The difference between health and medical care

0:00In a world full of lies and deception, it takes courage to speak the truth. In a nation held bent on its own destruction, it takes honor to seek return to glory. Join us in cutting through the lies. Join us in cutting through the propaganda. Join us as we seek the truth on cutting through the fog from the America Out Loud Network. And here's your host, Wallace Garneau. Ladies and gentlemen, welcome to cutting through the chaos on the America Out Loud Network. Where we cut through the lies and the propaganda to bring you the out loud truth. I'm your host, Wallace Garneau, and I want to talk about lean government medical care without illusions. But before I do, we have to spend just a moment talking about the state of the union address. Not because it was a masterful address, it was a very, very good address. I thought it was the best speech I've ever seen Trump give with the exception of the end.

1:01And there was nothing specifically wrong with the end of the speech. But when he got to the conclusion, he was very clearly reading from the teleprompter. It was the only time in the speech where he was obviously reading from the teleprompter. Obviously, he was reading large parts of the speech. But he's a comedian. He is at heart a stand-up comedian and he's got great comedic timings. So he intersperses throughout his speech all of these comedic clips that really make it seem lively and make it seem like he's having fun. Many of his comedic clips are very funny. Much of this speech was very pointed. He really went on the attack against Democrats. And when he got to the conclusion at the end, it was almost like a light switch was flipped in. And he was very clearly reading somewhat monotone and just not as engaging as the rest of the speech. So that is the one negative thing I would say about what otherwise was a brilliant speech. But the most important part of it wasn't any of the promises that he made or any of the specific attacks or points he made about the left,

2:09other than the one that I think just cost the Democrats any chance at winning the midterm elections. And that was of course when Donald Trump said, if you agree with the statement stand up and that the statement was a paraphrasing, I don't have a right in front of me, but the statement was something long lines. If you believe or not, if the statement was something on lines of the purpose of the government, the primary purpose of the government is to protect American citizens and not illegal aliens. And of course, none of the Democrats, if any of them stood up, it looked like none of them did. And that was just I think an absolute damning moment for the Democrats, not just because it happened, but because of the optics of it. You know, there were cameras on these people and you could see their faces. And so I wish we had been more cameras on the people and less from a distance because they were showing the faces. You could see how uncomfortable they were at sitting for that. And you could see them kind of looking to the left and the right trying to figure out is sitting down really what we want to do with this question.

3:12Should we be standing up and clapping on this one and you know, they had a copy of the speech ahead of time. And this particular part of it was not ad lib, Trump had that in the speech. So they knew it was coming, which means somebody made the conscious decision. We are going to sit down or stay sitting down when this happens. We're not going to clap. And we're just the optics of that particular moment. There were other moments such as the whole Minnesota thing with Ili and Omar yelling at him. I think she was yelling, you killed Americans or something like that, probably in reference to the couple of people who are killed by ice. One of which clearly in self defense and the other one, I think when that comes out, it's going to be a situation where the officer made a mistake, but it was a mistake caused by multiple officers and not necessarily the ones who pulled the trigger. We would appear somebody said, God, the gun may even have gone off. And at that point, other officers opened fire. So neither one of these are both, of course, unfortunately, incredibly unfortunate circumstances. Incredible tragedies anytime somebody dies. But I don't think either one of those are going to lead to any kind of criminal prosecution.

4:15And you know, the whole thing, just you kill Americans, well, no, he doesn't, a couple of people. Unfortunately, in law enforcement situations, every once in a while, something unfortunate happens. But you know, just the optics of sitting down on the government is for American citizens first and foremost. It just blows my mind. I saw that and I was like, what? They're sitting down for that. They're not going to stand up. You know, I'm like, you know, message of Democrats when they say something that you agree with, particularly something that you know, virtually all Americans agree with, stand up a clap. You don't have to stand up a clap for everything. But, you know, they essentially just flushed any chances they had at winning the House or the Senate in the midterms. In my opinion, they flushed that chance right down the toilet on that because this is a billion dollar ad. And you're going to see that. You're going to see other things from the state of the union with the Democrats probably should have been clapping. But that particular one, you're going to see again and again and again between now in November.

5:17And I'm sorry, there just isn't any way to make that go away. And with that, you'll now bulk it into what I really want to talk about, which is health care. And something that's near and dear to me because my first wife had a cousin who died of heroin of a heroin overdose when she was just 18. I didn't meet her. I think I might have seen her a couple of times when she was on heroin. But what I really met her was when she was in remission, not currently taking heroin. And I met her a few times. She was an absolutely beautiful but troubled girl who just fell in with the wrong crowd. And then she found herself in a world that she could not control. I don't know exactly when she started using heroin, how old she was. I think was when she was about 16. But I know she overdosed once when she was about 17, nearly died from it, got clean. And then just over a year later, she overdosed again. And the first time she was rushed to Bronson Hospital in Kalamazoo, Michigan.

6:20And she received the very best treatment available. Her life was saved that day in what should have been, what people hoped for the next few months at least, and call it nine months. Hope would have been a life ball trick moment where she would have stopped using heroin forever. Because she did get clean and she seemed happy and got her life going again. And, you know, instead, they only bought her a year. Because after she was cleaned for a period of time, she drifted right back into the same crowd. And well, with a second overdose, helped us didn't arrive in time. I don't remember her name, but she will always be remembered as a remarkably beautiful girl, intelligent, had everything going for, but she had an incredibly tragic end. Now, another situation related to healthcare. My father-in-law grew up in common as Poland. He was exposed to his bestest as a student, later worked in the coal mine. He was a smoker for most of his life. And just to be clear, I'm talking now about my second wife.

7:20Of course, the woman I'm married to now, Gosha. If you go to Nashville over the fourth, July 4th, I wish she'll be there with me. So that's my second wife we're talking about. She's from common as Poland. She moved here when she was 20 shortly after the Berlin Wall came down. Her father spent his entire life first in common as Poland, and then after a stop being communist in Poland. And he was exposed to his bestest as a student, later worked in the coal mine. As I said, and he was a smoker for most of his life. He died toward the end, and he was mid-60s. He quit smoking. At 69, he was diagnosed with lung cancer. His doctors told him that he was very fortunate. He was not yet 70. His under Poland's universal healthcare system. Treatment options were still available at 69. But had he been 70, we'd only qualified for end of life care. And that would have been true in a matter of how healthy he might otherwise have been. I don't think Poland has changed that in their universal healthcare system either.

8:20I think at 69, you qualify for cancer treatment. And at 70, they'll make sure that you're not in pain, but they're not going to do anything to try to take the cancer away. You are at that point terminal, even if treatments are available because they want to save those treatments for people who are younger. Now, Poland at that time, this would have been 15, 16 years ago, was not known for having the most modern cancer treatments. So what my second wife, Gosha and I did is we married very quickly, and then flew to Poland so that I could meet her parents, not as a boyfriend, but as her husband. The idea here was actually that we would have, get married in front of the justice of the peace, and then go to Poland, and have a Catholic wedding in Poland. And we decided to do that after looking into getting married in Poland. And the law was, the time probably still is, that I'd have to live there for six months. I work full time, so the chance of me living there for six months to marry her in Poland, not very realistic.

9:21So the thought was, the problem is Poland won't recognize the wedding if I haven't lived there for six months. So what we'll do is we'll get married in America, justice of the peace, and then we go to Poland, or father could walk her down the aisle in a Catholic ceremony, and we don't have to worry about the six months because we won't, in that case, have to worry about the Polish government recognizing the marriage. They'll recognize my American marriage, so at that point, just a Catholic ceremony, and that would have worked out. We got there, though, and her father was like, don't waste the money, you're already married. So he didn't want us to spend the money on it, so we didn't do it. And no, he already pretty frail when I got there. A few months after I came home, doctors found another cancerous lesion on his brain. He died shortly thereafter. Gosh, of course, still wanted a Catholic wedding, so we did end up having a Catholic wedding. Her mother flew in for it all her family, real nice ceremony, and we were able to do that. But it didn't save her father. Her father did not survive to walk her down the aisle.

10:21Her mother had to walk her down the aisle instead. So let's Poland. If you're 70 years old, you can't get cancer treatment, and they're not known for having the best cancer treatments in the world anyway. But when the OECD evaluates countries on health care outcomes, it's not just Poland that doesn't rank particularly high. The United States does not either. As a matter of fact, the metric that the OECD looks at the most and gives the most attention to is life expectancy at birth, which is roughly 78.6 years in Poland and 78.4 years in the United States. Neither nation sits on top, on the top tier globally. Despite the fact that the United States spends a lot more per capita on medical care than does any other country on earth. In fact, by that measure, life expectancy at birth, Poland measures slightly better than the United States. In spite of the fact that we spend six times as much per capita on medical care,

11:21and people talk about this all the time. Well, if America had a great health care system, then we'd have a higher life expectancy. And we wouldn't have the high infant mortality rates. And we see that we do very, very poorly in relation to a number of other countries in relation to health care. The big one again being life expectancy at birth. And so they tell us, well, we should go with universal socialist health care system, just like all these other countries have, because some of them are doing better than us. About 20 of them are doing more than 20 of them are doing better than us. And so they're saying that we should do that too. Life expectancy, however, does not tell the whole story. Polish society is very much less car dependent. Obesity rates are much lower. Processed food consumption is much lower. Americans are more likely to be overweight, less likely to exercise regularly, and more likely to adopt lifestyles that accumulate long-term metabolic strain. Well, those choices shape your health outcomes

12:21long before a physician becomes involved. The American health care system receives constant criticism, but if the question is not obesity rates or life expectancy, so much as the quality of medical care when it is delivered, all of a sudden the United States is one of the best in the world. The only countries that compete against us measuring medical care when delivered are much smaller and generally oil rich. A disproportionate share of global pharmaceutical innovation, medical device development, and advanced surgical technique originates where in the United States. The world's leading academic medical centers are concentrated here. Why? Because they want to operate at the intersection of research, capital, and clinical practice. Breakthrough cancer therapies, transplant techniques, trauma systems, and complex cardiac treatments are often pioneered and refined in American hospitals before spreading elsewhere. We simply put lead of the world in medical

13:21and pharmaceutical innovation. When a patient gets a rear tumor, a complex neurological condition, or catastrophic injury, the technical ecosystem available in the United States is simply unmatched in depth. Advanced imaging, intervational radiology, robotic surgeries, biologics, and experimental therapies, those are the theoretical capabilities in the United States. No, those are routine components of high end practice. Clinical trials are extensive. Medical funding is immense, and global talent trains and frequently remains in American institutions. A simple truth is that whatever one thinks about cost, distribution, or coverage, the ceiling of American medical care is extraordinarily high. The technological depth and clinical sophistication available in the United States is as advanced as anything in the world, and in most domains, we are better than anyone in the world.

14:21And that's just true. I tell people all the time, they say, well, cancer is free. If you get cancer in Canada, it doesn't cost you anything. Well, that's true, but there's a really good chance in Canada that the time you're able to get in and see a doctor and have yourself checked for cancer, it will already be beyond what can be treated. Whereas the United States, as soon as you show symptoms and go see a doctor, you're being treated immediately. The simple fact of the matter is that the United States, if you have cancer or heart disease or anything that can kill you, you may, if there is a way for medicine to save you or for the medical industry to save you, they will do so in the United States. You may go bankrupt, but you'll be alive, whereas in a lot of these other countries, yeah, it's free, but you're not going to be alive. So, if you ask somebody with cancer, do you want to die for free, or do you want to be treated and you may go bankrupt? I would think most of them would say, you know, I'll take the bankruptcy. So, yes, we do have problems. We have problems with cost. We have problems with distribution.

15:22And we have problems with coverage. But we don't have problems with the ceiling of our medical care. And more importantly, the OECD measures health outcomes, such as life expectancy, but it doesn't mention the technical ceiling of medical care. And health and medical care, they're not the same thing, no matter how politically useful it is to pretend that they are. And that's why they pretend they are, by the way, because it is politically useful to do so. Politicians, particularly left-leaning politicians, that want us to have a socialist health care system. They tell us that our health care system sucks. They don't just throw cost out there. They'll throw all these measurements that relate to obesity and relate to the chronic drug usage, and all kinds of other problems that relate to cultural and lifestyle choices, that have nothing to do with the quality of medical care. And they treat that like that's medical care. Well, though, if you smoke, that's not medical care. That's you making a bad decision.

16:22If you drink too much or do drugs, if you're obese, that's not medical care. That's health care. And it's not your doctor's fault. Health is largely behavioral and cultural. It reflects diet, exercise, sleep, substance use, stress, and long-term habits that accumulate over decades. Health is upstream of medicine. It's shaped not in hospitals, but in kitchens, schools, workplaces, and of course, your home. Medical care is something else entirely. It is an intervention system for when health fails. The emergency room, the oncology ward, the operating suite, or the intensive care unit, that's medical care. When we collapse those categories, medical care and health care into a single political slogan, well, what ends up happening when you do that? Well, you design policy around sentiment instead of structure. The American health crisis is cultural. It exists, but it's cultural.

17:23Bobby Kennedy is supposedly working on it. We'll see how good of a job he does. If he solves that, though, that's got nothing to do with hospitals. Hospitals are something else entirely. The American medical price in crisis, and let's call it what it is. It's a price in crisis. That's structural. Confusing the two health care and medical care leads us to diagnose the wrong disease. And when you diagnose the wrong disease, you, of course, prescribe the wrong cure. We know what Obamacare was because the guy that designed it, the economist that actually designed it, was on TV about two years later, and they asked him about it. The two things that he said is, one of the purpose of Obamacare was not to provide affordable care act, despite of that being the actual name of it, affordable care act. He said the actual purpose was to make American medical care so prohibitively expensive that we would feel forced to socialize the system. And the second thing he said is that the reason it was sold to Americans, the reason why they accepted it and ended up wanting it was because they're stupid. So we have Obamacare because this is according to the economist

18:25that wrote the bill, we are stupid enough to buy things that, basically, by lies, and tell us it's for this, but it's not, and we want it then because it was told it's the affordable care act, and of course, we want care to be affordable. So we're stupid, we'll listen to lies. And the second one was that the purpose of it isn't to make healthcare affordable, but to make it so unaffordable that we will agree to have a socialized system. That's the truth, and that's now what we're living with. Thomas Sol was asked, well, what would you replace Obamacare with? And he said, well, if you went to the doctor, and the doctor said you have cancer, would you ask the doctor what you want to replace the cancer with? Or you just tell the doctor to get rid of the cancer? That's what he says about Obamacare. You don't need to replace it. Just get rid of it and let the free market begin to operate again. That's my take on it also. If I have cancer, I don't need to replace it. We have a cancer in our healthcare system. We don't need to know what to replace it with.

19:25You just get rid of it. So that's where we are, America. It does have a chronic disease problem. We're obese. We have sedentary lifestyles. We have metabolic dysfunction. We have a large, a lot of addiction. And we prevent cardiovascular disease. It's widespread. Diabetes, chill. It's widespread. No payment reform is going to fix that. There's no way that changing how you pay the bills is going to undo the arithmetic of decades of accumulated lifestyle strain in a country that is statistically the second most obese in the world. And if you're wondering who's the most obese, it's Australia. They adjust out by a very, very small amount. The United States and Australia are both incredibly fat countries. Now, a nation that is metabolically unhealthy, it's going to consume large amounts of medical care, regardless of how that care is financed. And keeping unhealthy people alive costs a lot more than just keeping healthy people healthy. Now, what I want to talk about, I want to separate health from medical care,

20:26because they're separate. And then I want to examine the structural architecture of medical pricing specifically. My goal is not to diminish access order that I need, but to use lean techniques to diagnose the system, and then to use lean methodology to redesign the American system to keep the world leading quality that we have come to expect, but to get it costs that we can actually afford. So if that's what you want to hear, you're in the right place. I'm going to tell you how to solve America's medical care cost crisis. Not our health care crisis, that's separate. Our medical care cost prices. So let's talk about one of the things that drives it, which is what I call the cost shift engine. Some argue that Medicare for all would save money by forcing providers to negotiate with a single payer. Well, I hate to admit it, but that's correct. If Medicare for all is the only payer out there, and they say I'm going to pay $5 for open-heart surgery, open-heart surgery now costs $5. The issue is not whether the payments would fall,

21:26because you can dictate prices if you're the only payer, but how and why they fall. You see, markets control pricing through having multiple buyers and sellers all negotiating with one another. When there was just one single buyer, though, that buyer does not participate. No, they get to set the terms. A single payer becomes a monopoly, giving it the power to set reimbursement rates, and those rates can be below the full cost of delivery. And in lean, you don't rely on force to lower prices. You don't say I'm just going to pay you less, and I'm the only game in town, so if you take my money or you don't get any money at all, no, that's a blunt force object. That's not what you do in lean. In lean, you study the system and you remove waste. Now, critics have not used a single payer system to argue that hospital cost can be inflated by accounting methods. But that's only half true. The truth is that any company that provides any kind of good or service has both variable costs like direct labor

22:27that go up or down as goods move and services are produced. But they also have fixed costs like property taxes that stay the same no matter how many goods or services are produced. With pharmaceutical products in particular, the fixed cost, research and development, all of the testing to get it through with FDA, and by the time you can actually bring a drug to market, you have spent billions and billions of dollars on research and development and testing, and a lot of the drugs they produce never make it to market. So those are fixed costs, and those fixed costs have to be spread out somehow over what you produce. And yeah, you could say I'm going to use one system to spread those fixed costs out over another system to a spread fixed cost out. But the fixed costs are real, and how you spread them out doesn't really, you know, they're real costs, and you have to account for them somewhere. Now, accounting models may allocate fixed costs across services in different ways. The method can be debated.

23:28I personally advocate activity based costing whenever it's possible. But the underlying expense is those are real. You can't just argue those away. And when it comes to the cost of medical care in the United States, the relevant figure isn't how you allocate the costs over the system, whether this service is too high or this one is too low. No, it's the full cost required to maintain a given clinical standard. So we can debate what services cost too much and too little based upon how fixed costs are spread out across the system, which is where this is where the truth is that costs can be inflated by accounting models, but the total cost of delivering a quality of medical care. That doesn't change based upon how you allocate the fixed costs. And so that's what really matters. The full cost to maintain a given clinical standard. And that is a hard number. That is something we can measure and quantify. It does not change with accounting models. Measured against that standard, by the way,

24:29Medicare and Medicaid reimbursed below market rates. The payments are set administratively in Medicare participation. It's effectively mandatory for institutions that serve a large population. You don't technically have to have it. A lot of doctors do laser eye surgery, don't take it. But if you're serving a large population with a large number of services, it's effectively mandatory. Medicaid, by the way, often reimbursed is even less than Medicare does. When reimbursement falls below cost, and participation is mandatory, someone has to make up the difference. Providers that are forced by economic necessity to pass those costs on to those with private insurance, like me. Employer premiums and individual market premiums then rise. Cash patients, by the way, just go out and pay cash. They're going to face inflated pricing as well, because somebody has to pick up the costs of what the government does not pay. When we mistakenly label as excessive profit, often it's actually making up for public shortfalls. The Affordable Care Act subsidies follow the same logic,

25:31ensures increased premiums for those who can pay in order to offset reduced payments for those who cannot. When I left IBM, I joined a smaller competitor in Muskegon, Michigan. The company covered employees, but it did not cover families. And IBM allowed me to keep my health insurance for a year. So initially I wasn't that worried about that. But when I priced insurance for my wife and son on the Affordable Care Act, I did not qualify for subsidies. So why you hear that millions of Americans get free health insurance or insurance for as little as 20 bucks a month? For me, it was $800 per person per month. Why? Because I had to pay for my care. I had to pay for the care of all those people that have free care or care for 20 bucks a month. They're passing the costs on to those that they think can pay and making everybody poor. Well, I did what I had to do, and I returned to the corporate world. From a lean perspective, this is a flawed system. We need transparent subsidies. Transparent subsidies permit evaluation and democratic choice,

26:31whereas the embedded hidden cross subsidies in Medicare and Medicaid and the Affordable Care Act, they conceal the true costs and distort price signals. Emergency care intensifies this cost problem with millions of Americans using the emergency room for all care, where it is illegal to turn patients away without for stabilizing them. The urgent nature of emergency care also makes it the most expensive type of care, so pushing people to the emergency room for non-urgent care when they cannot afford to pay, well, what hospitals do, the real costs, they're forced then to charge private insurance more to cover those emergency care losses. Crisis care, I'm not saying it should depend on credit. Of course, it shouldn't. Ability to pay should not count in the emergency room, but emergency departments are designed for emergencies. They are the most expensive entry point we have. They also only stabilize patients, so if you've got a chronic problem and you're only going to the emergency care, you've got to go back again and again and again.

27:32A price feedback is removed from consumption. We know what happens. Utilization rises, and when the highest cost setting becomes the default access point for non-immersion care, well system-wide inflation, it explodes. A lean system would not eliminate emergency care or public coverage, but it would align reimbursement with cost. It would separate crisis intervention from regular care, and it would make subsidies explicit, rather than passing them on to others as hidden transfer payments. And with that, ladies and gentlemen, it's time for a word from our sponsors. Reach our sponsors directly by going to AmericaOut Loud.News slash shop or just go into the America out loud website and click the shop button at the top of the website. Don't go anywhere. We still have a ton to cover on the other side of the break. We will be right to pay. Hi, this is Colonel Mike from the National Security Hour, calling all patrons to join me in Nashville. On July 2nd, 3rd and 4th, for America out loud news,

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32:33on July 4th, 2026. Tell us your uniquely American store by email us at Libertine at AmericaOut Loud.News. We'll publish the results on a special webpage celebrating the best of America. Now is our time. My fellow Americans, AmericaOut Loud.News, Libertine, and Justice for All. Ladies and gentlemen, welcome back to cutting through the chaos of the America Out Loud Network. I'm your host Wallace Garneau. We've got a lot to get into, so I'm going to get right back into it. We were talking on the last side of the break about transfer payments. We're going to get in now about how we can fix that a lean system for the uninsured. Access must be preserved, of course, while providing true cross-transparency. That's what we talked about before.

33:33One practical step we're fixing that is expanding direct primary care networks. Under a TPC model, patients pay a fixed monthly fee for defined primary care access. For the uninsured, poor states or municipalities can subsidize those memberships. Competitive local contracting would then allow multiple providers to participate. Community-based lean clinics provide another option. Nurse Practitioner lead centers, they operate or simplify regulatory requirements, and can manage routine conditions at far lower cost than due hospitals, even outside of the emergency room. These clinics do not require tertiary care infrastructure. They just require examination space, basic diagnostics, and clear pricing. When desired around functions instead of institutional hierarchy, they observe routine or observe routine demand, and they relieve emergency departments. A tiered model would preserve emergency stabilization while adding short-stay observation capacity. Structured referral and a primary care networks, and defined discharge pathways.

34:34Many urgent care centers today function as little more than triage points to redirect patients into a burn serums. We don't need that. We need centers that actually provide care. Hidden cross-subs and these then should be replaced with direct transfers. Rather, enforcing providers to hide or unpaid or underpaid care by passing costs on to private plans. No, governments can issue primary care vouchers for the poor. Or governments can pay the full cost directly and report it to the taxpayer. Preventative care pools and kept chronic disease management support should similarly be funded transparently. Entry barriers must also be reduced. Certificative need laws, restrictions and ambulatory surgery centers, retail clinic limitations, and unnecessary telemedicine restrictions protect incumbents in artificially increased pricing. Why do you want to do that? Well, because we have incumbent providers deciding who the new entrance can be. And incumbent providers have incentives to limit new entrants and preserve scarcity. Standards, of course,

35:34are necessary. I'm not saying get rid of standards. But governance bodies should maintain clinical standards without functioning as gatekeepers that protect market share. Let's talk about employer based insurance. Because during World War II, federal wage controls limited salary increases, so employers had to compete for labor by adding more and more benefits. Health insurance was exempt from wage caps and later reinforced by favorable tax law. It became a hiring tool and it became a default structure. We now, in fact, treat employer-based insurance as the standard. Tying insurance to employment creates structural distortion. Workers hesitate to move when it puts coverage at risk. Employers become intermediaries between patient and insure. You've been resource departments then negotiate plans and benefit managers evaluate the options. Employees like for predefined menus with limited visibility into the actual pricing. Premiums are embedded within compensation packages and rising medical costs lead

36:34to slower wage growth. Businesses may absorb the increases themselves and in many cases they claim to do so. But salary increases is compensate by staying low. So the costs are passed directly on to employees. Salaries in stage-nate, stagnate even when employers aren't passing on the costs. This obscures trade-offs. Individuals rarely see the full cost of coverage, so meaningful comparison doesn't exist. Employers negotiate for large groups they incurred standardized plans rather than the individualized risk assessments that you and I might choose if we're buying it ourselves. In lean terms, purchaser and consumer are misaligned. The person experiencing the service is not the one negotiating the price. Lean begins by examining architecture. Insurance tied to payroll solved a temporary problem, but then it became a permanent framework. In a modern and mobile economy, we need to reconsider that. When purchaser and consumer align, well, feedback improves. When coverage attaches

37:34to the individual, mobility improves. When insurance functions as risk management rather than disguised compensation, that gives us price signals again. Tax policy currently reinforces the existing structure. Employer sponsored plans receive favourable treatment that individually purchase plans do not. That imbalance of course directs behavior. Tax detriality would remove the distortion and allow individuals to purchase and retain coverage without penalty. That would then also allow them to move jobs without losing. They would not lose their coverage so they wouldn't have to worry any where near as much about pre-existing conditions. Regulatory mandates further distort the problem. Federal and state rules dictate coverage as regardless of individual risk profile. Baseline protections may be justified, but excessive standardization eliminates lower cost options, and enforces uniformity reveriation, would reduce costs across the board.

38:34A lean framework would permit tiered insurance products so that consumers could select coverage consistent with their age, with their health status, and their risk tolerance. Let's talk about regulatory inflation and facility mandates. Medical inflation is often blamed on physicians, on insurers, and pharmaceutical companies, but less attention is given to the regulations that reshape hospital costs. Facility mandates have increased in scope and expectation. Multi-bedwards have almost entirely been replaced by private rooms, and of course the square footage per bed, when you get rid of the wards, it explodes. Staffing ratios are more tightly regulated and building codes and accreditation standards require on going upgrades. We have infection control rules, safety protocols, and reporting requirements growing every year. If you look at each change individually that may be defensible, but the issue is the cumulative effect.

39:35When comfort and infrastructure preferences become regulatory baselines, rather than competitive options, costs rise across the board. And those overhead increases occur before clinical care even begins. Understand, whenever costs grow, so too must the payments that we pay to doctors. Facility design is one layer of cost growth so is administrative structure. Hospitals now employ a substantial non-clinical staff, dedicated to navigating regulations, coding specialists, utilization review teams, documentation auditors, accreditation managers, legal counsel, and reporting personnel all exist to navigate all of this unnecessary complexity. Administrative growth does not generally add clinical value. No, it frequently reflects the burden of reimbursement rules of liability exposure and reporting mandates. In lean terms, this is called processing.

40:35When a system requires multiple hand-offs, redundant documentation, and compliance layers sustain itself, well, that utilizes resources toward maintaining structure rather than delivering care. Lean systems examine whether each step adds value to the patient. When non-value steps are unavoidable, if we can't get rid of them, you optimize and minimize the waste. We don't do that. We should. Let's talk about third-party payment and price opacity. In most industries, the buyer sees the price before purchase, and transactions only occur if the consumer believes the product is worth the cost. Multiple sellers competed different price and quality levels, and sellers adjust to consumer demand, or they go out of business. Medical care does not operate that way. The consumer rarely sees the true clinical cost of procedures. The hospital stake and generate a number of separate bills. Some arrive months after care was performed, ensures to negotiate rates privately and discounts are applied out of view,

41:36while explanation of benefits tend to obscure more than they inform. I've paid for medical care only a build again with no idea whether I'm being charged for something else, or double charge for something I've already paid for. It happens all the time. Cross subsidies are hidden, so a privately-insured patient has no idea how much of a premium reflects Medicare underpayment, uncompensated emergency care, regularity overhead, or administrative growth. They're all blended together into a single number, even though not all of it reflects the care you received. Facility overhead, same thing. Capital costs for private rooms, expanded square footage mandates, compliance departments, electronic record systems, risk infrastructure, and to all the layers of accreditation. They're spread out across procedures. The patient gets one charge, but not the justification behind it. The payment chain defuses accountability. Employers negotiate plans, ensures negotiate contracts, government program set of administrative rates, providers

42:36submit coded claims. The individual patient stands at the end of that chain, insulated from the full cost of the care they were given. When costs increase, responsibility is unclear, and everybody points fingers. Nobody accepts the blame. Well, what happens? We pay the costs, we don't even know who we don't even know what the cost is. We don't even know what the cost is there for. Everybody points at everybody else. Let's talk about tort law and defensive medicine, because you can't solve this without addressing tort law. No examination of medical costs can be complete without looking at that. Mail practice, it's often looked at politically, but really it's an incentive problem. Medical outcomes vary, reflecting biology, timing, patient compliance, and other variables that are completely outside of physician control. Identical treatment can produce very different results, and an adverse outcome, that's not always proof of negligence. Negligence is a departure

43:37from accepted standards of care that a reasonably competent provider would not make under similar conditions. That's the legal definition of negligence. Air can occur without negligence, and adverse outcomes can occur without air. When we collapse these categories together, well, doctors resort to what I call another industry's defensive work. The difference being that defensive work in a manufacturing company is done to try to avoid getting laid off, whereas defensive medicine is done to avoid either getting sued, or to help win a lawsuit should want to occur. Liability should require negligence. When every undesirable result carries potential legal exposure, behavior adjusts and defensive medicine, of course, follows. The issue has grown so bad that doctors are now often sued for positive outcomes that fall short of optimal, with lawyers promising that they won't get paid unless you do. Defensive medicine is predictable, and litigation is

44:37costly even when claims fail. Physicians respond by increasing documentation and ordering unnecessary tests and procedures to try to create legal protection. Imaging may serve both clinical and legal purposes and documentation of legal waiver. The cost-chifting of course compounds the issue is uninterhr patients, or those covered by programs that reimburs below the cost can also sue, and those lawsuit costs are then transferred to whoever can pay the costs because they can't. Plaintiff's attorneys of course operate within their own set up incentives, carrying far more about a doctor's willingness to pay than about actual liability. We claims are often settled. The male practice insurance aggregates risks with the private premiums reflecting the aggregate costs ultimately passed on to patients. Every cost that this adds to health care, somebody has to pay, and that is of course us. Now we need to do is we need to have safe harbor protection for adherence

45:39to accepted clinical guidelines to narrow exposure. We also need to have pre-suit expert certification. We can screen weak claims before litigation that way. Independent medical review panels can quickly evaluate disputes. Specialized medical court staff by judges trained in clinical reasoning or juries drawn from medically qualified pools could replace juries that are untrained in the kind of evidence that exists in medical cases. Lawyer penalties for objectively groundless claims would adjust incentives. Escalating those consequences for repeated frivolous filings, well that's going to make a lot of lawyers stop doing it. That's what we need. Accountability of course must remain, but incentives need to be calibrated. Without balanced defensive medicine becomes another embedded cost with an already bloated price system. Many people want to blame physician compensation, saying that doctors simply make too much. I don't want to blame physician compensation. If a side he wants his best and

46:39brightest to become doctors, well it's got to allow that profession to pay well. Finance, technology, engineering, law, there are all kinds of other fields out there competing for the same talent. Compensation levels, they influence the field's people select. So if you're going to say we're not going to pay doctors much, your best and brightest won't become doctors. We medicine offers growing responsibility with diminishing rewards, the applicant pool adjusts over time fewer people go into the field. Understand becoming a physician requires not just exceptional ability, but sustained discipline and delayed income. The training includes undergraduate study, medical school, residency and fellowship. It can take well over a decade in total from the time you start college to the time you're able to practice. It also carries liability exposure, regularity burden and emotional strain. People that want to underpay doctors are missing the boat. If you want your best and your brightest to be doctors, bring down the cost, but don't bring it down the pay that doctors and nurses get is only a small portion

47:43of that cost. I think naturally it's about 8 to 10%. You're not going to save a ton of money by not paying doctors. So we shouldn't go there. Go ahead and pay the doctors, look for waste and other parts of the system. Let's talk about what I think is a big one. Equality of treatment versus equality of comfort. In debates over medical reform, equality is often treated as a single category, but it is not. Safe air travel does not require everyone having the same seats. We understand that the first class and the economy class all have the same aircraft, pilots and safety standards no matter where people sit. The difference of course lies in space and service, not in structural integrity. Medical systems can and should apply the same logic. There is equality of treatment and there is equality of comfort. You should not collapse those things into one metric because doing so raises costs. The standard of care for a procedure or diagnosis or an emergency intervention should not vary by income. If two patients require the same

48:45appendectomy or cancer protocol or trauma stabilization, the medical standard must of course be the same, but comfort is separate. Regulation and expectation have expanded from clinical standards into environmental and amenity mandates. Private recovery rooms become default requirements. Facility design and hospitality features move from preference to baseline, food service, square footage and aesthetic upgrades become embedded into the cost. When every bed operates inside the same high cost infrastructure, the price floor rises. That overhead attaches to every procedure delivered within the facility, regardless of medical complexity. And when you throw in the fact that Medicare, Medicaid and the uninsured often pay less than cost or nothing. And those costs have to be applied also. Well, now you're putting people that aren't paying for their care in private rooms? Well, it's certainly comfortable, but it doesn't make a lot of sense. People should have to

49:49pay for that comfort. They should all have the same quality of care, but not necessarily the same comfort level. Let's talk about lean medical policy and cultural reality. A lean medical policy would begin with transparent cost accounting. Hospitals and pairs should publish cost per case. They should also publish complication rates, infection rates and outcome metrics. And while we don't have to make them all exactly the same, they have to be in comparable forms that consumers can read. You have a right to know how much hospital's charge. You have a right to know their complication rates, infection rates and outcome metrics. You have a right to know that, so that you can choose now in emergency care, you're probably going to go to the closest hospital. But when it's not emergency, emergency care, you have a right to be able to choose where you want to go with metrics that are meaning for you to look at, meaningful metrics. Cross subsidies incidentally should be visible, such as subsidies are required. They appear in public budgets, not hidden inside private premiums. Medicare and Medicaid reimbursement, that has to be

50:55addressed. If public programs pay below cost, that gap needs to be acknowledged and debated openly. The public deserves to know that they pay a special tax every time they see a doctor, to cover Medicare, Medicaid, emergency care, all of the other, all of these other bloated costs. Insurance should be owned by individuals and portable across employers. Tax neutrality between employer plans and individually purchased plans would help return insurance to risk protection rather than being a part of a compensation package. You might notice I'm not saying stop giving tax subsidies to employers. I could call for that, it would probably be a good thing to do. The problem is that I am a free market guy and I don't want to, I want tax neutrality. We can talk later about whether we want to remove the tax benefit for employer plans. Let's just start by treating individually purchased plans the same. We can look in the future on whether or not we want to get rid of or discourage employer plans entirely. I want employers to be able to compete for employees using whatever techniques they think

51:59it works if they can get the employees that make the most sense for their place of business. If there are employers that want to do that with generous healthcare packages, I'm not, I don't want to tell them you can't do that. Routine and predictable care, however, that does not require an insurance layer. Direct primary care and expanded health savings accounts can manage those costs. We need to treat the uninsured outside emergency departments unless there really is any emergency. Subsidized direct primary care networks, community-based clinics, and chronic care centers can preserve that access while reducing waste, so that emergency care can remain universal, but for emergency care such that it's not exploding costs. Tort reform must rebalance incentives while preserving accountability. Liability should require negligence. It shouldn't just come from out-convariation. Safe harbors were adherents to accepted protocols, expert certification requirements, medical review panels, and specialized courts that can narrow defensive behavior while still

53:02preserving accountability. Facility and nature allow accommodation tiers while maintaining universal clinical standards. Equal treatment at the operating table does not require identical surroundings. Flexible infrastructure lowers capital burden without diminishing competence. If you want cheaper medical care, you're going to have to deal with that. If you want cheaper health medical care, if you can afford a private room knock yourself out, some of us if we have non-infectious things recovering from surgery or something, it's not in fact just some of us blowing awards. Lean operational benchmarking should emerge from transparency and competition rather than from centralized process mandates. Standardize the outcomes. Don't standardize methods. Encourage lean in hospitals. Encourage them. Show them how to do it. Have best practices in terms of delivery care at low cost, but allow doctors and allow hospitals to experiment. Don't strap them into a specific way of doing things. Just help them be more lean if when they want to

54:06participate. Architecture however is only a part of the equation as medical care treats what culture produces. An effective medical policy must hold two truths. Structure reform reduces distortion and restores price feedback to lower costs. Culture reform is what it takes to create better overall health. Confusing health care and medical care prolongs debate while preventing actual workable solutions. Polin incidentally now operates two systems. Wonder remains socialized. The other is entirely now private. We have a friend who practices an OB-GYN in the Polish town. She works two days a week in the public hospital and the rest of the week in private care. She makes almost all of her income privately and she would work privately entirely except that if she did, her town would not have a single OB-GYN outside of private care at all. All of the OB-GYNs in that town work in public care or work in private care. She is the only one doing work in public care.

55:10So she looks at that as basically charity. She looks at that as a public duty. In terms of the quality of the two health care systems in Poland, the public and the private, well if Goshi's father or diagnosed today, we would not rely on the socialist system. When he was diagnosed, that was all they had. We would not rely on that today. We would totally send him to private care. My wife's first cousin, she demonstrates the other side of the equation. She didn't die because America lacked competent medical care. She died because though medicine can reverse and overdose, it cannot make someone stop using. A saint system should preserve quality while removing the distortions that make routine care expensive. It should also tell the truth. The nation's health is upstream of medical care and though we can change government incentives, no financing model can substitute for the choices you and I freely make. Many Americans would have met a care for all but we may find as Canadians have, that while saving a life may bankrupt it, as I said earlier, we can all die for free.

56:15And just like that, ladies and gentlemen, we are out of time. That's okay. I got through the whole lean health care thing. I wanted to lose a lot to cover. I actually got through it. I apologize if I rushed through parts. As always, thank you for tuning in. Please tell others who might be interested in cutting through the chaos to listen in either on Saturday and Sunday at 9 a.m. Eastern Standard Time or 10 p.m. Eastern Standard Time on Sunday. We're on podcast, remember the halftime. Usually comes out Monday afternoon and we will see you next week at the same time in place. We'll once again be time to get involved and to get loud on America.