September 29, 2008
A huge bailout is being planned in Washington to avert a calamity that was brought about, in large measure, by the financial system operating the way financial operators told us it was supposed to function. The money is needed, we are told, to bail out the financiers who assured us -- up until just a couple of weeks ago -- that the system they operated was sound and would need no rescue.
What is the likely spill over to health care from the misbehavior of the financial system's owners, operators, and managers? I'm going to suggest there are likely to be both direct and indirect effects. One of the indirect effects is that we may lose faith in doctors, nurses, and hospitals, or at least come to suspect that the practice of their craft and trade is not aligned with their espoused principles of "doing no harm" and acting in our best interests.
Financially what we have discovered is that the assets of the system are so rotten in so many places, and in so many institutions, that none of the leaders in these institutions trust one another any more. So now they refuse the risk of doing business with each other without the federal government -- you and me, taxpayers -- serving as a backstop and guarantee.
The entire country, excepting perhaps the perpetrators of this massive but preventable mess, is rightly suspicious about the most basic issue: the motives of those in whom we have put our trust to manage finance, the banking system, and the credit markets -- in short, our money. They have steadfastly told us that they were working in our best interests by rationally investing our savings, our 401Ks, and our mortgages, in a financial system that efficiently allocates risk with reward, balancing both in a manner that maximizes the growth and stability of our nation's economy, and therefore our money invested in that economy.
Well, they lied. They weren't protecting us. They weren't helping us invest wisely. They were taking advantage of us, enriching themselves through a myriad of complex premiums, mortgage rate schemes, and derivatives. They told us that markets work best when government interference is the least. But this was self-serving manipulation of our trust. What they were really doing was diverting money ginned up by their schemes into their own pockets.
Any sentient observer of this trickery on such a massive and systematic scale will start to ask questions about who else among our highest paid and most trusted professionals might be lying to us about the well being we place in their hands. Who else, they will ask, is making money off our trust in them? Who else, they will ask, is skimming money off the top of an inflated and ultimately doomed -- because unsustainable -- market for complex services? Where is the next bubble that privatizes profits but socializes risk?
And I think the answer is pretty easy to imagine, and the sector easy to identify. It's the health care system, composed of health plan administrators, doctors, nurses, hospitals, pharmacies, device manufacturers, and so on, pledged to protect us and act in a non-profit (or at least financially fair) manner, to do us no harm, help us prevent illness, and treat us with skill and compassion when we are sick. But it's not happening exactly that way, is it? We trust them to protect and help us, but are they instead using our trust to enrich themselves?
My son, Ian, recently underwent an appendectomy. All went well, and I am grateful to the hospital staff, doctors and nurses who helped him get better quickly. But the bill was over $20,000 even though he spent less than a day in the hospital! He received an expensive MRI although the symptoms and basic tests were absolutely classic, as confirmatory of an appendicitis as I've ever witnessed, and his doctors admitted that the MRI was "probably not necessary." After the fact, he received a bewildering set of bills and explanations that took the good will of several experts in the Health 2.0 community to sort out (I want to thank, especially, Christopher Parks of Change:Healthcare for assisting Ian to make sense of this confusion).
This is perhaps not a very dramatic example of what I am suggesting is a profession and industry losing its moorings and escalating prices to serve the pecuniary interests of its own ranks. However, in a very personal way it has caused me to lose trust in the owners and operators of our health care system that they are acting fairly and that they are matching resources with a realistic appraisal of risk. And I know that there are other Americans who feel the same way and share my worries, perhaps millions of them.
I know that some readers will think that I'm over reaching with my analogy, stretching the fabric of comparison beyond what it can carry. But I would argue that when confidence in a fundamental American institution becomes as shaky as it now is with banks and mortgage lenders, and with the government officials who set fiscal policy and regulations to prevent the kind of meltdown we are now experiencing, it seems reasonable that people will become suspicious and cautious about others.
I'm very worried that there is as much excess and greed in health care as there has been exposed in banking and on Wall Street, and that a collapse and bailout is eventually likely, but that we have not reached the crisis point quite yet. But aren't we getting there? Fifty million people are without health insurance, and at least that many are under insured, while revenues going into the industry continue to increase at double digit rates of increase year after year. Medicare Part A, the portion of the fund that pays for hospital expenses for Medicare beneficiaries, went broke this year.
The net yearly shrinkage in employees receiving health care benefits from their employers is between 2 and 3 per cent, and disposable personal income spent for health care has now, for the first time, exceeded the costs of housing, groceries, and clothing for the average American. How can this go on much longer?
There is enormous anger at Wall Street among our countrymen and countrywomen, in all walks of life. If a bailout of health care is required, I think we'll see the same anger towards doctors, hospitals, and health plans. It may well be deserved if we don't get a grip on things medical.
