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The difference between health and medical care · Cultural Wars | America Out Loud News

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In a world full of lies and deception, it takes courage to speak the truth.
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In a nation hell bent on its own destruction, it takes honor to seek a return to glory.
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Join us in cutting through the lies.
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Join us in cutting through the propaganda.
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Join us as we seek the truth on cutting through the fog from the America Out Loud Network.
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And here's your host, Wallace Garno.
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Ladies and gentlemen, welcome to Cutting Through the Chaos on the America Out Loud Network, where we cut through the lies in the propaganda to bring you the out loud truth.
0:39
I'm your host Wallace Garneau, and I want to talk about lean government, medical care without illusions.
0:46
But before I do, we have to spend just a moment talking about the State of the Union address.
0:52
Not because it was a masterful address.
0:54
It was a very, very good address.
0:56
I thought it was the best speech I've ever seen Trump give, with the exception of the end.
1:01
And uh there was nothing specifically wrong with the end of the speech, but when he got to the conclusion, he was very clearly reading from the teleprompter.
1:09
It was the only time in the speech where he was obviously reading from the teleprompter.
1:14
Obviously, he was reading large parts of the speech.
1:17
And uh, but you know, he's a comedian.
1:19
He is at heart a stand-up comedian, and he's got great comedic timing.
1:23
So he intersperses throughout uh his speech all of these comedic clips that really make it seem lively and and make it seem like he's having fun.
1:34
Uh many of his comedic clips are very funny.
1:37
Uh, much of this speech was very pointed.
1:39
He really went on the attack against Democrats, and uh, you know, when he got to the conclusion at the end, it was almost like uh a light switch was flipped and and and he was he was very clearly reading, somewhat monotone, and uh just not as engaging as the rest of the speech.
1:55
So that is the one negative thing I would say about what otherwise was a brilliant speech.
2:00
But the most important part of it wasn't any of the promises that he made or or any of the specific attacks or or points he made about the left, other than the one that I think could just cost the Democrats any chance at winning the midterm elections.
2:15
And that was of course when Donald Trump said, if you agree with the statement, stand up, and that the statement was a paraphrasing, I don't have it right in front of me.
2:23
But the statement was something along the lines of if you believe, or not if the state was something on the lines of uh the purpose of the government, the primary purpose of the government is to so is to protect American citizens and not illegal aliens.
2:38
And of course, none of the Democrats, if any of them stood up, it looked like none of them did.
2:43
Uh and that was just, I think, an absolute damning moment for the Democrats, not just because it happened, but because of the optics of it.
2:51
You know, there were cameras on these people, and you could see their faces in so I wish we had been more cameras on the people, unless from a distance, because when they were showing the faces, you could see how uncomfortable they were at sitting for that.
3:04
You could see them kind of looking to the left and the right, trying to figure out is sitting down really what we want to do with this question.
3:11
Should we be standing up and clapping on this one?
3:14
And you know, they'd had a copy of the speech ahead of time, and this particular part of it was not ad-libbed.
3:20
Trump had that in the speech, so they knew it was coming.
3:23
Which means somebody made the conscious decision, we are going to sit down or stay sitting down when this happens.
3:28
We're not going to clap.
3:30
And uh just the optics of that particular moment.
3:34
There are other moments, such as the whole Minnesota thing with Ilian Omar yelling at him.
3:38
I think she was yelling, you killed Americans or something like that, probably in reference to the couple of people who were killed by ice.
3:44
Uh, one of which clearly in self-defense, and the other one, I think when that comes out, it's going to be a situation where the officer made a mistake, but it was a mistake caused by multiple officers, and not necessarily the ones that pulled the trigger.
3:57
Uh it would appear somebody said gun, the gun may even have gone off, and at that point, other officers opened fire.
4:03
So neither one of these are both, of course, unfortunate, incredibly unfortunate circumstances.
4:08
Incredible tragedies any time somebody dies, uh, but I don't think either one of those are going to lead to any kind of criminal prosecution.
4:15
And uh, you know, the whole, the whole the whole thing, just you kill Americans.
4:19
Well, no, he doesn't, a couple of people.
4:21
Unfortunately, in law enforcement situations, every once in a while something unfortunate happens.
4:26
But you know, just the optics of sitting down on the government is for American citizens first and foremost.
4:32
Just it blows my mind.
4:34
I saw that and I was like, what?
4:36
They're sitting down for that?
4:37
They're not gonna stand up.
4:39
You know, it's I'm like, you know, message of Democrats when they say something that you agree with, particularly something that you know virtually all Americans agree with, stand up and clap.
4:48
You don't have to stand up and clap for everything.
4:50
But but you know, they essentially just flushed any chances they had at winning the House or the Senate in the midterms.
4:58
In my opinion, they flushed that chance right down the toilet on that because this is a billion dollar ad.
5:04
And you're gonna see that, you're gonna see other things from the State of the Union where the Democrats probably should have been clapping.
5:10
But that particular one, you're going to see again and again and again between now and November, and uh, I'm sorry, there just isn't any way to make that go away.
5:22
And with that, you'll now get into what I really want to talk about, which is health care.
5:27
And uh, something that's near and dear to me, uh, because my first wife had a cousin who died of heroin of a heroin overdose when she was just 18.
5:38
And uh I didn't meet her.
5:40
I think I might have seen her a couple of times when she was on heroin, but when I really met her was when she was in remission, or in not currently taking heroin.
5:48
And I met her a few times.
5:50
She was of absolutely beautiful but troubled girl who just fell in with the wrong crowd.
5:56
And then she found herself in a world that she could not control.
6:00
I I don't know exactly when she started using heroin, how old she was.
6:04
I think it was when she was about 16.
6:06
Uh, but I know she overdosed once when she was about 17, nearly died from it, got clean, and then just over a year later she overdosed again.
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And the first time she was rushed to Bronson Hospital in Kalamazoo, Michigan, and she received the very best treatment available.
6:23
Her life was saved that day in what should have been what people hoped for the next few months at least, the next call it nine months, hoped would have been a life-altering moment where she would have stopped using heroin forever, because she did get clean and she seemed happy and and got her life going again, and uh, you know, instead, it only bought her a year.
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Because after she was clean for a period of time, you know, she drifted right back into the same crowd, and uh, well, with a second overdose, help just didn't arrive in time.
6:54
I don't remember her name, but she will always be remembered as a remarkably beautiful girl, intelligent, had everything going for, uh, but she had an incredibly tragic end.
7:05
Now, another situation related to healthcare.
7:07
My father-in-law grew up in communist Poland.
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He was exposed to asbestos as a student, later worked in the coal mine.
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He was a smoker for most of his life.
7:16
And just to be clear, I'm talking now about my my second wife.
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Wife, of course, the woman I'm married to now, Gosha.
7:22
If you go to uh if you go to uh Nashville for over the fourth, July 4th, uh, she'll be there with me.
7:28
So that's my second wife we're talking about.
7:31
She's from Communist Poland.
7:32
She moved here when she was 20, shortly after the Berlin Wall came down.
7:36
Her father spent his entire life first in Communist Poland, then after what stopped being communist, you know, in Poland.
7:43
And uh he was exposed to his best as a student, later worked in the cold mine, as I said, and he was a smoker for most of his life.
7:51
He died toward the end.
7:52
He's in his mid-60s, he did.
7:54
He quit smoking.
7:55
Uh at 69, he was diagnosed with lung cancer.
7:58
His doctors told him that he was very fortunate he was not yet 70.
8:02
Is under Poland's universal health care system.
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Treatment options were still available at 69, but had he been 70, we would only have qualified for for end-of-life care.
8:12
And that would have been true no matter how healthy he might otherwise have been.
8:16
I don't think Poland has changed that in their universal health care system either.
8:19
I think at 69 you qualify for cancer treatment, and at 70, you know, they'll make sure that you're not in pain, but uh they're not gonna they're not gonna do anything to try to take the cancer away.
8:30
You are at that point terminal, even if treatments are available, because they want to save those treatments for people who are younger.
8:38
Now, Poland at that time, this would have been 15, 16 years ago, was uh not known for having the most modern cancer treatments.
8:48
So what my second wife, Gosha and I did is we married very quickly and then flew to Poland so that I could meet her parents, not as a boyfriend, but as her husband.
8:58
The idea here was actually that we would have uh get get married in front of the justice of the peace and then go to Poland and have a Catholic wedding in Poland, and we decided to do that after looking into getting married in Poland, and the law was at the time, probably still is that I'd have to live there for six months.
9:15
I work full-time, so the chance of me living there for six months to marry her in Poland, not very realistic.
9:21
So the thought was the problem is Poland won't recognize the wedding if I haven't lived there for six months.
9:26
So what we'll do is we'll get married in America, Justice of the Peace, and then when we go to Poland, her father could walk her down the aisle in a Catholic ceremony, and we don't have to worry about the six months because we won't, in that case, have to worry about the Polish government recognizing the marriage.
9:41
They'll recognize my American marriage, so at that point, just a Catholic ceremony, and that would have worked out.
9:47
We got there, though, and her father was like, don't waste the money, you're already married.
9:51
So uh he didn't want to he didn't want us to spend the money on it, so we didn't do it.
9:56
And uh, no, he already looked pretty frail when I got there.
9:59
Uh a few.
10:00
Few months after I came home, doctors found another cancerous lesion on his brain.
10:04
He died shortly thereafter.
10:06
Gosh, of course, still wanted a Catholic wedding, so we did end up having a Catholic wedding.
10:10
Her mother flew in for it, all of her family, real nice ceremony.
10:14
And uh we were able to do that.
10:16
So, but it didn't save her father.
10:18
Her father did not survive to walk her down the aisle.
10:20
Her mother had to walk her down the aisle instead.
10:23
So that's Poland.
10:24
You did if you have if you're 70 years old, you can't get cancer treatment, and uh no, they're not known for having the best cancer treatments in the world anyway.
10:33
But when the OECD evaluates countries on health care outcomes, it's not just Poland that doesn't rank particularly high.
10:41
The United States does not either.
10:43
As a matter of fact, the metric that the OECD looks at the most and gives the most attention to is life expectancy at birth, which is roughly 78.6 years in Poland and 78.4 years in the United States.
10:57
Neither nation sits on top on the top tier globally, despite the fact that the United States spends a lot more per capita on medical care than does any other country on earth.
11:08
In fact, by that measure, life expectancy at birth, Poland measures slightly better than the United States, in spite of the fact that we spend six times as much per capita on medical care.
11:21
And people talk about this all the time.
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Well, if America had a great health care system, then we'd have a higher life expectancy, and we wouldn't have the high infant mortality rates, and we we we see that we do very, very poorly in relation to a number of other countries in relation to health care, the big one again being life expectancy at birth.
11:40
And so then they tell us, well, we should go with a universal socialist health care system, just like all these other countries have, because some of them are doing better than us.
11:48
About 20 of them are doing more than 20 of them are doing better than us.
11:51
And so they're saying that we should do that too.
11:54
Life expectancy, however, does not tell the whole story.
11:59
Polish society is very much less car dependent.
12:03
Obesity rates are much lower.
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Processed food consumption is much lower.
12:08
Americans are more likely to be overweight, less likely to exercise regularly, and more likely to adopt lifestyles that accumulate long-term metabolic strain.
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Well, those choices shape your health outcomes long before a physician becomes involved.
12:24
The American health care system receives constant criticism.
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But if the question is not obesity rates or life expectancy, so much as the quality of medical care when it is delivered, all of a sudden the United States is one of the best in the world.
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The only countries that compete against us, measuring medical care when delivered, are much smaller and generally oil rich.
12:47
A disproportionate share of global pharmaceutical innovation, medical device development, and advanced surgical technique originates where?
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In the United States.
12:56
The world's leading academic medical centers are concentrated here.
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Why?
13:00
Because they want to operate at the intersection of research, capital, and clinical practice.
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Breakthrough cancer therapies, transplant techniques, trauma systems, and complex cardiac treatments are often pioneered and refined in American hospitals before spreading elsewhere.
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We simply put lead the world in medical and pharmaceutical innovation.
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When a patient gets a rare tumor, a complex neurological condition, or catastrophic injury, the technical ecosystem available in the United States is simply unmatched in depth.
13:36
Advanced imaging, innervational radiology, robotic surgeries, biology biologics, and experimental therapies, those aren't theoretical capabilities in the United States.
13:48
No, those are routine components of high-end practice.
13:52
Clinical trials are extensive.
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Medical funding is immense, and global talent trains and frequently remains in American institutions.
14:01
Simple truth is that what everyone thinks about cost, distribution or coverage, the ceiling of American medical care is extraordinarily high.
14:11
The technological depth and clinical sophistication available in the United States is as advanced as anything in the world, and in most domains, we are better than anyone in the world.
14:21
And that's just true.
14:23
I tell people all the time, they say, well, Canada's health care is free.
14:26
If you get cancer in Canada, it doesn't cost you anything.
14:29
Well, that's true, but there's a really good chance in Canada that the time you're able to get in and see a doctor and have yourself checked for cancer, it will already be beyond what can be treated.
14:38
Whereas the United States, as soon as you show symptoms and go see a doctor, you're being treated immediately.
14:43
You know, the simple fact of the matter is that in the United States, if you have cancer or or heart disease or anything that has a that could kill you.
14:52
Now, you may, if there is a way for medicine to save you or for the medical industry to save you, they will do so in the United States.
15:00
You may go bankrupt, but you'll be alive, whereas in a lot of these other countries, yeah, it's free, but you're not going to be alive.
15:07
So, you know, you have to if you ask somebody with cancer, do you want to die for free or do you want to be treated and you may go bankrupt?
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I would think most of them would say, you know, I'll take the bankruptcy.
15:17
So, yes, we do have problems.
15:19
We have problems with cost, we have problems with distribution, and we have problems with coverage.
15:24
But we don't have problems with the ceiling of our medical care.
15:29
And more importantly, the OECD measures health outcomes, such as life expectancy, but it doesn't mention the technical ceiling of medical care.
15:39
And health and medical care, they're not the same thing, no matter how politically useful it is to pretend that they are.
15:46
And that's why they pretend they are, by the way, because it is politically useful to do so.
15:51
Politicians, particularly left-leaning politicians that want us to have a socialist health care system.
15:56
They tell us that our health care system sucks.
15:59
They don't just throw cost out there.
16:00
They'll throw all these measurements that relate to obesity and relate to uh to the chronic drug usage and all kinds of other problems that relate to cultural and and you know lifestyle choices that have nothing to do with the quality of medical care.
16:15
And they treat that like that's medical care.
16:18
Well, no, if you smoke, that's not medical care.
16:21
That's you making a bad decision.
16:22
If you drink too much or do drugs, if you're obese, that's not medical care, that's health care, and it's not your doctor's fault.
16:31
Health is largely behavioral and cultural.
16:34
It reflects diet, exercise, sleep, substance use, stress, and long-term habits that accumulate over decades.
16:44
Health is upstream of medicine.
16:46
It's shaped not in in hospitals, but in kitchens, schools, workplaces, and of course your home.
16:52
Medical care is something else entirely.
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It is an intervention system for when health fails.
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The emergency room, the oncology ward, the operating suite, or the intensive care unit.
17:05
That's medical care.
17:06
When we collapse those categories, medical care and health care into a single political slogan.
17:12
Well, what ends up happening when you when you do that?
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Well, you design policy around sentiment instead of structure.
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The American health crisis is cultural.
17:21
It exists, but it's cultural.
17:23
Bobby Kennedy is supposedly working on it.
17:25
We'll see how good of a job he does.
17:27
If he solves that, though, that's got nothing to do with hospitals.
17:31
Hospitals are something else entirely.
17:33
The American medical pricing crisis, and let's call it what it is.
17:36
It's a pricing crisis.
17:38
That's structural.
17:39
Confusing the two, health care and medical care leads us to diagnose the wrong disease.
17:44
And when you diagnose the wrong disease, you of course prescribe the wrong cure.
17:50
We know what Obamacare was because the guy that designed it, the economist that actually designed it was on TV about two years later.
17:57
And they asked him about it.
17:58
The two things that he said is one that the purpose of Obamacare was not to provide affordable care act, in spite of that being the actual name of it, Affordable Care Act.
18:07
He said the actual purpose was to make American medical care so prohibitively expensive that we would feel forced to socialize the system.
18:15
And the second thing he said is that the reason it was sold to Americans, the reason why they accepted it and ended up wanting it was because they're stupid.
18:22
So we have Obamacare because this is according to the economist that wrote the bill.
18:26
We are stupid enough to buy things that uh basically buy lies and tell us it's for this, but it's not, and we'll we want it then because it would told us the affordable care act, and of course we want care to be affordable, so we're stupid, we'll listen to lies.
18:42
And the second one was that the purpose of it isn't to make health care affordable, but to make it so unaffordable that we will agree to have a socialized system.
18:53
That's the truth, and uh, you know, that's now what we're living with.
18:57
Thomas Sowell was asked, well, what would you replace Obamacare with?
19:01
And he said, well, if you went to the doctor and the doctor said you have cancer, would you ask the doctor what you want to replace the cancer with?
19:08
Or you just tell the doctor to get rid of the cancer.
19:11
That's what he says about Obamacare.
19:12
You don't need to replace it, just get rid of it and let the free market begin to operate again.
19:17
That's that's my take on it also.
19:19
If I have cancer, I don't need to replace it.
19:21
We have a cancer in our health care system.
19:23
We don't need to know what to replace it with, you just get rid of it.
19:28
Uh so that's where we are.
19:30
America, it does have a chronic disease problem.
19:32
We're obese, we have sedentary life uh lifestyles, we have metabolic dysfunction, uh we have a large number, a lot of addiction, and we preventable cardiovascular disease.
19:43
It's widespread.
19:44
Diabetes, too.
19:45
It's widespread.
19:47
No payment reform is going to fix that.
19:49
There's no way that changing how you pay the bills is going to undo the arithmetic of decades of accumulated lifestyle strain in a country that is statistically the second most obese in the world.
20:00
And if you're wondering who's the most obese, it's Australia.
20:02
They edge us out by a very, very small amount.
20:05
The United States and Australia are both incredibly fat countries.
20:09
Now, a nation that is metabolically unhealthy, it's going to consume large amounts of medical care regardless of how that care is financed.
20:16
And keeping unhealthy people alive costs a lot more than just keeping healthy people healthy.
20:22
Now, what I want to talk about, I'm going to separate health from medical care because they're separate.
20:27
And then I want to examine the structural architecture of medical pricing specifically.
20:32
My goal is not to diminish access or to deny need, but to use lean techniques to diagnose the system, and then to use lean methodology to redesign the American system to keep the world leading quality that we have come to expect, but to get it at costs that we can actually afford.
20:50
So if that's what you want to hear, you're in the right place.
20:52
I'm going to tell you how to solve America's medical care cost crisis.
20:56
Not our health care crisis, that's separate.
20:59
Our medical care cost prices.
21:01
So let's talk about one of the things that drives it, which is what I call the cost shift engine.
21:07
Some argue that Medicare for All would save money by forcing providers to negotiate with a single payer.
21:12
Well, I hate to admit it, but that's correct.
21:14
If Medicare for All is the only payer out there and they say I'm going to pay $5 for open heart surgery, open heart surgery now costs $5.
21:22
The issue is not whether or not the payments would fall, because you can dictate prices if you're the only payer, but how and why they fall.
21:37
When there is just one single buyer, though, that buyer does not participate.
21:42
No, they get to set the terms.
21:44
A single payer becomes a monopoly, giving it the power to set reimbursement rates, and those rates can be below the full cost of delivery.
21:52
And in lean, you don't rely on force to lower prices.
21:55
You don't say, I'm just going to pay you less, and I'm the only game in town, so either you take my money or you don't get any money at all.
22:01
No, that's that's a blunt force object.
22:04
That's not what you do in lean.
22:06
In lean, you study the system and you remove waste.
22:10
Now, critics of not using a single payer system will argue that hospital cost can be inflated by accounting methods.
22:19
But that's only half true.
22:21
The truth is that any company that provides any kind of good or service has both variable costs like direct labor that go up or down as goods move and services are produced, but they also have fixed costs like property taxes that stay the same no matter how many goods or services are produced.
22:37
Uh, with pharmaceutical products in particular, the fixed cost, research and development, all of the testing to get it through with FDA, and you know, by the time you can actually bring a drug to market, you have spent billions and billions of dollars on research and development and testing.
22:52
And uh a lot of the drugs they produce never make it to market.
22:55
So those are fixed costs, and those fixed costs have to be spread out somehow over the product of the what you produce.
23:02
And yeah, you could say I'm gonna use one system to spread those fixed costs out over another system to uh spread fixed cost out.
23:09
But the fixed costs are real, and uh there's the you how you spread them out doesn't really, you know, you they're they're real costs, and you have to account for them somewhere.
23:21
Now, accounting models may allocate fixed costs across services in different ways.
23:26
The method can be debated.
23:28
I personally advocate activity based costing whenever it's possible.
23:32
Uh but the underlying expenses, those are real.
23:35
You can't just argue those away.
23:37
And when it comes to the cost of medical care in the United States, the relevant figure isn't how you allocate the costs over the system, whether this service is too high or this one is too low.
23:48
No, it's the full cost required to maintain a given clinical standard.
23:54
So we can debate what services cost too much and too little based upon how fixed costs are spread out across the system, which is where which this is where the truth is it costs can be inflated by accounting models, but the total cost of delivering a quality of medical care.
24:09
That doesn't change based upon how you allocate the fixed costs.
24:14
And uh, so that's what really matters.
24:17
The full cost to maintain a given clinical standard, and that is a hard number.
24:22
That is something we can measure and quantify.
24:24
It does not change with accounting models.
24:26
Measured against that standard, by the way, Medicare and Medicaid reimburse below market rates.
24:33
The payments are set administratively in Medicare participation.
24:36
It's effectively mandatory for institutions that serve a large population.
24:40
You don't technically have to have it.
24:42
A lot of doctors that do laser eye surgery don't take it.
24:45
But if you're serving a large population with a large number of services, it's effectively mandatory.
24:50
Uh, Medicaid, by the way, often reimburses even less than Medicare does.
24:55
When reimbursement falls below cost and participation is mandatory, someone has to make up the difference.
25:02
Providers then are forced by economic necessity to pass those costs on to those with private insurance, like me.
25:09
Uh, employer premiums and individual market premiums then rise.
25:12
Cash patients, by the way, you know, just go out and pay cash, they're gonna pay they're gonna face inflated pricing as well because somebody has to pick up the costs of what the government does not pay.
25:22
What we mistakenly label as excessive profit, often it's actually making up for public shortfalls.
25:28
The Affordable Care Act subsidies follow the same logic.
25:32
Insurers increase premiums for those who can pay in order to offset reduced payments for those who cannot.
25:37
When I left IBM, I joined a smaller competitor in Muskegon, Michigan.
25:41
The company covered employees, but it did not cover families.
25:44
And IBM allowed me to keep my health insurance for a year.
25:47
So initially I wasn't that worried about that.
25:49
But when I priced insurance for my wife and son on the Affordable Care Act, I did not qualify for subsidies.
25:56
So while you hear that millions of Americans get free health insurance or insurance for as little as 20 bucks a month, for me it was $800 per person per month.
26:05
Why?
26:06
Because I had to pay for my care and I had to pay for the care of all those people that have free care or care for 20 bucks a month.
26:12
They're passing the costs on to those that they think can pay and making everybody poor.
26:18
Well, for my what I did what I had to do, and I returned to the corporate world.
26:23
From a lean perspective, this is a flawed system.
26:26
We need transparent subsidies.
26:28
Transparent subsidies permit evaluation and democratic choice, whereas the embedded hidden cross subsidies in Medicare, Medicaid, and the Affordable Care Act, they conceal the true costs and distort price signals.
26:41
Emergency care intensifies this cost problem with millions of Americans using the emergency room for all care, where it is illegal to turn patients away without first stabilizing them.
26:52
The urgent nature of emergency care also makes it the most expensive type of care.
26:57
So pushing people to the emergency room for non-urgent care when they cannot afford to pay.
27:01
Well, what do hospitals do?
27:03
They're real costs.
27:04
They're forced then to charge private insurance more to cover those emergency care losses.
27:10
Crisis care, I'm not saying it should depend on credit.
27:13
Of course it shouldn't.
27:14
Ability to pay should not count in the emergency room.
27:17
But emergency departments are designed for emergencies.
27:20
They are the most expensive entry point we have.
27:24
They also only stabilize patients.
27:26
So if you've got a chronic problem and you're only going to the emergency care, you've got to go back again and again and again.
27:32
If price feedback is removed from consumption, we know what happens.
27:36
Utilization rises.
27:37
And when the highest cost setting becomes the default access point for non-emergent care, well, system-wide inflation, it explodes.
27:46
A lean system would not eliminate emergency care or public coverage, but it would align reimbursement with cost.
27:53
It would separate crisis intervention from regular care, and it would make subsidies explicit rather than passing them on to others as uh hidden transfer payments.
28:06
And with that, ladies and gentlemen, it's time for a word from our sponsors.
28:09
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We still have a ton to cover on the other side of the break.
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Ladies and gentlemen, welcome back to cutting through the chaos of the America Out Loud Network.
33:12
I'm your host, Wallace Garneau.
33:14
We've got a lot to get into, so I'm going to get right back into it.
33:16
We were talking on the last side of the break about transfer payments.
33:20
We're going to get in now about how we can fix that.
33:22
A lean system for the uninsured.
33:26
Access must be preserved, of course, while providing true cost transparency.
33:31
That's what we talked about before.
33:32
One practical step for fixing that is expanding direct primary care networks.
33:36
Under a DPC model, patients pay a fixed monthly fee for defined primary care access.
33:43
For the uninsured poor states or municipalities can subsidize those memberships.
33:47
Competitive local contracting would then allow multiple providers to participate.
33:52
Community-based lean clinics provide another option.
33:55
Nurse practitioner-led centers, they operate under simplified regulatory requirements and can manage routine conditions at far lower cost than do hospitals, even outside of the emergency room.
34:06
These clinics do not require tertiary care infrastructure.
34:10
They just require examination space, basic diagnostics, and clear pricing.
34:15
When designed around function instead of institutional hierarchy, they observe routine or absorb routine demand and they relieve emergency departments.
34:24
A tiered model would preserve emergency stabilization while adding short stay observation capacity.
34:29
Structured referral into primary care networks and defined discharge pathways.
34:34
Now many urgent care centers today function as little more than triage points to redirect patients into emergency rooms.
34:40
We don't need that.
34:41
We need centers that actually provide care.
34:45
Hidden cross subsidies then should be replaced with direct transfers.
34:49
Rather than forcing providers to hide or unpaid or underpaid care by passing costs on to private plants.
34:56
No, governments can issue primary care vouchers for the poor, or governments can pay the full cost directly and report it to the taxpayer.
35:03
Preventative care pools and kept chronic disease management support should similarly be funded transparently.
35:09
Entry barriers must also be reduced.
35:12
Certificate of need laws, restrictions and ambulatory surgery centers, retail clinic limitations, and unnecessary telemedicine restrictions protect incumbents in artificially increased pricing.
35:24
Why do you want to do that?
35:25
Well, because we have incumbent providers deciding who the new entrants can be.
35:29
And coven providers have incentives to limit new entrants and preserve scarcity.
35:34
Standards, of course, are necessary.
35:35
I'm not saying get rid of standards, but governance bodies should maintain clinical standards without functioning as gatekeepers that protect market share.
35:45
Let's talk about employer-based insurance.
35:48
Because during World War II, federal wage controls limited salary increases, so employers had to compete for labor by adding more and more benefits.
35:56
Health insurance was exempt from wage caps and later reinforced by favorable tax law.
36:01
They became a hiring tool, then it became a default structure.
36:05
We now in fact treat employer-based insurance as the standard.
36:09
Tying insurance to employment creates structural distortion.
36:12
Workers hesitate to move when it puts coverage at risk.
36:15
Employers become intermediaries between patient and insurer.
36:18
Human resource departments then negotiate plans and benefit managers evaluate the options.
36:24
Employees select for predefined menus with limited visibility into the actual pricing.
36:29
Premiums are embedded within compensation packages, and rising medical costs lead to slower wage growth.
36:35
Businesses may absorb the increases themselves, and in many cases they claim to do so.
36:40
But salary increases compensate by staying low, so the costs are passed directly on to employees.
36:47
Salaries and stage nays stagnate even when employers aren't passing on the costs.
36:52
This obscures trade-offs.
36:54
Individuals rarely see the full cost of coverage, so meaningful comparison doesn't exist.
37:00
Employers negotiate for large groups, they encourage standardized plans rather than individualized risk assessments that you and I might choose if we were buying it ourselves.
37:08
In lean terms, purchaser and consumer are misaligned.
37:12
The person experiencing the service is not the one negotiating the price.
37:18
Lean begins by examining architecture.
37:20
Insurance tied to payroll solved a temporary problem, but then it became a permanent framework.
37:26
In a modern mobile economy, we need to reconsider that.
37:29
When purchaser and consumer align, well, feedback improves.
37:33
When coverage attaches to the individual, mobility improves.
37:37
When insurance functions as risk management rather than disguise compensation, that gives us price signals again.
37:44
Tax policy currently reinforces the existing structure.
37:47
Employer-sponsored plans receive favorable treatment that individually purchased plans do not.
37:53
That imbalance, of course, directs behavior.
37:56
Tax neutrality would remove the distortion and allow individuals to purchase and retain coverage without penalty.
38:02
That would then also allow them to move jobs without losing.
38:06
They wouldn't have without losing their coverage, so they wouldn't have to worry anywhere near as much about uh pre-existing conditions.
38:14
Regulatory mandates further distort the problem.
38:17
Federal and state rules dictate coverages regardless of individual risk profile.
38:21
Baseline protections may be justified, but excessive standardization eliminates lower cost options and enforces uniformity where variation would reduce costs across the board.
38:34
A lean framework would permit tiered insurance products so that consumers could select coverage consistent with their age, their health status, and their risk tolerance.
38:43
Let's talk about regulatory inflation and facility mandates.
38:48
Medical inflation is often blamed on physicians, on insurers, and pharmaceutical companies, but less attention is given to the regulations that reshape hospital costs.
38:58
Facility mandates have increased in scope and expectation.
39:02
Multibed wards have almost entirely been replaced by private rooms.
39:06
And of course, square footage per bed, when you get rid of the wards, it explodes.
39:12
Staffing ratios are more tightly regulated, and building codes and accredation standards require ongoing upgrades.
39:20
We have infection control rules, safety protocols, and reporting requirements growing every year.
39:27
If you look at each change individually, then may be defensible.
39:32
But the issue is the cumulative effect.
39:35
When comfort and infrastructure preferences become regulatory baselines rather than competitive options, costs rise across the board.
39:45
And those overhead increases occur before clinical care even begins.
39:49
Understand whenever costs grow, so too must the payments that we pay to doctors.
39:56
Facility design is one layer of cost growth, so is
40:00
Administrative structure.
40:01
Hospitals now employ a substantial non-clinical staff dedicated to navigating regulations.
40:07
Coding specialists, utilization review teams, documentation auditors, accrediters, legal counsel, and reporting personnel all exist to navigate all of this unnecessary complexity.
40:21
Administrative growth does not generally add clinical value.
40:25
No, it frequently reflects the burden of reimbursement rules, of liability exposure, and reporting mandates.
40:31
In lean terms, this is called overprocessing.
40:34
When a system requires multiple handoffs, redundant documentation and compliance layers to sustain itself.
40:40
Well, that utilizes resources toward maintaining structure rather than delivering care.
40:47
Lean systems examine whether each step adds value to the patient.
40:50
When non-value steps are avoidable or unavoidable, they if we can't get rid of them, you optimize them to minimize the waste.
40:57
We don't do that.
40:59
We should.
41:00
Let's talk about third-party payment and price opacity.
41:03
In most industries, the buyer sees the price before purchase, and transactions only occur if the consumer believes the product is worth the cost.
41:12
Multiple sellers compete at different price and quality levels, and sellers adjust to consumer demand, or they go out of business.
41:20
Medical care doesn't operate that way.
41:22
The consumer rarely sees the true clinical cost of procedures.
41:25
The hospital stay can generate a number of separate bills.
41:28
Some arrive months after care was performed.
41:31
Insurers negotiate rates privately and discounts are applied out of you, while explanation of benefits they tend to obscure more than they inform.
41:40
I've paid for medical care, only a bill again with no idea whether I'm being charged for something else or double charge for something I've already paid for.
41:47
It happens all the time.
41:49
Cross subsidies are hidden, so a privately insured patient has no idea how much of a premium reflects Medicare underpayment, uncompensated emergency care, regulator overhead, or administrative growth.
42:02
They're all blended together into a single number, even though not all of it reflects the care you received.
42:08
Facility overhead, same thing.
42:10
Capital costs for private rooms, expanded square footage mandates, compliance departments, electronic record systems, risk infrastructure, and all the layers of accredited.
42:21
They're spread out across procedures.
42:23
The patient gets one charge, but not the justification behind it.
42:27
The payment chain diffuses accountability.
42:30
Employers negotiate plans, insurers negotiate contracts, government programs set administrative rates, providers submit coded claims.
42:39
The individual patient stands at the end of that chain, insulated from the full cost of an of the care they were given.
42:46
When costs increase, responsibility is unclear, and everybody points fingers.
42:51
Nobody accepts the blame.
42:53
Well, what happens?
42:56
We pay the cost, we don't even know who the who we don't even know what the cost will the we don't even know what the cost is there for.
43:03
Everybody points at everybody else.
43:05
Let's talk about tort law and defensive medicine, because you can't solve this without addressing tort law.
43:11
No examination of medical costs can be complete without looking at that.
43:15
Malpractice, it's often looked at politically, but really it's an incentive problem.
43:20
Medical outcomes vary, reflecting biology, timing, patient compliance, and other variables that are completely outside of physician control.
43:28
Identical treatment can produce very different results, and an adverse outcome, that's not always proof of negligence.
43:35
Negligence is a departure from accepted standards of care that a reasonably competent provider would not make under similar conditions.
43:43
That's the legal definition of negligence.
43:46
Error can occur without negligence, and adverse outcomes can occur without error.
43:51
When we collapse these categories together, well, doctors resort to what I call in other industries defensive work.
43:57
The difference being that defensive work in a manufacturing company is done to try to avoid getting laid off, whereas defensive medicine is done to avoid either getting sued or to help win a lawsuit should one occur.
44:10
Liability should require negligence.
44:13
When every undesirable result carries potential legal exposure, behavior adjusts and defensive medicine, of course, follows.
44:22
The issue has grown so bad that doctors are now often sued for positive outcomes that fall short of optimal, with lawyers promising that they won't get paid unless you do.
44:33
Defensive medicine is predictable and litigation is costly even when claims fail.
44:40
Physicians respond by increasing documentation and ordering unnecessary tests and procedures to try to create legal protection.
44:49
Imaging may serve both clinical and legal purposes, and documentation expands beyond clinical leads.
44:55
Cost shifting, of course, compounds the issue as uninsured patients or those covered by programs that reimburse below the cost can also sue, and those lawsuit costs are then transferred to whoever can pay the costs because they can't.
45:09
Plaintiffs' attorneys, of course, operate within their own set of incentives, caring far more about a doctor's willingness to pay than about actual liability.
45:18
Weak claims are often settled.
45:19
Malpractice insurance aggregates these risks with private premiums reflecting the aggregate costs ultimately passed on to patients.
45:28
Every cost that this adds to health care, somebody has to pay, and that is, of course, us.
45:35
Now we need to do is we need to have safe harbor protection for adherents to accept clinical guidelines to narrow exposure.
45:42
We also need to have pre-suit expert certification.
45:46
We can screen weak claims before litigation that way.
45:48
Independent medical review panels could quickly evaluate disputes or disputes.
45:53
Specialized medical courts staffed by judges trained in clinical reasoning or juries drawn from medically qualified pools could replace juries that are untrained in the kind of evidence that exists in uh in medical cases.
46:07
Lawyer penalties for objectively groundless claims would adjust incentives.
46:11
Escalating those consequences for repeated frivolous filings, well, that's going to make a lot of lawyers stop doing it.
46:17
That's what we need.
46:18
Accountability, of course, must remain, but incentives need to be calibrated.
46:24
Without balance, defensive medicine becomes another embedded cost with an already bloated price system.
46:30
Many people want to blame physician compensation, saying that doctors simply make too much.
46:35
I don't want to blame physician compensation.
46:38
If a side wants its best and brightest to become doctors, well, it's got to allow that profession to pay well.
46:44
Finance, technology, engineering, law, there are all kinds of other fields out there competing, competing for the same talent.
46:50
Compensation levels, they influence the fields people select.
46:54
So if you're going to say we're not going to pay doctors much, your best and brightest won't become doctors.
46:59
When medicine offers growing responsibility with diminishing rewards, the applicant pool adjusts.
47:04
Over time, fewer people go into the field.
47:07
Understand, becoming a physician requires not just exceptional ability, but sustained discipline and delayed income.
47:14
The training includes undergraduate study, medical school, residency, and fellowship.
47:21
It can take well over a decade in total from the time you start college to the time you're able to practice.
47:26
It also carries liability exposure, regulator burden, and emotional strain.
47:31
People that want to underpay doctors are missing the boat.
47:34
If you want your best and your brightest to be doctors, bring down the cost, but don't bring it down.
47:39
The pay that doctors and nurses get is only a small portion of that cost.
47:43
I think nationally it's about 8 to 10%.
47:45
You're not going to save a ton of money by not paying doctors, so we shouldn't go there.
47:49
Go ahead and pay the doctors, look for waste in other parts of the system.
47:54
Let's talk about what I think is a big one: equality of treatment versus equality of comfort.
47:59
In debates over medical reform, equality is often treated as a single category, but it is not.
48:06
Safe air travel does not require everyone having the same seats.
48:10
We understand that the first class and the economy class all have the same aircraft, pilots, and safety standards, no matter where people sit.
48:19
The difference, of course, lies in space and service, not in structural integrity.
48:24
Medical systems can and should apply the same logic.
48:27
There is a quality of treatment, and there is a quality of comfort.
48:31
You should not collapse those things into one metric because doing so raises costs.
48:37
The standard of care for a procedure, a diagnosis or an emergency intervention should not vary by income.
48:43
If two patients require the same appendectomy or cancer protocol or trauma stabilization, the medical standard must of course be the same.
48:54
But comfort is separate.
48:56
Regulation and expectation have expanded from clinical standards into environmental and amenity mandates.
49:03
Private recovery rooms become default requirements.
49:07
Facility design and hospitality features move from preference to baseline.
49:11
Food service, square footage, and aesthetic upgrades become embedded into the cost.
49:17
When every bet operates inside the same high cost infrastructure, the price floor rises.
49:24
That overhead attaches to every procedure delivered within the facility, regardless of medical complexity.
49:30
And when you throw in the fact that Medicare, Medicaid, and the uninsured often pay less than cost or nothing, and those costs have to be applied also.
49:40
Well, now you're putting people that aren't paying for their care in private rooms.
49:44
Well, it's certainly comfortable, but it doesn't make a lot of sense.
49:48
People should have to pay for that comfort.
49:50
They should all have the same quality of care, but not necessarily the same comfort level.
49:56
Let's talk about lean medical policy and cultural.
50:00
Reality.
50:01
A lean medical policy would begin with transparent cost accounting.
50:06
Hospitals and payers should publish cost per case.
50:09
They should also publish complication rates, infection rates, and outcome metrics.
50:14
And while we don't have to make them all exactly the same, they have to be in comparable forms that consumers can read.
50:20
You have a right to know how much hospitals charge.
50:23
You have a right to know their complication rates, infection rates, and outcome metrics.
50:27
You have a right to know that so that you can choose.
50:29
Now, in an emergency care, you're probably going to go to the closest hospital.
50:32
But when it's not emergency emergency care, you have a right to be able to choose where you want to go with metrics that are meaning for you to look at.
50:41
Meaningful metrics.
50:42
Cross subsidies, incidentally, should be visible, such as if subsidies are required, they appear in public budgets, not hidden inside private premiums.
50:52
Medicare and Medicaid reimbursement, that has to be addressed.
50:56
If public programs pay below cost, that gap needs to be acknowledged and debated openly.
51:02
The public deserves to know that they pay a special tax every time they see a doctor to cover Medicare, Medicaid, emergency care, and all of the other, all of these other bloated costs.
51:13
Insurance should be owned by individuals and portable across employers.
51:17
Tax neutrality between employer plans and individually purchase plans would help return insurance to risk protection rather than being a part of a compensation package.
51:27
You might notice I'm not saying stop giving tax subsidies to employers.
51:32
I could call for that.
51:33
It would probably be a good thing to do.
51:35
The problem is that I am a free market guy and I don't want to.
51:39
I want tax neutrality.
51:40
We can talk later about whether we want to remove the tax benefit for employer plans.
51:45
Let's just start by treating individually purchase plans the same.
51:48
We can look in the future on whether or not we want to get rid of or discourage employer plans entirely.
51:53
I want employees to be able to compete for employees using whatever techniques they think will work so that they can get the employees that make the most sense for their place of business.
52:03
If they're employers that want to do that with generous health care packages, I'm not, I don't want to tell them you can't do that.
52:10
Routine and predictable care, however, that does not require an insurance layer.
52:15
Direct primary care and expanded health savings accounts can manage those costs.
52:20
We need to treat the uninsured outside emergency departments unless there really is an emergency.
52:26
Subsidized direct primary care networks, community-based clinics, and chronic care centers can preserve that access while reducing waste.
52:34
So that emergency care can remain universal, but for emergency care, such that it's not exploding costs.
52:42
Tort reform must rebalance incentives while preserving accountability.
52:47
Liability should require negligence.
52:49
It shouldn't just come from outcome variation.
52:51
Safe harbors for adherence to accepted protocols, expert certification requirements, medical review panels, and specialized courts that can narrow defensive behavior while still preserving accountability.
53:05
Facility mandate should allow accommodation tiers while maintaining universal clinical standards.
53:10
Equal treatment at the operating table does not require identical surroundings.
53:15
Flexible infrastructure lowers capital burden without diminishing competence.
53:20
If you want cheaper medical care, you're gonna have to deal with that.
53:24
You might, if you if you want cheaper health help medical care, if you can afford a private room, knock yourself out.
53:29
Some of us, if we have non-infectious things, recovering from surgery or something, it's not infectious.
53:34
Some of us belong in wards.
53:37
Lean operational benchmarking should emerge should emerge from transparency and competition rather than from centralized process mandates.
53:45
Standardize the outcomes.
53:47
Don't standardize methods.
53:48
Encourage lean in hospitals, encourage them, show them how to do it, have best practices in terms of delivering care at low cost.
53:56
But allow doctors and allow hospitals to experiment.
54:00
Don't don't strap them into a specific way of doing things.
54:03
Just help them be more lean if when they want to participate.
54:08
Architecture, however, is only a part of the equation, as medical care treats what culture produces.
54:16
An effective medical policy must hold two truths.
54:19
Structural reform reduces distortion and restores price feedback to lower costs.
54:25
But cultural reform is what it takes to create better overall health.
54:30
Confusing health care and medical care prolongs debate while preventing actual workable solutions.
54:36
Poland incidentally now operates two systems.
54:39
One remains socialized, the other is entirely now private.
54:43
We have a friend who practices an OBGYN in the Polish town.
54:47
She works two days a week in the public hospital and the rest of the week in private care.
54:52
She makes almost all of her income privately.
54:55
And she would work privately entirely, except that if she did, her town would not have a single OBGYN outside of private care at all.
55:03
All of the OBGYNs in that town work in public care or work in private care.
55:08
She is the only one doing work in public care.
55:10
So she looks at that as basically charity.
55:12
She looks at that as a public duty.
55:29
We would totally send him to private care.
55:36
She didn't die because America lacked competent medical care.
55:40
She died because though medicine can reverse an overdose, it cannot make someone stop using.
55:46
A sane system should preserve quality while removing the distortions that make routine care expensive.
55:51
It should also tell the truth.
55:53
The nation's health is upstream of medical care.
55:56
And though we can change government incentives, no financing model can substitute for the choices you and I freely make.
56:03
Many Americans want of Medicare for all, but we may find, as Canadians have, that while saving a life may bankrupt it, as I said earlier, we can all die for free.
56:15
And just like that, ladies and gentlemen, we are out of time.
56:20
That's okay.
56:20
I got through the whole lean health care thing.
56:22
I would want to keep it was a lot to cover.
56:24
I actually got through it.
56:25
I apologize if I rush through parts.
56:28
As always, thank you for tuning in.
56:29
Please tell others who might be interested in cutting through the chaos to listen in either on Saturday and Sunday at 9 a.m.
56:36
Eastern Standard Time or 10 p.m.
56:38
Eastern Standard Time on Sunday.
56:40
Or on podcasts, whenever they have time, usually comes out Monday afternoon.
56:46
And we will see you next week at the same time and place.