US Medical costs are out of control. But rather than dealing with that, voters will be faced with political policy decisions based on whether the govt should pay for it.
The cost of healthcare affects us all. In the November 2018 mid-term elections, health care costs factored in as the #1 issue that swings voters. In the end, our health is more important than money, yet although we might not have as much control over our health as we would like, we have far more control over our wallets. And that means we tend to focus on how to pay less to get more with healthcare.
With all the spin around partisan politics in regards to health care, we are forgetting the elephant in the room.
The biggest issue with US health care is uncompetitive pricing
I've written and been interviewed on podcasts in the past about my view that healthcare should be categorized into three (3) areas:
Preventative - things you can do to keep yourself healthy
Elective - things you know you have to do, but you can plan for (like a knee replacement, hip replacement, etc.)
Adverse - things you have no advanced knowledge of, and cannot plan for (like Emergency Room visits, surgery, etc.)
Let's not focus on #1 above. Because that is something you can do individually (eat better, go to the gym, be more active, etc.). But #2 and #3 are the bulk of the large costs of health care.
We think of healthcare in those areas as "health insurance". This is the first mistake.
Health care is NOT Health Insurance
You buy insurance to give you some protection for very large costs that may come from an unforseen situation. Like a fire, flood, burgulary, earthquake, etc. These catastrophic events could wipe your home out, your life savings, etc. and having some risk mitigation plan using insurance as a tool for this makes sense. Of course you want to be dealing with an insurance company that will actually pay when the SHTF but that's a topic for another time. For now, we buy insurance for those adverse events. The pricing of the insurance is setup to be based on replacement cost of your home, your car, etc. and the frequency of adverse events that may occur in your geography. Insurance analysis is a complex business, but by pooling risks, they can make a lot of money. In order to get your business, each insurance provider has to offer a competitive and affordable product. One of the first things you can do to drop your monthly expenses is to shop around your insurance needs (again) and see if you can get the premiums down.
But the mistake that most US consumers make is to think of insurance as the payor of all healthcare related costs. You wouldn't use it to pay for routine maintenance on your home (like fixing your roof, repainting the exterior, etc.). So why do we think of using it to pay for elective medical issues as the first place for those costs?
There is a simple reason. The health care industry is scary to most of us. We are not doctors. We don't know the risks associated with any evasive procedure. Sure, it could be a simple appendix removal, but what if something goes wrong? What could that cost? We could go bankrupt if we don't use an insurance company for this.
Therefore most of us think of health care as health insurance since our only interface for payment for this is with the deductible on the insurance policy and having a high deductible means having a lower monthly premium.
Health care costs generally increase as we age
The older we get, the more we need to see the doctor. In the USA, at the age of 65, we are eligible for government funded medical coverage (Medicare) which we pay into an insurance fund over our younger years by way of tax deduction into a medicare pool. This takes a lot of pressure off the elderly for covering the costs of medical needs, although over time the level of coverage is generally reduced and the individual is responsible to pay for areas not covered by Medicare. This can be overwhelming in terms of prescription drug costs, etc. and as a result people go back to the old friend, "the insurance company" for this. Again, their interface for medical services payment is a third party again (government or insurance).
So in those years prior to Medicare elgibility, you are on the hook for the costs. And the older you get, the more on the hook you are.
Consequently medical debt is the #1 cause of bankruptcy in the USA. If you need medical services and you can't afford them, or you relied on insurance and they denied your claim because you had some pre-existing condition or other exclusionary factor, then you can lose everything. Your home, your possessions, your life savings, your retirement. This is scary stuff. This is the daily fear that Americans live with. It doesn't help anyone live a happy and peaceful life.
Let's look at health care as a business person would
The health care providers need to provide a level of service that reduces errors and increases positive outcomes. That means investing in equipment, maintenance, skilled professionals, etc. This is the case all over the world. Every hospital is in the same situation. They are either regulated by their government in regards to services, or they are regulated by the free market in that if enough bad news leaks out about poor patient care, no one will choose to go to that hospital.
Yet they have a business to run. They have to make a profit.
Guess what? So does every other business in capitalism. This is the case for every diner, shoe store, publisher, technology company, etc. Welcome to the world, hospitals. You are not "special".
Yet we treat them as special. We let them charge ridiculous fees for services that would never fly in a free market. We let them escape liability for bad behavior because they have more lawyers and lobbyists than we have. We let them do deals with insurance companies that looks more like a cartel operation than healthcare. And we look the other way because if it doesn't come out of our pockets, why do we care?
It does come out of our pockets though. It comes out of it in taxes or in future service levels that are constantly eroded. If people took more personal responsibility for preventative and elective activities in regards to health care, the costs would be way lower.
And this is my point - The ELEPHANT in the operating theater is COSTS - not who is going to pay for it. And when you start to dig deeper on this, you get really shocked.
First let's understand one thing - the cost of becoming a medical practitioner is SUPER EXPENSIVE. It is not uncommon that the cost of education could be as much as $500,000 to $1,000,000 in student debt. And a specialist could be in education for 10+ years longer than an average university graduate. But again, the competitive cost of education now becomes a factor in the competitive price of a physician.
A friend of mine used to be a bank teller at our local credit union. He was from Afghanistan and found himself raised & living in the USA. He always wanted to be a doctor. But he couldn't afford the educational costs of studying medicine in the USA. Consequently he became a bank teller. Not a glamorous profession, but he was able to make a living. But the urge to become a doctor weighed heavily on him and one day he told me he was quitting his job at the bank and going to study medicine full time. I asked him, "How have you been able to afford this?". I thought he would tell me about some student loan thing he found that he could leverage, but what he told me was shocking - but completely understandable.
He told me that he was moving to the Dominican Republic to study medicine for two years. The costs of the education were affordable and that with his studies there, and returning back to Florida to do his internship, he could become a certified general practitioner. And he did that. He is now a practicing GP and doing what he loves.
That story resonated with me. As an immigrant, I understood that you "go where you are treated best". He was an immigrant too. He came from Afghanistan to the USA. But he realized that studying medicine was cost prohibitive here. So he used the world to solve a problem. And he succeeded.
Consider your doctor, or the number of doctors you see practicing in the western world. How many of them are from other countries? From India, Bangladesh, South America, Europe, etc. How many of them are not native born US citizens that studied medicine here? How many of them took advantage of a lower cost of education in another country? And why is it that the CEOs & CFOs of these mega medical corporations are hiring nurses from South Africa because we don't have enough in the USA? Is it because they are better? Well that's debatable, but if you understand the concept and embracement of "Doctors without Borders" and the good work that they do worldwide, you will realize that there should also be a "Medical students without borders" or even "Patients without borders".
The CEOs of US corporations know the cost advantage of globalization in terms of manufacturing done in China or IT work done in India, etc. They know that the costs are as much as 1/10th of the cost of a US person to do that work, and they take advantage of it. They also know that bringing in trained medical professionals that were not trained in the USA, but have to pass certification here, is a significant way to keep costs down. Like any business owner, you strive to raise prices up and keep costs down, meanwhile remaining competitive.
So if this is happening, why are medical costs so expensive?
There are too many aspects of the medical business that have accepted unethical practices as being the norm. Whether it is the high costs of pharmaceutical drugs or patent manipulation for medical inventions or just that a patient on a stretcher about to be wheeled into the operating room can't shop around for the products & services they need at that time, that price manipulation is rampant and this is just wrong. The fact is we all pay for this because medical insurance premium costs are so high, and insurance companies will adopt similar unethical behavior to deny claims resulting in bankruptcy for most patients.
If ethics in terms of business practices were policed in some way, this would all change. Just to underscore the cost difference, I recently did a comparison for a hip replacement done in a US hospital vs. the same hip replacement done in Guadalajara, Mexico. The average price I was able to get in the USA was about $48,000. The same average price in Guadalajara was $4,400.
Is it at a horrible facilty in Mexico, with disease and infections? No. It was at a facility like the ones shown in this video below:
This is a 3 hour flight south of Phoenix, Arizona with any major US airline carrier (American, United, Delta, etc.).
And if you remember that most physicians that are working in the US system were probably trained outside of the US, or are not native born US persons, then having a physician in a region that supports medical tourism like this is really no different than what you are getting in the USA. And the costs reflect the impact of the free market on medicine.
Elective surgery using medical tourism may not be for everyone
If you cringe at the idea of having someone in a foreign land who may not speak your native language as your physician, then this could be a leap of faith too far for you. But at least I would suggest that if you are looking at not having insurance to cover needed procedures, and you can probably pay outright for the procedure for less than most people's insurance deductible in the USA, you might at least want to research where your procedures are done and maybe visit there on vacation and see what you find. Whether you have procedures done in central American, south east Asia, Europe, etc. it could be a far less expensive and stressful process.
And in some cases, it may be the only option. If the US stops debating on whether we *should* have "Medicare for all" or free, public healthcare, and doesn't address the rampant out of control costs of that industry in a meaningful way, then while you are waiting for a miracle to happen, you could be getting better by going where you are treated better. The world is your oyster and just as my friend at the bank found out, education overseas is affordable just as being a patient in an overseas medical tourist mecca may also be affordable. And you won't go bankrupt over it either.
Subscribe to our podcast
Our regular podcast is LIVE! We are in iTunes, Spotify, Google Podcasts, Stitcher, etc.
What will bring on the next imminet US economic collapse?
Remember 2008? Banksters created an illusion that housing prices could keep going up and up because they artificially fueled demand by creating a new customer base of people who got mortgages that previously would never have qualified.