INTRODUCTION
 
     There are two schools of thought on this nation’s health care dilemma.  One
asserts that the primary issue is the 47 million uninsured.1 It holds that were
all Americans covered under a single-payer system, the greater part of the
problem would be well on the way to a solution. The other asserts that the
uninsured are but a symptom of a far more critical underlying problem.  That
pathology is the steep and accelerating cost of health care.  Were it not for
that exorbitant cost, health insurance would be affordable to virtually all, and
fair value would be received for the premiums paid.
     These positions should not be mutually exclusive, but for all practical
purposes, they have become so. Each is firmly identified with a political party:
the former with Democrats, the latter with Republicans.  This is unfortunate. 
It ossifies policy positions and thwarts a fully developed critical analysis.
     The Obama Health Care initiative (Patient Protection and Affordable Care
Act) was passed by Congress on March 21, 2010. It is the most important bill
Congress has enacted since Medicare was passed in 1965. However, even if the
Congressional Budget Office’s optimistic projection on the legislation proves to
be correct, the bill will not significantly reduce healthcare costs.2 The
legislation fails to identify the crux of the problem.  The core issue is cost,
not coverage.  I trust progressives will be open to viewing the issue using a
different paradigm.  There is little theoretical or long term political
advantage in continued, unswerving loyalty to a defective analysis.
     The expenditures are massive. Health care spending in the U.S. now exceeds
$2.5 trillion annually ($8,196 per person), 17.3 % of the GDP (gross domestic
product). 3   The Congressional Budget Office predicts that by the year 2025,
the U.S. will be spending 25% of its GDP on health care.4 In 1960, it was only
4.7% of the GDP. 4 The cost of health care is devouring our economy.
     It would be a relatively simple issue if we, as a society, were paying for
these expenditures out of our past wealth or our present income.  We are not. 
We are financing our current health care through the burdening of the next
generation.  If one includes Medicare and
Social Security obligations, the federal government’s unfunded liabilities are
$455,000 per U.S. household. 5 
     Considering that Medicare has an unfunded liability six times that of the
Social Security,6  health care financing is a considerably greater problem than
that of the failing Social Security system. 7   And, according to the New York
Times, the projected Medicare and Medicaid deficits “(are) the equivalent of
adding at least $900 billion to the deficit every single year, in perpetuity. It
makes the cost of the 2008 bailouts (A.I.G, Fannie Mae, Freddie Mac) look like a
rounding error.” 8   Expenditures on health care in the U.S. far exceed the
means of a nation with a declining industrial base.    
     In this report, the reasons for the high cost of health care in the U.S.
are critically analyzed.  Conventional wisdom holds that “the primary driver of
health-care cost increases is technological progress.” 9   While technological
developments have increased the costs of health care, the assertion that they
are the “primary driver” is without substantiating evidence and is false.
Several radical but cogent proposals to reduce health care costs---all bluntly
stated and politically naïve, are offered. If implemented, however, they should
work. The focus of this treatise is primarily on reducing costs.  The issue of
cost is decoupled from that of expansion of coverage to the uninsured, and from
the issue of improving the quality of care.  These latter issues are not
unimportant; they are addressed in this book.  In a strict fiscal sense,
however, they are secondary. 
     If health care is looked on as a war on disease, then this report is
written not as if by a theoretical systems analyst back at the Pentagon, but
from the vantage point of boots on the ground.  That may be a disadvantage.  Not
seeing the forest for the trees is an overworked adage, and it could be
applicable here. Nonetheless, the perspective offered here has not been given an
airing, 10 and the time may be ripe for something other than a regurgitation of
stale proposals and platitudes.  
     They are all that have been offered thus far. The Obama Administration, in
its health care legislation,  has focused on expansion of coverage to the
uninsured. From the left, the talking points are “single payer” and “universal
health insurance”. From the right, it is “health savings accounts.”  All are off
the mark; they are largely irrelevant in slowing the rise in health care
expenditures.  It is a reflection of the intellectual bankruptcy of both sides
of the political spectrum that they continue to proffer these purported
cure-alls.
     It is a moral bankruptcy as well. Some wonk, somewhere, in each party, must
realize that their “solutions” are fundamentally incapable of containing the
accelerating expansion of the nation’s health-care budget. Yet they are silent. 

     The health-care system has been labeled as inefficient. That’s an
oversimplification. It’s remarkably efficient for the very few who have netted
hundreds of millions of dollars. In a macroeconomic sense, health care is just
another industry.  The notion that CEOs and top management in health care, when
handed the opportunity to make “a killing” would, by mere dint of their
position, place responsibilities to shareholders and patients over their own
interests is quaint.  The agenda of some in health care management may not be
that different from management in the financial services industry.11
     Another widespread criticism of American medicine is that it is “based on
treating illness, and not on promoting wellness.”12 Treating illnesses, of
course, promotes wellness, but what the critics really are saying is that if our
nation’s priority were on preventive medicine, much, if not most, of those
illnesses would no longer be present, and the treatments would therefore be
unnecessary.  This is nonsense, but it is a philosophy pervasive throughout much
of academia and the media. There are significant benefits, of course, that can
be realized with preventive medicine.  Early detection of asymptomatic disease
is certainly valuable. But cholesterol screening, blood pressure measurements,
colonoscopies, pap smears, mammograms, etc., are standard medical practice and
their savings already are built into the system.  Moreover, the impact of some
of these interventions is less than commonly realized. For instance, women who
have mammograms every one to two years have a 16% to 19% lower death rate from
breast cancer.13  That’s an impressive figure; but clearly, even if every woman
in the country had yearly mammograms, the great majority of breast cancer deaths
still would not be prevented. Rather than “preventive medicine,” a more accurate
term for such medical practice would be “proactive medicine”–looking for disease
before it becomes symptomatic. 
     Regardless, in financial terms, even if penetration of the above
interventions were to encompass 100% of the population, the savings would be
modest at best.  As for many of the remaining screening modalities, their
benefits are limited and exaggerated.
     The other arm of preventive medicine, beyond that of screening, is
lifestyle modification, such as good nutrition, supplements and healthy living.
This philosophy asserts that:
     “If we want to make affordable health care available to the 45 million
Americans who do not have health insurance, we need to address the fundamental
causes of health and illness, and provide incentives for healthy ways of living
rather than reimbursing only drugs and surgery. Heart disease, diabetes,
prostate cancer, breast cancer and obesity account for 75% of health care costs,
and yet these are largely preventable and even reversible by changing diet and
lifestyle.” 14 
      That statement misleading, and to a significant extent, false.15  
Granted, science shows that a healthy lifestyle can extend  one’s  lifespan by
nearly a decade.16   But short of prohibiting alcohol, banning tobacco and
taxing red meat etc., we have likely reached the public health limits of the
benefits of lifestyle modification. The current mandate, compelling doctors to
document lifestyle education into the medical record, is largely an exercise in
futility. And for what its worth, chronic disease generally is not prevented by
lifestyle modification; it is delayed. 17   The two (prevention and delay) are
not synonymous.  The diseases, and the expenses, arrive approximately ten years
later.
     The “prevention” position further claims that “doctors (profit) from repeat
visits. There is no financial incentive to keep patients healthy.” 12
     That statement refers to the fee-for-service model, as opposed to pre-paid
health plans, and implies that for financial reasons doctors, as a rule, let
their patients become sick.  There certainly are corrupt doctors, but those who
would keep their patients sick for profit are few and far between.  The purely
mercenary tend to go to Wall Street, not medical school.
     Experts tell us the American health-care system is in desperate need of
“quality improvement.” This report takes the opposite view. The “quality
improvement” movement is making the situation worse. 
     The positions taken here run contrary to the prevailing conventional
wisdom.  Among the topics given a fresh perspective are medical education,
malpractice and defensive medicine, the insurance industry and  managed care,
the pharmaceutical industry, single-payer systems (Medicare and Medicaid, the
Veterans Administration, the Canadian health plan), lobbying and mandates.
      This book attempts a straightforward, simplified approach, breaking down
the issue of health-care costs into their component parts: labor, business,
government and mandates.  Physicians, although we imagine ourselves to be above
the fray, are just labor.