Being Healthy Is Unprofitable

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

U.S. healthcare is unsustainable. That it will break in the next decade is predictable. 

That good health is insanely unprofitable was highlighted by a staggering statistic in the recent research paper The Concentration of Health Care Spending (via B.C.):
Mean annual spending for the bottom half of (the American population) distribution was just $236 per person, totaling only $36 billion for the entire group of more than 150 million people.
We don't know why the 150 million people did not consume much in the way of "health services"-- they might have been healthy and had no need for healthcare beyond routine tests, or they might have needed care and been unable to afford it, despite the Orwellian-titled Affordable Care Act (ACA).
 
But let's assume that the 150 million people--roughly half of America's 317 million residents--were healthy and had no need for health services beyond minimal prevention and a few low-cost tests.
 
The total cost of their care was $36 billion--just over 1% of the nation's $3.2 trillion bill for healthcare and healthcare insurance. Let's assume that 90% of the populace was healthy, and the remaining 10% were very ill and needed 100 times as much care as the healthy.
 
The total cost of caring for the 285 million healthy people would be roughly $67 billion, or just over 2% of the $3 trillion we currently spend on healthcare. The very ill 32 million would need $23,600 each, or $755 billion.
 
The total cost for a largely healthy population and 32 million ill people who required 100 times more care than the healthy would be $822 billion, or roughly 25% of the $3.2 trillion we currently spend annually.
 
Here is an example of the insanity of U.S. healthcare costs. One of our European friends was doing post-doctorate research at a major U.S. university. His son suffered a minor burn in the kitchen, and on the doctor's recommendation, the parents took the toddler to a hospital a few days later to have the dressing--basically a piece of gauze taped over the burn--changed.
Naive to the absurdities and costs of U.S. healthcare, the parents followed these instructions rather than just changing the gauze themselves.
 
Their punishment for foolishly asking the medical establishment to spend 5 minutes changing a small piece of gauze: a bill for $875. The list of similar charges is equally absurd. Among those known to me first-hand: $120,000 for a few days in a hospital, no operation, not intensive care; $6,000 for 20 minutes sitting in an observation room after a minor outpatient surgery on the patient's big toe--the list is essentially endless.
 
Readers are quick to note that the charges may not be paid in full--but that is no defense of the system. So that makes it OK that Medicare is charged "only" $80,000 for a few days in a hospital bed, or "only" $5,000 for sitting in a room for 20 minutes?
 
Estimates of the cost of paper-shuffling and fraud in our healthcare system start at 40%. Outright fraud (billing for phantom services and patients) accounts for an astounding percentage of healthcare expenditures, as do needless/ineffective tests and procedures.
Prevention is cheap, intervention and care of chronic disease is costly.
 
Sadly, we know 90% of the American populace is not healthy. Rather, the 70% who are overweight are facing decades of ill-health and needlessly early deaths.Consider this report cited in America The Obese:
 
Published in the journal The Lancet Diabetes & Endocrinology, a study comparing young men and women of healthy weights to young obese individuals found that those who were overweight lost about 8.4 years off of their lives if they were men and 6.1 years off of their lives if they were women.
 
Young obese men suffered 18.8 more years of poor health leading up to their early deaths compared to men of healthy weight, while young obese women suffered 19.1 years of poor health. Even when obesity emerged just in old age, both men and women were found to lose years off of their lives: for men, an average of 3.7 years and for women about 5.3 years.
 
Americans spend $60 billion annually on weight loss programs and products, yet we become more overweight every year. Note that this $60 billion is almost twice the amount spent on healthcare for 150 million Americans.
 
The weight gain may be linear in nature, but the adverse consequences of extra weight are geometric. As noted in New obesity guidelines help physicians and patients with weight loss treatments:
 
As our waistlines expand, so too do the number of medical problems caused by excess body weight. A 2012 report by the Robert Wood Johnson Foundation, “F as in Fat, How Obesity Threatens America’s Future,” found that if obesity rates continue on their current trajectories, the number of new cases of type 2 diabetes, coronary heart disease and stroke, hypertension, and arthritis could increase 10-fold between 2010 and 2020—and double again by 2030.
 
“As evidence unfolds, everyone is beginning to appreciate that obesity and excess body weight are driving medical conditions and costs. You cannot get medical costs under control as long as we have these rising rates of obesity,” says Donna Ryan, MD, professor emeritus at Pennington Biomedical Research Center at Louisiana State University Health System, and previous past president of The Obesity Society.
 
That America's ill health has become a national security risk is obvious: America: Too fat to fight.
 
Excess body weight threatens not just the nation's healthbut its economy and social fabric: F as in Fat: How Obesity Threatens America's Future (Robert Wood Johnson Foundation).
 
 
Anyone who thinks the stagnant American economy that already spends twice as much per person on healthcare as our advanced 1st World competitors can support 10-fold increases in lifestyle-caused chronic diseases is living in Fantasyland. The pharmaceutical industry has a plan to "cure" diabesity--their fondest dream is a bunch of pills that cost $84,000 a year, just like the recent treatment for Hepatitis C. Patients Get Extreme to Obtain Hepatitis Drug That's 1% the Cost Outside U.S.
 
Here's what will happen as the wave of weight/lifestyle diseases swell into a tsunami:
 
1. Care will become scarce within our "somebody else pays for me" system as the system starts breaking down.
 
2. Care will become cash only as payments to frontline providers dwindle.
 
The "cure" for excess body weight is well-known and well-documented. The vast majority of us can only change our lifestyle and thus our weight and health within a support group of others engaged in the same challenge. Supplements don't work, fad diets don't work, gym memberships (lacking a total transformation of lifestyle) don't work--nothing works but continual human support from those dealing with the same issues.
 
But operating support groups is not profitable, and so our healthcare system gives the only real cure lip-service. Prevention and support groups are cheap and effective, but they're terribly, horribly, unavoidably unprofitable, so they are given lip-service, while the healthcare industries gear up to provide $100,000 procedures and $84,000 per year medications, all paid by "somebody else."
 
U.S. healthcare is unsustainable. That it will break in the next decade is predictable. We are collectively wandering the beach, picking up seashells, while a mighty tsunami wave is approaching that will wash everyone on the beach away. We can either deal with the lifestyle and cultural causes of our mounting ill health or be swept away when the system crashes.

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Dog Will Hunt's picture

We excessively adiposed some folks.

NoDebt's picture

I had to look that one up.

Skateboarder's picture

I saw a Carls Jr. commercial on teevee the other day. It wasn't the same one as this one, but this one's even more ridiculous. Kind of sums up the blind-patriotic-exceptional-pacification in one short clip.

https://www.youtube.com/watch?v=NjSJj_Pdjys

Too much disconnect in too many places...

CrazyCooter's picture

I live in Alaska and we have some of the highest health care costs in the US. The wife and I went for a routine physical, on new insurance, and it cost us TWO THOUSAND DOLLARS, which was less than our deductible.

I have not been, nor will I, go back to the doctor.

Fortunately my wife is Asian so we will catch up on all that the next time we go west to visit her family.

I think the best thing folks can do is just stop going to the doctor (or ween off the meds and then stop going).

There's a lot of doctors tell me
That I'd better start slowing it down
But there's more old drunks than there are old doctors
So I guess we'd better have another round

https://www.youtube.com/watch?v=HKD_o4gbcSE

Life has been good!

Regards,

Cooter

Anusocracy's picture

The health care system is run by government.

Government is a WEALTH TRANSFER mechanism.

What's not to understand?

KnuckleDragger-X's picture

We don't need the four horsemen, we've got government instead......

pods's picture

Stock up on your caustic soda and caustic potash, there is a very lucrative market for designer soaps.

Tyler told me so.

pods

froze25's picture

you can get this at Lowes to make soap with, Home depot does not sell it.  http://www.lowes.com/pd_486650-331-HD-CRY-DO_1z0w5rn__?productId=4751600&pl=1

I have been making soap with grease from Briskets and Bacon for a couple of years now, I never tell the ladies I give it too until after I have them try it and tell me what they think of it.  They always ask for more.

Handful of Dust's picture

Skaterboard...had to repost that commerical; it's pretty incredible how they portray 'patriotism' eh:

 

https://www.youtube.com/watch?v=NjSJj_Pdjys

 

However, I will admit, that's one piece of delicious meat! Makes my mouth water.....

Luc X. Ifer's picture

And obese people can't stand-up & fight.

Handful of Dust's picture

Funny you should mention that. Some general was on NPR saying the armed services are having some serious difficulty finding 'good men' meaning: 1) not obese; 2) not on drugs; and 3) absent-to- minimal felony histories.

Luc X. Ifer's picture

Indeed all works by the plan, awesome indeed.
This statistic/status indicates that now it is the optimal point to hit the bison between its horns and drop the yoke on its neck.

Luc X. Ifer's picture

In capitalism it is AKA market creation :)

http://www.nationmultimedia.com/home/2010/02/17/business/Creating-a-mark...

Oh gawd when thou my Bisonian brotha gonna get it that thou art only cattle for the lords?!

froze25's picture

I started doing the Organic / Non-GMO (when possible) high protein low carb diet about ~8 months ago with filtering my water with one of those G4 filters that takes everything out.  I have lost a few pounds (losing weight was not a goal) but I feel much better and my sex drive is pretty darn high these days.  Just saying it may not only what we are eating but literally what type of what we are eating if that makes sense to you.  I have also switch to only Soda made with sugar for my Rum and Cokes (need some vices) and have almost completely cut out corn syrup.  I hope this info helps someone.

Son of Loki's picture

The best medicine to cure your weak sex drive ain't in a bottle or organic food, my friend:

 

http://img.phombo.com/img1/photocombo/3155/SexyBabe_Iphone_Wallpapers__a...

froze25's picture

It wasn't a bottle of anything it was a change in my diet over all to organic and non-GMO food. The sex drive thing was a pleasant side affect.  Also and I forgot to mention this in Nov 2013 I switched to Veggie Glycerol based E-Cigs and stopped smoking (still have a real one from time to time while drinking).

Moustache Rides's picture

Nice. I started doing the same thing. high protein. lower carbs...around 80 to 95 grams per day. and moderate fat. Also started juicing. I do the "mean green" juice once a day. It's great. Costs about $30-$60 dollars a week so it's really not that bad.
I'm buying organic veggies from Whole Foods to juice with. It makes me feel great. Probably more nutrition than I've had in my entire life.
Also, going to an acupuncturist. It seems to be straightening out a lot of problems, including acute dry eye and my stomach has flattened out almost instantly.

Stevious's picture

I hope your membership to the International Accupuncturist Assoc is all paid up... 

Accupuncture to flatten your belly?  What insane crap.

Moustache Rides's picture

spoken like someone that's never actually had acupuncture or is able to understand the concept. Do yourself and everyone else a favor and shut your ass.

Creepy A. Cracker's picture

If you don't like the cost, don't use it.

OK, but seriously, the high costs are due to a couple of factors:

1: Government interference in the free market, not allowing efficiency - actually FORCING incredible inefficiency.

2: Lawyerscum jacking up malpractice insurance, forcing unnecessary procedures, all in the name of greed.

Marco's picture

"1: Government interference in the free market, not allowing efficiency - actually FORCING incredible inefficiency."

If you want to provide universal healthcare you'll always need some regulation ... you have to set max prices for procedures, you need to find a way to incentivize people to pick cheaper options, you need transparancy regulation on average health outcomes (transparancy is not the choice companies tend to make to try to be competetive on a free market, easier to make your money off idiots through marketing). It's a balancing act.

Only if you consider social darwinism utopia are there utopian solutions.

Creepy A. Cracker's picture

I don't want to provide universal healthcare.  Universal healthcare is the problem.

MachoMan's picture

2: Lawyerscum jacking up malpractice insurance, forcing unnecessary procedures, all in the name of greed.

I see this parroted quite a bit...  First, malpractice insurance is a pittance for most medical practitioners.  Only the highest risk professionals have to pay much.

Second, please tell all of us, who makes the decision about whether to run a procedure and, moreover, who gets paid for that procedure?  When it was mentioned in the article above, it was thrown in with "fraud".  Why do you suppose it was characterized that way?

plane jain's picture

Tort reform in Texas did not lead to more affodable care. Shocking, eh?

MachoMan's picture

It hasn't lead to cheaper insurance rates anywhere...  and every state has tort reform.  The state legislatures pass tort reform without requiring insurance companies to reduce rates.  (HINT: WHO IS IT THAT WANTS TORT REFORM AND WHAT REALLY IS TORT REFORM). 

The simple fact is that tort "reform" has been going on since society started...  torts are simply the concept of having to pay for the injuries you cause to other people.  This has been something society has changed at all times, but stays within a particular band usually.  However, what medical practitioners are really clamoring for is tort immunity.  In every instance it has ever been tried, the industry becomes reckless and it leads to thing very thing that torts attempt to cure.

Creepy A. Cracker's picture

Interesting.  So you are saying that medicine in Great Briton, Canada, et al, are reckless.

MachoMan's picture

At common law, no professionals had any limited liability protection, especially doctors (I find it hard to believe that the countries that adopted common law didn't carry the torch in some form or fashion).  Are you saying that in all of these countries, medical professionals have tort immunity?  No matter what they do wrong, they cannot be sued?

drdolittle's picture

Gross negligence to lose immunity, not just judgement mistake or bad outcome. The current system is broken. 12 jurors too unemployed to have something better to do, deleriously medically unsophisticated trying to choose between two "experts" who are paid to support one side or the other. Bankruptcy courts have specially trained judges but med mal? Not at all.

Costs go up because hospitals have high fixed costs and low variable costs. They want docs to order cts and mris. Customers or "healthcare consumers" are always right. Patient wants a ct of the abomen, you'd better do it or they'll complain and you're dealing with administration. The whole idea of customers instead of patients is repulseive. There is an information asymmetry and patients can be taken advantage of because of it. Also, costs are just plain ridiculous. xray routinely $500. In japan you can get an mri for a third of that, but their insurance execs (major beneficiaries of the ACA) aren't in the middle. 

I'm looking forward to cash/barter only. I have a good reputation, take the time to do what I think is best, speak english as a first language and, am pretty easy on the eyes too. I will continue to do well and probably vetter when people have their own skin in the game and consider their choices more closely. Wife's the best pediatrician around, she already has good clientelle and will do better when it's a cash business again. Bring on the reset.

MachoMan's picture

Gross negligence to lose immunity, not just judgement mistake or bad outcome. The current system is broken. 12 jurors too unemployed to have something better to do, deleriously medically unsophisticated trying to choose between two "experts" who are paid to support one side or the other. Bankruptcy courts have specially trained judges but med mal? Not at all.

First, most states have passed laws that: (1) set limits on the extent of liability of a medical practitioner (virtually always patently unconstitutional, but never let a lobby get in the way of the constitution); and/or (2) establish a "reckless" or "gross negligence" standard for liability (at the very least, for the possibility of punitive damages).  In short, most places already have the system that you demand, or a hair away, but yet you believe that we do not...  this is ignorance.  If the system is broken, then your demands made it so.

Second, you're arguing from a technical standpoint (if you looked at it on paper) rather than how the system actually performs.  The common law standard for medical malpractice is an incredibly difficult hurdle for plaintiffs.  You want to completely dismiss a jury, but if there is any way they can give a case to a doctor, then they will.  "Judgment calls" are going to present a stalemate for a jury.  Further, given that no local doctors will testify against any other local doctors, you have to bring in an outside party, who usually starts off in the hole as far as credibility.

Third, there are no attorneys fees in tort cases.  If you bring a suit and lose, then you eat your own attorneys fees.  This causes attorneys to be risk averse (since virtually all of these cases are pursued on a contingency basis) and only pursue more viable cases.  This is why the vast majority of cases, in the real world, are gross negligence; there have to be so many bad actions on the part of a medical practitioner that liability is all but certain, e.g. sawing off the wrong leg, cutting an artery in surgery, hooking up an IV incorrectly, letting the patient choke on food, bed sores, etc.  Compare and contrast these issues to born losers, e.g. failure to diagnose...  things that require discretion on the part of the practitioner.

Fourth, medical practitioners are now protecting themselves through disclosure.  Patients come in and sign forms stating that they have been made aware of X issue and that it is their responsibility to attend their follow-up sessions (e.g. cancer screenings), for any damage that results from choosing not to undergo Y test (e.g. in the event that rare disease Z [that displays symptoms similar to other common issues] could be detected but for the use of lavishly expensive test A), etc.  This pretty much eliminates much of what was left of the "judgment call" arena from litigation.

Fifth, just because you have a job does not mean that you get out of jury duty...  unless you can get dismissed for cause (rare) or convince an attorney to use a peremptory strike against you (often based upon something you have no control over), then you're probably going to have to endure the case.

Last, to the extent that a jury gets it wrong, there is a trial judge who can set a verdict aside, as well as an appellate court who can do likewise.  Most people cite the initial headline of the mcdonalds case (spilled coffee) for all that is wrong with torts, but yet no one actually investigates what happened...  the jury's award was reduced by the court for being excessive...  Further, the SCOTUS has set constitutional limits on punitive damage awards...  [remember to differentiate between compensatory damages (what you can prove you were damaged as a result of someone else's act) and punitive damages (a monetary award meant to punish an actor for bad behavior and deter persons from similarly acting).  Punitive damages are virtually impossible against medical professionals to the extent they have not already been prohibited].  Given that you are a medical professional, I suggest you start becoming skeptical of the insurers' media narrative and do your own research.

Costs go up because hospitals have high fixed costs and low variable costs. They want docs to order cts and mris. Customers or "healthcare consumers" are always right. Patient wants a ct of the abomen, you'd better do it or they'll complain and you're dealing with administration. The whole idea of customers instead of patients is repulseive. There is an information asymmetry and patients can be taken advantage of because of it. Also, costs are just plain ridiculous. xray routinely $500. In japan you can get an mri for a third of that, but their insurance execs (major beneficiaries of the ACA) aren't in the middle.

Fixed costs/infrastructure spending are the crux of the matter.  Large players have built huge monuments to god on the expectation that insurance reimbursement rates would continue to increase and that consumers could afford to pay for the services in the event insurance wasn't available.  This was a fundamental miscalculation, but like all others who do the same, the medical industry will have its bailout.

In my experience, the patient isn't the one demanding tests...  most patients aren't doctors and don't know what tests are necessary.  Rather, it is the medical practitioner who demands the tests based upon the symptoms presented.  Tests are ordered on every possible scenario so that the most profit can be reamed from the patient's payer source.  Given the information asymmetry (it is a relationship of trust after all) and lack of patient skin in the game, why does the patient care?  Many are old and don't have anything better to do than talk with a nurse while getting blood drawn.  When confronted on the issue, medical practitioners blame attorneys for having to practice defensive medicine.  However, lawyers don't get paid for the unnecessary tests.

I'm looking forward to cash/barter only. I have a good reputation, take the time to do what I think is best, speak english as a first language and, am pretty easy on the eyes too. I will continue to do well and probably vetter when people have their own skin in the game and consider their choices more closely. Wife's the best pediatrician around, she already has good clientelle and will do better when it's a cash business again. Bring on the reset.

I advise my medical professional clients to prepare for a cash system now...  those who have already moved over are making more money as a result.  The trick is to cherry pick/market to the best cash patients in your locale before all the other professionals have no choice but to go after them.  However, I would advise against hoping for the reset: you may increase your societal standing because you're in a relatively better position to handle it, but it may be at a much lower overall level than you are anticipating.  A reset carries incredible risk...  fear of which is why the system has endured so long.  Don't fall prey to the central planners' hubris in believing that you can contemplate all aspects of such a dynamic system as the world.

 

Consuelo's picture

But their jalepeno swiss burger...   C'mon man - admit it...

 

 

SethDealer's picture

your average american is a 70 pounds overweight mexican

MisterMousePotato's picture

Treatment of diabetes is extraordinarily expensive. It is a major contribution to the overall excessive cost of healthcare in the U.S. Mexicans are particularly prone to diabetes. A quarter of the Mexican population is already here in the U.S. enjoying free healthcare (the California legislature just approved free healthcare for illegals yesterday, for instance - the rest of the states do, too, but surreptitiously - California just made it de jure instead of de facto).

You do the math.

G.O.O.D's picture

G o o d crash and burn bitches

Luc X. Ifer's picture

On purpose -
Obese people can't stand-up & fight.

tempo's picture

whatever, stay in school, max student debt, never work full time, milk the system. Its the Clinton way. BTW minorities don't do well in school because of racist 100 years ago, not a breakdown of traditional two parent families and the drug culture.

NoDebt's picture

We'll make Social Security solvent by shortening lifespans.  Unfortunately that will make Medicare and Medicaid go insolvent that much faster.

Decisions, decisions.

A Nanny Moose's picture

Meh. No need to heal that which is de@d. Gummint gotz 5 year planz for that

Seek_Truth's picture

 

The obesity epidemic is yet another symptom of the primary cause: Mammon worship.

Individuals who, in pursuit of a “better life”, and “happiness”, pile stress upon stress upon themselves, only to “unwind” by spending on junk food, fast food, short-lived material “toys” and things that prove a form of retail therapy, leads instead to less time and motivation to exercise, more stress to pay the bills, leading to obesity and related health problems, which require more money to pay for insurance, healthcare and prescriptions that further destroy health and happiness, while requiring more stressful hours of slaving for Mammon.

 

 

High stress levels causing an epidemic of stress related illnesses, heart disease, etc, that has led to Big Healthcare and Big Pharma taking a huge bite out of people’s incomes.

Ironically, the same people that stress themselves out serving Mammon are the same ones losing their income, time and health by serving Mammon.

Children raised by TV, X-box, etc, as they sit there stuffing their face. Children shipped to school and college to be brainwashed to believe serving Mammon and the Beast is the only way to “make” it.

What many have not come to understand is that money is debt, not wealth.  So Mammon worship is servitude to debt. The masses have been brain-washed to give the majority of their waking lives, health, mind, time and effort to acquire more debt! Which leads to more debt servitude!

No wonder people are unhappy, feeling like something is missing from their lives.

Eating too much, lounging too much, too much stress, being willfully ignorant about the pursuit of "riches" = how "we" got here.

 

pods's picture

He's got some decent boobs, little hang, but for his age not too bad.

pods

joseJimenez's picture

I know I am going off topic a bit, but why is it that everything socialists do winds up as a train wreck? It is almost like they are doing it on purpose or something.

NoDebt's picture

"Rather, the 70% who are overweight are facing decades of ill-health and needlessly early deaths."

'Needless' is a strong word in that situation.  They ate like pigs for a long time, taking no responsibility for their own condition and then their body felt the NEED to die early.  How is that 'needless'?

Lea's picture

That's why some things CANNOT be left to the private sector.

Capitalism is profit-based, all the rest about it is irrelevant. So, of course, they will happily make you sick so they can sell cures to you.

A State-funded health system is the only possible answer, like it is done in every sensible country, including the UK.

NoDebt's picture

So the UK is a "sensible" country, then?  I take issue with that.  

 

Bollixed's picture

I think an argument for personal responsibility over one's body trumps both those in spades...

juggalo1's picture

The problem is we socialize health care because we insist people receive treatments they can't personally afford out of pocket.  I don't have a better solution.  We also don't have a good way to divide costs between behavioral based and bad-luck based health-care costs.  If we discriminate on a profit based system between behavior and bad-luck profit motivated actors will have a huge incentive to provide as little care as possible.