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All items for March, 2008


New Jersey to Consider Health Plan to Cover All

Stanley Feld M.D.,FACP,MACE

It is refreshing to know that the politicians in various states are becoming aware of the need to do something to help the uninsured. However, most are doing it the wrong way by maintaining a model of insurance that continues placing patients in a passive position dependent on a third party payer. The only thing that will Repair the Healthcare System is to place potential patients in a responsible position for their care and ownership of their healthcare dollar. The government should make appropriate rules and then get out of the way. They should then modify the rules so no stakeholder has an advantage over another.

New Jersey is the most recent state to try to adopt mandatory universal coverage even though the state is reeling from financial problems.

A bipartisan group of legislators unveiled a proposal on Monday that would require all residents to have health care coverage within three years. New Jersey is reeling from financial problems, and the country appears headed toward a recession, the plan would avoid adding to the budget and would instead try to redistribute federal and state dollars in a more efficient way.”

It would be a nice trick if they could do it in the present payment system. You will recall Massachusetts budget has increase 85% from the baseline in 1 year.

“About 1.4 million of New Jersey’s residents — or nearly 1 in 5 — do not have health insurance. To bridge that gap, State Senator Joseph F. Vitale, a Democrat from Middlesex County who is chairman of the health committee, recommended that the state focus first on enrolling more children in the existing NJ Family Care program for families who earn as much as 350 percent of the federal poverty level, or about $74,200 for a family of four.”

The fact that states are beginning to recognize that hard working people earning over the federally defined poverty level of $20,000 a year can not afford healthcare insurance and are not eligible for federal or state aid is encouraging. All should review Moises and Medicaid. Additionally President Bush has refused to expand federal coverage to families with income greater than the obsolete 1955 definition of poverty.

“Then, Mr. Vitale said, the state would focus on cutting costs while establishing a self-financed plan, run by the state, to provide individuals with health insurance at affordable rates on a sliding scale.”

Self finance healthcare insurance has been adopted by many large and small companies. These companies saw a way of avoiding ERISA regulations and decrease their healthcare costs for employees. County governments in Texas formed an association to provide self funded healthcare insurance to its county employees. Both private corporation self funded and the Texas Association of County government healthcare costs have continued to escalate. This model was destined to fail because they outsourced the administration of the coverage healthcare insurance coverage to the healthcare insurance industry. The price of the insurance the next year is based on their medical cost experience for the previous years. The control of those cost are still determined by the healthcare insurance industry. They have not created a system of coverage in which patients have incentives to reduce healthcare costs.

“The insurance would be required, not an option: Residents would need to prove they have health insurance, similar to the way drivers must obtain auto insurance.”

How can this be enforced?

“ It would be financed, Mr. Vitale said, by using small surpluses in NJ Family Care and Medicaid.”

This is the same mistake Massachusetts made. Medicaid reimbursement to providers is small. A large proportion of the indigent are not covered by Medicaid .The indigents’ income can not exceed the federal poverty level of $10,000 year to receive Medicaid coverage. I suspect most of the federal and state funded Medicaid dollar are spent on the states’ bureaucracy.

“An additional contribution would be made by revamping the costly and much-maligned system of Charity Care, under which the state reimburses hospitals for costs associated with caring for the poor, often in emergency rooms.”

We have only to look at what happened in Massachusetts. When the state was forced to exempt citizen from the insurance mandate the safety net hospital use increased. The hospitals’ cost escalated while they were receiving less from the state for charity care because the money was shifted to the mandated universal healthcare insurance system. I suspect the same thing would happen in New Jersey.

“New Jersey’s plan would be similar in that the responsibility for obtaining the insurance would rest with residents and would expand existing state and federal health insurance programs. But unlike Massachusetts, New Jersey would use a single plan administered by the state rather than requiring individuals to buy such a plan in the private market.”

This is exactly what should not be done. The state bureaucracy will not compete with itself to be innovative. It will simply reduce reimbursement to providers and decrease access to care. A competitive environment must be created with appropriate rules made by the government so the healthcare insurance industry competes for individual patients’ healthcare dollar. The result will be to create a cheaper and better healthcare insurance product.

“While most of our members provide health insurance, those that don’t have consistently said the cost is what is preventing them from purchasing insurance,” said Jim Leonard, a vice president with the New Jersey Chamber of Commerce. “This initiative will make health insurance more affordable.”

This is an empty statement. There is no evidence that creating another government run bureaucratic system will make health insurance more affordable. It might cost the citizen less in the short run but more in taxes or restrictions to access of services or both. The New Jersey plan will reduce the responsibility to employees and increasing the costs to businesses in state. The result could be to drive business out of the state.

“But some unions and consumer groups reacted tepidly, saying it could prompt employers to drop health insurance plans.”
“Of grave concern is the proposal’s underlying policy that seeks to shift the cost of coverage away from a shared responsibility between employers and employees,”

This is exactly what will happen. I think the State of New Jersey has to go back to the drawing board to avert a state economic disaster.

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

  • Mike

    Dr. Feld I continually see healthcare professionals and bloggers discussing the many woes of our current healthcare “system”. I have penned a few words myself. A common theme seems to be that those in areas of influence keep turning to the insurance aspect of healthcare as a means to mitigate costs.
    Frequently I wonder what would happen if the many layers of healthcare were pealed back to expose the real cost of providing health related services. How much of today’s healthcare equipment, consumable supplies, etc. actually cost what is being charged? What is the mark up? Are we buying the proverbial $600 hammer that only cost $2.00 to manufacture?
    Looking towards the insurance aspect of controlling costs seems to be misdirected. Insurance is purely a means of reimbursement or payment for goods and services. It would seem that to allay the hypertrophying costs of healthcare we as a nation must look at what goes into the cost of healthcare and look for solutions at that point – the front end, not the back end – insurance.
    Finally I think you would agree that the rise of healthcare insurance is a byproduct of healthcare costs in general. Insurers have decided to take the lead now and regulate their out of pocket expenses by developing “never lists” and generally increasing premiums to the point that companies are dropping health benefits and individuals are foregoing coverage due to cost. Healthcare is being sacrificed for shelter and food for many. I believe it was Albert Einstein that said the definition of insanity “was doing the same thing over and over and expecting a different result”. Seems to be somewhat apropos in today’s healthcare arena.

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Massachusetts Universal Healthcare Plan Underfunded!

Stanley Feld M.D.,FACP,MACE

I predicted the bipartisan Romney universal healthcare plan for Massachusetts would fail. The reason is simple. The rules of the game were not changed for the insurance industry, the hospital systems and the physicians. The reason this important idea cannot work is because the program was superimposed on the rules of a broken healthcare system.

“The state’s new subsidized health insurance program will cost “significantly” more than the $869 million Governor Deval Patrick proposed in his 2009 budget just two months ago, the state’s top financial official said yesterday, after insurers were granted an increase of about 10 percent.”

As long as the insurance industry controls the pricing without price transparency the price is going to escalate. If hospitals and doctors are not competing in a price transparent market place, prices will escalate. As long as patients are not responsible for their healthcare dollar there will not be provider competition.

Officials are scrambling for alternatives after the four healthcare insurance companies providing subsidized insurance under the state’s universal health care law offered bids for continued coverage that were far higher than expected.”

“To close the gap, the Patrick administration has asked insurers, hospitals, healthcare advocates, and business leaders to propose ways to cut costs and raise revenue.”

Notice the group missing from the discussions. Physicians are missing from the table. Physicians are the providers that control healthcare costs. Physicians should contribute to a discussion on how to control costs. Why has no one thought of asking physicians to contribute to the discussion? Perhaps physicians as the non contributing scapegoat is required?

“Leslie Kirwan, secretary of administration and finance, declined yesterday to discuss specifics of the proposals or the size of the budget gap, but said that without changes, the state doesn’t expect “to be able to live within” the proposed budget.”

You may recall that Leslie Kirwan, chairperson of the Commonwealth Health Insurance Connector, said 4 months ago’ “It’s too early to make any departure from the health reform plan,” “We will follow the trends and adjust, if needed.”

“To partly offset the increased costs, the panel yesterday also voted to raise premiums by 10 percent for some of the 176,000 people enrolled in Commonwealth Care, and to increase copayments for many more. Starting July 1, the lowest premiums will range from $39 to $116 per month.”

If Massachusetts raises healthcare premiums and increases the healthcare copayment many more people will not be able to afford the mandated insurance. The state has already exempted 30,000 people from the mandate to date.

“The budget figure of $869 million already was significantly higher than projected by legislative architects of the plan because of the enrollment boom.”

The state budgeted $472 million in 2007 for the subsidized program, based on enrollment estimates made last winter. Commonwealth Care provides comprehensive insurance to people without access to work-based coverage who earn less than 300 percent of the federal poverty level, or about $31,000 for an individual. This represents an 84% increase and is not close to the insurance industry bids.

“In order to make up some of the difference Leslie Kirwan has shifted some of the money from the $448 million Health Care Safety Net Trust Fund, which pays for care at hospitals and health centers for uninsured patients.”

Officials at many so-called safety net hospitals said that as the new system – which requires all residents to buy health insurance – phases out payments for free care provided to the uninsured, hospitals are facing budget shortfalls and have been forced to cut back on investing in new equipment.

The Romney plan was suppose to be the new hope for a free market healthcare economy. Hillary Clinton’s healthcare plan is similar. However, I believe she knows her healthcare plan will fail. The nation would then be presented with her only alternative, a government run single party payer. In other words the politically incorrect term “socialized medicine” is the only remaining alternative.

No one has thought of giving patients responsibility for their care and ownership of their healthcare dollar. The ideal medical savings account can motivate people to be responsible for their health, their use of the healthcare system and be diligent in their use of their own healthcare dollar.

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Innovation in Healthcare

Stanley Feld M.D.,FACP,MACE

Shortly before President Bush’s state of the union address the AMA President Ronald M Davis M.D. published the AMA view of the state of health care.

The AMA is for universal healthcare for all.

“Every American deserves health care coverage, and we need to build on the strengths of our system to make that happen,” said AMA President Ronald M. Davis, MD “As the nation’s largest physician organization, the AMA is leading the fight to get all Americans covered through our Voice for the Uninsured campaign.”

The AMA’s call for action needs to be implemented with a system that includes patients responsibility for their care, and ownership of their healthcare dollar. The healthcare model of a third party payer is an anachronism. It has proven to be inefficient, ineffective and abused by all the stakeholders. Patients are the only ones who can set up a competitive environment for other stakeholders. If the third parties (government or healthcare insurance companies) created incentives for people to take care of themselves to avoid the complications of chronic disease the cost of healthcare would fall dramatically.

Implicit in the AMA’s recommendation is the creation of government driven public service campaigns to discourage obesity, smoking, pollution, and other environmental hazards to health.

“A leading cause of rising health care costs is treatment for patients with chronic conditions such as diabetes and hypertension. “We need to make an investment in helping patients quit smoking, avoid alcohol abuse, improve diet and increase exercise levels, as these lifestyle changes will not only lead to healthier lives, but lower health care costs,” advised Dr. Davis. “National rates of obesity and diabetes have doubled over the past 25 years, if we can get folks off the sofa and away from the pantry we can reduce these growth rates.”

In the past I have outlined suggestions to decrease the complications of chronic disease. The key is to educate the patients so they are the “Professor of Their Disease”. In my view the government is trying to reduce costs by penalizing the wrong stakeholders. Physicians cannot afford to care for Medicare patients’ because overhead is rising and reimbursement is falling. The result will be seniors on Medicare will not have access to care.

“Congress made a promise to America’s seniors to provide them with health insurance through Medicare, but that promise means little if seniors can’t get in and see the doctor,” said Dr. Davis. An AMA survey found that 60 percent of physicians would be forced to limit the number of new Medicare patients they can treat if the 10 percent cut occurs this July. “Medicare’s physician foundation is at terrible risk because of a short-sighted payment plan that will cut physician payments 15 percent over the next year and a half, beginning this July.”

At the present manpower levels America is facing a physician shortage. This physician shortage will become worse with Medicare’s reimbursement cuts. As practice cost increase it is impossible for physicians to afford investments in technology to create efficiencies in practice.

“Before the cut begins in July, Congress must take action to replace 18 months of cuts with payment increases that reflect medical practice costs. This will give Congress time to begin creating a new Medicare physician payment system that is based on medical practice costs.”

The AMA has outlined four broad strategies to achieve greater value for healthcare spending.

“The strategies are; reduce the burden of preventable disease; make health care delivery more efficient; reduce non-clinical health system costs that do not contribute to patient care; and promote value-based decision-making at all levels.”

The healthcare system needs governmental support to promote these strategies as well as the introduction of more innovative strategies. Andy Grove, ex CEO of Intel spoke of some innovative ideas that can be achieved with available technologies.

“The cost of caring for the elderly is huge and will only grow as our population ages. Of the $440,000 the average American spends on health care in his lifetime, $280,000 will be spent after age 65.”

Some say the longer people live the more they cost the healthcare system. This is a glib remark. The real issue is the better a person’s quality of life, the less ill those people will be, and the less they will cost the healthcare system.

I believe this is an underestimate of spending after age 65. Most people would like to stay in their own homes and be independent as long as they can. Present day technology can help make that happen.
Probably 50% of that post-65 outlay goes to assisted-living facilities and nursing homes. So it stands to reason that if there were a way to keep elderly patients in their own homes longer – without degrading quality of care – we’d have a cheaper and better system.

“I’m talking everyday, low-cost technology – the sensors, microchips, small radios you’d find in today’s PCs, in cell phones, and in Bluetooth earpieces. It’s not too difficult to use this stuff as monitoring tools. Not to spy, but to detect trouble. For example, did the patient go outside to get the newspaper or did she wander away? Has the patient taken his meds?”

Would seniors be opposed to this surveillance? I doubt it. Can these tools be used as teaching tools for a motivated population to maintain health and avoid the complications of chronic diseases and subsequent assisted living? Does Medicare, the provider for most seniors have any interest in supporting initiatives such as this? We have not seen any sign of it. The initial reaction is these maneuvers open the door to more bureaucracy and subsequent abuse. I do not think so. If patients were in charge of their healthcare dollar and were responsible for their healthcare expenditures the system would be efficient.

“Can we afford all this? Let’s do the math. In my estimation, the ER plan can be implemented for $20 billion per year, paid for with the 1% surtax I suggest. As for the elder-care plan, the savings achieved by keeping just 10% of the aging population in their homes can amount to a savings of $30 billion a year.”

America must afford innovations that can save $30 billion dollars or more a year. The more people are kept out of nursing homes the more money would be saved. It would also force the nursing homes charges to decrease.

The Presidential candidates have not introduced this or any obvious innovative solutions to Repair The Healthcare System.

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The Democratic Party’s Health Plan — a Preview

Stanley Feld M.D.,FACP,MACE

“Critical” What We Can Do About The Healthcare Crisis is a book by Tom Daschle, Scott Greenberg and Jeanne M. Lambrew. It provides a more detailed outline of the Democratic Party’s approach to overhauling American health care than either Mr. Obama or Hillary Clinton has offered on the campaign trail.

“The most important proposal in “Critical” is the creation of a “Federal Health Board,” explicitly modeled on the Federal Reserve Board. Its duties would include “recommending coverage of those drugs and procedures backed by solid evidence. It would exert influence by ranking services and therapies by their health and cost impacts.”

I knew this was the way the Democratic Party and Hillary Clinton are thinking. The thinking is dead wrong in my opinion. Increasing regulation and price control would lead to a more dysfunctional healthcare system.

“The Federal Health Board duties would include “recommending coverage of those drugs and procedures backed by solid evidence. It would exert influence by ranking services and therapies by their health and cost impacts.”

Previous rankings have had errors. I suspect these measurements will have errors also. It sounds as if the government is going to dictate the kind of care patients will have access to. It will not be the care the patients’ physicians think is best. Generic medication will replace newer medications. Innovation and inventiveness will be suppressed. Some medical devices will not be available unless the board says it is cost effective.

This is essentially price control and controlling access to care. Past experience has shown these maneuvers do not work. The creation of incentives generates innovation.

The principles of Mechanism Design would create a system of rules fair to all stakeholders with patients being the most advantaged.

“What about the uninsured? Mr. Daschle wants to open to all Americans the Federal Employee Health Benefits Plan — a menu of private-insurance options now accessible only to government workers. He would offer, in addition to the current plans, a government-run program, presumably similar to Medicare, although he provides few details. There would also be some form of means-tested premium support (or tax benefits) for Americans who couldn’t afford one of the available plans.”

The good thing is access to care will be available to all regardless of preexisting illness. The bad thing is it will not create a competitive market place healthcare system so badly needs. It will create another level of bureaucratic complexity.

“Most of Medicare’s costs are borne by doctors and hospitals that must meet the requirements of a host of regulations; if they do not, they may face federal investigations and lawsuits for noncompliance.”

Tom Daschle’s (the Democratic) vision creates a punitive atmosphere for stakeholders that inhibit innovation and usually leads to higher costs.

“Medicare has employeed a mere handful of mostly generalist clinicians reviewing its coverage and payment decisions.”

There is no way a handful of generalist clinicians are able to understand the nuances of complicated disease processes and enforce the new bureaucratic rules. The only way reform will be successful is if the patients force competition for their healthcare needs.

“Mr. Daschle federal health-board proposal is not exactly a new idea. Mr. Daschle himself proposed it as part of the failed American Health Security Act of 1993.”

This was translated into (Hillary Care) a program that assured the government as a single party payer dictated access to care and choice of provider. It failed because public opinion opposed it before it got started.

“Tom Daschle admits that the board is based on the National Institute for Clinical Excellence in Britain and the Federal Joint Committee in Germany. Both are charged with managing the public’s access to higher-cost drugs, medical devices and procedures. But both are growing increasingly unpopular in their home countries — precisely because they’ve become a triumph of cost-containment over patient access and choice.”

Americans had the same experience with HMOs. They failed because of public disenchantment with the system that eliminated choice and access to care. Public opinion turned against HMOs.

“Mr. Daschle proposes a dozen or so “experts” who would be “chosen based on their stature, knowledge, and experience, ensuring that the decisions they make have credibility across the health-care spectrum.”

I have outlined a system that puts the patients in charge. If Americans are given the appropriate incentives and the correct education they can make wise healthcare choices.

The trick is to not let the politicians sneak a defective system into law in the middle of the night.

I hope if Mr. Obama becomes President he does not fall for the Democratic Party’s folly. So far he has camouflaged his intentions.

  • mike

    “Innovation and inventiveness will be suppressed.”
    My take on the expression of “Innovation and inventiveness” is tweaking a pill so another round of patent protection can be had, and advertising to the public because the drug is not effective and will not otherwise be used.

  • JMesserly

    I need some help understanding the difference you see between a system with an undesirable governmental health entity, and one you see as acceptable. Daschle states his model is David Mechanic’s (“Truth about Health Care”) notion of a Federal Reserve like entity only in the sense of political independence from stakeholders but explicitly states it “wouldn’t be a regulatory agency”. Instead, “… the goal is a Board that is a standard setter that allows a private delivery system to operate within a public framework. A highly regulatory approach is unlikely to succeed.” (page 179). This is not in the model you portrayed, of socialized medicine like those in Europe, and not what Clinton was proposing in 1993. But I don’t want to focus on that- my confusion does not concern whether or not your characterization of what Daschle was proposing was fair.
    I am instead interested in what you are proposing. This is not a hostile query- I appreciate the value of mechanism design, but I am having some trouble understanding how the rules of your proposal are enforced minus some authority charged with oversight, and with ability to probe abuses.
    For example, your Medical Savings Account proposal states that it is mandatory that there be “price transparency”. Does this requirement for transparency cover scenarios when a patient might have had their bill padded with services of questionable medical value? What is the mechanism of enforcement? Is there a person knowlegable in the art who examines complaints, or performs spot checks to insure compliance? If so, what authority does that person operate under?

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War On Obesity Part 8: Our National Pastime Fuels Obesity Epidemic

Stanley Feld M.D.,FACP,MACE

Ninety percent of the Medicare dollars are spent on the complications of chronic disease. Obesity is the cause of the onset of many chronic diseases such as Type 2 diabetes mellitus, and heart disease.
I have said there is a solution to the predicted $34 trillion dollar healthcare deficit. It is the prevention of the onset of chronic diseases. The government, corporate policies, patients, and physicians do little to prevent to onset of chronic disease or its complications.

In pursuit of the dollar Major League Baseball has outdone McDonald’s as an irresponsible corporate citizen. You will recall the relationship of McDonald’s super sized campaign and its relationship to elevating cholesterol and heart disease.

The public outcry caused McDonalds to retreat from its super sized campaign.

Baseball and gluttony, two of America’s favorite pastimes, are merging in a controversial trend taking hold at Major League Baseball stadiums across the nation: all-you-can-eat seats.”

These cheap seats were difficult to sell. Now these seats are more expensive. They are advertised as party time with all you can eat food and drink. When people go to a ballgame they want to have fun. The message is fun equals baseball, hot dogs, nachos and soda pop. In a world where the” media is the message”

Major League Baseball is playing on the emotional message of fun while promoting the Obesity Epidemic.

“Fans in these diet-busting sections, for a fixed price usually ranging from $30 to $55, are able to gorge on as many hot dogs, nachos, peanuts and soft drinks as they can stomach. Some teams charge extra for beer, desserts and candy.”

I predict all thirty major league teams will have all-you- can–eat-seats in 2009. Where are the Presidential candidates on the issue of the obesity epidemic? Can the government do anything to protect us? Can people do anything to protect themselves? Can major league baseball do anything to stop this madness?

“At least 13 of the 30 major league teams are offering all-you-can-eat seats for all or part of the 2008 season, up from six last year. Some of the teams that offered them last season are expanding their all-you-can-eat sections this season.”

I have been saying for the past 2 years that citizens have to be responsible for themselves. The corporate interest is to make as much money as it can.

No one is going to step forward and protect us from ourselves unless public outrage occurs and we have a culture change toward overeating. “People Power’ expresses itself through public outcry.

“All-you-can-eat seats, usually in distant bleacher or upper-deck sections, are allowing teams to squeeze revenue out of parts of ballparks that used to sit empty game after game, team officials say.”

It is clearly all about money. All you can eat seats is an erroneous policy decision to increase revenue. The baseball executives always have lame excuses for bad policies.

“We’re getting rid of (tickets) and making the public happy” by offering them a way to save money, says Andrew Silverman, executive vice president of sales and marketing for the Texas Rangers. The Rangers saw sales of 616 seats in their stadium’s left-field corner take off last year after the seats were designated as all-you-can-eat areas.”

The public relations ploy is to put the blame on the fans and not their baseball franchise.

Mark Tilson, vice president of sales and marketing for the Kansas City Royals, says it’s up to fans to eat responsibly.
“We’re not making anybody purchase these seats, or eat seven hot dogs,” says Tilson.

Mark Tilson is correct. This is a strong reason for Americans to be responsible to themselves. If they owned their healthcare dollar they might not choose to abuse themselves especially if there was a financial incentive to take good care of their body. If they abuse their body they should be responsible financially as well as emotionally.

“What attracted me was eating as much as I could,” says Toney Fernandez, 20, of Harbor City, Calif., but “then I got hooked by the whole atmosphere:

The Dodgers began offering 3,300 right-field bleacher seats with unlimited Dodger Dogs, nachos, peanuts, popcorn, soft drinks and water. The section averaged 2,200 fans a game last season — and sold out for one-third of the team’s home games.

“Before the unlimited food and drink, such seats sold for $6 or $8, if they sold at all. Now, they go for $35 in advance and $40 for game-day tickets.”

The teams are doing it for money and not the health of their fans. The fans have eating contests.

” At the Braves’ Turner Field, some fans had hot dog eating contests, says Derek Schiller, executive vice president of sales and marketing.”

“The Royals tout their section with the slogan “Eat, drink and be merry!” At one game, a teenage boy scarfed down a dozen hot dogs, nachos and a couple of bags of peanuts.”

Ron Ranieri, general manager of concessionaire Aramark at Atlanta’s Turner Field, calculates that a typical all-you-can-eat customer downed: 3.35 hot dogs; one 20-ounce soda; one 7.9-ounce bag of peanuts; one 3-ounce order of nachos and 32 ounces of popcorn.

This translates to a caloric intake of about 4500 calories or about three times the recommended daily food intake. What is worse is that it also represents about 4 times the recommended saturated fat intake. This excessive intake increases the risk for heart disease, diabetes, stroke, and cancer and in turn the cost of healthcare. The question is who should be responsible for this excessive food intake. Should it be the government, society or the patient? In a free country it should be the patient’s responsibly for the excessive intake.

Should the government pay for care as a result of this abuse? Should the patient be responsible for the abuse? Should a system be created so that the patient acts responsibly and not abuse to his body? My answer is yes. The system be be able to accomplish this goal is not universal healthcare coverage with a single party payer.

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The $34 trillion problem: Senators Clinton, Obama, McCain Are You Listening?

Stanley Feld M.D.,FACP,MACE

It is easy for the presidential candidates to promise healthcare for all during a presidential election year. However this promise is made without testing reality. The reality is America can not afford to deliver healthcare to all. The country is having difficulty keeping its public hospitals open. These public hospitals are centers for last resort care.

“The prospects that Grady Memorial could close, and that Atlanta’s health infrastructure could crumble, have forced a civic re-examination of the region’s commitment to its least fortunate, a reckoning that has revived old antagonisms over race, power and class.”

“Some have suggested that Grady must compete for paying customers in Atlanta’s fierce medical marketplace, while others say that taxpayers should contribute more to continue its mission. Will Grady outsource, or simply downsize? And if it must downsize, which patients should be turned away?”

None of the presidential candidates have suggested viable solutions to the healthcare system’s problems. I think the Democratic Party wants its declared initiatives to fail. After the initiatives fail they will claim there is no other choice but universal healthcare system with the government as the single party payer. The failure of the proposed insurance paradigm is a back door entry to a single party payer system.

A recent Fortune magazine article said: “Medicare is poised to wreak havoc on the economy. And our presidential candidates are avoiding the issue.”

Alan Greenspan has been quoted as saying “the biggest threat to the American economy is Medicare. You’d think that the greatest threat to America’s economy would be Topic A for the presidential candidates. But it’s actually a topic they hate to touch.”

Instead, the great debate between Hillary Clinton and Barach Obama is to mandate universal coverage or not. If you require people to buy healthcare insurance using a defective healthcare insurance model all you will be doing is providing more customers for the healthcare insurance industry.

“An analysis of their speeches shows that last year Senators Hillary Clinton, John McCain, and Barack Obama would occasionally mention the Medicare mess. But recently, with the economy slowing and voters feeling insecure, all three candidates have turned more populist: Their economic talking points are about feel-good reassurances, not about facing hard realities.”

Americans should be suspicious of Sen. Clinton’s promises. I mention her because she has been the most vocal in diverting us from the reality of the government run healthcare systems mess.

“Unfortunately the day of reckoning is imminent. Sometime in the next President’s first term, Medicare Part A (hospital insurance) will go cash-flow-negative, and it’s all downhill from there.”

“Medicare services more than 40 million old and disabled Americans. As the country ages, Medicare and Medicaid will devour growing chunks of U.S. economic output.”

This is especially true if our obesity epidemic continues. Obese people are more prone to chronic diseases such as diabetes mellitus, hypertension and coronary artery disease.

If we institute universal coverage and single party payer the estimate of healthcare costs consuming 18% of our GNP will jump to 40% of our GNP by 2020.

“In 2070, when today’s kids are retiring, Medicare, Medicaid, and Social Security will consume the entire federal budget, with Medicare taking by far the largest share. No Army, no Navy, no Education Department – just those three programs.”

“Those estimates, reported in the latest Financial Report of the U.S. Government, assume that Medicare payments to doctors will be slashed drastically, by some 41% over the next nine years, as required by current law. It won’t happen. Every year for the past five years, Congress has overridden the mandatory cuts.”

It is obvious something has to change. The estimate of healthcare costs is base on a defect financial reporting by the US Government. The financial report admits these defects.

“As for future cuts, the Financial Report says drily, “Reductions of this magnitude are not feasible and are very unlikely to occur fully in practice.” So in reality, Medicare will go into the hole even faster than official projections reflect. And they show that if Medicare had to be accounted for like a company pension fund, it would be underfunded by $34 trillion.”

The Congress has been correct in its override of proposed Medicare cuts yearly. However, they have done it for the wrong reasons. I have been against the Medicare cuts to cognitive physicians. Medicare cuts do not solve the basic structural healthcare problems.

There are many other constructive solutions. These solutions include a War on Obesity, effective malpractice reform, encouragement of effective disease management and incentives for both patients and physicians to practice effective disease prevention and disease management to decrease the onset of complications of chronic diseases. The solution can only be accomplished with real price transparency by all the stakeholders, an ideal medical saving account, an ideal electronic medical record, and the creation of a system of competition so that the patients own their healthcare dollars and all the other stakeholders compete for their healthcare dollar. These elements of the solution can not be done piece meal. They have to be introduced and enacted as a complete package in order to be effective.

The solution proposed will probably never be enacted. The people (“People Power”) have to make the demand for effective change. There are too many powerful stakeholders who will lose and will not let effective change occur.

Physicians do an excellent job of fixing things that are broken. The government, corporate policies, patients, the healthcare insurance industry and physicians do little to prevent our bodies from becoming broken.
If Mr. Greenspan is correct and the healthcare crisis is “ the greatest threat to the U.S. economy and the candidates haven’t told us what they’d do about it, they haven’t told us a thing.”
The candidates should develop an understanding of the problems and viable solutions to the problems. However, they are avoiding them.

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

  • Maureen Heasley

    My husband recently passed away. Fighting through the medicare red tape was a nightmare. Things are not clear. Many things need to be updated and revised. There is new thinking about preventive care and alternative medicines to be considered. Some of medicare policies will pay for a person to go into a nursing home instead of being treated at home. How cost effective is that? And it goes on and on. I hope someone in congress will bite the bullet and take the leadership roll to reform medicare.

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Safety-Net Hospitals Falling Into Financial Crisis

Stanley Feld M.D.,FACP,MACE
Public hospitals in cities throughout America have been safety net hospitals for the indigent in its communities. Grady Memorial Hospital is such a large public hospital in Atlanta Georgia. It is in financial crisis as is many public hospitals in many cities in our country. A majority of Americans have no idea of the difficulty these invaluable resources have had in the last 20 years. In fact there were 1,600 public hospitals in the country 15 years ago. Three hundred have been force to close because of financial insolvency. The remaining 1,300 are struggling.

“Grady Memorial Hospital is home to Atlanta’s only emergency ambulance fleet and only Level 1 trauma center in north Georgia.. A teaching hospital, Grady owes $71 million to Emory University and Morehouse School of Medicine, which provides it with doctors.”

Grady Memorial Hospital does not have the money to pay its medical schools to provide physicians. The medical schools can not afford to donate their time to Grady Memorial nor can the medical schools survive without the income from Grady Memorial. It is in a Catch 22.

“To generations of Georgians, this city is unimaginable without Grady. Yet that has been the prospect facing the region for the last year, the result of a multimillion-dollar shortfall in the cost of providing charity and emergency care that no one — not the counties, the state nor the federal government — has been willing to cover, though Grady provides vital services to the entire region.”

The counties, the state and the federal government can not afford to cover Grady Memorial’s shortfall. How can we expect the state or the federal government to provide universal healthcare insurance?

“Once admired for its skill in treating a population afflicted by both social and physical ills, Grady, a teaching hospital, now faces the prospect of losing its accreditation. Only short-term financial transfusions have kept it from closing its doors, as Martin Luther King Jr.-Harbor Hospital in Los Angeles County did last year. That scenario would flood the region’s non-profit hospitals with uninsured patients and eliminate the training ground for one of every four Georgia doctors.”

The community hospitals are non-profit hospitals. They enjoy tax free status because they have made a commitment to provide indigent care for 20% of their admission. Most of the community hospitals do not fulfill that commitment. However the government does not enforce the community hospital’s commitment.

“Grady is among the most distressed of the country’s 1,300 public hospitals, others have faced similar challenges in recent years, including those in Miami, Memphis and Chicago, said Larry S. Gage, president of the National Association of Public Hospitals and Health Systems. Public hospitals have been forced to close in Los Angeles, Washington, St. Louis and Milwaukee.”

In order to survive, services are curtailed and access to care is restricted. If one definition of quality medical care is the right care at the right time our public hospitals are going in the wrong direction.

“Providers feel the strains when each counselor has to counsel 20 patients in a day, twice as many as they did only five years ago. Or when they have to tell diabetics at risk of blindness that it might take four months to get an eye appointment.”

As funds diminished, newer technology has not been installed at Grady Memorial.

“Its outdated technology is obvious in the emergency room, where patients are tracked not by computer but by hand on a greaseboard and on forms passed from tray to tray.”

” A third of the hospital’s patients, including those treated as outpatients, are uninsured, among them a rapidly growing group of immigrants. Another third are covered by Medicaid, which reimburses at rates well below Grady’s actual costs. Many hospitals use their privately insured patients to subsidize indigent care, but at Grady, only 8 percent of inpatients fit the privately insured category.”

The public hospital systems as well as the private and non profit hospital systems are operating under healthcare models that are no longer sustainable and will all implode unless they reinvent themselves.
With Medicare and private insurers reducing reimbursement hospitals are going to have to start decreasing salaries. Rather than decreasing administrative salaries they have started reducing nursing and other ancillary workers’ salaries. The hospitals have started to complaint they have a shortage of personnel.

“ The National Association of Public Hospitals says its members account for 2 percent of all hospitals, but provide 25 percent of the nation’s uncompensated care to uninsured and under insured.”
“Over the years, the cost of caring for the uninsured and underinsured has grown while taxpayer support has stagnated. Suburban counties have declined to pay a share of those costs, though their residents regularly wind up in Grady’s emergency room and its highly regarded centers for burn and poison treatment.”

This is a major problem in all the public hospitals in the country. Many cities have a dumping problem. The for profit and not for profit hospitals send extremely ill patients into the public hospitals for care even though many of these hospitals are in suburban counties that do not contribute to the public hospitals’ budget.

“Grady officials estimate it would take $366 million to meet long-ignored capital needs, like replacing quarter-century-old beds, antiquated computers, and the trauma ward X-ray machine, which conked out two years ago. Department chiefs predict a growing difficulty in recruiting physicians and residents.”

Even though the patient mix is extremely interesting and educational physicians in training simply do not want to learn in an antiquated infrastructure.

“Despite the efforts of the hospital’s passionately committed staff, patient care is clearly suffering. There are interminable waits for appointments, some services have been discontinued and the hospital ranks below average on safety measures like preventing bed sores, infections, and even death in low-risk procedures. One study, for example, ranks Grady nearly dead last in the nation in following standards for treating pneumonia.”

Grady Memorial Hospital must survive and must be upgraded.

“ Grady’s value is more than sentimental — it is essential to the region’s health.

None of the presidential candidates have mentioned the problems in the public hospital system. I think they should.

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

  • Medical Travel

    I have to agree,
    Where did all the money go?
    It appears the executives started pulling out there money a while ago to safeguard there futures. Unfortunately the selfish never realize how many thousands of people will be affected from these hospitals and their owners actions.
    Shame on YOU!

  • Travel Insurance

    These hospitals should learn to use the money allotted to them orderly to avoid foreclosures.

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Who Are the Real Bad Guys? Part 2

Stanley Feld MD,FACP,MACE

The beauty of Medicare is that patients are automatically insurable despite preexisting illness without a premium penalty.

I received this note today;

“ Did you know that diabetes is considered an “uninsurable diagnosis” as stated by the insurance industry. Unless a person is covered under an employer, or under someone else’s policy, as an individual seeking health care coverage, that individual has an “uninsurable diagnosis”….. that’s health care in this country.

M K, RN”

The answer is yes I do know. That is one of the great defects in the healthcare system.

The only premium penalty is a means testing penalty. I believe means adjusted premiums are an excellent idea. The slight defect is Medicare’s means adjustment formula. This defect could easily be repaired.

The big problem with Medicare and the private healthcare insurance industry is their payment structure. There are few incentives for patients to save premium dollars and disincentives for physicians to accept the endless reductions in reimbursements. All recent actions to improve the system such as P4P are punitive action. Punitive rules are impossible to enforce.

If the healthcare system has to mandate something it should mandate the prevention of complications of chronic disease. Ninety percent of Medicare’s healthcare dollar is spent on the complications of chronic disease. If this happens we could decrease the cost of care by at least 50%.

It should be every patient’s obligation to become the professor of his chronic disease. Financial incentives could help patients realize their obligation to themselves.

We are on the verge of a severe physician shortage because of overuse of the system despite the fact that 47 million people are uninsured. The payments for the treatment of the complications of chronic diseases are bankrupting the healthcare system even in the face of decreasing provider reimbursement.

The healthcare insurance industry is not interested in making any structural changes. It is doing just fine earning ever increasing profits and paying outrageous executive salaries. The insurance industry’s focus is to collect the highest premium from the least sick patients.

The exposure of abuses to the healthcare system by the healthcare insurance industry in California can lead the way to effective reform if the abuses are handled appropriately.

Wellpoint inc. with BC/BS of California and BC Life & Health and Health Net are not the only companies abusing the system.

“The lawsuit is the latest action by state regulators, lawmakers, doctors, patients and now law enforcement officials targeting insurance company practices — notably canceling policies when they become too expensive for the insurers.”

Surveys of the other plans — Kaiser, and PacifiCare — are ongoing.

This lame excuse given by a healthcare company should result suspension of its license to sell insurance in the state as opposed to a meager fine.

The healthcare insurance companies, however, maintain that they do this to keep costs down by weeding out people who may have failed to disclose preexisting conditions when they applied for coverage.”

There should be no exclusions for preexisting conditions. Preexisting condition exclusions lead to more uninsured and bigger strains on patients. The results would be increasing personal bankruptcies and bigger burdens on local charity hospitals.

The revelation that Health Net plans have cancellation goals and employee bonuses for rescinding the insurance coverage comes amid a storm of controversy over the industry-wide but long-hidden practice of rescinding coverage after expensive medical treatments have been authorized.

Most of the state’s major insurers have cancellation departments or individuals assigned to review coverage applications. They typically pull a policyholder’s records after major medical claims are made to ensure that the client qualified for coverage at the outset.

Anyone with any knowledge of healthcare insurance companies’ operations knows about their cancellations department. The State Boards of Insurance are our surrogate for fair insurance practices. They should review and act promptly and automatically on all unfair practices.

”Woodland Hills-based Health Net Inc. avoided paying $35.5 million in medical expenses by rescinding about 1,600 policies between 2000 and 2006. During that period, it paid its senior analyst in charge of cancellations more than $20,000 in bonuses based in part on her meeting or exceeding annual targets for revoking policies, documents disclosed Thursday showed.”
This is typical of bureaucratic systems. Usually intentions are good. The details and compromises with healthcare insurance companies’ lawyers decrease the bureaucratic systems ability to act.

“Eight months after pledging to put the brakes on retroactive cancellations of individual health insurance policies, the state agency that regulates HMOs said Tuesday that new rules were taking longer than anticipated because of the variety of health plans involved.”

Governor Schwarzenegger got the solution to the problem half right.

”The reforms sought by Gov. Arnold Schwarzenegger would require individuals to carry health insurance and would require insurers to sell it to everyone regardless of preexisting medical conditions.”

All California needs is to require insurers to sell it to everyone regardless of preexisting medical condition. They should not have the ability to rescind the insurance coverage. Governor Schwarzenegger caved into the healthcare insurance industry when he mandated insurance coverage. The insurance industry would love nothing better than to require everyone to buy healthcare insurance. They want the sick people to be paid for by the state and collect the premium from the young and healthy.

An industry trade group has long opposed new rules, saying they are unnecessary.

“Once proposed, new rescission rules could take as long as a year to be publicly aired and then revised and adopted or dropped. “

If the healthcare insurance industry did not have so much power and could not get away with all their abuses they would have to give people a good deal to be profitable. Everyone wants a good deal. Most of us understand the importance of health insurance. Some reject buying insurance because it is a bad deal for a low risk person paying with pretax dollars and healthcare insurance industry’s control over pricing, eligibility and rescissions.

“People Power” can solve the problem when public awareness of the healthcare industry’s abuse increases and the power of public opinion is activated.

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

  • Debra

    First, you’re a treasure to American’s healthcare discussion and the blogging community for being bold enough to state issues plainly and candidly. So, thanks.
    It would be terrible to have your health insurance coverage canceled when you need it the most, no doubt. But my question with this post is: did these people, in fact, lie on their applications? This is a contract. If an applicant lies, they have chosen the risk of having their coverage canceled.
    Since I began working at 22 years old (I’m 43 now), I have paid – either through my employer or most years, individual coverage – healthcare premiums without lapse. I am very proud of that. Do some people wait until they are severly ill until they begin contributing to our very excellent medical system? It is expensive and can be overwhelming to afford but I really think people should pay something.
    Again, thanks for the forum. It’s great.

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