How to Rebuild Healthcare Right

Healthcare Inflation Running Wild

“I reject the insurance model. I think we should have a free-market approach to healthcare.”
– Gary Johnson

“The goal of real healthcare reform must be universal coverage in a cost-effective way.”
– Bernie Sanders

“The fault, dear Brutus, is not in our stars, but in ourselves….”
Julius Caesar (I.ii.140–141)

“The numbers [referring to the growth in the aging population and its relationship to Alzheimer’s] point to a disaster that will be the real zombie apocalypse. Western societies simply won’t be able to bear the costs of Alzheimer’s as the incidence continues to rise. Faced with impossible financial, emotional and psychological costs, we would have to funnel so much of our resources into the care of Alzheimer’s patients that the quality of life for everyone would plummet.

“Escape from the zombie apocalypse, on the other hand, is entirely simple: cure aging itself. To be more precise, the solution to Alzheimer’s is to stop accelerated aging. We need to slow the degeneration that leads to Alzheimer’s and other age-related disease.”
– Patrick Cox, from his new book, The Methuselah Effect

Is inflation something to fear, or we should demand that our central bankers craft policy to nudge inflation upward? There are genuine arguments about this, and I have written about the problems we have even tracking inflation, much less guiding it toward a target.

However, one area where we have no problem detecting inflation is medical expenses. They seem to go nowhere but up, as I described in last week’s “Taking a Wrench to Healthcare.” Millions of Americans are about to learn how much their Obamacare premiums will be next year. But even if you have health coverage through your employer, or you’re 65+ and on Medicare, like me, I can all but guarantee severe inflation in the healthcare part of your budget.

I ended last week by saying I would describe a possible solution to the healthcare quandary. Today we’ll look at the remarkable results the Cleveland Clinic has already achieved with its 100,000+ employees and dependents and with numerous corporations they work with. They are making people healthier and reducing medical costs. It is a model that I think could work on a much broader scale.

Much of what you are about to read came by way of my own physician at Cleveland Clinic, Dr. Mike Roizen. He heads their Wellness Institute and is the author of a best-selling book, This Is Your Do-Over: The 7 Secrets to Losing Weight, Living Longer, and Getting a Second Chance at the Life You Want. I highly recommend it.

Healthcare Inflation Running Wild

Last Tuesday’s US Consumer Price Index lets us attach numbers to the problem. Here is the official CPI summary table. I have highlighted in yellow the relevant lines:

Direct your attention to the rightmost column, which shows the 12-month change through September 2016. CPI for all items rose 1.5% in the last year. Prices actually fell in the energy-related components, as much as 8.5% for fuel oil. Great news if you are a heavy fuel oil user. Most people aren’t. Fuel oil is used mainly in the Northeast and is less than 0.1% of the overall index. On the other hand, total medical care is 8.375% of the index (and rising).