Obamacare fiasco discussion

If you thought Obamacare was bad...

As usual, China is way worse.

http://m.npr.org/programs/all/2/242344329

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Part of another conversation I had about the recent Obamacare troubles... would love to hear your thoughts if you have time.

http://talkingpointsmemo.com/dc/obamacare-fix-what-is-it-good-for

Yeah, I have been really saddened and disappointed by how the Obama admin. has rolled out heathcare.gov. When you know the GOP is looking for any little excuse to scuttle the program, you'd think they would be extra careful every step of the way! It seriously looks like it was put together in a week by interns. I know health care is complex as hell, with different laws in different states, so then maybe they should have fought harder for single payer from the start! And as you suggested, if this is a wacky attempt to convince America that single payer is the way to go, it probably won't worry either since trust in gov't is so low. Well, even if Obamacare fails and is repealed by President Christie (LOL), I think it got the health-industrial complex to pay attention and realize that Americans (and even some of our leaders) are tired of being gouged by a broken system that under-delivers on health outcomes for all the money it takes in. Companies/doctors are being more cautious and not just assuming they can raise prices, over-prescribe treatments, cherry pick "profitable" patients, and bilk Medicare and get away with it every time. So I guess that is some progress?

I agree with you about the misrepresentation. That is the problem when passing the bill becomes the goal rather than actually helping citizens. But unfortunately Obama has not been a very transparent president, despite his claims. I think that is a reflection of his and his admin's poor communication skills. While Obama is an inspirational campaign speaker on the abstract level, he is fairly poor in terms of leadership and on the practical policy level, as we saw during the Romney debates. He gets too academic and technical, and doesn't empathize with others. Most of us barely understand our own health care, much less gov't policy, and it can be an emotional issue. Obama relied too much on logic/macroeconomics, and didn't do enough to put people's fears and concerns to rest (especially in the face of the GOP lie machine). Unlike Clinton, Obama never "felt our pain." So there wasn't much trust from the get-go, which was reflected in Obamacare's persistent low approval numbers among the public (despite high public support for the individual parts of the law, like covering kids until 25, no rejections for pre-existing conditions, etc.). So if he communicated better from the start, I think the public could be a lot more forgiving of the glitches now. Customers mostly forgave the iPhone 4 for it's "death grip" dropped calls problem, because they loved the company and were addicted to the product. ;)

Speaking of the implementation, it is seriously his Bay of Pigs. Like Kennedy, I bet Obama was too trusting of his people that they would handle it properly, and wasn't skeptical enough. He did go on the national PR tour to drum up support and interest, but he didn't really manage expectations and prepare the country for what could go wrong. In 2013, there is just no excuse for a website that works so poorly. Testing and pilot sessions with real customers were severely lacking. I haven't had time to follow the media discussion, so I am not sure if the pundits and Sebelius already covered these points. But they had ample time to prepare for the website launch, so I don't know why their product is so crappy now.

In general, I think a website is supposed to launch small at first to mitigate risk (like 5% of expected peak traffic) and gradually ramp up as long as things are working. I am not sure, but did healthcare.gov suddenly turn on for the whole country all at once? That is a bad strategy. Maybe try it out with ISPs from a couple small states first, check the performance, collect feedback, and make necessary fixes before expanding the reach. It would have let them catch bugs (or maybe delay the 100% launch) before it became a national embarrassment with thousands of frustrated users. I heard an alternate rollout plan was first to make sure the site was stable and let users browse plans only (to make sure the info they got was accurate too!), then when registration/enrollment was ready and tested, they would add that functionality later. But Obama's people worried that users would browse plans, not like any, and never come back (if you are so worried about that, then maybe your product is not so appealing and you should fix that first!), so they wanted to require registration prior to browsing. There was also the political pressure to get as many people enrolled as possible during the initial launch period, so they required visitors to register up front. But that is bad for several reasons: web users often mess up the registration process, and if you mandate it at launch, you introduce a bottleneck and they will flood your customer support line all at once. Also registration is annoying, so that will cause many users to just drop off too (if they can even get the page to load). Plus let's remember that many uninsured Americans or those who buy individual plans could be lower income and less tech savvy, even if they have a helper to assist.

On the issue of the "deception" over keeping your old plan and old doctor, I have mixed feelings about it. On one hand, if Obama knows that a major argument against Obamacare is a supposed loss of freedom, then "forcing" people to change plans/doctors (even to ostensibly better ones) is risky and plays into the GOP hand. But if they need to eliminate ineligible plans to make the whole system work, then I understand, but that is a major program risk that should have been addressed years ago. The doctor-patient relationship is sensitive and almost sacred, so if Obamacare really does prevent some people from keeping their old doctors (even if they are crappy or charge too much), then that is unacceptable to me. I think you can convince people to let the gov't upgrade their coverage (but again, Obama's people did a terrible communication job), but change is hard for some folks and you can't just drop their coverage suddenly and tell them to choose a new plan on a buggy website. All this mess plays into the conservative narrative that gov't is totally meddling in our lives and inept in providing services (which is unfortunately true at times). The 'fix' from the first link above is too little, too late. Maybe a better plan would be what companies do for new hires. They default you into a basic health plan, and you have the option to pick a different one within 60 days. At least then everyone is sure they are covered from the start, and there is no rush/panic/anger. Maybe that is impossible nationally, since health plans and laws are different in each state (another issue we probably need to address)?

http://www.washingtonpost.com/blogs/plum-line/wp/2013/11/13/what-the-obamacare-enrollment-numbers-really-tell-us/?wprss=rss_homepage&clsrd

Health care reforms

http://www.interfluidity.com/v2/4013.html

Thought you might appreciate this. The author is a pretty intense econ blogger (much of it right at or beyond my ability to understand the arguments), but here he just unloads in response to the recent Time article about health care costs.

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I haven't read the Brill article yet, but based on the blog post - I get his argument for collective action. But as with most market failures, the public is just so ill-equipped because of asymmetrical info and influence with policymakers.

We've chatted about this issue during the Obamacare debate and other times, but as you said, most of the "proposals" are marginal improvements - and even those are unlikely to pass because of entrenched interests. You probably have thought about more comprehensive fixes, and I'd love to hear about them. From what little I know about healthcare economics, here is my initial list and let me know what you think:

1) Shift from fee-for-service to fee-for-outcome - and along these lines, empower consumers to refuse unnecessary or excessive care. Just as we are constitutionally guaranteed to legal defense, maybe we should be guaranteed a health advocate who represents our personal interests vs. the healthcare providers (who also care about us, but also care about other things)

2) Related to (1) is tort reform because medical malpractice much more lucrative and widespread in the US, compelling some providers to over-prescribe. But along those lines, there should be lawsuits and penalties for over-prescribing too.

3) This one is the most controversial and hardest to achieve (if it's even a good idea), but change the nature of demand - it's amazing that people can live longer and enjoy life more. But we are part of a society with some zero-sum aspects. Keeping an elderly person on life support for a year affects other needy patients. We are constitutionally entitled to pursue our happiness (which usually involves avoiding death), so no laws can apply here. But maybe people should reconsider their life expectations and their resource allocation impacts on society. It's OK to get sick and die when you're old. It's OK to "tough out" non-critical issues. A "good life" does not mean being top performing and discomfort-free all the time. Unless you have a high-deductible crappy plan, over-using resources doesn't hurt the patient, but at scale it does to everyone else. In other words, tragedy of the commons. 

4) market-based pricing & more buyer power - there has to be a supplier out there who is willing to sell us gauze for less than $77/box. And for medicare, the VA, or even Blue Cross with thousands of members should be able to negotiate better rates (the whole point of HMOs according to Kaiser and Nixon). But providers and vendors have local monopolies so there is little to no market. Also switching costs can be high, especially for employers choosing insurance. The health-care exchanges won't help much (if at all) because the pools are small and some of the most high-cost customers.

5) Harmonize state laws and health benefits admin - a lot of waste, bureaucracy, and delays regarding the different laws relating to privacy, insurance, benefits payout, taxes, etc. As part of this, there has to be more layoffs and pay cuts in the industry. It's ridiculous that health is 15-20% of the economy (just in the US, and maybe sub-Saharan Africa). It doesn't really make sense today to have >5 major airlines in the US, so why would we have dozens of insurers?

6) Incentivize hospitals and providers to have excess capacity, not fill empty beds with less sick people. Pay them to NOT treat people (when appropriate), because treatment also increases the risk of medical error and infections. This may free up resources to help underserved areas. Like with public schools, shut down or take over poorly performing hospitals and reward the good ones (measured by health outcomes per $ spent, not revenues).

7) Shift medicare spend from end-of-life emergency treatment to daily maintenance and preventative care (do this for younger patients too). Seniors sometime go to the doc mostly because they're lonely, yet we're cutting in-home services. If they feel socially connected, there is some data to suggest that their health improves too. And there will be someone there to take care of the small things before they get big, and take pressure off the elder's family.

8) Change the research grant structure - those who financially benefit from the research should pay back the gov't (at a low interest rate), even nonprofits. Along those lines, shift the emphasis from public-subsidized medical high-tech research to efficiency & outcomes research. Yes, future innovations are sexy and amazing, but probably not cost effective and affordable to many. It's better to focus on using our current proven tech in better and smarter ways. Even improving IT and data collection/analysis would be huge, and much cheaper than the next specialty drug that extends a sick person's painful life for 2 more months. Many docs and hospital admins are notoriously horrible with data. Again, this will cost jobs, but will save lives for less $.   

Case study in health care abuse: McAllen vs. El Paso

“Come on,” the general surgeon finally said. “We all know these arguments [why Medicare costs are highest per capita in McAllen than anywhere else US] are bullshit. There is overutilization here, pure and simple.” Doctors, he said, were racking up charges with extra tests, services, and procedures. The surgeon came to McAllen in the mid-nineties, and since then, he said, “the way to practice medicine has changed completely. Before, it was about how to do a good job. Now it is about ‘How much will you benefit?’ ”

Providing health care is like building a house. The task requires experts, expensive equipment and materials, and a huge amount of coördination. Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet, and a carpenter for every cabinet. Would you be surprised if you got a house with a thousand outlets, faucets, and cabinets, at three times the cost you expected, and the whole thing fell apart a couple of years later? Getting the country’s best electrician on the job (he trained at Harvard, somebody tells you) isn’t going to solve this problem. Nor will changing the person who writes him the check.
- Atul Gawande

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande?currentPage=all

With the health care debate in DC in full swing, controlling costs and usage are obviously key factors to any reform plan. We previously discussed comparative effectiveness analysis, and it will probably be a key ingredient to any American universal coverage program. This New Yorker piece clearly demonstrates why comp. eff. is long overdue to counter "zealously entrepreneurial" physicians and clinics. We know more care is more costly, but more care is not necessarily better for your health either. "The most expensive tool in medicine is a doctor's pen." I'd laugh if it wasn't so true. The author suggests that the abuses taking place by medical professionals in McAllen is analogous to unscrupulous mortgage brokers in the sub-prime mess. They just want to get as many patients through the door as possible and collect more commission (in some cases, illegal kickbacks). And like the financial industry, incentive systems are set up in medicine to reward these types of excesses, so it's a miracle when some communities like Grand Junction, CO or the Mayo Clinic like can actually buck the trend and offer better health outcomes for less money ("accountable care org's"). The story was written by a doctor too, so he is not just MD-bashing.

Some highlights from the article:

-McAllen... is one of the most expensive health-care markets in the country. Only Miami—which has much higher labor and living costs—spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.

-Yet public-health statistics show that cardiovascular-disease rates in [McAllen] are actually lower than average, probably because its smoking rates are quite low. Rates of asthma, H.I.V., infant mortality, cancer, and injury are lower, too. El Paso County, eight hundred miles up the border, has essentially the same demographics. Both counties have a population of roughly seven hundred thousand, similar public-health statistics, and similar percentages of non-English speakers, illegal immigrants, and the unemployed. Yet in 2006 Medicare expenditures (our best approximation of over-all spending patterns) in El Paso were $7,504 per enrollee—half as much as in McAllen. An unhealthy population couldn’t possibly be the reason that McAllen’s health-care costs are so high. (Or the reason that America’s are. We may be more obese than any other industrialized nation, but we have among the lowest rates of smoking and alcoholism, and we are in the middle of the range for cardiovascular disease and diabetes.)

-And yet there’s no evidence that the treatments and technologies available at McAllen are better than those found elsewhere in the country. The annual reports that hospitals file with Medicare show that those in McAllen and El Paso offer comparable technologies—neonatal intensive-care units, advanced cardiac services, PET scans, and so on. Public statistics show no difference in the supply of doctors. Hidalgo County actually has fewer specialists than the national average. Nor does the care given in McAllen stand out for its quality. Medicare ranks hospitals on twenty-five metrics of care. On all but two of these, McAllen’s five largest hospitals performed worse, on average, than El Paso’s. McAllen costs Medicare seven thousand dollars more per person each year than does the average city in America. But not, so far as one can tell, because it’s delivering better health care.

-“[The reason for McAllen's high costs is] malpractice,” a family physician who had practiced here for thirty-three years said. “McAllen is legal hell,” the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere.
That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. Didn’t lawsuits go down? “Practically to zero,” the cardiologist admitted.
-In a 2003 study, another Dartmouth team, led by the internist Elliott Fisher, examined the treatment received by a million elderly Americans diagnosed with colon or rectal cancer, a hip fracture, or a heart attack. They found that patients in higher-spending regions received sixty per cent more care than elsewhere. They got more frequent tests and procedures, more visits with specialists, and more frequent admission to hospitals. Yet they did no better than other patients, whether this was measured in terms of survival, their ability to function, or satisfaction with the care they received. If anything, they seemed to do worse. That’s because nothing in medicine is without risks. Complications can arise from hospital stays, medications, procedures, and tests, and when these things are of marginal value the harm can be greater than the benefits. In recent years, we doctors have markedly increased the number of operations we do, for instance. In 2006, doctors performed at least sixty million surgical procedures, one for every five Americans. No other country does anything like as many operations on its citizens. Are we better off for it? No one knows for sure, but it seems highly unlikely. After all, some hundred thousand people die each year from complications of surgery—far more than die in car crashes.

-To make matters worse, Fisher found that patients in high-cost areas were actually less likely to receive low-cost preventive services, such as flu and pneumonia vaccines, faced longer waits at doctor and emergency-room visits, and were less likely to have a primary-care physician. They got more of the stuff that cost more, but not more of what they needed.

-In an odd way, this news is reassuring. Universal coverage won’t be feasible unless we can control costs. Policymakers have worried that doing so would require rationing, which the public would never go along with. So the idea that there’s plenty of fat in the system is proving deeply attractive. “Nearly thirty per cent of Medicare’s costs could be saved without negatively affecting health outcomes if spending in high- and medium-cost areas could be reduced to the level in low-cost areas,” Peter Orszag, the President’s budget director, has stated.

-She wasn’t the only person to mention Renaissance [Hospital]. It is the newest hospital in the area. It is physician-owned. And it has a reputation (which it disclaims) for aggressively recruiting high-volume physicians to become investors and send patients there. Physicians who do so receive not only their fee for whatever service they provide but also a percentage of the hospital’s profits from the tests, surgery, or other care patients are given. (In 2007, its profits totalled thirty-four million dollars.) Romero and others argued that this gives physicians an unholy temptation to overorder.

-“In El Paso, if you took a random doctor and looked at his tax returns eighty-five per cent of his income would come from the usual practice of medicine,” he said. But in McAllen, the administrator thought, that percentage would be a lot less. He knew of doctors who owned strip malls, orange groves, apartment complexes—or imaging centers, surgery centers, or another part of the hospital they directed patients to. They had “entrepreneurial spirit,” he said. They were innovative and aggressive in finding ways to increase revenues from patient care. “There’s no lack of work ethic,” he said. But he had often seen financial considerations drive the decisions doctors made for patients—the tests they ordered, the doctors and hospitals they recommended—and it bothered him. Several doctors who were unhappy about the direction medicine had taken in McAllen told me the same thing. “It’s a machine, my friend,” one surgeon explained.

-Beyond the basics, however, many physicians are remarkably oblivious to the financial implications of their decisions. They see their patients. They make their recommendations. They send out the bills. And, as long as the numbers come out all right at the end of each month, they put the money out of their minds. Others think of the money as a means of improving what they do. They think about how to use the insurance money to maybe install electronic health records with colleagues, or provide easier phone and e-mail access, or offer expanded hours. Then there are the physicians who see their practice primarily as a revenue stream. They instruct their secretary to have patients who call with follow-up questions schedule an appointment, because insurers don’t pay for phone calls, only office visits. They consider providing Botox injections for cash. They take a Doppler ultrasound course, buy a machine, and start doing their patients’ scans themselves, so that the insurance payments go to them rather than to the hospital. They figure out ways to increase their high-margin work and decrease their low-margin work.

-In a few cases, the hospital executive told me, he’d seen the behavior cross over into what seemed like outright fraud. “I’ve had doctors here come up to me and say, ‘You want me to admit patients to your hospital, you’re going to have to pay me.’ ”
“How much?” I asked.
“The amounts—all of them were over a hundred thousand dollars per year,” he said. The doctors were specific. The most he was asked for was five hundred thousand dollars per year. He didn’t pay any of them, he said: “I mean, I gotta sleep at night.” And he emphasized that these were just a handful of doctors. But he had never been asked for a kickback before coming to McAllen.

-Powell suspects that anchor tenants play a similarly powerful community role in other areas of economics, too, and health care may be no exception. I spoke to a marketing rep for a McAllen home-health agency who told me of a process uncannily similar to what Powell found in biotech. Her job is to persuade doctors to use her agency rather than others. The competition is fierce. I opened the phone book and found seventeen pages of listings for home-health agencies—two hundred and sixty in all. A patient typically brings in between twelve hundred and fifteen hundred dollars, and double that amount for specialized care. She described how, a decade or so ago, a few early agencies began rewarding doctors who ordered home visits with more than trinkets: they provided tickets to professional sporting events, jewelry, and other gifts. That set the tone. Other agencies jumped in. Some began paying doctors a supplemental salary, as “medical directors,” for steering business in their direction. Doctors came to expect a share of the revenue stream.

-Something even more worrisome is going on as well. In the war over the culture of medicine—the war over whether our country’s anchor model will be Mayo or McAllen—the Mayo model is losing. In the sharpest economic downturn that our health system has faced in half a century, many people in medicine don’t see why they should do the hard work of organizing themselves in ways that reduce waste and improve quality if it means sacrificing revenue.

In El Paso, the for-profit health-care executive told me, a few leading physicians recently followed McAllen’s lead and opened their own centers for surgery and imaging. When I was in Tulsa a few months ago, a fellow-surgeon explained how he had made up for lost revenue by shifting his operations for well-insured patients to a specialty hospital that he partially owned while keeping his poor and uninsured patients at a nonprofit hospital in town. Even in Grand Junction, Michael Pramenko told me, “some of the doctors are beginning to complain about ‘leaving money on the table.’ ”

Are US doctors paid too much?

http://www.startribune.com/politics/national/congress/22708684.html?location_refer=Opinion

Recently there has been some squabbling over budget cuts to Medicare/Medicaid and state-sponsored health care that may cause doctors to decline services to those patients, because they won't be "properly compensated" by the government. So the doctors are revolting, and Bush has threatened to veto any cuts proposed by Congress. Right now they're debating a 10% cut, actually as part of a mechanism that was previously approved in the event that costs exceed certain markers, which is happening now in a big way. The pay cut survived the House, but will probably stall in the Senate and will definitely be killed at the Oval Office.

I know doctors are businessmen/women too, and they have a bottom line to maintain. They are skilled professionals who went through rigorous training ($30,000/year tuition + living expenses), and deserve compensation for their critical contributions to society. But I don't know how they can morally refuse to treat needy people dependent on government health care, just because they'll be reimbursed $2,700 for an arthroscopic knee surgery instead of the "going rate" of $3,000. Are they pinching pennies that much, even with a $200,000 salary? The cars they drive surely don't suggest it.

And what other industry but health care can the providers dictate costs and the consumers just have to accept it? Equally greedy HMOs and others might try to negotiate a "fairer" price, but in the end the doctors bill Medicare as they like, and our tax dollars go up in smoke (in many cases, overcharging Uncle Sam). In other markets like automobiles and air travel, competitors are cutting prices left and right in order to secure customers. But can we "shop around" for doctors who can provide the best service at the most reasonable cost? We just go where our insurance tells us to go, and actually most of the process is a black box to us. I guess most of us just feel lucky that we weren't refused care!

There was an interesting NYT article last year (below) discussing whether US doctors are paid too much, and whether they have more impact on the insanely high costs of health care than even prescription drugs. Pharmaceuticals are 30-50% more expensive in the US vs. Europe, but doctors' salaries are sometimes 100% more. A typical UK doctor in 2002 made $60-120,000 and lives well, if you've seen Michael Moore's "Sicko". But US specialists make $300-400,000, and we all know the young doctors graduating from school all want to be specialists. But how many radiologists and anesthesiologists do we need, versus the pediatricians and GPs who deal with normal patient problems and practice normal medicine "in the trenches" (ironically the lowest-paid doctors)? Relatively few new doctors are going into those "unglamorous" fields versus the huge demand, so no wonder we have to import them from other nations - yet some patients complain about foreign accents and demand an "American" doctor. Well, blame the American medical system and its students then, who would rather be Nip/Tuck than Patch Adams!

Because the fees they charge are so high (and patients have no choice but to pay), doctors also have a financial incentive to over-prescribe treatment in order to make more money. I am sure we can Google many examples of this to back up the NYT's claim, as well as cases of defrauding Medicare/Medicaid. And unlike Europe, Medicare lacks the resources (and/or motivation) to scrutinize a doctor's treatment request, veto if unnecessary, or maybe suggest a cheaper alternative. Doctors in other developed nations are more-or-less paid flat salaries from their national health systems, with performance-based incentives. Their doctors are paid less, yet deliver better services on average, based on WHO rankings and other studies. In fact, socialized medicine nations like the UK, Canada, and Australia outperformed the US in terms of medical errors and patient satisfaction (http://www.medpagetoday.com/PublicHealthPolicy/HealthPolicy/tb/2074). So maybe there is a real problem with the "quantity over quality" approach by many US doctors.

From NYT:

"Almost all expenditures pass through the pen of a doctor," he said. So a doctor may decide to perform a test that costs a total of $4,000 in order to make $800 for himself — when a cheaper test might work equally well. "This is a highly inefficient way to pay doctors," Dr. Bach said.

Medicare, especially, does not like to second-guess doctors' clinical decisions, said Dr. Stephen Zuckerman, a health economist at the Urban Institute. "There's not a lot of utilization review or prior authorization in Medicare," he said. "If you're doing the work, you can expect to get paid."

As a result, doctors have steadily increased the number of procedures they perform on Medicare beneficiaries — and thus have increased their income from Medicare, Dr. Zuckerman said. But the extra procedures have not helped patients' health much, he said. "I don't think there's any real strong evidence of improvements in health status."

Private insurers like H.M.O.'s are more aggressive than Medicare in second-guessing physicians' clinical decisions, and they will refuse to pay for imaging scans or other expensive new procedures. Now Medicare and private insurers are moving cautiously to change the current system. Recently, they have proposed pay-for-performance measures that would give doctors small bonuses if their care meets the standards set by national medical organizations such as the American Heart Association.

BUT all those measures are a minor fix, said Dr. Alan Garber, a practicing internist and the director of the Center for Health Policy at Stanford University. Instead, he argues, the United States should move toward paying doctors fixed salaries, plus bonuses based on the health of the patients they care for.

Even in the existing system, some health insurers, notably Kaiser Permanente, already have large networks of salaried doctors. But it would require doctors to give up some of their autonomy and move into larger group practices or work directly for insurers, a step they have been reluctant to take. About 40 percent of doctors are in single or two-physician practices, Dr. Garber said.

Nor is the American Medical Association, which represents doctors, eager for wholesale changes in the system, said Dr. Edward L. Langston, chairman of the A.M.A. board.

But Dr. Goldman of RAND said that doctors are misleading themselves if they think the current system serves patients' needs. For example, if a diabetic patient visits a doctor, he said, "the doctor is paid to check his feet, they're paid to check his eyes; they're not paid to make sure he goes out and exercises and really, that may be the most important thing."

"The whole health-care system is set up to pay for services that are rendered," he said, "when the patient, and society, is interested in health."


Oh yeah, and I forgot to mention that doctors are often paid the same from insurance/Uncle Sam whether they perform a procedure brilliantly or totally botch it. Some legislation was proposed to only pay doctors in full upon successful completion of the procedure, but of course the physician's lobby fought it and watered it down. Now the government doesn't have to pay doctors for a few specific errors, like if surgical instruments are left in patients, catheters are improperly implanted, and won't cover the costs of preventable hospital-acquired infections. Doctors warned that such rules would cause legal nightmares and actually reduce overall care, as patients would have to disclose their entire medical histories before doctors would agree to treat them, so various post-op complications wouldn't be blamed on them. And then doctors might even refuse to treat the most at-risk patients to avert potential consequences. Well, I guess we shouldn't revere doctors as selfless heroes. They look after #1 just like the rest of us.

http://www.washingtontimes.com/news/2007/aug/28/medicare-and-medical-mistakes/
http://www.bcbs.com/news/national/medicare-won-t-pay-for-hospital-mistakes.html

So if our presidential candidates do seriously want to overhaul and improve the US health system, trimming doctors' salaries may be a politically daunting but absolutely necessary component of the solution.

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http://www.nytimes.com/2007/07/29/weekinreview/29berenson.html?_r=1&oref=slogin


The Nation
Sending Back the Doctor's Bill


By ALEX BERENSON
Published: July 29, 2007

Health care reform

Universal health care in Massachussetts

http://www.npr.org/templates/story/story.php?storyId=5330854

http://www.npr.org/templates/story/story.php?storyId=5336532

http://www.iht.com/articles/2006/04/05/news/insure.php

http://www.kqed.org/epArchive/R604110900 (could it work in CA too?)

The bill has points that will satisfy both the left (sliding scale of premiums and subsidies for the impoverished) and the right (personal choice and responsibility in health care decisions). Of course the numbers and details are not totally worked out, but it seems feasible and is set to take effect this summer. Of course MA is a pretty wealthy state with good medical infrastructure and only six million people. However, they still have over half a million uninsured residents, and state legislators found that situation to be unacceptable, as well they should.

WHAT ABOUT THE REST OF US?

The USA has over 80 million uninsured citizens, and we’re the only developed country with over 15% of the population uninsured (the percentage worsens to over 30% if you factor out the elderly who have government coverage). This was a major sticking point in the past few presidential elections that neither Bush nor Kerry seriously addressed in 2004. Of course the Clintons attempted to enact “single payer” legislation and health care overhaul in the 1990’s, but were summarily beaten down by powerful physician groups and insurance lobbies. The plan had its share of flaws, and conservatives disliked the lack of patient choice and “socialistic” overtones. After Gingrich and Co.’s 1994 “Republican Revolution” in Congress, the bill was pronounced dead, and universal health care was never seriously addressed on Capitol Hill again. Meanwhile, health care costs, medical errors, and the number of uninsured Americans continued to rise at alarming rates into the 21^st century.

http://msnbc.msn.com/id/5224207

http://en.wikipedia.org/wiki/Clinton_health_care_plan

http://www.fair.org/index.php?page=1221

http://www.princeton.edu/~starr/20starr.html

We all know the system is broken, failing, and getting worse. One would be hard pressed to find the evidence to back the claim that we have the “best” health care in the world. Even if this were true, our system is the most inefficient in the industrial world (we spend much more per capita and get fewer/worse services in return). If your personal wealth permits carte blanche access to medical care, you will get great service and better health outcomes (like Magic Johnson and Lance Armstrong). If you are poor and live on a remote Indian reservation in North Dakota, or even in urban areas like New Orleans’ Ninth Ward, good luck. The US spends the highest fraction of its GDP on health care (around 15%, versus sub-10% for France, UK, and Japan). Shamefully, we rank 37^th in world health care systems according to a WHO study in 2000 (on par with Slovenia and Cuba). Universal health care nations like France, UK, Singapore, Japan, and Canada were all ahead of us, with France being the top nation.

http://www.webmd.com/content/article/26/1728_59750.htm

http://www.photius.com/rankings/healthranks.html

http://www.who.int/inf-pr-2000/en/pr2000-44.html

http://www.frbsf.org/publications/economics/letter/2005/el2005-10.html

If America is the world’s leader, the land of opportunity and good life, how can this be? Our economic system is the most robust in history, and our wealth is unmatched. Is health care a human right or a privilege? We believe in a level playing field here, but how about the ones who fall off the edge? One impoverished, uneducated child can cause major social problems years down the line. Would we rather pay a little more in taxes to improve bad schools and drug rehab, or pay lots for security to keep desperate criminals out of our gated communities and away from our families? The same goes for public health: would we rather work harder to cover the uninsured and improve care, or let people roam sick and unmonitored among us during this time of epidemic paranoia? Millions of American families are one accident or illness away from financial ruin, yet some profligate patients get all the Viagra and MRI scans they want courtesy of taxpayers. Let’s forget the uninsured for a moment, because Blue Chip titans like General Motors are going bankrupt trying to pay for employee and retiree health care too. How can they compete with Toyota and other automakers from nations with universal government coverage? Why aren’t more people up in arms about this mess and why aren’t our elected officials doing more to address the problem (Massachusetts excluded)?

http://money.cnn.com/magazines/fortune/fortune_archive/2006/02/20/8369111/

http://www.ahcpr.gov/news/costsfact.htm

http://www.nyu.edu/projects/rodwin/american.html

So we are the wealthiest and freest nation in the world, we boast the strongest economy and medical research industry (apart from stem cell work), and spend the most money (per capita and overall) on health care. The percentage of our population employed in the health care field is the highest in the world too. Yet our system is far from dominant, and actually we are terribly lacking compared to other First World countries. In the study below, we ranked worst in various medical care quality metrics behind New Zealand, Australia, Canada, Germany, and the UK (nations that spend a tiny fraction on medicine in comparison).

http://www.medicinenet.com/script/main/art.asp?articlekey=60890

http://www.thecompounder.com/HealthCareCanKill.html

Yes, it is expensive to be an American and to care for one, especially with the growing ranks of elderly and retirees. The meager money I give to Kaiser each year (and I have the cheap, $88/month “Don’t get sick!” plan) could provide care for several villages in Chad. But even factoring in cost of living, wages, life expectancy, and whatnot – we’re still getting totally RIPPED OFF for sub par health care. But we don’t have a choice, right? We need protection in case we get cancer, have a car accident, or get pregnant – not to mention LASIK and other non-essential surgeries. Some people lack even minimal access to health care, and others abuse the system and take more than they need. HMOs and doctors are partly to blame, but they’re also getting squeezed with rising costs and malpractice insurance. Whom to insure, whom to treat, who will make us more money? Tough questions. And our state/federal governments play the fool with our hard earned taxes, getting overcharged for medical reimbursement by greedy drug companies and unscrupulous physicians (yet people still prefer to blame illegals for draining our resources!?!). Bush’s recent Medicare “reform” package is a clear example, which only serves to confuse seniors, marginally reduce the cost of their pills, and yet reward drug makers with subsidies that will cost the nation trillions in the long term! Unfortunately, some people and businesses profit from a defunct, inefficient, wasteful system. Over 10% of American medical expenses are lost to “administrative costs” (a.k.a. bureaucratic waste), that is about $1,000 a person (or $275 billion plus total) according to Harvard Medical School – but it pays people’s salaries and boosts stock prices.

http://www.hmsa.com/risingcost/feature/part1/4.asp

http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=32260

http://www.townhall.com/opinion/column/brucebartlett/2005/10/18/171730.html

HEALTH CARE ABUSE (An overly-preachy side note, skip to the next section if you like)

Pharmaceuticals, biotechnology, hospitals, insurance, private practice, and whatnot are multi-billion-dollar industries, and often times they profit when we abuse or overuse health care. The establishment may resist any efforts to downsize, streamline, or reorganize such a cash cow. Those who prefer to maintain the status quo may have more voice with lawmakers than the rest of us. So what are we to do? Drug makers and health care providers might hype or even invent illnesses to try to convince us that we need to shell out many dollars for treatment (attention deficit disorder, depression, allergies, chronic halitosis, etc.). The ad campaigns brainwash us into believing that our lives will be so much better from these wonder pills, hence the rise of non-essential “lifestyle drugs” like Viagra. It’s not just about being healthy and happy, but we need these drugs to be perfectly healthy and supremely happy with our bodies. We’ve been conditioned to expect our bodies to behave exactly as we would like, at peak performance at all times, otherwise something’s gravely wrong with us. And that’s just unrealistic, if not totally ridiculous. But that is the prevailing ideology unfortunately. No wonder why pharma is the most profitable sector of the Fortune 500. We’re flawed, weak humans, not gods! It’s ok to have love handles, minor aches or infections, even deep sadness at times, and yes – someday something will kill us.

By all means, if a patient is in need, he or she deserves access to the best quality care and as many helpful therapies as possible, within reason and ethics. But NEED is the key word, and it’s a misused and abused term in health care. A billion people in the Third World need mosquito nets and antiviral AIDS cocktails (REALLY need them, as in their lives depend on it), yet we’re going batty about flu shot shortages? We all want to maximize our quality of life and avoid heath problems. We all deserve to live long, comfortable, happy lives, but we must assess the cost-benefit of our actions. With finite supply, the health care resources spent on us means that other people, maybe people in greater need, won’t get them. It’s about living responsibly and recognizing your place in the greater community (“what I want” versus what we all need). Plus the more drugs we take, the less effective they become and the more dependent we become. Some pathogens are evolving to develop drug resistance, and maybe our innovations won’t be able to keep up. Most ailments won’t kill us, and maybe we should endure them instead of running to the doctor to remedy every little discomfort.

And what happened to fixing yourself and preventative health care like exercise, smart eating, good personal hygiene (without being obsessive), and relaxation? Those are great therapies, much cheaper and more effective than Prozac, Lipitor, and penicillin. Wouldn’t we prefer to wean ourselves off such medical intervention, even if it means a reduction in extravagant doctor salaries and pharma profits? Just imagine the time we’d save and stress we’d avoid: endless waiting rooms, stuck on hold with the HMO hotline, or the reams of paperwork! And if we really get sick and need help, it will still be there for us. But Americans can be lazy, and we want the immediate, easy, quick fix pill solution rather than enacting lifestyle changes or toughing it out. Our bodies can be frail, but also amazingly strong. Somehow, much of humanity endured microbes, anxiety, and even pandemics before drugs/vaccines were invented. It might involve some hardship and discomfort, but our bodies can heal themselves better than any physician. I’m not calling for a return to medieval lifestyle or the abolition of medicine, but we can’t sterilize the world and thwart every single disease, no matter how hard we try. Most health care providers and health industry workers are good people who want to help humanity. But the system is malfunctioning because often they are forced to help themselves first (even at our expense). Something has to be done.

http://heterophily.com/blog/?p=88 (a blogger’s comments on Laura Penny’s very provocative chapter on the abuses of the pharmaceutical industry in The Truth About Bullshit)

A PROPOSAL BY ECONOMIST TIM HARFORD

Now we are in a quite a pickle, and it’s getting worse with each day we refuse to act. Even some fiscal and ideological conservatives admit that we have no choice but to nationalize America’s health plan. Private companies competing in the tight global economy just cannot keep up with ballooning worker health costs under the current system, and much of the GOP thinks they shouldn’t have to. Plus the number of uninsured Americans is just appalling, and many liberals refuse to tolerate that indecency. Can we nationalize the system and still remain true to our small government, free market traditions? We need a system that provides patient choice, grants individual responsibility for most health care decisions, and punishes/discourages waste, ignorance, and exploitation. We should be able to do the research, compare the cost-benefits, and choose accordingly, not be forced down one path or another by the HMO Nazis or doctors with conflicting interests. We need a health plan that will cover catastrophic problems with no questions asked (as the Massachusetts plan does), so people have the peace of mind that their family won’t go hungry if tragedy strikes. Patient choice and universal coverage… can we have our cake and eat it too?

http://amconmag.com/2006/2006_03_27/review1.html

http://www.commondreams.org/views02/0525-06.htm

http://www.findarticles.com/p/articles/mi_m1282/is_n24_v41/ai_8206533

Like Levitt’s Freakanomics, Tim Harford’s recent text The Undercover Economist takes a rogue approach to the analysis of everyday socioeconomic problems/mysteries in the world today, thankfully in laymen’s terms. He spends a chapter evaluating the US and UK health systems, and then proposes a better alternative that is a mix of the liberal and conservative approaches (kind of like the Massachusetts bill). He operates on the economic principle of maximizing efficiency (benefiting as many people as possible without making anyone else worse off).

http://www.amazon.com/gp/product/0195189779/103-9305564-5839827

Harford diagnoses our current health care system dilemma mainly as a problem of information imbalance or inside information (brought to light by Nobel winner George Akerlof). I know, it’s not what you’d expect, but he uses a clever analogy. Like with the used car market, only the seller truly knows the condition of the vehicle. Is it a lemon or a gem? People will try to sell a lemon for top dollar if they can. The buyer can’t help but be suspicious, and obviously wants to pay the minimum possible. But this impasse actually destroys a fair or “perfect” used car market, where buyers pay actual value to sellers and everyone is better off. Instead, everyone loses, just like health care. Based on the car analogy, we customers are the sellers and the HMOs are the buyers. They can’t tell if they’re selling insurance to clunkers like Dick Cheney, or gems like us young, healthy folks. They try to give us questionnaires or tests to gauge our health and scale their premiums accordingly (plus reject costly customers), but an information imbalance still plagues the health care market.

Health insurance is obviously very important, because we don’t know when we’ll need it. But it shouldn’t be so expensive to protect oneself against tragedy or bad luck, and we would hope that the healthy customers help pay for the sicker ones in a group plan. But with premiums so expensive, it encourages unhealthier people to buy (like lemon used cars) – the ones who will actually use the services and get their money’s worth. The healthier, poorer people might decide to cancel their insurance and pay out-of-pocket at the rare times they’re ill (sadly, this option is becoming more and more financially justifiable). So if only sickly, needy people buy health insurance, costs-per-customer will rise, and the HMOs will be stretched and forced to cut back benefits or raise prices to compensate, and they do. Fewer people buy insurance, and those who do get crappier, pricier care. Hence the downward spiral in coverage that we’ve all observed. So insurance companies combated the information imbalance with probes to identify the lemons (could genetic testing be far off?), such as price-targeting consumers with a whole range of different plans to buy (high premium, low deductible plans for the sick, low premium, high deductible ones for the healthy). But all this ends up excluding the most needy customers from care (or pricing them out of the insurance market), which defeats the whole purpose of health coverage anyway.

Obviously the malfunctioning US system is not the only one with problems. Harford is British and he also examines the Western European systems. The voluntary, market-driven US system is linked to risk instead of income (you pay more if you’re sicker, no matter how rich or poor you are – government aid aside). But health insurance is also linked to market forces and employment, which involves the greed factor and makes the US labor market less competitive, as we’ve already discussed. The mandatory, government-driven European systems are linked to income instead of risk (health insurance is a legal requirement like auto insurance, so everyone has access but you pay into the system through taxes on your wealth). Wasteful US health coverage per person costs twice what it does for most Europeans. But both systems have flaws: a voluntary system means that some will go without, but a mandatory system creates care rationing and the “moral hazard” of people living less cautiously when they know their health care is guaranteed and paid for. But universal health care is a source of nation pride for Canadians, Britons, and others who seem to respect human dignity a little more than we do. Imagine being able to walk into any clinic in the country and get treated (when your turn comes) without question and paying hardly anything? A measly 17% of American respondents were satisfied with their health coverage, but only 25% of Britons were happy, so universal coverage isn’t an automatic panacea. The UK’s National Health Service has the huge responsibility of rationing out care. They quantify and evaluate all the medical interventions out there, and decide who is eligible for what treatment based on supply, demand, and the potential improvements to quality of life. But these value judgments are hard for a government organization, people always try to abuse a free service, and some deserving people get snubbed.

People on both sides of the Atlantic complain about the quality of health care and others making choices for them (either the government or the HMOs). People want and deserve a say in their health decisions, but are we responsible enough to make informed, appropriate choices? We need incentive to do so, such as giving everyone PRIVATE HEALTH SAVINGS ACCOUNTS. People can choose what forms of health care they want to buy, and must live with the consequences of frivolity and excess. So they do their homework, consult the right people, and make sound decisions with their future in mind, like selecting which university to attend or what home to purchase. I know some people will mess anything up if you give them the chance, and this sounds eerily similar to Bush’s Social Security Privatization Act, but stick with me here.

The government would be responsible for covering catastrophic costs, so no one will be financially ruined by a sudden cancer diagnosis or broken neck, even if they don’t have much money left in their health savings account. The “catastrophe insurance” would be compulsory in the form of taxes, but actually an individual’s taxes would decrease, because there would be no need to support the inefficient US government employee and public health systems. People would use their income to pay into the health system, like we do for retirement, and everyone would get routine, equal deposits from the government. Lower-earning and especially needy people would get extra subsidies. Unused dollars in the account would accrue interest like a savings account, and could be doled out as retirement supplements or passed on to beneficiaries in your will. Like with Roth IRAs, this is clever because health care costs are generally low when you’re young, but you would build up a lot of savings and interest by the time you’re aging and in need.

Therefore, we can have our cake and eat it too: everyone is covered against catastrophe and patients have choice and access to the highest quality and range of services should they desire. Waste and ignorance are reduced because people have incentive to study their options and conserve health savings dollars for only the most critical needs. Healthy living is also encouraged so people can earn interest and accumulate their health savings for retirement. But if you really want braces or colored contact lenses, you still can, and paying out-of-pocket is always an option. Raw medical costs to us would also diminish, because the HMO middleman is eliminated and medical providers must compete in a free market for patients. So you can get more care for your buck. Of course this reform does not address health care shortages and a growing elderly population, but with less bureaucracy and other inefficiencies, we’d hope that our system would have enough resources freed up to expand and improve for everyone. The inherent conflict of interest between provider and consumer will remain (you want the best care during an emergency, but government needs to ration money), but it will be greatly mitigated. So the system will still be market-driven, but private insurance would be taken out of the equation, saving billions. It’s not a single-payer system, but more like an “everyone pays” system with a government safety net.

What do you think?

This innovative “keyhole economics” system that Harford describes is actually SINGAPORE’S of the last 20 years, which expectedly is ranked #6 in the world by the WHO. Singapore has a higher life expectancy than the US, and the health costs to each citizen are about $1,000 a year, or roughly the cost of US health care bureaucracy alone! Of course Singapore is a small, highly efficient and orderly country with vast sums of wealth and stringent government controls. Yet still they live in a safe, democratic, and capitalist society with shrewd and intelligent pragmatist leaders. They saw beyond the petty political and ideological squabbles of market-driven versus “socialized” health coverage, and decided to merge the two instead. But if we’re the greatest country in the world, why can’t we do just as well, if not better than Singapore? It can’t be all the fault of illegals, frivolous lawsuits, and terrorists, can it? Without health, nothing else matters, right?

APPENDIX

A major tour-de-force analysis from Physicians for a National Health Program:

http://www.pnhp.org/docs/TheHealthCareMess-KipSullivan.pdf#search='health%20care%20industry%20waste%20administrative%20cost'

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I don't think HCSA's will work; while I'm all for market dogma the fact
of the matter is that healthcare is not elastic and won't respond to
market forces in the same way that a non-durable good will. If you take
a look at what a hospital typically bills for a procedure vs. the
negotiated rate the insurance company ultimately pays there's a factor
of 10 difference; this means the rates that the providers are charging
are systematically inflated and won't be significantly affected by
universal HCSAs. A single-payer system, however, can exert serious
price pressures on providers (at the cost of bureaucracy and patient
control.) It seems (though I haven't researched it enough) that the
Massachusetts plan is a step in the right direction, though I've learned
that you can never trust a GOPer or his plans for the poor.

The reason unfunded liabilities are becoming such a problem for GM and
the like is that health care costs are rising at an accelerating rate
and doubling every 5 years. Short of traveling to Mexico for that next
bypass operation there's not much that a globalized market can do to
reign in costs; outsourcing medical imaging, etc. to the third world
ultimately serves to increase profit margins but does little to drive
down costs when the tradeoff between saving $ and saving lives is
non-negotiable.

The healthcare industry is also so heavily regulated that efficiencies
often take a backseat to things like privacy concerns or other
regulations that may or may not make sense (drug safety guidelines?).
The idea that saving $100 by getting your CT scan done across town is
absurd if costs your doctor time and/or convenience (and ultimately your
care) in terms of accessing the results due to privacy regulations, etc.
Most people who truly are in need of healthcare will either (a) pay,
whatever the cost, to get the best care they can or (b) receive
substandard care with the expense shouldered by the public. While I
have Kaiser and BlueCross/BlueShield coverage my doctors at UCSF are
never able to access my test results from Kaiser and vice-versa - I've
found that, even if Kaiser is cheaper for things like MRI, CT, or
Ultrasound, it's better to get it done at UCSF since the doctors there
have immediate access to the results and known what to do with them.

Being a savvy healthcare consumer is not a market externality waiting to
be realized - it's a fact of life. For anyone who ever gets seriously
ill there is no "choice" to become a savvy consumer - you either do or
you subject yourself to substandard care and risk death! While I
certainly can see how a healthcare consumer of the future could logon to
a web page and decide which doctor to visit based on price, I don't see
how doing so would (a) change the quality of care for the better or (b)
significantly impact the *real* cost of healthcare which stems from
regulation and management of liability and risk.

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Well, actually a lot of this stuff is going to show up in my
thesis. A little more info...people often think there are two
paradigms of
healthcare deliverance, privatization (US model) and government-run
healthcare (UK model). But, there is a third model, which is used
in most continental European countries, including Germany and
France. This model is the Sickness Insurance Fund (SIF), where
citizens are required to join different (govt.-private hybrid)
organizations. The benefits are things like shorter lines for the
doctor, etc. However, it does cost a bit more as a percentage of
GDP.

Of course, nothing rivals the cost of our system because we pay so
many of our bills out-of-pocket. Incidentally, the same pattern
holds in education (again, we spend way more). The crucial
difference between our system and those of Germany and France is
that our insurance companies are profit making. This is why I
ambivalent on the Massachusetts law; I haven't read it carefully,
but I'm not sure how it's going to work if insurance companies are
still profit making. I have included OECD data on healthcare
expenditure from the OECD (these numbers were tabulated last in
2003).

My thesis relates to the fact that, contrary to popular belief, the
decentralized provision of social programs like healthcare and
education in the US is totally inefficient. Furthermore, the
decentralized provision of programs leads to greater discrimination
in program implementation (e.g. blacks don't get the same access to
welfare that whites do).