(courtesy of

Why We’re Doomed

This is the reason I’m giving up folks:

A new Rasmussen Reports national telephone and online survey finds that 88% of Likely U.S. Voters say it’s important for Congress and the president to have some sort of replacement program in place if they repeal Obamacare, with 69% who say it’s Very Important. Eleven percent (11%) don’t think it’s important for them to have a replacement plan ready, but that includes just three percent (3%) who say it’s Not At All Important. (To see survey question wording, click here.)

Let me start from the beginning when it comes to insurance of any sort.

The cost of insurance is determined by the following arithmetic formula:

$ = p(event) * cost(event) + profit(insurance company)

This is not my opinion it is a mathematical fact.

Those who deny mathematics are idiots, frauds, thieves or all three at once.

Now let’s ask a question: If you have just totaled your car what is the price of collision insurance on your car?

p(event) is 1.0 (probability of a collision) since the wreck already happened.

Therefore the price of said insurance will be the cost to replace your (now-totaled) vehicle plus a profit for the insurance company (without which it will not stay in business.)

In other words it is always cheaper in that instance for you to just go buy another car because you are paying the insurance company a profit for no reason at all.

It is usually not all that hard to figure out what the cost of an event is; given enough of a data set it’s actually quite easy since an insurance company cares only about the average cost of the event across all of those people it insures of like sort and with like limits. The hard part is the p(event) piece, and if you get that wrong as an insurance company in the wrong direction you will go bankrupt fast. For this reason insurance companies pay actuaries quite a lot of money to get as close to the true value of p(event) as is humanly (and, with all the computers we have now, analytically and computationally) possible.

For this reason those who argue for “health insurance” for pre-existing conditions are either ignorant or worse, they are actual thieves who deserve to all be thrown in prison because what they are demanding is the ability to steal from everyone else.

That sounds harsh, and it is.

It’s also absolutely true and if you actually adovcate and try to get enacted into law anything that forces such a paradigm on the public then you are personally a liar, a fraud and you deserve to go to prison as well for the crime of being an accessory both before and after the fact to their theft.

There is only one way that such a person, arguing for such a thing, can have a position that makes any sense at all.

He or she must argue for rationality in the cost of the treatment of such a condition.

Further, if such is achieved then “insurance” that covers same would be stupid since you then would simply be paying more for the treatment of said condition with the involvement of said insurance company than if you just paid for it yourself.

We have the mess we are in today in health care because the American public believes in and demands the mathematically impossible and nobody in the political class is willing to stand up and tell them that what they’re demanding is impossible and, if they don’t stop, our national economy, markets and all asset classes including all government support and assistance of any sort will be ruined.

Roughly one dollar in five spent today in the United States goes toward health care. This is double what other developed, industrial nations spend and virtually all of them have socialist health care systems. Capitalism always beats socialism because capitalism adds the motive to undercut your competitor(s) on price along with developing new means of efficiency that lower your cost, allowing you to earn the same margin while charging less money. It is this motivation that has led to $200 TVs that weight 25% as much, use a fifth of the energy and have four times the resolution of a TV set 20 years ago that cost $800. It is this motivation that has led to the development of $35 computers the size of a pack of cigarettes that are 200 times faster and have more than 1,000 times the memory of a $2,500 computer sold in the 1980s. It is this motivation that has led to the development of $50 cellphones you can hold in your hand, have a $30/month “all you can talk” bill and run a week on a charge with 30 minutes of talking a day. The same capability used to require a device the size of a small briefcase that cost $1,000, it weighed 20 pounds, had a battery that was good for an hour of talk time and cost $2/minute to send or receive a call.

I personally have owned all of the predecessor devices I mention in the above paragraph, and many of you have as well. Medical care and technology should follow the same cost:benefit curve but it has not. The reason is not because it is different than anything else.

It has not because the companies in the business of providing that care have colluded, they have fixed prices and they have otherwise employed tactics that have driven up the cost of care by a factor of six in terms of the percentage of our economy devoted to same while our actual health in objective terms lags our western peers over the last 40 years instead of that cost plummeting while quality and results skyrocket just as occurred in every other technologically-focused endeavor.

To those who say that Health Care providers “aren’t” engaging in acts that are rank and outrageous violations of 15 United States Code (Sherman, Clayton and Robinson-Patman, respectively) let’s take health care and transplant it into the sale of, oh, cars and see if you still agree with your position.

Let’s assume that a car dealer decides to sell poor people a Frobozz Max (we’ll use a made-up make and model) for $3,000. He decides to charge rich people $50,000 for the same vehicle. He posts the $50,000 price as his “chargemaster” price for the car, but some people will get it for a lot less. To figure out exactly how much you will pay you must tell him what sort of insurance you have and you must also sign a piece of paper allowing him to bill you anything up to and including the $50,000 before you can have the vehicle — you’ll find out how much it is only after you leave the lot. The “middle class” guy will probably, provided he has the “right” insurance, pay somewhere around $8,000 for that car. But, if he doesn’t, he might get swatted for the entire $50k.

It would be very easy to sell that “model” of car sales to more than half the country — everyone upper middle class and below — wouldn’t it? It would be very easy to get elected running on that platform, right? Here’s a middle-class guy who is going to pay $8,000 for $24,000 worth of car! That’s a hell of a deal and only the “rich” will get soaked — they can afford it, right? That’s exactly the model you have been sold and voted for and then once it was in place the medical industry ramped up the price so that instead of $8,000 you’re paying $20,000 and the so-called “market” price is $300k instead of $50k — but you’re still getting “a deal” even as they expanded the “base price” by a factor of six!

But are you really getting a deal as “Joe Average”?

Think for a moment about how long this dealer will stay in business unless he colludes with all the other dealers — or gets the government to force you to work with this model of car sales and force you to buy said insurance. Unless he does one of those two things someone will open up a car lot next door and sell a comparable vehicle for $25,000!

If both dealers cost of the car is actually $24,000 the first dealer with his differential pricing scheme and ramped-up cost model at six times what it should be will immediately go bankrupt. Everyone who would be charged more than $25,000 will go to the second dealer and buy his or her car there, paying less. The only people left at the original dealer’s lot will be those who are getting the “poor person’s price” which is below his cost.

If he can’t make someone else pay the difference for all those “poor people” then he will be out of business in a day.

This is true for any line of work — including medicine. That such a billing system exists — where different people are charged different amounts for the same thing not based on the quantity of their purchase (everyone who needs a given procedure only needs one, right? Likewise anyone who needs a month’s supply of a given drug) but rather based on what sort of “insurance” they have or how rich they are is proof beyond any doubt of collusion, restraint of trade and anti-competitive activity.

It is impossible for such a system to survive for a single day without such acts of illegal collusion or the use of force for the simple reason that if just one non-colluding entity in the market offers the same good or service but doesn’t do that sort of thing then everyone who is being forced to pay above cost to subsidize those getting below cost will do business with the non-colluding entity and the party trying to use such a billing model will instantly go bankrupt.

Now let me remind you that all of these acts are against the law. They are not just civilly against the law — in many cases they’re felonies and carry prison sentences.

If you enforce the law then the cost of health care, all-in, will drop by approximately 85% and that assumes no technological innovations have occurred in the interim 30+ years that would make it even cheaper! Of course such innovations have occurred — in medicine as elsewhere.

Let me give you one simple example of this outrageous behavior that is trumpeted in public statements and even advertisements on TV and elsewhere: So-called “patient assistance programs” from drug companies. Robinson-Patman (federal anti-trust law) says the following:

It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered

It does not say “it’s ok to discriminate for someone in pricing if they’re poor.” It does not say “you may soak the rich.” It does not say “you can charge $5/gallon for gasoline to someone who has a lot of money, and $1 to someone who does not.”

Note that the law does say you can offer a quantity discount, provided that the discount rationally relates to the difference in cost of delivery of X .vs. X+Y. So if I buy 1,000 of a given thing in a package you can charge me less per item than if I buy 10 of the same thing if the difference in price rationally reflects the difference in packaging and distribution costs. This is why if I buy 5lbs of coffee from a particular supplier I can be charged $8.50/lb (for green coffee) and if I buy 10-25 lbs the price is $7.95/lb, and so on.

But you cannot charge customer X who needs 30 pills a month $20 and customer Y who also needs 30 pills a month $500 based on their income or the insurance they choose to buy (or not.)

Doing so is black-letter illegal.

For those who say that “insurance companies can do this” no they cannot. That went up before the United States Supreme Court in 1979 when insurance companies tried to claim that under Mccarran-Ferguson (which allows limited anti-trust immunity to insurance firms — and is the reason they can have and use things such as the CLUE database in their underwriting) a differential-pricing scheme was exempt from anti-trust law and they lost.

There is only one way to prevent the escalation of cost in the federal budget related to Medicare and Medicaid, not to mention the outrageous pricing decisions such as charging $2,000 for a course of treatment of a drug in one country and $80,000 here in the United States — and that is to enforce the law and break all of these monopolies.

Every medical provider of any good or service, whether it be a doctor’s visit, a drug, a procedure, a device or anything else must be required to have one price that is charged to every person equally, irrespective of how they pay or what sort of insurance (if any) they carry and irrespective of where such a product or service is sold, absent a reasonable difference related to the cost of delivery or manufacture in a given locale. Such prices for each and every service, procedure, drug, device or anything else must be published and maintained where the public can verify that each person who receives like kind and quantity of same is charged the same price exactly as the local gas station is required to post a price and charge the same to each person who wishes to buy gas.

Any entity that colludes with any other to fix prices must be indicted, prosecuted and imprisoned in accordance with 100+ year old law found in 15 United States Code.

The customer, that is the person seeking care, is then free to compare price and quality of service, along with whatever their “insurance” will cover (if any of it) and decide which facility to utilize. State anti-gouging statutes must be fully enforced for those instances where someone is unable to decide (e.g. they just got in a car wreck and are unconscious, they are having a heart attack, etc) while various EMS and other services that are caught “steering” people in such circumstances to higher-cost treatment options must be criminally and civilly charged.

Drugs are slightly more-difficult. Unlike the other components of anti-trust law (which explicitly include international commerce) Robinson-Patman could be construed to not apply across national borders. However, should drug companies wish to continue the practice of differential pricing in different nations they remain exposed under the other elements of Sherman and Clayton until Congress repeals the reimportation ban or extends Robinson-Patman by adding “international” to “interstate”, never mind existing case law where book publishers tried to prevent the resale of books bought overseas in the United States (and lost in the USSC.)

It will take about one day if these changes are adopted for the cost of medical care to collapse to a tiny fraction of what it is now. With that collapse it will be unnecessary and undesirable for you to buy “insurance” against already-existing conditions because it will be cheaper for you to simply pay in cash. For nearly everything you will be able to pay.

For those possible catastrophic situations that haven’t happened yet you will be able to buy reasonably-inexpensive insurance because the product of p(event) + cost(event) + profit will be small enough that the premiums will be affordable to virtually everyone, even those of very modest means.

Finally, for the truly indigent we can certainly keep Medicaid and, since this cost reduction will occur across the board we can also keep the promises made for Medicare both for today’s Seniors and tomorrow’s. The cost of those programs will fall like a stone — a more than 50% immediate reduction is assured, and instead of going up in cost every year as technology and productivity improvement will no longer be able to be stolen by said medical providers (since the price is the price for everyone including those in Medicare and Medicaid!) the cost of these programs will go down every year instead.

This is the only way out folks and it’s one we must take now. It cannot wait, it cannot be done tomorrow, we cannot “repeal and replace” with yet another scheme to try to keep the ponzi-based fraud and felony-laced medical system we have in the United States afloat.

If we do not do this now then the federal budget and all state budgets will collapse within the next 5 years.

Attempts to “negotiate” out of this may be able to buy another couple of years of time, but will not change the outcome. That’s the math, like it or not, and we have repeatedly squandered the opportunity to address the issue when it would have been far less disruptive (in terms of the short-term economic recession that will occur) all the way back to the passing of EMTALA in 1986.

We either do this now, and we demand as citizens that it happen without exception and backed by whatever action(s) are both necessary and possible to enforce that demand with both Donald Trump and Congress, up to and including a full general strike called across the nation, or we lose the financial stability of our federal government, our state governments and our way of life in America.

We are doomed to collapse as a nation because the fact is that you won’t do it, your neighbor won’t do it and as a result Trump won’t do it and Congress definitely won’t get behind him in doing it either because the medical and pharma lobbies will be completely destroyed if it happens and they know it.

Yet there is literally no other issue that matters to any material degree if we don’t take care of this one — right here, right now.



Author: Michael Miceli

Political, satirical writer on daily events in and outside the political arena. Also, commentator on quirky acts in society.

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