Spoiler alert. This post:

  1. Quotes Peter Suderman
  2. Who is selling snake oil
  3. And who contradicts his own premises.Related image

Here are excerpts from his article:

Health Care Spending Is Out of Control
Health insurance doesn’t just protect people from financial ruin. It insulates them from individual decisions about price and service quality.
PETER SUDERMAN | FROM THE AUGUST/SEPTEMBER 2019 ISSUE of REASON

Health care in America costs too much because we pay for it the wrong way. And it’s all but certain that we’re going to continue doing so for a very long time.

The crux of the problem is third-party payment, or, as most people think of it, insurance.

The crux of the health care problem in America is insurance??? Americans would be better off if there were no health care insurance???

Pass me another swig of snake oil.

Health insurance doesn’t just protect people from financial ruin. It insulates them from individual decisions about price and service quality.

Those decisions become invisible, outsourced to a middleman—either a private insurer or a federal program—while the patient whose health is at stake is removed from the equation. The result is a system where prices are inscrutable, if they can even be called prices at all.

More spoiler alert: Suderman’s premises are:

  1. Health insurance is bad for America because it relieves you of an impossible task: Shopping for the best and also least expensive hospitals, doctors, nurses, etc. (He later will contradict this nonsense in his own article)
  2. Employees are the ones who actually pay too much for health care insurance when it is provided “free” by businesses. (He doesn’t actually say this, but he should have. It’s the one thing to which I would have agreed.)
  3. Federal taxpayers and the federal government can’t afford to pay for the increasing cost of Medicare. (This demonstrates his colossal ignorance of Monetary Sovereignty and federal financing). 

The dominance of third-party payment is almost entirely a result of two policy decisions that have warped the nation’s health care system for decades.

The first was the decision to allow employers to provide fringe benefits, including health coverage, tax-free. This created an incentive for employers to provide more expansive and more expensive coverage.

It made an extra dollar in salary, which would be subject to taxes, worth less than an extra dollar in benefits, which did not incur taxes.

Apparently, Suderman would prefer that employees and employers pay taxes on health care payments, which would reduce the number of companies that would pay for it, and the number of people who would receive it.

These reductions would benefit America how? He never says.

The result is that most private insurance is provided through employers, and it tends to be reasonably comprehensive, covering everything from ordinary doctor visits to foreseeable surgeries to truly catastrophic events.

Ooooh, “reasonably comprehensive” health care insurance. This is a bad thing, how? Suderman never says. Apparently, he thinks you should have insurance that won’t pay for . . . what?

Because employers and insurers manage the costs for everything, patients have little incentive to shop based on prices or quality, which can be difficult to determine anyway.

In addition, employers typically pay a large share of the monthly premium, meaning that tens of millions of people are kept ignorant about not only the cost of medical services but the true price of the insurance itself.

Here is where he contradicts his own premise. How many people are capable of intelligently shopping for health care based on prices and quality, which Suderman admits “can be difficult to determine anyway”?

If doctor “A” may be a  less skilled diagnostician than doctor “B,” but also is less costly for some procedures, but not for others, by what intelligent criteria can a layperson measure dollars vs. quality of care?

Taking price out of the equation simplifies the task for the average person. Only the very rich can afford to say, “I want the best, no matter the cost.”

As for the rest of us, are we would be left to say, “I can’t afford the best health care, so I’ll settle for the surgeon with the shaky hands.”

Seemingly, that is what Suderman wants for you.

The second policy decision was the introduction of Medicare (and, to a lesser extent, Medicaid) in the 1960s.

Medicare expanded a system of government-run third-party payment to seniors, who, for understandable reasons, consume an outsized share of health care services.

The result was a huge new revenue stream for the health care industry, which rapidly reorganized itself around extracting funds from the program—which is to say, from American taxpayers—by any means possible.

Apparently, Suderman thinks Medicare is a bad thing, because it provides “a huge new revenue stream for the health care industry.” The fact that it happens to provide affordable medical services for the elderly is not really a consideration to Suderman.

And there it is again, the ignorance of federal financing. After all these years of promulgating misinformation, Suderman hasn’t learned that state taxpayers fund state spending, and local taxpayers fund local spending, but federal taxpayers do not fund federal spending.

Image result for bernanke

Former Fed Chairman, Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Suderman doesn’t understand (or doesn’t want you to understand) the fundamental differences between federal financing and state/local government financing.

(The federal government is Monetarily Sovereign. State and local governments are monetarily non-sovereign.)

Suderman’s ignorance about this basic fact is pitiful.

In the first year alone, average daily charges for U.S. hospitals shot up by 21.9 percent, according to professors Ted Marmor of Yale and Jon Oberlander of the University of North Carolina at Chapel Hill.

The rate of growth of physician fees more than doubled in the year between the law’s passage and Medicare going into effect.

During the first five years of the program’s existence, reimbursements through the program grew by 72 percent, while enrollment grew by just 6 percent.

And still, America is short of doctors, nurses, and hospital space. But Suderman wants to cut doctor, nurse, and hospital compensation. That should help America.

Better yet, cut Suderman’s compensation, and pay doctors and nurses more. We need more doctors and nurses, and fewer writers that spread disinformation.

In their recent book, Overcharged: Why Americans Pay Too Much for Health Care (Cato), Silver and Hyman argue that the U.S. health system is best understood not as a means of delivering the best possible care but as a system for funneling as much money to health care providers as possible.

Medicare, they note, will pay for countless expensive in-hospital tests and treatments for a dying individual but not less expensive palliative care offered in that same individual’s home.

Suderman not only wants less money for doctors, nurses, and hospitals, but less for tests and treatment of “dying individuals.” (“We’re cutting off your treatments, Mr. Jones.  You’ll be dead in a month, anyway, so this will just make it come a bit sooner. We hope you don’t mind.”)

And yes, the government should pay for palliative home care, just as it pays for hospice (though Suderman probably would complain about that, too, because he complains about all federal spending).

There are few meaningful checks on doctor reimbursements under the program; fraud and waste are pursued after the fact (if at all), which means doctors can always be assured of payment.

Wrong. Medicare and all private insurance companies do place limits on doctor reimbursements. In fact, Medicare’s limits are too low. Suderman surely knows this, so why does he claim otherwise?

Suderman claims your doctor is a wasteful fraud. Apparently, most doctors are, if Suderman says so.

He doesn’t like it that your doctor is “assured of payment.” Better that your doctor should have to sue or beg for payment??

The tax carve-out for employer-sponsored insurance pushes people into more comprehensive coverage, which increases overall demand for health care services, which makes health care providers more money.

If there is anything that angers Suderman, it’s people like you receiving the same “comprehensive coverage” he has.

And having such good care makes you go to the doctor when you aren’t even sick, right? Because you love getting stuck with blood test needles, and enduring digitals, just for the fun of it.

Suderman, who probably has comprehensive coverage, doesn’t want you to understand that overall demand increases when earlier programs were substandard.

It was as if the system was designed with only one goal in mind—maximizing not health or patient satisfaction but the amount of money Americans spend on health care.

The fiscally ruinous results speak for themselves.

Yes, the fiscally ruinous results of not having comprehensive care, have greatly been reduced by health care insurance. Apparently, Suderman believes only rich people deserve comprehensive care.

Silver and Hyman note that the Surgery Center of Oklahoma, a clinic that posts prices online and focuses on patients who pay cash, charges less than $20,000 for a knee replacement; the average price paid across the country is $57,000.

Uh, Peter, who are the people who can afford to pay $20,000 cash for a knee replacement? That’s right, the rich. They are the ones who trot to the Surgery Center of Oklahoma for the best care.

And what happens to the people who can’t afford $20,000 cash? Presumably, the Surgery Center of Oklahoma turns them away.

Fortunately, most people have that health care insurance you so despise.

And, the others just limp along on bad knees.

Direct payment by quality-conscious consumers is an effective way of bringing down costs and total spending. Which is exactly why it will never happen at scale.

No, direct payment by consumers won’t happen because it already has been tried, here and everywhere.

It’s called, “doing without insurance.” 

Heading into the 2020 election, Democrats have proposed multiple ways of expanding Medicare, including pushing Medicare for All, a single-payer system in which the government finances nearly all health care services in the United States.

Right. And what exactly is wrong with that? Suderman never says.

The failed 2017 (Republican) effort to “repeal and replace” Obamacare would have left much of its infrastructure, including most of its spending, in place.

. . . Left much of its infrastructure (and) most of its spending in place“??? What the hell is Suderman talking about? He has zero idea about what would be “left in place.” He’s just babbling ignorance.

And what spending would be “left in place”? Spending by whom? Surely not by the government. It’s the spending that the GOP wants to cut.

The best hope for change is very bleak indeed. Medicare is racing toward a predictable fiscal crisis. The program’s actuaries predict it will be insolvent in 2026, able to pay only about 89 percent of its bills. That percentage will drop below 80 percent in the coming decades.

The system as it exists today, in other words, is unsustainable. It simply can’t go on like it is—and if Congress continues to do nothing, it won’t

And then we finish off with the old “federal spending is unsustainable” lie. It’s the same lie that Suderman and those of his ilk have been telling since 1940 –even before he was born.

Back then, the federal debt was $40 Billion, and called a “ticking time bomb. Today, it is 50,000% higher at $20 Trillion, and that old time-bomb stills a’tickin’. Wrong for 80 years; still wrong, today.

I am tempted to say that Suderman and his ilk are damn fools, but that would give damn fools (like, for instance, Trump backers) a bad name.

So I’ll be kind and just say Peter Suderman is misinformed, and tries to make you uninformed, too.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY