Archive for February, 2010

Here is a nice article that I hope gets some political attention.  I find the proposals elegant.  Meaning, they may look simple but the underlying actions that they create are very complex.

Here’s a little lesson in engineering.  Start with an above ground pool, perfectly still with the surface of the water completely flat.   Let’s say that the pool had a window on the side so that you could see the water level and you place a mark where it currently stands.  Now, let’s place a small boat into the pool.  When you do, the boat sits in the water, not on top of it.  The water that the boat displaces is spread to the other parts of the pool.  The water that makes contact with the bottom of the boat is lower, right?  What about the remaining water in the pool?  When you go back to the window, you will see that the level of water within the pool has risen, maybe not a lot but it is higher.  What you have done is spread the displaced water (that which was where the boat now sits) to the other areas of the pool.

Let’s take this farther.  You want the boat to be larger and to sit lower in the pool so you build a bigger boat and make it heavier.  You will have succeeded at making the boat sit lower and for the water that touches the bottom of the boat to be lower.  Go back to the window and you will see that the water level of the remaining free water (meaning no boat sitting on top of it) has risen even higher.

There.  you have finished lesson one of CIRCLE’s unaccredited marine sciences course.  What, you don’t see this as practical knowledge since you have no above ground pool or a desire to put a boat into the one you have?  Well, this is something that can be applied to other systems.

Take healthcare.  Replace the pool with our healthcare economy.  Think of the surface of the water as the prices paid for all healthcare services.  Think of the boat as Medicare and Medicaid.  The water level under the boat is the price levels set by the government for healthcare goods and services (remember, their prime goal is to lower the price of those services that are currently available in the market but because they are big, they can use their size to demand lower prices, similar to taking on more weight within a boat).  So, when the government pressures healthcare facilities and providers to take less, what happens to the those that reside outside of the government program?  Or in the case of the pool analogy, the people that reside outside of the boat?  Remember, the heavier the boat, the higher the surface water moves.  Your answer should be (if I have done my job) is that we, those reside outside of the government system, pay higher and higher prices.  Do you think there is a direct link between the more people on government healthcare and overall healthcare inflation?  I do.

So, some may say that we should all reside under the boat so we, too, can get lower healthcare rates.  Well, if only that were true…

Let’s go back to the pool (metaphorically).  Let’s take a large object that covers the entire inside of the pool and start placing lots of weight on it.  Does the water go down?  If you have a tight seal on that, no, but the object doesn’t go down either.  Ok, let’s make it so some of the water can leak out, making it easier to have the object drop within the pool.  Where does the water go?  Over the side and out of the pool, forever.

Go back and apply this to healthcare.  The water in the system represents our healthcare economy.  Water leaving the pool is analogous to money leaving the healthcare economy.  Where does it go?  Some of it may go to other investment opportunities but much will just cease to exist.   The money that resided within the healthcare economy, prior to us pushing it out of the pool, was used to pay doctors so they could pay off student loans.  It went to pay the nurse or technician so they could sustain their living standard.  It was used to invest in research and development projects to bring to market better value added goods and services.  In essence, it went to make more money that would reside within the pool.  But we kicked it out by forcing the water level down.

That is how I think of the debate on Universal Healthcare.  If you force an unnatural monopoly ( the large object that covers the pool) onto people they will avoid it at all cost.  You may be comforted in paying lower fees now (sitting lower in the boat), but you have dramatically taken away the funds needed (the water within the pool) to make advances and to support those that provide the services.