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I recently read a new book by Dick Morris called, Catastrophe. Mr. Morris spent two decades as a political consultant to President Bill Clinton. While we do not necessarily agree with everything in the book, we thought it might be interesting to review some concerns he has on the new health care bill. We have not checked out any of his facts (although he documents everything) and take no responsibility for any errors or omissions.
Health care now accounts for 16% of our nation's budget. In 1993 when Bill Clinton was advocating changes, the cost was only 12% and President Clinton warned that anything over 14% would be a disaster. Today we are just shy of 50 million Americans who are uninsured. Putting all of these people on the insurance rolls will be a financial challenge.
The solution that President Obama has is to ration care. That means giving it to some and denying others. In 2006, there were over 800,000 active practicing physicians. In the previous four years, that number had only grown by less than 5%. That means the rolls of doctors are only growing about 1% a year which is far short of our country's population growth. Obviously, we have a huge shortage of doctors and nurses and no amount of government stimulus is going to change it. At least not for five to ten years. Recently, it was reported that the average time spent with a doctor was about six minutes, a frightening number which means our resources are very stretched and thin. Obama's plan will add at least 20% more to the workload.
Economics tells us that when there are too many dollars chasing limited resources that the prices will go up for those who can afford it and the rest will go without. That sort of puts us right back to where we are now. The solution is rationing or government control over who gets what.
The problem is not money; the problem is enlarging the workforce. By making insurance mandatory, that keeps people in the Obama system and keeps them from opting out and paying for services themselves. If we don't have the personnel then someone is going to have to decide who gets services and who does not. That means the tests, medicines, therapy, treatment and procedures will be rationed by bureaucrats. These people will hold the power of your life and death in their hands.
Mr. Obama makes it very clear if you like your current plan that you can keep it. Not only that, he has promised that our premiums will be cut on average $2,500 annually. The implementation of cost cutting and standardization techniques along with electronic Internet recordkeeping of patient files will supposedly provide the cost cuts. Presumably the rush for Internet patient records is so bureaucrats have total access to records and hence can decide who deserves what services and when.
How will rationing work? If you are old and sickly, you may be out of luck. Nurse practitioners will be increasingly important as physicians will simply be too busy. You will see your doctor much less than before. The beneficiaries of the plan will be the young, the poor and the newly legalized immigrants. Illegal immigrants will be fast tracked to citizenship, most likely in time to put them on the voting rolls for the next election. Canada provides a model that Mr. Obama is seeking to emulate.
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In Canada, all health care is provided and paid for by the government. Nonetheless, while we have insurance companies here, nothing will really be much different. The key is when everyone is insured in some form, then the government can control what is covered and what is not. Canada also suffers from a shortage of health care personnel.
Here is the onerous part. In Canada, you cannot spend your own money to get better health care. It is illegal. Canadians who want to bypass the bottlenecks and delays of the system are barred from paying privately for their health care. In other words, short of going to another country, there are no options for Canadians seeking better health care.
In a recent article in The American, Brett Skinner, the director of health and pharmaceutical policy research at Fraser Institute noted that Americans spend 55% more than Canadians as a percentage of GDP. Here are some other facts:
- The U.S.had 327% more MRI machines and 183% more CT scanners per person than Canada
- U.S. docs perform twice as many inpatient surgical procedures than their Canadian counterparts
- The U.S. has 14% more doctors and 19% more nurses per capita than Canada
- In Canada, the average wait time from first seeing the family doctor to treatment is 18.3 weeks. In 1993, it was 9.3 weeks
- Only 44% of all new drugs approved by the Canadian government in 2004 were covered by insurance in October 2007. The average wait time to get the drugs is one year, on average
- About 5% of Canadians were unable to access a physician in 2007
- In 2005, the average wait time in Manitoba for non-urgent cardiac surgery was 19 days. Now it is 77 days! Cardiac problems can become urgent real fast!
- Even though colorectal cancer is the second leading cause of death in Canada, the drug Avastin which is the standard treatment in the U.S. was not available through their health care system. Apparently it has recently been approved. In some provinces, the cost is free while other provinces charge $36,000 for a six month treatment
Are we really going down that road? We don't know but we found Dick Morris' thoughts interesting. He has an updated website (www.dickmorris.com) for anyone interested in following the health care debates. Our politicians need to tread carefully. We urge them to take their time and get it right. Once in place, it will be very hard to change or roll back.
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That does it for this weeks Vance Advance!
Working for your Wealth and Peace of Mind,
The Vance Capital Management Team |
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