The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
Subscribe to the Flinchum File
View Archives

Great Idea . . . Lousy Timing

05/20/2014

I keep thinking about one particular lecture last week.  The speaker began by saying his parents told him that some things should never be discussed in mixed company, i.e., sex, religion, and politics.  Today, he is adding a fourth subject, i.e., healthcare.  That term is now too politicized.

If you say something positive about healthcare, then you are a supporter of Obamacare and therefore an “Obama-lover.”  If you say something negative, then you oppose healthcare for the poor, and you are an “Obama-hater.”  He wanted to emphasize that Obamacare and healthcare are two different things, related but different.

Long before anybody ever heard of President Obama, we faced a crisis in healthcare.  It consumed 12% of our  national income in 1993 but had risen to 17.5% by 2012, which means we had less money for our homes, cars, education, infrastructure and everything else.  “Bending this cost curve” was already declared essential by both sides of the aisle.

It is well-known that doctors must practice “defensive medicine” to protect themselves from predatory lawyers.  This means they test everybody for everything, so the predatory lawyers cannot accuse them of negligence.  The dirty little secret is that doctors started doing the testing themselves, which greatly increased their profit margins.  Doctors made more money when they ordered more tests.

The trendline for the last few years has been for hospitals to buy out the medical practices of doctors and put them on a salary, instead of a “fee-for-service.”  Hospitals are big enough to fend off the predatory lawyers and can also make the employee-doctors justify tests they order.  Hospitals who have done this include the Mayo Clinic and the Cleveland Clinic.  Their charges are as much as 40% cheaper than old-fashioned “fee-for-service” doctors and hospitals.  They are called “Accountable Care Organizations” or ACOs.

Making this transition from a high-cost “fee-for-service” model into an ACO model was already confusing enough.  Then, the President added 30 million people to the staggering system, under the belief that poor people deserved some healthcare as well.  It was a one-two punch — first, we hit the system with a confusing transition and, second, we dump a lot more people into that system.

So, which is better?  Should we have added the poor to our healthcare system years ago?  Or, should we tell them to wait even longer?  

We are a fee-only advisor providing best interest fiduciary services to clients
in Chesapeake, Newport News, Norfolk, Suffolk, Virginia Beach, Williamsburg, and the surrounding areas of Hampton Roads.

CONTACT BAY CAPITAL ADVISORSWe Will Respond Promptly

Contact Us Bottom