Tag Archives: medicare

Iron Rice Bowls and the Impact of Government Funding

  There was an interesting editorial item in The Economist that unintentionally says a lot about the impact of government intervention on industry. In the last generation, the average number of working hours needed to purchase an automobile, clothing or other … Continue reading

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11 Responses to Iron Rice Bowls and the Impact of Government Funding

  1. craig eastman says:

    We must never let our guard down.

  2. David Basri says:

    While I completely concur with the article with respect to education and housing, healthcare is a different beast entirely. The United States has by far the least efficient healthcare system of any developed country because of a deficiency of government involvement, not an over-abundance of it.

    By depending on a vastly greater level of market-based forces, instead of control, the U.S. has created a monster. This is because healthcare by definition does not work on market principles. When any individual’s health is at stake they do not care what it costs, they just want to be treated. That means the suppliers have total coercive control over the “market”.

    Can anything realistically be called a market when it a) is difficult or impossible to even determine what a product costs before it is purchased; and b) there is not really choice about whether it should be purchased? Do you operate that way in any other aspect of your life?

    U.S. healthcare has evolved to a level of insanity beyond what even a pure market system might produce. The stakeholders: people, providers, insurers, employers, state government and the federal government all have competing interests. The result is that if you are lucky in terms of employment, insurance, income and location, you might get absolutely world class healthcare. If not, you might get none at all. Meanwhile the entire system thrashes against itself creating unbelievable inefficiency and overhead, resulting in costs 3 to 4 times higher than necessary. Small example: our local hospital system has 12 executives making over a million a year.

    ANY other business operating this way would have been bankrupt a very long time ago. Some things should not be market driven. I submit access to roads, clean water and healthcare for starters.

    I would say, “Don’t get me started. . . .” but too late for that.

    • John F. Dini says:

      Well stated, David, although I don’t entirely agree. Correcting healthcare won’t come from further government intervention. The competing special interests you mentioned hold too much sway over Congress. They will never address the twisted incentives that drive the system, where unnecessary work (both direct care and regulatory) makes everyone more money.

  3. Jeff Shapiro says:

    To take the average working hours concept a step further: (1) the average working hours to purchase an automobile has decreased, yet vehicles haven’t remained static — they’re loaded with many more safety, comfort, and entertainment features today than ever before; (2) a student leaves school with about the same amount of basic knowledge today compared to say the ’70s or ’80s and pays considerably more.

    • Jeff Garvens says:

      Don’t forget (3) healthcare: The amount we SPEND on healthcare is up considerably, but the value we receive is up considerably too. I agree healthcare isn’t a normal marketplace, but 40 years ago we did not have the choice to have life saving and life improving MRIs, Cat scans, organ transplants and many prescription drugs. All of those innovations come with a cost.

      As the slice of our income pie needed for basic needs shrinks, the rest of the pie necessarily grows. If not to healthcare, housing and education, then to where? Smaller homes with larger flat screen TV’s?

      • David Basri says:

        My issue is not with MRIs, medical technology, research or even prescription drugs (though that is also an outrageous “market”), or anything else that directly relates to delivering healthcare. I get riled up over the incredibly high overhead, inefficiency and waste. These are the direct result of competing interests and multiple layers of profit motivated entities exploiting a distorted system.

        For example, billions of dollars are spent annually on prescription drug advertising. That is entirely a function of profit motive, not any objective to improve health. If everyone had access to preventive care on a regular basis, decisions about prescription drugs would be made by doctors and patients discussing someone’s health, not a TV or magazine ad.

        Add to that the fact that a significant portion of the population has limited or no access to healthcare, and the overall situation is just plain dumb.

  4. David Basri says:

    Sadly, your response is entirely correct.

  5. Thanks for introducing me to the Iron Rice Bowl concept. You guys in the beltway and Washington DC area, it is time to listen up!

    When will we bring back an objective money standard, i.e., gold or silver?

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Healthcare Reform: Managing What You Measure

The Affordable Care Act (Obamacare) expanded health coverage to millions of people. It did little or nothing to control costs, and is just the tip of the iceberg in improving the quality of care. Think about how you select your … Continue reading

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Health Care Costs: Is Medicine a Market?

There is an excellent article in The New Yorker comparing the production and quality control methods of the Cheesecake Factory to certain advances in “Big Medicine.”  It focuses on the savings available from large health systems through standardization and quantity purchasing. In reality, … Continue reading

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One Response to Health Care Costs: Is Medicine a Market?

  1. Mimi Grant says:

    John, loved your post. Here are a few more issues to factor in: most “customers” (folks who actually pay the bill) don’t see the doctor. Why? Because these customers are typically the employers and governments that are paying the insurance premiums. Only those few truly paying “cash” for services, or those in the “individual market,” where they’re paying their own premiums, are the true customers who have a better idea of the actual cost of healthcare.

    Of course, the government, through the Affordable Care Act, is trying to give more individuals “greater access” to care. This in turn has accelerated another phenomenom: consolidation. As hospitals hire physicians directly, where they can, or indirectly through Foundations, in the states where they can’t, prices are going up – simply because hospital-based services receive a higher reimbursement.

    The other trend we’re seeing is the increase in “direct pay/concierge” physicians. With rates typically starting at $2000/year and going up from there, these doctors “limit their panel” of patients they see, a win-win for the doctor (smaller patient panel for the same or more money) and the patients who can afford this perk (easier access). The only problem is – now that the doctor’s panel has decreased, let’s say, from 3000 to 600 patients – the 2400 Former Patients need to find a new doctor. Play this out, as we hear is happening in Massachusetts, and the unattended consequence of providing for greater access, is greater expense and/or longer waits to see your same (or a new) doctor.

    Clearly we need to “bend the cost trend” to bring down the unsustainably growing high cost of healthcare. But who among the 18% making their living from this 18% of the GDP spent in healthcare (the ultimate “service” business), is going to “volunteer” to cut their compensation? After all, when you have burgeoning demand from the Medicare population (and the 10,000 Boomers a day joining it), and a society – starting with our children – increasingly prone to obesity and all its attendant ills, due to their eating/lack of exercise choices, what “magic bullet” is going to bend this trend?

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Socialized Medicine, or Capitalized Medicine?

In 2000 I was asked by a client to make a single business prediction for the new millennium. It was “By 2011, we will have some form of national health care plan, and small business owners who have been priced … Continue reading

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A New Tax

I dislike taxes as much as anyone. I have a copy of Davey Crockett’s speech “Not Yours To Give” and I think it is true, albeit completely ignored since 1933. But taxes are a fact of life, and some serve … Continue reading

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