Stanley Feld M.D.,FACP,MACE

Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee announced on March 8,2011 that “The Senate will never vote to confirm Dr. Donald Berwick as CMS administrator.” Dr. Don Berwick is currently serving through a temporary one year appointment made by President Obama while congress was in recess last summer.

Mr. Bacus did not call for confirmation hearings before the recess because of fears that Dr. Berwick’s views would be too controversial for him to be confirmed. He and President Obama feared the Senate and the American people would reject Dr. Berwick’s nomination.

Last week 42 Republican Senators sent a letter to President Barack Obama requesting that he withdraw Berwick from consideration. The Republican Senators said they would not vote for Dr. Berwick under any circumstances.

Senator Bacus said the “Republicans won”. He said alternative nominees to the post are "up to the president."

President Obama has announced, after receiving the Republican Senators letter, his support of Dr. Berwick’s nomination. President Obama declared Dr. Berwick is the most qualified candidate to lead CMS. Dr. Don Berwick told reporters that he “was grateful for the White House support.”

The 42 no votes would block confirmation because 60 votes are needed. Dr. Berwick was asked if he has met with any of those Republican senators to address their concerns about him. He said he would “meet with anyone in Congress who wants better healthcare.”

His answer implies Senate Republicans do not want better healthcare. It also implies that Republican Senators have no interest in meeting with him and that he knows the answers and they do not.

Republican Senators have expressed many concerns. One concern stems from Dr. Berwick’s praise of the British single-payer system which is failing and the sense President Obama’s healthcare reform act is heading toward a single party payer system.

The concerns are deeper than these. There has been little coverage of the Republican Senators’ letter to President Obama in the traditional media.

The Republican Senators wrote; “Withdrawing Dr. Berwick’s nomination would be a positive first step in rebuilding the trust of the American people.”

The letter says; “CMS is in charge of both Medicare and Medicaid, and will oversee most of the implementation of the recently-enacted health law.”

The Republican Senators letter lists the reasons for their request in a civil way.

1.“Don Berwick is a contentious choice to head an agency with a budget larger than the Defense Department’s and implement the vast majority of the $2.6 trillion health law.

2. “ The White House’s handling of this nomination – failing to respond to repeated requests for information and circumventing the Senate through a recess appointment – has made Dr. Berwick’s confirmation next to impossible,”

3.  “In the spirit of cooperation, the President should withdraw his nomination and choose a different candidate who has the support and confidence of the American people.”

4. “Both Congress and more than 100 million Americans that will be affected by this partisan health care reform plan need to know who is minding the store at CMS.

5. There are just too many questions about what Dr. Berwick and CMS are doing or will do with the unprecedented power they have been given to reshape our health care system,”

6.  “The President should start with a clean slate and send the Senate a nominee who is willing to answer our questions and seek our bipartisan support as he or she leads CMS in implementing the new health care law.”

7. “ The occupant of this important position, which affects the health care of so many Americans on a daily basis, requires an individual with the appropriate experience and management ability. Our seniors and those who rely on Medicaid deserve no less.”

The letter questions Dr. Berwick’s experience and management ability to handle large organizations. There has not been evidence presented to the congress verifying that Dr. Berwick has experience in running large organizations with multiple competing vested interests.

The healthcare system is dysfunctional. Only a consumer driven healthcare system with consumers in charge of their healthcare dollars will repair the healthcare system. Consumers must have access to appropriate information and appropriate incentives to make wise health decisions. This is the only way to control the costs of the healthcare system. A complex bureaucracy will not do this.

Mistrust of President Obama is rampant among Americans. President Obama must regain the trust of the American people and stop his trick plays.

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

Stanley Feld M.D.,FACP,MACE

I predicted that the healthcare insurance industry would increase healthcare insurance premiums because of President Obama’s healthcare reform plan.

I had also predicted that employers would drop healthcare insurance coverage for employees. It is much cheaper to pay President Obama’s penalty than it is to insure workers.

“McDonald’s Corp. has warned federal regulators that it could drop its health insurance plan for nearly 30,000 hourly restaurant workers unless regulators waive a new requirement of the U.S. health overhaul.”

This is the first corporation to threaten to drop healthcare insurance for employees. It is also a first step toward the failure of President Obama’s healthcare reform plan as written.

I have speculated that President Obama wants this plan to fail. Then the public option could be accepted. The public option will fail. The next step will be government controlled single party payer healthcare system.

The infrastructure for this progression is being put into place. The regulations are being written. The agencies are being formed.

An entitlement system of universal care with restriction of access to care and rationing of care will be a necessary part of this new entitlement program.

The government cannot afford a new entitlement that permits citizens to have the freedom of choice they have enjoyed for so long.

Between now and then, we will hear a lot of babble from President Obama about how the government is doing everything to help consumers take control of their healthcare.

McDonald’s decision is a result of the new regulations. The regulations make the kind of healthcare insurance it offers unaffordable to McDonald’s. McDonald’s provides “mini-med” healthcare insurance for workers at 10,500 U.S. locations. Presently a single worker can pay $14 a week for a plan that caps annual benefits at $2,000, or about $32 a week to get coverage up to $10,000 a year.

It is a plan that offers an insignificant about of healthcare coverage.

The traditional media has made a big deal out of the McDonald’s story. It is a big deal pre midterm elections for President Obama and Democrats seeking re-election. Potentially 1.4 million people could be added to the count as uninsured.

What is going on?

McDonald’s outsources these “mini-med” benefit plans to healthcare insurance carriers. Carriers are supposed to pay 80% of the premium for healthcare insurance benefits in 2011.The healthcare insurance industry has fought hard to exclude many of its overhead expenses from this calculation.

For example, if McDonald’s pays the carrier $100 for a premium, the amount that goes for insurance overhead is excluded from the medical loss calculation. Let us say fifty cents on the dollar is excluded. Then the healthcare insurance carrier must pay 80% of the remaining fifty cents for benefits. If the insurance carrier does not spend the 80%, McDonald’s should get a rebate on their insurance premium the following year.

President Obama’s healthcare reform law is trying to limit credited expenses claimed by the healthcare insurance industry. President Obama wants to regulate profits by regulation rather than by competition.

The healthcare insurance industry is raising its rates in anticipation of the government’s new regulations. McDonald’s has a high turnover of employees. The carriers claim this high turnover increases its administrative services. Administrative services it will not get credit for as expenses in the new regulations. Therefore, it must increase the premium. McDonalds cannot handle the increase in premium for 30,000 employees

“McDonald’s last week sent a top official at the Department of Health and Human Services a memo saying "it would be economically prohibitive for our carrier to continue offering" its "mini-med" limited benefit plan unless it got an exemption from the requirement.”

Mini-med healthcare insurance plans are becoming a stopgap for employee health care coverage. With more employers than ever cutting back or completely removing health insurance from their fringe benefits, providing this minimal coverage plan is becoming more popular. The employee, not the employer, most often carries the entire premium cost for the plan.

McDonald’s offers its hourly workers two different health care plans, which are known as “mini-med” plans. In one, workers can pay about $730 a year for benefits of up to $2,000. In the other, they can pay about $1,660 a year for benefits of up to $10,000.

The “mini-med” plan is very cost efficient for the employer.

These employees of McDonald’s mini-med plans are in reality uninsured now. However, it makes these McDonald’s look like a good corporate citizen. The healthcare insurance industry makes a lot of money. Employees think they have good healthcare insurance.

Two days later, the Obama administration said its top health official will "exercise her discretion" in enforcing a new health-law requirement.

One commenter said;

RE: "The Obama administration said Thursday that its top health official will "exercise her discretion".
“This is it folks; this is the beginning of the end. We once had a government confined law, now we instead are ruled by "her discretion.””

“We are getting a small taste of the wonderful world of big government bureaucracy and unintended
consequences.”

White House officials said they have sought to ensure that insurance coverage for employees isn’t disrupted as a result of the law.

Aetna Inc., one of the largest sellers of mini-med plans indicated that a potential medical-loss ratio waiver could provide relief to dozens of low-wage employers. Aetna provides min-med plans to Home Depot, CVS, Disney Worldwide Services, Staples Inc., Blockbuster Inc., AmeriCorps teaching-program sponsors, and others.

Kathleen Sibelius issued “her discretion” decision to grant waiver through the HHS bulletin.

“In the case of mini-med plans, the HHS bulletin says plan sponsors can seek a waiver from those limits for 2011 through 2013.”

Howe
ver, the government bureaucracy went to work. A plan sponsor must apply for a waiver, must detail terms of the plan, the number of covered individuals and the plan’s annual limits for approval.

Also required is a statement by the plan administrator or CEO of the issuer of the coverage that says the plan existed prior to Sept. 23, 2010, and that meeting the minimum annual limits would result in a significant decrease in access or a significant increase in premiums for the plan.

Another commenter said;

“ Wonderful. This is exactly the problem with huge government intervention in the marketplace. Large businesses with enough clout can get a waiver but small guys get the shaft.”

There are several important issues;

1. President Obama now has the power to interpret healthcare law at “its discretion.”
2. Healthcare waiver is being used to political advantage to affect the mid-term elections.
3. Lobbying and big business clout is influencing President Obama’s administration to interpret the law in its favor.

We are going to see these unintended consequences repeatedly in the coming years.

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

President Obama is playing a dangerous game with our healthcare system and the delivery of medical care in our country.

His ultimate goal is apparent. It is to develop a government controlled single party payer healthcare system. This goal makes Barney Frank and John Kerry happy. Physicians will be salaried employees of the government.

President Obama could not get congressional support for the present law unless he made secret deals. He also faked out many Senators and Congressmen with promises he could not keep. His healthcare law is also unconstitutional. He is in the process of trying to fake out the judicial system.

President Obama knows the bill passed will fail to achieve universal care at an affordable price. All he has to do is look at the failed Massachusetts healthcare reform act. It is obvious the healthcare reform law will fail.

Americans are already feeling the pain of his healthcare reform law. As the pain intensifies, Americans will be willing to accept anything the government has to offer. Heidi Klein described this strategy perfectly in her book “The Shock Doctrine.”

First, we will have the public option. The public option will fail. Next, there will be a total takeover of the healthcare systems by the government. The government will dictate the medical care Americans can receive.

I know it is hard to believe but I predict this is Obama’s ultimate goal.

President Obama has one problem in achieving his goal. . He does not hold the Aces or the Jokers in the deck. The healthcare insurance industry does. It hold the most important cards in the deck. It provides the administrative services for the government run healthcare systems. Therefore, the healthcare insurance industry controls the money and the hidden administrative overhead costs.

The healthcare insurance industry will increase in premiums to the private sector. If there is no private sector, it will increase premiums paid by the government. The government will raise the money by restricting access to care, rationing medical care and increasing taxes. Increasing taxes will be difficult because the government is bankrupt. With rising unemployment rates the tax base decreases.

I will walk you through the scenario as it develops. First, it is necessary understand the steps the healthcare insurance industry is taking to insure its secure hold on the Jokers and the Aces.

This year the healthcare insurance industry is increasing premiums once more as it is reducing patient coverage and decreasing physicians reimbursement to physicians. Where is the money going?

The increased premiums will choke the healthcare system. The result will be more uninsured patients. Small business is struggling to survive economically during this recession. They will be forced to drop coverage for their employees.

I received an email from a reader. The email tells the story. The reader described herself as a 40 year old MBA small business owner of a high tech company. She wants to provide healthcare insurance to her employees. Since she is also an employee of her company she feels it is also essential to provide healthcare insurance for her family.

This is her story.

As an employer, the options available are overwhelming. The information available to determine the differences in various plans is difficult to get to, analyze and understand.

Insurance premiums continue to go up yearly as plan options change. President Obama is wrong when he says if I like my plan I can keep it. My plan is not available.

As an employer, we’re trying to help our employees by contributing a similar contribution on % basis. We increased what we’re paying as an employer to cover the increase in price of this years premiums. We can barely afford the increased premium.

It’s equally difficult and confusing as an employee to determining the differences in the healthcare insurance plans available to me through my employer (me).

I’m use to PPO (choice of doctors – well, at least those within the network). HMO is less
expensive, but I don’t really know what the difference is in terms of care, services, hoops to go through to get a primary doctor for referral to other doctors.

As an employee I’m paying $1600/yr, and my employer(me) is paying $14,500 for medical coverage for my family. This is for a $1500 per person ($3000 family) deductible.

In essence I am paying $19,100 ($1600+$14,500 +$3000) plus my copay per year for less coverage than I had last year. Where is President Obama’s promise of relief?

For the lower deductible plan I was on last year ($1000 / person, $2,000/family) the price is $17,500/year plus $1600 from the employee plus $2,000 deductible for a total of $21,100 excluding copay.

Dental and vision plans are optional and separate from this, and add another $1600/yr for basic emergency coverage.

This is insane! Expensive, very hard to understand and navigate plan differences, and although I have plan options, I don’t really have any options outside of a certain band of options provided to me through my employer, unless I want to go it alone, do more research and spend time/energy managing my health care options.

Sincerely

Where are you President Obama when we need you? The healthcare insurance industry is setting us up. These are unintended consequences for the non retired. Wait until we see the consequences for the retirees.

President Obama’s reply would be “I am on my way.” I’ll bet he is.

He would say everyone will have to live through this pain until I can stuff a single party government payer down the throat of congress. At that time everything will improve. The government will run the healthcare system correctly. The government will salary physicians. This will Repair The Healthcare System.

I suggest Americans should not hold their breath.

If you’ve let your congressmen know how you feel, tell them again and again-and again.

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.

Stanley Feld M.D.,FACP,MACE

Obamacare is already proving it is going to fail. By President Obama’s own admission, it will not achieve universal coverage. It will not provide affordable coverage because the healthcare insurance industry is already raising the price on private insurance and the fees it charges the government to administer service for Medicare and Medicaid.

Seniors will notice that their Medicare premiums for Part F has increased starting August 1^st. Seniors can also expect premiums for Medicare Part D, Ordinary Medicare and Medicare Advantage to increase on January 1^st 2011.

Why would premiums increase? Physician reimbursement has decreased.

There will be an increase in the fee the government pays administrative service providers (healthcare insurance industry) to subsidize Medicare and Medicaid. The reason for these increases will be non- transparent.

To many the name Newt Gingrich is a dirty word. Nonetheless, he is perceptive. In his recent book “Real Change: A Fight for America’s future”, he explains why the current third party payment system for healthcare is inefficient, ineffective and leads to fraud. I will amplify his model in order to point out the dysfunction in the healthcare system and its solution.

He explains why a “buyer-seller model” in healthcare is more efficient than a" “buyer-seller-receiver bureaucratic model”, whether it is a public or private system.

In the third party payer system (buyer-seller-receiver system), the buyer (insurance company, employer or government) receives no direct value for its payment. Its goal is to pay as little as possible. The seller (physicians or hospitals) knows the buyer suspects the seller of greed, and incompetence. The relationship is adversarial.

The receivers (patients) have little concern of cost. They have first dollar coverage. They have no incentive to save money. They have been conditioned to believe the medical care is an entitled service. Patients want more service with more convenience. They have no accountability for their habits. They have no incentive to lose weight or exercise consistently. Obesity leads to chronic disease and its complications. Patients have no incentive to care for their chronic disease.

President Obama’s healthcare reform plan does not provide these incentives. Yet the key to repairing the healthcare system is patients being the keeper of their health and the manager of their disease.

On the other hand, in a buyer-seller system, the buyer (patients) can be given incentive and educated to be a wise buyer of a service (medical care). The buyer (patients) has freedom of choice. Patients decide whether a service is worth the price. They decide whether they want to avoid the cost by taking care of their health.

The sellers (physicians, hospitals, or pharmacies) can choose to sell at the offered price or refuse to sell. The seller has a free choice. The seller’s freedom is not shackled by government regulations. The price is determined by previously negotiated prices. Prices are transparent.

Patients must be made aware of the negotiated prices by the government.

The buyer-seller-receiver bureaucratic model with the government being the buyer in a single party payer will lead to;

1. Fraud, abuse and administrative waste.

2. Lack of individual freedom of patients to choose their medical care.

3. Bureaucratic control of healthcare which undermines personal responsibility for health and medical care.

Fraud, abuse, and administrative waste.

There are many examples of fraud. The easiest examples to comprehend are the occasional physician or physician’s clinic billing for services not performed.

There are examples of hospital systems overbilling Medicare and Medicaid for non-rendered services. These actions seem to have political overtones. It is usually private hospital corporations or management companies and not faith based non-profit hospital systems that are accused of this level of fraud.

Medicare and Medicaid outsource the administrative services to the healthcare insurance industry. There are many examples of the fraud and abuse by the healthcare insurance industry.

The public perceives the largest cost is physician abuse. Physicians are the weakest stakeholder. However, if the government looked closely enough it would find the largest area of fraud and abuse comes from the healthcare insurance industry.

A popular notion in congress is that 40 cents of every healthcare dollar goes for administrative costs to the healthcare insurance industry. I believe this is a low estimate. Some economists have demonstrated that administrative services expenses are 60 cents of every healthcare dollar.

Congress has chosen not to change the accounting rules used by the healthcare insurance industry. These defective accounting regulations lead to the largest area of fraud and abuse. An estimate is $250 billion dollars a year.

The Government Accounting Office estimates that 10% of Medicare and Medicaid spending is lost to fraud and abuse. Ten percent of Medicare and Medicaid cost is $80 billion dollars a year. Over the next decade, the cost would amount to $800 billion dollars if both programs were not expanded. With the entitlements being expanded it could be 2 to 3 trillion dollars over the decade.

I believe if we created a buyer seller system, the fraud and abuse would decrease to less than 1% of healthcare expenditures. Every patient would be a police officer for his own healthcare dollar.

Lack of individual freedom to choose.

Bureaucracy can only function by creating rules and regulations to control the receiver and the seller. This leads to an increase in the number of regulatory agencies. The result is many unenforceable and conflicting rules and regulations. The rules and regulations usually lead to unintended consequences and greater budget deficits.

The receivers’ (patients’) medical needs might be unfulfilled by these rules and regulations.

Americans love the free market and their ability to make choices. We love to be consumers and admire incentives, bargains, and choices. One only has to look at consumer products such as electric products and automobiles. Consumerism drives our economy not centralized bureaucratic control. Healthcare should be driven by consumers and not by the system, which President Obama and Dr. Donald Berwick advocate.

Bureaucratic control of healthcare will undermine personal responsibility for health and health maintenance.

The buyer (the government bureaucracy) pays for the receiver (patient) to receive care from the (physician). The patient is forced into a passive position. The government defines what care the patient can receive. The physician must provide the care the government dictates.

Patients are conditioned to believe that someone besides themselves is responsible for their health and healthcare.

The government should provide the appropriate information and education for the patients to make wise hea
lth decisions. These wise decisions must be encourage by giving patient control and ownership of their own healthcare dollars.

This can be accomplished through the ideal medical savings account.

Patients should make healthcare and medical care decisions for themselves.

Patients must play an active role in the management of their health and disease.

I believe the bureaucratic single party payer system will not Repair the Healthcare System.

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