Prasad's Law: there's always enough health spending to concentrate wealth, never enough to diffuse it

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Thanks, this really is a good and widely applicable principle to understand.

On a macro level, as above, it explains how and why lobbying twists our major economic trends, but on a micro level or also explains how and why marketing bends our consumer economy away from needs and towards wants, and then even further to create wants where none previously existed.


My son is Deaf and Prasad’s law holds utterly true for Deaf-Ed / early intervention. Research is consistent that early & regular exposure to natural signed languages (ASL in the US) is the most effective intervention for children to prevent language-deprivation, which is a devastating condition and the biggest potential issue for deaf children born to hearing families.

But to do that would mean dispersing dozens of modestly-paid individuals into communities statewide to be instructors / mentors / caregivers to supply services and language models in ASL. Instead, insurance and basically the entire healthcare apparatus pushes towards hearing aids or cochlear implant surgery, which comes out to hundreds of thousands of dollars billed to the hospital and the surgical team.

While some kids thrive with CIs (and my own son is doing great with them) the outcomes are uneven. Kids without sign language who can’t get or don’t respond well to CIs or other technology end up with permanent cognitive damage by the time they’re 5 years old.

So we have a situation where the concentration of resources ends up helping some, and permanently disabling others, when a dispersal of resources would support nearly all kids.


I get the idea, but ultimately this boils down to “hiring people is more expensive than even overpriced medical devices.” Ironically one of the things that makes hiring people so expensive is the high cost of their healthcare.


Didn’t Marx say something like that?
IIRC, there is something like that capitalism will try to commodify everything because most of the surplus come from capital not labor, since the former can be easily scaled while the latter cannot, which will eventually try to remove all the workers from production to enable even bigger profits.


This is classic economics - capital versus labor. Shareholders lose money when labor increases - i.e. more nurses are hired - because labor is an expense which reduces return on investment. But when more MRI machines or more fancy pharmaceuticals are sold, the return on capital increases, and share prices rise. And you thought healthcare was about health? Not when your healthcare comes from the free market. The goal with US healthcare corporations is NOT to make us healthier, it’s to sell us more healthcare. Don’t forget that.


This goes well beyond just healthcare. It’s also true of American foreign and domestic policy in general, and of both the major parties in particular. We need a lot more focus on smashing the current parties and power structure, because trying to compromise only works if the other side is dealing in good faith, and working within the system doesn’t fix anything when the system is thoroughly, deliberately broken.


That’s not really the take-away. The people who sign the checks and determine the budget are influenced by people who have things to sell, because they are the ones who have the money to exert influence/pressure/leverage. The people who do the work don’t have influence, so they don’t get budget. This is why physician and nurses unions should not only exert more power, but, ideally, unite.

Health care in the US has the additional perverse incentive that many payers have incentives to pay more for care, not less.


This is one of the great sociological discoveries(?) (“Articulations of a known but not well-described phenomenon” might be better than “discovery”) of all time.

You look at bureaucratic decisions through that lens and a lot of stuff snaps into a new focus. It’s not even about any greater riches for the decision-makers, but for those who lobby them.

I decided not to go into a page of detail here, but my career in IT, where I’d expected that the PC would distribute IT budgets and staff and power across the organization (and it did until IT realized these PC toys were not toys and were eating their lunch), was cruelly disappointed. IT reasserted centralized control, all purchases were Big Purchases, all Approved Software was expensive (and Microsoft or other monopolist if possible), and IT-handholding staff were aggressively cut as the main goal of the re-centralization. But the new, efficient, centralized IT help was almost JUST as expensive, and almost no help at all - every complaint was “solved” by re-imaging the whole computer.

I mean, wow. This is a VERY generalized principle of bureaucratic behaviour.


What’s remarkable is how, in fields dominated by more socially-awkward people, all it takes to wield tremendous influence on many of the buyers is social interaction.

I went to a very technical conference a couple of years ago with a colleague who was from a more mainstream industry. A few hours of booth duty later, he whispered to me, “Do any of these people ever make eye contact?” I responded, “Welcome to the _______ industry!”

This is even true of some medical specialties. Radiology and Electrophysiology come to mind as specialties that draw physicians who are more comfortable with machines than people. And they have decision-making power on huge equipment and pharma spends…


Earlier today a coworker explained to me that in the US, the definition of a “medical device” in regards to what i can spend money from an HSA on is decided by the IRS. Which… I see how that happens, but the result is I can spend money pretax to hire a Christian Scientist to pray for me, or on tuition, but not on some vaccines.

There are so many distortions in healthcare spending I don’t even know which apparently well supported stories about them are real.


If you privatize government functions and turn them over to corporations, then spending that goes into contractor salaries all of of sudden is part of corporate profits, and so this law may not apply so much then. Not to say that is a good idea, in fact IMO it’s pretty clearly a bad one especially for government functions like prisons and schools.

I think that even if you don’t get full on language deprivation the damage of not learning sign language is huge.

My sister is deaf and was one of the first children getting a cochlear implant. When we were growing up I saw her play with her friends, both the local kids that were non-hearing impaired and didn’t really know sign language and her friends from school that all were varying levels of hearing impaired, and crucially, did know sign language. The difference in those interactions is not surprising when you think about it, but it’s very significant.

When you are deaf and surrounded by hearing kids you always lag behind in the conversation, you always miss things, it’s inevitable, not matter how good the cochlear implant technology gets. Around people that know sign language, that barrier totally falls away, the playing field gets levelled. It’s almost like she was a different person depending on where she was in those times.

I still love seeing her interact with her deaf friends, sign language is a beautiful language. And while I know sign language, when she is talking with another sign language native I have to work really hard to be able to follow the conversation. I can only imagine that this must be similar to the amount of effort a hearing impaired person must put in to follow a spoken conversation.


Under the existing Medicare program, both hospital services (paid by “DRG’s”) and physician services (paid by “RVU’s”) lean massively toward paying more money for expensive surgical and other procedural interventions than they do for bedside care and medical disease management.

I have not seen anything in the various M4A proposals that attempt to address this.

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When you treat healthcare as a profit-generating enterprise rather than a system that operates for the benefit of society, this absolutely happens. An MRI machine is a multimillion dollar investment, but you can bill stupid amounts for the scans and encourage a lot of unneeded procedures with it. For the same money, you can hire quite a few nurses, but they do not actually generate more income, merely improve the care of the patients you already are caring for. They also come with ongoing expense, especially their own healthcare. Hence, to maximize income you minimize nursing staff, work them like dogs and replace them with young and inexperienced staff when they inevitably burn out. Treating machines like valuable assets and human beings like machines is not limited to healthcare, but since that is what I do, I am painfully aware of it. Perhaps MfA can get us away from the for profit model? I cannot see it making things worse, at the least.


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