Insurance Isn’t the Issue

Right now healthcare policy is all the rage. The USA spends an outsize amount of money and gets sub-par results. The left thinks we can fix that by making the government pay for our healthcare. The right thinks we can fix that by making people pay for their own healthcare. Most people in the middle seem to want some sort of “worst of both worlds” compromise. All of the above miss the point entirely.

The problem isn’t who pays for healthcare, it’s how much those treatments cost and the sheer quantity in which we use them. Neither the existing ACA (Obamacare) nor the proposed AHCA (Trumpcare) does anything to meaningfully address those two issues.


Cost

Right now I buy Novolog insulin in the USA. With insurance, it costs me about $200 per vial. If I instead smuggled it in from Canada, I could get it for about $50 per vial, without insurance. Sure, drug prices in Canada are negotiated down by the government, but I’m not the Canadian government. The cost of insulin is determined by those negotiations when the government is buying, but Novo Nordisk could very easily just decide charge me (or more realistically, a private third party in Canada) the same $200 per vial I pay here.

But they don’t.

Why not? To answer that question, let’s consider why I called buying insulin from Canada “smuggling.” Despite overwhelming public support for making the practice legal, congress recently voted to reaffirm the ban on importing foreign medicine. The main GOP argument against it was that Canada’s pharmaceutical market is too under-regulated (bear that in mind next time you hear a GOP establishment figure railing against the regulatory state).

At the orthopedic devices company I used to work for, I was involved in getting both FDA and CE (the EU counterpart to the FDA) approval for one of our implants. It cost us far more to jump through the FDA’s hoops, and getting CE clearance was barely a speed bump by comparison.

I can assure you from my professional experience that the regulatory environment in the USA (not necessarily the number of regulations, but the sheer amount of attention and paperwork they require) is much, much more stifling to competition than that of the EU or Canada. It’s not an accident that FDA approval tends to cost suppliers literally billions of dollars, and that price has more than doubled in the last ten years. Billions, with a B.

So let’s imagine that I want to start a new pharma company so that I can undercut Novo Nordisk’s ridiculous insulin prices. Good idea, right? Do you have a few billion dollars laying around to help me get started?

And when was the last time you read about a major public health crisis in the EU or Canada resulting from bad drugs or devices? I personally think that EU and Canadian pharma/device regulations are more than adequate for safety purposes. The regulatory burden in the USA, on the other hand, is too damn high.

Regulation isn’t the only issue with health care costs, of course. There’s also the fact that health insurance companies employ about half a million people, and this number is also rapidly growing. Each of those people need paychecks and health insurance of their own, and that’s even before you consider the physical infrastructure for all of their offices. The average salary for a health insurance specialist is about $91,000, and it costs an average of about 1.35 times salary to keep an employee on board.

When I do a quick back of the envelope calculation (500,000 people * $91000 per person * 1.35), that comes out to a rough estimate of about 61 billion dollars (or 15 Great Walls of Trump) per year being spent on people who don’t actually deliver healthcare or help create drugs/devices. Sure, that’s not a professional economic analysis by a long shot, but it should give you an idea of the order of magnitude we’re talking about. That’s without even including all the hospital administrators, regulatory bureaucrats, and industry compliance professionals. There’s a whole lot of people who create zero value for the system and yet soak up mountains of cash.

You’re going to wind up paying for all of that, no matter who the middleman is.


Quantity

The current state of public health in the United States is such that ~70% of us are overweight, ~50% of us have diabetes or prediabetes, ~50% of us are at high risk of developing heart disease, and ~70% of us take at least one prescription drug. Although we’ve gotten much better at dealing with infections diseases than in the bad old days, when you look at the problem of chronic diseases, we might just be the sickest population in all of human history.

At that point, the price of a particular pill and who’s paying for it are mainly just circus sideshows for political entertainment. We’re so preposterously sick that life expectancy in the USA has not only stopped increasing, but is actually now decreasing. Most of our problem has to do with diabetes/heart disease/obesity-type issues and their related complications.

Now for some good news. It turns out we’ve discovered a drug that’s scientifically proven to help you lose weight, helps prevent diabetes, helps prevent heart disease, costs literally nothing to produce, requires no prescription, and you can even produce it for yourself at home with no prior experience! I’m not pulling your leg here, that’s literally true.

Actually, we’ve discovered two such drugs: hunger and exercise.

Okay, so I was being misleading and click-baity when I used the word “drug” to describe lifestyle interventions. But you know what? Hunger and exercise work.

Reducing food intake will make you lose weight, can prevent diabetes, and can prevent cardiovascular disease. Exercise can help you maintain weight loss, can prevent diabetes, and can prevent cardiovascular disease. Dieting is also easier to achieve if you exercise, because exercise suppresses appetite-increasing hormones.

Doesn’t all of that require extremely painful levels of hunger and exertion, though?

Not at all. Let’s take a look at the Da Qing Diabetes Study (which I also cited twice in the previous paragraph). In this study, they screened an entire town in China for impaired glucose tolerance, a risk factor for diabetes. This would never have been allowed in the USA, speaking of regulatory burden.

Of the people they identified as at-risk, they randomized study subjects into control, exercise-only, diet-only, and exercise plus diet groups. All three of the lifestyle intervention groups cut their incidence of later developing diabetes roughly in half, and as I’ll show you in a moment, the interventions required to get this remarkable result were actually quite mild.

Diabetes, by the way, is the leading cause of kidney disease (so it can land you on dialysis), and one of the leading causes of blindness. It also causes something called diabetic foot ulcer (WARNING: very graphic images), which is the leading cause of amputations, and if left untreated, will literally cause your flesh to rot off of your bones. Remember, this is the deadly endgame of a pathology that now affects half of American adults to one degree or another.

So how much exercise does it take to cut your odds of getting diabetes in half? Let’s take a look at the methods from the Da Qing prevention study:

10 minutes of disco vs flesh rotting off your bones: your choice

Note that this was the amount of exercise added to the subjects’ daily routines, not the total amount of daily exercise they were performing. Still, if you can add 10 minutes of disco dancing to your daily routine and massively reduce your chances of getting a disease that can literally cause your flesh to rot off of your bones, maybe you should just rock out instead of waiting for the system to save you.


Conclusions

Go play outside. Eat your veggies. Next time you want a greasy snack, disco dance for 10 minutes instead. It’ll quell your appetite and it’s both more fun and much healthier.

In the meantime, let biotech people like me off our leash so that we can make you better, cheaper medicine. We’re very ready, and Europe is leaving us behind.

Finally, quit with the partisan rage over who pays for your healthcare. That really isn’t the issue here.

Show your support

Clapping shows how much you appreciated Dionysus Powell’s story.