Numerous recent articles advise investors which healthcare stocks to buy and which ones to avoid.  Other economic reports confirm healthcare as one of the fastest growing segments for jobs in the economy.  These writings fail to report that as stockholders profit and as more healthcare jobs are created, patients suffer and die due to the seesaw effect.

Stocks and Patients

A 2020 study compared ten-year (2007–2017) performance of top healthcare stocks to patients’ access to care.  The time period extended from before the Affordable Care Act (ACA) — passed in 2010 and implemented in 2014 — to after full implementation and thus included effects associated with the ACA on stocks and on patients. 

Over the ten years, the seven largest healthcare stocks all increased in share price, with average gain of 307 percent (range: 157 to 635), while the Standard & Poors Index gained 80 percent.  Over the same time period, the maximum average wait time to see a primary care physician increased from 99 days to 122 days. 

As stockholders gained value, patients lost access to medical care.  While this is a statistically significant (p<0.0001) temporal association, that does not prove cause and effect.  One may infer causation based on how health insurance companies profit. 

Health insurance prices are fixed according to contracts with health plans after negotiation with state governments.  Since insurance companies can increase revenue only by signing up more people, their best way to increase profit is by reducing costs — i.e., spending (on patients).  This is done by the “three D” strategy: delay, defer, deny authorization for care.  Thus, the longer people wait for care, the longer insurers keep premium revenue, and profits rise.  

The stock-to-care connection is an inverse relationship called the seesaw effect: as the number of insured individuals rises, care falls.  When insurance companies insure more people, they deploy the three “D” approach, causing more people to wait longer and longer for care, delaying a proper diagnosis (viz., cancer).  Medical ailments progress, and patients’ health worsens, ultimately leading to death by queue — patients who die waiting in line for care.

Simply put, as more Americans are insured, insurance profits rise, and patient care falls.  Washington is the primary insurer of Americans — 194 million — through Medicare, Medicaid, and Tricare. 

Job growth and patient care

One of the triumphs attributed to the ACA by then-president Obama was job growth.  According to Goldman Sachs, “500,000 jobs [were] added to health-care sector under ObamaCare.”  When the data are studied in detail, 47,000 were care providers, meaning that 453,000 (91 percent) were non-clinical jobs, people who did not provide patient care. 

Mentally calculate the salaries for millions of bureaucrats, administrators, rule-writers, regulation compliers, compliance officers, overseers, mandate-enforcers.  This is the cost of healthcare BARRCOME associated with regulations such as the ACA, which cost $1.76 trillion.  In fact, to cover part of this BARRCOME cost, $716 billion was taken from the Medicare Trust, money intended to pay for hospital care for seniors.  According to the Trustees, Medicare will be insolvent by 2028 and thus unable to provide this care. 

The ACA was merely one more money sump that diverts healthcare spending away from paying for care.  In 2023, the U.S. expended $4.5 trillion on its healthcare system, an amount greater than the entire GDP of Germany, the fourth largest economy on Earth.  It is estimated that 31 percent to more than 50 percent of U.S. healthcare spending goes to BARRCOME.  That translates to $2 trillion’s worth of patient care Washington denies its citizens while paying itself. 

Job growth in healthcare demonstrates a variation of the seesaw effect: as federal BARRCOME goes up, patient care goes down, and Americans die.

Federal healthcare: A Potemkin village

Washington’s takeover (by regulation) of healthcare has produced a Potemkin village. 

Grigori Potemkin was an 18th-century Russian statesman and one of Russian Empress Catherine the Great’s many lovers.  Under his leadership, in 1783, Russia took the fertile lands of Crimea away from the Ottoman Empire.  He promised Catherine a huge bounty of food and a grateful populace.  In 1787, Catherine demanded to see how well her people had done as a result of the war.  Potemkin built a façade of a prosperous village and hired people to smile and bow down as Catherine’s entourage toured the “village.”  While Catherine’s caravan made slow progress, Potemkin’s hirelings moved the fake village and happy actors to the next tour stop so Catherine (again) saw thriving Russians and thought the invasion had been a great success.  In fact, it was a failure — no great agricultural wealth materialized, and Russians continued to starve.

Washington has produced a Potemkin village called Federal Healthcare.  The uninsured rate is the façade of success.  Each reduction of this number is heralded as a new triumph.  Another false building front is added and propped up for viewing pleasure.  Behind the façade, there is reality: Washington paying itself with “healthcare” dollars, and Americans with insurance die waiting in line for care. 

Deane Waldman, M.D., MBA is professor emeritus of pediatrics, pathology, and decision science; former director of the Center for Healthcare Policy at Texas Public Policy Foundation; former director, New Mexico Health Insurance Exchange; and author of 12 books including the multi-award winning Curing the Cancer in U.S. Healthcare: StatesCare and Market-Based Medicine. 

Image: Pkd2016 via Wikimedia Commons, CC BY-SA 2.0.