The Health Care Coverage Challenge: A Different Perspective

Peter Weiss offers a different perspective on the health care challenge.  I will paraphrase the article, but here is the link if you want it from the horse’s mouth.  Also, as I’ve written extensively on this issue lately, here are the links to my health care related posts:

In Defense of Statistics and Private Health Care, Sept. 23, 2008

The Health Care Coverage Challenge: Can Obama Solve It, May 3, 2009

The Health Care Coverage Challenge: An Update on Massachusetts, June 12, 2009

The Health Care Coverage Challenge: Some Questions from the Conservatives, June 24, 2009

Let’s begin with the facts asserted by Mr. Weiss:

1. Health care spending in this country is equivalent to 16% of our GDP.  For the average family of four, that means that $29,680 is spent by them or on their behalf (either by their employer or federal government) to provide them with the standard of health care to which we have become accustomed.  Incidentally, according to a recent Rasmussen poll, as a group, Americans think that health care in this country sucks (only roughly 30% rate our health care system as excellent or good).  However, individually, we are quite satisfied with the quality of care that we receive through our current system (70-plus% rated their own coverage as excellent or good).  There is an enormous disconnect somewhere!

2. The Congressional Budget Office predicts that by the year 2025, the U.S. will be spending 25% of its GDP on health care. In 1960, it was only 4.7% of the GDP. I’d love to see the background on that number because around 2025 is when our Medicare and Social Security liabilities completely overwhelm the federal budget.  I don’t see how the real number can’t be closer to 50% when we add Medicare and Medicaid into the mix!

3. If one includes Medicare and Social Security obligations, the federal government’s unfunded liabilities are $455,000 per U.S. household.  With an average household income of just over $50,000 per year, we’re talking about a 100% tax rate to close that gap for the next nine years!

Mr. Weiss rightly accuses both parties of failing to fix the underlying problem of health care in this country, though he does point out that “[w]hile the proposed Republican solutions for health care, by and large, will be ineffective and are off point, they are on point in identifying the crux of the problem. The core issue is cost, not coverage.”  His argument is a simple one: reforms that aim to increase the number of Americans with coverage are bound to fail because they miss this key fact.  In fact, it shouldn’t require a degree in advanced economics to realize that reducing the cost of health care itself will enable more Americans to afford it.  Wow!  What a novel idea!

Obama understands the mutual exclusivity of coverage vs. cost in the policy debate and, so, he has attempted to fudge by talking about preventive care and streamlined administrative processes through the greater use of IT.  I’ve already discussed at length the myriad problems with the Obama Plan, but I have given relatively short shrift to the notion of preventive care.  Preventative care involves two interconnected notions.  First, that early detection of many serious diseases makes them easier to treat.  Secondly, a focus of lifestyle changes will make healthier and, hence, more productive individuals.

Only the first part of this is really susceptible to public policy.  But, as Weiss points out “… cholesterol screening, blood pressure measurements, colonoscopies, pap smears, mammograms, etc., are standard medical practice and their savings already are built into the system.”  There are little to no savings left to be achieved through an early detection model.  Even were we to adopt such a model (who says we haven’t, but we’ll go with it for now), early detection of breast cancer, for instance, lowers a women’s risk of death from breast cancer, but cannot eliminate it.  Indeed, the vast majority of breast cancers deaths (80-plus%) would still occur.  This is a marginal improvement in health for no cost savings at all.

As for second part of the equation, it is true that living a healthy lifestyle can add a decade to your lifespan.  “But short of prohibiting alcohol, banning tobacco and taxing red meat etc., we have likely reached the public health limits of the benefits of lifestyle modification,” according to Weiss.  As Americans, we are warned from the moment that we can understand words that smoking will eventually kill us.  It can cause numerous forms of cancer and COPD/emphysema.  We tax it beyond any reasonable limit.  We ban smoking in public places and quarantine smokers into dark street corners.  And yet, it is estimated that some 43 million Americans still smoke, despite more than three decades of education about its dangers.

So what is Weiss solution?  It is one that is certain to be universally hated by both sides of the political spectrum.  Here it is in three bullet points.

• The doctor is placed at the center of medical decision-making process.  Insurance companies answer to him, not to stock holders, pharmaceutical companies market to him, not to consumers, and government leaves him alone to practice medicine, instead of hamstringing him with a myriad of idiotic mandates. 
• The tort system will be reformed to ensure that victims of malpractice are compensated for their injuries and no more (i.e. a cap of punitive damages).  Individuals will be required to carry catastrophic coverage insurance (as opposed to the full coverage mandate of ObamaCare).  The government will provide subsidies (or vouchers) to those who cannot afford such insurance, which will be privately-run, not government-operated.  Insurance will become an individual choice, not an employer’s mandate.
• Medical education will be revamped through restructuring, eliminating several wasteful years.  Tuition will be reduced, possibly even eliminated, in exchange for a “Teach for America” style program in the medical field.  Finally, nurses, physicians assistant’s and other non-physician medical personnel will be tasked to handle routine check-ups and procedures, such as pap smears and cholesterol screenings.

Weiss’ plan places the emphasis back where it belongs on the doctor-patient relationship.  It reduces cost by subrogating insurers, pharmaceutical companies, trial lawyers, and the government to subordinate, supporting roles, not equal players on the stage.  It also properly utilizes medical personnel for routine, non-emergency procedures.  Just as it makes no sense for a lawyer to draft a simple letter of understanding when a paralegal can do the same job just as efficiently for half the cost, it makes no sense to utilize doctors in routine medicine when PAs and nurses are equally capable and cheaper!

The Health Care Coverage Challenge: Some Questions from the Conservatives

The Republican Study Committee has put out a list of questions that they would like President Popeil aka Barack “Barry” Obama to answer in his ABC primetime infomercial to the nation tonight.  I’m going to attempt to provide some possible answers for the Great Salesman to give as well as the pertinent facts.

1)     During the debate on the so-called stimulus package, your estimates on future unemployment and economic recovery proved to be wildly off-base.  Why should Americans now believe you that they will not be forced out of the private coverage they enjoy, as basic economics would dictate?

His answer: This administration has made a promise to the American people that we will provide health care to all Americans.  This plan accomplishes that.  It says that if you like your current insurance arrangement, you can keep it.

The facts: According to the Lewin Group, almost 32 million Americans will lose their current health insurance coverage under the Obama Plan.  Obama’s Plan will reduce the net number of uninsured by a little more than a quarter … at a cost of well over a trillion dollars.

2)     Despite your assertions that health care reform will save money, the reality is that plans proposed by Democrats would cost taxpayers between $1 trillion and $2 trillion.  How does this save money and how will you pay for this?

His answer: This plan will be paid for by efficiencies created in the provisioning of care, such as electronic record-keeping and other IT initiatives that will streamline care and reduce administrative cost.  Beyond that, the individuals partaking in the plan will pay for it through much the same system we use now.  Both employer and employee will contribute a set percentage toward the purchase of a government-provided plan.

The facts: Even leading Democrats, such as Max Baucus, Chairman of the Senate Budget Committee, admit that they cannot pay for the Obama Plan through greater efficiency alone.  A cost of between one and two trillion dollars over the next 10 years is both reasonable and realistic.  One way that Democrats have sought to pay this bill is by taxing the health insurance premiums of all non-union households.  This would not only accelerate the Lewin Group’s projections, but it was also the same idea presented by John McCain that the Great Salesman criticized as being too heartless and cruel.

3)     If, as you claim, a government-run option is essential to maintaining honest competition in the health insurance market, why is it not also true that we need a government-run competitor in the fast food industry, neighborhood babysitting, or Major League Baseball?

His answer: Because these industries are not hurting Americans.  They are not putting profit ahead service to the customer.  They are not industries run amok with no oversight by the federal government.

The facts: I guess that it depends to a certain extent on what your definition of “honest competition” is.  There is no evidence that the Obama Plan will increase competition in the private sector.  If anything, it will drive people out of the private sector and into the public insurance market being created out of thin air by the Obama Administration. 

In Massachusetts, where a plan similar to Obama’s has been implemented, there is no evidence of increased competition.  In fact, it is just the opposite! The Urban Institute’s Sharon Long and Paul Masi find that Massachusetts is facing a growing physician shortage and ever increasing rationing of care.  Where is the increased competition?  Some 20% of those surveyed were told that doctors or clinics were either not accepting new patients or not accepting patients with their type of coverage.

4)     Proponents of a government-run option, you included, claim that it will compete on a level playing field with private insurance providers.  In that case, will your government-run plan operate under a for-profit model and be forced to pay all applicable state, federal, and local taxes?

His answer: This plan envisions that the government will pay rates comparable with those paid by other forms of insurance out there.

The facts: Obama envisions a Medicare-style public insurance plan that will pay rates slightly higher than the current level of Medicare reimbursement.  There is no evidence presented that the Obama Plan intends to pay on par with private insurers.  What is currently envisioned is a plan that would pay reimbursement rates that are around 20% less than what private insurers pay to providers now.

The Lewin study concludes that Obama’s plan would mean up to a 5% decrease in revenue for hospitals and 7% for physicians.  According to the American Hospital Association, in 2005, roughly one-quarter of all the hospitals in the nation operated in a negative revenue margin (meaning that they spent more than they were earned).  Overall, a hospital’s operating margin was roughly 3%, while their patient margin (the difference between reimbursements versus expenses) is about -2%.  The Obama Plan will literally bankruptcy the entire health care industry.

5)     How do you expect to meet the growing need for physicians and medical professionals if the government-run plan pays lower than market rates to physicians while forcing them to participate or lose a majority of their patients and their livelihood?

His answer: This plan will free doctors and medical professionals to be true healers for their patients.  By eliminating inefficiency and administrative waste, we will enable medical providers to give their patients quality care at a reasonable price for everyone.

The facts:  See answers to Questions 4 and 5.  Massachusetts has already run into the problem of primary care doctors and clinics refusing to take insurance provided under a similar scheme there.  Obviously, Obama could mandate acceptance of his insurance scheme, but that still ignores the fact that if a doctor can’t make a living under the Obama Plan it won’t matter what mandates are in place.

6)     If the government mandates that all Americans purchase health insurance, it must also define what qualifies as health insurance.  Can you provide us your definition (with details please) and explain how this definition will not limit innovation and choice in health care?

His answer: We are working with Congressional leaders and stakeholders in the health care and other fields to come up with an appropriate definition of what constitutes a de minimus acceptable level of coverage.

The facts: The current legislation repeatedly refers to “qualified health insurance plans” without providing a definition of what that means.  In fact, the legislation as it stands today basically leaves that definition for the bureaucrats in the Department of Health and Human Services and the Treasury Department (!!!) to decide at some future point after the legislation is passed.  There is no guarantee that the majority (or even any) health insurance plans (outside of those provided to union households, which are exempted from virtually any new obligations under this legislation — this is what Obama will mean when he says “other fields.”) will qualify under the new legislation.

7)     According to the House Democrats’ plan, a family of four with an income of $88,200, four times the federal poverty level, would qualify for health insurance subsidies.  In your view, is this a subsidy for low-income Americans or an effort to use taxpayers to put more health care under the purview of the federal government?

His answer: More than a third of those currently unable to afford insurance make between $50,000 and $100,000.  This plan must provide those individuals with the ability to afford coverage if we are to tackle the issue of health care reform in this country.

The facts: Of the roughly 46 million American without health insurance at some point throughout the year, nearly 17.5 million earn over $50,000 per year.  However, there is little evidence to suggest that they cannot afford to purchase insurance coverage.  It quite frankly depends on where you live.  $50,000 is an excellent income in North Dakota and most parts of the Midwest, but it won’t buy you much if you happen to live on one of the coasts (which strangely enough is where Democrats seem to live).  In areas such as these, where the cost of living is extremely expensive, publicly subsidized insurance is still unaffordable for most families making between $60,000 a year and $110,000 a year.  Therefore, even if you do need the coverage, there is very little evidence to suggest that the Obama Plan will make getting it any easier.

8)     The new Federal Coordinating Council for Comparative Effectiveness Research is charged with determining what treatments should be offered to patients.  Do you believe that these personal medical decisions should be made by patients in consultation with their doctors, or by unaccountable bureaucrats?

His answer:  As this administration has previously stated, this council will will not recommend clinical guidelines for payment, coverage or treatment. The council will consider the needs of populations served by federal programs and opportunities to build and expand on current investments and priorities.

The facts:  This is actually double talk for the Federal Coordinating Council for Comparative Effectiveness Research will determine what treatments should be offered to patients.  While many of the members are medical doctors, they are almost uniformly bureaucrats that have been involved with the provisioning of health care services and treatment, either currently or in the past.  Consider the some of the members if you don’t believe me:

Dr. Anne Haddix, Chief Policy Officer for the CDC.  Her claim to fame: She established the first set of guidelines for cost-effectiveness analysis of public health treatments. 

Dr. Thomas Valuck, Sr. Advisor for Centers for Medicare & Medicaid Services.  His claim to fame: He advises CMS leadership on policy issues related to Medicare’s payment systems. 

Dr. David Hunt is the Chief Medical Officer in the Office of Coordination.  His background includes a stint as the Medical Officer in the Office of Clinical Standards and Quality at CMS.

None are practicing physicians and, at least from their bios, it is apparent that none of them have seen actual patients in years! Far from being clinicians interested in duplicating the work of NIH (which is essentially what they’d be doing if you buy Obama’s explanation), these are policy wonks with specialization or expertise in the provisioning of health care access and treatment, and the payment thereof!

9)     Why are there no actively practicing physicians included in the membership of the Council for Comparative Effectiveness Research?

His answer: These are individuals who are recognized as clinical experts in their relevant fields.  They have authored hundreds of peer-reviewed articles on issues of health care reform, hold dozens of patents, and are recognized as innovators in the health care field.

The facts: This is largely true.  However, it is also true that not a single member of the council is currently a practicing doctor.  Many of the council members are not even medical doctors.  Several are lawyers or economists, while others approach health care from the relative safety of academia or the research lab.  It is hard to see how they have any real world understanding of the populations that they are serving.  Seeing as there is at least one member of Congress who is a practicing doctor in the state of Oklahoma, surely it couldn’t have been to difficult to find at least one person with real world experience to serve on a committee!

10) If the final reform proposal is controversial enough that it will not receive the necessary 60 votes in the Senate, Democrats have left open the possibility of using a procedural move to pass it with only 51 votes.  Do you believe massive changes to such a vital area of American life should be pushed through in this manner with only 51 votes?

His answer: I won!

The facts: I’m sorry, but it is hard to envision any answer that Obama can come up with here that should satisfy Americans.  The truth of the matter is that Democrats control a filibuster-proof Senate, yet they may not have 51 votes, let alone the 60 that is needed to shut down a filibuster!  It is hard to see how a plan that is not supported by a majority of the Democrats in Congress is going to be supported by a majority of Americans!  And, surprise, surprise, it’s not!  Only 41% of Americans support the creation of a public insurance plan similar to one Obama is pushing.  43% of Americans believe that government-based health care reform will make the quality of care worse, not better.  Moreover, 61% oppose even the requirement of mandatory coverage! 

With the odds for passage of ObamaCare getting longer by the day, it should come as no surprise that the Great Salesman has enlisted the help of a trusted friend, ABC News, to make one last attempt to cram this foul-tasting, smelly mess down our throats!  He’d better be at his best because if he stumbles tonight, the jig is up on ObamaCare.

The Health Care Coverage Challenge: An Update on Massachusetts

Joseph Rago reports in the Wall Street Journal’s Political Diary that the future of Obamacare may be quite similar to the problems that Massachusetts is having today (bold is mine):

Democrats have seen the health-care future, and it looks a lot like Massachusetts. Everyone else should take a look too, given that another wheel has fallen off the liberal vision of “universal” coverage.

In a new study published in the journal Health Affairs, the left-leaning Urban Institute’s Sharon Long and Paul Masi find that the Bay State is now facing a growing physician shortage and residents are enduring lengthening waiting times and other restrictions on care. “Paradoxically,” the authors write, “the increases in health care use . . . were coupled with the indications that some adults were having more difficulty obtaining care.”

But there’s no paradox at all. Of course people will flood any “free” insurance program financed by taxpayers. RomneyCare (the plan was spearheaded in 2006 by then-GOP Governor Mitt Romney) entailed no effort to think through the likely consequences, such as the stresses on available medical resources now being witnessed. But then, every mainstream idea of “reform” seems to insist the solution is to extend “free” care to more people, even though health care that appears “free” to the recipient is exactly the source of our long-running troubles. As the Urban Institute authors dryly note: “Although major expansions in coverage can be achieved without addressing health care costs, cost pressures have the potential to undermine the gains.” No kidding.

In Massachusetts, some 20% of surveyed adults seeking care were told doctors or clinics were not accepting new patients, or not accepting patients with their type of coverage. The rejection rates were concentrated among those enrolled in the “public plan” option — no surprise, given that government coverage pays far lower rates to doctors, clinics and hospitals.

Massachusetts is a high-wage economy with a wealth of health-care providers. If it can’t handle universal coverage without restricting patient choice, what state can? Yet the key features of the Massachusetts plan (a mandate requiring health insurance for every individual combined with a subsidized public option) are the emerging elements of ObamaCare. Look for exactly the same problems to be exported to the rest of the country.

We should carefully consider whether our President has bitten off more than the rest of the country can chew.

Letter to the Editor, Laurel Leader, June 11, 2009

Moving library to Main Street isn’t enough to revitalize city

In her letter of May 21, Ms. Lubienicki made the case for moving the library into the old police station. Ms. Lubienicki claimed that moving the library further into Old Town would bring about a revitalization of the area, bringing not just visitors, but new shops and restaurants, and would provide a real town center.

Not to disagree with Ms. Lubienicki, but it will take more than a library to revitalize Old Town. It will take a commitment from a city government that seems more concerned about strip mall development along the Route 1 corridor than it does people less than a mile from city hall.

I may be selling the City Council and the mayor’s office short, but there simply does not appear to be a desire among our elected officials (or, frankly, the citizens of Laurel) to engage in a redevelopment project of Old Town that would emphasize boutique shops and restaurants over law offices and orthopedists.

Old Town Laurel is a lovely place. That’s why I chose to live here when my family moved to Laurel four years ago. But, we shouldn’t kid ourselves. It will take more than a library to return Old Town to its glory. It requires a transformative vision of what this city should look like. It also would require a commitment not just from city officials, but county and state officials who will ultimately be responsible for integrating Laurel’s vision into the greater fabric of Prince George’s County and Maryland. Maybe the library should be spurring this debate about our future, instead of our past. That is truly a debate worth having.

Jason W. Papanikolas

Laurel