Creative destruction

There's an empty chair at the coffee shop's geezer table these days and no, don't worry, none of my geezer homies have cashed in their one-way tickets to the Starbucks in the sky. Ralph Don Ralphonso to you uppity young 'uns had a creaky knee replaced, and is convalescing for a while. Apparently, the operation was a success, and Ralph'll be back in a week or two, better than new.

For Ralph, and for most of us at the table, the American medical system works just fine. We're securely middle-class, adequately insured and able to self-fund most procedures, in the event of capricious denial by managed care.

That's not true for many Americans. Tens of millions are both poor and uninsured, tens of millions more are underinsured, and the system is irretrievably broken. We spend twice as much per capita on health care as any other first-world country, and our results are worse. The "solutions" that our bloviating politicians have embraced health savings accounts and the Medicare drug benefit, for example arguably have made the situation worse.

Let's consider the way we deliver health care. It's primarily funded by government programs and by employer/employee-funded private insurance. Millions are employed by HMOs, insurance companies, health-care providers, governments and drug companies to manage the system or game the system. Insurance companies want to insure the young and healthy, and hand off the elderly and sick to someone else. Docs, hospitals and nursing homes want to get paid, and drug companies want top dollar for their product.

Meanwhile, the government alternatively coddles and threatens the private sector, depending on who's running things in Washington. As for us, the hapless patients, we're just billing opportunities for the players. Our role is to write checks, shut up and be grateful.

So how do you fix this rickety contraption?

Simple. You do what most other developed countries have done: go to a single-payer system. It works. Just ask the Canadians, eh?

But we won't, not until our system collapses under its own weight, because Republicans are afraid. Oh, they'll yap about "socialized medicine," and make all kinds of dire predictions, but that's not what worries 'em. They're afraid because some of the party's core constituencies (insurance companies, drug companies, HMOs) are absolutely terrified of a single-payer future. And that's because, in a single-payer system, they're history a government-run organization collects all fees and pays all costs.

Like the Main Street merchants driven out of business by Wal-Mart, or TV networks reeling from the dual impact of cable and the Internet, or once-dominant companies like Polaroid, Kodak and IBM caught flatfooted by new technology, their business models wouldn't work any more. Hundreds of thousands of jobs would disappear, and scores of now-bloated companies would shrink or go belly-up.

Understandably, these dinosaurs would like us to believe that a single-payer system would be just another government boondoggle, a giant, wasteful bureaucracy that would make things even worse.

T'ain't so. We're not looking at a government program. We're looking at, in investment banker-speak, a "disruptive technology." That's something an invention, a process, a service that changes an entire industry, that epitomizes Joseph Schumpeter's description of capitalism as "creative destruction." Think Wal-Mart, Federal Express, Microsoft, Google. And think government-created disruptive technology: aircraft carriers, nuclear weapons, the Federal Reserve, Social Security and Medicare itself.

Seen in this light, Republican opposition to radical health-care reform is difficult to understand. The facts are simple: We can't afford our health-care system, just as we couldn't afford cars until Henry Ford invented the assembly line. As Alan Greenspan said in a final speech before retiring as Fed chair: "I fear that we may have already committed more physical resources to the baby boom generation in its retirement years than our economy has the capacity to deliver."

So Ralph, get well soon, young fella! If you have to write a check, just close your eyes, take two aspirin and call me in the morning.



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