Healthcare issues

Here are what I see as the biggest healthcare issues:
(1) High healthcare costs - due to everyone supping at the trough.
(2) Lack of universal coverage - creates insecurity.
(3) Lack of transportability - reduces flexibility.
(4) Doctors paid too much - this is hard because they study for so long and those costs are huge, but the reality is that US doctors are way overpaid relative to doctors in other countries; implication is fewer people entering the profession (now that could be a problem).
(5) Drug companies and medical device companies make too much profit - by allowing medical companies to charge a market rate the US is subsidizing the rest of the world's healthcare costs, but to control domestic expenses the US needs to manage medical company profitability kind of like it does with utilities.
(6) Legal framework increases costs - so many issues and problems here; one nasty by-product is the overprescribing of procedures and medical services (also related to the conflict of interest between the doctors fiduciary duty to their patient and their desire to make money).
(7) Multiple payers creates an administrative mess - not to mention duplicative administrative costs.
(8) US consumers won't accept "no" for an answer - resources are limited and there are constraints in any system.
(9) Too many vested interests supping at the trough - makes the development of good policy unlikely.


There are no easy solutions for the country's problems. Solving one problem leads to a compounding of other problems. The problem with instituting a universal healthcare system is you are creating a massive new entitlement program. If you were to go this route, you would need to manage everyones margins in the system and the only way to do that effectively is through a single payer entity.

Where There Is Smoke, There Is Fire

Excellent Weekend Interview in the WSJ, highlighting the rot (basically poor structure, corrupt practices, and perverse incentives...sound familiar) that exists within the US legal system ("He Fought the Tort Bar - and Won").

Given our recent experience of an unsustainable imbalance (financial crisis), it reminded me of the importance of identifying other areas in the system that are rotten. These will be ruled by Stein's law "if something can't go up forever, it will stop."

There is a price to be paid for corruption. And, there is a day of reckoning. Getting a handle on how and when it will play itself out is the hard part. But first you must identify where the problems lay.

Here are a few suggestions of unsustainable imbalances:

Political/democratic process and systems - perverted by money
Healthcare - perverted by vested interests
Tertiary Education - 10% pa inflation unsustainable
Defense spending - military/industrial complex + political ideology
Unfunded Entitlement Liabilities - self-evident
Fiscal Deficit, Current Account Deficit, Govt Indebtedness - not sustainable, but...

I think that each will have their "Minsky Moment" but the damage from their fallout, in most cases, will be less severe than an overly leveraged financial system (the multipliers there are huge).

I will talk much more about these things at another time, as well as possible ideas as to how each of their unravelings may play out.

P.S. While we are essentially on the subject of systemic risk factors, here are two other substantive risk factors with systemic possibilities - inflation and deflation. More on those at another time also.