Health Care in an Era of Institutional Collapse: Repost From 2008

If in New York City education the signposts to the future are easy to see, that is even more the case in health care, where an institutional collapse is slowly grinding on even as health care spending escalates. For the shrinking number of people with access to benefits paid for by others, ever more services of greater or lesser value continue to be provided at greater and greater cost — to someone else — with no end in sight. Meanwhile, a larger and larger number of people – particularly younger and working people — are uninsured and entitled to less and less. The one thing that could head off a retirement crisis caused by rising lifespans, moreover, is a reduction in lifespans due to rising obesity and diabetes and the increasing number of people without access to health care. Average American life expectancy could fall as a result, the way it did in the former Soviet Union after its institutions collapsed, unless the increasingly long lives of those with the good deals are enough to offset the shorter lives of the majority. Moreover, those facing premature death and disability are, by and large, also those without access to retirement benefits other than an oversubscribed Social Security system. So we could have two classes — one that has to go on working though unable, and perhaps dies before qualifying for Medicare and Social Security, and one that is able to work but doesn’t have to, and gets to live on while not working, and consuming lots of publicly-financed health care, for a very long time.

There is, however, a reason to believe that present trends might not continue. None of the candidates for President see this situation — all for some, nothing for others who pay for it, and ever more spending — as acceptable. All promised to put a stop to it. And the leading candidate for President, Barak Obama, is not a member of the generations that have set up a very good deal for themselves and passed the check to those coming after, so he might have a different perspective. Health care, moreover, is a federal issue, and in much of the rest of the country the United States remains a democracy, so it is possible that at some point the national policies that work to the disadvantage of a growing majority will reverse. Congress, however, represents those on the winning side of current arrangements, and takes their donations, so institutional collapse for the majority remains the most likely course, as those with good deals hold onto and expand them no matter what. What might be expected is a repeat of the Medicare prescription drug benefit — more funding for more services for those who already receive a great deal of funding and services — combined with a concession that the next President’s “hands are tied” by the exploding budget deficit with regard to doing anything for anyone else.

Note: of course this was written pre-Obamacare. And for all its flaws, Obamacare has reversed the trend of more and more public spending on health care for fewer and fewer. A trend that, given their opposition to Obamacare and lack of a coherent alternative policy, is the Republican policy – and an example of why I never vote for Republicans at the national level. So while Obamacare might have prevented, or at least postponed, the dystopian future described below, it is enough of a mess, and opposition is sufficient, to make a return to the pre-existing trend possible. So it remains worthy of consideration. Additional post-Obamacare commentary will follow the rest of this original post.

Clearly the U.S. health care industry is not going to disappear. What may be expected is that at some point (perhaps already passed) its cost will have become so great that it just cannot absorb additional resources. Perhaps the trigger will be a massive financial crisis, when those who save (generally outside the United States) are no longer willing to lend more money to the federal government than Americans can afford to pay back. At that point, the only way those currently entitled to whatever additional health care may come along, at whatever cost, can maintain that entitlement is for money to be saved on the less entitled. For some to have all, with someone else footing the bill, more and more have to have less and less.   So what can those not in on the deal, other than high taxes to pay for those who are in on the deal, expect to do for health care twenty years from now?

For education, I suggested that in the future the best option remaining available for middle and working class families might be assisted home schooling – pay taxes for luxury class schools for those who matter, and then teach your own kid at home, perhaps in cooperation with other parents, probably with the assistance of a tutor. For health, the likely result is self-health care, supported by the internet.

Most people, in fact, provide health care to themselves and their loved ones, relying on the health care industry to do testing, provide advice and check on progress. When one is injured or ill, the health care industry diagnoses the problem and recommends a treatment. Subsequent visits check the results and recommend modifications. Today’s young people, lacking access to health insurance (and if unable to afford physicians), are likely to rely on the internet and home testing kits – or perhaps tests administered for a more modest fee in pharmacies – to figure out what is wrong with them. Physicians currently retain a monopoly on the availability of restricted drugs, but as both health care and drugs become more expensive many Americans, like those in poor countries, are likely to rely on bootleg and black market pharmaceuticals. Self care chemotherapy for cancer based on a web-assisted self-diagnosis? For many of tomorrow’s Americans, the alternative might be no care at all.

Where the health care industry does provide direct care is surgery. Here the response to decreasing insurance is likely to be an expansion of the already booming medical tourism industry. According to a recent article in The Economist: “over 45m Americans are uninsured, and many millions more are severely underinsured. Such people may find it cheaper to fly abroad and pay for an operation out of their own pockets than to find the money for deductibles or ‘co-payments’ charged for the same procedure at home. Arnold Milstein of Mercer, a consultancy, calls them America’s ‘medical refugees.’”   In addition to foreign surgery, we may have home surgery, and home childbirth by assisted practitioners who are paid in cash and do not give their names to avoid getting sued.

So while some Americans receive the finest and most advanced high-tech care at here in the U.S., health care that the world’s wealthy travel here to receive, other Americans will either have to travel to poor countries or go on an unregulated black market to receive run of the mill health care, paying out of their own pocket. Obviously, I recommend that young people do all they can to remain healthy as long as possible, as they are unlikely to be able to obtain the care older generations take for granted.

And what about the unhealthy, those with serious debilitating or deadly congenital or acquired conditions? Self-help via the internet, home test kits, bootleg drugs, and trips to Thailand for a surgery or two are unlikely to meet even their most basic needs. The life expectancy and quality of life of people with many conditions has improved in recent decades. For non-wealthy people on the outside of the formal government subsidized health care finance system, that trend may reverse.

I do not predict this nightmare will occur because taxes fall and less public money is spent on health care. Indeed, those without any government health insurance or subsidies will probably have to pay increased taxes for past (financed by debt) and future benefits for those with extensive and increasing health insurance or subsidies. This prediction is based on an extrapolation of current trends forward. America’s institutions are being hollowed out from the inside by self-dealing and excess privilege. Health care will be no exception.

Update: Ever since Obamacare was enacted, the Republicans have been riding a backlash by those who benefitted from the pre-existing trend of more and more public health care spending to benefit fewer and fewer.

Generation Greed seniors who want ever more Medicare spending on themselves, but also Medicare and Social Security cuts for the generations to follow, to pay back their national debts. That is, the Tea Party.

Affluent workers who already had health insurance, health insurance with an unlimited government subsidy via the exclusion of employer provided health insurance from taxable income, and do not want to pay more for others to receive government funding for health care as well.

Those who were free riding by choosing to be uninsured, expecting to just go on Medicaid if they ever got sick (since they didn’t have any assets to lose anyway).

Just about the only special interest that switched sides from Hillarycare to Obamacare was the health care and health insurance industries themselves, and that is only because Obamacare did not directly challenge their interests (although health care inflation has fallen since its enactment).

What is perhaps more troubling than the “party of no” opposition by the Republicans is the failure of Democrats to defend their own law. That is because the Democrats themselves are primarily a party of special interests, and among the biggest beneficiaries of the pre-Obamacare trend were unionized public employees.

Like Generation Greed seniors, they got untaxed, unlimited, publicly-funded health insurance whose costs were soaring even as nothing was done for the uninsured. The public employee unions fought Obamacare, and are now looking for its repeal. Particularly the repeal of the cap on the tax break for employer provided health insurance, a “Robin Hood” tax intended to stop the stampeding increase in public health insurance costs while doing something for the uninsured.

Obamacare is a mess, in fact, because many needed reforms were hidden rather than discussed and debated, due to fear of interest group power.

The U.S. needs to slow health care inflation, but Obamacare provisions that do so operate inefficiently by stealth.

The U.S. needs to separate place of employment from health insurance to increase the flexibility of the economy and provide options for workers, but Obama claimed to be shocked when employers started giving workers money to buy insurance on the exchanges rather than keeping them tied up with employer-linked employer-chosen policies.

Group health insurance provides an incentive for insurance companies (and employers paying for health insurance) to try to keep the sick, and those who were more likely to become sick, out of their group. I suggested dropping it, and going with individual underwriting with the government directly covering the greater health care needs of some with subsidies. Here again Obamacare operates by stealth, taxing insurance companies with fewer sickly customers and transferring money to those with more.

The price of stealth is inequity and inefficiency, but the federal Democrats seemed to believe it is a political necessity.

In an interview with The Economist, President Obama admitted Obamacare’s flaws. If the Republicans were not so intransient, so manipulative, so determined to screw things up for ordinary Americans in order to come out ahead, additional reforms could move the health care system forward, he claimed. As it is, however, going backward seems a more likely result, particular with Generation Greed still in charge.

Ah well, I had predicted that instead of Medicare younger generations would be lucky to get medical marijuana followed by legal assisted suicide. And at least there has been some progress on that front, progress that is less likely to be reversed. Perhaps in a couple of decades, if some other type of cancer becomes a more pressing problem than lung cancer, I’ll become a stoner myself, and find out what I missed out on by being a nerd and a square when growing up back in the 1970s. But younger generations will not be permitted to just grow their own pot to ease their symptoms as they head for their premature deaths. Nope, they’ll have to buy it from someone with a heavy tax added to the price, to pay off Generation Greed’s debts.