The Medical Money Pump: The Truth About Healthcare

So here is the way the American medical profession works, and let’s start from first principles.

If we have a population of human beings, and if no one ever gets sick or injured, the need for the medical profession doesn’t exist. So, it is that people getting sick or injured is in the interest of medical professionals — doctors, nurses, techs, pharmacists. It is also obvious that medical professionals should have some form of knowledge and skill that enables them to help these sick and/or injured people get well. This being true, the patient is then willing to pay the medical professionals for their services and seeks out their help when necessary. The number of doctors and hospitals serving a community rise and fall based on the needs of the population. Those who offer substandard services fall by the wayside, and those who are good at their profession prosper. It is a direct relationship: medical care costs paid by the patient directly to those providing it, the decisions about services and payment worked out directly by those providing the service and those using it.

This was the situation back in the 1940s and ’50s when I was kid growing up on a farm. We went into town when one of us came down either sick or injured. If hospitalization was necessary, we went to the hospital in the next town over. My parents paid all our medical bills out of pocket. The bills for both the doctor and/or the hospital were both reasonable and within a lower-middle-class budget. Even when my father had to have emergency medical surgery and spent several days in the hospital, he paid the bill without taking out a loan. It was the same when one of us kids had to have our tonsils removed or had to have a laceration stitched up.

It was not a broken system, but some of those who witnessed this process in action from afar wondered how they might stick a straw into this system and suck a few more bucks out of it. From purely a functional standpoint, the first thing that would bring more money into the system from a patient would be simply an increase in fees. Of course, this would require a loosening of ethics from the providers viewpoint, but it was certainly doable. Here is the inescapable fact that would allow this to occur. All you have to do from a provider’s standpoint is to ask how much the patient would be willing to pay for the services beyond a reasonable fee? Another way of saying this is, How much are you willing to pay for your health, your spouses health, or that of a child. How much are you willing to pay to keep a loved one alive?

When viewed in this way, it is difficult to put a monetary value on medical care. Ethics had always kept the medical professionals from putting so much monetary pressure on the system that such questions came into play, limiting them to how much is reasonable based on the wholesale price of the service, plus a reasonable salary. Once you get away from this ethical approach to medial care, the sky is the limit. Put in purely capitalist terms: How much will the marketplace bear? The patient then has to ask the doctor the following questions. You want my car? My house? Both? It is obvious that the ethical approach worked and this purely capitalistic, supply-and-demand approach wouldn’t. But morality is an outdated concept in the world of capitalism’s MBAs and finance officers.

Once ethical motivations are pushed aside in favor of capitalistic free-enterprise, prices can be raised to the breaking point, and that leaves open for patients to consider a communal approach to financing medical care, where everyone pays into a kitty based on a monthly fee, and then major medical expenses are paid out of it. This keeps families from going bankrupt when the more expensive procedures or even hospital care are needed.

Enter your friendly downtown insurance salesman. Emphasis on friendly.

But before we bring in these parasites, let’s take a more in-depth look at the conceptual mechanisms he will use to further his quest for money.

The Money Pump

A pump is a mechanism that, with an energy expenditure at its input, produces a needed quantity as an output. A simple input/output device. Water pumps were the most frequently used in days gone by. The user of the pump raised and lowered the handle and water came out the spigot.  In the case of medical care, the doctor provides some sort of knowledge or energy to the patient, and he offers up his wallet. Yes, in the case of the medical profession, the patient is the money pump. We can see from this analogy that the health of the patient isn’t a necessary outcome for him/her to be a money pump.

As a matter of fact, the patient’s recovery is counter productive to the generation of money. The patient ceases to perform a money pump.

So, the medical profession depends on people getting sick or injured, that they stay sick or injured, and remain as sick or injured as they can be and still stay alive. The medical profession is then economically robust. It has then become a money-making machine, and the people who benefit economically from it can do certain things to ensure the profession remains as healthy as possible. Notice I didn’t say that the patients remain as healthy as possible, but that the people who practice in the profession stay economically healthy as possible.

I know what you’re thinking. People go into the medical profession to help people live healthy, happy lives. And to a certain extent this is true. But the focus of the medical profession has gradually changed, particularly with the advent of HMOs, so that the focus is no longer the health of the patient but corporate financial health. One might even call them IMOs, Illness Maintenance Organizations. Even doctors themselves now tend to focus much more on the financial side of their businesses than they do the welfare of their patients. The MBAs have infiltrated the medical profession to the extent that practicing medicine has been pushed aside as the top priority. If you don’t believe this, just go anywhere, doctor or hospital, and try to get care, even emergency care, without insurance, a valid credit card. or a wad of greenbacks.

Parasites

Insurance

Insurance is an interesting phenomenon, and to fully understand the implications and function of insurance, we again need to go back to first principles. Insurance is a communal phenomenon. People band together to share medical expenses so that medical bills never exceed the ability of a patient to pay. Communal fund take care of the bill. Also inherent in this communal concept of medical care is the proposition that those who pay into it have no say in how the funds are administered, or even how much of the fund that are paid in by participants are available for medical-bill dispersal. All this is determined by those administrating the insurance. And this really starts to sound like communism, yes, the political form of government, because the insurance company is owned and its policies are administered, not by patients who pay the medical fees, but by the owners of the company, whether public or private.

How can a patient become a money pump even if they are never sick? This is where medical insurance comes in. In theory, this is a communal system where no patient actually pays the doctor or hospital performing the medical service. Everyone who has the insurance pays a monthly fee, the insurance company holds the money in a community pot until a claim is made, and then the insurance pays the bill instead of the individual.

as many people as possible get sick and/or injured and need — or at least have been convinced they need — their help to get well. This is an indisputable fact, and no fair person would argue with it.

We can build a model of the medical profession that now depicts its nature and explains what has happened, is now happening, and will continue happen into the foreseeable future. Yes, this model will give us an intellectual handle on understanding the future of healthcare.

When medical costs got so high that a patient couldn’t afford medical care, insurance providers saw an opening and stepped in with monthly fees in leu of real-time payments. Theoretically, a patient could buy insurance, pay a little each month and have the insurance company pay for the medical bills when the patient did become ill or injured. This had the added advantage of spreading medical costs over a large population, so that high bills could be spread among the entire ecosystem. When patients seemingly took unfair advantage of the situation, the insurance company invented a copay policy, where patients not only paid the monthly insurance premium but also a portion of the real-time doctor and/or hospital charges to keep the patient from going too often. This also provided an easy mechanism for deferring costs for the insurance company and to increase monthly payments and copays to increase profits and particularly salaries for executives who managed the insurance programs.

But the situation for the patient was even worse than that. Turns out, the medical insurance company doesn’t accept charges for just any old medical problem. The patient was asked to sign a contract, the fine print of which, excluded many types of illnesses that it didn’t want to pay for.

Pharmaceuticals

This article in the Washington Post, illustrates how patients are considered to be money pumps by pharmaceutical companies, and it also demonstrates how their moral authority has degraded to the point where they are willing to kill the patients who take their medication to make money as quickly as possible. It also illustrates how government can be used as a tool of the drug companies to milk patients even to their death. Of course, death is a violation of first principles of moral-less economics. You are not supposed to kill your target consumer, just keep them chronically ill, but when you have such a large population as that of America, this really isn’t much of a financial risk.

What Is to Come

Medical care is being integrated with pharmaceutical and insurance. To get medical care you will have to have insurance. When insurance takes over medical care, when a doctor prescribes medication, the patient has to take it or the insurance for the condition becomes void. They may even have access to your bank account as a condition of accepting you for medical insurance, and they can prescribe treatment and medication and deduct the costs from your account whenever they wish. You will have no choice concerning the medication or treatment.