Prerequisites of Affordable Health Care

It is impossible to look at health care without also looking at the context in which it exists. It should be obvious to anyone who doesn’t live under a rock that it is effectively impossible for anyone who is not wealthy to directly and personally pay for the costs of medical treatment beyond the most basic things. The cost of a simple leg fracture ($16,000) or a routine preventative colonoscopy ($26,000) is enough to drive the average person (median U.S. individual annual income $31k) into bankruptcy.

We have an employment-driven health insurance model in which most people have their insurance costs paid for, at least in part, by their employers. This, in and of itself, presents a looming problem because it is estimated that we will lose millions of jobs to automation in the next couple of decades.

Reducing the cost of employees is a major factor driving many social and political issues in the United States. It drove slavery, which has left this country with a racial-social-economic mess ever since. It has driven nearly all legal and illegal immigration that is displacing us. And this, also, increases the price of health care as the costs of emergency room visits for illegal immigrants as well as people who are paid below the poverty level is reflected in rising costs for those who are insured. Government-subsidized plans enforce below-market prices for medical care that institutions are forced to recover by raising prices for those with regular insurance. The next thing you know, a two-cent aspirin tablet costs $10.

Employees are usually the single largest cost of an organization, so the desire to keep costs low is understandable. And providing health insurance easily raises that cost as much as 50%. So this drives yet more automation, more immigration, and repeats the cycle with health care costs spiraling ever higher.

My father tells me that when I was born, in order to pay for my birth, in full and in cash, he only had to work overtime for a couple of weeks at the foundry where he worked doing maintenance and repairs. But when my own child was born 30 years later, it cost $20,000 more than I earned in a year … before taxes. How did it come to this? How did our health care costs get to such a point that a STEM graduate would literally be bankrupted if he had to pay out of pocket for the birth of a child?

The spirals caused by the desire for cheap labor only explain part of the problem. The entire picture must be seen in terms of the U.S. economic system and our regulatory system as well.

In 1987, you could buy a top-of-the-line 19” color TV for $199. Today at Walmart you can find a 19” color TV with far more capabilities for $88 – or, merely $40 in 1987 dollars. The cost of a TV, in real dollars, has gone DOWN 80%. The same has been reflected in clothes and numerous consumer items. This is attributable to automation, off-shoring, etc. And that’s the rub. Inflation has been hidden.

Wages for Americans have remained absolutely stagnant or lost ground for 50 years. This gets hidden by the rise of the two income (and too often childless) family, but also by sending the production of consumer goods such as clothes, tools and electronics to sweat shops and communist slave labor overseas. Of course, this hides inflation, which is also hidden by exporting dollars for off-shoring and requiring U.S. dollars to be used world-wide for the purchase of petroleum.

But some things cannot be effectively done by Chinese slave labor, or by importing people who are illiterate in even their native languages from the third world. And these will reflect REAL inflation. We often hear that medical costs or college tuition costs are rising at rates “faster than inflation.” But this is not true. Instead, they are reflecting TRUE inflation. So while incomes have been stagnant or declining, health care costs have reflected the true impact of our Federal Reserve monetary policies.

Please notice that our brave capitalists have no moral objection to partnering with communism to make a buck. You never see a word about China’s mobile execution vans for organ harvesting on the news.

Speaking of capitalists, that is the next level of problem. Free markets and profit are important, but free markets and capitalism are not the same thing. Under our current system, medical companies and regulators have conspired to raise regulatory barriers that make them effective monopolies. Bringing even the most innocuous of drugs to the market requires the payment of hundreds of millions of dollars in fees to the FDA, not counting the research costs. And the costs of compliance – the rooms of lawyers and compliance experts – are too heavy for a startup to bear, thus confining medical research to a handful of long-established companies whose political contributions are quite hefty.

Don’t get me wrong, production of medical grade products on an industrial scale that is safe and sterile requires conditions that are expensive to achieve. Testing these products competently is not cheap. But it is also true that monopoly conditions allow Americans to be gouged, which is why many medications cost 75% less in other countries.

I believe that people should have access to high quality health care without regard to how much money they earn, but in order to achieve this, we have to address the fundamentals that make it so expensive in the first place: replacement labor (both within and without the country), our never-audited Federal Reserve system, and the unholy alliance between big money and those charged with regulating those enterprises. All of these issues come down to two things: dealing with our immigration problem, and making sure the economy serves the people rather than using government as an enforcer for oligarchs. Once we implement these common-sense policies, health care will be affordable for most, with government easily funding any who slip through the cracks.