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It is easy to point out what is wrong with healthcare. It takes somewhat more thought to discover why those problems exist, and still more thought to make policy recommendations about how to solve the problems. Here is such a recommendation, one that will improve healthcare financing. If your agenda is to shrink government, you will dislike this proposal. If your agenda is to enlarge government, you also will shun this proposal. However, if your agenda is to create a system that works for most Americans and is sustainable in the long-term, you may find merit in this plan.

Auto Warranty

Health insurance is more like a car’s warranty than auto insurance. Third party liability, as exists in auto insurance, is not envisioned in health insurance. It offers only the equivalent of “collision” coverage, which covers damage to your own vehicle in an accident without regard to fault; plus a warranty covering damage to parts and systems during normal use.

There are two types of car warranties: powertrain and bumper-to-bumper. Powertrain warranties cover the engine, transmission, and drivetrain – the components necessary to “power” your car. Bumper-to-bumper warranties cover almost everything, including the powertrain.

Powertrain Health Insurance

When discussing health insurance, it would be useful to differentiate between “powertrain”-type health insurance and full “bumper-to-bumper” health coverage. Here are definitions of the terms:

Definition of Powertrain healthcare: insurance covering treatment to a person’s vital organs and systems if it is necessary to maintain the person’s life and basic functions.

Definition of Bumper-to-bumper healthcare: insurance covering the full spectrum of non-elective treatments that are reasonably expected to improve a person’s quality of life.

Details can be worked out. We may want to include treatments for Type I diabetes but not Type II, for example, in powertrain coverage. For the broader purposes of this article, the category of treatments now considered “medically necessary” is being split into two categories, vital and non-vital. These definitions disregard whether a condition is an emergency. This means regular ECGs are more likely to be covered than a fractured ankle under a powertrain plan.

Role of the Federal Government

Powertrain issues – heart problems, cancer, stroke, Alzheimer’s – destroy lives, put people out of work, and bankrupt families. This area is where Americans need help from their government. Limitations on treatments for life-threatening and disabling conditions are more often a product of availability than price. Therefore, the quality of care has little to do with who pays.

The U.S. government should provide powertrain coverage for all Americans. However, it should leave additional bumper-to-bumper coverage to businesses and individuals if they so choose. It should also make self-insurance for bumper-to-bumper conditions a viable alternative.

Big Government versus Small Government

Here is an enduring debate between fiscal liberals and conservatives. Each side would love to savor the taste of victory. Unfortunately for both sides – and perhaps fortunately for our nation – this debate is unwinnable.

Usually, when two sides are deadlocked or engaged in a back-and-forth over long time periods, it is because neither side is addressing the real issue. The question to ask in this debate is how big does government need to be to fulfill its role effectively? The size our government needs to be is the inverse of the private sector’s effectiveness plus the square of its corruption, written in the formula: Size of Government = (Size of Overall Economy – Private Sector Effectiveness) + (Private Sector Corruption)².

Corruption is squared because as it increases, it is seen as more acceptable; and there is less will within the private sector itself to discourage and expose corruption. Of course, this formula applies to government involvement in the economy only, not in social or foreign policy matters.

Problems with National Health Coverage

What turn off many Americans are anecdotal complaints from citizens of nations having a form of national healthcare. Most of these complaints center on two problems, rationing and lack of choice. The problem of rationing is really a blessing in disguise. When people think that if they become ill they can have access to quality healthcare, they are not as inclined to care for their bodies. This concept is no doubt unpopular, but it is established truth in the insurance industry. Rationing is therefore desirable in a national health plan.

Lest anyone think rationing healthcare is totally unacceptable in a modern society, understand that if we do not control rationing, the system will ration itself – and it may not be in a way that we would prefer. Healthcare’s growth as a percentage of GDP is unsustainable. Soon society, including the federal government, will no longer be able to pay, and services will diminish. And even now, the idea that Americans with health insurance have ready access to quality care is a myth. Many Americans hold onto this myth until they or a family member becomes ill. It is then that the reality of healthcare’s limitations becomes apparent; and oftentimes, prevention offers no second chance.

A Pro-Choice Policy

Perhaps the most important healthcare choices are vital in nature. However, on a practical level, the choices Americans really care about are in non-vital matters, such as who their family doctor is and whether they get access to new medications. Life and death matters requiring procedures such as kidney dialysis, appendix removal, and insulin injections are not what they think of when asking for more healthcare choices.

This proposal preserves these choices by limiting government-sponsored healthcare to matters of vital importance, where there is general agreement about proper methods. This broad outline leaves room, as well, for building choices into a government insurance plan.

Perfection is out of reach

While it is utterly impossible to develop a system that satisfies the desires of all Americans and interest groups – so long as corporations profit from bad care, and Americans live dangerously unhealthy lifestyles – it is still quite easy to create a system better than the one we have now. Therefore, you should view this proposal as a new perspective; a different, and perhaps better, way of seeing the issues. This is not a quick fix. Anyone who tells you they have found a quick fix to healthcare is lying. There are just too many factors to consider.

The foremost factor in healthcare reform is the false, illogical theories upon which the medical profession is based. Until medical theory and practice are reformed, tinkering with the financial and business aspects of healthcare will accomplish little. This does not mean we should replace “conventional” medicine with “alternative” medicine. Nor does this mean we should take the best of both schools and form hybrid practices. Rare is the person who does not subscribe to one of those two camps. Alternative or “complementary” medicine is no longer a catch-all category for rejected methods. Instead, it has become a defined, competing branch of medicine; sadly, with illogicality similar in degree to that of conventional medicine.

Instead, what this means is that we should set aside ambiguous studies and marketing claims, and go through the evidence – studies, patient testimonies, physicians’ observations – with an eye for correlations among facts. Patterns of correlations can be used to theorize. Then we test those theories, not only with double-blinded placebo-controlled studies, but by logical, rational, and reasonable analysis. Are patients responding the way we would expect them to? Are there any symptoms that cannot be explained by our theories?

Tested theories are truth. They do not become truth because truth was present already; it was found, if you will. Various truths can be placed within a framework and cohered. When there are enough truths known in a particular branch of medicine for them to present as a mental image, they can be intellectualized into working models. Such are a physician’s most valuable assets. Technology, formal education, facilities, and skill are dwarfed in significance when compared to reliable medical models that explain why patients get sick and suggest what needs to be done to help. Penicillin would have been useless without the germ theory; or never discovered in the first place.

Many of the treatments in both conventional and alternative medicine are working for reasons other than the ones physicians think. Conversely, treatments physicians claim will work do not for reasons they cannot explain. This indicates, to those who are analyzing evidence logically, rationally, and reasonably, that their models are incorrect. All this talk about truths and models might appear abstract and even irrelevant. However, the Fascial Distortion Model reveals that once physicians correctly understand disease and injury processes, successful treatments will naturally follow. Models, theories, and philosophies ought to be discussed and debated openly, for they are the gems of healthcare reform. Financing is the gold in which they are set.

Automotive Safeguards

Here in Michigan and in other states too, auto repair shops are required to present a written estimate of repair costs. This law prevents an awkward scenario where a car owner discovers, to his dismay, that charges are far higher than he expected. A similar law would be nice in the healthcare industry. Granted states do have laws requiring doctors to post their office visit fee schedules, but this applies primarily to out-patient care.

When it comes to emergency and in-patient care – and prescription medications – patients can do little more than cross their fingers, hoping the hospital bill is not as bad as their reason for the visit. The argument for “surprise billing,” presumably, is that the patient’s health is more urgent and important than financial matters in a crisis. This may be true, but anyone who has gone to the Emergency Room with anything less than an immediate, life-threatening condition will tell you they always find time beforehand to check your insurance.

It is a principle that systems operating behind closed doors are easily subject to corruption. In the healthcare industry, openness is compromised not only by entrenched interest groups, but by the system’s sheer complexity. It is well nigh impossible for any single entity other than the federal government to oversee it. This is not to say the government is unsusceptible to similar corrupting forces. Therefore, a form of national healthcare such as powertrain coverage should be seen as merely the beginning of reform; logical, rational, and reasonable medical models as the end.

Alexander Typaldos

After the stock market declined sharply in September and October of 2008, it was revealed that investment manager Bernard Madoff had been running a giant Ponzi scheme for decades which allegedly stole $50 billion from his investors. But is it the biggest Ponzi scheme ever?

Ponzi schemes “work” by promising and posting unreasonably high returns on investments, and funding payouts with money brought in from new investors. The schemes inevitably lose money over time because payouts to both investor and investment manager exceed revenues. Usually, Ponzi schemes are short-term cons. However, if performed artfully, they can last for a very long time.

Surprisingly, the characteristics of a Ponzi scheme apply to the stock market itself. To maintain the value of stock, investors must believe there will be future demand for that stock. And future demand itself depends on the belief that there will be more future demand. This is true of many assets, but in the case of stock investments, most investors have little use for the assets other than later selling them for a profit.

Monetary dividends from stock investments are far too low to justify their value. Dollar for dollar, bonds pay much higher returns. And as a practical matter, most investment funds and virtually all small investors have no use for the voting rights of common stock. It takes a lot of shares for your vote to count in a large corporation, and even then you probably want those who are more involved with the organization making decisions.

I need to clarify that stock ownership itself is not a Ponzi scheme, only trading on an open stock exchange. When you own stock you own a piece of a corporation. With it, you have the right to vote and you are entitled to a portion of earnings paid out each year. The value of the right to share in profits and make decisions should equal the fair market value of stock.

In the case of publicly-traded corporations, their stock is typically valued higher because public trading adds an element of speculation. This fact becomes apparent when a corporation “goes public,” meaning it allows its stock to be freely traded in a stock market. Share values can spike (although it is not guaranteed) and the corporation’s current owners and executives often enjoy a windfall, for two reasons.

First, offering shares for sale in a public exchange drives up the value of the shares the owners and executives already own. Second, when investors purchase the newly issued shares, their investment money goes directly to the corporation, which becomes more valuable as a result. If you think this infusion of cash justifies the heightened stock values, keep in mind that in a Ponzi scheme the infusion of cash from new investors merely perpetuates the scheme. It cannot turn losses into gains nor reconcile the book value of investments with their real value.

Caught red-handed

Many economists think the mortgage and credit crisis caused the recent stock market collapse. In actuality, the credit crisis had no more to do with causing the collapse, than the collapse itself had to do with causing Mr. Madoff’s Ponzi scheme.

The mortgage crisis has instead revealed fundamental instability in the stock market. Values on paper were too high, and as shocking as it is to witness trillions of dollars in assets vanish over a period of several weeks, understand that those assets were never really there.

Government intervention

When millions of Americans suddenly have reduced assets resulting from drastic losses in their stock portfolio, they effectively have less cash because they can no longer sell their investments for the same amount of money they could several months ago. The Federal Reserve Bank can now print large amounts of currency without an immediate risk of corresponding inflation. The federal government is able to use this money to purchase toxic mortgages, bailout companies, and stimulate economic growth.

However, more currency does not equal more value; we must add valuable goods and services to our economy to sustain growth. If we try to force growth by speculating in stocks and printing currency, we are setting our economy upon a weak foundation – one that will be subject to more crises and a prolonged recession.

I know corporations need a way to quickly raise capital. I know investors claim future growth is the justification for otherwise unjustifiably high stock prices. I know market values have climbed more or less steadily since the great depression. But could it be that a time will come when the world’s largest Ponzi scheme collapses, losses are measured in trillions, and everyone wonders why the signs were ignored? Could it be that time has already come?

Alexander Typaldos, JD

Some people think the growth of healthcare is a good thing for the United States economy. In fact, it is a tremendous burden. Let me provide a simple explanation that most can relate to. Is it a good thing for healthcare costs to grow as a percentage of your family budget? Of course not, because every dollar you spend on healthcare is one less you have to spend on things you really want. Likewise, at the national level, healthcare’s growth as a percentage of the economy is draining the resources of other industries we would rather foster, such as education and construction.

It is best for our economy to keep healthcare small, because healthcare is what I classify as a negative industry. A negative industry is one that corrects errors, solves problems, and fixes things when they go wrong. It takes bad situations and makes them neutral. In short, a negative industry is one that would not exist in a perfect world. This includes healthcare, law enforcement, social services, and armed forces, among others.

A positive industry is one that creates something of value. It turns neutral situations into positive ones. Examples are agriculture, transportation, textiles, and communications, to name a few.

Negative industries are not bad themselves. They are equally important to society as positive industries. However, our goal should be to reduce the size of negative industries, while ensuring they are still able to accomplish their purposes. This makes more resources available to positive industries so they can create the goods and services we really want to spend our money on.

From Negative to Positive

America’s healthcare system is fundamentally flawed. And society is so dependent on its services that it is pouring massive resources into healthcare just to keep it functioning. The obvious solution is to reform healthcare so it can function better than it does now with far less resources.

In this article, though, I want to go beyond the issue of healthcare reform and share my vision. In society today in America, we are too focused on preserving what we already have and protecting ourselves from fears, real and imagined. We should be more focused on growth, advancement, and improvement.

What this means for healthcare is that we can fix the system. More than that, we can reform the practice of medicine so that all conditions are treatable. How will we do this? By systematically categorizing the various but limited causes of illness and injury, and then logically, rationally, and reasonably analyzing treatment options, while placing value on creativity and having one goal in mind – results. We have the talent and technology to do this; it is medicine’s bad ideas and philosophies that stand in the way.

My ultimate objective is to turn healthcare into a positive industry by inventing protocols and procedures that enhance the mental and physical performance of already healthy individuals. Your annual checkup will become a comprehensive diagnostic process to look for ways to improve energy levels, mental clarity, flexibility, even appearance.

Again, we have the ability to do this; it is just not a part of medicine’s culture. Lasik surgery is an example of this type of treatment, because it can give people with good 20/20 vision even better eyesight. With a focus on nutrition, hormone levels, the musculoskeletal system, habits and health practices, this approach offers a lot of promise for improving Americans’ quality of life.

Growth in this part of healthcare will not take from our economy, it will add in the form of healthier workers and products and services we can export overseas. Economic growth is not certain; it happens only when we add something new and valuable. We await a revolution in medicine on the scale of the industrial and technological revolutions that preceded it.

Alexander Typaldos, JD