Health Care – Part 1 : The Financial Hypnosis

Briefly

“.. Health Insurance, uses actuarial studies but doesn’t actually deliver Insurance.”

This article is going to be a look at the transformation of what was an obvious and proven approach to health care and how, lobbyists, financial companies and politicians forced the public discussion in a different direction and convinced many Americans to cheer for a system that steals from them.   While this article is an overview – its focus is on how the discussion changed and why.

There are a few quick terms that need to be clarified:

1. Patient: A patient is someone that is suffering illness and requires, medical counsel, education or medical treatment.  For the purposes of this discussion, there is no illness associated with breast augmentation, lypo-suction, or any of the the other cosmetic procedures delivered through health care professionals.

2. Finance Co.: This is a company that refers to itself as Health Insurance, uses actuarial studies but doesn’t acutally deliver Insurance.  What the Finance Co. provides is the equivalent of a pre-paid telephone card – however, they have the right to increase the connection charge – on the fly, with little recourse to the patient.

3.  Medical Professionals:  Doctors, Nurses, Scientists, Medical Admin, Services and Support; including public health services (gov’t)

4.  Non-medical Professionals: Massage therapists, teachers, instructors, social service representatives, other public health services (gov’t)

5.  Non-Insurance Medical Providers: Kaiser-Permanente is the perfect example. We will refer to it in subsequent installments of this article.

How DId the Discussion Change from Health Care to Health Insurance?

“… drama in the waiting room, eerie reminders of pre-Civil Rights days in the deep South.”

Fifteen years ago, there was a National discussion about health care, and 20 years before that, there were similar discussions.  The hiatus was supplied by the Vietnam war, Richard Nixon’s struggle with the rules, the warm-up energy crisis and Oliver North’s homegrown foreign diplomacy. Scores of other distractions were spawned by America’s financial boom, a nice way to describe the national addiction to investing and exponential profits that we’ll further refer to as financial crack cocaine.

When the discussions re-started, they included everything from expanding the public health service to providing basic health care for Americans.  Not only basic health care but health education and preventive medicine.  As it is, there is no incentive for delivering preventative medicine in the insurance company dominated health system – yet there are numerous financial incentives for treating more and more illness.  In short, the system, as is, becomes more profitable for investors if the number of sick people rises.  The system by design is flawed.  Consider a private police department whose investors privately hope for higher crime or less public safety in order to increase profits.

Now consider that the cost of detectives is driven by market conditions, and the amount of attention they can dedicate to particular cases is based on the overall profit of those cases, determined by the Financial Co-op.  Public safety, no longer driving the results, the highest profit is realized when more and more cases are opened and crime is elevated, since the crime victim must pay, or pay through a Finance Co., for services.

So as you can see, for the purposes of Part One – we propose that Health Care is essentially the same as Public Safety, Public Water and Sewer, Public Works.  There is only one answer to how the discussion was altered and thereby further dividing classes of American citizens.  The most obvious being Insured and Uninsured.  While many may not see this as a ‘Class’ distinction – visit  Medical Professional company in your area and observe the drama in the waiting room, eerie reminders of pre-Civil Rights days in the deep South.

Pay Attention to Small Stuff

“… the payment was spread among the entire school population.”

For the purposes of this section of the article – we’re going to have to stick to practices and not specific people or companies.  While we have some excellent examples of specific people and companies that benefited greatly by redirecting the national discussion, we’ll save that for later chapters, with footnotes and research material.

Clearly, the changes were motivated by a new approach to economics.  After being indoctrinated with ‘free-market’ platitudes, even High School football teams were looking for revenue far beyond what booster clubs and community fund-drives could yield.  So the answer is appetite.  The American appetite for opportunity and great return.

When Junior High schools were selling real-estate to Coke and Pepsi so that they could line the halls with machines selling high fructose corn syrup laden carbonated drinks to children; we were trading public health for corporate finance.  While it paid for the illuminated scoreboard on the football field and much more updated uniforms and equipment, the payment was spread among the entire school population.

While on the surface it seems to be logical, there was a serious breech of both public health and the loco parentis care of our children of which public schools are charged.  But ‘the Beat goes on’ seemed more enticing than pedantic pleas of health professionals about force-feeding our youth sugary water.  And anyone that doesn’t believe that Soda dispensing machines strategically located throughout a public school isn’t force-feeding than we beckon a more suitable word.

Courting Independence

“… then you were going to get credit – big and fast.”

The financial appetite for return on investment permeated the atmosphere.  IRA’s abounded benefiting investors with deferred income tax and lower base taxes by lowering their taxable income.  It was all the talk at the supermarket, at the beauty parlor, at the VFW and at the golf course.  An entire generation of tax planners were armed with Texas Instruments printing calculators in order to show investors, just how many millions they would have at early ’80s interest rates of 12%.

These opportunities were not curtailed simply by the sudden drop in interest rates as the stock market began its first surge – because the SEC swung open the doors at the behest of the Reagan Administration to permit individuals to personally direct their retirement money into the risky equity markets.  Penny stocks abounded with the lucre of  Mom’s and Pop’s, although, much of it evaporated by the late 80’s as the equity markets – adjusted.  That’s what they call crashes because of uncontrolled financial growth – “adjustments”.  On the way up … they don’t call them anything, because no one can hear over the cheering.

Pick a Card – Any Card

“.. create a highly lucrative financial turbine of the insurance company.”

During this period of time, gasoline rose in price, food rose in price and health care rose in price.  A society stuck for a  ready cash with appetites further whetted by buying stocks and bonds on margin; they started abandoning the sound financial tenets of their roots and willingly accepted credit cards in the simple recruitment terms of the credit card companies.  Buying on credit was easy. It was certainly an analgesic to financial pain -moreover – the new American voracious appetite for  acquiring  more “stuff” wouldn’t be derailed because the disposable cash dried up.  Not for a second.  If you could prove that you were stupid enough to load up your retirement portfolio with Penny Stock get rich quick schemes and would be ‘market averaging’ for the next 100 years in order to get your principle back – then you were going to get credit – big and fast.

The Finance companies were watching and in the game.  They were buying up medical services companies and even hospitals through holding companies and even real estate trusts.  After all, if you are going to expand a business that collects money , shouldn’t you also own the companies that you ultimately pay.  In this way you can add the power of the check book while containing costs. Further,  by leveraging the assets of the holding company by selling it off to investors – the Finance Co. in actuality, creates a highly lucrative financial turbine from what appears to be an insurance company.  Ultimately, taking more in than it pays out,  the Finance company maintains high profitability by delivering less health care to the insureds.  In effect, they create a layer that in conclusion, does nothing but convert the massive buying power of an organized group, and convert it into investor profit instead of an actual comprehensive medical plan.  It’s very much like the new Electronic Scoreboard and the Soda machines.

To be continued ……  part Two next week.