Wednesday, January 16, 2019

Confidential to Bernie and AOC - We Already Know Medicare For All Won't Work

There's a wonderful quote attributed to Thomas Sowell that says, "It is usually futile to try to talk facts and analysis to people who are enjoying a sense of moral superiority in their ignorance".

Despite the warning from the obvious genius of Dr. Sowell, I'm going to try to present facts and analysis for AOC, Bernie, and all of the idiots running around now saying we need to have a nationalized healthcare system like those other countries.  Perhaps you have friends or family members who are parroting the same lines and this will be useful to you. 

We already know it will fail because it is currently failing in every single country that has it.

This is drawn from an article by author Jim Kelly at FEE (Foundation for Economic Education) called "How We Know Single-Payer Won't Lower Health Care Costs" and it's in the format of four questions for anyone advocating for this.

Let's start at the top.  Bernie and the Bunch say we'll save money because the government doesn't have to make those awful profits that insurance companies make.  Bernie says we'll lower costs 20%, others have gone as high as saving 60%.  This is really easy to dispel because all of those insurance company financial annual reports are available.  As Kelly puts it:
Unfortunately, outrage buys fewer tongue depressors than one might hope. The top health insurers averaged 4.1 percent profit in 2017 (per Yahoo Finance). That’s taken on half (at most) of spending for-profit insurers handle. Eliminating those profits would save about 2 percent. Since health care gets 4.5 percent more expensive every year, that would in effect roll prices back to last August.
The advocates say that we'll be able to negotiate better deals with pharmaceutical companies.  Maybe, like President Trump says, they're all awfully crappy negotiators now because Medicare is already the largest single-payer system in the world, and if they can't get a better deal now why should we think they'll negotiate better in the future?  That's an argument against Medicare for all, not for it.

What exactly has the Federal Government ever taken over and reduced costs over time?  Not education. Not defense. Not police and fire protection.

In what country is single-payer making health care cheaper from one year to the next?  Not one.of the 36.

Not to insult any of my dear readers, but if healthcare costs were going down, the growth rate would be negative and there's not one negative growth rate on this chart, which includes the UK's National Health Service, Canada and other places always put up as a paragon we should try to reach.  In fact, the US has a cost growth rate in the lowest third of all 36 countries.

Which says if we were to go to single-payer and even held costs down at the average rate, our costs would go up not down. 

Where has adopting single-payer lowered costs?  Kelly can't find any country that has lowered costs.

Granted that the first few years of the NHS in the aftermath of WWII were abnormal in the UK (and much of the world), but ...
In the first year, it spent 32 times what it had planned for eyeglasses. It had to raise salaries to attract more nurses. Prime Minister Clement Attlee pleaded over the radio with citizens not to overburden the system.
In the early days, prescription drug volume tripled and was threatening to collapse the system.  They had to start adding charges for prescriptions, which helped reduce the explosive growth, but over the last 68 years, their costs have gone up an average of 4% per year.

Let's assume there is still some waste in the medical industry.  The thin profits the insurance companies are making seem to be a reasonable indicator that there's not much waste.
Less than a dime of every health care dollar gets distributed to someone as profit. The great majority goes into someone’s paycheck—maybe a nurse, maybe an advertising copywriter, maybe an IT guy at the FDA. Health care is 18 percent of the US economy, which means 30 million of the country’s 165 million jobs.

Any health care reform that has us put fewer dollars in means fewer dollars out to all those people. For costs to halve, 14 million people need to lose their jobs. Or 27 million need to take a 50 percent pay cut. Or there needs to be some combination of the two, all without comparable drops in quality and while handling higher demand.
When the advocates talk about cutting costs, they don't talk about putting people out of work, do they?  Can you imagine a politician campaigning on wanting to put 14 million Americans out of work?

The public in general, but especially leftists, seem to have terribly inaccurate ideas about company profits.  The American Enterprise Institute published a study back in 2015 in which people were asked as rough guess what percentage profit companies make.  The average response was 36%, which is only 5 times higher than reality.

According to this Yahoo!Finance database for 212 different industries, the average profit margin for the most recent quarter was 7.5% and the median profit margin was 6.5% (see chart above). Interestingly, there wasn’t a single industry out of 212 that had a profit margin as high as 36% in the most recent quarter.
With ideas this distorted from reality, it's not surprising that Bernie, Occasional Cortex, and the rest try to sell the idea that they can save money by eliminating that big profit.

The truth, of course, is far more sinister.  By taking control over health care the gets total control over every aspect of your life and death.  It has always been, and still is, the dream of tyrants everywhere to have that control over the masses.


  1. Pretty much what I've always believed, but I've never done any kind of investigation. My unscientific data gathering revealed a few interesting facts, but I'm on shaky ground and I know it. However...

    Doctors and similar medical personnel don't make as much as you might think. At one time an MD pretty much had the deal made, but these days? No, not so much.

    One industry that cannot possibly be over-regulated is the insurance industry. Accounting practices, how profit is determined, and the real cost of labor are very likely out of sync with the numbers everyone accepts as accurate.

    Eliminating health insurance and allowing the government to replace it (functionally) would be the biggest disaster that anyone who hasn't lived in Zimbabwe has ever seen. Take a look at the number of people insurance companies employ, and know that anytime they could cut labor they'd do it in a New York minute.

    What the leftist commercial media fails to mention is that there are cases where people are allowed to expire quietly, due to economic concerns. For instance, someone of limited financial means has a child, who, for medical reasons, has a very short lifespan - a couple years, let's say. Now there's a cure for this, but it costs one million five. Who's going to pay for that?

    So the government springs for the treatment, and the child grows up to be a line worker with an IQ of around 80. He'll never make a million five in his entire life, let alone pay that much in taxes, nor is he a major contributor to civilization as we'd all like to know it. Why do I argue this way? Because it's a whole lot more likely that we, the Great Unwashed, produce mouth breathing idiots than rational geniuses who'll discover a method for cold fusion, cure cancer, or colonize Mars.

    Nice article, by the way. I enjoyed it and I'm going to quote you at some point.

    1. For instance, someone of limited financial means has a child, who, for medical reasons, has a very short lifespan - a couple years, let's say. Now there's a cure for this, but it costs one million five. Who's going to pay for that?

      So the government springs for the treatment, and the child grows up to be a line worker with an IQ of around 80.

      Instead, the government kills the kid. You don't even have to look at how the British NHS treated Charlie Gard and Alfie Evans: it's embedded in Obamacare now. It's called the Whole (or Complete) Lives System (see a plot I did long ago here).

      The system assigns a value to a life based on how much that person can contribute to the collective. Under 10 or over 70, they're headed for the Soylent Green plant. OK, they didn't use those words, but it's clear that's the intent. It talks about how it's not wrong to allow a 70 year old to die to give care to a 25 year old, because the 70 year old would have gotten preference when they were 25. Plus, if today's 25 year makes it to 70, then the Health Care Wizards can let them die.

    2. When the XVIth Amendment was passed, everyone agreed they couldn't ever see government taxing people beyond 1-2% of income.

      Since then, the actual rates have peaked at around 70% or so, IIRC.

      So you give government the ability to let people croak at under 10, or above 70.

      But costs go up, and people live longer, so they decide to tighten that up to, say, 18 and 65.

      Still not enough.
      And too many line workers with 80 IQs, and not enough terminal septuagenarians and pre-teens.

      So they're going to have to start whacking anyone with an IQ under 50, pro-actively. And anyone left-handed. Or with red hair.

      Costs go up, and revenue never meets expectations. Now, sure as God makes little green apples, Congressweasel Evita Guevara-Castro burps out the idea of whacking anyone who lives in a trailer. Or Alabama. Or who votes Republican.

      (My best guesstimate of the graph over time of that particular slippery slope would be a picture of Hoover Dam's face. Just a guess, mind you.)

    3. I've said a bunch of times that among the scariest thoughts I see running around in the Dem party is that the prosperity of post-WWII America was because of the 70% tax rates, not because the rest of the industrial world was bombed back to the stone age and we were rebuilding them.

      I think that idea came from Paul Krugman, a Nobel-prize winning economist who is wrong so often that you can just assume whatever he says is the exact opposite of reality. He endorsed Occasional Cortex, saying "she must be talking to some really smart economists".

  2. Cutting out insurance will cut costs dramatically.

    You can't just count the 4% profit. You also have to count the total cost of compliance and processing. In addition to profit, insurance companies have expenses. And the doctor's office has to hire people just to fill out the forms and deal with the insurance companies. And buy IT systems and programs to comply with and process the electronic submissions. And teach their people how to use them. None of this is medical care, and all of it costs money.

    1. No, it won't cut cost dramatically - if you mean having the government take over the role of insurance provider, which is what single payer is about. Those costs will still be there, because those expenses you outline (extra staff, IT, etc) will still be there. As they are now for Medicare users.

      If there's no longer any insurance at all, then yes, those costs go away. You pay cash for everything at every doctor, hospital, and you name it. That's not even "catastrophic coverage" insurance, that's pay cash for everything.

      This echoes the question he posed and I echoed, What exactly has the Federal Government ever taken over and reduced costs over time? In this case: what exactly does the Federal government do more efficiently than the private sector? I know of nothing.

    2. Charlie Gard! I couldn't remember the name, but I remembered the case, which I still believe is a crime perpetrated by the government against humanity. What did the government have to lose? Someone else was paying for the whole thing.

      The answer was obvious. If the government allowed treatment to take place, it was surrendering control of the situation - and it's common knowledge that Liberals love control.

      Good job, Graybeard.

    3. I see.
      So insurance goes away, and you're going to pay for all your medical care, out-of-pocket...?

      Please, show your work.

      When you (and 50M of your friends and neighbors) can't do that, and your bills go to collections, what happens to health care prices?
      Do they go up? Or down?

      When facilities just barely scraping by are forced to close, dumping you and your neighbors onto the next-closest ring of lifeboats, does your time sitting in the waiting room go up, or down?
      What's your hourly rate, and how much is your time worth to you when the now grossly overburdened hospital or doctor's office becomes as competent as the VA, as speedy as the DMV, and as customer-friendly as the post office?

      When you get rid of insurance, will you be getting rid of tort lawyers too?
      Because they and their antics drive up the cost of care more than everything -- except the all-time winner, the government.

      So will you be outlawing government and lawyers too, or just insurance?

      If you can explain that, I'll march in your parade, and subscribe to your newsletter.

      For a hint on how this works in real life, note what ObozoCare getting rid of insurance that didn't meet government standards did for the average health care bill for anyone, single, married, young, old, kids, no kids.

      Oh, and note how many doctors took early retirement rather than deal with it. And how many now won't take any more Medicare patients.

      And how many doctors never took Obozocare cards, dumping even more people into the one place that can't turn them away: The ER.

      So if I gave you a credit card that no one took except McDonald's, and it only paid pennies on the dollar for goods and services...

      1) How long would the line be for a Big Mac the next day?
      2) What would the price of a Happy Meal be, and do?
      3) How long would McDonald's stay in business?

      I'll wait.

  3. If health care (including insurance) costs are rising at 4-5% per year, while inflation is rising at 9-10% per year, doesn't that mean that, proportionally, health care is getting cheaper?

    1. Right. Except that when you see plots of medical costs rising at 2 or 3x inflation, that's the Oh-fish-ul inflation of 2% or whatever number they rectally extract, not the more realistic 9-10%.

  4. Communism is the instinctually-programmed social-political organization of gorillas and common chimpanzees. Humans inherited these instincts. Your neighbor's instincts see no contradiction between helping you individually and then stealing from you collectively. If the 1% of freethinkers who become libertarians want liberty, they must stop obeying and then defend against predation from 99% of their neighbors. That's the only way it's going to work.

  5. There needs to be a companion graph, showing how those profit numbers compare to actual inflation, the government-stated fake inflation rate, and what people think the rate of inflation is.

    Which all but wipes out all those profit numbers.

    Exactly like the lottery, socialism is a tax on stupid people.