What To Do About Healthcare
The other day I told Twitter that I would answer all serious questions about #FixingCapitalism in Medium posts. The first was from @netbacker.
First let me say that I am not an expert on healthcare, except when it comes to having my own issues treated, and I am pretty mediocre even at that. But many of our healthcare problems are actually financial problems and solving financial problems is what I do. So what to do about the healthcare situation in the United States?
In order to comprehend the problem, first imagine our healthcare system. Institutionally, it consists of hospitals, doctors practices, insurance companies, pharmacies, pharmaceutical developers, collection agencies, software developers, law firms, medical supply and technology companies, as well as venture capitalists, hedge funds and private equity firms. Probably there are others I don’t even know about. Whatever you think of these various industries, each one plays a role in our current healthcare system, and our current healthcare system is valuable. As a system of institutions to which we have access, our healthcare system makes us wealthier by its very existence. That is because it provides us with a place to get help when we are sick. We live longer and better lives because of healthcare.
While outcomes do leave something to be desired, the most vocal complaints about our healthcare system are financial in nature. No question, it’s too expensive to get your issues treated. And it isn’t only the actual cost, but the uncertainty, and the risk, and the onerous, time-consuming process you have to go through just to pay for your disease. They either won’t take your money at all, or they want every last dime of it.
Yes, fixing healthcare is part of #FixingCapitalism.
Step one is to alter our expectations for the financial aspect of healthcare. We have been trying to make the premium payments balance out the claims, dollar for dollar. That isn’t ever going to work. Healthcare is not life insurance or car insurance. Cars and lives have fixed payouts, but the downside of insuring a person’s health is virtually unlimited. As a sick person I want unlimited access to the care I need. But as a finance person, I do not want to write insurance policies on people like myself. Especially as the range of potential treatment options continues to expand, as it should. The bottom line is this;
We need government to pay our medical bills for us.
But introducing new taxes which are intended to balance out the claims does not solve the problem with private health insurance. The government cannot make taxes balance claims any more than the private insurance industry can make premiums balance claims. The government is going to have to run a deficit in connection with its role of healthcare payer of choice. We do not want to squeeze healthcare providers and suppliers for their income. After all, the healthcare industry is a bellwether of middle-class employment at all levels.
On social media I encounter those who say that we can save a lot of money by eliminating “useless” jobs in health insurance.
I do not accept the “useless” argument to begin with. Health insurance companies play an important role in matching patients to providers, which will have to be fulfilled by government in a single-payer system. But suppose that there is a more efficient way to distribute care. Then we need a fully-funded transition plan for those who will be displaced. If there is money to be “saved”, it should be redeployed for the benefit of those having their careers disrupted by a change in government policy. They don’t only need job training. They need guaranteed jobs.
Another frequent argument is that we can save money by squeezing pharmaceutical developers.
But it is a fallacy to say that because drugs are available for cheaper overseas, that research will not suffer if Americans stop paying higher prices. What matters is the total amount of revenue, not its source. We have to get out of the money-saving mindset and into a resource-allocation mindset. If R&D is to be funded by sales of medicine then we have to ensure that government pays whatever prices that are needed to keep each research area funded and profitable. Not the lowest price it can “negotiate”.
Once we agree that deficits and money creation are essential to the goal of providing universal, next-generation healthcare, we can determine how much we can afford and what mix of programs should be initiated. I do not know whether it should go towards increasing the number of nurses or towards increasing the amount that they are paid. I do not know whether it should go towards increasing access to existing treatments or developing new ones. Those are budgeting questions. My message is this:
We are going to have a budget to develop our healthcare infrastructure.
If we can improve our healthcare system, then we can create the money to fund that improvement. If we can cure a disease, then we can create the money to fund that cure.
The way money is created is always by spending without taxing it back. And the reason the new money is valuable is always because the assets acquired in exchange are valuable. Once you learn to see that, it’s just a short way to a new vision of healthcare, and a new vision of capitalism.
