Health Care Costs More in the U.S.: So Where Do All of Those Excess Dollars Go?

Where do your health care dollars go? 

The U.S. expenditure on health care is approaching $9,000 per capita .  Indeed, the medical/health industry now accounts for 18% of GDP.  This is far more than the $3 to $4 thousand per capita and less than 10% of GDP spent by most advanced industrial countries.  Have you ever wondered where all of that excess U.S. expenditure goes?

How about this: into the pockets of Wall Street moguls and investors.  Of course! It must! Where else would it be going?  Paul Krugman, in his latest book, End this Depression Now writes about Lawrence Feinberg of Oracle Partners, a hedge fund specializing in the medical-industrial field.  Mr. Feinberg purchased a mansion in Greenwich, Connecticut for $18 million, razed it to the ground, and built a 30,000 square foot palace that has been compared to the Taj Mahal.

And Mr. Feinberg engaged in all of this lavish expenditure on a Gilded Age lifestyle before the Affordable Care Act has actually been implemented.  Imagine how well investors and hedge fund managers will do upon the infusion of literally trillions of dollars of taxpayer money into hospitals, insurance companies, the pharmaceutical industry, and medical device manufacturers – just to name a few.  That is, until the money runs out.  Or until as much can be squeezed out of the masses as is tolerable.  Given a compliant, complacent, and easily manipulated U.S. population that seems to be a fair piece down the road.

In 2009, Barron’s business weekly quoted Mr. Feinberg as saying that healthcare reform would benefit hospital, drug, and biopharmaceutical companies.  It will benefit him immensely also but he didn’t say that – at least he didn’t say it to Barron’s.  Oh yes, and keep in mind that Mr. Feinberg, as a hedge fund manager, pays taxes at a maximum rate of 15% – it’s called “carried interest.”  I doubt if he pays even that much but you can rest assured he won’t be paying any more than that.

As a person with no animus towards capitalism per se and no problems with a “free market,” I think it is OK if investors earn a reasonable return on their investments. I also have no problems  with individuals becoming wealthy.  I do have a problem with rigging markets so that we don’t actually have a free market.  And that is exactly what has happened in health care.  We have a medical industrial complex, the members of which are able to persuade (bribe) congresspersons to rig prices or, at the very least, fail to regulate anti-competitive practices.

The Affordable Care Act will be funneling massive amounts of taxpayer money into these rigged markets.  The excess will be siphoned off and ploughed into lifestyles of the rich and famous.  In the process, taxpayers will not be getting the health care they need and deserve.  Those who can afford something better will be headed for the concierge medicine realm.  Those who can’t will take what they can get.  And, I imagine, it will take some sharp elbows and/or good luck for most people to make it into the system.