A healthcare conspiracy theory

When Mad Magazine was still being published one of my favorite cartoons was Spy vs Spy. It was symbolic of a time when each nation had a spy trying to sabotage the other spy’s diabolical activities. I believe such a covert action has been secretly playing itself out in health care.


When the Affordable Care Act was enacted I read the law and came away stunned. It was remarkably well written. Way too well written to have been crafted by politicians.  No, they simply could not have written that bill!  Now, on the eve of the 2014 implementation I am even more convinced it was really done by outside third parties. The problem is that even K-Street lobbyists tend to be puppets-on-a-string. I have long wanted to know who was puppet-master, and now I think I know. The clues have led to William “Bill” Frist, a conservative Republican and a past Majority Leader of the U.S. Senate.

You might remember Bill Frist as the heart surgeon-turned-Senator. He is also the CEO of Nashville, Tennessee-based Hospital Corporation of America(HCA), and the son of its founder. HCA does business in Colorado as HealthOne.

It is my belief that Senator Frist, more than any single individual has been responsible for the failure of conservatives to ever achieve health reform. And, I believe he is the spiritual leader behind the Affordable Care Act. Mitt Romney had a part but he played second fiddle. Between these two supposed conservatives, they handed the American health care system over to the socialists on a silver platter.

We all have to remember that during the Bush years conservative Republicans controlled the three branches of government. They cut taxes and took us to war, twice. Why was nothing done in health care?

By the 1990s, the cumulative effects of public policy legislation in the 1970s and 1980s conspired to create a perfect storm in the financing and payment of health care. First, there was a wholesale acquisition of non-profit community hospitals in Colorado and across the country by holding companies such as HCA. Second, insurance companies and large self-insured plans and their TPAs scrambled as public entitlement programs negotiated fixed fee schedules and cost shifting began in earnest. This all led to healthy groups abandoning the old system in favor of self-insurance. Not buying insurance is a form of self-insurance for healthy individuals. Cost shifting caused different segments of the system to inflate disproportionately, accelerating the out-migration of healthy individuals and groups from the system. This left insurers like Blue Cross and the for-profit, high-cost hospitals gasping. For the past two decades they have desperately been trying to figure out how to get back in the game.

It is probably mere coincidence that Bill Frist was in the midst of a workout and turn-around of HCA when he entered politics. Even more bizarre–this all came at the same time when HCA (HealthOne) was  negotiating the largest fraud settlement ($2 billion) in U.S. history for overbilling Medicare.

It is now ironic that those segments of the health industry most grieving the loss of cost-based reimbursement and bemoaning the shift towards managed care found their first hope of salvation in Medicare Advantage HMO plans. By tightly integrating the insurance product using contractual relationships with providers this new hybrid approach between provider and insurer once again made health care profitable.

I now predict old fashioned managed care is being relabeled “accountable care”. But, it’s the highly integrated, contractual, and sometimes, ownership ties between provider and insurer that will serve as the alpha model for implementation of ObamaCare.

The social contract between the insurance/provider health complex and government is symbiotic. When markets fail, whether it is supply, demand or financial intermediary-induced, society turns to government to solve the problem. And, because government basically works best when it plays the role of purchasing agent or contract officer it routinely turns to institutional actors to do its bidding under contract. It no longer matters whether the U.S.  is waging war or gathering national security data. It is habitually farmed out to third party contractors who answer to bureaucrats.

The unstated quid pro quo is “you (government) pay us outrageous amounts and, mandate everyone buy the product and we(the insurer) will corral the providers in our networks. Once the gate is closed, we can impose price controls and utilization controls that would cause rebellion if government did it directly. Better to do the dirty work by proxy.

Who needs the freedoms of conventional market disciplines that are subtle and nuanced, when government can forcibly institute the carrot and stick approach of tax subsidies and penalties?  Why engage in surgery when a club will get the job done twice as fast? So what if it introduces trauma?

This has unknowingly led to a perverse form of adverse selection that is cannibalizing traditional insurance the way self-insurance gutted the risk pool twenty years ago.  People who are low utilizers and who wish to avoid paying premiums and deductibles will migrate to the new managed care offerings. This will cause premiums to rise even faster in the older, more established groups, causing more migration in the next round of enrollment. Eventually, though, you can run but you can’t hide and the only solution is a community-rated risk pool that completely socializes risk and justifies the conversion to a single payer system administered by the same wardens currently building exchanges and the cooperatives.

Look at the specific example of the Health Exchanges. They seek to offer the consumer low cost premiums and deductibles and a smorgasbord of benefits such as free wellness. To keep copays reasonable requires something happen in the shadows.  First, it is absolutely necessary to have large numbers of healthy people buying insurance that they will seldom use.  To get people who would otherwise self-insure to buy-in, government has to give tax credits and subsidies. And, that necessitates the consumer buy “approved” and “certified” insurance through the Exchange, not in the open market. The Exchange’s Board of Directors is comprised of the same select group which promotes managed, accountable care.  Small insurance carriers who might actually innovate the market are kept out. Eventually a “Law of Lemons” effect will take place.

While ObamaCare was being crafted, I believe Bill Frist and Mitt Romney and their confederacy of operatives from Nashville threw the American public under the proverbial bus to further their private equity interests. They had already donned sheep’s clothing and infiltrated government. They ended up making conservatives the laughing stock. The Republican Party has failed, not because of its treatment of illegal immigration but largely because of an inability to reform health care and education when they had the chance.  It is now a market controlled by oligarchs. You and I are mere wage slaves.

From now on, the health care you and I receive will be determined by some for-profit hospital or insurance company’s goal seeking financial model. Your doctor is no longer your loyal agent. You have a new Navigator who works for the Exchange. The provider’s contract is not with you but with the accountable care organization. They will arrange hospital financing and pay back the physician’s school loans. Health care has become an extractives industry lacking any sense of morality. Beware, the most dangerous people you encounter from this point forward are those who believe their own hype.

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