How a Disease Develops

Richard D. Lamm in his 1990 booklet 'The brave new world of Health Care' calls the economic health crisis in America with the subtitle 'Health Care as Economic Cancer' (our boldness). As a critic, he stated the most prevailing opinion in 1999, the year this work was published. As an approach to the problem, I believe that his stand is a sign of impotence or worse, despondency. It shows that Mr. Lamm, a former Governor, sees himself as a frustrated politician. I think that, as an outsider, that politicians are quite the opposite of the 'public wisdom' when it comes to handling money. Politicians start from the premise treating a problem starts with throwing money on it. 'Public wisdom' sees the lack of money as a known enemy that should be detoured and avoided. Even the poorest populations, if left alone, deal with scarcity in the best way they can muster. That is why I think that Health Insurance should be left to the public to handle. Politicians, including kings, have fallen to despair in their later days, as is the well known case of King Solomon, who in his golden years was disenchanted with society (Book of Ecclesiastes, compared to the book of Proverbs, which was written when he was younger).

It is almost passively accepted that 41 million Americans can go without health insurance, with many more billions around the world, and of course without proper health care. Today, more than 12 cents of every dollar spent in the United States goes to health care, and the costs continue to rise at more than double the rate of inflation. I am trying to prove that the origin of this crisis not in Medicine as a science, and not in the Economy as a sector, but specifically in medical insurance. The problems I confront may make the readers think pessimistically at the start, but the solutions I offer are optimistic. Not only are they feasible, but they are also close at hand, as the distance between talking and thinking about them. Health insurance has been with us since the beginning of the 20th Century. At the time of its inception, the system intended to cover medical treatment done mostly by doctors personally, including lab tests and surgery. All services were based in small clinics and community hospitals. Doctors were still performing tonsillectomies in private offices in the 50's and 60's, outside the hospitals' operating theaters. Medical treatments were generally less frequent than they are today. The coverage was then adequate, and it was cheaper both at the premium to the individual and relative to the rest of the economy. Among the many causes for increased in medical costs are societal expectations, among the many psychological reasons.

T. V. shows are crowded with 'medical wonders' and technical innovations that take the public imagination hostage, leaving viewers spellbound and in awe. Another very important and objective cause are rising life expectancy and an aging population. Our mean survival age is rising fast, the aged are a larger portion of society, and they consume much more health care services relative to their proportion of society. Another important factor is employers' union labor agreements that promote the expansion of healthcare coverage, with its obvious expenses. General Electric, for example, figured that it had to produce an extra $ 1 billion in 1990 sales simply to cover the expected increases in their healthcare costs. That was in 1990. Today the same principle applies to much smaller companies. That was the main reason for creating Health Maintenance Organizations (HMOs), with the accompanying illusion that they can slow this rapid increase in healthcare costs. In 1999 we witnessed what happened in reality. The HMOs were infected by the fatal virus that killed all other systems of health insurance before them. Another very important factor increasing medical expenses is malpractice insurance, which brought a whole new dimension in litigation, not only against physicians, but against anybody and anything supposed to have produced a real or imagined damage, or just 'suffering'. The appetite comes with the meal. The development of the hospital industry sometimes anticipated demand, especially if somebody else is paying the bill, as in Medicaid and Medicare. To attract Medicaid patients, ‘Medicaid Mills’ were set up in inner cities for outpatient clientele, while hospitals getting most of what Medicare covered. I still didn't mention the practice of ‘recycling’ patients inside hospitals and not even ‘defensive medicine,’ where mostly unnecessary tests and procedures are performed to preempt a future suit. The third party encourages demand solely by existence, and the coverage malpractice insurance provides encourages ‘defensive Medicine,’ which is several digits more expensive than if it were practiced only with common sense. All these factors together spin a vicious circle that accelerates faster than the rate of inflation, and surely faster than the economy as a whole. Technology loves medicine as customer. Where the money goes, development is invited to dinner. As a consequence, we witness the proliferation and sophistication of modem medical technologies, making the (old fashioned) health insurance almost prohibitive. I want to convince you that the crisis arrived because the economy has been unable to develop the tools necessary to cope with these contingencies. When budgets get tied, critics mount in piles, voices raise their volumes and ask for drastic funding cuts.