Medicynic

Simon Johnson observes regarding the LIBOR scandal:

In the aftermath of the Barclays rate-fixing scandal, the most surprising reaction has been from people in the financial sector who fully understand the awfulness of what has happened. Rather than seeing this as an issue of law and order, some well-informed people have been drawn toward arguments that excuse or justify the behavior of the Barclays employees.

The justifications offered include that this kind of cheating has long been done; that everyone does it; that “no one” get’s hurt; that the regulator’s should have caught them; and that it was only a very few basis points—a very small percent of a huge amount of money.

Medicynical Note:  This sounds vaguely similar to some of the arguments put forth for continuing and “freeing from regulation”  our non-system of health care.  It is posited that “free markets” without government regulation will magically contain costs and result in better outcomes.  Something that has not occurred anywhere in the world. 

It should be noted that we’ve seen how well deregulation worked in the 80’s with Reagan’s S&L disaster; in the 90’s with Enron’s manipulation of energy markets; in this past decade with the Bush/Greenspan collapse of the financial system and now with the LIBOR scandal. 

From these experiences, the long term effect of deregulation on complex markets would appear to be collusion and corruption.  The goal of which is to maximize short term profit (and incomes) of those involved.  Perhaps, that’s why the U.S.’s quasi free market of health care costs 1.5-2 times that of any other place in the world. 

Improved health is not the driving force of this system.   But rather the motivation is more revenue and profits  for suppliers, whether they are insurers, providers, pharmaceutical companies or developers of technology.  As with the LIBOR scandal, integrity and honesty (and improved quality, affordability, and access) is not their concern.

And as Simon Johnson noted:

Power corrupts, and financial market power has completely corrupted financial markets. Barclays and the other global mega-banks involved in fixing Libor have brought their own industry very low – completely destroying the legitimacy on which sensible financial intermediation needs to be based.

Interesting article in JAMA (Journal of the American Medical Association) reviewing the effects of incentives (mostly financial) in medical decision making.  They affect both patient and physician decision making and may be useful in getting additional value out of our non-system of health care.

There is ample evidence that physicians, who typically fulfill the criteria for being economically rational, are exquisitely sensitive to the incentives they face. Physicians tend to recommend tests and treatments that will provide them with financial benefit. For example, oncologists who are reimbursed based on the chemotherapy drugs they provide administer more of these drugs and concurrently, the more expensive drugs.¹ On average, compared to physicians paid on a capitated basis, physicians paid for specific procedures tend to recommend more of those procedures. 

And

Patients tend to face idiosyncratic health issues, get relatively little useful feedback about the quality of medical decisions, and often make decisions when sick and, as a result, in a heightened emotional state. Perhaps not surprisingly, therefore, the behavior of patients can be less than perfectly rational.

Medicynical Note:  There is an opportunity here but I’m doubtful that there is enough support for the  social engineering necessary to improve.  For example, doctors are all for change until it affects their bottom line.  Patients want limitless access to everything regardless of efficacy or cost.  Both approaches lead to excessive costly medical interventions without quality improvement.

I guess we’ll see!?

Those favoring unleashing and deregulating markets in health care should consider the July 2,  Planet Money episode – The Little Lie that Rocked the Banks.  More here on July 7.

The episode involves Barclay Bank’s and likely other bank’s manipulation of the LIBOR which is the basis for lending money between banks and to consumers around the world. A little manipulation can lead to a lot of profit.

You would think that after 2007, when banks were deeply involved in the fraud and manipulation of the bank/market meltdown, that they would be scrupulously honest.   But no,  the instinct is to take advantage wherever you can.  Well you might then say “that’s the beauty of free markets.”  Find a weakness and take advantage.  But, again as in 2007,  it involves lying and cheating consumers—which sadly also appears to be part of unregulated  markets.

Medicynical Note:  Free markets are driven by the “need” to maximize return.  The game is not to provide the best service (in the LIBOR case an honestly derived interest rate) but rather to maximize return, even if you need to manipulate the “system.”  Regulation is anathema to “free markets” because it interferes with the game. 

In health care this partially explains our inefficiency and high costs.   As it is we have health insurers who do their best to not insure sick people so as to maximize return.  We have suppliers whose goal is to pad their bottom line, not benefit the health and well-being of patients.  And lastly we have a well developed non-system that allows and, in some ways, encourages conflicts of interest at every level. 

If we value health care rather than profits we need a regulated health system whose aim is universal access and affordable cost.  More here.

Interesting look at bubbles and capitalism.  The article is ostensibly about the views of Jeremy Grantham (a manager of a global investment firm) and notes his hypothesis that there are 10 bubbles slowly destroying capitalism.

Flash forward: in Grantham’s early 2012 newsletter he saw a bigger train accelerating: When he focused on the “common good, it became quickly apparent that capitalism in general has no sense of ethics or conscience. And probably its greatest weakness is its absolute inability to process the finiteness of resources and the mathematical impossibility of maintaining rapid growth in physical output.”

This we call the Myth of Perpetual Growth, the pseudo-scientific justification for modern capitalism.

Grantham concludes that capitalism’s flaws are so deadly that while it does “a thousand things better than other systems,” it fails in those three crucial areas. And “unfortunately for us all, even a single one of these failings may bring capitalism down and us with it.

Number one on the bubbles list: is “the Health-care Bubble: Forget court, elections — health care will implode.”  It’s unsustainable.

Read the article for the others.

Medicynical Note:  We’ve long postulated that we have no system of health care in the U.S.  (Here and Here) The facts seems to bear this out:  50 million without insurance; New drugs that cost more the average and median income;  Hospital bills in the hundreds of thousands of dollars; Our (the U.S.) Cost/capita for health care twice that of many other industrialized nations.   

It’s not rocket science.   Our non-system is broke.

Drew was reportedly on the GlaxoSmithKline payroll:

In June 1999, popular radio personality Dr. Drew Pinsky used the airwaves to extol the virtues of GlaxoSmithKline PLC’s antidepressant Wellbutrin, telling listeners he prescribes it and other medications to depressed patients because it “may enhance or at least not suppress sexual arousal” as much as other antidepressants do.

But one thing listeners didn’t know was that, two months before the program aired, Dr. Pinsky—who gained fame as “Dr. Drew” during years co-hosting a popular radio sex-advice show “Lovelines”—received the second of two payments from Glaxo totaling $275,000 for “services for Wellbutrin.”

Read the article for more details….other doctors received more in payments to shill for the drug company.

Medicynical Note:  Sadly my profession has been corrupted by it’s conflicts of interest.  Some inevitable because of the nature of medical care.  Doctors earn more by “doing” more.  Other conflicts are optional and apparently more remunerative, as indicated in the article.  This too needs reform.

Maybe I should add a post category for medical corruption?