Health Reform Bone to Pick

In my last blog, I mentiond that the Senate Finance Committee’s health reform plan (also called the Baucus Plan or Gang of Six Plan) would likely impose annual fees for on insurance companies ($6 billion), medical device makers ($4 billion), drug firms ($2.3 billion), and clinical laboratories ($750 million).

The rationale for these “fees” is a mystery, as well as how they were arrived at. Presumably they are a trade-off for the new customers, i.e., the more uninsured the plan would bring to market, or maybe they are an indirect slam at those “profit-making” entities as political villains and strawmen to be be struck down as targets for easy political victories.

These fees brought to mind an animal fable described by Thomas Sowell, a senior scholar at the Hoover Institute (“Fables for Adults,” September 15, Real Clear Politics).

Fables for Adults
By Thomas Sowell

Many years ago, as a small child, I was told one of those old-fashioned fables for children. It was about a dog with a bone in his mouth, who was walking on a log across a stream.

The dog looked down into the water and saw his reflection. He thought it was another dog with a bone in his mouth-- and it seemed to him that the other dog's bone was bigger than his. He decided that he was going to take the other dog's bone away and opened his mouth to attack. The result was that his own bone fell into the water and was lost.

At the time, I didn't like that story and wished they hadn't told it to me. But the passing years and decades have made me realize how important that story was, because it was not really about dogs but about people.

Today we are living in a time when the President of the United States is telling us that he is going to help us take that other dog's bone away-- and the end result is likely to be very much like what it was in that children's fable.

Whether we are supposed to take that bone away from the doctors, the hospitals, the pharmaceutical companies or the insurance companies, the net result is likely to be the same-- most of us will end up with worse medical care than we have available today. We will have opened our mouth and dropped a very big bone into the water.

Elements of Baucus Health Plan

In next several weeks, Senator Baucus (D-Montana) says he will unveil the much awaited Senate Finance Committee’s plan to control costs, protect consumers against “unfair” insurance industry practices, and put America back on a path towards fiscal sustainability (Max Baucus, “The Senate if Ready to Act on Health Care,” WSJ, September 16, 2009). According to the Kaiser News, here is what we know about the plan will contain;

• Provide tax credits to small businesses that offer insurance at work.

• Prohibit health insurance companies from denying coverage to individuals with pre-existing health problems.

• Allow health insurers to vary premiums based on three factors: tobacco use, age, and family composition.

• Allow states to form compacts with other states to permit for the interstate sale of health insurance.

• Establish state-based health insurance exchanges to help consumers compare insurance plans and costs based on four benefit coverage options ranging from minimum (bronze) to comprehensive (platinum).

• Allow for a catastrophic coverage plan for young adults.

• Require all U.S. citizens and legal residents to have health insurance or pay an annual fine of up to $3,800 per family.

• Require employers with more than 50 full-time employees tp pay an annual fee of $400 per employee, if they do not offer health insurance at work.

• Authorize funding for the Consumer Operated and OrientedPlan (CO-OP) program to encourage the creation of nonprofit, member-run health insurance companies in every state .

• Expand Medicaid coverage to individuals not currently eligible..

• Impose a 35% excise tax on insurance companies and administrators that offer insurance plans that cost more than $8,000 for singles and $21,000 for families

• Limit contributions to Flexible Savings Accounts to $2,000 per year..

• Impose annual fees on insurance companies ($6 billion), medical device manufacturers ($4 billion), pharmaceutical manufacturers ($2.3 billion), and clinical laboratories ($750 million).

There is plenty to chew on here. Much of the plan – individual and business mandates to compel coverage or be fined, annual “fees” (in less polite terms, known as “taxes”) imposed on health insurers, device makers, drug firms, and clinical laboratories to the tune of $ 13.05 billion, excise taxes on high end plans, insurance portability between states and health exchanges in every state.

We shall see if this “plan” passes political muster..

Obama's Health Reform Steep Hill Reclimbed

Back in April, 2009, when I was writing Obama, Doctors, and Health Reform, I predicted Obama’s plan would fail to bring about universal coverage.

Here is what I said,

“Debts incurred by the economic stimuli package and staggering federal deficits ($1.75 trillion for 2010 alone) may be too steep a hill to climb for Obama and those who crave universal coverage or single-payer in the near term. Whether the Obama administration will be an epiphany or a Sisyphus in health care is unknown.”

“In any event, under any circumstances, I don’t foresee how Obama in the next few years can create 3.5 million jobs, redesign the health system, save the auto industry, reinvent the energy sector, revitalize the banks, and reform education with one swipe of his magic wand.”

Well, I’m here to report I may have been right, at least if you believe the polls and Susan Page’s USA Today piece today, September 15, , which goes, in part, as follows,

Health care bill has steep hill to climb

By Susan Page, USA TODAYWASHINGTON — President Obama's long, hot summer is about to turn into a chilly fall.

A USA TODAY/Gallup Poll taken after the president's dramatic address to a joint session of Congress last week shows Americans almost evenly divided over passing a health care bill and inclined to think it would make some of the system's vexing problems worse, not better.

The findings underscore the steep climb ahead for the White House in trying to push a health care plan through the House and Senate during the next few weeks. Some major provisions, including how to pay for it and whether to include a government-run plan as an option, haven't been settled.

The president's speech apparently failed to galvanize public opinion in the way the White House had hoped. While it drew a national television audience estimated by Nielsen at more than 32 million people, there's little evidence in the survey that it changed minds.

The USA Today/Gallup Poll of 1003 adults indicated 50% of adults were for Obama’s health care bill and 47% against. In answer to the question, will it accomplish his goals, that is, expanding coverage to nearly all Americans without raising taxes on the middle class or lowering the quality of care to those who have coverage, 38% said “Yes,” and 60% said “No.”

Obama’s problem depends on whom you ask.

• If you ask T.R. Reid, author of Healing of America, Obama's problem is the failure of Americans to make the right moral choice, and we ought to be ashamed of ourselves (“Universal Health Care is a Moral Choice,” Newsweek, September 15, 2009).

• If you ask George Will. It’s because , after 233 days of his presidency and 122 public statements on health care with countless contradictory shifts in position, no one believes him anymore *”Why We Don’t Believe Obama,” Newsweek, September 13, 2009).

As for me, I believe the health care hill is too steep to climb in light of unemployment, economic, and debt obstacles at the top of the hill.

Partisanship by the Numbers - Estimates of the Size of the Washington Taxpayer March

None of us really understand what’s going on with all these numbers.

David Stockman, 1946 - , President Reagan’s Budget Director

How and why media estimates vary on the size the taxpayer march on Washington fascinates me. Why? Because the estimates reflect media bias.

For example, the New York Times, an acknowledged and proud Obama partisan, puts the number at “tens of thousands” and places the story on page 27 of its September 13 Sunday edition.

The Wall Street Journal, not exactly an Obama enthusiast, puts the number on at 1.5 to 2 million, and then scaled it back to “tens of thousands.” The WSJ added. “A spokesman for D.C. Fire and Emergency Medical Services estimated the crowd at "in excess of 75,000" people. Local and federal law enforcement authorities don't provide crowd estimates.” No surprise considering Democrats dominate D.C. politics.

The Associated Press cited the media-approved “tens of thousands” number.

CNN at first said the number was 1.5 million, then backed down and used the operative “tens of thousands” figure.

ABC said the crowd was 1 to 1.5 million.

British media outlets said 2 million came.

Wikipedia simply said " the number was larger than expected.“

What frustrates me is that, using satellite imagery, which can hone down to 2 square feet, can precisely estimate the exact number? I'm sure they have detailed pictures of the crowd.


Besides the numbers game, there’s another element to media behavior – describing the make-up of the crowd. It is most often said to made up of “conservative activitists” organized by “right wing organizations.” This is an opinion, not on fact, or detailed informtion who were actually there.

I was speaking to two dear friends of mine, both loyal Democrats. I asked one what the taxpayer march and what the hundreds of thousands of protestors at town hall meetings meant. His comment was, if you’ll pardon the expression, a “bunch of dumb shits.”

I put the same question to the other Democratic friend. I threw in the fact that Obama’s popularity on handling of health care reform, has dropped to 50% or less, depending on the poll. His comment was succinct, “nitwits."

These comments reflect a common opinion among partisans in the ruling party, namely that Obama is "smart," that opponents are “stupid,” as the President said of the policeman in Cambridge, Massachusetts. Ssomehow the Democrats seem to think they have some stranglehold on collective wisdom. This may be, but I doubt it. Democrat majorities,their altitude, has affected their attitude.
Don’t tinker, don’t think, don’t resist, just accept what we say. The thought that the tea parties, taxpayer marches, and town hall protests may be a spontaneous grassroots movement bubbling up from below never seems to cross their mind.

I predict this dismissive, condescending, arrogant, and elitist attitude will backfire, as the American people , who have minds of their own, become more alarmed about growing unemployment, the faltering economy, the skyrocketing debt, and concerns about inflation, taxation, and health care rationing for the elderly.

Response to Response to My Latest Blog on Top-Down Vs. Bottom-up Reform

Response to my blog of yesterday.

From Steve:

"I agree with the future shortage issue. The rationing point is a bit complex.
Anyway, how do we resolve Medicare does not pay doctors enough, and often hospitals for that matter, with Medicare going broke? Who do you think is going to successfully address Medicare costs and how? Bottom-Up sounds good, but I do not see how this works in practice. Private insurance has shown no ability/willingness to hold down costs."


"I enjoyed the interview with Dr. Cooper. Penn grad '85 here. Since graduation I have spent time in the military, moonlighted quite a bit and now work at several places in PA. My experience and what I have seen of physician behavior is a bit different than his. I see guys who own MRIs and PT services making self referrals. I see the consultants coming in to make sure we don't :leave money on the table." Yes, most docs remain good guys, but there is a lot more bad behavior, questionable behavior, than he has seen."



My response to his reponse

Steve:
Excellent point about Medicare not paying doctors and hospitals enough yet going broke. The main reason, I think, is that Medicare has no way to control the number of procedures being down in a fee-for-service environment.

Further, Medicare has neither the staff, nor the expertise, nor the political stomach to deny or review requests. To control costs, Medicare simply arbttrarily rachets down fees for doctors , and more and more doctors respond by declining to accept new Medicare patients. Or doctors do more tests and procedures – either to meet patient expectations and to meet their bottom-up lines.

Insurers, on their part, to keep their networks open and to offer needed services, have to negotiate higher fees than Medicare to keep respectable networks of providers.

And so the cycle goes.

Bottom-up means payments refers to services and innovations set at local and regional refers to services and payments in private markets , rather than by what the government dictates from the “top-down” by fiat.

Health costs, in my opinion, will be best controlled and quality maintained by health consumers spending their own money and truly understanding what things cost. This bottom-up approach will vary by region – in California by capitation, in Massachusetts iby budgets for episodes of care, in Pennsylvania by the Geisiinger approach with integrated care coordination with outcome guarantees for some high-ticket procedures. More globally,i.e. nationally, by HSAs with high deductible accounts or by cross-state shopping for the best deal, or by doing away with “community rating” or comprehensive “ standard” benefit plans. The governnment could seize the initiative by opening up FEHBP (Federal Health Benefit Plans) to all rather than just government employees and to national politicians. I would like to point out that “bottom-up” HSAs are working beautifully in Minnesota , not exactly a conservative state, which leads the nation in HSA membership, and where employers have experienced health care cost drops of 30% to 50% in those with HSAs. I would also note another “bottom-up” approach “work-site clinics,.“ These are being set up by half the corporations across the land, with more than employees in one localtion, with 20% to 40% cost savings. I have interviews in Obama, Doctors, and Health Reform with HSA and work site clinic leaders.

Cost control will not be easy, and much of it will be ironic and contradictory, as exemplified by those who say, “ I hate socialism but don’t mess with my Medicare.” Well, someone has to mess with Medicare. It is going to financial hell in a handbasket. To use it as a model for reform defies logic. To save itself, Medicare is going to have to reform, partly by learning lessons from the hated private sector, where costs are going up at a 30% lower rate than Medicare.

Bottom-Up, Incremental, Not Top-Down, Total Reform

Talk prepared for presentation at the Acton Public Library, Old Saybrook, CT, September 13, 2008, no given because of mix-up in scheduling

“There are, it may surprise you to know, more public libraries than MacDonalds. No other civilization, ever, has had anything comparable to our public library system. Free to the public. You walk through the portals of the public library, and you are walking through the portals of freedom.

David McCullough, Historian

I am here tonight to discuss my book Obama, Doctors, and Health Reform.

I wish to thank Jan Crozier, head librarian here at the Acton Library, for setting up this meeting and for reviewing my book for a library association. I am a library junkie. I am deeply grateful for the services you offer here – access to books, computers, magazines, newspapers, videos, DVDs, meeting rooms, and, of course, ubiquitous courteous librarians, always available at our beck and call.

A Running Start

Let me start by saying, as a physician, I support incremental health reform, expanding coverage for the uninsured, and lowering costs. I am, however, dubious about the practicality of top-down total reform that pays for most care, dictates the terms of payment, interferes with the details of the patient-doctor encounter, pays doctors and hospitals at Medicare rates, which are 20% less than the private sector, and tries to completely overhaul 1/6 of the economy. I realize I am making a moral choice, but I do not think we can afford it right now.

Respectful But Skeptical

My book is respectful but skeptical of Obamacare. It begins by saying President Obama has overreached and over-interpreted his mandate. He has bitten off more than he can digest. It predicts the President will get 1/3 of what he wants. It ends with a toast and prayer for President Obama.

ACDF

My message is ACDF. Government cannot, all at once, Absorb, Control, Dominate, and Finance the financial, automobile, energy, education, and health care industries.

That is not the American Way, as demonstrated by the town hall demonstrations of August and the taxpayer marches on Washington. In President Obama's eight months in office, if you position the U.S. on the capitalist-socialist scale as measured by the percentage of total government money spent compared to Gross Domestic Product, the U.S. has moved from 9th to 3rd among Western nations – from 36.4% to 49.6%, just behind Sweden at 57.0% and France at 54.6%. Grassroots America is concerned we are accumulating debt we can never repay.

That is why the town halls and marches on Washington are important. It is a case of a moral obligation to cover all against a fear of government domination with an encroachment on personal freedoms. It is uncertainty where this country is going, and 60% think we are going in the wrong direction.

To me reform is essential and overdue, but reform should be incremental. It should include, among other things, tort reform with caps on damages, prompt payment, and expert panels to decide what to pay; shopping across state lines for the best plan, similar to the federal health employee benefit plans now available to Congressman and Senators; and bare bones coverage with lower premiums for the young, the healthy, those making $50,000 or more now dissuaded from being insured because of unaffordable premiums; and insurance reforms, such as not excluding people for pre-existing illness or cancelling policies because of high costs.

My biggest fears are limited access to care because of the doctor shortage and expanded coverage, mediocre care, and uncontrollable costs.

Acknowledgement

I wish to acknowledge the presence of my wife, Loretta, a nurse who graduated from the Massachusetts General School of Nursing, and who deep insight into the problems of doctors and their patients.

I wish to also acknowledge the example set by son. From attending Spencer's poetry readings, I have learned two things: The importance in context and brevity. Spencer by the way, is a nationally known poet, who is candidate for the Episcopalian priesthood at Yale Divinity School.

Spencer’s influence brings to mind this poem,

Seek brevity.
With a touch of levity.
In short, be terse.
For nothing is worse.
Than verbal longevity.

I invite questions after I end my remarks, which will take about 10 -12 minutes.

Context

I am a retired pathologist. Since I retired, I have diversified into writing 10 books and composing a daily blog, medinnovationblog.blogspot. com., which now has 977 entries. The Physicians’ Foundation, a non-profit organization representing 650,000 doctors helped finance the book. I have been interviewed on Royal Dutch TV and CNN about the book.

I have lived in Old Saybrook for 14 years with Loretta and Paris, a French bulldog of impeccable heritage. I love my wife, my dog, this town, and my friends. I meet 2 or 3 times a week at the Rivermart convenience store on Main Street with a dozen or so townpeople to discuss domestic and foreign affairs.

I worked for 6 months to write this 304 page book, which has been out for a month and which can be obtained at amazon.com, barnesandnoble.com, and booksamillion.com, or by ordering through your local book store.

The book represents a doctor point of view and is biased. It is respectful but skeptical of President Obama’s plan for reform. As George Orwell, who has been on my mind lately because of his warnings about Big Brother watching you, every writer, whether he admits it or not, has a political bias which sooner or later shows through.

My bias? I am an unabashed cheerleader for doctors, and I think our input into the reform process has been too limited. I am not a big fan of big government which underpays doctors by 20% on average, threatens to cut their income each year through a SGR (sustainable growth rate formula), and just a month ago arbitrary cut cardiologists’ and radiologists’ fees by up to 50%. It takes 15 years to make a doctor, takes a big slice out or your working years, and often puts your $200,000 in debt before you start practice. And after all of that is said and done, you must deliver the reform, whatever it is.

Unifying Themes

My book has two great unifying themes - one, that the next big health care crisis will be lack of access to doctors as 78 million baby boomers become eligible for Medicare in 2011 and as we expand coverage to the uninsured ; and two, that exploding costs and mounting federal will result in rationing of care, particularly for Medicare recipients. That may be why only 31% of those over 65 approve of President Obama’s handling of health reform.

For what may involve as we evolve towards universal coverage, let’s look at the neighboring state of Massachuetts. Patrick Deval, governor of Massachusetts, who remarked of his state’s universal health plan, now 3 years old, “Universal coverage without universal access is meaningless.” The Massachusetts experiment indicates that without enough doctors to cover the 46 million uninsured Obama proposes to cover, we are likely to have limited access and rationing. Both will first take the form of long waiting times to see a doctor, now 60 days in Boston, twice that of other comparable u.S. cities, and will feature increased costs, already 30% above the national average in Massachusetts.

Let’s also examine the frequently heard statement that the system is “broken.” Mark Twain, who spent much of his working life time in Hartford. When asked about what he thought about Richard Wagner’s music, Twain quipped, “It’s not as bad as it sounds.” Likewise, I do not think President Obama’s characterization that the American health care system is as “broken” as he makes it sound.

In the last 5 months, I have had a heart attack, treated with stents at Yale, and cataract surgery, treated as the Constitution Eye Center in Waterford. In each case, the treatment was superb, and was, of course, covered by Medicare and supplement Blue Cross Coverage. I am fortunate in having insurance, like nearly 230 million insured Americans, and I am satisfied with the care I receive.

Obstacles to Reform

As I say in my book, I see four obstacles to Obamacare.

One, the American Culture, which distrusts Big Government which cherishes individualism, choice, and freedom and which demands choice and prompt access to the best American medicine has to offer. Incidently, the Whord Health Organization recently said the U.S., despite its high costs, ranked number one in the world, in patient “responsiveness.”

Two, Complexity. It is a tough if not impossible job to instantly superimpose a largely government-run system on our current employer-based system on an inefficient public system, in which Medicare and Medicaid costs are rising 30% faster than in private plans, no matter what you hear to the contrary.

Three, Costs. How are we going to pay for expanding coverage for 46 million uninsured without not adding “one dime” to the deficit, which has already doubled in the first 8 months of the Obama presidency. How are we going to cut $500 billion out of Medicare with 78 million babyboomers coming on board in 2011?

Four, Consequences. Dismantling or to use that appalling phrase, “overhauling” the system will have employment consequences. Collectively, health care, with 13 to 14 million employees, is the largest single employer of Americans and constitutes the only growing employment. sector Those health care sector include doctors’ offices, hospitals, home care, and yes, health plans and the agents who sell these plans and the health resource people who administer them.

President Obama Will Get Something

In spite of these obstacles, I predict President Obama will get something, probably about 1/3 of what he wants, including coverage of some of the uninsured, cancellation of current health plan polices of not covering those with pre-existing illnesses or cutting off of coverage for those with high costs, and other things, and things like shopping across state lines and lower premiums for the young. He will not get a public option or individual or employment mandates. For these accomplishments, he should get credit and can declare victory.
Thank you for listening. I now invite questions.