A cunning plan to fix US healthcare Pt 1

Emad Mostaque
Jul 24, 2017 · 2 min read
No job is too big etc etc I watch too much kids TV

In my job as an emerging markets investor I often see examples of waste, corruption and outright greed.

Few of these examples compare to the boondoggle that is the US healthcare system, with spending rapidly approaching 20% of GDP, around double that of other developed countries.

The current bill winding its way through the legislature to abolish “Obamacare” and replace it with “Trumpcare” is patently a tax redistribution to the rich, but even if it did provide a better insurance system it still doesn’t solve the core issue.

The bill is too damn high.

Any sustainable solution has to focus on the cost.

So here is a potential solution:

  1. Fix maximum costs for medical treatment or supplies at the price Medicaid pays, which is negotiated to guarantee a profit whether insured or not.
  2. Standardise all medical procedure and supply codes and have a government digital platform with full price transparency that could dynamically check all bills for patients and punish gouging.
  3. Where US prices exceed OECD prices by a set amount (say 30%) for a chemically equivalent compound, importation is allowed from the competitor and/or the producer must cap the difference if it is their product that costs more (eg Epipens)

These three steps would collapse prices in the US back towards the developed market average and likely gut medical administration.

This would allow individuals to pay out of pocket for most day to day measures and have insurance for what it should really be used for, emergencies.

It also wouldn’t need major new laws, but slight amendments and actual enforcement of existing antitrust laws.

The negative side of this is that it would hit the secondary medical industry, ie administration, hard.

This is particularly important as US healthcare has made up over half of all incremental US service jobs in the last decade, although this job driver is pretty much at an end already..

To drive down cost even more, something needs to be done about the US obesity epidemic: according to this paper the US has 6% of the world’s population, but 34% of the biomass.

But that is a problem for another day.

Thoughts, as always, appreciated.

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