Money down the drain

Pardon me while I vent a little…

We spend a crap ton of money in this country for which we get absolutely nothing in return.

First, the insurance industry. I have medical insurance, car insurance, renter’s insurance, business insurance, malpractice insurance (I’m a doctor), and because I have an employee, Workman’s Comp insurance and unemployment insurance. (I think that’s it, but I wouldn’t be surprised if I missed one or two. Thank you, FDR.) What a ridiculous system: we pay money every month (and a LOT of it) and hope that we never have to make any claims against it. We actually hope that we are paying money for nothing.

Medical insurance: Because everyone is expected to have insurance, prices for medical care are astronomically high. Nobody can afford them. Not only that, but most medical care isn’t even very good — the US is 36th in the world for life expectancy, but #1 in the world for medical spending! The insurance companies are the ones who dictate standards of care for a given illness, which often means (for instance) patients who need a particular drug can’t get it because it’s too expensive and the insurance company refuses to pay. Happens in my office regularly. Insurance insists that the patient fail two other cheaper drugs (that don’t even do what the patient needs) before they’ll authorize one that’s much pricier. (Why is that drug pricey though? Because it’s still under patent, which gives the manufacturer the right to inflate the cost. But the only reason they can get away with inflating it that high is because of the insurance companies. In a free market, that would never fly.)

Insurance also dictates how long a doctor can spend with his patients—that’s why your doctors typically spend only 5-15 minutes with you at a time. That’s the only way he can get reimbursed for his services enough to keep his doors open. And nobody can actually get to the root cause of an illness in 5-15 minutes—it’s not possible. So instead, they’re relegated to writing you a script for some pharmaceutical that will simply suppress your problem, and you’re mad that they aren’t really listening to you, while they’re utterly exhausted by the fact that they’ve seen thirty patients already today who are just as mad as you are. Is it any wonder that the suicide rate for doctors is 100% higher than the average for the population? (Think about that the next time you want to complain that your doctor has a God complex, or isn’t treating you like you’re important. Maybe some of them are jerks, but by and large, they’re overworked and exhausted, and doing the best they can.)

…Ok, so now let’s imagine a world in which the medical insurance industry dissolved altogether. Nobody has insurance at all. What would happen?

1. The free market would determine prices that people were willing and able to pay. (No more $800 saline IV bags in the hospitals that probably cost them $3 in materials.)
2. Doctors could choose to spend as much time with patients as they needed to in order to truly hear them and deal with root causes—and patients would pay them for their time directly. No doubt as a result of this, malpractice insurance would plunge too, because most people sue not because of medical mistakes, but because they don’t feel heard.
3. Prescription medication would be reasonably priced, and no non-doctors would tell the doctors what they had to prescribe for a given condition, just because it was cheaper.

In a nutshell, medical care would dramatically improve for everybody.

Student loans: School tuition has shot up like a rocket in the last few decades—ever since the government got involved in federal student loans, and said loans became available to absolutely everybody, regardless of whether or not they had saved appropriately for college and had a reasonable plan to pay back what they did borrow in a reasonable amount of time.

…Once upon a time a college degree actually meant that the person who held it was an intelligent and capable person, and would be a smart bet for employers. Now? Everyone has one, and lots of them are in liberal arts degrees for which there are almost no positions. (But did these kids do the research to find out which positions would actually set them up for success in the future? Of course not—because a reasonable repayment strategy is not a prerequisite for qualifying for student loans. Why should they bother? After all, everyone else is doing it.) As a result, default for student loans is around 58%… and degrees are a dime a dozen. More college grads than ever are working at Wal-Mart.

…But let’s just imagine a world in which student loans were privatized again, and discriminating. Not everybody can qualify. Lots of those “underwater basket weaving” type degrees would disappear altogether, because there wouldn’t be enough students to pay the tuition to keep them running. (And really it’s criminal that some of them exist—they plunge these poor unsuspecting students into a hole from which it’s unlikely they’ll be able to extricate themselves. You can’t declare bankruptcy on student loans, after all.) Without freely available government loans, students would be forced to actually think about what kinds of degrees are in demand and pay decently, and choose those instead.

Also, barring scholarships (which would still be around for the deserving and underprivileged, of course), only those students who had already worked hard and saved for college beforehand could afford to go. At the moment, tuition is much too high for anybody to be able do this, but years ago when tuition was more affordable, it was commonplace. These were the types of kids who would actually study in college, too—rather than go just to “have an experience”. After all, people value what they have to work for. They don’t value what gets handed to them on a silver platter. That’s just human nature.

Income tax: I’m especially pissed off about this one because I’m a business owner and I’m getting taxed on my gross income, not my net. This means before I pay all of my very substantial overhead: my rent, payroll, bank service charges, etc, etc, I get taxed a HUGE percentage right off the top. It makes no sense. Employees get taxed a varying amount off their actual take-home amount, but there is an enormous difference between the gross income and the actual take-home profit for a business—they are not even close to the same thing. Not even CLOSE. Between that and all the business licenses and certificates of occupancy requirements (also money down the drain), you might think the government doesn’t want small businesses to survive. Small wonder that eight out of ten businesses fail in the first five years of operation.

…But where do the employees in this country actually get jobs from? Small businesses, many of them. The more small businesses survive, the more jobs there will be, and the more citizens there will be who can freaking pay income tax. But no, instead they tax the crap out of the people who would otherwise reinvest in their businesses—at minimum restricting the new positions they could create, and at worst, forcing them to close their doors.

And don’t even get me started on the mortgage industry, now government-run and guaranteeing housing loans to darn near anybody, regardless of whether they’re a good risk or not. People look at the mortgage and think, “Oh, I can pay that! That’s what I’m already paying in rent!” But they don’t even factor in all the property taxes and HOA fees, and the rest of the money they’ll be pouring down the drain. Before they know it, they’re working ridiculous hours and destroying their health just trying to make the payments… or, like in 2008, they decide to cut their losses and walk away in a mass exodus, glutting the market with houses and precipitating an economic crash.

But have we changed the loan policies to prevent this from happening again in the future? Of course not. That would be smart.

Why are so few people angry about this? Some of it is our fault for poor planning, yes (i.e. don’t buy a house you can’t afford, or don’t get a degree that won’t set you up for a job)… but so much of it is outrageously beyond our control. Why are we voting for government programs for student loans, for mortgages, for insurance of all kinds? Why aren’t we angry about the fact that we are taxed multiple times on the same amount of money? (Didn’t we fight a Revolutionary War in part over the issue of double taxation? Isn’t that unconstitutional?) Why isn’t anybody noticing the fact that we are paying more for systems like the insurance industry, which actually deliver far less than they would if the government just butt out altogether and allowed the free market to determine reasonable, fair prices?

(Wow. Some part of me can’t even believe I wrote that. I feel so very old right now.)