Stanley Feld M.D.,FACP,MACE

In order to gain support for Democratic candidates during the midterm elections , President Obama is on the campaign trail. During his campaigning he is telling Americans to be patient. His healthcare reform bill is going to be great for seniors and all other citizens.

Democratic candidates running for reelection are avoiding his support. They are not campaigning on the healthcare reform act many were forced to vote for.

Americans are not buying President Obama’s rhetoric.

The healthcare reform law is extremely complicated. Many people do not understand the consequences.

At this time, I feel it is important to repeat what is known about the law. The subtext is the government cannot afford to continue spending at the present level for the Medicare and Medicare entitlements .

None the less President Obama plans to expand the Medicaid entitlement in order to insure the uninsured. The logic to expand the entitlement is irrational within the framework of the present healthcare system. President Obama is attempting to change the framework. Budget deficits will increase, taxes will increase, access to care will decrease and rationing of care will increase.

Americans are not interested In President Obama’s plan to pay for the health care law by cutting Medicare services many seniors depend on. Below are just some of the Medicare cuts outlined in the law. There are many other unfavorable consequences of the law that I have discussed previously.

These cuts have been largely denied by the President on his present campaign trail.

· Medicare will cut reimbursements to inpatient psychiatric hospitals. It is not clear to me what profit margins these psychiatric hospitals enjoy. It would be important to know if these hospitals could remain viable. If the hospitals stop accepting Medicare patients the entire economic burden will be on the seniors.

In 2011: 

• Wealthier seniors ($85K/$170K) begin paying higher Part D premiums. Presently Medicare Part B is means tested and pay high premiums. Wealthier seniors pay up to $250 per month per person for traditional Medicare coverage. It is anticipated these premiums will increase. the total cost for Medicare coverage can rise for full coverage to over $18,000 in after tax dollars for a husband and wife.

• There will be Medicare cuts to home healthcare agencies. I always thought the fees paid for home healthcare by Medicare were high. However, if the home healthcare agency refuses to accept Medicare, the burden of payment will be on the patient. Patients might have no choice but to go to the hospital. Hospitalization will increase the cost of care unless Medicare refuses to pay the hospital.

• Medicare payments for ambulance services will be reduced. I always thought that a $1000 plus fee for ambulance services was high. I could never understand how this fee was negotiated. I believe a study of the actual cost of ambulance services would be important before the fees are cut.

• Medicare payments to ambulatory surgery centers will be cut. Ambulatory surgery centers cost less than hospital surgery centers. It is not wise economically to drive ambulatory surgical centers out of business.

• Medicare will cut payments for diagnostic labs and durable medical equipment companies. The government should be stimulating competition and innovation. If should be negotiating prices. It should not be dictating prices.

• New Medicare will decrease payment to long term care hospitals. Long term care hospitals charge less than acute care hospitals. However, these hospitals are charging excessive fees. The government should be discovering where the inefficiency and overcharging is occurring and negotiate fees to increase competition among long term care hospitals. The government’s action will cut prices. The cost of the price cuts will be shifted to seniors.

• Medicare Advantage premiums will be increased and benefits will be decreased. There is no mention in the law of controlling the healthcare insurance industry effectively. Massachusetts’ healthcare insurance exchange has not be successful in controlling costs.

• Seniors will be prohibited from purchasing power wheelchairs. Seniors must first rent wheelchairs for 13 months before Medicare will pay for a wheelchair. I imagine the government figures the senior will die before the 13 months are up.

In 2012:               

• Medicare reimbursements for dialysis treatments will be drastically reduced. This is a clear indication of rationing of care.

• Medicare will decrease the fees paid for hospice care. Hospice care is a great service. It keeps dying patients out of the hospital. It supposedly results in a tremendous reduction in the cost paid for a dying patient. In my opinion hospice care is one of the most innovative developments in the last two decades. I do not understand why President Obama wants to destroy one of the most cost effective services of Medicare.

• Medicare will continue to reduce payment for hospital services and nursing home services. Seniors will bear the direct economic burden of these reductions.

The government is at fault for the rising Medicare costs. Rather than setting up a system of competition and empowering patients to spend their healthcare dollar wisely it has dictated rules and regulations that have served to increase the cost of delivering healthcare. The government regulations have caused an increase in abuse and administrative waste by the healthcare insurance industry.

The only way to repair the healthcare system is to permit consumers to own their healthcare dollars. Only then will consumers be motivated to be responsible for their health.

President Obama’s healthcare reform law is accomplishing the opposite. He is making consumers dependent on the government.

It will not work in America.

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

Stanley Feld M.D.,FACP,MACE

An interesting debate occurred in the Washington Post between Michael Leavitt was the former secretary of Health and Human Services, and a member of the Medicare Board of Trustees from 2005 to 2009, and Dr. Don Berwick, the director of CMS.

Michael Leavitt wrote a scathing article criticizing President Obama’s Medicare Reform Act calling it an illusion. Don Berwick wrote a rebuttal to Michael Leavitt’s article.

Michael Leavitt starts off his article by stating, “Despite the report from Medicare’s trustees this month that the hospital insurance trust fund will not be depleted until 2029, 12 years later than was predicted just last year, Medicare is no better off than it was a year ago. “

The Medicare Trustees Report was strange. Nothing was done to change anything and all of a sudden, the hospital insurance fund was extended 12 years. I thought it was funny arithmetic.

Medicare Trustees is supposed to be an organization independent of the administration. Shortly afterward Richard Foster, Chief Actuary for Medicare, who is independent of both the Medicare Trustees and the administration, wrote an “Alternative Report.” He report received little coverage in the traditional media.

I wrote an article about Mr. Fosters report.

“The Medicare Chief Actuary Alternative Report: Richard Foster

After the Medicare Trustees Report was published, Richard Foster the Chief Actuary for Medicare warned “the projections in a Medicare Trustees Report “unreasonable” and “implausible.”

He encouraged everyone to ignore the report and view instead an “Illustrative Alternative” report. He said, “The projections shown in the report do not represent the “best estimate” of actual future Medicare expenditures.”

“Noting that the formal Trustees report assumes Medicare physician fees will be reduced by 30% over the next three years, Chief Actuary Richard Foster says that’s “implausible.” In addition, the Trustees report assumes Medicare fees will fall below Medicaid rates by 2019 and fall further and further behind private payment rates in future years, as the following chart shows:”

In his April 22 report, Richard Foster laid out the implausible aspects of the math. President Obama has used funny arithmetic to get his healthcare reform bill passed with a promise of budget neutrality. Foster said;

• Cuts in Medicare spending of $575 billion over the next decade.

• 7½ million members of Medicare Advantage plans to lose their coverage and cause another 7½ million to face higher premiums and benefit cuts.

• About one in seven facilities — hospitals, skilled nursing facilities, home health agencies, and hospices — to become unprofitable and possibly drop out of Medicare altogether.

• Many doctors to quit seeing Medicare patients entirely.

The public no longer believes President Obama and his projections. They understand his motives.”

President Obama constantly claims his healthcare reform law will “Bend the Cost curve” According the Chief Medicare actuary report it will bend the curve in the wrong directions.

In his rebuttal, Dr. Don Berwick uses the Medicare Trustees Report as a given truth to defend President Obama’s healthcare reform law.

“The Medicare Board of Trustees estimated last month that the Affordable Care Act produces savings that extend the life of the Medicare Hospital Insurance Trust Fund for 12 years, to 2029. The actuary of the Centers for Medicare and Medicaid Services (CMS), an independent office, reached the same conclusion.”

Dr. Berwick has misquoted Richard Forster, the chief actuary of the Centers for Medicare and Medicaid Services.

Dr. Berwick goes on to say, the Congressional Budget Office has estimated that the law will reduce the federal deficit by more than $100 billion over the next 10 years and more than $1 trillion in the following decade.

Those real savings help today’s and tomorrow’s Medicare beneficiaries.

The problem with that statement is that is what the CBO said before the bill was passed. The CBO was given assumptions by Nancy Pelosi, Harry Reid, and President Obama.

After the bill was passed in May 2010, the CBO revised the estimate. Rather than decreasing the deficit, it will increase the deficit by $115 billion dollars over ten years.

The problem begins with double counting. The Congressional Budget Office estimates that the health law will reduce Medicare spending by about $450 billion over 10 years. But all of those savings, plus massive tax increases, are used in the new law to pay for an expansion of Medicaid and a new entitlement program to subsidize insurance premiums for low-income households.

Dr. Berwick explained the double counting away by pointing out that Medicare cuts can be used to improve the government’s capacity to finance benefits in the future or to pay for another entitlement.

If there are cuts to Medicare payments of $450 billion dollars over 10 years how are Medicare benefits going to improve. The CBO and Medicare’s actuary said the $450 billion dollars could not be used for both Medicaid and Medicare. More importantly, congress has already committed those funds to other projects.

Dr. Berwick says this is not double counting. It sounds like double counting to me.

“Some, including Leavitt, claim these savings are "double counted." This argument is inaccurate and oversimplifies what is really going on.”

The government accounting rules opaquely cook the books and increase the deficit. Medicare’s estimated saving is credited to the Medicare Trust Fund. The Medicare Trust Fund buys treasury bonds. The government uses the bond proceeds to fund other projects. When Medicare needs the money, they sell the treasury bonds. The government prints more money without congressional approval. The increased funds will then pay for Medicaid expansion.

It is double counting.

Many Americans have a hard time following these manipulations.

I must warn President Obama and Dr. B
erwick that Americans’ are interested now. There is a developing mistrust for the administration and the increasing budget deficits. The mistrust is growing especially since nothing is being accomplished except bigger government control over the healthcare system.

This is all smoke and mirrors with patients and physicians being the victims

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

Stanley Feld M.D.,FACP MACE

I have pointed out the many trick plays President Obama used to pass his healthcare reform plan. These trick plays are now obvious to the majority of Americans. The tactics have led to profound mistrust for President Obama.

Democrats running in this falls midterm election are avoiding talking about their vote for the healthcare reform law. Twenty-one states believe the bill is unconstitutional.

Two weeks ago, Politico broke the news that a major coalition of liberal supporters of the health care overhaul was telling activists not to mention deficit or cost reductions when attempting to sell people on the bill. Now, Politico reports, another major liberal health care activist group, Health Care for America Now, has an even better strategy for helping out the politicians who voted for the bill: Maybe just avoid talking about the law entirely! 

Over the next couple of weeks President Obama is going to campaign to persuade voters of the benefits and constitutionality of the Patient Protection and Affordable Care Act (Obamacare).

I think President Obama will be shooting Democrats running for re-election in the foot.

The majority of Americans is not buying anything President Obama has promised.

Remember Nancy Pelosi telling us not to worry because we will understand the bill after it is passed?

Americans are now finding out what is in the bill. It is not pretty.

If you like your plan, you can keep your plan.

Americans are realizing that President Obama couches his words with double meanings.

“What I’m saying is, the government is not going to make you change plans under health reform,”

Everyone knows employers change plans each year. These new plans do not qualify under President Obama’s statement. In a draft document laying out grandfathering rules it states that most plans will relinquish their grandfathered status if the plan is unchanged after a period of time.

Healthcare Reform will cost around $900 billion.

President Obama told a joint session of Congress that his health care plan would cost “around $900 billion over ten years.” He even said it would save tax payers money.

It will be paid for “mostly” by shifting around money that we are already spending.

Actually, the majority of the money from the bill’s official scored cost comes from new taxes. According to the CBO, “the two pieces of legislation [that make up the health care law] were estimated to increase mandatory outlays by $401 billion and raise revenues by $525 billion.”

The original CBO’s report said the final cost estimate for the law came in at about $950 billion. After the bill was law the CBO report stated the law will actually require about $115 billion in additional discretionary spending, putting the official price tag well over $1 trillion. http://cboblog.cbo.gov/?p=835

My guess is this estimate is still low.

President Obama said healthcare reform law will not cut Medicare benefits.

He said, “Nobody’s talking about reducing Medicare benefits.” But according to the head of the Congressional Budget Office, “thanks to $130 billion in planned cuts to companies that offer Medicare Advantage plans, the health care law will “reduce the extra benefits that would be made available to beneficiaries through Medicare Advantage plans.”

President Obama’s statement again represents another misdirection of reality.

President Obama declares that his healthcare reform law will put Medicare on better fiscal footing.

In August 2010, the Obama administration’s Department of Health and Human Services released a report claiming that the PPACA would “extend the life of the Medicare TrustFund by 12 years.”

Affordable Care Act Update: Implementing Medicare Costs Savings

“This new law recognizes that Medicare isn’t just something that you’re entitled to when you reach 65; it’s something that you’ve earned. It’s something that you’ve worked a lifetime for, having the security of knowing that Medicare will be there when you need it. It’s a sacred and inviolable trust between you and your country. And those of us in elected office have a commitment to uphold that trust – and as long as I’m President, I will.And that’s why this new law gives seniors and their families greater savings, better benefits and higher-quality health care. That’s why it ensures accountability throughout the system so that eniors have greater control over the care that they receive. And that’s why it keeps Medicare strong and solvent – today and tomorrow.”

– President Barack Obama, June 8, 2010

The Director of CBO Douglas Elmendorf said that “to describe the full amount of HI trust fund savings as both improving the government’s ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings.”

Medicare’s top actuary agreed. He said “in practice the improved (Medicare hospital insurance) financing cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions) and to extend the trust fund.”

President Obama’s Healthcare Reform act will give consumers more access and greater choice.

I do not think so. It will generate many unintended consequences.
Organizing for America, the successor to Obama’s campaign organization, claims that the new health care law will result in “more choices…for millions of Americans.”

Most experts expect that the health care overhaul will result in a serious doctor shortage, particularly amongst primary care physicians, meaning many individuals will have to wait longer for care, and may not get to see the doctor they want to see. Meanwhile, insurers in some states are already cutting back on insurance options. Healthcare insurance premiums will increase dramatically.

It will bring down the price of insurance.

President Obama, Nancy Pelosi and Harry Reid promise their healthcare reform bill would provide affordable healthcare insurance. The even called the bill the Patient Protection and Affordable Care Act.

The healthcare insurance industry is raising the cost of insurance between 10% and 29% next year. Insurance deductibles are increasing. Consumers’ out of pocket expenses are increasing.

“The CBO predicted that the law will cause average health insurance premium prices to rise by 10-13 percent in the individual market. And a recent survey indicates that most businesses expect insurance prices to rise as a result of the PPACA.”

I wonder what President Obama meant when he said the law would “bend the cost curve”? The implication is it would reduce the cost of healthcare coverage. I think it is bending the curve in the opposite direction.

CBO Director Douglas Elmendorf said in presentation at the Institute of Medicine; “the health legislation e
nacted earlier this year does not substantially diminish [the] pressure” of rising health costs.”

The big question should be where is all the money going? It is not physicians. Reimbursement is continuously being reduced.

The money is going to the additional government bureaucracy, and the healthcare insurance industry.

I think the American people get it. I wanted to repeat it

Lest We Forget.

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

Stanley Feld M.D.,FACP,MACE

President Obama cannot understand why the American people are frightened about his healthcare reform act. The reasons are obvious.

The new healthcare reform law is increasing government bureaucracy and increasing regulations. Americans believe this is shorthand for increasing cost of care, decreasing access to care, rationing care, and increasing deficits.

President Obama has not demonstrated respect for Americans’ fear or wisdom.

President Obama’s healthcare reform act is on a collision course toward complete government control of the healthcare system. America’s destiny is a single party payer system. Why would President Obama want America to have single party payer system? The single party payer systems are failing in Canada and England. Those two countries are in the process of switching to a decentralized healthcare system.

Disintermediation of the healthcare system could solve many of the problems in our healthcare system. Presently, the healthcare insurance industry controls private insurance as well as public insurance by its administrative service fees. The federal government outsources its administrative services to the healthcare insurance industry.

Harry Reid and Nancy Pelosi are going to finance this debacle by increasing taxes.

Two of the most successful innovative entrepreneurs of our time, Jeff Bezos of Amazon.com and Michael Dell of Dell Computing have invested in Qliance Medical Management.

Qliance Medical Management is a company that disintermediates healthcare insurance. Its plan is to deliver real market-based solutions for healthcare by eliminating the middleman.

“According to Qliance, 40 cents of every dollar spent on health care goes toward dealing with insurance companies and paying for overhead.”

I have calculated the administrative services cost to be closer to sixty cents of every dollar spent.

“Qliance plans bet is that by getting rid of insurance companies and associated administrative fat, such as elaborate customer billing and reporting, they can deliver cheap, quality health care.”

Qliance is like a health club membership for healthcare. Membership includes unrestricted access to a Qliance clinician and clinic services for one monthly fee.

“Instead of dealing with costly overhead, we reinvest that 40¢ in our clinics, electronic medical records and in patient services. You experience shorter wait times, longer appointments and lower costs.”

Jeff Bezos and Michael Dell are on the right track but the plan has several defects.

“ Qliance customers pay a flat monthly fee of $44 to $84 dollars – depending on age and level of care you choose – to become a member.  For this, they get health care in clinics that are open seven days a week, covering 90% of the problems that we see doctors for, such as “check-ups…minor fractures…as well as ongoing care for chronic illnesses.”

Qliance customers must purchase catastrophic coverage for all other illnesses not covered. Qliance Medical Management is an attempt to deliver real market-based solutions for health care. This model is one of the first attempts to disintermediate the healthcare insurance industry.

Qliance is not the answer. It has too many defects. The most significant defect in the model is it depends on the population that joins, and the use or overuse of the system. Most importantly, the model is lacking patients’ incentives to remain healthy and live a healthy life style. If patients have a chronic disease, the model does not include motivation for patients to self-manage their disease.

Today, medical payments of insured patients are paid by the government or the healthcare insurance companies. The healthcare insurance companies also provide the administrative services for the government. There is a 40 to 60 cent burden on every healthcare dollar. This is the largest source of waste.

As government controls and regulations displace consumer power and choice, our health care costs and expenditures increase, not decreased. The Massachusetts healthcare reform experiment has proved this point.

“When you buy a car, a computer, purchase a cell phone plan, you shop.  Vendors compete for customers by finding innovative ways to make and distribute their products so they can deliver higher quality and lower costs than the competition.”

Our highly regulated health care reform act has none of these characteristics. 

President Obama believes more government regulations rather than innovation and freedom of choice is the answer. He is wrong.

Mike Tanner of the Cato Institute in his paper entitled “Bad Medicine.” points out that President Obama’s healthcare reform law will fail in all three goals. He estimates that the bill will cost three times the estimate and fail to provide healthcare insurance for all Americans, reduce insurance costs for, businesses, and government, and increase the quality of health care and the value for each dollar of health care spending.”

“The Reid Pelosi Obama plan that we’re now stuck with builds on what has already failed.  More government, more spending, and less freedom.  Unleashing entrepreneurs like Bezos and Dell is what we need to address health care.”

Qliance is a first step in the march to consumer driven healthcare. It must be combined with an ideal medical savings account to disintermediate the healthcare insurance industry.

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

Stanley Feld M.D.,FACP,MACE

Director of CMS, Dr. Don Berwick, has the same central government control philosophy as President Obama. They have different reasons for central control.

Dr. Berwick is going to feel disappointed and deceived when he fails to effect meaningful change or reduce medical costs. President Obama’s healthcare reform law is going to increase the cost of Medicare and Medicaid, restrict access to care and result in rationing of care.

President Obama wants to increase quality and decrease cost of healthcare with more efficiency. Everyone has the same goal. President Obama is going about it the wrong way

Dr. Berwick has stated that he loves the British National Healthcare System. He was hired as a consultant to that system by Tony Blair. The goal was to modernize Britian’s centralized system. He failed to reduce their costs. Britain is now decentralizing its healthcare system.

Dr. Berwick thinks in systems terms using the concepts of Fredrick Taylor. In a 2009 speech Dr. Berwick said,

“The idea of a system is neither a frill nor a fine point if we are to get reform right,” “System of healthcare lies at the very center of the scientific and political challenges that stand between us and the care we seek. With a proper understanding of systems, authentic health care redesign is feasible and socially productive. Without that understanding, ‘reform’ will likely do more harm than good.”

Our healthcare system does not coordinate care using teams. If they did the patient must be at the center of the team not the government.

All the stakeholders must be members of the team. They all must be accountable to each other. Members include patients, physicians, hospitals, healthcare insurers, and the government. Dr. Berwick is only considering physicians and other healthcare providers. He is giving the healthcare insurance industry a pass. The healthcare insurance industry is the biggest villain in our dysfunctional healthcare system..

Patients and physicians are the most important members of the team. Physicians are the managers, patient are the workers.

In order for a system to work, team members first have to know the elements of the system. The team members should then be provided with incentives so they are motivated to make the system work.

Dr. Berwick is not considering incentives for patients and physicians. He does not believe in the value of the free market. I believe his attitude will be a huge problem in his attempt to convert medical care to Taylor’s principles of scientific management..

I do not doubt his ability to create systems of care. I disagree with his punitive system of fulfilling systems of care. It will not work.

“Health care reform without attention to the nature and nurture of health care as a system is doomed,” Berwick said. “It will at best simply feed the beast, pouring precious resources into the overdevelopment of parts and never attending to the whole — that is care as our patients, their families and their communities .”

Dr. Berwick has criticized physicians care. He does not criticize patients lack of adherence to recommended care or their lack of compliance to healthy lifestyles. There has been little discussion on where money is wasted in the healthcare system. The healthcare insurance industry, hospitals’ or government’s role in the dysfunction of the healthcare system is not being discussed.

His has focused on waste created by the deficiencies in safety, effectiveness, patient-centeredness, timeliness, efficiency, and equity. There is no doubt the healthcare system’s needs the scientific management approach in each area. However, this is not where the bulk of the waste is.

“The improvement of health and health care depends on systems thinking and systems redesign,” Berwick said. “ ‘Reform’ without systems thinking isn’t reform at all.”

I agree we need systems of care. This philosophy is expressed in AACE’s System of Intensive Self-Management for Type 2 Diabetes Mellitus. I was the chairman of the task force for these guidelines. I ask develop of system of care for the diagnosis and treatment of osteoporosis.

President Obama favors a single-payer system with central control. Central control does not increase efficiency.

Dr. Don Berwick believes that the only efficient way to develop a process of scientific management in healthcare is central control with a single-payer system.

There are multiple defects in his notion.

1. Medical care should not be a set of algorithms that are centrally dictated. Algorithms should be a guide to care. Physicians must use clinical judgment.

2. The patient physician relationship must be nurtured. A large part of the therapeutic effect is that relationship. Medical care is not a commodity.

3. Clinical judgment is vital to successful patient outcomes.

4. Systems of care, with an interdisciplinary team approach, should be taught in medical schools and post graduate courses.. Presently, all disciplines are taught in isolation. When physicians go into practice, they realize the importance of interdisciplinary relationships. Models for interdisciplinary treatment approaches must be promoted and incentivized.

5. Dr. Berwick’s approach assumes that politicians and politics do not play a role in forming healthcare policy. Few believe this notion. Politics plays a big role in dictating agency policies.

6. In 1945, Friedrich Hayek pointed out that the command approach to dictating work flow is doomed to failure. Commanders do not receive accurate information about what is happening on the ground. This results in faulty central decisions.

7. Technocrats, like Dr. Berwick, may believe they can marshal statistics to optimize the health-care system. Statistics on outcomes and treatment plans have been misleading..

8. Statistical analyses rely on too many assumptions and too much unreliable data. These are the reasons government programs often result in colossal amounts of waste, fraud, and abuse.

9. The interaction of all the stakeholders must be considered. If the abuses of all the stakeholders are not considered and eliminated, the decision reached by the technocrats could be incorrect.

President Obama believes technocrats (Dr. Berwick) can solve the problems in the healthcare system. Dr. Berwick sees the problems in the healthcare system from 30,000 feet.

Our healthcare problems will only be solved by consumers at ground level along with disintermediation of the middlemen in favor of consumers.

Repair of the healthcare system can be achieved with consumer driven healthcare and ideal medical saving accounts. Consumers must be empowered by the government to take care of their health and their medical care individually with the appropriate incentive.

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

Stanley Feld M.D.,FACP,MACE

President Obama has to understand the differences between Taylorism and Disintermediation. He would then understand the difficulties Americans are having with his healthcare reform law.

President Obama must combine the advantages of Taylorism with the advantages of Disintermediation in order to Repair the Healthcare System. The system must be for the benefit of consumers.

The disadvantages of Taylorism combined with central government bureaucracy will destroy healthcare in America.

President Obama’s only concern is to increase centralized government even if America cannot afford it.

Dr. Berwick is the right technocrat for President Obama. Dr. Berwick’s only concern is to convert the practice of medicine and the delivery of medical care to Frederick Taylor’s Principles of Scientific Management.

Taylorism

Frederick Taylor published his monograph The Principles of Scientific Management in 1911. Henry Ford utilized Taylor’s concepts in mass producing the automobile.

Taylor believed that decisions based upon tradition and rules of thumb should be replaced by precise procedures developed after careful study of an individual work process. Its application is contingent on a high level of managerial control of the worker.

He stated that central authority must provide detailed instruction and rules to each worker. Managers have to supervise and grade workers in the performance of their tasks. The managers plan the work. The workers actually perform the tasks.

Taylor was convinced that productivity efficiency lies in scientific management, rather than in searching for extraordinary creative workers to perform the work. .

Scientific management commoditizes products and lower cost of production. Medical care should not be a set of algorithms and rules that are centrally dictated. Algorithms should be a guide to help physicians’ with clinical decisions.

The problem with President Obama and Dr. Berwick’s plan is it disregards the role the healthcare industry plays in the inefficiency and cost for healthcare. It disregards the cost and inefficiency created by 160 new bureaucratic agencies to create new rules and regulations. It disregards the waste created by defensive medicine.

Disintermediation

Disintermediation is a term used in the “science of economics.” It is the elimination of the intermediaries in a supply chain. Simply put it cuts out the middlemen.

President Obama and Dr. Berwick are not eliminating the biggest middleman with their plan, the healthcare insurance industry.

Michael Dell of Dell Computing and Jeff Bezo of Amazon.com are the masters of disintermediation. They have eliminated the middlemen and revolutionized the computer industry and the publishing industry. Steve Jobs did the same to the music industry with the IPOD and ITUNES.

Consumers are empowered by market transparency. The middlemen were bypassed. Disintermediation has liberated consumers and reduced costs.

Wal-Mart uses the same disintermediation principle with its effective use of information technology. Wal-Mart passes the saving produced by eliminating the middlemen on to consumers. Wall-Mart has revolutionized retailing.

Healthcare reform should include systems of care. It should also include a disintermediation system to bypass the healthcare care insurance industry. Disintermediation in the healthcare system can empower patients to control of their health and healthcare dollars.

President Obama wants to increase quality and decrease the cost of healthcare by increasing the efficiency of healthcare delivery.

Everyone has the same goal. President Obama’s route is wrong.

Our healthcare systems problems can be solved by combining Taylorism with Disintermediation.

This can be achieved with consumer driven healthcare and ideal medical saving accounts.

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

President Obama has asked us to change to green. We should listen to him..

http://online.wsj.com/article/SB10001424052748703579804575441330559553568.html?mod=djemEditorialPage_h

Another reader sent this video expressing the frustration of the people.

“Mr. Rasmussen has a partial answer for Mr. Emanuel’s confusion, and it lies in a significant division among the American public that he has tracked for the past few years—a division between what he calls the Mainstream Public and the Political Class.”

Mr. Rasmussen did a survey asking three questions.

1.
Whose judgment do you trust more: that of the American people or America’s political leaders?

2. Has the federal government become its own special interest group?

3. Do government and big business often work together in ways that hurt consumers and investors?

Those who identify with the government on two or more questions are defined as the political class.

“ A majority of Democrats, Republicans and independents all agree with the mainstream view on Mr. Rasmussen’s three questions. "The major division in this country is no longer between parties but between political elites and the people," Mr. Rasmussen says.

The political class overwhelmingly supported the bailouts of the financial and auto industries, the health-care bill, and the Justice Department’s decision to sue Arizona over its new immigration law. Those in the mainstream public just as intensely opposed those moves.

President Obama insists he is doing what is right for America. The statement has a similar sound to Nancy Pelosi’s statement that “we will understand the healthcare reform bill after it is passed.”

One last reader comment.

to be signed by a president who also smokes,

with funding administered by a treasury chief who didn’t pay his taxes, to be overseen by a surgeon general who is obese,

and financed by a country that’s broke.

There you have it. I suggest President Obama start listening to the people and stop ignoring the expression of their feelings.

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

Stanley Feld M.D.,FACP,MACE

Dr. Don Berwick, Director of CMS, has stated that the Healthcare System is too complex for people to manage their own medical care. It must be left up to the experts in government. I believe 160 new government agencies will not succeed in managing individuals’ medical care very efficiently. The resulting system will be less efficient. It will also limit access to care.

The Massachusetts Healthcare Reform experiment has failed for reasons I have outlined previously.

President Obama’s Healthcare Reform Plan will also fail at a very high cost to the American taxpayer. His healthcare reform law follows the basic principles of the Massachusetts Healthcare Reform Plan.

Some readers misunderstand the two models I have proposed to Repair the Healthcare System. Those models are Consumer Driven Healthcare and the Ideal Medical Saving Accounts.

Regina Herzlinger the Nancy R. McPherson Professor of Business Administration Chair at Harvard Business School has been called the “godmother” of Consumer Driven Healthcare.

For those readers who skim blogs, I think it would be a excellent exercise for the reader to settle down and watch an entertaining “You Tube” by Dr. Regina Herzlinger describing the power of Consumer Driven Healthcare.

McKinsey consultants have claimed that administrative inefficiency of the healthcare system accounts for $500 billion dollars of excess cost per year to the healthcare system. I think it is closer to $250 billion dollars a year.

Eliminating inefficiency will not be achieved by adding 160 new bureaucratic agencies and over 800 new regulations.

The solution to the problem is easy. The social contract for medical care should be between patients and physicians. Consumers should owned their healthcare dollars. They should be given incentives to be responsible for their medical care and maintaining their health. Chronic disease complication rates would fall, obesity would be decrease and the cost of healthcare would decrease.

The role of government should be to empower consumers to control their medical expenditures and maintain their health. The government should level the playing field between stakeholders. It should provide education and subsidies to those who need it. The government should teach them how to control their healthcare dollars and maintain their health. Then government should get out of the way.

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

Stanley Feld M.D.,FACP,MACE

As soon as President Obama’s healthcare reform law passed, rules and regulations had to be made by non-elected state regulators to interpret the new law.

For the healthcare insurance industry, the fight is now over the details. The healthcare insurance industry has graciously volunteered to help regulators craft these regulations.

Senator John D. Rockefeller IV, Democrat of West Virginia, sent a letter to regulators expressing his concern that the insurers could have too much influence on how the regulations were being drafted.

“The health insurance lobbyists failed to beat the health care reform bill in Congress — but with billions of dollars at stake, we cannot and we should not expect them to throw up a white flag and start looking out for the livelihoods of American families,” Senator Rockefeller said in a statement. “They’re working every angle of the implementation process to shirk their obligations under the new law.”

As stated in my last blog entry, the healthcare insurance industry is already increasing premiums without justification for a rate increase except actuary anticipation.

The individual State Boards of Insurance are supposed to regulate rates. The State Boards of Insurance have acted as if they are impotent in the past few years. President Obama has just given State Boards grants to regulate the new law.

“Senator John D. Rockefeller IV fears that insurers are affecting how regulators interpret the recent health care legislation.”

“The new law requires health insurers to spend at least 80 cents out of every dollar they collect in premiums on the welfare of patients, a critical issue for the companies’ bottom lines.”

State regulators are drafting the new regulations to reflect the laws mandate that 80 cents of every healthcare dollar be spent for patient care. This should result in a decrease in healthcare insurance rates.

In the past, Medical-Loss ratio meant a percentage of the healthcare dollars applied to medical care after the healthcare insurance industry’s administrative services expenses.

The healthcare insurance industry wants to keep it that way. They are going to do their best to help state regulators do the same.

Consumers are being ripped off. The healthcare insurance industry loads administrative services expenses with creative bookkeeping. The actual expenses are opaque. In 2008, administrative expenses in Minnesota were 65 cents of every premium dollar. After administrative expenses, if the healthcare insurance industry spent more than 90% of the remaining 35% of the healthcare dollars for medical care, the healthcare industry was permitted a rate increase by the State Board of Insurance.

DOUBLE CLICK ON EACH FIGURE TO ENLARGE

Figure 1 Sixty five percent of private insurance dollars in Minnesota went to administrative services including brokerage fees. Only 15% went to physicians and 20% to hospitals. Figure 2

Figure 2

"The social contract for medical care should be between the physician and patient. Private Insurers aggregate 32.6% of the dollars that Americans pay in the hope of getting care, and insurers pay out only 4.9% of the money collected from the nation’s Consumers to physicians. Insurers pay out only 6.5% to hospitals.  Administrative service fees could not possibly add 15% value to the care of a patient. The administrative service fee can and must be reduced markedly."

http://www.state.mn.us/mn/externalDocs/Commerce/Blue_Cross_anfd_Blue_Shield_of_Minnesota_051606085017_BCBSM.pdf

Figure 3

Figure 4

The math is complicated. As pointed out by a reader, government officials are not anxious to uncover the creative bookkeeping for good reason.

“No career politician (Republican or Democrat) would touch attacking the Insurance lobby. Both the Democrats and the Republicans like the campaign donations from healthcare Insurance companies. Neither will the media attach the healthcare insurance industry because it biggest revenue comes from political advertisement. Who pays for this political advertisement in an era where the “media is the message.”

The healthcare insurance lobby and Big Pharma contribute heavily to political campaigns.

The good news is the traditional media is losing its impact on consumers in the era of You Tube, texting and Twitter. The cynicism is justified. Politicians are not interested in listening to the needs of the people.

As soon as a politician is sincerely interested in consumers’ needs, he will win. Many thought President Obama was that man. Unfortunately, he has another agenda.

What are the healthcare insurance industry’s administrative expenses it wants to include in the new regulations before it has to spend 80 cents for every healthcare dollar.

1. The cost of verifying the credentials of doctors in its networks. This cost is opaque. It is automated but the healthcare insurance industry wants to charge full price year after year.

1. The cost to ferret out fraud by identifying doctors performing unnecessary operations,
   procedures, and tests. Who should decide on unnecessary treatments? Peer physicians in local hospitals and local communities should decide. These physicians are usually not paid and are supposed to be immune from liability.

1. The cost for programs that keep people who have diabetes out of emergency rooms.

The healthcare insurance industry should not be doing this. It should be paying physicians to develop Diabetes Care Teams to teach the patients to self- manage their disease. The healthcare insurance industry has not universally paid for Diabetes Education. The help desks maintained by the healthcare insurance industry are not effective. These help desks are not an extension of the physicians’ medical care. They tend to undermine physicians and the physician patient relationship.

1. Healthcare insurers insist that typical business expenses should not be considered part of the Medical-Loss Ratio. The healthcare industry is not satisfied with a 20% profit on every healthcare dollar. It has managed expenses to receive 65% of every healthcare dollar by loading the administrative expenses.

1. The healthcare insurance industry believes it should be entitled to expense sales commissions for insurance agents. The expense is already built into the premium. It wants to continue to expense the sales commissions.

1. It wants to expense taxes paid on investments. These tax expenses should be subtracted before the 80% is calculated.

It is bizarre because the insurance industry bought the investment with profits. The profits were then leveraged with mortgages. Now it wants deduct the taxes as well as the interest paid on the mortgages. This is an excellent example of Wealth building 101.

1. The healthcare insurance industry wants to expense the insurance reserves. What are the rules for calculating insurance reserves? There is a line in the financial statements reporting outstanding accounts payable. Are the outstanding accounts payable the difference between what physicians billed and the physicians’ reimbursement? Our regulators are not protecting consumers.

1. It is essential to the healthcare industry to influence the rules for calculating for the Medical-Loss ratio.

The new law requires the healthcare insurance industry to provide a refund if it does not spend 80 cents on each healthcare dollar after administrative expenses. If the industry can achieve proper administrative accounting rules, it can continue to expense 65 cents of every healthcare insurance dollar.

Medicare and Medicaid do not escape this 65% administrative fee. President Obama claims Medicare’s administrative fee is only 2.5%. CMS’s administrative fee is 2.5%. The 2.5% is the fee to administer the outsourcing of administrative services to the healthcare insurance industry. Medicare pays 65 cents of every dollar to the healthcare insurance industry for these administrative services.

It sounds complicated. It is complicated on purpose. The goal is to keep the taxpayer stupid. The healthcare insurance industry can then blame hospitals and physicians for the rising healthcare costs. Hospitals and physicians become the healthcare insurance industry’s scapegoats.

I think Americans are starting to wake up.

If you’ve let your President and Congressmen know how you feel, tell them again and again-and again. It might help.

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

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

http://www.usa.gov/Contact/Elected.shtml

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