Forget ObamaCare, RyanCare, Or Any Future ReformCare - The Healthcare System Is Completely Broken

Tyler Durden's picture

Authored by Charles Hugh-Smith via OfTwoMinds blog,

It's time to start planning for what we'll do when the current healthcare system implodes.

As with many other complex, opaque systems in the U.S., only those toiling in the murky depths of the healthcare system know just how broken the entire system is. Only those dealing daily with the perverse incentives, the Kafkaesque procedures, the endlessly negative unintended consequences, the soul-deadening paper-shuffling, the myriad forms of fraud, the recalcitrant patients who don't follow recommendations but demand to be magically returned to health anyway, and of course the hopelessness of the financial future of a system with runaway costs, a rapidly aging populace and profiteering cartels focused on maintaining their rackets regardless of the cost to the nation or the health of its people.

Ask any doctor or nurse, and you will hear first-hand how broken the system is, and how minor policy tweaks and reforms cannot possibly save the system from imploding. Based on my own first-hand experience and first-hand reports by physicians, here are a few of the hundreds of reasons why the system cannot be reformed or saved.

Say 6-year old Carlos gets a tummy-ache at school. To avoid liability, the school doesn't allow teachers to provide any care whatsoever. The school nurse (assuming the school has one) doesn't have the diagnostic tools on hand to absolutely rule out the possibility that Carlos has some serious condition, so the parents are called and told to take Carlos to their own doctor.

Their pediatrician is already booked, so Carlos ends up waiting in the ER (emergency room). Neither the school nurse nor the parents see the symptoms as worrisome or dangerous, but here they are in ER, where standards of care require a CT scan and bloodwork.

Hours later, Carlos is released and some entity somewhere gets an $8,000 bill--for a tummy-ache that went away on its own without any treatment at all.

Since the Kafkaesque billing system rewards quick turn-arounds, observation is frowned upon unless it can be billed. So if observation is deemed necessary (to avoid any liability, of course), Carlos might be wheeled into an "observation room" filled with other people, where a nurse pops in every once in a while. This adds $3,000 to the bill.

(Never mind the stress on Carlos being in such unfamiliar surroundings; he might have felt better if he hadn't been subjected to the anxieties that come with being enmeshed in the healthcare system's straight-jacket of standards of care.)

If Carlos doesn't feel better after all this, then the bill is set to balloon bigtime because an overnight stay in the hospital is the next step--and if there isn't a 100% certainty that there is no chance of his stomach-ache becoming something serious, then the system will insist on overnight observation as the only legally defensible option.

There are other ways to increase the fees without actually providing additional care; was Carlos receiving "critical care"? Of course he was, because, well, it pays better, and by definition any ER visit is critical care.

This example is just the tip of the iceberg, but you get the point: all institutional care decisions ultimately revolve around thwarting future liability claims and maximizing the billing value of each interaction or procedure.

You've probably seen some of the racketeering that passes for "business as usual" in the pharmaceutical arm of the "healthcare" industry. A pharma company that spent $500,000 trying to keep pot illegal just got DEA approval for synthetic marijuana (via Chad D.)

Pinworm prescription jumps from $3 to up to $600 a pill (via John F.)

Off-patent medications double or triple in cost, and then double or triple again with a few years, without any justification. To extend expiring patents, Big Pharma corporations petition the FDA to change the target audience for the med, and this trivial administrative change awards the corporation years more of lucrative patent protection.

The scams are endless, the skims are endless, the fraud is endless, the waste is endless, the fortunes expended to limit "winner take all" liability claims are endless, the paperwork churn is endless and the perverse incentives and negative unintended consequences are endless.

Everyone knows the system is unsustainable, perverse and insane, but they are powerless to change it within the system as it is. The usual sort of political horsetrading that passes for "reform" yielded ObamaCare, which did essentially zero to limit costs or cartel rackets.

A system based on parasitic predation by all the cartel players cannot be reformed or saved from its own perverse incentives and skyrocketing costs. The foundations of U.S. healthcare are rotten to the core. "Reform" is an appealing delusion, but the rot is so deep and so pervasive it is embedded in the society and the culture, beyond the reach of legislative overhauls, no matter how well-meaning.

This chart-fest reflects the trends that cannot be reversed by policy tweaks and tucks: The U.S. spends more than twice as much per person than our advanced competitors such as Japan and France.

The U.S. spends 2.5 times more per person than the OECD (i.e. the industrialized nations) average:

Wages have risen 16%, GDP rose 168%, and healthcare soared 818%. Do you reckon wage earners might have a hard time paying for healthcare nowadays?

If healthcare had risen only as much as official inflation, each household would be saving $10,000 per year--$100,000 each decade. $100K here and $100K there, and pretty soon you're talking real money in a conventional wage-earner household budget.

Projections of skyrocketing Medicare and Medicaid program costs guarantee national bankruptcy. The projection of 90 million Medicare enrollees is predictable, but there is no reason to believe costs will be limited to $20,000 per enrollee annually.

U.S. healthcare costs more in every category than other healthcare systems. Tweaking policy in one slice does nothing to limit the staggering increases being logged in all the other tranches of the system.

America's healthcare system is the perfection of the fraud triangle: the pressure to increase billings, fees and profits is immense, the rationalizations are unlimited (it's within the legal guidelines, etc.) and the opportunities for fraud are equally unlimited.

Individual caregivers and administrators want a different, better role and a better outcome, but each is trapped in the system as it is--and reform is impossible given the systemic foundations, incentives and legal framework.

It's time to start planning for what we'll do when the current system implodes. We might start by considering The "Impossible" Healthcare Solution: Go Back to Cash (2009).

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jcaz's picture

Let it implode, kick the Government out of the healthcare insurance business, and let's have some true price discovery-  real markets fix everything.


Chupacabra-322's picture

@ jcaz,

Exactly. DirectCare. Let the free market, advertising & licensed professionals, Clinic & Hospitals determine the prices.

MRI / X-Rays Tech hasn't changed much in recent years if not decades. There's absolutely no reason to change Thousands for them.

Elimination of the Insurance Company's is the only answer to real price development.

BaBaBouy's picture

Donaldo Said It Will Explode ...

Cognitive Dissonance's picture

Recent example of the scam.

Lab 'billed' $500 for blood tests. Insurance paid $40 and I paid $20. Lab considered the bill paid in full.

If I did not have insurance, I would be billed and expected to pay $500.

Essentially I am purchasing sickcare insurance for the significant pre-negotiated discount, not to have anything paid for me.

The Juggernaut's picture

What may happen is that because the health care is such garbage in the US, the unintended consequence is that the US people may start being the most healthiest people.  That or the health care system goes bankrupt… then people will become more self-reliable.


For example no one can live on social security.  SS is a joke.

Beam Me Up Scotty's picture

Lets not forget, healthcare costs are embedded in the price of EVERYTHING we buy too.  From a burger at a restaurant to a new car at a car dealership.   Every business who has to provide healthcare, has raised the price of whatever it is that they sell to pay for that expense.  Everything you buy, EVERY SINGLE THING costs more because government has put the burden of insurance on the employer.   So not only does your health insurance costs explode, so does the price of everything else you have to buy on top of that.

mtl4's picture

Geez, wonder where all that discretionary income went?!

Dabooda's picture

Several points here: 

1. You can cut your insurance costs ENORMOUSLY  by joining a religious health-sharing ministry.  The one I use is Liberty Healthshare -- costs $224 per month, with a $500 annual "unshared amount" (deductible).  All other medical expenses are "shared" (covered) 100%.  Any doctor, your choice.  They do have restrictions on smoking and pre-existing conditions. Using a health-sharing ministry exempts you from Obamacare penalties, too.  And my personal favorite part:  if you're conscientiously opposed to Medicare & Medicaid (I am) -- Liberty HS will not force you to apply to the government for such payments, even if you're eligible.   They'll still pay your medical bills 100%.

2. The second article linked above is spot-on:  cash payments are the answer -- all the other "reforms" we hear from Trump and Congress are band-aids and bullshit.  The bankers and lawyers and insurance scammers who control Congress have inserted their greedy hands between doctors and patients, and have  made healthcare into an extortion scheme designed to loot the entire nation.

3.  Some considerable part of the medical rip-off racket is caused by the educational rip-off racket by which wannabe doctors are extorted.  Cash is the answer there, too:  ending  student loans & government subsidies would bring costs back to reality.

4. Medical licensing and educational prerequisites are yet another ripoff racket; it used to be that wannabe doctors apprenticed  to practicing doctors for a few years, to learn the trade -- no colleges or universities required.  The educational and internship requirements for becoming  a doctor were designed by doctors to PREVENT more people from becoming doctors --  it had nothing whatsoever to do with protecting the public.  Nobody needs eight years of college to be a doctor -- the programs don't even start teaching practical medicine until the second year of medical school (5 years of useless BS!?)  The AMA is a closed shop, and wants the whole profession locked down, a monopoly to their benefit.  Wonder what happened to midwives?


DCFusor's picture

You can't live on SS in a place where cost of living is high and the lights are bright.  That's why no one with a brain does that anymore.  Doesn't mean you can't live just fine, I do.

DCFusor's picture

Cog, you may be interested to know that not all the med business is scamming by default.  After going through the Carilion grinder as described in the article, a doctor friend turned me on to an outfit locally that is more or less "doctors for other doctors, and their friends" and what you paid is actually high - even forgetting insurance premiums.

I had cancer surgery late last year - $850.

6 blood tests - total $120 including the doc office visit.  Several repeats of that and for < $600 I have a 3 page single spaced list of everything they can test for.

BP meds - $4/month.


You know how to get in touch if you care.  Paying the Ocare fine was far cheaper...and the care not as good.  We good ol boys still know how to deal.. It's one of the reasons you bugged out, even if you didn't know that.

kizell's picture

I work in Healthcare and the madness is never-ending.  He is totally right when he said the waste is endless.  The fraud part is a good point too but the waste is unbelievable.  This ship will implode because it has too.  There is no congressional answer to our problem.  Only pain will end the problem, and a lot of it too.

KimAsa's picture


There is a safety net for victims of the aforementioned racket, Chapter 7 liquidation. When Congress changes the rules again, read: Reforms, and makes medical debt like student loan debt, undischargeable under Bankruptcy Reform, America's hatred for itself will be nearer to completion.

Oracle of Kypseli's picture

You did not actually pay $20, You also paid a monthly fee even if you are not sick.

Labs will give you pricing on tests online if you do not have insurance and it will be cheaper.

Friend had xrays, insurance was 1000 deductible was 20% she paid $200. when  we explained to her what we do, she priced them at $115 if she claimed no insurance. The games they play is amazing.

Those who are basically healthy do not need insurance. Those who have preexisting and the lower middle class who do not qualify for medicaid, are screwed.

My dad's medicare part b is $220, he needs to visit the doctor twice per month to even break even as they have copay and deductible.

Insurances capitalize on human fear. 

chunga's picture

Nice clean headshot by Charles. Congress will NEVER "fix" this because they LOVE it.

The scams are endless, the skims are endless, the fraud is endless, the waste is endless

BeerMe's picture

Same could be said about the "causes" out there.  None of them actually want to cure anything.  Too much money involved.

Ghost of PartysOver's picture

ObamaCare or RyanCare it does not matter.  Until a serious solution is proposed to rein in the cost of healthcare this colossal crock of simmer'n cow crap will continue.  And if/when that proposal is finally put forth you will see a firestorm of rage coming from the special interest and K Street Lobbyist.    Fight that battle or succumb to Single Payer Government controlled healthcare because that is where things are headed.  Just make sure you are on the good side to the Death Panel Actuarial Tables.

zedwood's picture

25% of Medicare and Medicaid goes to people with Diabetes- that is a preventable condition and is caused by lifestyle choices.  One easy fix is to stop paying for lifestyle caused conditons.   Not to say that is going to save HC, but a good start.

Richard Chesler's picture

Insurance Parasites is a more appropriate term.

exi1ed0ne's picture

You used free market and licensed in the same sentence.  If you need a license, it's not a free market and you are only arguing how much regulation is appropriate. 

Chupacabra-322's picture

@ exi1ed0ne,

Agreed. However, I was speaking in terms of functioning with in the Criminal Fraud entity aka the UNITED STARES, CORP. INC.

Illini Fan's picture

And scummy attorneys need to go

Illini Fan's picture

And scummy attorneys need to go

Wulfkind's picture

You mean like the JPM, Goldman Sachs, TOO BIG TO FAIL markets we have now?


Those "real markets".



Giant Meteor's picture

That shit was pretty funny .

NoDebt's picture

"First thing we do, we shoot all the lawyers."

You want to fix healthcare, that's where you start.  None of these "perverse incentives" would exist if some lawyer hadn't figured out a way to make a million dollars off of suing somebody over it.

ZERO medial malpractice suits.  NONE.  Doctor fucks you up?  Tough shit.  Maybe you should have picked a different doctor.  If you think you have a good enough case to prove gross negligence on the part of the doctor or hostipital, you are still welcome to pursue that legal avenue, as always.  But suing just because you don't like the outcome goes away.  COMPLETELY.

chunga's picture

One question on that, how do we deal with gross negligence/incompetence?

jcaz's picture

That's the point- we don't.

As it stands, negligence/incompetence DOESN'T get dealt with- it gets paid off and swept under the rug,  passed on via higher insurance premiums.

The ONLY way to weed it out is to let the free market weed it out-  gonna be ugly,  but not as ugly as this never-healing open wound of a health care system.

Yes, people are gonna suffer and die as a result- but they are anyway.  This delusion that we can all "make it better" in medicine has to go away- there will be winners and losers in health- same as it's always been.

chunga's picture

I'm no expert but have a hunch that if *all* wrongful lawsuits were removed from the equation swamp-care would still be a yuge scam.

NoDebt's picture

Not all wrongful death or gross negligence would go away.  It's just a much higher standard that needs to be met legally.  THat keeps the number of lawsuits down.

I should point out that members of the US military already run under this standard.  If you're an Army soldier you do not have the option to sue your Army doctor for malpractice.  Gross negligence (or wrongful death if a surviving spouse is the plaintiff) are the only legal avenues open to you.

This suing for an easy settlement because your hangnail got infected shit has to go away.  And if you want to know the second-fastest way to make something go away, take away the incentive for lawyers to sue you over it (first fastest way is to cut off all money but then you end up with no healthcare at all).



chunga's picture

That's fine. Lovey has been a medical pro fro a long time and we've made a pact to NEVER, under any circumstance, go for anything other than routine alone. Doing so is just asking for trouble because serious errors/mistakes/negligence are exteremly common.

Killdo's picture

Around 100k die annually in the US from medical negligence as is:


Now comes a study in the current issue of the Journal of Patient Safety that says the numbers may be much higher — between210,000 and 440,000 patients each year who go to the hospital for care suffer some type of preventable harm that contributes to their death, the study says.

That would make medical errors the third-leading cause of death in America, behind heart disease, which is the first, and cancer, which is second.

jcaz's picture

Amen, brother.

I'd even accept the English version-  sure, feel free to bring ANY lawsuit to court.  But if you lose,  YOU pay half of what you were asking-  it's called "put up or shut up".

That's the real world.  Shit happens, people die. Never gonna change, no matter how many ambulance chasers we pad.

August's picture

>>>ZERO medial malpractice suits.  NONE.  Doctor fucks you up?  Tough shit. 

The medical liability system in New Zealand works reasonably well, and is dirt cheap.

If a medical doctor is grossly negligent, you work through the complaint system (and possibly the local press), and you have his license to practice medicine revoked, ending his career.  If the performance of a doctor or hospital is merely sub-optimal, it's basically "tough luck... that's life."  In either case, there are NO multi-million dollar settlements by anybody, to anybody.  

The NZ system may not be ideal, but it works "well enough".   


Canoe Driver's picture

Price discovery is impossible under conditions of infinite inelastic demand. This is the fundamental problem with applying capitalist principles to healthcare. It is possibly the only arena in which direct government involvement, in the form of single-payer, may ultimately be the only plausible solution for large, diverse populations.

Rich Stoehner's picture

Close the bases, scrap the carrier and feed the poor.

Dixie Rect's picture

Right, kick ass. Well, don't want to sound like a dick or nothin', but, ah... it says on your chart that you're fucked up. Ah, you talk like a fag, and your shit's all retarded. What I'd do, is just like... like... you know, like, you know what I mean, like...

Darktarra's picture

FUCK people, the entire American system is broken!  $225 Trillion in total unfunded lability, drugs ruinging lives by the millions ... the left becomming more physically agressive in the streets ... its time for Civil War II ... its just a matter of time! 

XqWretch's picture

Fuck people... I love it haha. I like to fuck people, preferably of the female variety

Squid Viscous's picture

Ask your doctor about "..." (imavictumbutamuzol...)...

* side effects include shitting your pants, vomiting, uncontrollable penile/vaginal disharge, severe flatulence, and drooling on your bib

Giant Meteor's picture

You got a line where I can get some of that ?

Thanks in Advance !

post turtle saver's picture

"Their pediatrician is already booked, so Carlos ends up waiting in the ER (emergency room)."

no... right here it falls apart, as Carlos can just as easily end up at urgent care and not end up incurring the costs of an ER visit for something which, although may end up being serious, most likely isn't...

post turtle saver's picture

sorry to break that whole "sky is falling" narrative, downvoters... but, the scenario simply isn't real...

Giant Meteor's picture

Yes, but they prefer to be paid upfront no ?

Newager23's picture

The problem is that too many people do not feel the pain of high healthcare costs. All government employees (local, state, federal) have insurance at a low cost to them personally. The same with anyone who works for a large company. Also, those on medicare and medicaid. When you have a large majority not feeling the pain, it's hard to fix the problem.

This is the main reason they left Obamacare as is, even though it is a mess. Those who don't fit into the groups that I mentioned above have become the disenfranshised who bare the brunt of high healthcare costs. Until everyone feels the pain, you're not going to lower the costs. 

Sonny Brakes's picture

People without means should expire. This is the message being sent. Get used to it. Once your gone they absorb all of your worldly possessions. Thanks for playing.

Giant Meteor's picture

Meh, ya can't take it with ya ..


halcyon's picture

American's are fat, sick and eating crap. Almost 70% of Americans are overweight or obese, with all the associated sicknesses.

No amount of healtcare bills moving money from tax payers to healthcare or pharmaceutical companies is going to fix it.

You need to stop farm subsidies, stop drinking HFCS, eating all that GMO grain and go back to real food.

Within a year, billions would be saved.

But no, it's better to keep people sick, because sick-profit system is sooooo good money for the 0.001%.