Monday, June 6, 2011

Provide-Side Economics must be Addressed

In the realm of healthcare, we have the suppliers versus the providers. The suppliers are the insurance companies which supply the customers to the providers (hospitals, doctors, nurses, medical device manufacturers, drug companies, etc.). With the aging of the baby boomers, we have the increased demand for underwriting from the insurance suppliers, thus decreasing their profits. Concurrently, we have an increased demand for services from the providers, thus increasing their profits.

Unfortunately, the providers being flush with money, have greater lobbying clout with Congress. Meanwhile, the suppliers are in the losing end of the stick -- yet still had enough clout to have demanded the individual mandate to be part of ObamaCare and RomneyCare. These healthcare reform bills were, in essence, a bailout of the insurance industry. But unfortunately, the private sector insurance companies (for healthcare) may eventually become extinct.

In order to save the supply-side of healthcare from its demise, the provide-side sector must be more firmly addressed. The corrupting influence of lobbyists and money from the providers had skewed ObamaCare and RomneyCare too heavily in their favor, and not enough in favor of the insurance industry. These "reforms" have been crafted with new laws and regulations that will exacerbate the oligopoly status of the providers. With less competition at the provider end, the price of healthcare will increase ... and the quality of care will suffer. If prices are capped, then there will be rationing.

When there is a limited amount of providers, it does not matter whether we have government insurance or if we have several private insurers -- the suppliers will be under the mercy of the providers. There will be an increased demand for care while the shortage of care becomes acute. This is a recipe for hyperinflation, bankruptcy for the private insurers, sky-high taxes for the American citizen, increased government debt, and the rationing of care.

The bozos in Washington D.C. are being duped into paying too much attention to the supply-side of healthcare (i.e. insurance reform) without being tough on the providers. We need a Teddy Roosevelt type of figure (like Donald Trump who does not bow down to anyone) and would then bust up the healthcare monopoly (on the provider side) ... or a Sarah Palin who had the guts to face up to the oil companies in Alaska (whereas the establishment Republicans were stooges for that industry).

The Ryan Plan for Medicare reform will not work if we continue to have an oligarchic system of healthcare at the provider end. The American Hospital Industry (AHA) are scoundrels in having crafted the ObamaCare legislation to include the severe restrictions against physician-owned hospitals. We need more hospitals in the marketplace, not less! Likewise, we need more medical schools and more doctors -- to hell with the AMA should they thwart this needed goal.

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  1. Good post, it is so frustrating to see how powerful these lobbyists have become. While the government takes care of the special interests it is the American people who suffer and this is another example.

  2. Steve, I hope Paul Ryan will read this post. Once he realizes that market-based solutions need to be imposed at the provider end, then insurance reform becomes secondary ... albeit still important.