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unspinning healthcare reform and exposing the US healthcare oligarchy

By Morose Perish
2/19/2010
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Editors note: An oligarchy (Greek Ὀλιγαρχία, Oligarkhía) (oligocracy) is a form of government in which power effectively rests with a small elite segment of society.

Healthcare in America today is delivered by an exclusive club. This exclusive club consists of providers, hospitals, insurers and big pharma. Big pharma funds the FDA which acts as a wholly owned subsidiary.

Over 3,300 lobbyists have descended on Washington to to throw money at politicians for votes specifically on “healthcare reform”, thus ensuring the interests and profits of the healthcare oligarchy are upheld.

Over the past 40 years, the cost of healthcare in America has risen at an annual rate of approximately 12 percent. This is the root of the healthcare crisis in America. $100 dollars spent on healthcare 40 years ago increasing at an annual rate of 12 percent costs $9,300 dollars today. During this same 40 year period, $100 dollars in average income has increased to about $220.

The simple fact is that the cost of healthcare has risen at a greatly exaggerated rate relative to the cost of everything else. The rate of increase has been so dramatic relative to income that the costs are now an impossible burden on society.

Two thirds of all personal bankruptcies in America today are due to illness requiring major medical treatment. 78% of those people had medical insurance.

Over the past several decades, Americans have been paying more, getting less, and the enormous profits generated by Americans paying more and getting less have lined the pockets of but a few. Furthermore, there is an economic incentive to overtreat by prescribing unnecessary drugs, ordering expensive tests, and undergoing ineffective treatments. This has the effect of increasing patient costs and unnecessarily increasing risks to patients from side effects of drugs, tests and procedures that were ordered not out of necessity, but out of greed from our elitist providers. Enormously profitable cholesterol lowering drugs have been pushed upon the population by big pharma for decades under the auspices of preventative treatment. Now decades later, we find that not only are the drugs ineffective, they substantially increase the risk of death and disease from other causes. This is not medicine. It’s legalized drug pushing to maximize corporate profits at the expense of their trusting victims. A tragic error? Statistically improbable when we look at the volume of so called preventative drugs pushed on the population in the past several decades which were later pulled from the market because they killed or injured healthy people.

In my city, the CEO of the hospital drives a Rolls Royce. We recently saw an orthopedic specialist to give an opinion by reading an xray. We gave him the CD, he loaded it into his computer, and he spent a total of 10 minutes with us. The cost? $600. That’s $3,600 an hour for giving opinions.  The point is that the healthcare system in America as it stands today is enriching a few at the expense of the many, and at the expense of the sick.  This is not healthcare, it’s racketeering and profiteering from illness and injury. Capitalism? No. Powerful special interest cartels, yes. The only thing that has been capitalized on is the inherent willingness of sick people and their families to spend everything they have and go into debt to save themselves. The healthcare system in America today has many, if not all of the attributes of organized crime.

Furthermore, when analyzed on a price performance basis, although the costs have skyrocketed relative to everything else, the average life expectancy of Americans has gone down, and quality of life studies show that Americans are less healthy overall today and on a declining trend. The system has become impossibly unaffordable, and at the same time delivered a lower quality product as measured by longevity and quality of life. The system, collectively, as a whole, has become a wealth confiscation mechanism, siphoning off the wealth of the citizens and depositing it with a small group of elitist oligarchs.

In recent years, we have seen the development of a phenomenon called “medical tourism” where the costs of treatment in foreign countries is so much lower relative to the US, that US citizens are traveling to places such as India, staying in a five star hotel, receiving first rate treatment for major medical procedures, and then returning to the US still for far less than the cost of the medical treatment or procedure here in the US.  How is this possible?

Clearly something is systemically wrong with the US healthcare system.

Today one in ten of the adult population in America have diabetes and take on the average six different expensive drugs as a result. One in 100 children have autism. Studies have shown that the highest cause of death in America is being admitted to the healthcare system. The list goes on and on but plotted as price vs performance, it can be easily argued that Americans are paying more and getting less, that the system is not competitive, and it is siphoning off the wealth of the citizens at an unsustainable rate.

Why?

To answer that question, we need to ask the question, what mechanism is in place to contain healthcare costs balanced against the demand side of people willing to pay whatever they have to pay to save, cure or treat themselves.

In a free market, with competition, one would expect healthcare costs to rise only at the baseline rate of inflation. Healthcare however is not a free market. There are 4 distinct groups, each having enormous lobbies in Washington, and there is effectively no competition because barriers to entry have been erected.

  • providers (represented by the AMA and ADA)
  • big pharma (funded and represented by the FDA, lobbied by Hill & Knowlton and tens of other powerful lobbying firms)
  • medical insurers (represented by “America’s Health Insurance Plans” and other lobbies)
  • hospitals (represented by “American Hospital Association reps” “the Federation of American Hospitals” and others)

In other words, this is not a free market. There are 4 distinct cartels, each with powerful lobbies, and competition outside of those four groups is effectively banned.

Given a monopolistic supply curve and an inelastic demand curve, the cartel can effectively charge whatever price they want without reducing demand. They can charge up to the point where the society is unable to pay. This system has reached that point and then some.

As a result of this, any sort of “reform” can be guaranteed one thing. Each of these 4 lobbies will pay money to lawmakers to ensure their interests are upheld. Interestingly, those interests all involve maximizing their own profitability. If the providers, big pharma, insurers, and treatment centers are all maximizing their profitability, the flip side of that is that they are delivering decreased price performance…ie a higher cost and lower quality care. Their maximizing of profits ensures a declining standard of care and ever increasing costs. Interestingly, this lines up exactly with what can be documented using the historical data.

Where does that leave us?

It leaves us with a broken healthcare system. It is a broken system because the system itself after 40 years of annual double digit cost increases now collectively requires more money than is available to feed it.

It is not going to be fixed because of corruption. The lobbies will ensure that every vote on any kind of reform is paid for in advance. In come cases, the lobbies are even writing the reform and the lawmakers are just rubber stamping it without even reading it. It doesn’t matter because it’s all been purchased. The votes have been purchased and the wording in the reform has been purchased. The corporate media is running interference by trying to paint it as a left vs right political issue. It isn’t. It’s the criminal corruption of an entire industry who effectively bribes Washington to get what they want.

So what about the future of healthcare in America?

In an introspective look, I wrote that the only thing you can be sure of regarding healthcare reform is that you will pay more and get less. The lobbies will ensure that as they endeavor to maximize their profitability. One would expect to see the total size of the four groups decrease, but for prices to continue to rise. It will be a dysfunctional system with shortages of care, high prices, and a good percentage of the people going bankrupt as an unfortunate result of getting sick and entering into it.

Edit:Add Footnotes

Life Expectancy Declines for American Women
By Larry West
Life expectancy for American women is declining for the first time since the Spanish influenza epidemic in 1918, according to study [pdf] published today [April 22, 2008] by the Harvard School of Public Health and reported in the Washington Post.
Address

Life Expectancy Worsening or Stagnating for Large Segment of the U.S. Population
Monday, April 21, 2008
Boston, MA — Researchers at the Harvard School of Public Health (HSPH) and the University of Washington found that 4% of the male population and 19% of the female population experienced either decline or stagnation in mortality beginning in the 1980s.
Address

Anemia drug doubles stroke risk, study finds
Marilynn Marchione, Associated Press
Saturday, October 31, 2009
A new study raises fresh safety concerns about widely used anemia medicines, finding that the drug Aranesp nearly doubled the risk of stroke in people with diabetes and chronic kidney problems who are not yet sick enough to need dialysis.
Address

Cholesterol-lowering drugs increase risk of diabetes, study finds
17 February 2010
By Lyndsay Moss
USING drugs to lower cholesterol increases the risk of developing Type 2 diabetes, research in Scotland suggests. An analysis of 13 studies involving the drugs, known as statins, found that they increased the chances of someone developing diabetes by 9 per cent.
Address

Child cases of diabetes set to double, says study
Number of under-fives with type 1 diabetes will be twice figure it was four years ago by 2020
Alexandra Topping
UK Guardian
Thursday 28 May 2009
The number of cases of insulin-dependent diabetes among children under five is expected to double in the next 11 years, according to experts. If present trends continue, by 2020 the number of children with type 1 diabetes will be twice the number it was four years ago.
Address

U.S. diabetes rate doubles in 10 years
By CDC
Oct 31, 2008
Address

Dozens of Pfizer and Merck Research Studies Faked
In the largest research fraud in medical history, Dr. Scott Reuben, a former member of pharmaceutical giant Pfizer’s speakers’ bureau, is pleading guilty to faking dozens of research studies published in medical journals.
Address

Senate Turns Down Drug  Reimportation
Mark Crane
December 15, 2009 — The US Senate today turned down a bipartisan amendment to allow the purchase and importation of prescription drugs from other countries.
Address


Widely-used diabetes drugs can cause heart disease and death, warn experts

A diabetes drug used by tens of thousands of Britons increases the risk of heart disease and death, according to a new report.
Address

Medical problems were behind two-thirds of personal bankruptcies in 2007. And that was before the economic crisis.
By Andrew Leonard
Friday, Jun 5, 2009
Salon
Americans filed for bankruptcy at a rate of 6,020 per day in May, reports Credit Slip’s Bob Lawless. That’s the first time the 6,000-per-day mark has been broken since the passing of the 2005 bankruptcy law, which made it hard for Americans to seek relief from their debts. In related bankruptcy news, the results of a study to be published in the August issue of the American Journal of Medicine show that “medical problems contributed to nearly two-thirds (62.1 percent) of all bankruptcies in 2007.” More strikingly — “between 2001 and 2007, the proportion of all bankruptcies attributable to medical problems rose by 49.6 percent.” (Found via Mark Thoma. The authors of the study cite their findings as yet more evidence that the healthcare system in the United States is broken.
Address

78 Percent Of Bankruptcy Filers Burdened By Healthcare Expenses Had Health Insurance
In an update to their landmark 2001 study on medical bankruptcy, researchers at Harvard University have concluded that medical debt contributed to 62 percent of U.S. personal bankruptcies in 2007 — 78 percent of bankruptcy filers burdened by healthcare expenses had health insurance but “still were overwhelmed by their medical debt“:
Address

Six Lobbyists Per Lawmaker Work on Health Overhaul
By Jonathan D. Salant and Lizzie O’Leary
Aug. 14 (Bloomberg) — If there is any doubt that President Barack Obama’s plan to overhaul U.S. health care is the hottest topic in Congress, just ask the 3,300 lobbyists who have lined up to work on the issue. That’s six lobbyists for each of the 535 members of the House and Senate, according to Senate records, and three times the number of people registered to lobby on defense. More than 1,500 organizations have health-care lobbyists, and about three more are signing up each day. Every one of the 10 biggest lobbying firms by revenue is involved in an effort that could affect 17 percent of the U.S. economy. These groups spent $263.4 million on lobbying during the first six months of 2009, according to the Center for Responsive Politics, a Washington-based research group, more than any other industry. They spent $241.4 million during the same period of 2008. Drugmakers alone spent $134.5 million, 64 percent more than the next biggest spenders, oil and gas companies.
Address

Modern Health Care System is the Leading Cause of Death
Doctors are in fact the LEADING cause of death in this country. Not heart disease, not cancer–doctors. In all fairness, doctors themselves are not to blame for all of this. The entire modern health care system, however, is to blame for allowing, even promoting, so many unnecessary procedures, drugs and mishaps.
Address

How Big Pharma is Infiltrating Your Child’s School
by Steve Gaylord
F ebruary 25, 2010
This subject is definitely alarming…
School Based Health Centers: How Big Pharma Is Infiltrating Your Child’s School
Address

Despite outcry, Anthem Blue Cross to go ahead with big rate hike
By Michael B. Farrell
San Francisco – Anthem Blue Cross, the health insurer that plans to boost rates by as much as 39 percent in California this year, has become a lightning rod in the national debate over healthcare reform
Address
Statins: The side effects ‘are worse than feared’
By Jenny Hope
Last updated at 10:02 AM on 21st May 2010
The side effects of statins can be far worse than previously thought, a study suggests. For the first time, the level of harm posed by the cholesterol-lowering drugs has been quantified by researchers. They found some users are much more likely to suffer liver dysfunction, acute kidney failure, cataracts and muscle damage known as myopathy. For some patients, the risk is eight times higher than among those not taking statins. Overall, the risk of myopathy – which may be irreversible – is six  times higher for men on statins and three times higher for women.
Address

Tags: Healthcare,  Health Care, medical insurance, unaffordable, lobbyist, lobbying, reform, oligarchy, bankruptcy, illness, major medical, medical tourism, failure

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  1. Haold Hollister
    February 22, 2010 at 10:05 pm

    Hi,
    Thanks for putting it down on paper. I have a question. What are *we* going to do, or what are we doing about it? If your answer is nothing, how can all of America have their hands tied like this.
    You present this information to us and when we are finished we say Oh hum, next. Why is no one upset enough to organize something and put health care in the hands of people who can use it and not in the hands of corporations who would rather milk the system?
    Congressmen and Senators do the bidding of the lobbyists. It’s all about money. Is there any other section of the United States that allows lobbyists to openly bribe it with out committing a crime?

    Harold

    Harold

  2. Frank
    February 23, 2010 at 4:11 am

    I think it’s pretty obvious that the costs can’t just keep rising forever relative to incomes. Sooner or later there has to be a breaking point. It’s interesting to think about the idea that we have reached the point where the whole thing is consuming too large a portion of income to be sustained.

    I wonder if anyone has looked at what it is that is different in a place like India that keeps the costs reasonable?

  3. February 23, 2010 at 3:39 pm

    This article underwent a major revision today with added facts, figures and supporting footnotes. Thank you for your interest.

  4. Kim
    March 1, 2010 at 4:37 pm

    Ugh; this whole situation is beyond messed up and is never going to get fixed.

  5. Ron
    April 15, 2010 at 12:44 pm

    Since you wrote this before the legislation passed, and since the legislation came out basically the way you predicted, I’m going to say you had it all nailed. Simple analysis but it’s sad this is the case with greed and money trumping everything else.

  6. September 18, 2011 at 4:01 am

    Excellent content! I will be back to follow your posts. Thanks for sharing this information! Scott

  1. February 19, 2010 at 6:18 pm
  2. February 20, 2010 at 6:03 am
  3. February 22, 2010 at 4:25 pm
  4. February 27, 2010 at 10:20 am

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