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Combining My “Ideal Medical Savings Accounts” And “Reference Pricing”

Stanley Feld M.D.,FACP,MACE

President Obama has declared over
and over again that no one has presented ideas better than Obamacare. 

I believe he has no interest in
listening to anyone.

I sent him 6 letters between 2008-2009
presenting my solution to repairing the health care system. These ideas were
from a practicing physician’s perspective. President Obama paid no attention.


President Obama fooled many people
with his intentions, including me. The traditional media is finally catching on
to him. 

All of the stakeholders are at fault
in causing the dysfunctional healthcare system. The dysfunction is the result
of all the stakeholders trying to adjust to ever changing government regulations
during the last 48 years

Obamacare is making that dysfunction
worse.

A consumer driven healthcare system
is the only way to Repair the Healthcare System.

I think President Obama wants the
healthcare system to fail. He wants to prove that the free market cannot
succeed.

He is deaf to the fact that the
healthcare system is not a very free market system.  Government regulations, tax favors, and tax
barriers over the years have interfered with the free market in healthcare.

The Affordable Care Act (Obamacare) intends to transform the
health-care system, extend coverage,
reduce costs and increase quality—all
without asking anything of the patients.

 Consumers will pay
with higher taxes, of course, but otherwise will face no incentives to make
wise choices, compare price with performance or shop for value.

 Doctors, hospitals,
insurers and, most of all, the government will do that for them, which is
hardly reassuring.

 This reflects what I
call the "impossibility theorem" in health care. The impossibility theorem maintains that patients cannot
make good choices, but, rather, must be dependent on the well-intentioned
decisions of others.

Policy makers believe this theorem by
definition. But, just to make sure, they have structured the health-insurance
system to ensure that patients are never asked or allowed to make
price-conscious choices.

The arrangement underlies the innumerable
rules, subsidies, entitlements, mandates and prohibitions that collectively
make health care the least efficient part of the economy.

 ObamaCare makes it worse.

I do not think consumers believe or trust President
Obama. Consumers certainly do not believe “the impossibility theorem.”

Consumers are ready for some common sense healthcare
policy. They just do not know what to do.

Consumers must be given incentives to control
healthcare costs. This can be done in several ways.

Consumers must be put in charge of their health and
healthcare dollars.

The
central pillar of effective healthcare reform is the creation of a system that
forces the healthcare insurance industry to be competitive and answerable to
consumers.

Consumers
must have incentives to control costs. This, in turn, would force hospital
systems and physicians to be competitive and reduce costs.

The government’s
role should be to empower consumers to have greater control over their
healthcare decisions, their health, their healthcare dollars and their
healthcare coverage.

The
government should teach consumers to make educated choices in their healthcare
decision-making.

Price
transparency of healthcare fees and parity of tax deductions between the individual
insurance market and the group healthcare insurance market is essential.

It is fool
hearty to assume that the redistribution of wealth, raising taxes by means
testing and price fixing will solve the problems in the healthcare system.

  “Why on earth would we want a system,
especially with something as personal as health care, where all of these free market
signals are lost, and insurers responding to regulators, not to us?”

Entitlement programs have never produced free market
efficiencies
. Entitlements have created unsustainable, unfunded liabilities.

Leadership must face this problem not add to the
problem.     

In the past seventy years medical advances through
research and technology have improved medical care and medical outcomes. Medical
advance has focused on fixing diseases after they have occurred.   

Consumers are the only ones that can prevent most
medical and surgical problems.

They can prevent most chronic diseases such as Type 2
Diabetes, heart disease, lung disease and others. 

Consumers are also the only ones that can prevent the
costly complications of a chronic disease.

A healthcare system must be constructed to incentivize
consumers to be responsible for their health and healthcare dollars.

Eighty percent of the healthcare dollars spend on
diabetes care is spent treating the complications of diabetes.

A healthcare system must be developed to align all of
the primary and secondary stakeholders’ incentives.

Only consumers can align all the stakeholders’
incentives.

Government control of the healthcare system cannot and
has not aligned those incentives.

Right now we are seeing bureaucracies making a $634
million dollar error with healthcare.gov. This is only the tip of the iceberg
for the problems in store for Obamacare.

The solution is not a single party payer. We will have
the same problems or worse because of the expansion of Medicaid. President
Obama’s hope was the cost of increasing Medicaid would be shifted to the
states.

The increase in cost will increase the federal deficit
and unfunded liabilities.

A healthcare system must be constructed to empower
consumers. I have written in detail about my ideal medical savings accounts.

I have pointed out that it can be very democratic.
Everyone can be insured while decreasing the costs.    

The ideal medical
saving accounts will motivate and empower consumers to save money by staying
healthy, staying out of the emergency rooms, and decrease over testing and over
treatment.

Consumers would be
motivated to shop for the top value and quality care.  

The government would
require providers to publish the discounted prices paid by the government and
the healthcare insurance companies to all consumers.

My ideal medical
saving account would incentivize consumers to save money. It would be the
responsibility of consumers to shop for the best price at the best quality.

Consumers would
carry their medical records digitally on a flash drive or on their smart phone
to avoid over testing. They would reap the financial benefits of these cost savings.

Consumers, after
the initial $6,000 dollars was spent, would receive first dollar healthcare coverage.
 

I have always been
satisfied with the front-end incentives. I have never been satisfied with the
catastrophic coverage. It does not provide financial incentive for consumers to
save.

I finally figured
it out. Consumers would continue to receive first dollar coverage if they spent
over the initial $6,000 after the initial stakeholders.

The discounted
hospital, surgical and medical device costs would be published along with
outcomes.

Discounted prices
for services could also vary for the same services. The outcomes could be the
same.

A hospital system
with better outcomes should receive more. If the hospital system negotiates a
higher fee than another hospital system but has the same outcome the consumer
should be liable for the difference.

 In this way the decision for choosing the
provider is in the hands of the consumer.

Combining my ideal medical saving account and “reference
pricing” will incentivize consumers to be in control of their healthcare costs
and their health and healthcare dollars.

Consumers should receive pretax dollar treatment for
all expenditures.

Consumers will then shop for price and quality to
their financial advantage.  This will
incentivize providers to compete on both price and quality.

The Oklahoma Surgical Center has forced local
hospitals to do just that
. The Surgical Centers’ online prices were one half to one
fifth the prices of the local hospital.  The hospital centers are now starting to
compete on price and quality.

 The combination
of the ideal medical saving accounts and reference pricing will incentivize
providers to be aligned with consumers’ goals.  

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

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My Ideal Medical Savings Account Is Democratic!

Stanley Feld M.D.,FACP,MACE

A reader sent this comment; “My Ideal Medical Savings Account (MSA) “was not democratic and leads to restriction of medical care for the less fortunate.'

This comment is totally incorrect. I suspect the comment came from a person who has “an entitlements are good mentality.”

I believe that incentives are good. They lead to innovation. Innovation leads to better ideas.

Healthcare entitlement leads to ever increasing costs, stagnation, restrictions on freedom of choice and a decrease in access to care.

I have written extensively about the virtues of My Ideal Medical Savings Accounts (MSAs). They are different than Health Savings Accounts (HSAs).

HSAs put money not spent in a trust for future healthcare expenses. MSAs take the money out of play for healthcare expenses. MSAs provide a trust fund for the consumer’s retirement.

MSAs provide added incentives over HSAs to obtain and maintain good health.  Obesity is a major factor in the onset of chronic diseases. Consumers must be motivated to avoid obesity to maintain good health. MSAs can provide that incentive.

The MSA’s can replace every form of health insurance at a reduced cost. It limits the risk to the healthcare insurance industry while providing consumers with choice.

This would result in competition among healthcare providers. Competition would bring down the cost of healthcare.

Some people might not like MSA’s because they are liberating. They provide consumers of healthcare with freedom of choice. They also give consumers the opportunity to be responsible for their healthcare dollars while providing them with incentives to take care of their health.

MSAs could be used for private insurance purchasers, group insurance plans, employer self insurance plans, State Funded self-insurance plans and Medicare and Medicaid.

In each case the funding source is different. The cost of the high deductible insurance is low because the risk is low. 

If it were a $6,000 deductible MSA, the first $6,000 would be placed in a trust for the consumer. Whatever they did not spend would go into a retirement trust.  If they spent over $6,000 they would have first dollar healthcare insurance coverage. Their trust would obviously receive no money that year.

The incentive would be for consumers to take care of their health so they do not get sick and end up in an expensive emergency room.

If a person had a chronic illness such as asthma, Diabetes, or health disease with a tendency to congestive heart failure and ended up in the emergency room they would use up their $6,000.

If they took care of themselves by spending $3,000 of their $6,000 trust their funding source could afford to give their trust a $1500 reward. The benefit to the funding source is it saved money by the consumer not being admitted to the hospital. The patient stayed healthy and was more productive.

President Obama does not want to try this out. He wants consumers and businesses to be dependent of the central government for everything.

MSAs would lead to consumer independence from central government control of our healthcare. MSAs would put all consumers at whatever socioeconomic level in charge of their own destiny.

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

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Ideal Medical Savings Accounts For Everyone: Encourage Patient Responsibility!

Stanley Feld M.D.,FACP,MACE

The third spoke in the future states wheel is Patient Responsibilty for their health and Healthcare dollars.

The Ideal Medical Saving Account would decrease the cost of the Healthcare System because it would dis-intermediate the Healthcare System’s complex and convoluted business model.

The Ideal Medical Savings Account should be an option for all consumers who have all types of insurance coverage. The Ideal Medical Savings Accounts would create competition for patients among physicians. It would create competition among healthcare insurers.

Medicare, Medicaid, corporate self-insurance plans, association healthcare plans, individual healthcare plans and ordinary healthcare insurance plans provided by employers could all offer the Ideal Medical Savings Account.

If MSAs were structured as my Ideal Medical Savings Account is structured the result would be a decrease in the cost of healthcare, a decrease in premium costs and an increase in healthcare quality.

The Ideal MSA must be paid for by pretax dollars as all other healthcare plans are.

If the government, individual or employer puts the first $6,000 of insurance in individual trusts for the consumer the entire healthcare and medical care supply chain would be disrupted by consumers.

An immediate argument is Medicaid patients are not smart enough to determine their own healthcare needs if they were responsible for the first $6000 of healthcare insurance coverage.

This is rubbish. It is condescending to patients on Medicaid. If the government is so worried they should provide education to help these Medicaid consumers make wise healthcare choices using available social media.

 

 The entire goal of the Ideal Medical Savings Account is to provide incentives for consumers to become responsible for their health and healthcare needs rather than be entitled to medical care.

The mechanism for this reversal from a dysfunctional system’s business model to a functional system’s business model is patients’ owning their healthcare dollars and having financial as well as medical incentive to be responsible for their health, maintaining their health, and choosing the most efficient and effective medical care.

Consumers would become Prosumers (Productive consumers) of health care rather than passive consumers of healthcare.

This mechanism has worked in many industries using the Internet as a facilitator.

The Internet can become an extension of the physicians care.

At present there are many web sites offering advice to patients. The defect is they are not an extension of the physician’s care of the patient.

Physicians would be motivated through competition for the patients’ owned healthcare dollars to choose the sites for his patients that would be an extension of their care.

Physicians associations could create web sites for their members.  Social networking between physicians and their patients could direct their patients to that site. This would be the meaning of an extension of the physician’s care.  

Patient responsibility is the third spoke in my formulation of the future state business model of a functional healthcare system.

 

Slide20

It must be remembered that the present state’s business model is dysfunctional. It must be repaired.

The future state must not be encumbered by any of the baggage of the dysfunctional present state business model.

If the future state model is made clear to patients, potential future patients and recovered patients (consumers) they will demand for this future state model.  

Using social media consumers can drive the healthcare system to the future state business model.

It is similar to what ITunes did to music publishing, Amazon did to book publishing and Netflix did to the movie industry.

 It turns out everyone is better off and the system is more efficient and costs less for consumers. 

The consumers would own the first $6,000. They would be responsible for the management of there healthcare dollars. They would also be responsible for choosing their physician.

I have found that when physicians and patients sign a patient physician contract the treatment results improve. Both physicians and patients have their responsibilities clearly defined.

The patient physician contract motivates patients to be responsible for their own care. Patients responsible for their care is critical to successful clinical outcomes.

If there were a financial incentive attached to this physician patient contract along with a potential bonus the results would be even better.  

This was especially true in the treatment of Diabetes Mellitus.

In treating chronic diseases such as Diabetes, physicians must be the teachers, prescribers and coach. Patients must become the professor of their disease. Patients live and care for their disease 24/7.

Financial incentives would motivate patients to take an active role in their medical care.  

Obesity is a major problem in America today. Patients and patient education is the only solution to the “The Obesity Epidemic.”

The only way to decrease obesity is by burning more calories than is eaten.  Society must encourage exercise, and reducing intake. It turns out society encourages the opposite.

Mayor Bloomberg is doing the right thing in New York City. He uses simple transit Subway advertisements to increase awareness caloric intake. He has required each restaurant to publish calorie counts.

It is a simple educational message that everyone can understand. It is amazing how intelligent people misjudge their caloric intake.

Constant repetition of calorie counts of various foods along with estimates of calories burned can result is a cultural change for the need to burn more than we eat.  

Companies such as FitBit are building simple products to help us achieve this goal. 

Obesity contributes to the onset of many chronic diseases. The treatment of the complications of chronic disease result in eighty percent of the healthcare dollars spent for direct patient care.

If a consumer abuses his health and ends up spending the initial $6,000 he has no money left to put into his retirement account.

If a patient has a chronic disease and has excellent control of his disease he can avoid the complications of his disease. If the patients take the appropriate medical care avoids hospitalization and the emergency room for the year, the provider of his Ideal Medical Saving Accounts can afford to give that person a bonus for his retirement account.

This would add an additional financial incentive for consumers.

As a society we are smart enough to solve the problem of a dysfunctional healthcare system. The present course is unsustainable.

The future state’s business model with consumers responsible for their healthcare dollars and the patient physician relationship restored can achieve the goal of a sustainable healthcare system. 

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

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The Second Spoke Of The Wheel: The Ideal Medical Savings Account

Stanley Feld

"Dear Dr. Feld

If your ideal Medical Savings Account is such a good idea why has it not become more popular?"

The reason is simple. The Ideal Medical Savings Account does not exist as a healthcare insurance option. The healthcare insurance industry has obfuscated the purpose of creating financial incentives for consumers with the offer of Health Savings Accounts.

The Health Savings Accounts keep premium dollars in the healthcare insurance industry’s control at the end of the year. Consumers are able to use unspent money on healthcare deductible in the future.

The Ideal Medical Saving Account puts the money not spent in a separate tax-free trust for consumers’ retirement. The logic is to reward consumers for good health financially and to encourage consumers to be responsible for their health and healthcare choices.

The goal is not to reward the healthcare insurance company it is to reward consumers. The healthcare insurance industry is controlling the consumer’s money for its own profit.

Despite its faults HSA’s are becoming very popular. It is the fastest growing healthcare insurance product in America.

President Obama wants to eliminate HSAs. His goal is to increase government control over consumers’ healthcare choices. He does not want consumers to control their healthcare dollars. He wants to control consumers.

The healthcare insurance industry’s goal is to maximize its profit. It is not concerned about the consumer’s health. The more consumers in the healthcare system the more premium dollars the healthcare insurance industry controls. 

 Using the power of lobbying and the influence of lobbyists it has been able to rig the game against the consumer.

    "Wendell Potter, former senior executive[1] at Cigna turned whistle-blower, has written that the insurance industry has worked to kill "any reform that might interfere with insurers' ability to increase profits" by engaging in extensive and well funded, anti-reform campaigns."

"This is nothing new. However, as consumers (patients in all three categories) the Internet and social networking can empower us to have more influence over the politicians than lobbyists."

"After all, we are the people who give them their jobs. Some might say this is a naïve view. However, recent events have shown the effect of People Power and its ability to disrupt the establishment and its lobbyists.

The industry, however, "goes to great lengths to keep its involvement in these campaigns hidden from public view," including the use of "front groups." Indeed, in a 1998 effort to successfully kill the Patient Bill of Rights at that time, “the insurers formed a front group called the Health Benefits Coalition to kill efforts to pass a Patients Bill of Rights.

While it was billed as a broad-based business coalition that was led by the National Federation of Independent Business and included the U.S. Chamber of Commerce, the Health Benefits Coalition in reality got the lion’s share of its funding and guidance from the big insurance companies and their trade associations."

The question is why would the National Federation of Independent Business or the U.S. Chamber of Commerce do this? They either don’t understand the healthcare insurance industry’s motives or they received grant money from the healthcare insurance industry. Both groups are working against the benefit of it own people.

"Like most front groups, the Health Benefits Coalition was set up and run out of one of Washington’s biggest P.R. firms. The P.R. firm provided all the staff work for the Coalition. The tactics worked. Industry allies in Congress made sure the Patients’ Bill of Rights would not become law."[2]" 

Obamacare and the Democratic congress have also yielded to the demands of the healthcare insurance industry. President Obama’s goal is to control all medical decisions for patients to keep healthcare costs down. Most advocates of Obamacare overlook this fact.

President Obama’s individual mandated purchase of healthcare insurance would increase the number healthcare industry’s customers. Its profits would increase. 

Medicare and Medicaid are totally dependent on the healthcare insurance industry for administrative services. This results in keeping the healthcare insurance industry in control of healthcare spending. The 2.5% overhead for Medicare and Medicaid continuosly repeated by government officials is completely bogus.

The healthcare insurance industry receives at least 30% of every Medicare and Medicaid dollar spent.

The administrative services costs are supposed to be no more than 15%. However, large sums of administrative costs are applied to direct patient care. Each administrative cost has a profit center attached to it.

These profits center increases the healthcare industry’s profits. In turn the salaries of the executives increase.

The Ideal Medical Savings Account eliminates all these layers of bureaucracy, profits and abuses.

It is a perfect opportunity for “People Power” to demand through social networks that the Ideal Medical Saving Account be added to healthcare insurance choices.

The Ideal Medical Savings Account puts the power back in consumers’ hands.

Neither traditional insurance plans or Medicare or Medicaid provide financial incentives for patient to be responsible for their disease nor their healthcare needs.

 

Spoke CDHC

 

Financial incentive for all categories of patients (consumers) can serve to increase adherence to physician’s treatment instructions.

Financial incentives can stimulate consumers to be educated consumers of both healthcare and medical care.

Financial incentives can serve to incentivize patients to become professors of their chronic disease. Self-management can avoid many emergency room visits and hospitalizations.

Instant adjudication of claims can decrease many of the excessive administrative costs.

The Ideal Medical Savings Account is simple and transparent to consumers.

IMSAs revives the patient physician relationship. It drives the government and the healthcare insurance industry to the edge of the medical care transaction. It disrupts the hairball and will instantly disrupt the food chain that is failing under the weight of healthcare costs.

The Ideal Medical Savings Account is a perfect healthcare insurance product if deployed properly. Social networks must be formed to demand its availability in order to permit consumers’ (patients) to drive the healthcare system.

Social networks on other levels can force physicians to be more competitive.

The result would be a reduction in the healthcare system’s cost while eliminating administrative abuse, waste and fraud.

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

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Public Option vs. Ideal Medical Savings Account: Part 4

 

Stanley Feld M.D.,FACP,MACE

Politicians and healthcare policy makers have not included consumer driven healthcare in the healthcare reform debate. They have not included tort reform in the debate either.

The debate is about a public option. President Obama is going to redefine his meaning of the public option in his message to congress. He will make it sound benign. It will not sound like a government takeover of healthcare. He will omit the details and consequences of the bill.

President Obama must know the government cannot afford a public option. He knows he must control costs somehow. His policy makers believe the only way to control cost is by total government control over the healthcare system. Ultimately the goal is a single party payer system.

This way of thinking about the problem is wrong. Government control does not reduce costs in most projects. It usually increases costs. The President is focused on reducing physicians’ and hospitals’ reimbursement. He believes they are the reason for increasing costs. Medicare has continually decreased reimbursement to physicians and hospitals. Yet costs have increased.

To some extent decreased reimbursement leads to increased utilization but it is not the principle reason for the increase in utilization. A principle reason is an increase in the need to practice defensive medicine. Plaintiff attorneys deny it. The Massachusetts study confirms that defensive medicine leads to a large increase in utilization and costs.

Physicians are an easy target because they are not well organized. The Democrat controlled government is timid about attacking the plaintiff attorneys and tackling tort reform. Defensive medicine results in about a $700 billion dollar a year cost to the healthcare system

Howard Dean said it a few weeks ago. “Congress will not face the issue of tort reform because it does not want to take on plaintiff attorneys.” Consumers can solve this for congress by signing a valid limited liability waiver. Patients can put their own cap on damages. It would not require any courage on the part of congress or the President to face this difficult political issue. All congress and the President have to do is declare the waiver valid.

Texas and California have had the courage to place caps on damages. It has been very successful. If there were caps on damages and they were effective the need for defensive medicine practices would decrease.

The public does not trust congress or the President with control over its healthcare coverage. The public experience with unintended consequences of government control is obvious to all.

Recent examples are the unintended consequences of the bank bailouts, Goldman Sachs bailout, the economic stimulus package promise, the auto bailout, and the war in Afghanistan. All these bailouts are increasing the deficit at the expense of the taxpayers and future generations.

The public mistrusts the healthcare insurance industry as much as it mistrusts the government to control healthcare. The healthcare insurance industry has restricted access to care and rationed care. It has not reimbursed physicians and hospitals in a timely fashion. It has found it is cheaper to pay the negotiated settlement rather the medical bills for its insured.

Nancy Pelosi is right about one thing and only one thing. The real villain is the healthcare insurance industry. However, she does not understand with a public option she is not controlling the healthcare insurance industry fees for administrative services. The government outsources administrative services to the healthcare industry and will still be subject to grotesque administrative services fees.

The healthcare insurance industry has lobbied to change the law to increase co pays to 35-40% of bills so it can lower premiums to affordable levels. Increasing deductibles and lowering premiums would satisfy President Obama’s goal of affordable premiums. At the same time, it will increase the out of pocket cost of medical care for consumers who might need to use their “affordable healthcare insurance.”

The healthcare insurance industry will be forced to offer insurance to consumers with preexisting illness at an affordable cost. Some states have a high risk pool. The premiums in the high risk pools are at least 11/2 times higher than normal premiums and have higher deductibles. High risk patients must be put into the general insurance pool.

There has not been a word in the healthcare reform discussion about patient responsibility for their health. We are in the middle of the worst Obesity epidemic in American history. President Obama should declare a War on Obesity. He should promote legislation that could help eradicate obesity. He should provide patients with financial incentives to eliminate obesity and adhere to prescribed therapy. Obesity is a leading driver of increasing healthcare costs. The costs will only become grater as the obesity epidemic continues.

It is time consumers took control of their own health care dollars and their own health and well being. The defensive medicine/tort reform issue can be solved by consumers. Obesity can be solved with the government rewriting farm subsidies and a substantial public service health campaign to change our eating habits.

A consumer driven healthcare system along with the ideal medical savings accounts could solve many of the healthcare system’s problems without total government control. The government’s job should be to help with educating the public, negotiating prices that are transparent and fair and enforcing regulations to create a level playing field for consumers among the other stakeholders.

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

Permalink:

Public Option vs. Ideal Medical Savings Account: Part 3

 

Stanley Feld M.D.,FACP,MACE

Dear President Obama;

Please listen. The American public doesn’t want the public option. They know America cannot afford another entitlement program. Americans do not want increased taxes. They are afraid China is lending us too much money. If and when they pull out it will be doomsday.

The healthcare insurance industry would love you to get your healthcare reform bill passed. It would increase their profits at taxpayers’ expense. The healthcare insurance industry did it to Massachusetts. The federal government had to bail out Massachusetts. Why not the entire country?

Americans want healthcare reform. They would love to provide universal care, have affordable insurance coverage, and increased quality of care. Your strategy is wrong.

There is another way to accomplish these things. It requires you to have faith in the intelligence of the American public. The strategy would decrease the cost to the healthcare system instantly. It would decrease the obscene costs for administrative services to the healthcare insurance industry. It would diminish the need to develop a massive government bureaucracy.

It eliminates the influence of lobbyists for vested interests. It would create competition among physicians, hospital systems and healthcare insurance companies. The healthcare insurance industry is drooling over your healthcare reform plan.

Americans know government bureaucracy can be cruel and inefficient. There are too many generalities that are wide open to abuse.

I received this note from a reader summing up America’s mistrust of government control. This person is neither a Republican nor Democrat. He is an American.

Stanley,

To sum up the recent post you can simply remind readers of the laughable old line, "I am from the government and I am here to help".

It was gaggy enough to see all the pigs at the trough getting 100’s of billions.  It will make everyone wretch just watching the same participants helping themselves to trillions of dollars worth of slop.

Heaven help us.  Neither the press nor the Obama fans can see through this smokescreen.  God, haven’t people figured out that when the government doles out money poor people don’t get helped, rich people do.  Does foreign aid help poor people in other countries.  If it did poverty in Africa would have ended decades ago.

Go back to the days of Lyndon Johnson.  We fought the war on poverty and lost that.  We lost the Drug War.  We lost the Vietnam War, we are losing the Afghan and Iraq Wars and we are well on our way to losing the war on the high cost of healthcare.  All of these efforts were lost not because they weren’t laudable goals, but because they were not properly considered.  As you know, some we should not have fought, others we should have fought differently.

Interestingly, the only real win we have had in the last forty years was the war on welfare and it came about because something was taken away, not added. 

Is there a lesson here?

L

How do you accomplish your goals and have the American public trust you once more? You can accomplish your goals of universal care, affordable insurance and increase in quality of care by putting individuals in control of their health and healthcare dollars.

This must sound radical to a liberal. If you permit consumers to drive the healthcare system they will drive the prices down.

How would a consumer driven healthcare system work using an ideal medical savings account?

Employers, states, and the federal government are currently paying healthcare premiums at very high administrative service fees to the healthcare insurance industry. Many self employed are paying the entire healthcare insurance premium with after tax dollars making their cost at least 35% higher than employer based coverage. Most cannot qualify for insurance because of preexisting illness.

The healthcare insurance industry controls the premium dollars. Patients have no financial incentive to be responsible for their health or healthcare dollars. The goal of a consumer driven healthcare system is to create a system that would provide incentives for consumers to be a watchdog for their healthcare dollars.

If these payers gave half of the $12,000 per family per year to consumers and permitted them to keep monies unspent in a retirement account, then patients would be motivated to use their healthcare dollar wisely

If consumers with chronic diseases perform well (weight loss, diabetes control, asthma prevention, COPD and heart disease prevention) and stay out of the ER or hospital because of proper maintenance they should receive a bonus for their retirement fund.

The fees for services would have to be negotiated beforehand as we presently do. All fees should be totally transparent. You would have 300 million people watching and reporting their costs or care.

The remaining $6,000 would buy high deductible coverage that would provide first dollar coverage. The healthcare insurance industry would do very well. If they quit Fidelity or Vanguard could do the bookkeeping.

Think of all the administrative costs saved on the first $6,000. Think of all the middlemen expenses avoided.

Medicare cost per patient in only $6600 per year including the last 30 days of life. The average cost of younger persons is much lower. Cost of care would be decreased because physicians would be paid at point of service. If the cost for medical care was over $6000 for a patient’s care first dollar high deductible insurance would take over.

Medical care is the relationship between the patient and the physician. If you provide the tools and money to create a transparent relationship without middlemen the patients would make the cost decrease as we have seen in other industries. America would have an affordable system.

If the employer became an extender of the physicians care and a patient advocate the costs would drop.

Employers, patients and physicians have the same goals. All are at the mercy of the middlemen (healthcare insurance industry).

This is the American way. It can be done.

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

Permalink:

Public Option vs. Ideal Medical Savings Account: Part 2

Stanley Feld M.D.,FACP,MACE

The Public Option is a misnomer. It will not be an option. It will become the only choice.

The intent of the Public Option is exactly as Barney Frank described in his off the cuff interview. It is a critical step to a single party payer system government. Representative Anthony Weiner has confirmed the intent of the Public Option. President Obama has been saying it in code all along.

The Public Option is a critical step on the way to a single party payer since the Democrats do not have the votes for a single party payer at this time. A single party payer system would work if it would not be paralyzed by a bureaucracy, did not run out of money, did not engage in rationing of care and permits patients to make their own medical decisions.

Medicare is running out of money and Social Security and Medicare has 107 trillion dollars of unfunded liabilities.  Medicare deductibles are constantly being increased. Physician reimbursement is constantly reduced. A 300 billion dollar reduction in physician reimbursements is scheduled for 2010.

Investor’s Business Daily revealed President Obama’s goal on Wednesday, July 15th one day after HR3200 was published.

“Right there on Page 16 is a provision making individual private medical insurance illegal.”

The Investor’s Business Daily was not sure its interpretation was correct so they checked with the House Ways and Means Committee.

It turns out we were right: The provision would indeed outlaw individual private coverage. Under the Orwellian header of "Protecting The Choice To Keep Current Coverage," the "Limitation On New Enrollment" section of the bill clearly states:

“LIMITATION ON NEW ENROLLMENT.— LIMITATION ON INDIVIDUAL HEALTH INSURANCE COVERAGE page 16

IN GENERAL.—Individual health insurance

coverage that is not grandfathered health insurance

coverage under subsection (a) may only be offered

on or after the first day of Y1 as an Exchange-participating health benefits plan.”

President Obama has promised we could keep our present healthcare insurance if we like it. It will be grandfathered in. Otherwise, we will have to buy insurance from Healthcare Exchange-participating health benefits plans.

"Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day" of the year the legislation becomes law.

“Drawn by a public option that will be 30% to 40% cheaper than their current premiums because taxpayers will be funding it, employers will gladly scrap their private plans and go with Washington’s coverage.”

If an individual changes healthcare insurance carrier he cannot buy private insurance from another company except through the certified healthcare insurance exchange.

Those who currently have private individual coverage won’t be able to change it. Nor will those who leave a company to work for themselves be free to buy individual plans from private unregulated carriers.

“What wasn’t known until now is that the bill itself will kill the market for private individual coverage by not letting any new policies be written after the public option becomes law.”

On average, consumers change insurance carriers every eighteen months. The Healthcare Insurance Exchange will regulate the kind of healthcare insurance available.

The healthcare insurance industry has abused all the stakeholders. The consumer should be protected from abuse.

However, the healthcare insurance industry will continue to abuse the government and taxpayers. It charges the government a 15% administrative service fee to process claims.

Consumers will be forced into the government subsidized public plan. Employers will be happy to pay the 8% of their gross revenue. Employers are currently paying 18% of their gross revenue to the healthcare insurance industry. The healthcare insurance industry will not compete with the government. It will withdraw from selling healthcare insurance.

By default America will have a single party system, with an enormous bureaucracy and an enormous deficit.

Another downside is individuals will be paying public option healthcare premiums with after tax dollars. Premiums will be determined by means testing. Healthcare costs could become higher than today’s healthcare insurance premiums between tax rates increasing and the surtax for healthcare.

The cost will go down only by decreasing physicians’ and hospitals’ reimbursement. Six hundred billion dollars are scheduled to be removed from Medicare payments as the number of seniors covered increases. The result will inevitably be a further rationing of medical care for seniors.

HR 3200 is going to outlaw health savings accounts (HSAs) Health Savings Accounts are not as good as Medical Savings Accounts. HSAs do not provide enough incentives to patients to control their health and healthcare dollars. It keeps the healthcare insurance industry in control of the healthcare dollars.

Eliminating alternative forms of healthcare insurance has been a goal of Democrats for years. They want to crush any creative alternative.

“With HSAs out of the way, a key obstacle to the left’s expansion of the welfare state will be removed.”

Washington shouldn’t be killing business opportunities, or limiting choices, or legislating major changes in Americans’ lives. It should be making rules to eliminate abuse of systems, and providing incentives for individuals to be innovative and efficient.

The public option won’t be an option for many, but rather a mandate for buying government care. A free people should be outraged at this advance of soft tyranny.

Healthcare reform is not about better healthcare for Americans. It is about the government controlling our lives and decreasing our freedom to choose.

I would suggest the following note.

“We do not want the government to control our lives and increase our taxes. We want affordable, universal healthcare coverage that does not limit access to care. We want control over our healthcare dollars.

You can reach you Congressional Representative with the links below.

https://writerep.house.gov/writerep/welcome.shtml

http://www.senate.gov/general/contact_information/senators_cfm.cfm

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

 

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Public Option vs. Ideal Medical Savings Account: Part 1

 

Stanley Feld M.D.,FACP,MACE

In response to my last post I received this note.

“Stan

This is interesting.  You may like this but it is very obvious that it is just another stall tactic.  If the current bill, with reconciliation, passes, we still have to address these points.  So where are this fellow’s solutions?”

I watched President Obama’s town hall meeting in Grand Junction on Saturday evening. He is a compelling and seductive speaker. If I thought his plan would work and at the same time be budget neutral I might be seduced.

It will not work for the consumer and it will not be budget neutral. He needs a better plan.

What is missing?

President Obama’s generalities are correct. The country needs a system that provides universal care at an affordable cost and an increase in quality. I believe his strategy is wrong. His strategy is reflected in his healthcare reform bill.

He is correct in pointing out that the healthcare insurance industry controls the healthcare dollar. His prescription to destroy the healthcare insurance industry is wrong because it will penalize patients. President Obama’s healthcare reform bill is not doing anything to limit the healthcare insurance industry 20% gross administrative fee whether we have a single party payer or a private insurance system.

He promises to get rid of the waste in the system. He claims eliminating the waste will pay for two thirds of the 1.1 trillion dollars his healthcare billion will cost in the next ten years. The remainder will be paid for by taxing people making over $250,000 a year. He needs to redo the math.

President Obama’s system sounds pretty simple. However, it seems the government hardly ever does anything efficiently. The costs are always underestimated. There are always uncontrolled abuses or unintended consequences.

President Obama is ready to create a massive new bureaucracy and employ approximately 110,000 new employees. Bureaucracy is always a prescription for inefficiency.

President Obama is ignoring the waste created by defensive medicine. The total cost of unnecessary testing is about $750 billion dollars a year. Nonetheless, tort reform is off the table. Defensive medicine is blamed on physicians wanting to generate more money for themselves. I think defensive medicine came first, and then physicians figured out how to generate more income in response to decreasing reimbursements for their services and an increase in malpractice lawsuits. Placing a cap on malpractice awards destroyed the malpractice business in Texas and California.

Where is the role of patients’ responsibility for their own health and healthcare. Patients with adequate healthcare insurance are satisfied. The healthcare inflation problem is the result of medical care costing little for the patient with insurance except for the deductibles.

Our healthcare system is a fix the sick system. The healthcare system is not geared to prevent an illness. The administration’s healthcare reform plan speaks of prevention but does not provide incentives to patients or physicians to prevent illness or even deal with the obesity epidemic..

Consumers are receiving quality medical care at little direct cost to themselves. This creates runaway costs that have to be addressed. But ill-advised reforms can make things much worse.”

The public has no great love for the healthcare insurance industry. Their protests about the healthcare reform bill are not to protect the healthcare insurance industry. It is to protect their freedom of choice. The public does not trust the government to make choices for them.

Both political parties have extremely low approval ratings. President Obama’s approval rating is sinking because of the perception of his half truths and a mounting distrust by independent voters.

“An effective cure begins with an accurate diagnosis, which is sorely lacking in most policy circles. The proposals currently on offer fail to address the fundamental driver of health-care costs.”

President Obama’s public option and increase in bureaucratic decision making is not going to solve our healthcare systems problems. He is not focusing on repairing the perverse incentives that are presently in the dysfunctional healthcare system.

Consumers must solve the healthcare system problems just like they solved the auto industries problems. Government role should be to provide the appropriate regulations to level the playing field.

“The health-care wedge is an economic term that reflects the difference between what health-care costs the specific provider and what the patient actually pays. When health care is subsidized, no one should be surprised that people demand more of it and that the costs to produce it increase.”

The solution is not a public option or a single party payer system. Consumer driven healthcare is the solution through the use of the ideal medical savings account.

“To pay for the subsidy that the administration and Congress propose, revenues have to come from somewhere. The Obama team has come to the conclusion that we should tax small businesses, large employers and the rich.”

President Obama’s plan will not work because the health-care recipients will lose their jobs as businesses can no longer afford their employees. The economy will get worse and the wealthy will flee to tax havens.

General anxiety will increase, patients will get sicker and the healthcare system will be overused creating more debt and more taxes.

A few economic self evident truths are:

  1. A free marketplace with appropriate rules encourages innovation and productivity.
  2. In the United States profitability is a strong market driver. If inappropriate rules are set up entities will try to figure out how to benefit from the rules to the disadvantage of others.
  3. The higher the taxes the lower the productivity. The lower the taxes the higher the productivity.
  4. The greater the bureaucracy the lower the added value productivity.
  5. Consumers will try to maximize their purchasing power.

“According to research I performed for the Texas Public Policy Foundation, a $1 trillion increase in federal government health subsidies will accelerate health-care inflation, lead to continued growth in health-care expenditures, and diminish our economic growth even further. Despite these costs, some 30 million people will remain uninsured.”

Rather than expanding the role of government in the health-care market, Congress should implement a consumer driven approach to health-care reform. A consumer driven approach focuses on the consumers being the policemen for their own healthcare dollar. If would focus on the doctor relationship and empower the patients and their physicians to make effective and economical choices.

The patients would be proactive rather
than passive. The result will be an increase in efficiency in the healthcare system rather than a further decrease.

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

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The Ideal Medical Savings Account System

Stanley Feld M.D., FACP, MACE

Medical Savings Accounts for our discussion are tax free trust accounts that are funded by the employer, the self-employed, and the government for the employee, or the Medicare or Medicaid beneficiary. The Medical Insurance provided by the employer, the self employed, or the Medicare or Medicaid beneficiary in addition to the MSA trust account is a high deductible insurance plan. The rating on the high deductible insurance should be community rating without exclusions for preexisting illness.

The deductible is $6,000. The MSA contribution will be $6,000. If the patient does not spend the trust accounts money in the current year that money accumulates tax free until retirement. In the case of Medicare the money accumulates tax free until used at the beneficiaries discretion or is deposited in the beneficiaries’ estate. At that time the rules for traditional IRA’s apply.

It is mandatory to have insurance and the premiums will be subsidized by the government for persons that qualify. Price transparency by the insurance industry, hospitals, and physicians is also mandatory. It is the responsibility of all parties to aid the patient to become an educated consumer. If they want to purchase an unnecessary or inflated medical care product it is their decision and not the insurance industry or government’s decision. The patient pays the inflated price and not the insurance industry and the government.

This is the basic formula for the Medical Savings Accounts. It is important for this system of insurance not be contaminated by modifications made by stakeholders in order to benefit their vested interest. The formula creates a system of insurance that compels the patient to be an informed consumer. It also compels the stakeholders to be competitive for the patients’ healthcare dollar.

The result will be lower prices and increased quality. The advantages to stakeholders are obvious. It would foster individual ownership of the healthcare dollar with individual responsibility for the healthcare dollar. The result would be lowering the cost of health insurance with a high deductible. People would no longer face premium increases resulting from wasteful medical care decisions made by others. This is the famous restaurant effect discussed earlier. It would also lower the administrative costs of adjudicating bills. The charges would be adjudicated at the point of service serving to lowering the cost of insurance further.

Patients would have a vested self interest to avoid unnecessary costs because the result would be additional savings for the patient in their Medical Savings Trust Account. Also, MSAs would eliminate the barriers for the purchase of insurance by the temporarily unemployed. Patients would create a competitive medical marketplace with their individual purchasing power. We will see this happening right now with the Wal-Mart $4 generic drug policy.

The high deductible insurance would be true insurance and not the “managed cost insurance” we have presently. Managed cost insurance simply angers every stakeholder in the system. Patients would now have incentive to think about as well as learn about the risk of certain lifestyles and the need for lifestyle changes to prevent the complications of chronic diseases. The patient by avoiding the complications of chronic diseases with be earning money in their own Medical Savings Trust Account that would continue to grow tax free until retirement.

All of these incentives are free market incentives. None of the incentives force the patient to have certain behaviors. It is in their vested economic interest to make appropriate lifestyle changes and wise medical care decisions.

With pure Medical Savings Accounts the Healthcare System will be in a position to self repair.