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The Second Spoke Of The Wheel: The Ideal Medical Savings Account

February 8, 2012
inConsumer Driven Health Care, Health Savings Accounts vs Medical Savings Accounts, Healthcare Insurance Industry, Information Technology in Healthcare, Medicine: Healthcare System, Stakeholder Mistrust
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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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Confusion About The Ideal Medical Saving Account: Part 2

October 18, 2009
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
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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.

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Public Option vs. Ideal Medical Savings Account: Part 4

September 8, 2009
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
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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.

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Public Option vs. Ideal Medical Savings Account: Part 3

September 4, 2009
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
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Stanley Feld M.D.,FACP,MACE

Dear President Obama;

Please listen. The American public doesn’t want the public option. They know America cannot afford another entitlement program. Americans do not want increased taxes. They are afraid China is lending us too much money. If and when they pull out it will be doomsday.

The healthcare insurance industry would love you to get your healthcare reform bill passed. It would increase their profits at taxpayers’ expense. The healthcare insurance industry did it to Massachusetts. The federal government had to bail out Massachusetts. Why not the entire country?

Americans want healthcare reform. They would love to provide universal care, have affordable insurance coverage, and increased quality of care. Your strategy is wrong.

There is another way to accomplish these things. It requires you to have faith in the intelligence of the American public. The strategy would decrease the cost to the healthcare system instantly. It would decrease the obscene costs for administrative services to the healthcare insurance industry. It would diminish the need to develop a massive government bureaucracy.

It eliminates the influence of lobbyists for vested interests. It would create competition among physicians, hospital systems and healthcare insurance companies. The healthcare insurance industry is drooling over your healthcare reform plan.

Americans know government bureaucracy can be cruel and inefficient. There are too many generalities that are wide open to abuse.

I received this note from a reader summing up America’s mistrust of government control. This person is neither a Republican nor Democrat. He is an American.

Stanley,

To sum up the recent post you can simply remind readers of the laughable old line, "I am from the government and I am here to help".

It was gaggy enough to see all the pigs at the trough getting 100’s of billions.  It will make everyone wretch just watching the same participants helping themselves to trillions of dollars worth of slop.

Heaven help us.  Neither the press nor the Obama fans can see through this smokescreen.  God, haven’t people figured out that when the government doles out money poor people don’t get helped, rich people do.  Does foreign aid help poor people in other countries.  If it did poverty in Africa would have ended decades ago.

Go back to the days of Lyndon Johnson.  We fought the war on poverty and lost that.  We lost the Drug War.  We lost the Vietnam War, we are losing the Afghan and Iraq Wars and we are well on our way to losing the war on the high cost of healthcare.  All of these efforts were lost not because they weren’t laudable goals, but because they were not properly considered.  As you know, some we should not have fought, others we should have fought differently.

Interestingly, the only real win we have had in the last forty years was the war on welfare and it came about because something was taken away, not added. 

Is there a lesson here?

L

How do you accomplish your goals and have the American public trust you once more? You can accomplish your goals of universal care, affordable insurance and increase in quality of care by putting individuals in control of their health and healthcare dollars.

This must sound radical to a liberal. If you permit consumers to drive the healthcare system they will drive the prices down.

How would a consumer driven healthcare system work using an ideal medical savings account?

Employers, states, and the federal government are currently paying healthcare premiums at very high administrative service fees to the healthcare insurance industry. Many self employed are paying the entire healthcare insurance premium with after tax dollars making their cost at least 35% higher than employer based coverage. Most cannot qualify for insurance because of preexisting illness.

The healthcare insurance industry controls the premium dollars. Patients have no financial incentive to be responsible for their health or healthcare dollars. The goal of a consumer driven healthcare system is to create a system that would provide incentives for consumers to be a watchdog for their healthcare dollars.

If these payers gave half of the $12,000 per family per year to consumers and permitted them to keep monies unspent in a retirement account, then patients would be motivated to use their healthcare dollar wisely

If consumers with chronic diseases perform well (weight loss, diabetes control, asthma prevention, COPD and heart disease prevention) and stay out of the ER or hospital because of proper maintenance they should receive a bonus for their retirement fund.

The fees for services would have to be negotiated beforehand as we presently do. All fees should be totally transparent. You would have 300 million people watching and reporting their costs or care.

The remaining $6,000 would buy high deductible coverage that would provide first dollar coverage. The healthcare insurance industry would do very well. If they quit Fidelity or Vanguard could do the bookkeeping.

Think of all the administrative costs saved on the first $6,000. Think of all the middlemen expenses avoided.

Medicare cost per patient in only $6600 per year including the last 30 days of life. The average cost of younger persons is much lower. Cost of care would be decreased because physicians would be paid at point of service. If the cost for medical care was over $6000 for a patient’s care first dollar high deductible insurance would take over.

Medical care is the relationship between the patient and the physician. If you provide the tools and money to create a transparent relationship without middlemen the patients would make the cost decrease as we have seen in other industries. America would have an affordable system.

If the employer became an extender of the physicians care and a patient advocate the costs would drop.

Employers, patients and physicians have the same goals. All are at the mercy of the middlemen (healthcare insurance industry).

This is the American way. It can be done.

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

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Public Option vs. Ideal Medical Savings Account: Part 2

August 22, 2009
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
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Stanley Feld M.D.,FACP,MACE

The Public Option is a misnomer. It will not be an option. It will become the only choice.

The intent of the Public Option is exactly as Barney Frank described in his off the cuff interview. It is a critical step to a single party payer system government. Representative Anthony Weiner has confirmed the intent of the Public Option. President Obama has been saying it in code all along.

The Public Option is a critical step on the way to a single party payer since the Democrats do not have the votes for a single party payer at this time. A single party payer system would work if it would not be paralyzed by a bureaucracy, did not run out of money, did not engage in rationing of care and permits patients to make their own medical decisions.

Medicare is running out of money and Social Security and Medicare has 107 trillion dollars of unfunded liabilities.  Medicare deductibles are constantly being increased. Physician reimbursement is constantly reduced. A 300 billion dollar reduction in physician reimbursements is scheduled for 2010.

Investor’s Business Daily revealed President Obama’s goal on Wednesday, July 15th one day after HR3200 was published.

“Right there on Page 16 is a provision making individual private medical insurance illegal.”

The Investor’s Business Daily was not sure its interpretation was correct so they checked with the House Ways and Means Committee.

It turns out we were right: The provision would indeed outlaw individual private coverage. Under the Orwellian header of "Protecting The Choice To Keep Current Coverage," the "Limitation On New Enrollment" section of the bill clearly states:

“LIMITATION ON NEW ENROLLMENT.— LIMITATION ON INDIVIDUAL HEALTH INSURANCE COVERAGE page 16

IN GENERAL.—Individual health insurance

coverage that is not grandfathered health insurance

coverage under subsection (a) may only be offered

on or after the first day of Y1 as an Exchange-participating health benefits plan.”

President Obama has promised we could keep our present healthcare insurance if we like it. It will be grandfathered in. Otherwise, we will have to buy insurance from Healthcare Exchange-participating health benefits plans.

"Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day" of the year the legislation becomes law.

“Drawn by a public option that will be 30% to 40% cheaper than their current premiums because taxpayers will be funding it, employers will gladly scrap their private plans and go with Washington’s coverage.”

If an individual changes healthcare insurance carrier he cannot buy private insurance from another company except through the certified healthcare insurance exchange.

Those who currently have private individual coverage won’t be able to change it. Nor will those who leave a company to work for themselves be free to buy individual plans from private unregulated carriers.

“What wasn’t known until now is that the bill itself will kill the market for private individual coverage by not letting any new policies be written after the public option becomes law.”

On average, consumers change insurance carriers every eighteen months. The Healthcare Insurance Exchange will regulate the kind of healthcare insurance available.

The healthcare insurance industry has abused all the stakeholders. The consumer should be protected from abuse.

However, the healthcare insurance industry will continue to abuse the government and taxpayers. It charges the government a 15% administrative service fee to process claims.

Consumers will be forced into the government subsidized public plan. Employers will be happy to pay the 8% of their gross revenue. Employers are currently paying 18% of their gross revenue to the healthcare insurance industry. The healthcare insurance industry will not compete with the government. It will withdraw from selling healthcare insurance.

By default America will have a single party system, with an enormous bureaucracy and an enormous deficit.

Another downside is individuals will be paying public option healthcare premiums with after tax dollars. Premiums will be determined by means testing. Healthcare costs could become higher than today’s healthcare insurance premiums between tax rates increasing and the surtax for healthcare.

The cost will go down only by decreasing physicians’ and hospitals’ reimbursement. Six hundred billion dollars are scheduled to be removed from Medicare payments as the number of seniors covered increases. The result will inevitably be a further rationing of medical care for seniors.

HR 3200 is going to outlaw health savings accounts (HSAs) Health Savings Accounts are not as good as Medical Savings Accounts. HSAs do not provide enough incentives to patients to control their health and healthcare dollars. It keeps the healthcare insurance industry in control of the healthcare dollars.

Eliminating alternative forms of healthcare insurance has been a goal of Democrats for years. They want to crush any creative alternative.

“With HSAs out of the way, a key obstacle to the left’s expansion of the welfare state will be removed.”

Washington shouldn’t be killing business opportunities, or limiting choices, or legislating major changes in Americans’ lives. It should be making rules to eliminate abuse of systems, and providing incentives for individuals to be innovative and efficient.

The public option won’t be an option for many, but rather a mandate for buying government care. A free people should be outraged at this advance of soft tyranny.

Healthcare reform is not about better healthcare for Americans. It is about the government controlling our lives and decreasing our freedom to choose.

I would suggest the following note.

“We do not want the government to control our lives and increase our taxes. We want affordable, universal healthcare coverage that does not limit access to care. We want control over our healthcare dollars.

You can reach you Congressional Representative with the links below.

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

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

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

 

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Public Option vs. Ideal Medical Savings Account: Part 1

August 18, 2009
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
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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.

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Can You Believe This? Health Savings Account Threatened By The “Taxpayer Assistance and Simplification Act

April 22, 2008
inHealth Savings Accounts vs Medical Savings Accounts, Medicine: Healthcare System
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Stanley Feld M.D.,FACP,MACE

The House of Representatives passed a bill called the “Taxpayer Assistance and Simplification Act” last week that will essential destroy Health Savings Accounts and the quest for consumer independence from the government’s control of the healthcare system. I have criticized HSAs in the past because they only give consumers partial control and not full control of their healthcare dollar. If you do not use the money you lose it. In my opinion this creates a perverse incentive that does not stimulate wellness. It stimulates potential abuse. Patients keep the money they do not spend with my Ideal Medical Savings Account. The MSA would increase incentives for wellness and decrease abuse, because if patients abused the system they losing their own money.

“Democrats have made affordable health care a mainstay of their election agenda, but apparently only if you’re willing to get insurance through the government. Witness their stealthy assault on Americans who prefer the private-sector option of Health Savings Accounts.”

No one in the Democratic Party dominated House of Representative nor the Democratic Party’s presidential candidates seem to understand the government can not afford to have a government dominated system. It is also clear they do not trust patients to pursue their vested interest.

“The House passed legislation on Tuesday, the mis-named “Taxpayer Assistance and Simplification Act,” that contained the awful provision that would throw a mountain of paperwork at Health Savings Accounts.”

<President Bush sent a note to congress stating that he would veto the bill if it contained the anti HSA provision. I do not think the Senate will accept the provision either. The frightening thing is the lack of understanding by the Democratic Party of what is necessary to Repair the Healthcare System.

“A key player here is Ways and Means Health Subcommittee Chairman Pete Stark, whose main purpose in politics is to give the U.S. a government-run health-care system. He is a known opponent of HSAs – once comparing them to “weapons of mass destruction” – because they introduce more individual choice into the health-care marketplace.”

“Mr. Stark and his friends want to impose the same bureaucratic overhead even on spending that consumers do with their own money. The Senate should stop this one dead in its tracks.”

I thought Pete Stark finally understood the folly of his thinking. He trusts neither physicians nor patients. I was misled by his comments in Forbes magazine when he admitted he made a mistake with his Stark Laws.

“This week, the House passed legislation that included a provision to require every HSA transaction be reviewed and verified as a legitimate medical expense. Democrats say this is to ensure that consumers are using their tax-free withdrawals for a knee replacement, rather than a new iPod. In reality it adds a layer of bureaucracy that could sharply reduce the appeal and cost savings of HSAs.”

Presently the healthcare insurance industry administers these health savings accounts and does not permit misuse to occur. Maybe the only way the Democratic Party can reach its goal of government controlled single party payer healthcare system is to destroy HSAs?

“Pushing for the provision was a company called Evolution Benefits, which has patented a system for the substantiation of health-care expenses. Evolution’s lobbyist, John McManus, was the former staff director of the Health Subcommittee under Republican Bill Thomas.”

Unfortunately, this is how the government works. It is influenced by vested interested other than the people it is suppose to represent. Republicans are furious at John McManus, a former Republican congressman’s staff director now a lobbyist.

“Liberals claim HSAs are insurance for the “healthy and wealthy,” but there’s little evidence this is true. “

There is no evidence that HSAs are only for the healthy and wealthy. It is a potential mechanism for the government to subsidize insurance for the poor and not so poor to promote patient responsibility and stimulate a substantial reduction in cost and increase incentive for citizens to improve healthcare habits. All congress has to do is pass a law saying everyone automatically will be insured using a community rating system and pre tax dollars.

“The high deductable insurance permits the insured to open an HSA and make an annual contribution up to $2,900 for an individual in 2008, which he can use to pay for ordinary health needs. Savings not spent in any given year can build up tax-free for medical expenses. HSAs also give consumers more reason to care about prices, bringing much-needed market discipline.”

A family contribution is over $5,000 in 2008.

“ In any case if people cheat on their HSAs, they are only cheating themselves.”

I wonder how many congresspersons really understand the problems in the healthcare system and what will motivate the people they represent?

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

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Health Savings Accounts For Poor Tested: Another Well Intended Program To Fail

January 9, 2008
inMedicine: Healthcare System
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Stanley Feld M.D.,FACP,MACE

President Bush keeps trying. I do not think he really understands the difference between poverty and unaffordability in America today. If he did his goal would be affordable healthcare insurance for all.

“The popularity of health savings accounts for the poor will be put to the test in Indiana under a program approved Friday by the Bush administration. Under the plan, someone making $20,000 a year could get health coverage for about $19 a week.”

Sounds good. However, the devil is in the details.

“Bush has long pushed health savings accounts as a way to slow the rising cost of medical care and extend basic coverage to the uninsured.

Under the Indiana program,eligible residents can pay up to 5 percent of their incomes into state-subsidized “Personal Wellness and Responsibility Accounts” that cover their initial medical expenses up to $1,100. Once that deductible is reached, private insurance purchased by the state kicks in.”

I have no quarrel so far. I see a few problems and questions. One problem is $1,100 does not get you much health coverage at retail prices. Private health insurance is still in charge of reimbursement and not a partner with the patient. What is the type of healthcare insurance coverage after $1,100? What are the co-pays? Only a few patients will have money remaining in their health savings account. There is nothing mentioned about giving patients incentives to stay well and potentially accumulate money for retirement.
Eligibility is limited to adults with incomes below twice the federal poverty level. The poverty level is now $10,210 for an individual and $20,650 for a family of four.

I looked up the actual eligibility criteria on their web site. I was curious to know if eligibility meant people making $41,300 a year would be qualified for the plan. The answer to this frequently asked question was;
The Healthy Indiana Plan (HIP) will provide health insurance for uninsured adult Hoosiers between 19-64 whose household income is between 22 – 200% of the federal poverty level (FPL), who are not eligible for Medicaid. Eligible participants must be uninsured for at least 6 months and cannot be eligible for employer-sponsored health insurance.

I was confused after reading this statement because of the absence of definitions. I asked the web site the following question.

Does this mean that people with a family of four making up to $41,300 a year can be eligible for this plan?
This feedback I got was as follows.

“The Healthy Indiana Plan (HIP) will provide health insurance for uninsured adult Hoosiers between 19-64 whose household income is between 22 – 200% of the federal poverty level (FPL), who are not eligible for Medicaid. Eligible participants must be uninsured for at least 6 months and cannot be eligible for employer-sponsored health insurance.”

The reply did not clarify a thing.

The eligibility limit is better than Medicaid but not as high as necessary to make it affordable. Moises would qualify in Indiana. He does not qualify in Texas. He makes $22,000 per year. An illness would destroy him and his family financially. He can not afford nor does he qualify to buy private insurance as an individual.

The limits for being qualified to receive benefits should be at least $50,000. The benefits packages should be developed by the insurance industry. The deductible must be higher than $1,100. Six thousand dollars is a realistic in order to provide patients with the appropriate incentive. It should be the Ideal Medical Saving Account formulation. It should be bought by citizens through the insurance industry on a competitive basis. It should not be run by the government as a single party payer. It should be subsided by the government for those who qualify for subsides. If the government finds that the insurance industry is taking advantage of patients or providers it should intervene and disqualify that insurance company from participating in the program. Patients of higher income should pay more for insurance than lower income people.

A mechanism for means testing should be developed. People below a certain income should receive government subsidies. Subsides should be regressive with lower income people receiving a higher subsidy than higher income people. The price of the insurance should be affordable and emphasize reward for good health, and prevention of disease. Both patients and providers should receive adequate incentive to achieve this goal. The Ideal Medical Savings Account could include both low income families and high income families. The high income families would pay a means tested surcharge to a certain amount.

“The waiver in Indiana is the first of its kind for the Medicaid program, a state-federal partnership that provides health coverage to the poor and disabled.”

The punishing criteria for eligibility for Medicaid still exist. On close study I have concluded that the Medicaid program is a way the state can obtain a subsidy from the federal government. The criteria for eligibility is simply too restrictive.

“Indiana officials said they’ve already received inquiries from more than 1,000 people interested in applying.
This sound bite implies impending success of the program. I think it is a long way from success.
The program will be monitored closely because of the philosophical divide among lawmakers about the value of health savings accounts for the poor. Many say such accounts work best for healthier and higher-income people with low medical expenses.”

The enemies of Health Savings Accounts have an excuse to react negatively. I believe that most lawmakers do not understand the goal of Health Savings Accounts. They also do not understand that Health Savings Accounts are a bastardize form of Medical Saving Accounts to keep the healthcare insurance industry in control and accumulate unconscionable profits

“Judith Solomon, senior fellow at the Center on Budget and Policy Priorities, said she doubts that many people making $10,000 a year can afford to pay $500 for health insurance. She said that about 50,000 people lost Medicaid coverage in Oregon after that state got permission to raise insurance premiums to $20 a month.”

“You can say it’s better than nothing, but I just don’t see how many of those folks will be able to afford it,” Solomon said.

Judith Solomon is absolutely correct. People making $10,000 dollars can barely afford to put food on the table or a roof over their head. So many well intended programs are built to fail.

“This is a big step forward that will lead to approximately 120,000 uninsured Hoosiers having the peace of mind of health insurance,” said Indiana Gov. Mitch Daniels, a Republican who once served as Bush’s director of the Office of Management and Budget.

I believe Governor Daniels should check to see how many of these 120,000 uninsured are living under the poverty level. I would guess less than 50%. It is fun to listen to Governor Daniels’ advertisement. , He makes a false promise and a false hope with false information.
If the state and federal government really wanted to do something they should expand the eligibility level to $50,000 a year. They should subsidize the Ideal Medical Savings Account with the incentive for patients’ to accumulate money in their retirement fund if they spend their healthcare dollars wisely.

Healthcare programs such as the Indiana program continue to appear and are destined to fail. The consumer must force lawmakers to get serious about 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

Healthy Indiana Plan: http://www.hip.in.gov

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Medical Savings Accounts and the Problem of the Uninsured

November 24, 2006
inMedicine: Healthcare System
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Stanley Feld M.D.,FACP,MACE

We have experienced an increased number of uninsured patients for the past 16 years as insurance premiums have escalated and employers have been reducing and eliminating medical insurance benefits as part of the employment package. In 1990, 34.4 million Americans were uninsured. At that time, 85% of the uninsured patients were members of a family with a working adult.

Today, that number is 46.6 million, according to a new Census Bureau report. This represents 15.9% of our population up from 15.6% of our population in 2004 representing an increase of 1.3 million in the last 2 years. The number of workers with no health insurance rose from 26.5 million to 27.3 million. Nearly all the increase in uninsured was among working adults.

Do you think we need a creative innovative solution to ensure that all Americans have affordable and comprehensive health insurance coverage? You bet!

Congress has so far failed to reach a consensus on how to even approach the problem.
Our difficulty is we have an elected Congress that professes to support the publics’ vested interest but in reality is swayed by vested interests’ political contributions. This is the reason they are in a State of Denial about everything including medical care of our population. America does great when the crisis is overwhelming. When the crisis subsides we resort to our highly developed short attention span and ignore our problems. We leave ourselves vulnerable to be taken advantage of by stakeholders who are protecting their vested interests.

What should we be focusing on?

1. As the price of insurance has increased and out of pocket payment for the employed has increased, the price of coverage has exceeded the price the employers can afford.

2. People working and not covered by employer provided health insurance have to pay for health care premiums with after tax dollar, while their employers pay for employee health insurance with pre tax dollars.

3. Evolving tax laws and employee benefit laws are causing employers to act in ways that cause the employer to provide fewer benefits to the employee. The biggest impact is felt by moderate to low income families. They are priced out of the market. If they get sick, they figure they can get medical care paid for by their community. The result is an increase in economic pressure on the individual and the community.

In light of this the facilitator stakeholders try to protect their envisioned vested interests at the expense of the patients and society. Policy makers have proposed to force everyone to buy insurance. The goal is to force the employer to buy insurance for the employee, or force the uninsured to buy insurance or go on Medicaid. The State of Massachusetts just passed a law mandating insurance and guarantying insurance for all.

It seems to me all of these proposals ignore real reason people do not buy insurance on their own in the first place.

They cannot buy reasonably priced insurance on a before tax basis. The patient is disadvantaged by an expensive and defective third party payer insurance system that does not permit them to control their healthcare dollar.

A Medical Saving Account system in a Price Transparent environment cures all these defects. Real insurance would be sold to individuals using after tax dollars in a freely competitive environment. The competitive environment would not be price manipulated by the insurance industry as the Medicare Part D benefit is. People would have an economic motivation to purchase insurance and keep themselves healthy. If someone had a chronic illness and if they avoided the complications of disease they could be rewarded economically.

Families on Medicaid could be motivated in the same way with the government providing the same or similar subsidies. The cost of care to State governments would be less than it is today. However, we would be empowering to the Medicaid family to make independent decisions rather than demoralizing these families in the present system of care rationing.

Americans yearn to be free and make free choices. We are not a dumb people even though our education system is crumbling. We need enlightened leadership not imprisoned by our hierarchical bureaucracy. I believe it is going to be up to the population of 40-50 year olds to step forward and say “we are sick and tired of this and we do not want to take it anymore.”