By LARRY ROMANOFF – September 29, 2020
Insurance is not a financing mechanism for regular and predictable expenses. It is not a kind of “Ali-pay” for treating colds and tonsillitis. Insurance and re-insurance are used to cover the costs of unpredictable calamities for which a person or corporation cannot be reasonably assumed to be able to cover on their own. We carry fire insurance on our homes because that loss, however unlikely, would be disastrous for us. In the world of health care, for any one individual, a major medical emergency may be totally unpredictable and the cost potentially disastrous. But for a national population as a whole, medical emergencies and normal medical care needs are highly predictable as a percentage of the population and costs can be accurately estimated in advance. This is the reason all intelligent Western governments have a universal health care plan funded by the national government out of general tax revenue. They do it because this is the best, simplest, and least expensive way to supply a universal good to a universal population.
There is no point in bothering to argue this principle; its fundamentals are based on grade-three mathematics and no amount of foolish propaganda can change this. But perhaps more to the point, the provision of health care is a social good, not a commercial venture. Kidney operations, cancer treatments, blood transfusions, are not the stuff of neighborhood shops or high-end malls, nor should they be. They are social infrastructure like education, and should be considered as such. Neither efficiency – in the capitalist sense – nor profit maximisation have any place in the provision of social needs. Of course, efficiency in the dictionary sense of avoiding waste and loss is always prudent, but social goods like health care, education, parks, museums, and much more, do not belong in the corporate boardroom where the objectives are not only unrelated – but often opposite to – social goods or the needs of society. It is only in politically Right-Wing places like dysfunctional America where this private-enterprise infection is so deep. Sane governments and mentally healthy societies take a very different view of these matters.
I was once asked to advise on the design and planning of a dental program for the academic and admin staff of one of Canada’s largest universities. I took the university through all the necessary steps of benefit design, restrictions, and cost limitations. We examined all options, debated details, interviewed insurers, obtained price quotations for various programs, and in general wasted quite a lot of expensive time. With a client by now reasonably well-educated about group dental care and its attendant costs, I gave them a new option they would not likely have accepted at the beginning: open their own dental clinic. The university had the space available for a clinic, could purchase the equipment and hire five or six full-time dentists, some junior and some senior, to serve their staff in an on-campus private clinic. There would be no insurance applications, no forms, no underwriting, no denied claims, no refusals or limitations on treatment even including orthodontia. And even with the expense of furnishing the clinic, their annual costs would at worst have been about half of what they would have paid if they had used an insurance company – for lesser benefits and a great deal more trouble. Any organisation with huge resources, facing exposure to large numbers of individually trivial claims (or expenses) will always self-insure, because this is the option of sanity. An organisation with more than 1,000 people can often safely afford to self-insure a simple benefit program of health and death benefits for the same reasons.
There is one other personal experience I would share with you here, one that involves auto insurance. At the time in question, if my memory serves me correctly, the average price of auto insurance throughout the Canadian provinces and including most categories of private automobiles was about $300 per year. But in one province, auto insurance cost little over $100. The reason was that auto insurance in the province was not provided by an insurance company but was a universal program operated by the provincial government – to the great chagrin of capitalists everywhere. The government simply calculated the actuarial cost of auto accidents in total, and divided that by the number of registered automobiles, adjusted a bit for various classes of value, and added that fee to the annual price of purchasing the license plates for the car. There was no administration, no underwriting, no insurance claims, no nothing. If a car was damaged, the cost was assessed and the car was repaired. In this province, everything was paid, including medical expenses resulting from injury. The system was perfect, and provided by far the lowest-cost and least-troublesome auto insurance scheme in North America. Drivers in other provinces were truly envious, but the insurance companies maintained a vicious and decades-long media campaign against this repulsive “socialist” government for caring more about the people than about the profits of the insurance companies. This same province courted but successfully avoided eternal damnation by doing the same with its provincial health care system, also the best in the country.
I suggest you remember this story, and ask yourself where the law is written that private enterprises must be involved in an activity just because they can profit from it. Where is this law written? Who is dictating the narrative? By what law, what philosophy, what religion, do insurance companies demand the “right” to operate a national auto insurance scheme or a health care plan? Who is in charge: the corporations or the government? And how corrupt does a government have to be, to subject its citizens to a private for-profit system, knowing it may eventually cost them twice that of a transparent, government-run public system? What pathology do government leaders have in their heads, to make them collect hundreds or thousands of dollars from each citizen each year through an overpriced scheme, so that a few rich Americans can have even more billions than they have now? There are quite a few people in China who need to ask these questions openly, before it is too late.
China today is suffering an onslaught of US capitalist propaganda and pressure to abandon its healthcare field to the American vultures, with various trade publications and columnists spreading this ideology as well, hoping to raise government and public acceptance of this approach. Gordon Orr, a Shanghai Director for McKinsey & Co., wrote a paper titled, “What’s in store for China in 2012?”, in which he listed 10 exciting “predictions”, the last of which was that “Hospital reform will accelerate”. According to Mr. Orr, “. . . local and overseas funds will lead a wave of hospital privatization, including both existing and new assets.” This means that some local – but mostly American – firms will come to China to buy up all the good hospitals and turn them into hugely profitable businesses, removing the best chunks of the health care network from accessibility to the general public, and making health care in China a luxury for the rich. Mr. Orr’s words are more wishful thinking than prediction, but we would be foolish to ignore a man who is cut from the same cloth as the Voice of America. If people like this are successful, they will irrevocably damage China’s opportunity to build a truly effective and universal health care system. A two-tier health care system – one for the rich and one for the poor, is the last thing China needs, but that’s what will happen if China doesn’t stop listening to the Americans.
In September of 2014 Caixin ran an article titled, “Can Doctors Cut the Public Hospital Cord?”, telling us breathlessly of “a prominent Shanghai doctor” who is living his dream of – wait for it – “freedom”, by introducing yet one more American ‘best practice’ into China, that of stripping hospitals of their senior staff and organising freelance “talent agencies” that can strip the population of their bank accounts. According to this journalistic masterpiece, Dr. Zhang Qiang not only “appreciates his freedom but wants to help his professional colleagues fulfill their dreams as well, by dismantling the “rigidly regulated, government-controlled public hospital system” and introducing American-style “freedom” where half the people with money have good health care and the other half die in the parking lot at the hospital. Our Dr. Zhang is quoted as saying he wants all Chinese doctors to receive “the same kind of treatment that doctors receive in the United States so that all they need to worry about is treating patients.” Well, the treatment that all doctors receive in the United States is the kind that requires medical liability insurance and expensive lawyers. All that extra money comes with a price.
The most irritating part of almost all of Caixin’s articles is that the content is presented with an assumption that its readers are at least uninformed if not stupid, offering a simplistic one-sided American capitalist view with neither interest in or mention of, the other side of the picture. And in most of Caixin’s topics there is always another side, usually an unpleasant one that hides the necessary facts from readers. In this case, we have our Dr. Zhang, reckoning “the group will initially operate something like a talent agency – similar to agencies that represent musicians, actors and other professionals – while financing medical supplies and equipment at hospitals and clinics.” That already doesn’t sound like any place I want to go when I’m sick. But in spite of the lofty ideals of undefined (and non-existent) ‘freedom’, this is just about sucking money from China’s health care system, couched in glowing terms of wondrous utopian ideals to be achieved. And Zhang makes the point himself when he says, “Medical services are priced according to the public welfare system,” he said, “but compensation payments are set at market prices.” It is clear from this one statement that ‘public welfare’ is far from his mind but that ‘compensation payments’ at ‘market prices’ are the goal, and that means charging the highest possible fees that anyone will be able to pay. By his own admission, Zhang is driven only by the money – greed – but Caixin tries to present this as “freedom”.
Caixin tells us that “Public health insurance can only be used in government-approved hospitals, which means most patients using doctors in Zhang’s group must pay their own way.” And according to Zhang, “It’s a cruel reality that patients can’t go with a doctor, but rather have to go with a hospital.” But in fact anyone in China can go to any hospital and request to see whatever physician they want. I can do it, and have done, and so can they. What we cannot do – so far – is be pushed into one of Zhang’s gold-plated talent agencies where his medical musicians, clowns, and other professional capitalists cannot charge us three times the price for an identical treatment in the name of “freedom”. I’m truly sorry that Chinese doctors are not free as Caixin would like them to be, but on the other hand the purpose of medicine and doctors is to treat the sick rather than profiting from them. If Zhang so desperately wants to be a capitalist, he should either leave the health care system or move to the US where he will undoubtedly be treasured, if not by the patients at least by his banker. And I think the owners and editors of Caixin should move to Iraq or Libya and gain a better appreciation of what American “freedom” really means, before they attempt to inflict it on the Chinese.
One of the great flaws in private-enterprise American-style medicine is the extent to which the government has been bullied into permitting all practitioners to gorge themselves like pigs at the public trough, abandoning entirely its responsibility to the people. One of these areas is the calculation of physician payments. According to a recent study reported by the Washington Post, “Pay for doctors is supposed to depend on the time and intensity of the procedures they perform. But the estimated duration of medical procedures used by the American Medical Association and the government are so exaggerated that many doctors averaged more than 24 hours of work in a single day.” There were reports of American doctors charging for 50 hours per day of medical treatments. To exacerbate the problem is that physicians are paid per procedure, the time and pay rates for which are established by a committee of the American Medical Association and which are greatly inflated, often at least doubling the actual time required and therefore at least doubling the cost as well. One ophthalmologist in Florida was apparently performing nearly 4,000 cataract surgeries per year, with a workload of 30 to 40 per day on many days, which would result in presumed workdays of more than 30 hours though he worked only about ten. The payments, however, were based on the presumed 30-hour days.
Of course, this means that patients and insurers are paying far too much for their medical treatment, but it also means that with this huge financial incentive doctors will perform procedures far more often than is necessary because there are no checks on a physician’s judgment and no restrictions on his milking the system. One of the study’s authors, James S. Goodwin, a geriatrician at the University of Texas in Galveston, said doctors make decisions based on a large number of factors. But it’s foolish, he said, to ignore the financial angles. “Economic incentives in medicine are like the force of gravity. To pretend they don’t exist is crazy.” And to pretend they won’t soon exist in China is also crazy because this is where the Americans are taking China’s health care system.
I must say I am appalled at the naive blindness with which misguided Chinese so recklessly and thoughtlessly buy into American capitalist propaganda, and I think this is a good time to throw another stone at Caixin. This so-called news medium is showing all the symptoms of being a mouthpiece for AmCham and the US State Department on all matters of public policy in China, whether on GM foods, healthcare, automobiles or the environment. Some of Caixin’s articles so eloquently articulate the American desire to plunder and colonise China that I am often left with a strong suspicion these articles were ghost-written by NED and funded by the CIA. I find it disturbing that this newspaper would abandon its responsibility to the Chinese public and promote such biased and almost seditious opinion pieces disguised as news articles. This is not news, and it is not reporting; it is American colonial ideology presented as disinterested fact. Most days, there is no difference between reading Caixin and the New York Times or the Wall Street Journal, in terms of the long-term damage to China and the misleading of the public.
In July of 2014 Caixin published an article titled ‘Getting a Healthy Interest in Medical Tourism’, ostensibly written by staff reporter Li Yan, that literally reeked of having been ghost-written by the US State Department or the NED, essentially (and cleverly) attempting to trash China’s medical care system by promoting a particular American hospital – the Mayo Clinic – and also a so-called “consulting company” whose job is to obtain gullible and naive clients in China who are willing to spend their life savings on American-style health care. I re-read Caixin’s article after several months, and it stinks even more than the first time.
When George Bush was US President and busy invading Iraq, he made plans to eliminate a journalistic irritant by bombing to rubble the headquarters of the media group al-Jazeera. I see no reason China’s government cannot do the same to Caixin, and I would heartily recommend it do so before the rot goes any deeper.
Note of the poster: Alipay (Chinese: 支付宝) is a third-party mobile and online payment platform, established in Hangzhou, China in February 2004 by Alibaba Group and its founder Jack Ma. … It is the world’s number one mobile payment service organization and the second largest mobile payment service organization in the world.
Mr. Romanoff’s writing has been translated into 32 languages and his articles posted on more than 150 foreign-language news and politics websites in more than 30 countries, as well as more than 100 English language platforms. Larry Romanoff is a retired management consultant and businessman. He has held senior executive positions in international consulting firms, and owned an international import-export business. He has been a visiting professor at Shanghai’s Fudan University, presenting case studies in international affairs to senior EMBA classes. Mr. Romanoff lives in Shanghai and is currently writing a series of ten books generally related to China and the West. He is one of the contributing authors to Cynthia McKinney’s new anthology ‘When China Sneezes’. (Chapt. 2 — Dealing with Demons).
He can be contacted at: email@example.com