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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

Please send the blog to a friend

 

 

 

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Medicine Is A Calling: Not A Business

  Stanley Feld M.D.,FACP,MACE

I am pleased that I am able to stimulate comments from physicians in various parts of the country. Please keep the comments coming.

Many of these physicians feel trapped by the bureaucracy and medical care policies that are restricting them from developing a real physician patient relationship. The physician patient relationship is precious to the practice of medicine.

The positive physician patient relationship enables an enhanced therapeutic effect.

As stated by a previous physician writer in my last blog,

The patient has a complaint, the physician listens (or not), performs an examination (or not) makes a decision regarding the probable cause of the complaint, writes a prescription (or two, or three), offers some instructions regarding what the patient should be doing to help himself (or herself), says goodbye and asks that the patient return at some future date for reassessment (or not).”

Physicians have been trapped into this behavior as John Goodman pointed out. The patient physician relationship has been destroyed by the dysfunctional healthcare system. Obamacare is accelerating the dysfunction in the healthcare system.

 Many tests are done for defensive medicine purposes. In fact the extrapolated cost of defensive medicine is $700 billion dollars a year.

 Physicians might even give the patient a shot of something for good measure to prevent a malpractice suit.

The government, hospitals systems, and healthcare insurance industry control the healthcare system.

These secondary stakeholders have made physicians commodities. Physicians are trapped into going through the motions. Medicine is a calling not a business. Physicians have been forced into making it a business.

Physicians are so frustrated with the system that they are joining hospital systems to rid themselves of the bureaucracy and avoid practice responsibility and malpractice suits.

The hope is that it will lead to a “happier life.” Not true.

The privileged hospital employed physicians become the designated spokesperson by the hospital administrator for the staff physicians.  They deny there is any anger or frustration toward the government, the hospital system or the healthcare insurance industry.

The rest of the physicians keep their mouth shut and trudge along angry and frustrated.

There is a mountain of pent up anger and frustration toward hospital systems by these physicians.

I received this note from another physician writer,

“Dr. Feld:

When I read your post last week “It’s All About Patients and Physicians”, I thought you were writing to me directly. I have been thinking about this for years. It is not only that software innovation in Medicine lags behind every other industry, but also the focus has not been in the correct area. As with everything else, the medical profession has given control to others.” 

This physician is absolutely correct. In a country whose administration and congress is run by lobbyists who are not interested in patients or physicians but are more interested in protecting and furthering their clients’ vested interests the problems will not be solved.  Medicine and Surgery do not have adequate representation or resources to make their case to the public.

Perhaps it is because the AMA is too democratic or too civil. The AMA’s customers are physicians. Physicians have deserted the AMA because of lack of representation.

I think the AMA might still have a chance with some bold leadership. After all without patients or physicians you wouldn’t have need for a “healthcare system.”

 He goes on,

“Current software tools allow the development of disruptive systems that can put patients and physicians on the same side of the equation, develop networks to allow much better communications, and integrate the future of mobile devices that will transform healthcare. It should be possible to produce change in current relationships.” 

It is not only possible it is probable. I need a Posse of consumers to step out and force the secondary stakeholders to not take advantage of them. This must be a consumer driven effort.

Consumers can be organized through social networking just as Internet companies, venture capitalists and citizen expressed their voice on the Internet and stopped the two Censorship Acts (SOPA and PIPA) that were being railroaded through congress. The traditional media did not cover these two bills until the organized effort was working.

President Obama backed these bills until it was obvious to all that the anti-censorship effort expressed the will of the American people.

Patients (consumers) need leadership and innovative software to demand that they own their healthcare dollars and healthcare care decisions.

 I believe many physicians yearn for the ability to spend more time with their patients. Patients must demand it also and pressure the government to relinquish control over our healthcare system.

This writer/ physician’s note to me expresses this desire. It is an important story about the physician patient relationship’s key role in patient care.

“Let me begin with a story. I take care of an elderly man who lives in Brooklyn and suffered a stroke one year ago. At the time the patient was visiting with his son, who is a Rabbi in Chicago. The patient made an excellent recovery following high-quality rehabilitation at a Chicago hospital.

 He is a survivor of the Holocaust who lives with his wife and is generally independent. Although his walking is slow, he is able to walk utilizing a cane to a nearby synagogue for services every morning. As I was interviewing him last week, he mentioned that most of his day is spent at home with very little to do.

 He does not have television, and is not that interested in reading newspapers.

 After hearing this, I excused myself to go to my office and bring back an iPad to show him. I placed it in front of him, and logged on to a website sponsored by Yeshiva University (yutorah.org).

 I showed him that he would have access to literally thousands of lectures by leading rabbis that he could listen to on demand. His eyes widened and he looked at me with amazement. He asked me if that device needed a computer, and whether it would work in his home. He inquired about the cost.

His wife immediately told me that she wanted one (iPad) for him, and that their daughter would be calling me for the information about setting things up.”

Ninety percent of physicians would like to have time to relate to patients this way. The dysfunctional system has forced physicians to act differently.

 This patient recovered from his depression. He is thriving with the use of his innovative device (iPad).

He goes on further to say,

I cannot finish my career in Medicine without finding a way to integrate experienced people with great ideas and insight with young people who know how to create the tools to bring innovative approaches to actuality.

 I will describe the future state next. Innovative software can be built in the future state that provides patients with the tools to express their needs and for patients to accept responsibility for their care.

Consumer driven healthcare with the ideal medical savings account will be the foundation of this transformative healthcare system.

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

Please send the blog to a friend

 

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Healthcare’s Impending Software Revolution

Stanley Feld M.D.,FACP,MACE

It is clear to me why the healthcare industry has not experienced the same transformation resulting from software innovation that the publishing industry, the music industry and the movie industry have experienced.

After practicing Clinical Endocrinology for 30 years as the founding partner of Endocrine Associates of Dallas P.A. and as President of the American Association of Clinical Endocrinologists, I believe I understand the reasons the healthcare industry has not be able to break through and enjoy the economies of scale offered by the software revolution.  

I have formed these opinions by dealing with local and national hospital administrators, healthcare insurance executives, pharmaceutical executives, healthcare policy wonks and government bureaucrats.

Most of these executives are focused on the wrong customer. Most are too busy trying to solidify their perceived position of power in the healthcare system.

Those executives who understand who the customer is have kept quiet in order to maintain or advance their position in various organizations.

The result is software innovators have been chasing the wrong customer. The result has been greater dysfunction in the healthcare system.

There are also many healthcare system issues making it very difficult to stay focused on the main problem.

I have been fascinated by my son Brad Feld’s insight into the software industry.  His tutoring has helped me learn how to critically think about software development and its transformational potential.

My brother, Charlie Feld, has also helped me through his insight into pattern recognition and the use of information technology to solve the problems of various industries.

I have followed the progress of medical software innovation for the last three decades. I am still far from expert but believe I have a better grasp on the problem than most.

I have a good feel for the potential offered by this software revolution for the practice of medicine and how to use it.

If the software industry understood the physician mentality and understood the real customer, the needed breakthrough could occur.

The result would be a large decrease in the cost of healthcare.

Waste, abuse and overuse would be decreased and the therapeutic effect of the patient physician relationship would be restored.

I believe the medical software is available right now. It has to be manipulated and synthesized as Steve Jobs, Jeff Bezos and Mark Zuckerberg have done in their respective software areas.

Brad is not interested in healthcare system software innovation. He dealt with physicians and dentists when he ran Feld Technologies in 1985 while a student at MIT.

He built an interoffice and intra-office network for my practice Endocrine Associates of Dallas P.A. in 1985.  He hired MIT students to write software with him and Dave Jilk.

The network these kids built was the sturdiest Medical Systems network in Dallas. The network lasted from 1985 until 2002. There are still remnants of this software in the practice today.

When he finished my software project he pledged to himself he would never deal with physicians again. He concluded that they are all a pain.

Not true. Physicians know what they want and need. They have an awesome responsibility for their patients’ lives and privacy.

Secondary stakeholders have frequently taken advantage of the medical profession and its intellectual property. Physician mistrust of secondary stakeholders is monumental. 

Much of the “data collected” from information systems has been used against them even if the data is incorrect or incorrectly interpreted.

Healthcare policy has been formulated on inaccurate data and inaccurate conclusions.

These conclusions have been used to devalue physicians and to destroy the patient physician relationship.

Healthcare software companies are paid by secondary stakeholder to create innovative software. The software companies do not realize that the real customers are patients and physicians. These companies do not understand why they cannot get patients and physicians to cooperate.

When data collected is wrong, incomplete or misunderstood physicians protest. They are ignored. The typical response is that this is the only data available.

Healthcare policy should not be formulated on the bases of false data.

 Is it any wonder that physicians are not interested in cooperating with the powers that be in the healthcare system’s use of inaccurate data?    

The medical transaction must be between the patients and physicians. All of the secondary stakeholders have jumped into the center of this transaction to control the healthcare system. The secondary stakeholders only add value at the edges of the patient physician transaction. 

Our health is our most precious asset. Americans are willing to pay as much as necessary for medical care. They want everything done especially if they are not responsible for paying for it.

If physicians do not think something should be done they can get sued. The knee jerk reaction is to do everything.

Physicians only receive between 5-10% of the healthcare dollars.  

Where is the money going? Secondary stakeholders are ripping off the healthcare system as they undermine and undervalue the patient physician relationship.

Third parties have taken control of the healthcare system. They have assumed responsibility for the healthcare of patients. They are also in the process of dictating access to care. The present increased healthcare costs are unsustainable.

All the secondary stakeholders are like a giant hairball destroying the viability of patient physician relationships.

Innovative software used properly can disassemble the elements of the hairball and drive them to the edges of the healthcare system where they belong.

Proper software innovation can accomplish the goal of decreasing costs and increasing the quality of care by restoring the patient physician relationship.

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

Please send the blog to a friend 

 

 

  • DannyHorowitz

    Hi Dr. Feld. I don’t know much about existing healthcare software or endocrinology BUT, what do you think about things like fitbit (Brad/Foundry are investors) Is it possible that this is driving the revolution. Potentially massive collection of personal data will allow me to not just test measure and optimize my health alone, but with the help of an understanding doctor (expert) who is able to use this data to suggest additional tests/diagnoses etc.
    Traditionally, doctors/patients spend little time together so the amount of data doctors have at their disposal is small. These devices allow for doctors to have significantly more data/information about their patients that will hopefully lead to cheaper and better care.
    I’ll bet a lot of really good basic data collected by a device like fitbit and augmented with diet and energy levels can predict a potential thyroid problem. This should be automatically detected by good software/analytics. Then with a high confidence, you, the doctor can order a thyroid test, which will be inexpensive and whose price will go down over time. There is also a need for greater transparency in medical test pricing. Many practices mark up the price of blood tests considerably.
    I guess I’m thinking the revolution will be driven by a) more better cheaper data (i.e. data collected by the patient and not via expensive unnecessary tests and short inefficient expensive doctor visits) and b) more transparency (with everything) and together this will lead to a closer patient/physician relationship, higher quality of care, more money flowing directly from the patient to the physician, knowledge of what the money is for, and possibly the ability to be better quantify the contribution of the doctor.

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It Is All About Patients and Physicians

Stanley Feld M.D.,FACP, MACE

Society is in the midst of an electronic revolution. Innovations in hardware and software have created greater shifts in our economy than the assembly line, mass transportation and electricity. We ain’t seen nothing yet.

The potential for economic growth as of result of this revolution is unimaginable.

Current business models have crumbled and have been replaced by software driven companies. Software driven companies are cheaper to run and have created innovative and easy to use products and services for consumers.

Marc Andreessen, founder of Netscape, has a tremendous handle on this revolutionary change. So does my son, Brad, and his good friend Fred Wilson.

Marc Andreessen wrote an excellent article in the WSJ on August 20th, 2011 entitled, Why Software Is Eating The World.”

“More and more major businesses and industries are being run on software and delivered as online services.”

Almost all industries have been affected. The hardware and software revolution have overturned many industry’s business models. 

Brad Feld wrote a perceptive blog today defining some of the changes to be expected in the near future. He also warned of incumbent and political abuses to the technological advances that are being made by entrepreneurs.

Even the freedom of the Internet is being threatened by a congress that does not understand its potential and is driven by vested interests, not the preservation of freedom, creativity and innovation.

My hope is Congress will be unsuccessful in restricting these freedoms. There will be many more industries that will be disrupted by innovative software in the coming decade.

Over two billion people now use the broadband Internet, up from perhaps 50 million a decade ago.”

Marc Andreessen expects, “at least five billion people worldwide own smartphones, giving every individual with such a phone instant access to the full power of the Internet, every moment of every day.

Amazon.com is a dramatic example of a company that has used innovative software to transform an industry. Twelve years ago Borders was the king of stick and brick booksellers. Borders had an effective software book distribution system for its increasing number of bookstores.

Amazon, with software that distributed books directly to the customers ate Borders’ lunch. Borders thought on-line book sales was non strategic. “People like to touch books before they buy them.”

How wrong can one be? Using the same software Amazon now sells everything at a lower price than most retail stores and on-line companies. Its software decreases overhead and in turn consumer prices.

Consumers are not stupid. They want the best product at the lowest price. Amazon produced and consumers responded.

 Big box stick and brick retail stores that took over the local mom and pop businesses will fail unless they became hybrids.

The old business model bankrupted Borders.

Amazon didn’t stop there. Its Kindle digitized books and delivered them instantly at half the price to consumers with a greater margin for Amazon.

This demonstrates the genius of innovation. The creative uses of innovative software are staring us in the face daily.  Most industries  have a Blind Spot.

The existence of those people who want to touch the pages of books is fading fast. Jeff Bezo saw this Blind Spot.

Netflix copied Amazon with DVD movies. It destroyed Blockbuster.  Netflix then switched from physically delivering DVDs by mail to both delivering DVDs and on-line downloads.

It would have worked if they put the consumer first. Netflix infuriated  consumers with its pricing. It almost immolated itself. I do not think Netflix will recover unless consumers perceive that they are first.

Amazon, using a more sensible model, is going to take over the on-line movie business. Blockbuster, now owned by Dish network, doesn’t have a clue about the needs of consumers. 

Dish, Direct TV and Cable are trying to adjust to the rapid pace of software innovation. I do not think they can because they are bogged down in bureaucracy.

They are simply not entrepreneurial.

This brings us to Apple, Steve Jobs and the entrepreneurial spirit. Steve Jobs turned the music industry on its ear with ITunes, the smart phone industry on its ear with the IPhone and the computer industry on its ear with the IPad and the Mac Book Air.

His method was to use innovative software that made the appliance work for the consumer. He does not make the consumer suffer as Microsoft does with constant software freezes.

He kept his eye on the consumers. He put the consumer first. It served his vested interest well.

Before is died he made a statement in which he said he finally figured out television.

Google is a close second to Apple but Google is hampered by a growing bureaucracy.

“The great incumbent software companies like Oracle and Microsoft are increasingly threatened with irrelevance by new software offerings like Salesforce.com and Android (especially in a world where Google now owns a major handset maker).”

I could mention many more companies that have served as disinter mediators of incumbent businesses by software innovation. These innovations have resulted in vast improvements in value to consumers, decreased costs and economic growth.

 Why hasn’t healthcare in the U.S. been the beneficiary of this software revolution?

The reasons are clear to me having practiced Clinical Endocrinology for 30 years.

Healthcare is an industry with a gigantic Blind Spot. There is a good reason for healthcare’s Blind Spot.

Software developers in the medical space do not know who their customers are. Their customers are patients and physicians and the patient/physician relationship. The customer is not the government, the healthcare insurance industry or hospitals.

Once this is understood the software revolution in medicine will begin.  

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

Please send the blog to a friend 

 

 

  • Dave Chase

    Stanley – I couldn’t agree more. This is the reason why the kernel of my startups architecture is opening a rich communication channel between physician and the individual (most of us don’t think of ourselves as “patients”). I was fortunate to have founded Microsoft’s health business many moons ago and play a role in the shift from mainframe to client-server based systems. However, this shift is not only a big architectural shift but the fundamental healthcare delivery model must shift as well. The biggest driver, for better or worse, is the shift that is happening from the “do more, bill more” reimbursement model to one that is focused on value and outcomes.
    I can’t think of a more exciting time to be in the field. There is a wave of disruptive innovation that isn’t fully recognized right now — Gibson’s quote (“the future is here…it’s just unevenly distributed”) is apropos. One great example is Direct Primary Care — see http://www.delicious.com/chasedave/DPCArticles for more. There’s more where that came from.
    Great to see experienced MDs blogging like this, btw!

  • Stanley Feld M.D.,FACP,MACE

    Great comments everyone.
    Thanks
    Stanley Feld M.D.,FACP,MACE

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President Obama Is Destroying His Theoretical Basis For Obamacare In Order To Win Re- election.

 

 

Stanley Feld M.D., FACP,MACE

I have been speaking to many people about the hazards of Obamacare.

Many well-educated people do not understand the defects in President Obama’s Healthcare Reform law and its potential unintended consequences.

Unfortunately, many congressmen and senators do not understand the consequences of the law either.

Rather than President Obama’s Healthcare Reform law making the medical care system better it is destined to make it worse.

I have explained the reasons for these unintended consequences in past blogs.

Most people have difficulty understanding details of the law because it is poorly covered in the press in our sound bite society.

Only a small percentage of people need medical care at any one time.  To those not needing medical care the healthcare system under President Obama’s law has changed little except for higher healthcare premiums and deductibles.   

The 35-55 year olds are the group that must become aware of the changes that will result from the law. When they will need medical care our healthcare system will likely be decimated. 

Everyone is in agreement that our federal, state and local governments are bankrupt.  Everyone understands our federal government has borrowed and spent the money we should have saved to fund our future healthcare needs.

Additionally, entitlements and administrative inefficiency, waste and fraud will have intensified the problems of overspending.

Paul Krugman believes deficit spending is immaterial. He continues to insist that John Maynard Keynes was right even though he lack evidence for his conclusion. Deficit spending is immaterial until there is no one around to lend the government money.

President Obama keeps saying he is going to decrease healthcare costs with his law. His conclusion is theoretical. His conclusion defies his own government’s CBO and various experts.

President Obama’s conclusions also demonstrate his lack of understanding of the complicated defects that have accumulated over many years of adjusting to defective healthcare policy. 

Increasing bureaucratic structure and government control is at the root of the problems in the healthcare system. Increasing this structure is not the solution to the healthcare system.

President Obama is now backing off some of the draconian aspects of contaminating the theoretical basis of his Healthcare Reform Act.

The Obama administration’s surprise announcement Friday that it planned to give states broad leeway to pick the benefits offered under the federal health care law offers yet another example of a gradualist approach to carrying out its signal domestic policy achievement.

 Obamacare mandates what must be covered under the Federal Health Care Law

• Ambulatory patient services, like doctor’s visits

• Emergency services

• Hospitalization

• Maternity and newborn care

• Mental health and substance abuse services

• Prescription drugs

• Rehabilitative and habilitative services, and specialized social and medical services for people with conditions like autism and cerebral palsy

• Laboratory services

• Preventive and wellness services and chronic disease management

• Pediatric services, including oral and vision care

 

President Obama is choosing to avoid some crucial choices until well after the 2012 elections. Critics accuse the administration of political expediency. The Obama administration insists the decisions have been based on sound policy judgments.

I hope the public is not stupid enough to believe President Obama’s ploy. The public has been duped in the past. I think it is  waking up.

 In passing a good deal of the decision-making to states, the administration has guaranteed that Americans will continue to face a patchwork of state regulations that make coverage uneven and inefficient.

People in Utah and Wyoming, for example, are likely to have more limited access to expensive services now mandated in states like Massachusetts and Maryland. And consumer advocates worry that some states will limit benefits too strictly.

President Obama has taken the guts out of his law just as he previously discontinued the insurance mandate to large organizations in 2011.

 “I think what Congress had in mind was creating a uniform national level of benefits that would be available to everybody,”

President Obama is playing another trick play on the states and the American people. The net result will be more uncertainty, more unintended consequences and more deficit spending.

Let us not be fooled again. Let us wake up!

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

Please send the blog to a friend 

 

 

 

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A Wakeup Call About Individual Freedom

Stanley Feld M.D.,FACP,MACE

President Obama and congress have made major progress in increasing central power over individual freedoms during President Obama’s tenure in office.  Congress has done it by passing unpopular laws; President Obama has done it issuing unpopular by executive orders.

Two prominent examples are working their way through the governmental system right now.

The first is Obamacare with its many defects. The next congress and President will probably repeal Obamacare. President Obama’s Healthcare Reform Act has already damaged the economy, increased the budget deficit and is destroying the healthcare system.

The Supreme Court will not overturn Obamacare completely. The court is only judging the law on limited issues. The Supreme Court’s decision is going to take at least two years fro the time the bill was passed.

The real issue at stake with President Obama’s Healthcare Reform Act is should the central government have the power to control our lives and our choices.

The states are protesting that the federal government is taking power away from the states.

 Citizens are complaining that the federal government is limiting their rights and freedom of choice.

This conflict has existed throughout American history. America has struggled with the challenge of the balance of power between federal control, states rights and individual rights.

President Obama is a strong advocate of central control. In the process he is trampling states rights and individual freedoms.  He has bypassed congress and by executive order conferred absolute power to administrative appointees.

If the federal government can require people to purchase health insurance, what else can the government force Americans to do?  The government will be able to compel citizens to do any number of things by decree.

President Obama has ignored this basic issue.  Has congress and the executive branch overstepped their constitutional authority?

His administrations’ lawyers have had a difficult time providing a coherent response to the question in court appearances around the country.

Judge Laurence H. Silverman said, Let’s go right to what is your most difficult problem,”

 “What limiting principle do you articulate?” If Congress may require people to purchase health insurance, what else can it force them to buy? Where do you draw the line?

Would it be unconstitutional, to require people to buy broccoli?

Beth S. Brinkmann, the administration’s lawyer said, “No,” then “It depends.”

Judge Silverman asked the next logical question,

 “Could people making more than $500,000 a year be required to buy cars from General Motors to keep it in business?

Beth Brinkman’s response was “I would have to know much more about the empirical findings,”

Judge Brett M. Kavanaugh asked,

“How about mandatory retirement accounts replacing Social Security?”

Ms. Brinkmann replied. “It would depend.”

None of these ridiculous responses were published in the traditional media at the time of the testimony. The administration’s lawyers are trying to define its views of the limits of government power. The have not provided constitutional justification for their views.

 “They have said, for instance, that laws authorized by the Constitution’s commerce clause must be economic in nature, must concern interstate commerce and must address national problems.”

I do not think this should be done at the expense of states’ rights and individual freedoms.

The reason President Obama’s Healthcare law requires an individual mandate to purchase healthcare insurance is because Obamacare is not actuarially sound. It might work if everyone pays into the premium pool.

Rather than repairing the healthcare system and its inefficiencies President Obama is adding more revenue to a failing system by mandating everyone to pay into something they do not want. 

In reality, Medicare has failed economically even though seniors are satisfied with the insurance.

Medicare Part A mandates everyone to pay into the system through payroll taxes.  The reason the government had gotten away with the Part A mandate is because Americans had the right to opt out of Medicare Part B.

Another hollow argument President Obama’s lawyers have used is that the health care market is unique.

The administration’s lawyers have suggested,

 “Questions about constitutional limits can miss the point. The only question actually before the courts, they said, is whether the particular law under review was within Congress’s authority. Other cases, they said, can be decided as they arise.”

There are many unintended consequence of Obamacare already. Hopefully, the Supreme Court judges will understand these implications of these unintended consequences. Most important is the precedent the law set for other cases.

In 1995, when the court struck down a federal law that prohibited people from carrying firearms in school zones, Chief Justice William H. Rehnquist wrote that “we pause to consider the implications of the government’s arguments” in defending the law — that stopping activities that could lead to violent crime relates to interstate commerce because it affects “national productivity.”

Under that reasoning, Chief Justice Rehnquist wrote, “It is difficult to perceive any limitation on federal power,” adding that “if we were to accept the government’s arguments, we are hard pressed to posit any activity by an individual that Congress is without power to regulate.”

Many judges are reluctant to issue rulings without some sense of what their consequences will be in other cases.

The outcry about Obamacare has been loud and clear.  Our constitutional government should be government for the people by the people.

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

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The Healthcare System vs. The Medical Care System

Stanley Feld M.D.,FACP,MACE

The difference between the healthcare system and the medical care system is very clear to me. The stakeholders in the healthcare system are patients, physicians, government, hospital systems, pharmaceutical companies, pharmacies, pharmacy middlemen, and healthcare insurance companies. 

 Government, hospital systems, pharmaceutical companies, pharmacies, pharmacy middlemen, and healthcare insurance companies are secondary stakeholders in the healthcare system.

 The primary stakeholders are patients and physicians. They also comprise the medical care system. Without the primary stakeholders there would be no need for a healthcare system.

 The secondary stakeholders have long ago taken over the healthcare system. All businesses and the government deal with the hand they are dealt using their best judgment. The people running the business or government pursue their vested interest. The difference between businesses and government is businesses work to make as big a profit as possible. Government, depending on the political party in power, pursues fulfillment of its ideology.  

 Since 1942 and the Economic Stabilization Act of President Roosevelt the market place for medical care has been distorted. In 1946 healthcare insurance was introduced. At that time the interaction between the primary stakeholders, physicians and patients, started to be destroyed by secondary stakeholders.

The cost of healthcare has progressively increased since the government passed the Medicare and Medicaid in 1965. Costs increased further in 1980 when the government said we couldn’t keep paying these increasing costs and instituted price controls for Medicare and Medicaid.

This led to cost shifting of the difference to the private healthcare insurance sector.  Businesses providing healthcare insurance for their employees accepted the resulting premiums associated with cost shifting until 1985. At that time they said, “stop.”

The healthcare insurance industry asked corporations what percentage of your gross revenue could you afford for healthcare insurance benefits. The healthcare premiums were 18% of gross revenue.

 The corporate answer was they could afford up to 12% of gross revenue. The healthcare insurance industry’s response was, no problem.

HMO pricing became the most economical option for corporate employers. HMO fixed healthcare cost for corporations and healthcare insurers.

HMOs shifted the risk to physicians and hospitals. HMOs failed because physicians and hospital did not know how to assess risk. They accepted risk initially because they were afraid to lose patients.

 Hillarycare failed to become law because of the potential for patient abuse, restrictions of access to care, rationing of care and loss of freedom of choice. Patients did not want the government to dictate their medical decisions.

 Obamacare was passed by a Democrat controlled congress with a very liberal ideology.

  Many congressmen did not read the entire document or debate the potential unintended consequences.

  The difference in ideology between liberal and conservative is easy to understand.

 “Liberals believe that health care is treated as a market commodity today but should not be, and conservatives think that health care is not treated as a market commodity but should be.”

 The healthcare system is not a true marketplace. The healthcare marketplace has been continuously distorted by government regulations and adjusted regulations since Medicare passage in 1965.

 All the stakeholders have distorted the market even further by adjusting to government regulations in order to purse their vested interest.

If real repair of the healthcare system is to occur a real marketplace has to be created. Obamacare is another adjustment in an already distorted marketplace. Obamacare is accelerating the dysfunction in the healthcare system until it implodes and results in increasing costs not savings.  

 The healthcare insurance industry controls costs. Many Democratic healthcare policy experts have ignored the facts. The healthcare insurance industry’s goal is to maximize its profit. It takes 30% of the healthcare dollars off the top.

The healthcare insurance industry should not be in control of the economics of the healthcare system.

 Consumers should be in control of their medical care decisions and the money they spend for those decisions.

Personal medical care decisions should not be left to the munificence of the government. The government has never done anything efficiently.  

 Private and Medicare insurance has kept control of medical decisions out of consumers’ hands.  Consumers purchase healthcare insurance individually or from Medicare. Consumers also can receive healthcare insurance from their employers as a job benefit.

 The healthcare insurer directs consumers to use physicians and hospital in its network. The insurer negotiates reimbursement rates for the insured with hospitals and physicians.

Consumers are given little or no information about the comparative cost or quality of any particular doctor or hospital.  Consumers go to a doctor in their network.

Physicians do a history and physical exam and order tests and procedures on patients’ behalf.  When the test and procedures come back physicians prescribe the appropriate medication after a follow-up visit.

The healthcare insurance company reimburses physicians.

  Patients receive a copy of the bill from the insurer with patient portion of the co-pay. The explanations of benefits are impossible to interpret.

This is not a marketplace transaction. Patients have no control over the reimbursement. Patients and physicians have little incentive to restrain overuse of the healthcare system. They have no incentive to even scrutinize the bill. Patients’ have no incentive to control costs.

The use of healthcare services is divorced from marketplace forces that constantly assess cost benefit ratios.  Neither physicians nor patients have incentive to get the best care at the lowest price with the best quality.

As healthcare costs increase each year the source of the increase remains opaque. The increasing costs are made to appear to be the result of patients’ and physicians’ overuse of the healthcare system.

The increase in cost could be the result of the healthcare insurance industry and the pharmaceutical industry’s increased profits.

All stakeholders pursue their vested interests. The only way to align vested interests is to have consumers be responsible for thei health and healthcare dollars.

Only then will a true market place exist. Entitlements and price controls do not work. The cost of healthcare will skyrocket with Obamacare and create a larger budget deficit.

 

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

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    difference between medicare and medicaid

    Repairing the Healthcare System: The Healthcare System vs. The Medical Care System

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Pharmacy Monopolies

Stanley Feld M.D.,FACP, MACE

 Pharmaceutical companies have been merging for years. Pharmacies have also been merging for years. The excuse for mergers has been efficient production, distribution and sale of drugs.

“Senior executives say the merger will significantly reduce the nation’s health care costs and deliver drugs in a safer, more efficient fashion. “

If any one believes this I have a bridge to sell you.

The real reason is to form a monopoly. President Obama and his Federal Trade Commission (FTC) have allowed pharmacies to get away with it.  

 “The Federal Trade Commission (FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act. Its principal mission is the promotion of consumer protection and the elimination and prevention of what regulators perceive to be harmfully anti-competitive business practices, such as coercive monopoly.”

The commission has not done a very good job in protecting consumers of healthcare for years.

The next wave of monopolies which will hurt consumers is the merging of pharmacy benefit management companies.  Their executives are using the same excuse to both the FTC and the congress.

“Senior executives say the merger will significantly reduce the nation’s health care costs and deliver drugs in a safer, more efficient fashion. “

 I have finally figured it out.

First, I must explain this attempt to create another healthcare monopoly that will result in increased cost to the healthcare system.

If past behavior is a predictor of future behavior, whoever is paying for the drugs will pay more.

 Express Scripts’ has offered to pay $29 billion for the acquisition of Medco Health Solutions. Both pharmacy benefit manager are among the biggest in the business.  

 Combined they will handle prescription drug benefits for more than 115 million people. The two companies now control 33% of the prescriptions filled in the United States. Their combined revenue is $110 billion dollars a year and growing.

 The Federal Trade Commission wants more details before it approves the merger. The antitrust subcommittee of the Senate Judiciary Committee wants to examine the antitrust implications of the merger.

 It is pretty obvious that the merger will decrease competition leaving only two major pharmacy benefit managers Express Scripts/Medco and CVS Caremark. 

  A Morgan Stanley Research indicated that the 50 largest companies in the United States rely heavily on the services of Medco, Express Scripts and the third major benefit manager, CVS Caremark.

"Dan Gustafson, an antitrust lawyer who recently helped write a letter to the F.T.C. objecting to the merger on behalf of the American Antitrust Institute, a Washington organization. “These are customers who require a broad spectrum of services on a national level,” he said."

The smaller pharmacy benefit managers (40) typically do not have the geographic reach, bargaining power or data-handling capabilities of Express Scripts, Medco and CVS Caremark.

“When benefit managers steer health plans to their own pharmacy fulfillment services, employers may have little choice but to agree, said Edward A. Kaplan, a benefits consultant at Segal, which advises employers and others about health insurance. “They have very little leverage,” he said.

The Senate subcommittee and FTC regulators want to study the implications of the merger on the individuals, large companies that provide drug insurance to their employees, the mail order pharmacy and specialty drug markets.

The merged company would control a third of the specialty drug market. This market produces a high net profit. By controlling the market Express Scripts/Medco would not only increase the price it would increase their net profit.

Robert Seidman, a former pharmacy executive at WellPoint who is now a health care consultant in Los Angeles said,

We’re not talking pennies here,” he said. “We’re talking thousands” per drug.

  Express Scripts/Medco retort is pretty lame. It asserts there is plenty of competition including companies like UnitedHealth Group, the powerful insurance company. The obvious reply should be that there is not enough competition.

 A number of consumer groups including Consumers Union, along with associations representing community pharmacists, chain drugstores and supermarkets, have sent letters to regulators and legislators arguing that the combined company would create a drug benefit giant with unrivaled power.

 The fear is Express Scripts/Medco would have the power to steer patients to its own mail order and specialty pharmacy businesses.

 “Our concern is that a mega P.B.M. would have tremendous power and control over what prescription drugs Americans can get, where they get them, and how much the drugs cost,” said Don Bell, senior vice president and general counsel at the National Association of Chain Drug Stores.

DeAnn Friedholm, the director for health care reform at Consumers Union, said her group was particularly concerned that the merger could reduce consumer choice.  

“We like the idea of having good choices for consumers that meet their needs, not just the need of these huge P.B.M.’s,” Ms. Friedholm said.

Just as President Obama and previous administrations has encouraged hospital systems to become monopolies in the name of efficiency, President Obama is going to believe Express Scripts/Medco’s promise of efficiency and lower costs and have the FTC push through the merger.

I would guess President Obama thinks he can control Express Scripts/Medco or he is playing favorites again or he wants the healthcare system to implode.

This is one more step toward the implosion of the healthcare system.

 

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

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  • Joanne Velazquez

    Merging doesn’t happen because they want to help other people. They are merging because they just want to help their business to grow fast.

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Hospital System Monopolies And ACOs

Stanley Feld M.D.,FACP,MACE

I have been a constant critic of Accountable Care Organizations. I have said they cannot work to the benefit of patients and physicians because of the difficulty of organizing them and the subsequent unintended consequences. ACOs will increase the costs to the government and healthcare insurance industry to provide the administrative services.

Government has proven over and over again its ability to make complicated mistakes. These mistakes result from bloated bureaucracies and conflicting bureaucratic missions.

Additionally the government outsources administrative services to the healthcare insurance industry. Administrative services fees are constantly increasing because of waste, inefficiency, and mark-ups.

Hospital systems have been merging for 15 years. In the process they are attempting to buy physicians practice and provide a salary for physicians.

 Hospitals are brick and mortar structures. They are not the future of medical care. Hospitals, now hospital systems, had to change their business plan because more and more patients are being treated out of the hospital.

Outpatient clinics, diagnostic imaging centers, chemistry laboratories and ambulatory surgical centers have shifted income from hospitals to physician owned outpatient clinics.

Hospital systems goal has been to buy physicians’ practices and ancillary care facilities. Hospital systems’ consultants have concluded that they would be in a better position to negotiate price if they owned the physicians infrastructure regardless of the cost and pay physicians a salary.

The published reason given for this action is to provide better and integrated medical care within their hospital system. The real reason is to capture the revenue lost to outpatient facilities and profit from physicians’ productivity. Physicians are realizing they are being taken advantage of and are demanding their fair share of their own productivity.

 The Federal Trade Commission is supposed to have the authority to challenge monopolistic hospital mergers to protect consumers.

 

In 1996, the FTC amended its policies on health care mergers. The new policy encouraged hospital systems to merge by providing safe harbor to competing hospital systems when the hospital system could prove their hospital could achieve sufficient clinical integration.

 

The definition of sufficient integration was very loose and ill defined. The government thought it could save money by having all the fees under one roof. The FTC encouraged healthcare system monopolies in order to achieve more efficient and integrated care. It did not realize it would bite them in the leg someday.

It has always been a mystery to me how the government came to this conclusion. Suddenly the government has realized that the monopolies have turned on it and are in a position to demand more reimbursement. 

J. Frank Rosch the FTC Commissioner said,

 “I thought that the 1996 amendments…were the biggest loophole in the antitrust laws I had seen,”

 “Subsequent Advisory Opinions issued by Commission staff…were about as clear as mud.” 

Dr. Donald Berwick and President Obama claim that Accountable Care Organizations are the cure to our rising healthcare costs. A gigantic and expensive bureaucratic system has been constructed by CMS to regulate these new ACOs.  ACO’s promote further consolidation and mergers of physicians and hospital systems.

“The net result” of ACOs, says Rosch, “may therefore be higher costs and lower quality health care—precisely the opposite of its goal.”

Remember the government outsources all of the administrative services to the healthcare insurance industry. I have shown how the healthcare insurance industry has taken 30 to 50% of every Medicare healthcare dollar to the disadvantage of the taxpayer and seniors. 

Large merged hospital systems have in turn taken advantage of their size to take advantage of the healthcare insurance industry.

The healthcare insurance industry has taken advantage of the government in pricing administrative services.

Finally, the government has taken advantage of seniors by increasing Medicare premiums, increasing deductibles and decreasing benefits..

“ The final ACO guidelines, says Rosch, are “extraordinarily generous to providers,” and will constrain the FTC’s ability to block exploitative provider mergers.”

The Congressional Budget Office, much to the dismay of Obamacare’s advocates, did not think ACO’s would save much money in ten years.

 The CBO projected that the Medicare ACO initiative would save $5.3 billion over ten years.

 “In other words,” Rosch points out, “the savings to Medicare from the ACO program are no more than a rounding error. Yet even the CBO’s modest cost savings projections are likely overstated.”

 This supposed savings amounts to eight-hundredths of one percent of Medicare’s spending over the projected ten years.

People have a tendency not to do the arithmetic when present with what sounds like a big number.              

 “Against the very meager prospects for cost savings,” Rosch concludes, “there is a very real risk that some ACOs will be formed with an eye toward creating or exercising market power.

Middle-class Americans are already struggling with the burdens of the rising cost of health insurance. The potential ACO policy blunder is not to be taken lightly.

 Obamacare’s failure will skyrocket our federal debt. The lack of consideration of the dysfunctional dynamics of the healthcare system will result in unintended consequences that will create greater dysfunction and higher costs.  

Obamacare and ACOs will end up making health care even less affordable and accessible.

Maybe that is President Obama’s goal.

 

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

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    By some weird arithmetic, the more life stuffs itself into the valley, the more spaces it creates for further life.

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