By KIM BELLARD
A recent report from Moody’s Analytics, by chief economist Mark Zandi, had an eye-opening fact: the top 10% of earners in the U.S. – those who make $250,000 or more – now account for just shy (49.7%) of half of consumer spending. If that strikes you as unusual, you’re right. It is a record since at least 1989. Thirty years ago the comparable percentage was 36%.
“The finances of the well-to-do have never been better, their spending never stronger and the economy never more dependent on that group,” wrote Dr. Zandi. He added: “Wealthier households are financially more secure and thus more able and willing to spend their income. That is, they save less than they would otherwise.”
The rest of us are struggling to hold our own against inflation, not always successfully. It’s why companies like Costco and Walmart are trying to target upscale shoppers, while “value” oriented firms like Big Lots, Family Dollar, or Kohl’s are closing stores or even declaring bankruptcy.
This extreme bifurcation, of course, made me think of healthcare, where – as is famously known – half of all spending is attributable to only 5% of patients. In case you’d forgotten, in healthcare, half the population accounts for 97% of all spending, so the other half accounts for a measly 3%.
Now, you might say, neither of those is surprising: rich people spend more, and sicker people cost more. But somehow neither of those seems right to me.
I started thinking more about this after reading a recent New York Times op-ed from Ezra Klein. In it he makes the following assertion:
The answer to a politics ofscarcity is a politics of abundance, a politics that asks what it is that people really need and then organizes government to make sure there is enough of it.
Mr. Klein didn’t coin the phrase “politics of abundance,” but he and Derek Thompson did just write a book on the topic (Abundance) that discusses their thoughts at more length. I have not read the book, but I saw a quote from it that I quite liked: “What is scarce that should be abundant? What is hard to build that should be easy?”
And so we’re back to healthcare.
We seem to live in a country where healthcare is too scarce. A new analysis suggests that we have a looming shortage of hospital beds, and if you live in a rural area, it’s already here. If you believe the Association of American Medical Colleges, we have a looming physician shortage, and if you’re looking for primary care, it’s already here. We’re facing nursing storages, pharmacist shortages, nursing home worker shortages, home health worker shortages, to name a few. We even have shortages of many critical prescriptions, including some needed for cancer treatments.
Despite all these shortages or would-be shortages, of course, we manage to spend way more than other countries on healthcare. One can only imagine how much we might be spending if there were no shortages. I take that back: I’m not sure I can imagine.
In the category of things that are scarce that should be abundant, and/or things that are hard to build that should be easy, I’d probably put housing at the top but healthcare as a close second. The trouble is, when we pour more money into healthcare, as we are wont to do, we don’t seem to fill any of our many shortages, much less improve the quality of care or outcomes.
In his article, Mr. Klein recounts the long saga of California’s Prop 1A, which called for a high speed rail line between Los Angeles and San Francisco. Other countries have high speed rail lines, most notably Japan, so certainly the richest state in the richest country should be able to build such a line. But, nope, 15 years later the predicted cost of the line has ballooned 300%, not much of the line is actually complete, and there is no end in sight, much less money available to complete it.
It reminds me of ACA: important goals, lots of money spent towards achieving them, some key accomplishments to show, but oh-so-far from achieving what we actually need.
We can’t keep going on the way we’ve been going on. We need to make scarce health care abundant, and to make things that are hard to build in healthcare easy to build. Finally, we may be approaching technologies that would allow those.
It starts with A.I., as everything seems to these days. Healthcare, to my surprise, has started to embrace the use of A.I. Whether it is to assist physicians, to handle the too-many administrative tasks, to develop new drugs, it’s clear there will be a role for A.I. in healthcare.
My worry is that our healthcare system will absorb A.I. the way it did digital, making use of it but not using it to drive costs lower or to increase access. My worry is that it will be used to make more money for the people already making money in the system. My worry is that it be used to put a shiny new coat on our healthcare system, not to revamp or to reinvent it.
Here’s my plea: let’s use A.I. to make health care abundant – and cheap. Let’s make A.I. make building resources used in healthcare – be they people, devices, drugs, or buildings – easy to build. Simply adding A.I. into our existing system won’t do those. We have to design it towards those ends.
And let’s not stop at A.I. I’ve long been a fan of robots – be they full-sized, nano, or anything in-between – in healthcare. We know we have people shortages, especially for caregiving, and we should be planning for how robots can help fill those. But we need to use them with the abundance mentality: make them cheaply, use them ubiquitously, make them readily available. I think of how Ukraine has reinvented drones for its war efforts, because American drones were too expensive, too few, and too uncertain. We need that mentality for building healthcare robots.
Same for 3D printing. Medical devices, supplies, even prescription drugs: we should be ramping up use of 3D printing to make them – you guessed it – more abundant and easier to build, not to mention much cheaper. The companies currently making them won’t like it, of course, but our healthcare system doesn’t exist to make them money. Or, at least, it shouldn’t.
The people and companies currently profiting from healthcare thrive on scarcity – perceived or real—and on making things hard to build. We need healthcare leaders that want us to thrive on abundance.
Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor
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