Dying in the Hospital

Time Magazine recently published an unmistakable, and very valuable, act of journalism.  "Bitter Pill: Why Medical Bills Are Killing Us," one of the longest articles Time has ever published, generated a vast quantity of letters to the editor as well as Facebook likes, Twitter posts, and other generally favorable reactions.  These plaudits were richly deserved; the article analyzed what's wrong with American health care with a thoroughness and fairness that we'd thought was long gone from the American mainstream media.

In proving that health care costs are too high, the article cited a line from a patient's bill:

It read, "1 ACETAMINOPHE TABS 325 MG." The charge was only $1.50, but it was for a generic version of a Tylenol pill. You can buy 100 of them on Amazon for $1.49 even without a hospital's purchasing power.

That's somewhat unfair.  You and I can buy our own Tylenol and choose when to take it, but it's different in a hospital.  The doctor has to prescribe the medicine.  The order has to be sent to the central dispensary, where it has to be put on a cart and routed to the nursing station on the proper floor.  The nurses have to record the fact that they gave the pill and write down how the patient reacted.  All that process overhead usually costs far more than the drug itself.

What's more, hospital can't just buy drugs from Wal-Mart or Amazon as you and I can.  Federal, state, and local laws require that hospitals deal only with approved suppliers.  Drug orders and inventory must be carefully tracked, and expired drugs must be discarded on time according to the rules.

That said, however, the article accurately explained a number of reasons health care costs are so high.

Nobody Cares About Cost

The problem, as we've said before, is that nobody really cares about keeping costs down.  Hospitals want costs to go up so they can raise charges, make more money and award nifty management bonuses.  Insurers don't really care because they can just raise premiums and, as long as all the other insurance companies raise premiums too, their customers will have no choice but to pay.

Patients with insurance don't care; someone else is paying, usually their employer or government.  Welfare patients don't care because everything they get is free to them.  The only people who care are taxpayers and working folks who can't afford insurance and happen to get sick.  Those patients are the focus of the Time article.

The basic reason costs are out of control is that, as a democracy, Americans have decided that nobody will ever die because they can't pay for medical care.  Hospitals are required to treat anyone who comes through the door whether they can pay or not.  If they can't, the costs are added to everyone else's bill.

In effect, American voters have decided that health care ought to be free to anyone who can't pay.  When anything can be had for free, demand becomes infinite.

Health Care and College Tuition

The health care cost explosion is the same as with college tuition.  Having required that hospitals treat everyone, the government has to throw money at medical providers to keep them from going under.  Having decided that everybody should go to college, the government threw money at colleges.

The end result is also the same: Just as hospitals raise fees as fast as insurance programs make money available, colleges raised tuition as fast as government increased the amount of money they'd lend to students.  Just as sick Americans are going bankrupt under monumental medical bills, all too many young Americans are starting life crushed under crippling education debts without even the hope of discharging them in bankruptcy, because the law doesn't let you.

Adam Smith to the Rescue

Poorer countries like India don't have this problem; they don't have a lot of government-provided health care, nor do they have any regulations forcing unwilling doctors to treat people who can't pay.  People who can't afford a life-saving procedure simply die, their carcasses cheaply disposed of by the local government.

Medical establishments must keep their prices down in order to sell their services at all, because actual people have to be able to pay the bills.  Many procedures in Indian hospitals cost 1/10 as much as in America, with comparable results.

They don't do this by scrimping on pay, either.  Doctors with comparable skills make as much money as in the US, but work more efficiently and generate a lot more health care per year.  They work smarter because they have to - they'd have no patients at all without keeping costs under control.

The Death Panel Solution

Our health care costs will continue to explode because nobody really cares about keeping costs down and government price-controls are known not to work.  People are living longer than expected and older people demand more medical services than younger people.

What, then, will keep exploding health care costs from sinking our nation?  That's simple - rationing, a.k.a. death panels.

The British have decades of experience with a single-payer health system.  Essentially all health care workers are unionized government employees, and we know how efficiently those work.

As a government entity, the National Health Service has a fixed annual budget.  How do such systems keep costs within budget?  By limiting the amount of care they give.

No less a luminary than England's Health Secretary Jeremy Hunt tells us:

Just look at what has come to light in the last few years: patients left to lie in their own excrement in Stafford Hospital, with members of the public taking soiled sheets home to wash because they didn't believe the hospital would do it.  The man with dementia who was supposed to be monitored every 15 minutes who managed to leave Pontypool Hospital and drown.  The residents kicked punched, humiliated, dragged by their hair and forced through cold showers at Winterbourne View.  The elderly woman with dementia repeatedly punched and slapped at Ash Court Care Home.  The cancer patient at St George's, Tooting, who lost a third of his body fluid, desperately ringing the police for help, because staff didn't listen or check his medical records.

These were not "isolated incidents," he said, but appeared with such "depressing regularity" that they indicated problems which were in places "part of the fabric."

Of course "death panels," either by accident or by design, are "part of the fabric" of any government-run health system.  Given infinite demand and limited resources, a government system will kill enough patients to stay within budget.

Consider the man with dementia who escaped from his hospital and cheaply drowned: do you have any idea how expensive it is to have him checked by professional staff every 15 minutes around the clock for years on end?  Whichever negligent nurse let him slip out the door and into the pond saved British taxpayers many millions of pounds sterling.

Time has it right - American health care costs are out of control.  Unfortunately, Time doesn't propose the only solution that has any chance of increasing efficiency and keeping costs down - limiting demand to what customers can pay for.

People are going to die one way or another, either because they can't afford care or because the system can't afford to take care of them.  Given that people will die, it would be better to arrange matters so that their deaths improved the system rather than merely generating pompous rhetoric from officials who know very well that they can't improve the system given the political situation.  Our politicians know this and carefully exempted themselves from Obamacare.

Death Panels!  Rationing!  Coming soon to an Obamacare facility near you!