By:

Dave Kingsley

Why would any capitalist believe that government funded medical care is amenable to capitalist fundamentals.  It’s nonsensical, even crazy, to think that “free markets,” “competition,” “buyer-seller negotiation” (bargaining over price), and so forth are relevant to medical care.  The results of this delusion – that Medicare and Medicaid can be administered through a “free market” – are: (1) bizarre, costly, and insulting advertising blitzes during Medicare open enrollment, (2) excessive costs due to payouts to shareholders and executives, (3) corrupt politics, which is also driving up costs, (4) dearth of R&D and innovation, and (5) lack of access for many citizens and residents who pay taxes that help fund the system.  I’m amazed that the public tolerates this corrupt, inefficient, unfair, and costly system.

    For a comparison to what is happening in the medical-industrial complex, consider the merging electric vehicle industry – about which I’m thrilled – as an example of real capitalism.  The traditional auto industry failed to move quickly enough toward vehicles that reduce the kind of emissions posing a threat to the future of the human species.  Hence, companies like Tesla have disrupted the staid auto manufacturing business.  Either Ford and GM will move much faster or will shrink into oblivion.  It is exciting to see upstart companies like Rivian (recent IPO & a contract to build delivery vehicles for Amazon), Lucid, and Archimoto challenge big auto and other gas vehicle manufacturers. We have a whole new exciting industry that is designing and building electric vehicles, inducing battery technology, spawning charging station manufacturers (e.g., ChargePoint), and creating well-paying jobs.

    Compare the Medicare-Medicaid funded, tax advantaged, nursing home industry to the rapidly emerging electric vehicle industry. The primordial roots of the industry can be dated to 1950 when the Social Security Act was amended to authorize federal funds for medical care (almshouses were state and local eleemosynary institutions and did not receive federal funds). It wasn’t long before federal lending began to boost a private, for profit, real estate industry – justified by a façade of medical care.  Medical delivery was based on the total institutional, industrial, model because efficiency and economy trumped professional medical standards. In 1965, massive amounts of federal and state dollars began to flow into the industry, which grew into a major sector of the commercial real estate industry and the medical industrial complex.

    There has been no innovation to speak of in the design of facilities and delivery of care in the nursing home industry since 1950.  The same substandard, disgraceful, care delivered in 2021 is essentially the same standard of care that has been delivered for the past 70 years. Conversely, financial innovation since the 1980s has been breathtakingly swift.  The “shareholder as supreme” theory of management and financialization throughout the economic system overtook a publicly funded nursing home system.

    What we now have is trillions of dollars funneled into the medical industrial complex – including the nursing home sector – without a correlative expectation that providers deliver a standard of care that is comparable to the money they are paid.  The nursing home industry operates in collaboration with government in a cartel like arrangement in which prices are guaranteed but labor floats in the low-wage service market.  Entry into the market is restricted and those providers privileged with a license are guaranteed an excessive return.  Owners, executives and their families are becoming fabulously rich in this system while patients suffer from low grade care without concern for professional medical standards. 

There is no disruption and innovation in a system like this.  Hence, it is not a capitalistic system at all.  It is government funded privilege accorded to select groups of shareholders. The tax codes are not incentivizing them to invest in capital and operational improvements. Rather, they have been able to arbitrage tax provisions into enhanced revenue streams without any other purpose than increasing shareholder returns.

Watch For Future Posts:

“The General Welfare Clause in the U.S. Constitution: What Should be Public and What Should be Private in a Democratic Republic with a Capitalist Economic System.”

“Taxpayers & Tax Codes: What Should Residents of the United States Expect for the Money They Spend on Medical Care?”

“Conservative Industrialists Have A Narrative and a Political Strategy. Advocates, Liberals, and Progressive Legislators Do Not.”

“Framing & Narratives Do Not Have to Be Based On Deceits, Falsehoods, and Propaganda. The Truth and Scientific, Objective Data & Information Work Well.”