Beyond Private Health Plan Attacks

It is a socialist idea that making a profit is a vice: I consider the real vice is making a loss.

Winston Churchill, 1874-1965

Profit is not the primary goal, but rather an essential condition for the company's continued existence.

Peter Drucker, 1909-2005

In the health reform debate, private health plans have become everybody’s whipping boy. Private health plans, it is alleged, are bad for your health and don’t offer a good return on your premium money. Besides, most of these plans are for-profit and are beholden to stockholders rather than patients.

Therefore, to reform the system – expand coverage, cut costs, and achieve fairness - one must reform private health plans, by, among other proposals.

• Ending the practice of excluding people with pre-existing illnesses.

• No longer allowing cancelling of policies for those with high-cost disease.


• Eliminating Medicare Advantage Plans, which are said to offer no advantages over traditional Medicare.

• Imposing a 35% excise tax on insurance companies that offer plans that cost more than $8000 for singles and $21,000 for families.
• Limiting tax deductible contributions to health savings accounts and other flexible plans, new and popular products of private health plans.

• Regulate all insurers and compelling them to negotiate with the government to set common payment rules for all.


• Setting up health exchanges so people can shop for the lowest premiums.

• Offering a government public option with lower premiums to insure competition and introduce choice into the equation, and to make private health plans “honest.”

Presumably, all of these proposals will decrease the monopoly or oligopathy powers of health plans, regulate their function, and decrease their “excessive” profits. Also the proposals will offset profits to be gained from bringing into the market new customers through individual, business, and Medicaid mandates.

But, as with anything designed to control health care markets, there are unintended consequences.

• Many with the so-called “Cadillac health plans” are union members, one of the bedrocks of the Democratic party.

• Health premiums are likely to soar, as they have in Massachusetts, because of increased “medical costs,” the main index by which the market judges the stock of health insurers.


• Health insurers, not government, employ most of the talent – executives, medical directors, actuaries, and others – who have been more efficient at controlling costs than Medicare.

One other point, According to Karen Ignagni, who leads America’s Health Insurance Plans (AHIP), the industry has been at the reform table since 2006 with proposals for coverage for all Americans, improving care quality, and bringing down the rate of increase in costs. In addition, AHIP has made these proposals (“Health Insurers at the Table – Industry Proposals for Regulation and Reform,” NEJM, September 17, 2009)
• Guaranteed issue- insuring everyone regardless of health status with a guarantee that coverage not be taken away.

• Access to essential benefits.


• No medical underwriting – same premiums for others of same age with same policy.

• Greater transparency and improved choice.


• Limiting the growth of costs.

The AHIP argument is: build on the strengths of the present public-private system rather than dismantling it and replacing it with a government system.

In the end, it comes down to a good cop-bad cop approach, leaving it to the public to decide who is good and how is bad, and who to trust, those proposing a government overhaul or those advocating retention of the best elements of the status quo.

Does Obama Lie? No, He Does Not - He Elides

Elide (def) – To leave out; suppress, omit, or ignore.

According to Charles Krauthammer, a syndicated columnist and a physician, President Obama does not lie – he elides.

In a recent column, “Does Obama Lie?” Krauthammer had this to say about President Obama’s health care speech before a joint session of Congress on September 15.

1) “I will not sign a plan if it adds on dime to the deficit, or in the future.”“But,” Obama added, “there will be a provision that requires us to come forward with more spending cuts if the savings we promised don’t materialize.”

This is not a lie. This is bait and switch, also known at kicking the can down the road.

2) Then there was Obama’s comment that the current bills do not insure illegal immigrants.

But he neglected to say illegal immigrants are now allowed to take part in health insurance by default because ER staffs are not allowed to ask illegals if they are citizens. After Obama’s talk, Congress quickly changed the language of the bill to require proof of citizenship.

This is not a lie. This is a sin of omission rather than commission and Congress quickly corrected the omission.

3) Finally, President Obama said he would solve the cost problem by “cutting hundreds of billions of waste and fraud” out of Medicare.

Again this is not a lie, but says Krauthammer, an insult to our intelligence. His administration should already be cutting out fraud and abuse without waiting for a reform bill to pass.

No, concludes Krauthammer, “Obama doesn’t lie. He implies, he misdirects, he misleads – so fluidly and incessantly that he risks transmuting eloquence into mere slickness.”

“Obama merely elides, and glides from one dubious assertion to another.”

The Obama Tap Dance

President Obama is from Chicago. Perhaps that’s why his frenzied attempts to sell his health reform plan reminds me of Richard Gere’s tap dancing performance in the movie Chicago.

If you’ll recall, Gere played the role of Billie Bly, a slick high-priced Chicago Lawyer who was defending his client by talking fast while tap dancing around the issues.

This weekend President Obama is appearing on 5 Sunday talk shows – a modern day Presidential record. Why the tap dancing metaphor? The heart of the problem is that he is trying to defend a plan that does not yet exist. That will require some fast talking and fast dancing.

I’m also reminded of the lyrics of the song, “Hey, Big Spender,”

Hey, Big Spender,
The minute you walked into the joint
I could see you were a man of distinction
A real big spender
So good looking, so refined

These lyrics might be changed to read,

Hey, Big Talker,
The minute you walked onto the set,
The nation could see you were a man of distinction
A real big talker
So smooth talking, so refined.

President Obama’s great strength is the power of his rhetoric. He is a magnificent speaker - a great and persuasive talker. But that’s not what’s being tested here. It’s the power and logic of his ideas and policies.

It may be that presidential leadership will prevail. It may also be he is over exposing himself and protesting too much.

As you listen to the President, keep in mind that a June 2009 ABC News/USA Today/Kaiser Foundation survey indicated 89% of Americans were satisfied with their health care and that, according to Obama himself, 281 million of 311 million, or 90%, have coverage. Let’s see how he tap dances around those numbers.

Balancing Health Reform and Medical Innovation

Obsession with the politics of health reform has diverted attention from a huge issue: the decline of U.S. medical innovation.

In March 2009, A coalition of leaders in research, medicine, patient advocacy, academia, education, labor and business leaders anticipated the harmful effects of this diversion. They formed the Council for American Medical Innovation.

"American leadership in medical innovation must be part of our economic recovery plan," said Former Representative Dick Gephardt, a founding member of the Council ,"It has a direct impact on job growth, U.S. competitiveness and the health of all Americans. The future belongs to those who can create and sustain innovation economies, and we must work now to put policies in place that will nurture medical innovation, protect America's ability to maintain its global leadership position and help us find cures."

The other founding members included Dr. Francis Collins, former director of the National Human Genome Research Institute at the NIH; Dr. Edward Benz, CEO of the Dana-Farber Cancer Institute; Billy Tauzin, President and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA); and Marc Boutin of the National Health Council,. America's future prosperity, they said, will depend on maintaining a lead role in scientific, technological and medical innovation.

Personal Awareness

I am personally aware of this diversion because my two most recent books Innovation-Driven Health Care (Jones and Bartlett, 2007) and Obama, Doctors, and Health Reform (IUniverse, 2009) and my blog medinnovationblog.blogspot.com address the issue. The slogan for my blog is “Notes of a Medical Innovation Watcher,” but lately all I have talked about is reform.

Obamacare has distracted from innovation by its laser focus on standardization and consistency as a means of system-wide cost control and expanding care to include the uninsured. President Obama rarely mentions innovation as a solution to our health care problems. He focuses instead on savings through prevention, comparative-effectiveness research, disease management, health information technologies, and reduced payments to hospitals and doctors and private Medicare Advantage Plans.

Shayvitz Blog

In a September 18 The Health Care Blog, Dr. Daniel Shayvitz, health care consultant and co-founder of the Pasteur Project, a program to educate Harvard medical students for the future, has captured the essence of the reform vs. innovation problem,

“Our healthcare system is now facing a problem that has plagued business leaders for years: how do you balance consistency and innovation?

The drive for consistency in health care is based upon the fundamental observation that physicians across the country treat similar medical conditions in dramatically different fashions. Sometimes, these different approaches are costly, such as using a more expensive treatment when a less expensive approach might be as effective. In other cases, these practice variations are dangerous – failing to provide patients with treatment the evidence suggests is best.”

“Standardizing the delivery of care -- identifying “best practices,” and then insisting physicians follow these guidelines – could, in theory, save money while improving quality, and is the basis of Obama’s healthcare proposal.”

Obama and his advisors may be right about “consistency and standardization” as a reliable means of achieving “savings and efficiency,” and maybe a more even quality, but consistency and standardization come at a price.

The Price of Consistency and Standardization

From the physician’s point of view, this price includes:

1) being reduced to mere technicians or robots carrying out government policies or blindly following protocols or algorithms of others not present at the patient encounter;

2) losing one’s autonomy to do what one thinks is best based on one’s training and clinical judgment at the point of care;

3) unwanted and usually unneeded interference by corporate or government business interests primarily occupied with saving money based on statistical averages rather than personal nature of the patient’s problems;

4) limiting clinical choices and freedoms of action on the part of both patient and doctor;

5) ignoring the different cultures, practice styles, and different socioeconomic demands and needs in different sections of the country.

A Sharper Point

To put a sharper point on what I’m saying, I do not believe a centralized government can possibly anticipate or dictate what needs to be done or on what is desirable at the point of care using claims or outcome data based on “averages” or by relying on management consistency standards. Medical care is an individual, personal, and emotional thing and does not lend itself to health 2.0 interventions

Shaywitz sums up the problem well,

“At some level, standardized algorithms might be good for medicine, reducing the blatant mismanagement of patients by physicians who have not stayed current, and discouraging doctors from reflexively selecting expensive procedures or medications that have been shown to offer little benefit. In simplifying the physician’s decision tree, such guidelines may also enable doctors to spend more time listening to patients, and less time running through a confusing litany of therapeutic alternatives. “

“At the same time, if medicine lurches in the direction of guidelines and algorithms, two important opportunities may be lost:

“- First, we may lose the chance to individualize care; as Steven J. Gould famously wrote, “The median isn’t the message,” and a treatment ineffective for most patients may be enormously useful for some. A key driver of personalized medicine is the urgent clinical need to identify just which patients are most likely to benefit from a particular drug or intervention. “

“Second, we may lose the opportunity to tinker and innovate – so many powerful discoveries originated with a clinician’s chance observation or slight deviation from standard treatment. If the role of physicians is dumbed down to the point where they are simply expected to mechanically execute on established protocols, the ability to intelligently improvise may be curtailed, thwarting medical progress.”

To put it another way, passive or rigid reliance on evidence-based medicine may come at the cost of producing doctors who rely on technologically-generated statistical averages, rather than on the human beings before them. The practice of medicine calls for creativity and innovation and discernment. not blind reliance on computer-generated data.

Baucus Plan - Malice in Wonderland

Today Max Baucus (D-Montana), Montana senator, and leader of the Senate Finance Committee’s Gang of Six, three Democrat and three Republican senators ,who have spent months laboring to craft a bipartisan health reform bill, released the final version of his bill.

The bill’s contents drew immediate negative responses – from Democratic Senators Jay Rockefeller and Ron Wyden and Dr. Howard Dean, head of the Democratic Party. Nary a Republicans signed on . There was a collective sense that this thing was DOA and this pig wasn’t going to fly, especially among fervid liberals and fuming conservatives. Doom and gloom prevailed on both sides of the aisle.

This response caused me to wonder and to recall two verses from Alice in Wonderland.

“When I use a word,' Humpty Dumpty said in rather a scornful tone, 'it means just what I choose it to mean - neither more nor less.' 'The question is,' said Alice, 'whether you can make words mean so many different things.' 'The question is,' said Humpty Dumpty, 'which is to be master - that's all.”

"The time has come," the Walrus said, "To talk of many things; Of shoes - and ships - and sealing-wax - Of cabbages - and kings - And why the sea is boiling hot - And whether pigs have wings."

The question here is, who is going to be the master - Obama, Democratic liberals, or the Republican opposition?

President Obama has staked his domestic reputation on the success of health reform. He wants to be master of health reform. Many say the Baucus plan achieves Obama’s overall objectives - extending coverage, affordable care, and a major overhaul to achieve “fairness” under government rules and regulations. Obama wants the plan to be “bipartisan,” which I interpret to mean he wants to get one or more Republicans to sign on. Olympia Snowe of Maine is everybody’s token candidate for Republican sacrificial lamb for the Democratic cause.

Republicans, meanwhile, are hoping Obama has met his political Waterloo, has aroused the anti-socialist grassroots, will end his first year in office empty-handed on the health care issue, and will be set-up for defeat in the November 2010 off-year elections.

What Baucus has done, it seems to me, is to throw a lot of proposals on the wall to see what sticks. Baucus is betting the collection of deals Obama has engineered with health plans, hospitals, drug makers, medical device manufacturers, the AMA, unions, business and the “Harry and Louise’ crowd have enough concessions and new protections to keep the “special interests” at bay. At the heart of these deals is the bet that 30 million new customers from the uninsured ranks will bring enough new business to offset news fees of $93 billion to be inposed on these industries.

As the Walrus said, “The time has come to talk of many things, of tax credits for small businesses; prohibiting denial of coverage for pre-existing illnesses; allowing premiums to vary with tobacco use, age, gender; establishing of competition via health exchanges; catastrophic coverage for young adults; individual mandates; business mandates for those with 50 or more employees; limits on HSAs and other flexible savings accounts; and annual fees on profit-making health industries to help fund the whole kit and caboodle.

It’s enough to boggle the mind , goggle the media, toggle the political switches, and boondoggle the health system.

Mt. President, I Have Bad News

The bad news comes in two parts:

• The young, aged 16 to 24, who make up about 40% of the uninsured, and who voted overwhelming for you, don’t particularly like the individual mandate in your plan. The law may force them to pay a 2.5% levy on their adjusted income ($1000 for an income of $50,000). This is important because 17.6 million of the 30 million uninsured (your new figure for the uninsured) make $50,000 or more. In Massachusetts, which has a universal plan, and where less than 3% are now uninsured, many individuals have chosen not to participate, and 40% who have bought individual plans have dropped out. Furthermore, costs in the Bay State, already the highest in the land, are rising at 5% to 10%. causing officials to consider paying only for episodes of care rather than paying fee-for-service. If you consider waiting long times to see a doctor as rationing, Massachusetts leads the country in waiting times. The bad news is that not only has the individual mandate and covering the uninsured failed to contain costs, but these young folk are notorious for not voting in off-year elections, like in November 2010, the first broad electoral test of your policies.

• The other piece is bad news is that the old, 65 and older, don’t trust you. This is not new news. Seniors were the only age group to vote for John McCain, by 53% to 45%, the mirror image of your 53% to 47% total electoral margin. Today the situation is even worse among the elderly. Only 35% approve of your handling of health reform, and seniors made up the bulk of those protesting your policies at town hall meetings, tea parties, and the march on Washington. They are leery of the $500 billion you propose to cut out of Medicare over the next ten years. They have the sneaking suspicion Medicare cuts will come out of their care. They know firsthand Medicare has prolonged and bettered their life with striking reductions in deaths from heart attacks, strokes, and cancer. The chances of living longer are greater in America among middle-aged adults and older are greater in America than in other countries. As Fred Barnes, a conservative commentator recently observed. “If you reach 80 in American, most people are dependent on health care. Your chances of reaching 90 are at least as good as and probably better than anywhere else in the world. The older you get in America, the better your chances of getting to 100.”

There’s another problem too. Seniors are concerned about the present and the future. They fear today’s economic situation will spur inflation, eat into their savings, and burden their offspring with unpayable debts. They have benefited from American capitalism, which for them has been a blessing, and fear Socialism, which purports to spread the wealth equally among all, and in the process, taking away from the old and giving to the young. This may be the right thing to do if you subscribe to the collectivist philosophy, but so far the elderly have not bought in.
Finally there is anxiety your reform will ration their care. The old consume a disproportion amount of health care resources. You and many Democrats still claim that our new health-care system won’t feature the kind of rationing in countries like Canada and the United Kingdom. Yet when given the opportunity to add language to prevent the newly established Center for Comparative Effectiveness Research from rationing health-care services on the basis of cost (as a similar commission in the United Kingdom already does), Democrats rejected the amendments during committee markup.

So seniors are wary. They know the National Health Service acts as Britain's national triage service, deciding who is most likely to respond best to treatment and allocating health care accordingly. The NHS sets priorities for those who can benefit most from medical treatment and who is most likely to respond. This is called comparative effectiveness.

Because of rationing among the elderly and cut-offs for expensive care, a crisis is brewing in the UK. British seniors are restless. The Patients Association, an independent charity, is concerned about end-of-life care. The charity reports “a consistent pattern of shocking standards of care” and “appalling treatment.” In the U.K. in 2007 and 2008, 16.5% of deaths occur as a consequence of “terminal sedation.”
You and your followers dismiss concern about reporting of these events as GOP “scare tactics,” and perhaps it is, but, irhgtly or wrongly, the elderly fear you will take “my Medicare” away and to them talk of “death squads,” which you and I know to be inaccurate, is real.

A scarcity assumption similar to the British mentality underlies your proposed health-care overhaul. You have said, "We spend one-and-a-half times more per person on health care than any other country, but we aren't any healthier for it," That may be true for the population as a whole, but not for our seniors. You claimed in your address to Congress last Wednesday that this situation threatened America's economic competitiveness. This rhetoric does not satisfy the elderly. Until now, they have had the best American medicine has had to offer, and they would like to keep it that way.

The last piece of bad news for you, of course, is that In America, seniors vote in greater numbers than any other population sector in off-year elections. You are going to have to do something to satisfy their apprehension. I am confident you recognize the age gap crisis, which will grow worse when 78 million baby boomers begin to enter the Medicare market in 2011. I am not worried, as your chief-of-staff, Rahm Emanuel, known affectionately at Rahmbo, says, “Never let a crisis go to waste.” Waste not, Mr. President.