Tag Archives: Karl Denninger

Karl Denninger’s 5-Point Plan to Reform U.S. Healthcare

Imaginary view from my office

Healthcare costs represent almost 20% of the U.S. economy, a much higher percentage than seen in other first-world countries. And we’re not getting our money’s worth (judging from average lifespan, for instance).

The Republicans just rolled out a healthcare reform plan to replace Obamacare and address other issues. I haven’t read it. But I have zero confidence in those clowns being able to solve this problem.

Denninger has sussed out a plan that you may enjoy considering if you’re a policy geek. In brief:

  • If you sell “insurance” to anyone in a given state, you must accept all persons in that state on the same terms and at the same price. to open. For acute conditions where adverse selection becomes most important this restriction resolves the problem.
  • All “insurance” companies must offer a true insurance policy covering only unlikely-but-catastrophic events on the same terms as their “full service” policies.
  • All health providers must publish a price list and may not bill or accept payment at anything other than that price; doing so becomes a violation of Robinson-Patman and exposes the provider to civil suit for treble damages.
  • No event caused by the provision of your treatment may be billed to you. Period.
  • If you show up without insurance or ability to pay with a life-threatening condition, you will be treated, but the hospital cannot cost-shift the bill – it instead bills The Federal Government.

He concludes:

“Five points and a fully free-market solution that brings affordable health care coverage to all who can buy it, yet protects those who cannot, while, to the greatest possible extent, forces everyone to bear the cost of their own decisions.

If you choose not to be insured and pay cash you are free to make that choice. If you have a catastrophic illness or injury, insist on treatment but have no means to pay then you are subject to attachment of wages and assets by the IRS, a debt that is only discharged by your death.

Simple, fair, free-market and this path will dramatically control costs as free market competition will be forced to the forefront among health providers who will be compelled to make available their pricing schedules to everyone before they show up for treatment and are presented the bill.”

My Fellow Americans: How About Paying 80% Less for Your Healthcare?

Karl Denninger has a plan that he thinks would reduce the cost of healthcare in the U.S. by up to 85%!

Almost one in every five dollars spent in the U.S. is for “healthcare.” That’s probably the highest percentage of any country, and I don’t think we’re getting our money’s worth.

Karl’s plan hinges on the reality that the healthcare system here is not operating as a free market. There’s too much price-fixing, lack of price transparency, lack of competition, and consumer fraud done by collusion among the big players, such as health insurers, hospitals, physicians, and politicians. Karl says such practices have been illegal for decades, but applicable laws simply have not been enforced by the powers that be.

I’ve always had the impression that health insurers were exempt from anti-trust laws. Karl says that ain’t so.

Read the whole thang if you’re interested in U.S. healthcare reform. For example:

I’ve repeatedly, over some 30 years time, heard that there’s “some law” that exempts health care from anti-trust [laws] when the discussion turns to the topic of price-fixing, collusion, differential billing for commodities of like kind and quantity and similar. Every time I hear this claim I respond the same way: “Show me the law.”

Nobody ever has.

And I haven’t asked just once or twice. I’ve asked dozens of times since the 1990s. I’ve asked politicians. I’ve asked lawyers. I’ve asked political candidates. I’ve asked policy “wonks” of various flavors. Gary Johnson got asked (Lib candidate for President) in person a number of years back in his suite during the Libertarian convention in Orlando. Yet not one of the people I’ve asked has ever replied with a title, chapter and section of US code that provides such an exemption.

As just one of many examples I heard this claim during the campaign from a (Democrat) candidate for the US House when I asked him whether he would demand that the executive enforce anti-trust law against all medical providers and suppliers. He said he’d call me with a cite to the law when I responded that with all due respect the exemption he claimed did not exist at a meet-and-greet in a room full of Libertarians. He never did call me. (He lost the election, incidentally.)

I’m utterly convinced that’s because the oft-claimed exemption doesn’t exist. I’m in fact quite sure of it, because I can actually read the US Code — it’s public, of course, and the sections that could bear on this matter are reasonable in size (that is, I can and have read through them in a day or two.)

Never mind the contravening evidence too – like this case from 1979 that went to the Supreme Court which ruled that Mccarran-Ferguson does not protect insurance companies against anti-trust claims related to drug “discounts” on collusive actions. In other words the insurance company took the case to the Supreme Court and lost, which is damn good evidence that (1) anti-trust does apply to health care broadly including the criminal provisions in the Sherman and Clayton Acts and (2) health insurance firms and providers are not exempt to the extent they collude to restrain trade or fix prices.

It is thus my considered position that the reason the law isn’t enforced isn’t because it doesn’t apply — it isn’t enforced because the Executive voluntarily chooses to refuse to enforce it in collusion with Congress and the States and has done so for 30+ years despite the evidence being clear that the law — a law that carries both ruinous civil and felony criminal penalties — is being violated on a daily, continuing basis by the entirety of the so-called “health system.”

Karl Denninger’s Solution to the U.S. Healthcare Mess AND Federal Deficit Spending

Steve Parker MD

One of two bridges over the Colorado river in the Grand Canyon near Phantom Ranch

Karl says that U.S. healthcare and health insurance are way too expensive because of:

  • monopolistic practices
  • collusion among the major players (e.g., insurers, labs, Big Pharma, politicians, doctors)
  • ignored violations of the Sherman, Clayton, and Robinson-Patman Acts (15 USC)
  • ignored violations of state consumer protection laws
  • absence of market forces
  • price-fixing

Eliminate those problems, and you’d cut the cost of healthcare by 80%, the point at which you would need only catastrophic health insurance coverage, if at all. We’d have enough money left over to stop our federal deficit spending and eventually retire the entire federal debt. According to Karl.

What are examples of an absence of market forces?

  • Have you ever seen health insurance companies or hospitals compete on the basis of cost? Doctors rarely do it, either (and only when insurance isn’t involved).
  • Have you ever tried to get a firm estimate on the total cost of a proposed procedure before you have it done? Good luck with that.
  • The consumer of healthcare services usually isn’t the one paying for it. Your insurance company or the government (e.g., Medicare) is paying. You’ll get no thanks for your time spent shopping around for the best deal.
  • Scorpion antivenom costs $100 in Mexico, but if you get it in an emergency department in the U.S., you’ll be billed $40,000 for it. And don’t think you can go to Mexico and stock up then sell it to emergency departments for $150—that’s illegal.

Karl sings the praises of the Surgical Center of Oklahoma. They post their prices up front, work on a mostly cash basis, and eliminate the bill-padding and wasteful bureaucracy of other facilities. Their prices are a fifth of what others charge.

One possible fly in Karl’s ointment is that insurers are exempt from federal antitrust laws per 1945’s McCarran-Ferguson Act. Only a handful of industries are exempt. Karl doesn’t mention that. Nor does he talk about the cost of medical malpractice insurance and defensive medicine, wherein doctors order excessive testing to protect themselves from lawsuits.

I appreciate Karls’ efforts. He’s a smart guy with many good ideas.

RTWT.

Steve Parker, M.D.

Could Smart Healthcare Reform Solve the U.S. Budget Deficit?

Karl Denninger makes the case that the U.S. federal budget deficit is the fault of medical monopolies that are exempt from the Sherman and Clayton anti-trust laws. In his 20-minute video, Karl mentions that a vial of scorpion antivenin costs $10,000 in the U.S., but only $100 across the border in Mexico.

In a free market, a buyer of a product or service can easily determine how much it costs, whether it’s a haircut or a house. If you think U.S. healthcare is anything near a free market, just call up your local hospitals and ask how much they charge for an uncomplicated hospitalization to have a baby or groin hernia repair. Go ahead, I’ll wait.

They won’t or can’t give you the numbers. Nor do they advertise the prices so you can be a smart shopper.

Have you noticed how advances in science and technology tend to lower the cost of most goods and services, such as computers, cell phones, food, and clothing? Why don’t we see that in healthcare? Because of monopolistic practices and other excessive governmental regulation and bureaucracy affecting not only healthcare providers but also Big Pharma and health insurers.

Unfortunately, I don’t see the situation changing anytime soon.

Steve Parker, M.D.