Health Care Bubble?

Paranoid Renter over at Sacramento Land(ing) believes that the next bubble will be in healthcare:
"
The bubble I see is one where there are too many jobs created in healthcare and auxiliary industries. So the way I see this playing out:
- Lots of nurse positions; nurse salaries go up marginally. Nursing schools make out like bandits.
- Doctors salaries skyrocket and they start switching jobs like crazy to take advantage of pay hikes.
- Artificial shortages of drugs drive up prices of drugs and help the pharmaceutical industry report record profit.
- Lots of administrative positions created ("director of customer care for the hospital", etc.) and tons of bureaucracy in billing and hospital management. [For the record, my insurance/billing is not yet complete for a blood test I had last March!]. Errors in billing (usually amounting to overbilling) will proliferate.
- Insurance will cover less and charge more resulting in record profits for insurers."


My response, which was too long and not at all housing bubble related:

Nurse positions are chronically underfilled and have been for years. This article in USA Today sums it up fairly well. A bout 4 years ago, I sent away for a bunch of free promotional stuff , including a neat video, to encourage young people to go into nursing. I set up my table and video and posters and brochures at a local high school job fair, and there was enormous interest. During the fair, which also had representatives from Cal State (it has a nursing program) and American River College (ditto) , I was approached by one of the career counselors from one of the colleges, who told me that they had a waiting list several years long to get into their nursing program. The problem isn't convincing people to consider a career in nursing, it's convincing nurses to get the pre-requisite Masters or Doctors degree and teach nursing. Nurses make more by practicing their profession than by teaching it.
Laws mandate clinical nursing instructors supervise a very limited number of student nurses on the floor, as well, and that also tends to limit the number of students that can be admitted to a school.
We are currently importing a very substantial number of foreign nurses to fill positions that Americans want to fill and are unable to find training for.
It is hard to imagine a situation in which there will be an over-supply of nurses. The government already offers incentives to Colleges of Nursing, and while I would not turn down a pay raise, neither do I feel that I am not compensated enough . The laws of supply and demand work pretty darn well in nursing: we're in demand, and we get damn good salaries and benefits. We get paid more in California, because it is an expensive state in which to live and because it has a severe nursing shortage. California law mandates ratios of from 2:1 in Intensive Care units to 5:1 on Medical/Surgical floors. Considering the multitude of drugs and IV fluids/medications, and treatments, and assessments that must be performed a ratio of 5 :1 is not at all generous. Any parent who has ever cared for more than 1 sick child will immediately grasp this. People are not hospitalized for minor ailments any longer. Most routine surgeries go home within a day. My knees, hips and feet constantly ached when I worked on the floor, and it was a true aerobics and weight-lifting work-out. Statistically, the best care is of course one on one, but that is not economically feasable for any but the very sickest patients. Studies show that increasing the ratio beyond 5 patients leads to an increased mortality rate.

Doctors do not usually get salaries; they are usually in private practice and they receive compensation from a variety of sources. The exception is Kaiser docs, who do work for Kaiser and receive a salary. They also don't have to worry about paying their staff, including billers and coders and "authorization" clerks and not just the hands-on workers that take your vital signs when you see your MD. They don't have to worry about obtaining coverage for vacations, seminars or emergencies. They don't have to worry about malpractice insurance.

Medicare Part D has already driven up the cost of pharmaceuticals because the government is not allowed to bargain with drug companies on the price of the meds, and the drug companies are allowed to stop covering a medication in the middle of your coverage period if they want to, but the consumer is not allowed to choose a new plan until the next coverage year begins (and there are over 67 drug plans in California, btw). The Veteran's Administration, who up until the current political administration had provided excellent care to veterans since they cleaned up their act after the Vietnam War, actually gets very good prices on medications by driving a hard bargain. So do several HMO's who provide prescription medicine coverage.

There are already multitudinous layers of bureaucracy in healthcare. Your doctor, your clinic, your hospital (again, unless you are a Kaiser member) must staff entire departments who do nothing but submit and re-submit bills to insurers, trying to meet all their demands for verification and proof, and trying to get procedures authorized. Each insurer, and there are dozens of them, has different rules and paperwork. Medicare is probably the single biggest payer that most healthcare providers deal with, but it is not in the business of denying care to ensure fat CEO compensation and shareholder dividends, so it is tedious but quite possible to actually get paid under Medicare. There will always be administrative costs associated with healthcare; we are talking about people's lives and well-being. We are talking about your child, your mother, your lover. The state has regulations and inspectors, the feds have regulations and inspectors, and most hospital systems have the good ol' "Quality Assurance" department who keeps coming up with new goals to meet. And mistakes STILL happen, at an alarming rate.
Single-payer healthcare is more likely to reduce the need for clerical and administrative staff than to increase it. Knowing one set of regulations and codes is much more efficient than employing the staff necessary to specialize in each and every insurer's regulations.

Finally, insurance has been covering less and charging more for years now. Private insurance costs have risen at over twice the inflation rate in the past 2 years. Things have gotten so bad that even corporate capitalists are now screaming for a single-payer healthcare system -- at least the ones that don't work in the health insurance industry are. At this point, the greed of the few has pushed the tolerance of the many over the edge. Insurers refusing to pay for life-saving operations or procedures which are not experimental, but are very expensive, is now a fact of healthcare in the US.

Is this a "bubble"? I don't think so. Technically, a "bubble" arises in the financial sense when a commodity is irrationally valued without any basis in fact. The facts are that we DO have a growing population, of which an increasingly large number are living long enough to develop chronic illness. Additionally, we have made technological advances and are able to perform procedures that will add years to people's lives. None of this fits the definition of a speculative bubble.