Stanley Feld M.D.,FACP,MACE

Why will President Obama’s Healthcare Reform Plan fail? Medicare and Medicaid have unrelenting increases in its yearly deficits. Both programs as well as the available private health insurance do not provide incentives to consumers or physicians to improve the healthcare system.

Consumers, who have healthcare insurance have been passive until now. “If I get sick my insurance will take care of me.”

As more people get sick they realize they are uninsured.

Therein lies the problem with President Obama’s Healthcare Reform Plan. It forces the consumer to be dependent on the government rather than to be responsible for health and healthcare.

Sometimes patients cannot help it if they get sick. Some illnesses are genetic. Some illnesses are environmental. Many illnesses are preventable.

Healthcare reform should put an emphasis on disease prevention. It should provide incentives for consumers to prevent disease and incentives for physicians to teach patients to avoid complications once they have a chronic disease.

Prevention of the onset of chronic disease and the complications of chronic disease require motivated consumers. It also requires the elimination of environmental hazard that precipitate chronic disease. There are many examples of environmental hazards (air pollution, toxic wastes, cigarette smoking, and obesity to name a few).

Let us take obesity as an example.

Is there any language provided in any of the bills before congress addressing the obesity epidemic?  No, yet obesity predisposes consumers to Type 2 Diabetes and coronary artery disease. Medical care of these two problems cost the nation $400 billion dollars a year.

In a March 26, 2008 article in the New York Times, New York City was declared Fat City? Ten (10) million pounds were gained in 2 years according to the April issue of Preventing Chronic Disease, a medical journal published by the Centers for Disease Control and Prevention.

“About 173,500 adult New Yorkers became obese and more than 73,000 received new diagnoses of diabetes from 2002 to 2004, according to a new study by the New York City Department of Health and Mental Hygiene. Put another way, “the citywide weight gain totaled more than 10 million pounds in just two years,” the city noted in a news release summarizing the study.”

President Obama should be concentrating his efforts on how to motive people to lose weight in order to avoid the onset of Diabetes Mellitus and Heart Disease. He and his healthcare reform team should study my “War on Obesity.”

None of the necessary steps are being taken by the administration to solve Obesity in America. Without a solution to the obesity epidemic, the Type 2 Diabetes Mellitus epidemic will continue and the cost of President Obama’s new entitlement plan will escalate.

How should President Obama motivate people to be responsible for their own care? He should provide incentives. He should propose and enforce regulations that provide consumers with a healthier food environment.

A first step would be to deal with farm subsides that encourage obesity. It can be done. He must also provide effective education to the public to combat obesity. He must provide economic incentives to consumers to exercise and lose weight. This can be accomplished by the ideal medical savings account.

President Obama should become serious about dealing with malpractice reform. The cost of defensive medicine is $750 billion /year. Consumers must be educated to demand tort reform. Defensive medicine would affect the remaining balance in their medical savings accounts. Consumers should be taught to demand an explanation for the tests from their physicians. Consumers could be taught to waive physicians’ liability if there is no good reason for a test. Physicians have not been sued for tests they have done. They have been sued for tested they have not done.

President Obama should be spending money on a system that encourages innovation (the ideal medical savings account) rather than spending and wasting money on a new entitlement for a healthcare system that is broken.

I will repeat my answer to your question. Your employer or the government pays for your ideal medical savings account.  The entire policy (the $6,000 deductible and the $6,000 high deductible policy) remains tax deductible to your employer.

You have the responsibility to use the first $6,000 wisely and remain healthy. If you do not spend it you keep it in a trust account tax free for retirement and not for future healthcare needs. If you use it before you retire you pay ordinary income tax plus a penalty. If you spend more than $6,000 you receive first dollar healthcare coverage.

If you are self employed and qualify for government aid or a subsidy the government pays for healthcare premium. If you are on Medicaid the government remains the payor.

All citizens would have the same healthcare coverage. Everyone would be responsible for their choice of lifestyle. President Obama would instantly have 300 million consumers repairing the healthcare system. It would take major control of the healthcare system out of the healthcare insurance industry’s hands.

Stimulating innovation would decrease the cost of healthcare while insuring everyone. It would improve wellness and quality care.

Expanding an entitlement is not the answer to Repairing the Healthcare System.

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

Stanley Feld M.D.,FACP,MACE

President Obama’s speech on healthcare reform to a joint session of congress added nothing new to the healthcare reform debate.. It was just spun differently.

He did give a tepid nod to tort reform. Defensive medicine results from a defective tort system. The defective tort system generates between $300 and $700 billion dollars a year in excessive diagnostic testing. Lawyers and insurance companies make large sums of money from the malpractice system. The tort system adds little value to the health of citizens.

President Obama said he will set up a few demonstration projects. Government demonstration projects have not worked in the past. His tort reform projects are too few and will have little effect. Everyone knows the problem as well as the solution. Our healthcare system needs significant tort reform immediately. The President is protecting the plaintiff attorneys because he doesn’t want to take them on. They have been large contributors to Democratic Party member election campaigns.

President Obama said the “Public Option” is the best way to control costs. However, he will not have a Public Option if he gets a bill passed. He is going to try to sneak a single party payer system through the back door as Barney Frank has stated.

The President said no one will have to spend more than $5,000.00 a year in out of pocket expenses.

Who is going to pick up the costs after consumers spend $5,000.00? I assume the government will. Consumers have to buy government mandated and approved healthcare plans.

Consumers will have to pay for policies that have a 40% deductible with after tax dollars as opposed to the 20% deductible with pre-tax dollars. The Obama administration has been convinced by the healthcare insurance industry that it needs the increase in deductible percentage in order to produce a lower “affordable” premium.

Consumers, by paying with after tax dollars, will be paying 35% more for their healthcare policies and 20% more in deductibles expenses. If the tax rate goes up to 40% they will pay 40% more for both. This is a hidden increase in consumers’ taxes and a government increase in revenue.

The big winner is the healthcare insurance industry, not consumers. The healthcare insurance industry will have a greater number of people insured on its roles because of a presidential mandate that he had promised to avoid.

President Obama said he will subsidize businesses and individuals who cannot afford healthcare insurance.

Who is going to make that judgment? The government will make that judgment. He asks us to stop being skeptical and trust his administration. He will take care of consumers in the spirit that made our country great.

President Obama, how can we trust your administration with our healthcare needs when we have had experience with so much false hope from your administration in the last 8 months?

He is leaving the control of the healthcare dollars in the healthcare insurance industry’s hands. The healthcare insurance industry provides administrative services. Can we trust the healthcare insurance industry to be fair and look out for the well being of consumers? No!!

President Obama said there are almost 400 insurance companies in the nation. He claims his plan will force them to be competitive. There are only five major healthcare insurance companies (Unitedhealthcare, Aetna Blue Cross/Blue Shield, Cigna, and Humana). Most of the other healthcare insurance companies are subsidiaries of those five major companies.

There will be no competition. The administration says a “Public Option” is the only effective way to lower the costs of healthcare. It will make healthcare insurance companies compete. However the insurance industry will define the costs and the price of the government’s public option. It has done so for Medicare Part D at the expense of taxpayers and it will do it again.

Medicare Part D is another failed government entitlement whose monthly premium has gone from $14 to $37 in three years. The patient deductibles have increase and the onerous donut still exists.

In addition to increasing the premium price the government subsidizes Medicare Part D with of billions of dollars a year. I predict the premiums for the “Public Option” will slowly escalate at tax payers’ expense.

The only creative way to break this healthcare insurance industry stranglehold is to institute a system with Medical Savings Accounts. The government or employers, as providers, should give consumers first $6,000 for their healthcare needs and teach them how to spend it wisely. What consumers do not spend they keep. The second $6,000 would be used to buy high deductible first dollar healthcare coverage.

This is the only way to reduce the healthcare insurance industry’s influence and grasp on healthcare spending. Medical Savings Accounts will provide consumers with incentives to use their healthcare dollar wisely. It will also provide incentives for patients to comply with medication and treatment prescribed. America might even make serious progress combating our obesity epidemic.

Stanley Feld M.D.,FACP,MACE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Stanley Feld M.D.,FACP,MACE

In response to my last post I received this note.

“Stan

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

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

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

What is missing?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A few economic self evident truths are:

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

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

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

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

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

Stanley Feld M.D.,FACP,MACE

The United States cannot afford to provide universal healthcare coverage under a single party payer. The country is in financial difficulty without expanding Medicare.

“Bernie Madoff is small-time compared to the federal government. Really. You want Ponzi schemes? The new Obama-Democrat budget deficit is $1.8 trillion, four times larger than it was only last year. The national public debt has increased by more than 10 percent since Inauguration Day.”

Social Security and Medicare are underfunded entitlement programs. Medicare for the entire country is not viable.

These are the published numbers for 2008.

• Social Security’s unfunded liabilities stood at $13.6 trillion.
• Medicare’s unfunded liabilities are more than $30 trillion.
• Medicaid, another severely underfunded and politically untouchable entitlement program, only adds to the total.
• The federal government’s current entitlement bill, including future obligations-based only on promises it has made in the past — is greater than $57 trillion.”

The first Baby Boomers started drawing early retirement benefits from Social Security last year.”

78 million people are going to stop working, stop paying taxes, stop paying into retirement programs and start drawing Social Security and Medicare benefits. The federal government has made explicit and implicit promises to millions of retiring citizens. It does not have the funds to keep those promises without a big hike in taxes.

“According to a recent forecast by the Congressional Budget Office shows that Medicare and Medicaid alone are going to crowd out everything else the federal government is doing by mid-century”

In order to get close to funding our current obligations it is estimated that the income tax rate will have to increase to 66%. With all the bailouts and economic stimulus packages the federal government’s debt can only get worse.

Yet the game of who can have better sound bites and who can win is the only thing that is important to President Obama, the healthcare insurance industry, and the Democratic congress.

Healthcare reform should not be about a National Healthcare Insurance Exchange or universal healthcare with a single party payer. This is not going to fix the healthcare system. It will make our financial problems worse. Our government officials should face reality. It should do what all physicians know needs to be done.

It should be passing legislation to create a less polluted environment. It should revise the Farm Bill. It should eliminate the use of corn syrup. It should fight obesity with public service educational campaigns. It should create an insurance product that provides consumers with financial incentives to stay healthy. It should eliminate the causes of administrative waste and defensive medicine. These should be the areas of discussion in order to repair the healthcare system. These bold topics threaten powerful vested interests and are politically explosive.

America should set up a healthcare insurance system that provides incentives consumers to demand better foodstuff and a healthier environment. Consumers should own their healthcare dollars and be able to save what they do not use. (ideal medical savings account).

The federal government should make the conversion to functional electronic medical records easier and less costly to physicians (ideal electronic medical record). We should have major tort reform to decrease the intolerable cost of defensive medical.

These are areas in which the healthcare reform debate should be focused. If the Republican Party wants to seize the initiative from the Democratic Party and excite the citizens of our country they need to act .

Instead, we have a silly debate pitting the new media (Democratic Party) against the old media (Republican Party) over systems we cannot afford. The new media will win. Americans lose no matter which side wins.

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