What About This…? 7.20.2017

By Wayne William Cipriano

Writing about the problems many of us face with respect to health care requires a book, not a newspaper article. So many facets, so many questions, so many solutions – each demand too much space or result in too little attention. But I believe most would agree with one simple aim: Better health care for less cost. Which generates two simple questions: How can we improve health care? How can we do so for less money?

I’m going to write about the second question and frame it a bit differently: Why does health care cost so much? Oh, don’t the answers pour in? The extravagant salaries of many health professionals; the cathedrals of medicine so many of our “non-profit” hospitals have become; the ridiculously intricate technology; the “creative” bookkeeping employed by many health related industries and the friendly legislation that allows them to do so; the waste, the stupefying waste of time, resources, personnel, and energy that even the most unsophisticated consumer of health care cannot fail to notice; and so on.

In my opinion, health care costs so much because of health insurance companies (HIC). Not the only reason by far, but I believe the top one, simply because IHC want to spend more and more money on health care. How can that be, you ask? COST PLUS, that how.

Business enterprises like HIC only survive while they are producing profits – taking in more money than they pay out. And the larger a percentage of their income that they retain as profit, the “better” a company they are, right? And in a COST PLUS business model, where the business tacks on to its total costs a percentage to keep in profit, you wonder why any business would be satisfied with a 1% or 5% or 10% profit added on. Why not more? Much more?

The two factors that control a never-ending upward spiral of COST PLUS profit are competition and necessity. If a business charges “too much” beyond its costs for a necessary product or service, another business will enter the market, charge less, and win all the business. If a business charges “too much” beyond its costs for product or service that is not necessary, its customers will cease to purchase.

Neither of these factors seem to apply to HIC. We find advertise-ments in the media all the time for just about everything. When was the last time you noticed one for healthcare insurance offering better service, features, pricing, conveni-ence? And while not absolutely necessary, how many of us will go without health insurance and risk losing a loved one or going broke saving one?

A HIC can announce it is only adding 5% or 1% or even less to its costs for profit, sounding as if it is fulfilling a necessary social need almost altruistically. So, let’s say HIC adds only 1% in profit to its costs of say a million dollars a month, thus taking in “only” a hundred thousand dollars, and some bright account says, “Why not INCREASE OUR COSTS?” Are they nuts? No.

By paying whatever charges sent to the HIC by the health care industry with no questions asked, by thus encouraging larger expenditures, crazy salaries, wasteful building, unnecessary technological “advances,” and horrifying waste, that monthly cost of a million dollars now becomes two or three or…. and that “measly” 1% profit add-on increases at exactly the same rate as do those unquestioned charges received by the HIC.

Does anyone in the entire health care delivery system complain? Of course not! Except for us, the payers, and who listens to us? And the HIC know that while we may become enraged as overall costs skyrocket, none of us will insist that limits be placed on the cost of Grandma’s care, or our kids’. And so competition does not jump in to ameliorate this COST PLUS bonanza, and custo-mers do not withdraw.

What is the answer? How can what is essentially a death spiral in healthcare costs be averted? Very simply. Do away with Health Insurance Companies.

How do we do that? We construct one huge HIC. Call it the United States of America Health Insurance Company. Everyone in our country is a member. Everyone is an owner. Everyone shares in the cost when we pay our taxes. And, most important of all, MOST IMPORTANT OF ALL, the USAHIC negotiates every cost. From the largest hospital, the most highly trained professional, the most costly pharmaceutical product, the most necessary technology, to an individual aspirin, every necessary cost is whittled to its core and every financial abuse is severely punished.

And consider this: Even if the United States of America Health Insurance Company, which would make no profits whatsoever, were to do absolutely nothing at all in terms of reducing present costs, there would still be an immediate savings of whatever COST PLUS profits are being tacked on to health care costs today.

With no policing of outrageous bills, with no negotiating down of ridiculous costs, without eliminating the redundant services of each individual HIC, if all the huge, unregulated costs of our health care system today remained exactly the same as they are now, we would still immediately save whatever profits are being taken by HIC.

This is a way to secure adequate health care for less cost. There are others. We need to find one of those ways that appeals to us and execute it. And we need to do that pretty darn quick.