Wednesday, August 12, 2009

Taipan Daily: The Catastrophe Conundrum - Healthcare Revisited

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Wednesday, August 12, 2009
Taipan Daily: The Catastrophe Conundrum - Healthcare Revisited
by Justice Litle, Editorial Director, Taipan Publishing Group

Good news, Canadians – the president does not think you are scary. You have become a bit of a “bogeyman,” however, in regard to the growing din over U.S. healthcare reform. And a Canadian style government-run system wouldn’t fly in the United States.

That’s the president talking, not Taipan Daily. Mr. Obama’s remarks came in response to a question from a Canadian journalist, at a North American summit held in Guadalajara, Mexico.

Meanwhile, U.S. Representative John Dingell was shouted down by an angry protester at a town hall meeting in Romulus, Mich., last week. The protester, pushing his wheelchair-bound son to the podium, called Dingell a “fraud” and said that proposed changes would not help his son.

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Emotions are heating up all around the country, with strong outbursts on either side of the divide. Some are furious that healthcare reform does not go far enough. Others are furious that it is being foisted upon the country at all.

We touched on this debate two weeks or so ago – see “Throwing Rocks at the Healthcare Hornet’s Nest” – but it seems worth another look.

“Increasingly, the [healthcare reform] battle looks like a presidential contest,” says The New York Times, “with expensive advertising campaigns and Internet-driven efforts to mobilize support.”

Interestingly enough, the debate does not appear centered on how much all this might cost. Instead, it is more focused on quality of care... and whether Americans would be denied access to care, as some say happens routinely in other systems.

The below excerpt (slightly edited for clarity) from Taipan Daily reader Helen M. does a good job, in your humble editor’s point of view, in summing up the strengths and weaknesses of socialized medicine:

Let me tell you a bit about socialized medicine, this coming from someone who lived with it. First 28 yrs of my life I lived in Eastern Europe, in Czechoslovakia. This country strived to reach socialism and eventually communism, after the Russian example. Thank God it never reached any of them. You had a doctor that was assigned to your employer, or in absence of employer to the place where you lived.

Offices were always overcrowded, they did not [push] medicine on you as doctors in our country do, for [they] were in short supply. Medical care was rationed and so were the surgical procedures. When you did not like the doctor assigned to you you couldn't switch, [most] people of my generation worked very hard even physically (exercise) ate very sensibly (they could not afford more than basic food cooked from scratch at home, thus healthier than the USA supermarket food, most of which is bad for you) and they said keep away from the doctors if you want to live long healthy life. All my ancestors from both parents side lived a very long healthy life and worked till the day they died.

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Later my scientist husband and I lived in other European countries for months or a few years. The U.K. had a sort of socialized medicine. It was not any better: overcrowded offices (lonely old ladies [w]ent to see their doc to talk), medications and medical care was rationed.

Germany did not fare much better. Not only for patients but for the doctors as well. Government determine[s] what they are allowed to charge even to private patients and till recent days it did not change. During the month of June German doctors were on strike to object to their low fee scale. Actually in spring of 2008 I did go to Munich, where [a] top oral surgeon placed 7 implants into my mouth and his associated fine American dentist educated in USA... did 3 perfect bridges and both charged me equivalent of $ 20,000 whereas USA dentist and his oral surgeon would not even give me an estimate [beyond] saying could be up to $ 120,000. I chose German team and paid $16,000 or $20,000 including two trips to Munich. And that for the best team in Munich.

But due to their government ran system they are much less paid than their U.S. colleagues. Still they provide very fine care. [German] strike accomplished some fee scale increases but how would American doctors respond when their salaries go 300% and more down? We shall all get equal care regardless [of]our financial status – equally lousy. I would rather pay my last buck for a fine doctor of my choice.

These experiences are not based on speculation... but where I was and what I experience[d]. Lets all pray this sick scheme never passes.

Sincerely, Helen M. AIA, subscriber

Notice the interesting plot twist in regard to excellent German care. Helen’s long experience with socialized medicine was, overall, quite undesirable – “pray this sick scheme never passes” – but that did not stop her from saving $100,000 or so on an expensive dental procedure courtesy of a government-run system.

Does that count as hypocrisy? I would say no – it’s only common sense. Who wouldn’t want to save $100,000 without any noticeable reduction in quality if they could? There is real value in upholding one’s ideals and making decisions based on principle... but there is also real value in hard-nosed pragmatism and doing what makes sense in a world that will by and large remain screwed up anyway.

Saving $100K on a procedure is no small thing, and in many ways it goes to the heart of the healthcare reform debate. Many of those who passionately argued for reform, like Taipan Daily reader Ron E., had experience with financially debilitating healthcare-related events.

What about honest, hardworking Americans who have health care, insurance, good doctors, etc, but still face ruin in the event of a catastrophic health issue? For example, I am a hard working individual who has a fairly decent health policy. I have bulging of damaged vertebra in almost every disc in my back, and a fused neck. On top of that I had to have a valve replacement when my heart was attacked by infectious bacteria while on a trip to Singapore. My wife had brain surgery to clip an aneurism, she also suffers from Hepatitis C, and she has [a] ruptured disc due to an accident - a patient kicked her in the E.R. These health issues have required us to cash in 401Ks, IRAs, savings, and every penny we can get our hands on, and still led to financial ruin.

I don't expect to have a free ride, nor do I expect the government to pay for all of my costs but it just isn't right that I live in ruin due to poor health over which I have no control. Don't tell me our health system is fine. It isn't. I'm only one of millions in this position. I would say if you would take the anti-govt health plan constituent and give them a good healthy dose of my problems they would be changing camps in a hurry. Something must be done, and fast. There are way too many people with views like yourself. I'm not one to wish bad luck on anyone, but I do wish that all of the people that are "happy" with our health system would suffer (just temporarily) until they get a good taste of the consequences of poor health. They would change their minds in a hurry.
 - Ron E.


Ron E.’s situation powerfully underscores the source of strong emotions in this debate. In a free market system, the safety net is thin at best. Catastrophe can be absolutely devastating, no doubt.

This strikes many as a deep and grievous injustice... and who can blame them? Personally I would not wish poor health or capricious tragedy on anyone – there is already enough pain in the world – but given what Ron has gone through, I can understand why he would.

The debate also brings to mind one of the best science fiction novels of all time: The Moon Is a Harsh Mistress by Robert A. Heinlein. Written in 1966, the story is about a lunar colony’s revolt against exploitative Earthbound rule. The novel has been embraced by libertarians as one of the best expressions of libertarian thought to be found anywhere.

An acronym popularized by the Heinlein novel is TANSTAAFL, which stands for “There Ain’t No Such Thing As A Free Lunch.”

No matter how much we would wish it to be otherwise, everything has a cost. Like the moon, Mother Nature is a harsh mistress too. The discipline of economics is all about the allocation of scarce resources – “scarce” denoting the fact that there is not enough for all to have as much as they desire in the quantities they seek.

One might say TANSTAAFL applies to healthcare in terms of a trade-off... the trade-off between astronomically expensive (but rare) medical procedure coverage versus quality and availability of day-to-day care. Consider this from TD reader Joan:

As a Canadian I’m here to tell you our Health CARE(?) sucks. Our government has no problem making [its] citizens wait well over a year in pain for procedures to eliminate that pain. It doesn’t matter how much money you have you wait just like a bum on the streets. I needed a herniated disc operated on and waited 13 1/2 months to see a surgeon, who told me it would be another year to get into surgery. BUT, he wouldn’t operate on me then because 70% of hernias heal. (really?) Well, I had been in pain for a year and a half already and it was getting worse by the day. I was taking morphine and you know how addictive that is! I went to the U.S. and had the surgery in 2 weeks. I’m fine now and pain free. I look around me at all the people in pain and wish they could afford to go somewhere to be fixed. Now mind you, If you have a car accident and need immediate care, you jump to the first of the line. They also t ake cancer seriously. You only have to wait a month or so for that surgery. Imagine having cancer and waiting at all!!

Just my opinion, but I would take the U.S. health care over ours. Private insurance in the U.S. costs about $4500/year. I pay that here for additional health insurance and still have to wait in line for specialists.

Free ain't what it’s cracked up to be...


Yep. That’s TANSTAAFL right there... anything with the appearance of “free” actually has a cost.

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Where You Stand Depends on Where You Sit

The healthcare reform debate seems deeply driven by personal experience. “Where you stand depends on where you sit” as the old saying goes.

Those who have experienced catastrophic health events in their lives tilt strongly toward U.S. reform, of the sort that would have society (i.e. taxpayers by way of government) pay full freight. In contrast, those who have experienced the headaches of a dysfunctional government-run system on a day-to-day level tend to focus more on the general awfulness of that experience.

It isn’t quite that cut and dried, of course. Socialized healthcare systems also have horrible failings on the catastrophic side – think of patients dying on waiting lists – and free-market oriented systems can feel like a blatant rip-off to healthy individuals gouged by frivolous charges left and right.

Simple answers are hard to come by. TANSTAAFL still seems a fair guideline, though, because there will be major costs associated with whatever system America chooses. It’s never a pleasant exercise assigning financial weight to moral decisions – but the alternative is a fiscal road to ruin.

Warm Regards,


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