What You Can Expect from Socialized Medicine

Those of us bellying up to the Whiskey Bar really prefer to discuss economic matters, but politics are impinging ever more heavily on the exciting pastime of making money through analysis, seeing patterns, and forecasting behavior and business trends, whether we believe in fundamentals, technical analysis, or our own private systems of runes and crystal balls.  We’re in luck, today, because now is a good time for us to consider upcoming legislation likely to have profound impact on a lot of intertwined industries and the GNP.

What are predictable results of government ramming socialized medicine down our throats?  We can’t stop the programs, so how can we make money from the ineluctable outcome?  A few ideas spring to mind immediately:

1. Has it dawned on anyone in Washington that Socialized medicine just might have some slight effect on insurance companies?  It might be time for us to consider shorting a few viciously…or is that still illegal?!

The health insurance rack…ah, business…is one of the largest in America.  The law as proposed will make it illegal to have private insurance to supplement the government’s “single payer” plan.  A major portion of the GDP will be destroyed in that area alone.  What will happen to those who currently underwrite supplements to Medicare?

No one can prognosticate how many irrational requirements, forbidden activities, and finable offenses will come out of the final legislation, but we can certainly conclude that this shake up and shake down is going to be off the Richter Scale in terms of lost jobs and destroyed capital.  When the government is the HMO there is no place for a private HMO.

2. The proposed law also makes it illegal for doctors to provide services outside of the system and it will determine what doctors and hospitals are paid.  This is certain to lead to staff shortages, probably more quickly than we are anticipating.

A. How many older doctors will retire rather than submit?  Why should they work just as hard for a great deal less money?  Why should they tolerate having their medical judgment overridden by a bunch of penny-pinching bureaucrats?  “First, do no harm” also prohibits doing nothing when treatment is indicated clearly.

B. How many physicians are already considering retiring from the practice of medicine because of the proposed ukases which would require them, under penalty of law, to perform abortions on demand.

C. Any young student with the brains to make it through medical school will tend to decide quickly that it would be far more sensible, faster, and lucrative to become a dentist or a veterinarian.  Any good vet makes at least $100K, but socialized doctors don’t.  This isn’t guesswork; it is the experience in Canada and England.  A quick perusal of the literature reveals also that it is best not to become ill after June and that a dog can get an MRI the same week but people wait months, if they get them at all.

3. What effect will this have on the cost of medical and nursing schools?  Silly question; tuition will go up because it costs the same amount to offer instruction and classrooms whether they are full or half full.  We can prognosticate that less qualified applicants will be admitted because fewer will apply.  Corners will be cut wherever possible.  Fewer courses will be offered.  Why train in procedures likely to be forbidden?  Standards will be lowered.  It may even become a great deal easier to pass the exams to be able to write “M.D.” after one’s name.

4. What is to be done with the clerks in all doctors’ offices who do nothing except handle insurance paperwork–and keep their doctors up to date on how to write up bills and lab requests to obtain the greatest return from insurance companies?  Some of them may find jobs in the new bureaucracy, but one putative benefit of socialized medicine is that less paperwork will be needed to provide better records.  Good insurance clerks are paid well, and deservedly so, for theirs is specialized work.   We can suppose that those who train typists to transpose doctor’s recorded notes may find less business (knocking out their schools and a good at home source of income for quite a few), because a pretty good guess is that over-scheduled, under-paid doctors aren’t going to generate the sort of records we are accustomed to now.

5. The AMA and insurance companies have enormous lobbies, which makes one wonder why there isn’t any outcry from those areas.  That is really a very interesting point upon which to speculate.  What does the AMA expect to get out of this that is worth the price of tolerating bureaucrats to set fees and determine procedures? Do they think that going along will prevent even more Draconian cuts and restrictions, or can someone in the Bar today come up with a better answer to “Cui bono?”

6. Pharmaceutical companies spend lots of money in Washington; could it be that they do not expect the prices of their products to be cut as proponents of socialized medicine insist is one way costs will be controlled?  Perhaps a lessening of the restrictions that make developing a new drug cost billions has been tendered?  Again, what’s in it for Merck and Roche and Lilly not to scream their heads off? A good prediction is that only generics will be allowed to be prescribed, which is bad news for those of us for whom Synthroid is not an adequate substitute for Armour Thyroid, and a very nasty lump for Armour, which gets $90 from me, alone, every time I fill my prescription, instead of three or four bucks.  What is the point of developing proprietary drugs if the cost cannot be recouped many times over?

7. We old-timers are being told we will simply have to learn to live with our aches and pains and that services will be cut for us in order to care for the younger population better.  Doesn’t it make you feel all warm and fuzzy to know that you may not get a life-saving procedure because it “costs too much at your time of life and the money will be better spent on millions of lawbreakers granted amnesty and citizenship, instead?”  Already there are services to help us find superior medical and dental care at deeply reduced prices in India, for example.  However, if/when “Cap and Trade” is pushed through, what is that going to do to the airline industry?  We may well end up with no viable way to obtain adequate health care at any price short of suborning our private physicians.  I joked with mine when I saw him for routine blood work a couple of months ago that between the coming depression and socialized medicine we might end up skulking to meet in an alley at midnight, me with a chicken in my hand.  My brilliant young physician, with enormous student loans, looked grim, and said, “I’ll take it!”  Back in The Great Depression a chicken was considered a good fee, by the way.

8. Where will peripheral specialties come into all of this?  Lasik surgery, for example.  Will such surgeons be exempted, or will they be driven out of business because glasses were good enough for Benjamin Franklin?

“Is there a lawyer in the house?”  It will, one can only suppose, be forbidden for medical personnel to assist in times of crisis, accident, or disaster since the law as drafted forbids practicing outside of the system.  Few do anyway these days because of the danger of lawsuits.

If anyone here will admit to being an attorney, please take a shot at explaining the Constitutional justification for government controlled medicine, since it obviously isn’t going “to promote the general welfare.”  While you’re at it, explain how anyone can justify making it a crime for a duly trained and licensed doctor to treat patients who seek his care.

For preliminary actions…just off hand, I would not invest in a chain of dialysis clinics or expect MRI apparatus to sell as well.   We should probably be leery of many pharmaceutical companies.  On an individual level, it might even be a good idea to go get heart by-pass surgery now if you expect to need it in the next few years, although there are better choices.

So…I’ll raise my glass of Lambrusco (full of healthful substances and a modest jolt of alcohol), and look forward to hearing your views on how to profit from what is coming our way.

Linda Brady Traynham

May 5, 2009

The Daily Reckoning