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Healthcare Insurance Industry

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Stinkin Thinkin! Part 1

 

Stanley Feld M.D.,FACP,MACE

 

Unfortunately John McCain has misrepresented Barack Obama’s positions on many issues. John McCain has changed his own position on many issues. He seems to have a meager or shallow grasp of most issues. He claims he is going to fight for the middle class but he has not defined what he is going to fight or a strategy to fight it. He has chosen a Vice Presidential running mate who is being sold to the public as a champion of the middle class. I believe this has been her appeal. However, I have not hear her define any substantive issues or strategies. He is running a campaign of symbolism rather than substance.

He has not spoken substantially about most issues. He does not seem to understand the needs of the middle class. He said on many occasions that the economy is basically sound. On September 17 he said he is going to clean up the financial mess. His plan is to appoint a committee like the 9/11 committee. He has also has stated he does not understand the economy. His campaign chairwoman says he would not make a good corporate CEO.

John McCain’s sound bytes are not even good. He is an embarrassment to the Republican Party. Nevertheless the “polls’ say almost 50% of us will vote for him. How can this be? How is it possible that he can be pulling the wool over the eyes of the American public?

On the issue of healthcare he is way off the mark. His major proposal is his tax credit to consumers.

“Senator John McCain’s top domestic policy adviser, former Congressional Budget Office director Douglas J. Holtz-Eakin, recently said in a conference call with reporters that Mr. McCain’s health care proposal would “put 25 to 30 million individuals out of the ranks of the uninsured, into the ranks of the insured.”

In an article released Tuesday, a panel of prominent health economists concludes that Mr. Holtz-Eakin’s projection is off by, well, 25 to 30 million.

Simple logic tells us there is no way to decrease the number of uninsured by 25 to 30 million by creating a tax credit of $2,500 per individual and $5,000 per family to buy healthcare insurance. The tax credit is insufficient to have very much impact. It is not even a good sound byte because healthcare insurance costs $6,000 per individual and $12,000 per family. The families will still not be able to afford healthcare insurance.

However, the sound byte represents a major tenet of his healthcare plan. Even if he was correct the common man would still be at the mercy of the abusive healthcare insurance industry. He has said nothing about correcting healthcare insurance industry abuse and inefficiency. The abuse is directly related to how the healthcare insurance industry calculates the healthcare premiums.

“The article, published in the journal Health Affairs, argues that “initially there would be no real change in the number of people covered as a result of the McCain plan.” After a short-term reduction of 1 million in the number of people without coverage, the number of uninsured would increase by 5 million after five years, the authors predict. There are currently 45 million people without insurance, or 15 percent of the population, according to the Census Bureau.”


This misrepresentation of the true effect of his policy is pervasive in all of John McCain’s campaign assertions. His healthcare policy will not create more competition among insurance companies. It will give the healthcare insurance industry more control of the premiums charged and an opportunity for great net profits. Have media sound bytes become more influential in decision making than logic and facts? I believe Americans are smarter than that.

That, the McCain campaign asserts, would drive more people into the individual market, fomenting competition, reducing premiums and discouraging consumers from buying more coverage than they need or can afford. The economists wrote that many “people are likely to have far less generous policies than those they have today.”

The economists are from the University of Michigan, Columbia, Indiana University and Harvard. Their estimates of the effect of McCain’s healthcare tax credits are comparable to those made in July by the Urban Institute and Brookings Institution. The Urban Institute and Brookings Institute projected that 1 million people would gain coverage after one year under Mr. McCain’s plan, that almost 5 million people would gain coverage after four years, and that the number of uninsured would then creep upward.

John McCain is obsessed with the growth of entitlements like Medicare, Medicaid and Social Security. He is correct. They have gotten out of hand because of their defective structure. His goal is to shift these entitlements over to the private sector. The private sector loves his goal because it is an opportunity to increase profits.

John McCain should be asking why the entitlements are failing rather than giving them away to institutions that have abused systems such as the healthcare industry and the financial industry. These entitlements are failing because of their structure. These institutions will have to be restructured to correct their defects and inefficiencies. The current bureaucracies are incapable of creating initiatives linked to innovation and change.

Privatizing these institutions is not going to make things better for our middle class. John McCain’s plans will drive the middle class toward poverty for the benefit of big business. The pity is John McCain does not know the effect his plan is destined to have.

The strength of America is in a vibrant middle class with incentives to advance through education. It is in the creation of the desire and capability for upward mobility for the lower and middle class that will make us stronger. Government has to set rules that are fair to all and permit the lower class to rise to the middle class. People must have hope, security and goals. The middle class should not be conditioned to live in fear of war, economic collapse, and lack of adequate healthcare.

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

  • Elliott Klug

    Dr. Feld – I commend you and thank you for such a frank analysis. Sound Byte policy is scary and Mr. McCain’s fighter pilot approach is scarier.
    Will your fellow republicans take heed?
    An Independent.

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The Health Insurance Mafia

Stanley Feld M.D.,FACP,MACE

Jonathan Kellerman is an M.D.. He is telling it like it is even though no one asked. His story is clear. I believe many physicians understand the problems in the healthcare system more clearly than most of our politicians. I also believe it is our obligation to describe to consumers the real problems and dismiss political babble.

However, when physicians are in positions that represent many physicians they themselves become politicians and abandon the purpose of the medical care system which is to put patient care first. For some reason physicians do not articulate the problems of every day medical practice.

“Most discussions about the rising cost of health care emphasize the need to get more people insured. The assumption seems to be that insurance – rather than the service delivered by doctor to patient – is the important commodity.”

The healthcare insurance industry has kept the discussion focused on insurance and not on the patient physician relationships and services delivered by physicians to their patients, namely cognitive services. It also does not focus on the patients adherence to the recommended treatment and the exploding obesity epidemic.

“You don’t need to be an economist to understand that any middleman interposed between seller and buyer raises the price of a given service or product. Some intermediaries justify this by providing benefits, such as salesmanship, advertising or transport. Others offer physical facilities, such as warehouses. A third group, organized crime, utilizes fear and intimidation to muscle its way into the provider-consumer chain, raking in hefty profits and bloating cost, without providing any benefit at all.”

The healthcare insurance industry is the middleman that controls the healthcare system. The government through Medicare depends on the healthcare insurance industry to be the third party administrator for Medicare. The healthcare insurance industry sets the prices and the benefits using a unscientific social science called actuarial science.

“The health insurance model is closest to the parasitic relationship imposed by the Mafia and the like. Insurance companies provide nothing other than an ambiguous, shifty notion of “protection.

In order to control the healthcare system the healthcare insurance industry has managed to control the process of authorized treatment and reimbursement.”

“ But even the Mafia doesn’t stick its nose into the process; once the monthly skim is set, Don Whoever stays out of the picture, but for occasional “cost of doing business” increases. When insurance companies insinuate themselves into the system, their first step is figuring out how to increase the skim by harming the people they are allegedly protecting through reduced service.”

Insurance is all about betting against negative consequences; the insurance business model is unique in that profits depend upon goods and services not being provided. Using actuarial tables, insurers place their bets. However actuarial science is not an exact science. Therefore, to be safe a percentage is added to the potential pricing error guaranteeing an increase in profit.

“Health insurers have taken steps to avoid that level of surprise: Once they affix themselves to the host – in this case dual hosts, both doctor and patient – they systematically suck the lifeblood out of the supply chain with obstructive strategies. For that reason, the consequences of any insurance-based health-care model, be it privately run, or a government entitlement, are painfully easy to predict.”

Jonathan Kellerman nailed it. It is not about the patient, society’s health or the value of physicians’ intellectual property, it is about the healthcare insurance industry’s profit.

” There will be progressively draconian rationing using denial of authorization and steadily rising co-payments on the patient end; massive paperwork and other bureaucratic hurdles, and steadily diminishing fee-recovery on the doctor end.”

The result is obviously more profit for the healthcare insurance industry and more out of pocket expenses for patients.

In the olden days: “ The doctor had to look you in the eye – and didn’t need to share a rising chunk of his profits with an insurer – the cost was likely to be reasonable. The same went for hospitals: no $20 aspirins due to insurance-company delay tactics and other shenanigans. Few physicians became millionaires, but they lived comfortably, took responsibility for their own business model, and enjoyed their work more.”

The idea is to get the dollar out of the hands of the healthcare insurance industry and let the patient manage his own money and keep the money he does not spend in a trust.

Healthcare insurance must be converted to true insurance that is needed for expensive procedures.

Both physicians and patients need to be active in liberating themselves from the notion that insurance will pay. The healthcare insurance industry has figured out how to control the premiums and the reimbursement. They have now figured out how to neutralize the innovative concept of patient control of the healthcare dollars with Medical Savings Account and converted them to Health Savings Accounts with healthcare insurance industry control.

“Physicians and other providers need to liberate themselves from the Faustian bargain they’ve cut with the Mephistophelian suits whom now run their professional lives. Because many doctors are loath to talk about money, they allowed themselves to perpetuate the fantasy that “insurance is paying.” It isn’t. There is no free lunch and no free physical exam.”

One solution is for physicians and patients to abandon the traditional healthcare insurance grip.

Government (local,state or national) or employer associations (third party payers) set up their own healthcare insurance companies. They set rules in favor of the patient with the patient having control over their first six thousand dollars. The patient does not contribute the first 6,000 dollars. One of the third party payers contributes the insurance premium. Self employed people would contribute their own money with pre-tax dollars. If they could not afford the premium, they would be subsidized by the government. This is not an entitlement. This is pure insurance with motivation to save money.

I wonder how many politicians would be willing to past legislation to permit this to happen. It could easily be done on a state level. Consumer would then be able to control the system. We would be able to get rid of what Dr. Kellerman calls the Healthcare Insurance Mafia.

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

  • QuoteFL

    First of all, I love your mafia take as it is dead on! I am in favor of deductable assistance, or government subsidies for high risk individuals that need it the most. Another thing to point out is that unfortuntely in the US, insurance (especially health & life) is considered a luxury and many young people and working middle class with a choice of where to spend there money are opting for toys and entertainment rather than planning ahead. Hopefully that will change in the future. Great post and resource links…I’m your newest fan. Bookmarked!

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