- - Friday, June 22, 2012

People generally don’t recognize a bubble until it bursts. In order to sharpen awareness of our current dilemma, let’s compare the housing market around 2007 with health care now.

Prices are rising with no end in sight. New building projects are everywhere: then, McMansions, now, Walgreens, CVS drugstores and new hospital wings. New job opportunities are opening up: then, in real estate flipping and construction, now, in compliance, health information technology and physician extenders. Stocks are a “buy”: then, those related to the construction industry; now, managed-care cartels and pharmaceutical manufacturers. More and more people are drawn in to exercise their “rights”: then, to homeownership; now, to “health care.” Financial managers draw enormous salaries: then, bank executives and now, hospital and managed-care CEOs.

Behind it all are government subsidies, loan guarantees and regulations to end “disparities” in loan approvals or insurance coverage.

Government spending on health care has increased 5,400 percent since 1970, while total government spending has increased 1,890 percent, writes Dr. Andrew Foy in the summer issue of the Journal of American Physicians and Surgeons. With the federal government already borrowing 40 cents of every dollar it spends, continued inflation of the bubble must stop eventually.

With Obamacare, the federal government is trying to offload the financial burden while placing additional huge demands on the system: more people “covered,” but less paid to people who care for patients and more costs shifted to states. The purported “savings,” to the extent that they don’t represent cuts in services, are accounting gimmicks. One-fifth of U.S. households make less total income than their share of national health spending, which is close to $21,000. No matter how we redistribute the burden, we just can’t afford it.

The health care bubble will burst.

Enormous damage was caused by the collapse of the housing market, largely to those who had made imprudent decisions based on the belief that trends would continue forever. While many people suffered, we learned that you can have a roof over your head without a mortgage that could bankrupt you.

In the corrupt and irrational third-party health care payment system that we have, it is likely that 40 percent of the money poured into the system does not buy anything recognizable as a medical good or service. Many of the goods or services that are provided are overpriced or not really necessary.

The government has poured hundreds of millions, probably billions of dollars, into rooting out “waste, fraud and abuse.” Huge fines have been exacted, and some doctors have gone to prison for coding errors, but after decades of audits and prosecutions, the impact on spending is imperceptible. Once the bubble bursts, however, and patients are again responsible for most costs, enormous changes will happen immediately, if we can get the government out of the way.

With no “free” $18,000 scooters available through Medicare, patients who can walk would not be able get one to sell on eBay. Patients who need and value a scooter can buy one online for less than $1,500, less than they probably pay in a year for Medicare Part B and a supplemental policy. If Medicare stopped paying exorbitant monthly rentals for home oxygen equipment, more people would buy their own oxygen concentrator online for less than $500.

Without coverage, couples could save a few thousand dollars to pay in advance for obstetrical services rather than pay $10,000 every year for insurance. There would be fewer drug ads on television. People probably would take less medicine and might have a higher cholesterol level. Would the death rate spike? Not likely.

What would we do without managed-care bureaucrats? If a giant Medicare HMO has a medical-loss ratio of 85 percent, then 15 percent of the $1 billion it may get from the taxpayers - that’s $150 million - could be used to buy care for people who need it instead of to “manage” coverage for people who aren’t sick.

The Lord High Executioner of Titipu in “The Mikado” had a “little list” of people who never would be missed. In health care, there are legions of functionaries who will no longer be needed.

Dr. Jane M. Orient practices internal medicine in Tucson, Ariz., and is executive director of the Association of American Physicians and Surgeons.

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