurance.”) And finally without pricing being in the open and level you’re either being discriminated against or for and that discrimination is based on what you did or didn’t buy from a third party.

Then there are those who openly keep some of whatever “discount” they “negotiated”, such as “pharmacy benefit managers.” The classic example is that you have a $20 co-pay for a prescription but you can buy the drug without any insurance at all for $10! Not only is the pharmacist not required to post a cash price (so you know this before you pull out the insurance card) in many cases he’s forbidden by contract to tell you. Every time you fill such a prescription you get screwed out of $10 simply because you told them you had insurance!

How could you choose which station to pull into for gasoline if none of them ever posted a price and the pump didn’t tell you how much it was until after the gas was in your tank? Worse, what if you had to tell the gas station pump which car insurance you had before it would give you a price after you filled your tank? How badly would you get screwed on the highway if that was the case? What if there were no prices on the grocery store shelf — just a barcode that looked it up but the register never displayed anything except a final total when you pressed “all done”?

What if after you pressed “all done” and were presented a price, having told the grocery store which homeowners insurance company you had they kicked back 5% of your bill to a firm employed by the insurance company — all because they claimed they gave you a “special deal”? The “special”, of course, was that you paid double for your groceries over claiming you had no insurance at all.

You know the answer to this question — you’d get reamed every single day.

Here’s the other thing you also know: If a grocery store or gas station owner tried that sort of stunt nobody would shop there; they would go down the street. If they got together so everyone did the same thing they’d all be in jail in an afternoon.

Please explain to me why the doctors aren’t all in jail? Why isn’t the hospital administrator in jail? Why isn’t the pharmacist and the owner of the pharmacy in jail? Why isn’t the insurance executive in jail? Why do not those who work in any of these fields and gain their income by screwing you blind find themselves with nobody who will even sit in the same pew with them in church, say much less find themselves in the graybar motel for the rest of their lives — with all their material wealth confiscated to provide some restitution to the millions of people they screw blind every single year?

Folks, either this stops — right now — or we lose the country. It’s that simple.

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