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All items for February, 2008


Who Are The Real Bad Guys?

Stanley Feld M.D.,FACP.MACE

In my first blog I said all the stakeholders are responsible for the dysfunction of the healthcare system. Patients, physicians, hospitals, drug companies, the government and the healthcare insurance industry are all to blame. In my view the healthcare insurance industry has done the most to destroy America’s healthcare system. In its quest for short term profit they are killing the goose that laid its golden egg.

California usually recognizes trends in America early. A trend has surfaced in Los Angeles. In the last year a number of law suits have been filed in California by political leaders, regulators and consumers. Decisions made in Los Angeles highlight the healthcare insurance industry as the big bad guy in America’s healthcare crisis. Patients’ complaints have sparked state hearings of Blue Cross policies.

“Regulators want to see whether the healthcare firm is adhering to an accord with California. California has received more than 1,600 complaints from consumers, physicians and hospitals about Blue Cross of California since the state’s largest health insurer was acquired by an Indiana firm in 2004, officials said Tuesday.”

One could guess the complaints are warranted. If complaints are surfacing in Los Angeles, one could also assume there is cause for complaint in the rest of the U.S. Hopefully the state boards of insurance in other states are heeding the complaints of citizens.

”The state announced plans this week to hold a public hearing in Los Angeles on July 19 on how well Blue Cross has lived up to promises it made nearly three years ago as part of the $21-billion acquisition.”

“It is the latest sign that state regulators are stepping up scrutiny of insurers, particularly Blue Cross, a unit of Indianapolis-based WellPoint, which has more than 8 million customers in California.”

The state regulators in each state have control over the issuing of permits to sell healthcare insurance in its state. State regulators are hopefully starting to flex their muscle in favor of patients. This should have been happening all along.

“The Department of Insurance, another California regulator, last week issued a report of an investigation that found BC Life & Health, another WellPoint unit, had revoked 1,880 individual health insurance policies in California in 2004 and 2005, and a review of 83 sample cases cited more than half for alleged violations of fair claims handling laws. The citations could lead to fines of as much as $10,000 per infraction.”

The way healthcare insurance companies increase their profits is to increase patients’ premiums, decrease patients’ healthcare insurance coverage, eliminate the sickest patients from their insurance roles, and reduce payment to providers. It seems that BC,BC of California a Wellpoint unit has done all of the above.

“This summer, Blue Cross is imposing fee reductions on physicians at the same time it is sending letters to policyholders notifying them that their premiums are going up because of increasing medical expenses, said Karen Nikos, a spokeswoman for the California Medical Assn., the state’s largest physician trade group.”

“This is exactly what we said would happen,” she said. “This is what happens when you only have a few insurance companies controlling all insurance. They do it because they can.”

Wellpoint, the parent company of Blue Cross, received reimbursement from Blue Cross. Blue Cross listed the reimbursement as an administrative expense. Blue Cross of California financial statements then justified an increase in healthcare premiums because of increasing expenses.

”Regulators also are troubled by a $950-million payment Blue Cross made this spring to WellPoint. The department is investigating whether the payment violates the state’s terms for the acquisition.”

The $950 million is the administrative fee of Wellpoint in California alone. It partly explains the $150 billion spent nationally for administrative fees to the healthcare industries.

California has many consumer rights organizations trying to protect the consumer.

“The Foundation for Consumer and Taxpayer Rights said it conducted an analysis of money Blue Cross has sent out of state to WellPoint and its affiliated companies since the acquisition, and the latest dividend was only the tip of the iceberg. The Santa Monica-based group, a frequent critic of the insurance industry, urged regulators to investigate as much as $6.5 billion in transfers from Blue Cross to WellPoint and its affiliates out of state.”

Blue Cross and Blue Shield is not the only company playing this game.

“The city attorney of Los Angeles says Health Net defrauded policyholders by dropping patients who needed costly care.”

“The company defrauded thousands of policyholders using “a wide range of unlawful, unfair and fraudulent acts and practices” aimed at avoiding payment for expensive treatment by canceling the policies of those who needed it, “rendering that coverage largely illusory,” the suit maintained.”

“Los Angeles City Atty. Rocky Delgadillo said in an interview Wednesday that he was opening a separate criminal investigation into Health Net’s practice of paying employee bonuses based in part on canceling policies of people who have submitted substantial medical claims.”

This lawsuit concentrates on individual healthcare insurance policies not group policies. The individual policy holders paid a premium for these policies with after tax dollars. For a company to create incentive bonuses for employees to find the sick patients and cancel their policies is unconscionable.

“Health Net has been in government investigators’ cross hairs before. In November, the company’s bonus program was made public in an arbitration hearing and sparked outrage. Within a week, Health Net was socked with a $1-million fine by state regulators for lying twice to investigators about such payments. The state is still investigating the company’s bonus and cancellation practices.”

“One of a handful of insurers that dominate the California marketplace, Health Net is the first to be tagged by a city task force investigating tactics throughout the industry that make it difficult or impossible for consumers to get the coverage for medical care they believed they were buying with their premiums.”

This week an arbitration judge ordered Health Net to pay one patient 9 million dollars for its behavior.

“Arbitration judge Sam Cianchetti found that by canceling the insurance policy of Patsy Bates, a breast cancer patient who used Health Net for her health insurance, the company violated numerous California laws, the Los Angeles Times said”.

“It’s difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that keeps the public well and alive,” the retired Los Angeles County Superior Court judge said.”

I am happy to see the California Medical Association speaking out for patients. I am also happy to see that multiple state agencies and authorities are stepping up to solve these abuses to patients and providers.

“Dr. Richard Frankenstein, president of the California Medical Assn., applauded the effort to put an end to what he said looked like a scheme “to rapidly take people’s money and slowly tell them they won’t pay their claims.”

The state agencies are imposing fines. I do not believe fines are enough of a deterrent for these misdeeds. The following statement says it all.

“It is sort of like giving a bank robber a speeding ticket for driving too fast in the getaway car,” said Jerry Flanagan, a patient advocate with the Foundation for Consumer and Taxpayer Rights. “The real question is, what will they do next and are they looking at the underlying crime as opposed to a misdemeanor?”

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.


Medicare: Is Not So Cheap – Part 2

Stanley Feld M.D.,FACP,MACE

Medicare Part B plus Medi-gap is not so cheap and might not be affordable to many seniors. The promise of affordable universal healthcare with a single party payer is hard to believe if this is what is happening with Medicare premiums. However, most seniors can not afford to be without Medicare and Medi-gap. All of their retirement savings could be wiped out with a minor illness.

The magnificent thing about Medicare Part B is that each senior citizen is insurable at the same premium despite pre-existing illness. The guarantee of insurability despite pre-existing illness is a must in any healthcare reform insurance plan. The bad thing is fewer and fewer physicians are accepting Medicare because of the constant reductions in reimbursement. Therefore patient access to care is becoming restricted.

Patients are responsible for the entire retail price of the service if their physician does not accept Medicare payment. If their physicians’ do accept Medicare payment the patients are responsible for 20% of Medicare’s allowable fee. Medicare usually reduces physicians’ fee by 20-50%. Medicare reimburses the physician directly for 80% of its allowable fee. If patients have Medi-gap, it pays the remaining 20%. This means a physician’s fee for service of $100 might be reduced to a Medicare allowable fee of $70. Medicare would pay $56 dollars, Medi-gap $14 and the patient would be liable for an additional $30.

As the single party payer (Medicare) reduces payment (payment might be less than the physician’s overhead) and as Mediare’s rules become more complex and restrictive, physicians are forced to reject taking Medicare patients.

Hillary Clinton and the Democratic Party have not discussed these issues. They have not asked the patients or physicians where the problems are nor how they think they can be solved. The empty promise of universal coverage is all we hear. Barach Obama has not committed to this concept. He wants to get all the stakeholders to the table. Ms Clinton has attacked him for this stance as being weak.

It seems to me that he is the only one who believes there is more to the healthcare story than a flashy sound bite of universal insurance for all.

Medicare has been a godsend to people over 65 who do not have group insurance and are retired. People over 55 years old can not get healthcare insurance from carrier if they have any pre-existing illness without a coverage exclusion. Most are rejected outright. By the time Americans are 55 years old they have at least one preexisting illness. If they could get healthcare insurance it would be with after tax dollars.

Over 60% of Americans 60 years old have at least one risk factor for coronary artery disease. Obesity is an epidemic that has to be dealt with by providing patient incentives. It afflicts 50% of people over 60. The healthcare insurance industry does not want to assume the disease burden of obesity. It wants to pass this risk to the government.

I have pointed out that the healthcare insurance industry has stated that it wants to work with the states and the federal government to insure the uninsured. My interpretation of this statement is it wants to pass the risk on to the states while it insures healthy low risk citizens. If the federal government mandates healthcare insurance with a penalty to non covered citizens, the healthcare insurance companies would benefit by enrolling more healthy people and shunting the sicker people to the government roles. Citizen free choice would be eliminated. Hillary Clinton’s stated healthcare plan would cause this to happen.

What is the solution? Stakeholder incentives and appropriate rules of the game is the solution. Mechanism Design explains the construction of the appropriate rules. The playing field needs to be leveled for citizens to force the healthcare insurance industry, the hospitals and physicians to compete for their healthcare dollar at the best price. The government needs to remove all the artificial subsidies for secondary stakeholders, and shift subsidies to the patients benefit so that each pays a fair premium pretax premium determined by accurate means testing. Accurate means testing could result in a subsidy to many citizens. It will cost the government less if the patients owned their healthcare dollar than the ever escalating entitlement system supporting vested interests of the facilitator stakeholders.

The federal government has the power to do all of this without impinging on anyone’s freedom.

Medicare and Medicaid have failed as an entitlement. It is foolhardy to create a super Medicare or Medicaid system without further injuring our healthcare system and Americans’ ability to get good medical care.

As consumers, we stimulate the economy. Now is our chance to demand that he politicians give us control of our healthcare system. They are presently begging for our vote. We have to make it clear that they our not solving our problems. They are only going to make them worse. We must demand proper reform now.

Below are a series of blog posts I have published previously describing all the steps necessary to Repair the Healthcare System.

Ideal Medical Savings Account

The Definition of an Electronic Medical Record

The Ideal Electronic Medical Record

Medical Claims Data: The wrong measurement to control cost

Fall 2007 Summary Post- Part 1

Fall 2007 Summary Post-Part 2

Mechanism Design- Noble Prize in Economics 2007

Definition of Real Price Transparency

E-Prescriptions= Fuzzy Thinking

Inequality and Healthcare

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Medicare Insurance: It is Not Cheap-Part 1

Stanley Feld M.D.,FACP,MACE

The Democratic Presidential candidates have promised the country affordable healthcare insurance for all. With the structure of our present healthcare system it would be difficult to have effective universal healthcare for all.

The common impression is Medicare is excellent healthcare insurance coverage for the elderly. It is advertised as affordable healthcare insurance for everyone.

In reality Medicare is not affordable for all. Many contend providing affordable healthcare coverage for the elderly is the reason Medicare is expected to be bankrupt in the next ten years. Medicare is an entitlement program that is unaffordable for both government and many of its elderly recipients.

Advocates of single party payer universal healthcare system refer to Medicare as the ideal healthcare insurance model. One claim is Medicare is extremely efficient. Its overhead is only 2% of the insurance dollar. Private healthcare carriers’ administrative overhead consumes 20% of the healthcare dollar. Another publicized myth is in the last 30 days of life patients spend 50% of their total lifetime medical expenses.

Medicare outsources its administrative services to private insurers. On Medicare’s books it only spends 2% for administration. Private healthcare insurance carriers such as Aetna and Blue Cross are the administrator service providers for Medicare. The overhead of administrative services for Medicare is buried in the fees charged to Medicare.

The Medicare has stated that 90% of the healthcare dollar is spent on the complications of chronic disease and not the last 30 days of life.

What does Medicare healthcare insurance coverage cost a 65 year old husband and wife? Basic Medicare cost is $93.50 per month per person or $187 per couple per month and $2,244 per year. This insurance covers 80% of Medicare’s allowable fee.

If an allowable office visit fee is $100, Medicare will pay $80 and the patient will be responsible for the $20 co-pay. Medicare also pays 80% of allowable hospital fees after the $992 deductible is met by the patient. A $20,000 allowable hospitalization bill will cost the Medicare recipient $4999. The retail price on that hospitalization might be $40,000. Hospitals are committed to take the allowable fee as adequate reimbursement for services rendered. Many of you know it is very easy to incur a $40,000 hospital bill in a couple of hospital days.

Medicare has recently imposed an added assessment to the basic Medicare premium. It is called the Modified Adjusted Income Calculation. The IRS supplies Medicare with a senior’s previous year income tax returns. Capital gains, dividends, tax free dividends, and salaries are including in the Modified Adjusted Income calculation.

A married couple with a joint return and income from all sources are going to have an additional assessment of between $51.60 and $284 dollars per person per month depending on their Modified Adjusted Income calculation assessment. The assessment starts at $160,000 and ends at $410,000 per year. The husband and wife pay the assessment of between $25.80 and $142 per month or $619.12 to $3408 per year.

A widow with dividends, capital gains, an annuity and rental income of $164,000 per year is assessed and additional $103.30 per month or $1239.60 per year.

This assessment is paid with pre tax dollars. It gets deducted from the Social Security payment. If a person has earned income in addition to passive income the person is also paying additional tax on his Social Security check.

The deductible of 20% of the allowable fee and the initial $992.00 deductible for a hospital admission becomes expensive quickly.

In order for the Medicare recipient to have full coverage for the deductibles they have to buy Medigap insurance. There are seven Medigap insurance policies. The best and most complete is the Medigap Part F. Several private healthcare insurance sell this coverage. For persons under 70 years the cost of the policy is $140 dollars per person per month in after tax dollars. The effective cost per month is $200 per person or $400 per couple. The yearly after tax dollar cost is $4800 per year.

If you add Medicare Part D for prescription drug coverage, it adds another $24 per person or $34.28 dollars in after tax dollars per month per person or $822 dollars per couple per year. This cost does not consider the extra cost of the infamous doughnut hole.

The total premium for adequate Medicare insurance is $2244 plus $4800 plus $822 or $7866 per year. This calculation excludes the modified adjusted gross income. The modified adjusted income can add $619.20 to $3408 per couple per year to the premium. The MAGI creates a means adjusted premium. The maximum means adjusted premium is $11,274. per year per couple.

I believe in the concept of a maximum means adjusted premium for those who can afford to pay higher premiums.. However, I have two problems with the claim that Medicare is affordable insurance and universal. It order to be fully covered a Medicare couple would have to spend at least $7866 per year. Let us assume a couples’ only income is Social Security. They collect a maximum of $30,000 per year. It would be difficult to afford healthcare insurance of $7866 per year. It would be foolhardy not to have it. The couple would not qualify for a government subsidy.

The government, on the other hand, is subsidizing the insurance premium because the inefficiencies in the healthcare system. This is leading to a bankrupt system.

Visualize the premium necessary for an entitlement program for everyone. The government could not afford it unless services were severely curtailed. The only viable solution is to create a transparent, competitive market place for an informed consumer. It is essential that patients manage own healthcare dollar. If not, the government will be stuck with an entitlement for the benefit of the private healthcare insurance carrier with unaffordable coverage and an inefficient system.

We only have to look at the Massachusetts experience for confirmation. The cost of a high deductible ideal medical saving account with appropriate incentives for consumers would reduce the cost of healthcare.

It is time the Democratic Party stopped believing that universal healthcare with a single party payer would fix the healthcare system. It will simply generate shortages of physicians’ and hospital services’ while generating higher costs in an unaffordable system.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.


Another Great Father/Son Weekend

Stanley Feld M.D., FACP, MACE

Every year my son Brad and I go off for a father/son weekend. The goal is to just hang out and bond with each other. Some years we solve more of the world’s problems than others.
Kelly, Brad’s assistant, develops an agenda each year. It is a good outline that does not have to be followed to the minute. It is a wonderful feeling to just dink around with your son.

When Brad was young, I was the teacher and he was the student. I have always had a zest for teaching and learning new things. Early in my medical career I learned that the teacher usually learns more that the student.

When Brad was 13 years old our roles reversed. He taught me more than I taught him. His insights through the years have come from an entirely different generation perspective. A perspective that has always nourished me intellectually. I remember being pushed into the information technology era in 1978 with our first Apple II computer. I have not looked back since. I have owned a lot of hardware and software since 1978.

This weekend was another learning experience. Many of you know Brad is a successful Information Technology Venture Capitalist. In order to be successful in this area you have to recognize trends, see potential for opportunities and understand the economy.

As a physician I believe I understand the natural history of disease and its effects. I also think I know what has to be done to fix our healthcare system. Our healthcare system is methodically being destroyed by forces in pursuit of the almighty dollar. Our health is our most precious asset. The healthcare system must be saved.

A weekend with Brad gives me an opportunity to look at the world from another perspective. I am a very optimistic and realistic person. I always walk away from these weekends even more optimistic. I am able to look at America through younger eyes an see the possibility of tremendous opportunities.
We participate in activities we have enjoyed together in the past. Brad even ran around Austin Town Lake (aka Lady Bird Town Lake) at my jogging pace.

While waiting for our separate flights we sat at a table in the airport banging away at our computers. Society concentrates on the price of everything. I felt at that moment that the best things in life are free.

I can not wait until next year. Everyone out there should try this with their sons or daughters. It is good for your health.

Thank you Brad.

  • Alan Shimel

    Stan, knowing both you and Brad and being a father myself, this post made my heart sing. I look forward to my own sons growing up and spending weekends with them! Enjoy.

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Inequality and Health Care

Stanley Feld M.D.,FACP,.MACE

Neither the Democrats nor the Republicans are discussing the real causes of the escalating costs of healthcare.

The media, policy wonks and pundits are on another insignificant tangent about costs. I also believe our Presidential candidates are not interested in understanding the real problems in the healthcare system.

The solutions to the real problems challenge the vested interests of important and powerful secondary stakeholders. Secondary stakeholders finance the Presidential candidates’ campaigns.

America needs less costly political campaigns. Campaign finance reform would diminish the influence of secondary stakeholders in favor of the interests of the consumer. Candidates should be advocate for their most important constituent, the consumer.

Consumers have written to tell me the issues involved in healthcare reform are too complex to understand. I believe it is the consumers’ obligation to themselves and their families to understand the issues. It is the media’s obligation to truthfully present the issues. Politicians need to be shown the level of consumer concern or they will do nothing to reform the system.

The media is probably opposed to campaign finance reform. Its revenue would be severely decreased by campaign finance reform. None of the candidates would be able to afford advertisements on television or radio. Occassionally the media touches on a core issue that the politicians avoid. The issue is inequality in the tax code for healthcare.

“Democrats, and even a few Republicans, are in a populist mood, and fair enough. But if they really want the tax code to be more “progressive” — i.e., from each according to his means — they ought to forget the Bush tax cuts and address the way the government subsidizes health insurance. On the advice of our doctors, we’re not holding our breath.”

A progressive tax code is one core issue. Politicians are not dealing with the issue of the tax code and healthcare reform.

“According to the Democratic consensus, too many people lack health insurance, and the liberal remedy is to protect the status quo while expanding public programs for the uninsured.

We know most public programs such as Medicare and Medicaid are on the verge of bankruptcy. Patients are constantly faced with diminished access to care and increasing out of pocket expenses for services not covered by these entitlements. Physicians are faced with ever decreasing reimbursement for services.

What makes anyone think that expanding public programs for the uninsured would lead to an increase in efficiency of care? How could expanding public programs decrease the cost of care and increase the quality of care or access to care?

“Not only does the current system cause unnecessary problems for the insured, but many of the gaps in coverage are the result of the way tax subsidies shortchange the uninsured, particularly working-class and middle-income families.”

This represents a perverse outcome to the Democratic Party’s declared mission to help working-class and middle income families.

“If such inequality and unfairness existed anywhere other than health care, the Democrats would be raising hell. Instead, they’re silent — which is politically telling.”

The Democrats are clever. They want to pass a healthcare policy that will fail. Then the only remaining option will be universal healthcare with a single party payer. The politicians’ goal is to keep consumers frighten and not in control of their own destiny. Frightened consumers lead to political power.

“The core problem is that people who get insurance through their employers pay no income or payroll taxes on the value of the benefit. The Treasury defines this as”tax expenditure,” meaning its revenue the government forgoes to encourage certain behavior. If these losses were converted to the equivalent of direct spending, the tax exemption would have cost more than $208 billion in 2006. The only federal programs that cost more are Social Security, Medicare and national defense.”

This deduction is in favor of employer and high income earners. The deduction is not reflected in the federal budget. The self insured do not enjoy an equal benefit.

“If the purpose of health-care reform is to decrease the ranks of the uninsured, these job-related tax breaks are poorly targeted, even regressive. The more generous the employer health plan, the more the subsidies increase. On average, lower-wage workers have more limited coverage as part of their compensation, usually from small- or medium-sized businesses. Estimates show that the subsidy is worth more than $3,000 for upper-income families (with higher marginal tax rates), and less than $1,000 for those on the lower income rungs.”

If the politicians really wanted to subsidize the poor, they would reverse structure of this subsidy. This is not a new insight. It is an insight that is simply ignored by politicians.

“So why the Democratic silence? Perhaps it’s because they think such a change would interfere with their main policy goal, which is slow but steady progress toward government control of the health-care market. Or possibly it’s because many of the most generous tax-subsidized health plans come from union-negotiated contracts. Or maybe Democrats simply don’t want to concede that President Bush has a point.”

All of the above are true. However, President Bush has not shown political will, nor does he have the political capital or courage to declare that all the reforms he suggested must occur simultaneously in order to be affective in repairing the healthcare system.

“If the Republican Party came to their senses, they would recognize an opportunity to poach a traditionally Democratic issue. Whatever the Democratic Party’s other ambitions, how can they stand by a system that offers the least assistance to the working class and nothing at all to the uninsured?”

Healthcare is a major national issue. Let us get on with the business of Repairing the Healthcare System. Consumers must understand the issues and demand reform.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

  • Bob

    I believe the main problem with our health care system is the consumer has been removed from the equation with the growth of third party payors.
    Consequently, there is no transparency in health care pricing or payments.
    Nice article!

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Here Come Harry and Louise Part 2

Stanley Feld M.D.,FACP,MACE
The insurance industry is attempting to sound sympathetic to the plight of the uninsured. I think the attempt is an effort to diffuse their role as villain in our healthcare system.

“America’s Health Plans an association representing the healthcare insurance industry is saying their suggested steps are a way in which states and private insurers can work together to provide coverage in which insurers try to address shortcomings of the individual market.”

I would suggest the states proceed with caution. The states should carefully examine the details of the proposals and the motivation of the healthcare insurance industry.

The goal of the healthcare insurance industry is to increase its insurance roles with the state subsidizing the insurance policies. The defect is that it would be following the rules of the present healthcare insurance premium structure. It would not be creating incentives for the patients, physicians, or hospital systems.
Massachusetts recently reported a doubling of the insurance premium under the state Romney plan of universal coverage.

A self employed person between 50 and 65 years old can not buy affordable healthcare insurance with after tax dollars using the present actuarial rules for determining premiums.

“Currently, about 11 percent of all individuals who apply for coverage are not offered a policy after the insurers review their medical conditions, according to a new survey of the trade group’s members. And nearly 30 percent of individuals who are in their 60s but too young for Medicare are denied coverage.”

“To extend coverage to high-risk people with expensive medical problems, or likely to incur them, would cost money, and states might not go along. In states that already have programs for high-risk individuals, significant numbers of people still do not obtain coverage because the premiums are high.”
“Few states are willing to come up with the money to subsidize them so they can cover enough people,” Mr. Ginsburg said.

The states high risk pools have failed because of the premium structure and actuarial rules. The healthcare insurance industry refuses to adopted a community rating system. It would be unfavorable to its bottom line.

“In fact, only about 180,000 people around the country were covered by existing high-risk pools, said Katherine Swartz, a Harvard professor who studies health insurance issues. “

“The new proposals call for states to provide affordable coverage to anyone whose medical costs are expected to be at least twice the average. For other higher-risk patients who do not meet those criteria, the insurers would agree to cap the premiums at 150 percent of the market rate.”

There you go. The devil is in the details. The goal of the healthcare insurance industry is revealed.

“I have optimism that the states and the country will step up to the issue,” said Ronald A. Williams, the chief executive of Aetna, a large insurer in Hartford.”

I believe everyone is fed up with the healthcare systems’ structure. However, no one seems to be willing to relinquish his agenda in favor of the patients. The patients have to be responsible for their care and in control of their healthcare dollar.

“The trade association declined to provide any estimates for the cost of its proposals.”

“The insurance industry has backed health care change before. Insurers were at first supportive of the initiatives of President Bill Clinton in the mid-1990s, until they felt threatened and unleashed the memorable “Harry and Louise” advertising campaign that helped derail the effort.”

But Ms. Ignagni said her group was ready to push for change. “What’s different than in 1992 is we as an industry did not have a proposal of our own,”

I believe the healthcare insurance industry wants to sound as if it are going to help solve the problem of the uninsured. Patients’ ability to become insured might improve slightly. The healthcare insurance industry’s proposal will lead the states and federal government to create an entitlement with a single party payer system. This is exactly what the Democratic Party wants to accomplish.

I think the healthcare insurance industry is acting for short term maintenance of control over the healthcare system. When it realized the error in its ways in 1994 it introduced Harry and Louise to the healthcare system. I have a feeling we are going to be seeing Harry and Louise soon.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

  • denise

    Ban for-profit health insurance companies. Eventually medical prices will go down because there will have to be competition. Doctors will have to compete for our business. Heck it could force doctors to participate in customer service; like returning calls, answering questions, lowering prices, etc.
    I’m sorry but most doctors are not part of the solution, and if your not part of the solution…well you know how it goes.

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Get Ready For Harry and Louise: Act 2.- Part 1- Insurers Seek Bigger Reach in Coverage

Stanley Feld M.D.,FACP,MACE

In 1994 the insurance industry produced an advertising campaign that torpedoed Hillary Clinton’s healthcare plan. The campaign introduced Harry and Louise to America.

Hillary Clinton’s plan would have been a disaster if enacted. I believe it would have left the healthcare system in worse shape than it is now. I was against Mrs. Clinton’s healthcare plan. (HillaryCare). I was rooting for Harry and Louise. One tends to ignore the subtext of modern advertising campaigns when it seems to be competing with a policy one is against. Harry and Louise was simply a mass mind manipulation campaign by the healthcare insurance industry in order to retain control over the healthcare system.

I predict the healthcare insurance industry is getting prepared for another Harry and Louise campaign.

“Acknowledging that too many people simply cannot obtain health insurance on their own, the insurance industry plans to propose a series of steps the companies say would let more individuals, even those who have health problems, obtain coverage.”

The insurance industry’s strategy seems to be to get the heat off it during the presidential campaign and appearing to be sympathetic to the middle class individual with a preexisting illness and issue insurance to previously unqualified applicants.

“The industry’s announcement comes at a time when dozens of states are already considering some kind of health reform and insurers are increasingly being vilified by the Democratic presidential candidates.”

“The devil is in the details.” Unfortunately our sound bite society is not interested in the details. I believe the healthcare insurance industry is generating false hope in order to decrease the vilification during this presidential campaign season. I believe their intent is to maintain their control over the healthcare system. .

“The proposals, approved by a board of the industry’s main trade group (America’s Health Insurance Plans), would make it harder for insurers to cancel policies or deny coverage to people with pre-existing medical conditions. The steps would also limit the premiums that could be charged for such people.”

It sounds great. The catch is the healthcare industry is going to dump all of the problems on the taxpayer rather than take any more risk.

“The trade group also called on states to provide individual coverage for people who were likely to incur very high medical bills.”
“The effort is meant to help address the problem of 47 million Americans without health coverage. And it signals a willingness by insurers to abandon practices that have seemed aimed at excluding all but the healthiest individuals.”

If we read the details carefully nothing is substantially changed except a positive public relations push.

“We are taking responsibility for ensuring that no one falls through the cracks,” said Karen Ignagni, the chief executive of the trade group, America’s Health Insurance Plans.”

The healthcare insurance industry seems to be playing into the hands of the Democratic Party’s candidates by provide universal coverage for all. It wants to help set the rules so they can continue to cherry pick the lower risk patients.

“It is far from certain whether any of the specific proposals will be enacted or states will finance the cost of broader coverage. But the industry’s position indicates a willingness to move toward a system in which everyone can find coverage.”

The healthcare insurance industry wants to sound like it is going to help the people.

This month, former Senator John Edwards pledged to take on the insurance companies, saying “the American health care system is broken because wealthy insurance corporations and their lobbyists have rigged the system against the American people.”

I believe in reality they want to get the presidential candidate’s off its back.

“ The industry is trying to have a greater say in any state changes that may be enacted. Many insurers chafe, for instance, over what they consider an overly regulated approach in Massachusetts. Despite the Massachusetts controls the cost overrun are unmanageable.”

It seems pretty clear that the healthcare insurance industry wants to look like it is going to help while keeping the system rigged.

“The health insurance is coming to grips with the fact that practices that are clearly driven by market forces are giving the industry a black eye,” said Paul B. Ginsburg, the president of the Center for Studying Health System Change. “

Paul Ginsburg is correct. I think the insurance industry is trying to get society to vilify some other stakeholder. The weakest stakeholder in the system is the physician. I think we will be seeing this shift shortly.

“The insurance industry has backed health care change before. Insurers were at first supportive of the initiatives of President Bill Clinton in the mid-1990s, until they felt threatened.”

The healthcare insurance industry is shooting itself in the head with this initiative. If this faulty reform is turned into legislation sixty to seventy percent of the population will be on a government entitlement program. Once the industry sees this they will roll out Harry and Louise to turn public opinion against the lawmakers. I don’t doubt that this is part of its strategic plan.

The Harry and Louise campaign had the most direct impact on the downfall of Hillarycare in 1993.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.


Health Care Up to Public, Edwards Says Part 2

Stanley Feld M.D.,FACP,MACE

I will conclude analysis of John Edwards’ plan for healthcare even though he has dropped out of the presidential race. His plan represents the goal and direction of the Democratic Party with respect to healthcare reform. It will fail.

John Edwards had experienced the dysfunction of the healthcare system when he was suing physicians and hospitals.

He realized then the healthcare system did not make any sense. He took advantage of it. It still doesn’t make any sense. There are too many perverse incentives.

“Mr. Edwards did not propose a universal coverage plan when he ran for president in 2004, focusing instead on expanding enrollment of children. But a day after the Kerry-Edwards ticket lost, his wife, Elizabeth, was found to have breast cancer, and his family began its first-hand education in the vagaries of the system.”

“I mean, when you get the statements by the providers and the insurance companies about what’s covered and what’s not covered, even for two people who are well versed in the law and experienced with the health care system, it seems completely arbitrary in many cases,” said Mr. Edwards, a lawyer. “It doesn’t make any sense.”

Senator Edwards is correct looking at the system from the patients’ point of view. He ought to look at the system from the physicians’ point of view. The healthcare system makes less sense from the physicians’ point of view. Even though patients complained about their healthcare insurance carrier before 2004 he did not hear them until his family was one of the 20% of the population needing the system at any one time.

“The public nature of Mrs. Edwards’s illness — she announced a recurrence at a news conference last year — drew people with health care horror stories to the Edwards campaign. As health care costs and the number of uninsured continued to rise, Mr. Edwards sensed that people were ready for more radical surgery on the insurance system.”

Something needs to be done about the healthcare insurance system. If Senator Edwards understood how we got to this point he would understand his proposed solutions will not fix anything.

“I concluded that something bolder was needed, that the health care system had become increasingly dysfunctional,” he said. “And my contact with a lot of uninsured Americans, who were not children, made it clear to me that the plan had to be universal, that it had to cover everybody.”

I agree. Healthcare reform plans have to be universal. It should also be clear that absolute control has to be removed from the insurance industry. The control of the healthcare system has to be transferred to the consumers and not the governments.

“Under Mr. Edwards’s proposal, which resembles the plan adopted in Massachusetts in 2006, the government would require individuals to have insurance (illegal immigrants excepted).”

The Massachusetts plan is failing already. There are critical shortcomings of the plan. Thousands of residents are exempted from the insurance requirement because they cannot afford even subsidized premiums. The reason is the healthcare insurance industry has been instrumental is setting the price and protecting its vested interest.

“Mr. Edwards’ proposal would prohibit insurance companies from rejecting high-risk applicants and would restrict their profits and overhead to 15 percent of revenue from premiums.”

This is a good idea. It might motivate the insurance companies to compete with each other and decrease the premium prices. The more people a company insures the more premium dollars it collects. The percentage profit from premium would be decreased but the total amount of revenue would not.

The defect in this idea is it lacks real price transparency with respect to insurance real costs. The healthcare insurance industry could easily load the administrative overhead and keep their profit from premiums below 15%.

“Government subsidies and tax credits would be available to low- and middle-income families that cannot afford insurance. Those below the federal poverty line — currently $21,200 for a family of four — would get free coverage, Mr. Edwards said. Those making less than 250 percent of the poverty level — currently $53,000 — would be heavily subsidized and there would be some financial help for those making up to about $100,000.”

There is no question that the definition of people eligible for subsides should be higher than the antiquated definition of poverty. This subsidy is exactly the increased money the insurance industry wants injected into the present system.

However, the patients must be responsible for their care or else any plan will fail. Consumers have to have ownership of their healthcare dollar and incentive to use it wisely. Nothing in the Democratic Party’s or Edwards’ plan takes incentive into consideration.

“Employers that do not offer medical benefits to their workers would have to contribute 6 percent of their revenues to the regional government pools that would offer Medicare-style plans. Midsize businesses and employers with large numbers of low-wage workers might be asked to pay less, and the smallest businesses would be exempt.’

“To pay for those subsidies, which account for much of the estimated $90 billion to $120 billion cost of the plan, Mr. Edwards would rescind President Bush’s income tax cuts for those with incomes above $200,000. Additional revenue would be produced through a broad menu of cost-control measures.”

Punitive measures have never been effective. Just image the resistance of employers and entrepreneurs to mandates that represent tax increases.

Mr. Edward is proposing private sector promotion that will fail. The new Democratic president would then say “Gee shucks”, everything else we have tried has failed. The only thing left is create universal healthcare using a single party payer.”

There you have it. If they succeed in passing this type of reform we have arrived at socialized medicine through the backdoor.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

  • Mike

    “The control of the healthcare system has to be transferred to the consumers and not the governments.”
    The purpose of the government is to represent the people and manage the commons. Our “socialized” postal service works fine, police and fire departments – are socialized institutions, and they should be, they are for the common good. Health care should be a right to all, not just the wealthy.

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