Healthcare – the dirty little secret…

by Devin

Probably one of the biggest political topics of our time has to be healthcare. It’s the giant problem that everyone seems to want to solve. No doubt, it is a giant problem, but why is that so? Has it always been that way? If not, then what happened that caused it to be such a problem? In this essay, I’m going to try to illuminate two major factors that no one, anywhere, that I know of, is talking about, which just might answer these questions. But first, I want to emphatically state, right up front, that it has NOT always been such a huge problem. In fact, if you go far back enough, historically, in the United States, it wasn’t really much of a problem at all!

Factor number one: LBJ. Huh? LBJ? What’s LBJ got to do with anything??? Answer: The Great Society. Let’s go back to the late 1950s and early 1960s, the pre-LBJ era, and take a look at how healthcare was administered before it became such a huge mess. In those days, just like in these days, and all the centuries that came before, there were people who needed medical care that were not sufficiently wealthy to pay for the kind of medical care they needed. Nothing new there; however, those people still received the same quality medical care as those who were insured and those who were wealthy enough to not need insurance. How did that happen, you ask?

Well, back in those days, doctors and other medical professionals, including hospitals, were allowed to deduct losses from unpaid accounts from their gross income or revenue for tax purposes, just like any other ordinary business expense. The key to doing this was keeping a good set of books for your practice or business that showed which accounts went unpaid each year. Such accounts were backed up by the evidence of medical records for each patient and each patient was a verifiable real person with a real, verified medical condition. Of course, no doubt there were a few fraudsters out there. When has there ever not been? But by and large, indigent patients who could not pay their bill received the same medical care as everyone else and got a pass. Smart doctors understood that if they took enough indigent patients each year, they could actually end up paying no taxes at all!

Of course, from where the federal government stood, that was an utterly unacceptable situation! What’s this? Doctors are getting rich and paying no taxes!!! That could not stand! Nevermind that these doctors, and don’t forget hospitals and other healthcare professionals, were in fact paying their taxes in a big way in the form of unpaid medical services rendered to the poor of our society. Thus, along came LBJ’s Great Society solution: create a government program to pay for healthcare for the needy and then prohibit medical professionals and hospitals from deducting losses from unpaid accounts. (Eventually tax law was written such that no service-providing businesses could deduct uncollected debts.) From this point forward, medical professionals and hospitals were required to pay tax on all of their income/revenue (minus normal business expenses such as equipment, insurance, staff costs, etc.) and file a claim for payment for services rendered to those qualified and enrolled in the government program.

One of the arguments in favor of this new system was that now, instead of medical professionals and hospitals having to absorb losses from unpaid accounts, they would be in the superior position of being able to collect that revenue, which would otherwise be lost. From a tax accounting standpoint, it is always better to collect payment than to take a deduction, so it sounded good, well, at least, at first. Ask any doctor nowadays how much these government programs, officially known as Medicare and Medicaid, pay compared to their standard rates or even what private insurance companies pay. It’s pennies on the dollar. They would be far better off deducting the losses.

So this is how, pre-LBJ, poor people in America got the medical care they needed. And this is how the federal government stepped in and began the process of destroying what was once a very efficient and simple solution to the problem of getting healthcare to the poor. Ask any doctor over the age of 75 if there was a golden age of medicine and they will all (except those who live in la la land) tell you that indeed there was, once upon a time. They will also tell you that it is long past and they are so thankful to be out of the profession and retired (due to the destruction of the industry by the federal government.)

Of course, once the government puts its fingers in the pie and starts the process of screwing it up, it is never capable of backtracking to the last known good situation. Oh no. It just figures that it needs more tweaking to get it right; thus they (our wonderful politicians) never admit a mistake and repeal anything. Instead, they pass even more legislation trying to fix the problems they created with the first mistake. These “fixes” ultimately lead to even more unexpected consequences, which in turn lead to even more faulty legislation, ad nauseum, ad absurdum. Ladies and Gentlemen, I give you the Affordable Care Act, otherwise affectionately known as Obamacare, a roughly 2,700 page behemoth of a law passed in the wee hours of the night on a weekend over the holidays which no one had read and no one really understood. This law was supposed to lower everyone’s annual healthcare costs by an average of $2,500, so stated by its strongest proponents and President Obama himself.

It was also not supposed to affect anyone who had an insurance policy they liked or had a doctor they liked. I guess we all now know the truth on that one. Furthermore, instead of lowering the average annual healthcare costs, it actually increased them by as much as four to eight times. Go ask anyone who pays for their own health insurance if they got to keep the policy they had and what has happened to their premiums and deductible. Virtually no one experienced a lowering of any kind in the cost of their annual health care expenses.

But lest I go on for too long about Factor number one, let me get on to Factor number two. This one is a little trickier than Factor number one because it involves a moral question and a cultural factor. Factor number two is the result of the technology revolution.

Just 50 years ago we were barely on the cusp of the technology revolution. The standard method of diagnosing medical conditions was clinical. No fancy computer tomography or magnetic resonance imaging machines yet existed to provide highly detailed pictures of soft tissues inside the human body. The best that existed was a simple x-ray machine.

Back in those days, doctors (and that’s what people called them, NOT “health care providers”) had to rely on their training and experience to recognize what was causing an illness based on direct observations and patients’ responses to a series of questions. As is the nature of being human, some doctors were better than others at arriving at the correct diagnosis, but all doctors had to be able to make clinical diagnoses or they would be out of business in pretty short order.

Then along came technology.

New advances in technology gave doctors, for the first time in history, the ability to see inside the human body in great detail. Furthermore, developments in biochemistry resulted in tests that could provide all kinds of information to doctors which had never before been available. And to top it off, pharmaceutical companies began to sink giant amounts of money into developing medicines that could treat, cure, or prevent illnesses in ways that had never previously been imagined. But all these new advances came with a cost. And not a small one.

The rapid introduction of high technology equipment, tests, and medicines into the field of healthcare changed forever the way doctors go about diagnosing illnesses. As these new technologies became more and more available, doctors coming out of medical school and residencies began to rely more and more heavily on tests and equipment to figure out the causes of their patients’ illnesses. Old school doctors who already had clinical diagnostics down found the new technologies to be exciting new tools to add to their abilities, but were primarily useful for confirming what they already knew. Newly minted doctors, who did not yet have the years of experience at making clinical diagnoses began to use the new technologies to help them make a diagnosis. Finally, as the older doctors began to retire, clinical diagnosis was relegated to use only for the most basic and simply identifiable illnesses. The “no brainers.”

There was something else going on in American culture at the same time as the technology revolution that further pushed doctors to rely on tests and equipment to, at a minimum, confirm their own diagnoses, and more often, to make the diagnoses: medical malpractice. As soon as the question, “did you confirm your diagnosis with such-and-such test or machine?” came up in a malpractice trial, that was the end of the doctor’s discretion to decide whether or not a particular test or scan was needed. From that point forward, fear of lawsuits began driving doctors to order every test and scan they could think of that might provide some supporting evidence to confirm or make a diagnosis.

As I mentioned before, these new technologies came with a cost, literally. New tests, machines, and medicines cost millions of dollars to develop and manufacture. Many millions. Without the ability of those companies who develop the technologies to recover their costs, and without the motivation to make a profit, none of these technologies would ever be developed. Period. End of story.

As proof, I offer an examination of countries that do not have free market economies and where profits are taxed out of existence. How many such countries have contributed in any significant way to current medical technology? The answer, if you don’t already know it, is practically, if not entirely, none. And if you travel to any of those countries and are able to receive medical care that involves the use of any modern technologies, guess what? They most likely got them from the United States of America. They didn’t invent them. They bought them.

But I digress. The point of this discussion is to make clear the fact that these new technologies are not cheap. But if you look back through modern history, you will find unlimited examples of new technologies that started out so expensive that only the super-rich could afford them. The first cars and airplanes, for example. Over time, as the companies who develop new technologies begin to recoup their investments, their patents expire, competitors begin making alternatives, and the benefits of economies of scale begin to kick in, the costs of the technologies come down, making them more and more available to more and more people; the not-so-rich.

And herein lies the moral dilemma. People can live without cars and planes (although some people probably think they can’t.) But without some of the new medical technologies now available, some people will die.

That’s right. Some people will die. And, in fact, it happens every day. Not only in the USA, but all over the world. Particularly in third-world countries. This is actually nothing new. For as long as some countries have been more medically advanced than others, people in those lesser advanced countries have simply died. Or, in less extreme circumstances, suffered for the rest of their lives from something curable in a more advanced nation. The advent of high medical technology has, in this area, served primarily to highlight the difference.

But what about people right here in America who are not wealthy enough to take advantage of all these new technologies and thus suffer and/or die as a result? Doesn’t everyone have a right to these new technologies, regardless of their wealth? That is the $64 billion dollar question. It is the very moral question at the heart of today’s medical controversy. As an aside, I find it interesting that many of those arguing that it is our moral duty as a nation to make all these new technologies available to everyone are also people who do not have any moral values of their own! But again, I digress.

So, I have established that throughout history some people have always had access to better medical care than others. It’s undeniable. I have also established that the main difference between now and then is the cost and capability of the old medical technologies versus the new medical technologies. The moral question has not changed. It is simply more directly in the spotlight.

I propose that we ignore the fact that the new technologies cost radically more to develop and manufacture than the old technologies. If we do this, then the answer to the moral dilemma remains unchanged. Those who have the money will pay for the new technologies and over time, the prices of those technologies will eventually come down to the point where all but the poorest can afford them. If we accept this situation, then we can also expect that there will always be newer and more advanced medical technologies on the horizon. If we refuse to accept this situation, then we cannot expect that there will always be newer and more advanced medical technologies under development.

To make it, possibly, maybe, just a little bit easier to accept this situation, one has to understand that if we had never accepted this situation in the past, we’d still be treating fevers with leeches.

So, what about “the poorest?” When do they get to take advantage of the new technologies? The answer to this question is found in our culture. The United States of America is the most charitable nation on planet Earth. Bar none. When natural disasters strike in foreign countries, who comes to the rescue with millions in donations and billions in equipment? The United States of America. That’s who. Do any other countries do the same? Well, a few help out, but none have the capacity or the desire to help to anywhere near the extent of our great nation. So the answer to the question, “what about the poorest?” comes from within. It comes from charity. It does not come from the government. Private charities have the ability to provide financial support at the individual level like no other entity in the world. And they do. As a nation, we should be doing everything possible to promote and facilitate charitable giving. It is the total solution.

Will some people still fall through the cracks? Absolutely. No system is perfect. But as a free democratic nation, where we value both individual rights and rule of the majority, no one can do better.

So is all we have to do to solve the healthcare problems in this country is simply allow medical professionals and hospitals to deduct unpaid accounts from their taxes and its “Problem Solved?” No. I wish it were. But there are many other things we most certainly can do to fix our broken healthcare system. And, naturally, I know what they are! But they will be the subject of another blog on this site, when I have time write it.

Until then, here is to your good health!