Thread by @ObiWanKenoBit

1/Bitcoin, Healthcare and You

Bitcoin not only radically changes our relationship with money but can repair markets distorted by fiat. This thread explores how Bitcoin transforms healthcare from serving insurance companies & their cronies to one that puts you first. Read on 👇

2/Healthcare is a prototypical example of how centralized govt price control disrupts markets, de-incentivizes consumers (patients) from shopping and hamstrings producers (doctors) from competing.

3/This results in ever-ballooning, uncontrollable cost addressed by “bail ins” masked as fee schedule adjustments, service bundling and care denial.

4/National health spending grew 3.9% to $3.5T in 2017, or $11K per person, and accounted for 18% of GDP.

5/National health spending is projected to grow at an average rate of 5.5%/yr for 2018-27 and reach nearly $6.0T by 2027. It will grow 0.8%/yr faster than GDP over 2018-27 period.

(src CMS)

6/Healthcare prices have gone up nearly 100% since 1997.

7/Though patients may be insured they face an avalanche of insurance bills riddled with errors, overcharges, & outright payment denial due to mistakes made in filling out preauthorization paperwork. This is deliberate & direct theft enabled by the current payment system.

8/80% of medical bills contain errors. For hospital bills over $10K average error was $1300!

(src Equifax)

9/Healthcare prices are effectively set by the government through the Medicare fee schedule. Insurance companies contract with doctors and hospitals and express reimbursement as factor of Medicare (eg. 1.2X Medicare, 0.9X Medicare).

10/So why not compete on this price? It’s illegal. Insurance contracts prohibit doctors from revealing contracted rates. Doctors discussing insurance company contracts break anti-trust laws!

11/And Medicare severely punishes doctors if they offer a discount. Medicare may force them to “offer” the same discount to all their *previous* Medicare patients as a refund to Medicare. And each violation is subject to a fine.

12/Patients don’t pay directly. They (or employer) pay a premium to ins. cos and receive services in kind based on contract language. As indirect payers they have no idea how a service is priced or even if priced correctly.

13/Cash paying patients are faced with obfuscating bills and fees 3X what most insured people pay. No cash discounts here! You must buy into the premiums scheme or face financial disaster.

14/But copays are incentives! Not really. Copays and deductibles are going up ostensibly to encourage patients to “shop.” Really it’s a means to delay care. How can you shop if you don’t know the prices?

15/The concept of a medical free market can’t exist until the “central bank” of Medicare stops setting prices and lets providers and patients determine price in an open market. This is called price transparency.

16/But doctors will charge more! No. In fact, prices will fall as Drs and healthcare tech cos will be free to create innovative service models and faster ways to diagnose and treat. Prices should fall in line with other tech driven industries.

17/But doctors will go bankrupt! No. In fact, doctors will benefit immediately as nearly 30% of wasted healthcare dollars (billing, TPAs, etc) is immediately put back into their pockets. They can manage their practice based on real numbers.

18/Insurance contracts are so convoluted most doctor’s offices have no idea how much they’re going to get paid. How can you run a business if you don’t know your ARs?

19/Moreover doctors have not profited from the enormous run up in healthcare costs. The administrative arm has ballooned in size vacuuming up healthcare dollars!

20/But doctors will take advantage of patients! This false narrative has been propagated by an industry that thrives on misdirection and opaque rules. People are smart and will learn how to manage their healthcare needs.

21/So what has healthcare got to do with Bitcoin?

22/The US healthcare system socializes costs through higher prices partly reflected in Medicare tax, private insurance premiums, deductibles, copays and access to care.

23/This is much like how central banks socialize the cost of fiat through an expanding monetary supply, inflation, easy credit and bail ins. The healthcare system defrauds patients and doctors through similar insidious, opaque mechanisms.

24/Healthcare industry insiders directly benefit from fiat’s folly. They control prices and enrich themselves through subsidies, tax benefits and revenue from rising costs.

25/Bitcoin can be applied to state manipulated centralized verticals such as healthcare. Bitcoin as money changes our markets by realigning the flow of money between producers and buyers of goods and services.

26/In a true capitalist model, as demand for services increase, markets seek ways to provide better services at lower cost. But healthcare has been de-capitalized. For most people this seems to be the right way to control cost. But it clearly doesn’t work. Costs keep going up.

27/Today money goes from patient/employer to insurance company and then to doctors. The intermediary step creates vast dislocations in the market that distort incentives and prices.

28/Insurance company motives do not align with patients and doctors. Government interventionism, politics and a web of regulations sway how money is allocated. Fiat enables this behavior.

29/Patients cannot act as self-interested parties in healthcare. They are not allowed to perform price discovery and determine medical care efficacy.

30/With a Bitcoin based monetary system and correlating realignment of markets, patients pay providers directly and develop an economic relationship that is unsullied by rent seeking entities such as billing & insurance companies.

31/Hospitals freed from anti capitalistic regulations can negotiate medical supply prices in an open market. Moreover, patient’s will be able to make informed decisions and through social consensus drive bad actors out of the system.

32/Fiat’s inflationary mechanisms come to an end and healthcare industry players can no longer feed at the money trough. The medical industrial complex is dismantled.

33/Bitcoin lets the govt get out of medicine, unwind a $48T Medicare obligation & establish working markets. It transforms the healthcare system into a sustainable, profitable dynamic market serving the needs of people first.

Fin/Just as bitcoin is spurring a monetary revolution, healthcare will experience its own enlightenment period. Free from fiat’s free money schemes healthcare can normalize leading to lower costs, more innovation and better access to care.

@APompliano just read your post on healthcare and blockchain. Bitcoin as money can fundamentally transform legacy models like healthcare. Thread ☝️