(c)2009 Investors Business Daily
The principal argument used by the left to justify the mammoth healthcare legislation being forced by the White House and the Congress majority is that approximately 46 million Americans, 15 percent of the population, have no health insurance and therefore do not receive appropriate medical care. This figure stems from reports issued by the Census Bureau and is based on monthly surveys with a sample size of N=50,000 (50,000 persons surveyed). The latest report (2008) can be found here.
The left asserts that an 85% coverage yield in the current American healthcare process is not good enough for the most advanced country in the planet. This could be definitely arguable if the “defect” rate of the coverage rate of our healthcare system process were indeed 15%. But it is not.
Figure 1 shows a breakdown estimate of the 46 million uninsured figure made by the Heritage Foundation based on its own and external research1. Different breakdowns can be found in other references but this is the one I found the most consistent as it dissects the figure in congruent and relevant categories.
- Figure 1. The “46 million uninsured figure” disected.
Another unreported fact is that the uninsured rate has been pretty much constant in the last twenty years despite three economic recesions. In other words, the process is stable. This can be seen clearly in figure 2, drawn directly from the Census Bureau report.
- Figure 2. The process is stable.
Let’s be kind to the left by severely handicapping the breakdown figures above by assigning to each category a constant distribution using the numbers reported by Heritage as the distribution upper limit and their respective half as the lower limit. This means that in our model any number from Heritage’s down to half that number has the same probability of being true (for example, the number of uninsured people with income greater than $75,000 can be anywhere between 4.65 and 9.3 million, and any number inside this interval has the same probability of being true according to our model). These distributions are shown in figure 3.
Figure 3. Constant distributions assigned to the "46 million uninsured" breakdown figures calculated by Heritage. (c)2010 Victor Gamez
Running an Oracle Crystal BallTM simulation using the distributions assumed above reveals that the number of truly uninsured can lie between 8.53 and 24.59 million, with 16 to 17 million having the greatest probability of being “the true” figure (figure 4). Figure 5 presents the data in percents form: the truly uninsured may compose 2.78% to 8% of the U.S. population. 5% to 6% uninsured may be the rate with the highest probability of being true (figure 5). Not bad for a system as large, diverse and complex as it is the American society. But here’s the interesting part: 5% to 6% of the American population would still not be covered should the Senate version of the healthcare bill was enacted, according to estimates from the Congressional Budget Office2. Where is the process improvement with this legislation then?
Figure 4. Forecast of truly uninsured (in millions), under the current healthcare system. (c) 2010 Victor Gamez
Figure 5. Forecast of truly uninsured (percent) under current healthcare system. (c) 2010 Victor Gamez
So the process is stable and the yield is high. What’s a reasonable operations manager to do then to improve this process? Focus on cost reduction and throughput, of course.
Sadly, although plenty of cost reduction schemes have been proposed, none of them have been included or even considered by the House and Senate democrats. Thompson Reuters published an excellent research paper addressing changes that would have a dramatic impact in lowering healthcare costs.
What the White House and Congress democrats are trying to do with healthcare is like fully replacing a 95% – yield process with one that is unknown, untested and unvalidated (Massachusetts anyone?). All this in an attempt to completely eliminate a 5% defect rate of a process that accounts for approximately 16% of the United States GDP.
I would immediately fire anyone trying to force something like this at my factory. We’ll have the opportunity to do just that this mid-term elections.
All charts and computer models produced with Crystal Ball (Oracle Corporation) by Victor Gamez
References:
1. Heritage Foundation, http://www.heritage.org/Research/Reports/2007/08/The-Heritage-Foundation-Responds-to-Uninsured-Numbers-in-New-US-Census-Bureau-Report.
2. December 19, 2009 letter from Douglas Elmendorf, Director, Congressional Budget Office to Senate Majority Leader Harry Reid.
Version 1.1 of of the FDA QSR (Part 820) has been just released on 8/25/10.
On March 29th, a New York federal district court ruled in favor of overturning gene patents issued to the University of Utah and licensed to Myriad Genetics, Salt Lake City, UT, for commercializing genetic tests for cancer risk.
Take the FDA Quality System Regulation text with you anywhere.