What If Apple Ran U.S. Health Care?
    By Hank Campbell | October 18th 2011 01:36 PM | 10 comments | Print | E-mail | Track Comments
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    Quick, which British cell phone do you use?   No?  Okay, which French microprocessor is in your PC?  No again?

    America leads the world in innovation, the legacy of historical laissez-faire approaches to fixing big problems using the private sector.  Obviously that is different now, even in science, where Pres. Obama made good on his promise to add more science to his cabinet but erroneously thought all of science was composed of progressive academics who think more taxpayer spending is the only way science gets done, leading to the Solyndra boondoggle and more to follow.

    When I was a younger guy, in the 1980s, and the Japanese government was heavily subsidizing their semiconductor industry, and Taiwan was manufacturing boards cheaper(1), there were calls for America to 'invest' in the domestic semiconductor industry by progressives who claimed America could not compete against so much government money elsewhere.  It is laughable now to think that government subsidies and academia could have beaten the private sector - RAM would be $1,000 per GB if the government were involved - but that is dismissed as an 'exception' in modern times. Oops, biomedical is an exception also.

    In health care, we spend more than everyone in the world to have the best, yet critics of the current system say helping people regardless of cost is bad.  Well, in that sense overpaying for an iPhone is bad also.

    Apple Inc. is a juggernaut in consumer technology yet the actual service its phone provides is wildly overpriced.  It basically makes phone calls and checks some email, everything else it does is extraneous.  Why pay more when any basic phone for $9.95 can do all that?  If all phones were $9.95 everyone could have one and no one's phone would be better than anyone else.   That's the ultimate in progressive fairness.  

    Yet Apple's iPhone became successful despite being unfair, incredibly expensive and even adapting a closed source Communist mentality - only Apple gets to decide what apps you can install on your phone.  They even told you what carrier you had to use initially.  If you didn't like it, you got a different phone.   So what if you are 'under-phoned', you can still make a call.

    Yet the argument by some today regarding health care is that everyone should have the health equivalent of an iPhone and they should get it cheap and the turnaround should be just as fast as it is now.   That is not really practical. U.S. health care is expensive. Being the best makes things more expensive and health care is the only time progressive economists acknowledge that there is any trickle down theory at all.  72 percent of Americans said health-care coverage needed a major overhaul because it is too expensive, quality or not, so what was the government solution to expensive health care?  Increase coverage, which very few people asked for, yet it caught on quickly because businesses will be happy to offload insurance to the government.

    It makes no sense because more coverage cannot make health care cheaper, unlike iPhones, which rely on economy of scale, and people said they wanted the cost to come down so more people could buy it, they didn't ask to be forced to buy it any more than they want to be forced to buy an iPhone.  As Michael Tanner in USA Today notes, when Italian Prime Minister Silvio Berlusconi needed heart surgery, he came to the U.S.  Ditto Canadian Human Resources Minister Belinda Stronach and Newfoundland Premier Danny Williams.  American is the envy of the world at the high end but it is shockingly inefficient.   Hospitals are one of the few businesses where competition makes costs rise; if hospital A gets a new MRI machine, hospital B will have to get one or they could get sued for providing inferior health care, etc.

    What if Apple gpt to run health care?  Right now the United States spends $7,290 per capita on health care, far more than Holland, which still has pretty darn good health care, so let's say we want that cost to come down to Holland levels.  The average cost of a cell phone in 2010 was $76 but the cheapest iPhone is $199, 250% of that cost - cheaper is not really the Apple business model so we already may have the wrong company, they are more like health care as it is today. American health care costs 90% more than the Dutch pay so why does the model work for phones but not for health care? 

    To begin with, Apple currently is not forced to add in expensive features and maximum storage space for all, they have different products for different people, and wireless providers are not forced to provide maximum bandwidth to all, lest they be sued.  Yet hospitals and doctors are forced to do just that.  Teary John Edwards-style lawyers get rich portraying hospitals and insurance companies as greedy death panels and doctors as incompetent, so medical providers are forced to carry expensive malpractice insurance and run a lot of tests they know are unnecessary, which drives up the costs. As a result, 91 percent of physicians engage in 'defensive medicine', ordering more tests and procedures than necessary as a protective measure due to concerns over malpractice lawsuits.  To lower costs and still increase coverage organically would just mean not making it open season on medical providers.   

    Could even Apple pull that off?  It requires readjusting the mentality of Americans when it comes to suing; everyone knows it's bad but if they get in a car accident, watch the 'I am suing an insurance company, not a person' rationalization fly.  Apple would also have to make a lot of old people angry; right now, the old, the poor and Congress get a lot more for free than anyone else but you can't anger old people.  Unlike young people who have time to protest but not much else, old people vote.  And I essentially side with old people on this one.   When I got taxes taken out of my first paycheck, I began saying we should honor the commitments for every person even one day older than me but we should not saddle future generations with social security and Medicare.  Even when I was young, there were only 5 workers per retired person and this year the 'Baby Boom' births - kids born in 1946, after World War II ended in 1945(2) - reach age 65 so the workers to potential retirees now drops to 4.  When social security was created that ratio was 20:1.

    So Apple would quickly find that retired people are not going to be educated by undulating silhouettes on television.  Opposite older people with massively subsidized health benefits are younger people who have no health issues and are already overtaxed who would be forced, under a system similar to Holland's, to pay more taxes to cover half the cost of their health insurance.  In other words, they would be paying what they have to pay right now if they want health insurance.  The upside to forcing coverage, proponents claim, is that the increased purchasing power would allow the government to negotiate with 'providers', whoever they would be - it requires suspension of disbelief that the same government that overthrew private health care is going to stand up to its union constituents and use its 'purchasing power' to get the best deal out of them rather than curry votes.  Standing against a union is unthinkable for Pres. Obama and, if you have ever tried to unload a box in New York City when the Teamsters are around, bad for your personal health too.

    No, even Apple could not fix health care. Apple is successful because of innovation, as is American health care.  50% of the new drugs that give people better lives are created in America and it is well established that world leading medical research, primarily in the private sector, originates here.   The standard joke in business is that customers always want better, cheaper and faster and they are lucky to get two and that applies in health care is well.  Want the best when you need it?   America is still the place to go. 


    (1) Irony: On my last visit to Hsinchu to visit TSMC a few years ago, workers in Taiwan complained that China was undercutting them using cheap labor, and that the quality of the product would go down if cost were the only concern.

    (2) Sometimes now magically extrapolated out to being an entire generation.  Was I born the last year of the Baby Boomers or am I the first year of Generation X?  It depends on which marketing person you ask and if they claim a generation is 20 years, 18 years, or about 5 years, since each new high school class gets some new 'generation' label thrown at them.


    Gerhard Adam
    Our health care system makes no sense.  In far too many instances, we have the equivalent of a patient going for a routine visit being analogous to bringing in a PhD Mechanical Engineer to pump gas.  We have no sense of proportion when it comes to medicine. 

    We also fail to produce enough doctors, and I don't understand why a nation with our resources finds it impossible to have more schools and opportunities available. 

    Similarly, many of the malpractice suits are legitimate and probably understated by a fair amount, primarily because too many doctors simply practice routine medicine and fail to deal properly with serious events that are unanticipated.  I know, just in my own case, there have been at least three incidences within my family that could've been litigated because of sloppy diagnostic work, of which two could've resulted in death.  Since we didn't litigate, and I've heard similar stories from others, I can only wonder how screwed up events must've been to cause a lawsuit to be filed.

    This is also a direct result of insurance companies preferring to settle rather than go to court, so it is completely unreasonable to assume that this is a legal issue, since there's no way to know how many cases might've been thrown out if they had actually gone to court.  As a result, the insurance companies circumvent the system and then raise their rates as a "cost of doing business".  So, we aren't paying insurance premiums because of actual lawsuits, we're paying them because of preemptory settlements.

    In addition, the entire "business" of medicine has become bureaucratic enough so that no one can have a discussion to resolve issues anymore.  It's always a case of where one is forced to litigate to get anyone to listen or address problems. 

    I certainly agree that forcing more people to get coverage won't address the issues.  As I've stated before, the solution is to eliminate insurance companies.  That way, the medical profession must deal with charging rates that the "market" can bear.  Why should doctors be guaranteed a wage simply because there's a middle man that will pay whatever they demand?  If they had to collect based on people's actual ability to pay, I suspect we'd see all kinds of innovations being suggested for reducing costs.

    It would also stop a significant number of malpractice suits, since there would be no insurance company to offer settlements in lieu of actual evidence.
    Mundus vult decipi
    What happens if you get cancer? Need a new kidney? Drop something heavy on your foot crushing a number of bones? Are you going to look for the lowest bidding surgeon?

    Insurance amortizes risks. But as the ratio of sick to healthy people goes up, the cost has to go up.
    I think if you want to cover all of the sick, all of the healthy needs to buy insurance as well. That's the only way to keep the cost of insurance down for everyone.
    That's why everyone needs to have insurance, whether that's legal or not, I don't know, and I can't say.

    I think the only "fair" way is to have a direct vote, everyone has to buy insurance(though there would probably have to be subsidies for the lowest income levels) or we keep it the way it is.

    And all of this is regardless of how cheap you do your medicine. We can keep what we have and make it more cost effective. One of my Dr's said he thought we could get rid of 30-40% of tests just by not doing the same test more than once. We would also need more Dr's if we added another 50 million people into the health care system, and we probably need some sort of tort reform. I think this would help with current costs.

    Never is a long time.
    Insurance amortizes risks.
    That's just it, a subset of people now want 'insurance' to be free health care and that was never the intent.  Even in the 1990s I had a doctor who took no insurance, you just paid for general stuff, and it was much cheaper for him and me.  Now, people want birth control and viagra and calf implants covered under 'insurance', which makes no sense.

    If we rein in the Big Lawsuit industry and make insurance 'insurance', the problem is solved without forcing people to overpay even more for an already inefficient system or leave a status quo that penalizes the working poor so lawyers can stay rich creating class warfare.
    For general stuff, that works. Birth control is cheaper than a pediatrician, viagra and calf implants I'll give you.

    And we should rein in big lawsuit in any case.
    Insurance, can always offer an "insurance" plan for less, but i suspect few would buy it, they want the one with the "free" calf implants.

    One of the big issues is many people don't want insurance when they're healthy, but then complain that no one will give it to them when they get sick. But that's why you buy insurance, so you have it when you're sick.
    Never is a long time.
    Gerhard Adam
    What happens if you get cancer? Need a new kidney? Drop something heavy on your foot crushing a number of bones? Are you going to look for the lowest bidding surgeon?
    I don't have a problem with the point you're making.  In fact, this is precisely the point, because it indicates that the concept of "free market" solutions isn't really applicable.  It's fine to ask whether you'd go with the "lowest bidding surgeon", but that's irrelevant if the insurance company is doing precisely that cost analysis.

    My point in raising this issue, in this way is to illustrate that our concepts of "free market" don't apply in situations where we can't assess an actual value to something.  If the value is essentially unlimited, then it simply drives the market costs up indefinitely, because there are no forces that can ever counter the increases.
    Mundus vult decipi
    I've always picked my own Dr's.
    And in this case insurance companies (and medicare) have a standard and reasonable cost. Not an unreasonable solution, Dr Association's and Insurance Co's negotiate a cost schedule. You don't have to stay in plan, but it costs you more if you don't.

    I don't care for HMO's, and fortunately I get to choose, though it does cost me a little extra.
    Never is a long time.
    Gerhard Adam
    It's not necessarily a question of picking your own doctor, but it is often a problem in determining what treatment an insurance company is willing to cover.  As an example, a procedure such as a gastric bypass isn't covered under some plans.  So, while there may be some attendant risks to the procedure, there is little question that in some cases it may also be a critical procedure for dealing with obesity. 

    However, the insurance company's aren't determining what is covered based on science or medical advice.  They are arbitrarily determining the coverage based on their own profit and costs.  This is not a reasonable approach under any circumstances.  Either doctors are permitted to practice medicine or insurance companies do. 

    In addition with their ability to deny service based on "pre-existing" conditions, they can effectively force you to pay the full costs of medical service anyway.  So, my point is ... what's the use of an insurance company if it can arbitrarily deny you coverage.  I'd rather see no one have coverage and see real economic solutions being proposed than to be bullied by a company whose sole motivation is to maximize their profits rather than your health.
    Mundus vult decipi
    I've not had that problem, and I've had to get certain care pre-authorized, and although it has been variously from ~$1500-8,000/month, I've not had many problems getting it approved.

    As for Pre-existing conditions, it goes to my point that there are people who don't want insurance until they're sick, that's not insurance, that's looking for discounted medical care. However if you have ins, you should be covered. I'll also note that I've had to deal with a couple pre-existing conditions and changing insurance 6-8 times over that last 30 years, and not had any real issues.
    Never is a long time.
    Quick, which British cell phone do you use?   No?  Okay, which French microprocessor is in your PC?  No again? America leads the world ...
    Phone: Nokia (Finnish) the small one, next smart phone definitively again HTC (Taiwan) as they are the best now. Computer: all Chinese inside.
    I used European companies because that is the model that various people in the US want to mimic for health care, because they spend less - imagine that, a segment of the US (left) thinks we should spend less and another segment (right) thinks cost is no object.   It must mean there are more Republican iPhone users.  :)