Guest Post: How To Cut America's Healthcare Spending By 50%

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

How To Cut America's Healthcare Spending By 50%

The current sickcare system is financially unsustainable. Physician correspondent "Ishabaka" proposes practical ways we could cut costs by 50% while improving care.

Since sickcare is fiscally and demographically unsustainable, it will eventually be replaced by something that is sustainable. Our only choice is to either let the current system collapse and then start pondering sustainable alternatives, or begin an honest discussion of sustainable alternatives before sickcare implodes in insolvency.

In the spirit of openly discussing a variety of sustainable, systemic healthcare options, we present this essay by correspondent "Ishabaka" M.D. on how to cut our current (18% of GDP) healthcare spending by 50%. Ishabaka received training in Canada, so he has direct knowledge of the Canadian system from the inside. Having spent decades as a primary-care and emergency room physician in the U.S., he also has deep knowledge of the U.S. sickcare system from the point of view of a care provider to under-served (i.e. uninsured) Americans.

Here is Ishabaka's essay:

Some time ago I told you how I could cut health care costs in half and provide every American with the healthcare they need (not necessarily the healthcare they want!). Here goes. Some of my points might seem drastic, but we are facing a drastic problem.


1. Immediately introduce national healthcare for all Americans ( and ONLY American citizens and H1B visa holders ) which will be paid for by an immediate TAX INCREASE.


2. Like Canada, this will cover all doctor's office, E.R., clinic, hospital etc. visits. Unlike Canada (the biggest mistake Canada made), there WILL BE co-pays for routine office visits and visits to the E.R. that are NOT serious emergencies.


Here is why Canada's no co-pay system is wrong. A family physician friend of mine in London, Ontario had a family in her practice. The little girl got an ear ache, with a low-grade fever on a Saturday. The mother took her to an E.R. and got an antibiotic prescription. On Sunday the girl was feeling better with no fever, but the mother took her to a walk in clinic "Just to make sure everything was all right". The doctor said "Yes". On Monday the mother took her daughter, who was now feeling fine, to my friend's practice "Just to make sure the other doctors knew what they were doing". The ear infection was cured.


That was two totally unnecessarily visits the Canadian tax payers paid for, and the first visit should have been to the walk-in clinic, which is much cheaper than the E.R.


Co-pays have to be meaningful - not too much to dissuade patients from necessary care, but enough to make them think. That should apply to all aspects of healthcare.


Let me give you another example - right now, where I live, a basic ambulance ride (no drugs or treatments) is about $500. I have had a patient come in by ambulance for a TOOTHACHE. The paramedics should be able to say "No" and not worry about being sued.


3. Like Britain, every person will choose a primary care provider, who will provide their primary care. Referral to a specialist will require a request for consultation from the primary care doctor. In the U.S., there are no restrictions on seeing specialists who charge twice as much or more than a primary care doctor. I saw a guy who went to an ear nose and throat doctor to have his ear wax cleaned - a procedure any nurse can do!


4. Immediate tort reform. Not quite sure of the details, but I estimate that probably 50% of the tests done in the U.S. are to C.Y.A. against malpractice suits, and are medically unnecessary. What would probably be best would be a no-fault system. You are injured by the health care system, you are compensated a REASONABLE amount for your injuries, regardless of who was or wasn't at fault. You aren't really injured, you get nothing. This could be handled by arbitration panels which would take the lawyers out of the system.


Right now, it takes on average $50,000 to defend a doctor against a frivolous lawsuit - the doctor wins, but still $50,000 is down the drain. On the other hand I was involved in a suit where a patient died due to real negligence on the part of two doctors and the family lost the lawsuit and got nothing. This would cut malpractice premiums by at least 1/2 and drastically reduce the amount of testing.


5. We spend WAY TOO MUCH money on end of life care. We have to get together as a society and decide what we will and will not provide for end of life patients, and that doesn't just mean cancer patients, it also applies to end of life heart failure patients, emphysema patients, etc.


For example, a reputable study in The New England Journal of Medicine showed 0% survival from treatment of cardiac arrest on kidney failure patients on dialysis. Zero. I have had to do numerous "codes" on kidney failure patients on dialysis - they all died. A code costs thousands of dollars. The first code I ever ran was on a 38 year-old accountant having an acute heart attack. In the old days (1960's) I would have simply pronounced him dead. He lived, and was FINE, no brain damage from loss of oxygen, walked out of the hospital a week later and went back to work. That was money well spent. We don't have infinite money. We need to get the most bang for the buck.


The $90,000 chemo drug that extended terminal prostate cancer patients' lives by 6 months should NOT have been paid for by taxpayers' money. Patients who want it should have to pay for it themselves.


6. We have GOT to get the gold-bricks off disability and workmen's comp. If we did, we could put the truly disabled and injured-on-the-job folks in suites in the Ritz Carlton with 24 hour nursing and rehab care! It is mind boggling to see how many gold-bricks there are.


I really liked the system in Ontario, Canada. Any primary care doctor could certify a patient as disabled or off work for up to two months. After that, the patients had to be seen by a panel of specialists paid by the government. They had NO INCENTIVE to either certify the patients as disabled/unable to work or not. To make these specialists truly independent they should be salaried - and the government CANNOT fire them except for the reasons that would cause them to lose their license (sex with a patient, drug addiction, etc.).


7. All advertising immediately banned. We go back to the 70's. No doctor, hospital, clinic, drug company, can advertise to patients. Period.


8. All new drugs have to be compared to existing drugs (if there is a similar existing drug). ONLY if they prove superior to existing drugs should the FDA approve them. Every time a new drug is invented, all the other pharma companies copy it, change a molecule or two, and then study it compared to PLACEBO. We end up with 20 drugs that do the same thing. It's ridiculous.


9. Get rid of fraud and abuse - for real. This means doctors AND patients. You get caught committing health care fraud you pay in fines THREE TIMES what you stole, and spend a minimum of ONE YEAR IN JAIL OR PRISON. This is crucial - fraudsters MUST be made to do time.


Everybody's charges get audited by an independent panel. You charge for patients you didn't see, or wheelchairs you never provided to patients - you go to jail. It must be recognized that nobody is perfect, mistakes happen. A doctor accidentally charges for a patient they didn't see once in five years is not fraud - it's a mistake.


In the same way, patients caught "doctor shopping" for narcotics and selling them pay three times what they made and go to jail for a year. Same for patients selling blood pressure pills (this is a big racket for Medicaid patients) - doctors are usually suspicious of healthy looking patients seeking narcotics, but see a Medicaid patient who is on expensive blood pressure pills, says they ran out and can't contact their doctor - they will usually get a prescription. You can make a nice income on welfare doing this.


10. Eliminate health insurance companies, except for people who want to buy extraordinary coverage like for the $90,000 prostate cancer drugs. Do like we did in Ontario - fee for service with the fees paid by taxpayers via a Department of Health, the fees negotiated annually by either state or national medical associations.


11. Electronic medical records THAT WORK. Right now we are in the "pre-internet" era of EMR. There are a thousand different ones, they are very expensive, doctors pay the full amount, and NONE OF THEM CAN TALK TO EACH OTHER. I worked for a long time in an ER in Florida in an area where elderly people from the north came to winter. They would get sick all the time and come in not knowing their allergies, meds, or medical history. It was a nightmare. If I hear "I'm on a little white pill for blood pressure" one more time I may scream!


With a national standard EMR I could find everything I needed to know with a few mouse clicks. It will be a disaster if this info is stolen or hacked, so the punishment must be severe - TEN YEARS in prison WITHOUT PAROLE, and a hefty fine. No excuses. Set up something with Interpol and the UN so this applies to all countries. And, since EMRs would benefit patients, doctors, and the entire country, doctors and hospitals pay half, the government pays the other half.


12. Get rid of the bad docs/nurses/hospitals/ etc. I'll just speak for the docs here - there are two kinds of bad docs - ones who are bad usually due to lack of knowledge or drugs/alcohol but WANT to be good, and those who are bad and don't care. The second ones are immediately banned from healthcare for life. The first group gets extensive education/rehab, whatever they need. Then close monitoring. In my experience, most of them will turn out to be good docs. A few won't, and get banned from healthcare for life.


13. Finally, immediately outlaw high fructose corn syrup and foods made with trans fats. We know they are poisonous. Again, minimum one year prison for the CEO and board of directors of any company that violates this law, whether it's a mom and pop shop or Kellogs or McDonalds.


That's it, except for a few tweaks. Fifty percent cheaper, everyone gets what they need.

Thank you, Ishabaka. Here is a story Ishabaka sent recently that highlights the consequences of fast-food on human health:

This is an article from the July 2, 2012 issue of Circulation, the journal of The American Heart Association. It shows how frequency of eating fast food per week increases the risk of heart attack - up to 80% if eaten four or more times per week! This is a highly respected medical journal, not some crackpot website.

Western-Style Fast Food Intake and Cardio-Metabolic Risk in an Eastern (Asian) Country.

Conclusion: "Western-style fast food intake is associated with increased risk of developing type 2 diabetes and of chronic heart disease (CHD) mortality in an eastern (Asian) population."


* * *

And this from Zero Hedge - want to live to 100? Here's how:

The Centenarian Diet

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pragmatic hobo's picture

I'm somewhat confused by #9. Isn't it customary to reward fraudsters?

Shameful's picture

Another post of "If I was the Soviet Commissar of Health the world would be so great comrade"  Thanks but no thanks, love the pay a tax but they decide the level of care.  How about people take care of themselves, or does that not fit into the great collective?  This is about as valid as "We tax you, and buy bullets.  You get sick and cannot produce to pay the slave master, we shoot you"

wcvarones's picture

In other words, Nanny State + Death Panels.

Go back to Canada, you authoritarian a-hole.

pazmaker's picture

my thoughts exactly!  up arrow from me.   I just read the first line about more taxes and knew the rest would be bullshit!

Dr. Acula's picture

The -1's you got were from people who support theft.


smiler03's picture

I read it as "pay tax" instead of "pay insurance premiums".

Christophe2's picture

Is it so hard to see how much money you would save personally (thousands of $ a year, personally)?  You pay more taxes but you (or your employer) no longer needs to pay twice as much for private insurance...  Don't confuse what the article proposes with the BS solution offered by Obamacare, which basically increases taxes to further enrich the corporations.


It's interesting how people seem to not understand that government initiatives currently fail so miserably because the politicians are incredibly corrupt and ill-willed.  It isn't because the 'government solution' itself is inherently bad or worse than a private solution.  Fixing corruption is not impossible either: cut the money out of politics and replace the MSM with independent media (the later at least being something that is happening by itself).


If you have any understanding whatsoever of markets, you should understand how bad things are for the consumer when the provider is either a monopoly or oligopoly.  Privatizing water or electricity typically means 20% higher costs and worse service (proven time and time again), so why this unshakable faith that the private option is always better?

FL_Conservative's picture

National HC system the answer??  Sorry.  I think NOT!  I have a MUCH better idea.  It's called pay-as-you-go for all medical services, supplemented by a "catastrophic" insurance coverage to protect against the exhorbitant cost of emergency or lfe-threatening healthcare.  Then have the government actually do something for us (citizens) and provide an "exchange" that provides a clear view as to what doctors and hospitals are charging for particular services, so people have something to "shop" against.  Also, a system of rating and feedback so that people can know more about the medical practitioners that they are considering using would be helpful.  In addition, employers set up 529 plans for their employees to contribute to and allow funds to be carried over into the future so everyone can save for their needs.  Lastly, TORT REFORM!!!  Nuf said.

Gully Foyle's picture

You yell Tort Reform now, but when you need it then you will bitch about there not being any justice.


Dr. Engali's picture

The ability to sue and recieve compensation for damages brought on to you by another is both right and necessary, however it has been carried to the extreme with punative damages.

MachoMan's picture

Actually, I'm not sure how you can question a jury's verdict...  I think that's largely a function of the wealth gap, not an inherent problem in the framework of damages.

There is a reason numerous states have constitutions that forbid laws limiting damage awards...  I'll keep it short by saying that since the inception of liability, there have been attempts to limit it (hint: tort "reform" is an antiquated concept by decades if not a century+)

I'll also ask what tort reform on punitive damages is supposed to accomplish when the SCOTUS has already put a limit on punitives for due process purposes...  (typically less than 10x compensatory).

Everyone talks about tort reform like it's something that needs to happen...  IT'S ALREADY HAPPENED!!!  and you insurance premiums didn't go down...  find another scape goat.

FL_Conservative's picture

Sorry, but you sound like an ambulance chaser or else your married to one.

sdmjake's picture

Similarly, it seems to me that we need to change the way we view medical insurance. Can you imagine if we viewed our auto insurance in the same way? You don't go to your Auto insurer to cover fill-ups, tires, oil changes, etc...but that's how we view medical insurance. Insurance, by definition, is simply the transference of risk. [hopefully in the most cost efficient manner possible] But damn we have let the concept of medical insurance take on a whole new meaning.

user2011's picture

1. outsource all the prision and correction facilities to third world countries.

2. Audit all the medical insurance company for medical doctors and hospitals

3. Audit all the medical and health service providers

4. Audit all pharmasudical companies.



ebworthen's picture

"pharmasuicidal" companies?

I like it...

MachoMan's picture

they are audited...  clawbacks occur quite a bit, but generally it's simply a "going through the motions" sort of affair...  and, like wallstreet, with the only penalty being recoupment of fees, no one is incentivized to quit stealing.

time2blowitup's picture

Hey Doc..GO FUCK YOURSELF!! Tyler time to tighten up the editorial review! Next we'll be getting essays by Nancey Pelosi on the benefits of forced sterilization for libertarians. 

Terminus C's picture

yea!  How dare we allow different view points and perspectives on to this web site!  Doesn't Tyler know what is right!!?!?!?

Dr. Engali's picture

This post is so unbelievably ridiculous that I don't even know where to start. I guess I'll start by trying to make up for the time I wasted reading this clap trap. Why does this guy insist on looking to the state for all the answers  ? I've read my last Charles Hugh Smith post, he and Simon Black are a bad word.

lasvegaspersona's picture

CHS had a few good posts a couple of years ago...not so much lately.

the tower's picture

Will never work. USA is not Europe.

Americans don't want to be taken care of by the government.

Americans want the freedom to eat till they explode.

Just cancel disability for all obesity-related illnesses and America will be healthy - and working! -  in no time cause right now the fastest way to a life of entitlement is getting FAT.


honestann's picture

Damn, I love it!  Imagine that!
 - free to decide everything for yourself.
 - free to enjoy/bare/suffer the consequences.

tmosley's picture

How about a free market in medicine?  Remove all federal regulation on medical treatment, and let the market decide?  I, for one, would like to be able to get house calls from basic practicioners, as they had in the US before the AMA took over everything and gave us our current fascist medical system.

Terminus C's picture

This is truly the solution.  Rates, skills and reputation would all be set by the market.  However, for there to be a truly free market in medicine there must be a free market in medical knowledge.  No restrictions on medical students in schools (schools need to be free market and not "degree granting gatekeepers") etc... unfortunately, what you propose requires a paradigm shift in our entire society.

lasvegaspersona's picture

In the past 4 years I have 'won' every local magazine article that ranks docs in my speciality. It is all bullshit. Yes I have a great staff and do good work but measuring the skill of a physician is not possible. Much of the reason for liking a doctor is his manner. This can be faked by any sociopath. I would have to review 100 charts to see if a competitor was 'good'. Listing training, boards and other aspects of skill is a start but it is not going to be possible to achieve meaningful assessment of skill unless it is obvious to the bad side....sometimes that is fairly simple.

time2blowitup's picture

Worst post on ZH of all time..hands down..

jplotinus's picture

Point 1 ok
Point 2 ok, except co-pay
Point 3 worth considering
Point 4 only ok if no-fault compensation required and set high enough to compensate for pain&suffering
Point 5 worth considering
Point 6 not ok to presume "gold bricking"
Point 7 ok
Point 8 worth considering
Point 9 not ok to presume "fraud"
Point 10 OK writ large
Point 11 ok
Point 12 not ok to presume "bad"
Point 13 OK writ larger

Not a bad plan; very much worth considering.

pazmaker's picture

Point 1   "Pay more taxes"   Kiss my ass and pay more taxes if you want to I don't!

All other points invalid due to point 1.

XitSam's picture

Here's a system for medical records: I control my medical records. When my doctor needs to see them I give him permission to look. No copies. 

Jena's picture

That's great and all but I think electronic medical records are a requirement of Obamacare.

XitSam's picture

Electronic is good. Have it all on a thumb drive, with suitable encryption, including one-use decryption keys. All records are are cryptographicly signed with the doctor's private key.  

Matt's picture

Why not have your own records sealed with your own key? What happens, in your version, if the doctor dies and no one knows his key? Or if he is on vacation?

Jena's picture

Some people do have their medical records on a mini dvd, flash drive or some other storage device.  That way they have baseline EKGs and other crucial tests for comparison along with their medical histories, prescription pill lists, etc.

It is generally intended for informational use in case they need care while they are out of town or if they ever need to seek care while their primary doctors aren't available.

lasvegaspersona's picture

Doctors can opt out of electronic records but will see a 1% decrease in reimbursement.

I am against them. The federal government will only put that info to bad use.

Jena's picture

Exactly.  The electronic records requirement is not meant to be of use to the physician (although it may be helpful) or to the patient (although it may be useful to some who want to have control over their records).  It is meant for reporting and compliance to government standards of care.  If a physician doesn't comply, he/she will first see lowered reimbursement rates.  Supposedly after that there are other means to get them to comply to required standards of care.

Say hello to enforced standards of care.

Matt's picture

National, standard electronic medical records would be a huge help. Here's an example:

A person wearing perscription glasses lives in California, goes to Florida, glasses break. You go to get a pair in Florida, you have to set up records there, have a new eye exam, etc.

If they had shared records and the laws were setup to use it properly, you could just get the new glasses without the new unnecessary examination. 

This is actually a variation of what happened to me; I had my own prescription information on paper in my wallet, but Florida requires a Florida record with an exam within the last 3 years.

Jena's picture

In your common sense assumption, the shared electronic records would benefit you.  Yes, that would be a huge help.

That does not mean the state laws will change to accomodate you even though you have said electronic records any more than if you carry your handwritten opthalmologist's prescription with you when you travel.  The state of Florida will still likely require an eye exam by a doctor licensed by that state within the stated time frame.



honestann's picture

!!! BULLSEYE !!!

Except I suggest YOU keep copies somewhere.

Rudolph Steiner's picture

That we may live to look back on this cultural paradox of suicidal aquiescense, of GMO fast food crimes against humanity, with morbid nostalgia and, ultimately ~ horror, becomes less and less amusing.

Lab rats and transfats and the free will of a droned nation ... Born in the USA!!!

spastic_colon's picture

the junk troll algo is in full force today

midtowng's picture

Wow! I actually approve of almost everything here. I'm surprised. I thought the ZH solution to healthcare would be "fuck the weak. let them die".

the only addition I would make would be to allow generic drugs manufacturing after 5 years.

Dapper Dan's picture


Have you heard of  “Pay to Delay”?


WASHINGTON, Oct. 25, 2011 /PRNewswire-USNewswire/


 -- According to an overview of industry data released by the staff of the Federal Trade Commission, in Fiscal Year 2011, pharmaceutical companies continued a recent anticompetitive trend of paying potential generic rivals to delay the introduction of lower-cost prescription drug alternatives for American consumers.

The FTC staff report found that drug companies entered into 28 potential pay-for-delay deals in FY 2011 (October 1, 2010, through September 30, 2011). The figure nearly matches last year's record of 31 deals and is higher than any other previous year since the FTC began collecting data in 2003. Overall, the agreements reached in the latest fiscal year involved 25 different brand-name pharmaceutical products with combined annual U.S. sales of more than $9 billion.

"While a lot of companies don't engage in pay-for-delay settlements, the ones that do increase prescription drug costs for consumers and the government each year," said FTC Chairman Jon Leibowitz. "Fortunately, Congress has the opportunity to fix this problem through the Joint Select Committee on Deficit Reduction -- and save the government and American taxpayers billions of dollars."


Will Congress do the right thing?


Dr. Acula's picture

"fuck the weak. let them die".

That sounds like the Soviet solution

"After 70 years of socialism, 57 percent of all Russian hospitals did not have running hot water, and 36 percent of hospitals located in rural areas of Russia did not have water or sewage at all. Isn't it amazing that socialist government, while developing space exploration and sophisticated weapons, would completely ignore the basic human needs of its citizens?

The appalling quality of service is not simply characteristic of "barbarous" Russia and other Eastern European nations: it is a direct result of the government monopoly on healthcare and it can happen in any country. In "civilized" England, for example, the waiting list for surgeries is nearly 800,000 out of a population of 55 million. State-of-the-art equipment is nonexistent in most British hospitals. In England, only 10 percent of the healthcare spending is derived from private sources."


dugorama's picture

and yet Cuba has longer life expectancy and lower infant mortality than the US.  'splain please.

odatruf's picture

Their cane sugar is better than our corn syrup, which = not so many fatties.

Matt's picture

Very few people driving cars, so they get lots of excercise walking / cycling everywhere. No heavy industry and probably very little plastics and other carcinogens messing them up. I assume much less preservatives in their foods. 

The weather and lifestyle are likely major factors, rather than their medical services. Let's compare apples to apples, shall we?

USA Life Expectancy: 78.2 years

Cuba life expectancy: 79 years

Florida life expectancy: 79.7 years.

As for infant mortality, I'm going to guess it is the toxins that causes America to have ~1 per 1000 higher than Cuba, but it could be their healthcare, IDK.




Forbes's picture

Most countries--Cuba included--don't count as live births those that don't live 24 hours. The US counts all births, except stillbirths, as a live birth. The US also goes to extraordinary lengths to keep premature births alive. Creates apples and oranges when comparing life expectancy statistics.

midtowng's picture

As opposed to America, where are hospitals are nice and shiny, but the poor die outside unable to afford teatment.