IF THE GAME’S FIXED, BREAK IT

Last rant I discussed Steven Brill’s important piece on another critical aspect of our health care system’s malaise. Here’s what he recommends to change it:

  1. Tighten antitrust laws related to hospitals to keep them from becoming so dominant in a region that insurance companies are helpless in negotiating prices with them. They have increasing leverage as they consolidate lab work and doctors’ practices and will drive insurance premiums up.
  2. Tax hospital profits at 75% and have a tax surcharge on all non-doctor hospital salaries that exceed a certain amount (he offers $750,000 as a reasonable figure). He estimates this would save over $80 billion a year.
  3. Outlaw the chargemaster, the “retail” price list with the obscenely inflated charges.
  4. Amend patent laws to prevent pharmaceutical firms from exploiting the monopoly these laws give them, or set price limits or profit-margin caps. Reducing prices to conform to other developed countries, he argues, would save more than $25 billion a year.
  5. Tighten further what Medicare pays for CT and MRI scans and cap what insurance companies can pay for them, as well as profits on in-house lab tests.
  6. Embarrass Democrats into stopping the fight against medical-malpractice reform and provide safe-harbor defenses for doctors.

Tongue-in-cheek, he adds that we could limit administrator compensation at hospitals to 5 or 6 times the salaries of the lowest-paid physician, require the drug companies to post a notice of the gross profit margin on the drugs’ packaging and the salary of the parent company’s CEO (as well as their website).

He summarizes Obamacare as “doing some good work around the edges of the core problem,” but reminds us that ultimately it will raise, not lower, costs. In essence, you can’t get something for nothing, even if that something is a laudable goal.

Mr. Brill concludes that “…we’ve enriched the labs, drug companies, medical device makers, hospital administrators and purveyors of CT scans, MRIs, canes and wheelchairs. Meanwhile, we’ve squeezed the doctors who don’t own their own clinics, don’t work as drug or device consultants or don’t otherwise game a system that is so gameable. And of course, we’ve squeezed everyone outside the system who gets stuck with the bills.

“We’ve created a secure, prosperous island in an economy that is suffering under the weight of the riches those on the island extract.

“And we’ve allowed those on the island and their lobbyists and allies to control the debate….”

Where do I, the free market capitalist guy, come down on these suggestions? Because I don’t see free market forces operating in many areas of our health care playing field I’ll give a thumbs up on #1. I don’t trust the government with #2; giving them more money to waste is like handing a loaded pistol to a 2-year-old. Let’s have Medicare actually negotiate with drug and device companies like they do elsewhere, along the lines of #5, and get the lobbyists out of the equation. As an erstwhile affluent nation, I think that subsidizing the world made sense, but not to the extent that we’ve done it, and we certainly can’t continue this behavior while we’re borrowing 40 cents on the dollar. Two thumbs up on #3. Require the uber-wealthy from overseas to make a donation if they want to utilize our specialty health care institutions, or get their care at home. I’d prefer that #4 be handled, as previously stated, with hard-ball negotiations, à la #5. And I’d prefer to limit upper management salaries through market forces, though a mechanism to tie compensation more closely to performance is sorely needed. Even in the private sector, I’ve seen the sky-rocketing CEO salaries that appear to be more a form of racketeering than a function of the marketplace. Success should be well-compensated but coupled with real-world performance. Having the heads of corporate governing boards determine compensation willy-nilly is tantamount to letting the wolves guard the henhouse (sound familiar?—it’s what the ruling class has been doling out for themselves for years).

Finally, if we’ve decided we want everybody covered for all pre-existing conditions in perpetuity, let’s decide to go broke or make the hard rationing decisions that go along with it. Because, short of really, really, excising fraud and waste, the money has to come from somewhere. And a printing press or a Chinese bank will get you only so far.

Next: Forbes contests Brill as a shill

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