Stanley Feld M.D.,FACP,MACP

Universal Healthcare coverage is an important idea. It is not synonymous with a single party payer as some would like us to believe. When Mitt Romney was governor of Massachusetts he had a bipartisan bill passed for universal healthcare coverage. The coverage was going to be provided by multiple insurance companies. Governor Romney’s goal was to achieve universal healthcare coverage using the private sector. Market forces were supposed to control costs and there would be no need for government single party payer.

I predicted the Romney plan would not work. The reason is simple. The rules of the game were not changed for the insurance industry, the hospital systems and the physicians. The reason this important idea cannot work is because the program was superimposed on the rules of a broken healthcare system.

The patients thought they were going to get a good deal because now they had guaranteed coverage. Mitt Romney was a hero of the people. As soon as the legislation was passed the insurance industry was fighting over the premium price. The premium is expected to rise next year.

“Enrollment in the state’s new subsidized health plan is growing so quickly that the state could face a funding gap as large as $147 million by the end of the fiscal year, according to a state projection.”

The subsidized program is part of the state’s unprecedented initiative requiring nearly all residents to have health insurance. Even if the gap reaches $147 million, there is no indication it would cripple healthcare reform.

“It’s too early to make any departure from the health reform plan,” said Leslie Kirwan, secretary of administration and finance and chairwoman of the Commonwealth Health Insurance Connector. “We will follow the trends and adjust, if needed.”

This is a lame bureaucratic statement preparing the state of Massachusetts for a tax increase.

“Financial pressures will grow for fiscal 2009, which begins July 1, since insurers who participate in the subsidized program are expected to ask for significantly higher payments from the state. In addition, there is uncertainty about how much the federal government will contribute toward the total cost.

The enrollment booms “is a sign of success, not failure,” said John McDonough, executive director of the advocacy group Health Care for All. “The sky is not falling. There’s a budget challenge.”

Massachusetts has a lot of “budget” challenges.

“McDonough also said the higher enrollment suggests that there are more uninsured people in Massachusetts than state surveys showed.

Hospital officials are concerned about getting stuck with unpaid bills.
Boston Medical Center and Cambridge Health Alliance negotiated a special deal in the health reform law that guaranteed them $287 million a year through 2009 in fees and increased Medicaid rates
“This is one of many warning signs, especially in tandem with the projected state budget deficit and the skyrocketing cost of healthcare in the state,” said Alan Sager, professor of health policy and management at the Boston University School of Public Health. “The [healthcare] law is very shaky on the revenue side.”

Mitt Romney’s plan does not include price transparency on the part of all stakeholders. The plan does not provide consumers with ownership of their healthcare dollar. The plan does not encourage competition. The result of the plan has to be failure with cost overruns using the rules of the present healthcare system.

When the plan fails the healthcare wonks who promote a single party payer system will claim the failure of the Romney plan has proven that universal healthcare has to be regulated by the government as the single party payer

The only thing the Romney plan demonstrates is a governments lack of understanding of the problems in the healthcare system. The plan does not speak to the issue that 80% of the healthcare dollar is spent on the complications of chronic disease. This is where the most saving can be achieved.

It does not face the issue that we have to deal with the obesity problem in the country.

It does not deal with the insurance industry’s abuse of its power or the abuse of all the stakeholders.

It does not deal with patients’ responsibility for their care or their need to own and control their healthcare dollar. A Romney like plan will only succeed when we deal with these defects in the healthcare system.

It deals only with the concept of how much money we are going to put in the system and whom we will penalize. If the plan had been constructed correctly and motivated patients to create a competitive healthcare system, the universal healthcare concept of Romney and Schwarzenegger would have a chance to succeed.

Hillary Clinton’s healthcare proposal is similar in that it is also built for failure. Failure proves the concept does not work. The replacement will be a single party payer.

The consumer is the only one who can force politicians to understand the problems in the healthcare system.

Stanley Feld M.D.,FACP,MACP

The government could solve the uninsured problem with a few effective consumer driven incentives. Previously, I have made the point that all of the incentives need to be initiated at the same time. They have to be made simple and clear without loopholes.

Mitt Romney plan in Massachusetts and Arnold Schwarzenegger’s in California plans fall short. They promote universal coverage in a market environment. Universal Health coverage is important but should be optional to the consumer. Both plans are complex. Both plans have several problems in common. Both are contaminated by politics and facilitator stakeholders’ vested interests. The more complex a system is, the more opportunity for abuse by savvy facilitator stakeholders. Neither plan creates a true market economy. If the plans were attached to the ideal medical savings account plus tax equalization for a group and an individual, along with true price transparency, they would have a chance to be effective. The plans would create a pure consumer driven healthcare environment. The consumers would own their healthcare dollar and force competition. In the plans proposed the consumer does not have any increased power.

Hillary Clinton’s program is not the answer. It is designed to fail. When it fails the Democrats will call for a government controlled single party payer in a price controlled environment. This will create a larger mess than we have now. Her plan will also create another unaffordable entitlement. Our government cannot afford another entitlement program.

We have seen in an effort to control prices (price controls) the government has made irrational decisions. One such decision severely decreases the reimbursement for DEXA (bone density) to the point of discouraging medical practices from developing disease management programs for this chronic disease (Osteoporosis). The result will be to undermine the ultimate goal of creating a focused factories for the treatment of osteoporosis. These focused factories would increase the quality of care delivered for osteoporosis and avoid the complications of this chronic disease.

It is much better to create an environment which lets the patients determine the efficacy of a treatment if they are given the appropriate information to decide on the purchase of a medical therapy.

It is my opinion that community rated healthcare premiums should be included among the changes I have outlined to repair the healthcare system. Everyone in a city or region should have his premium rated by the health experience in his community. The premium cost is based on the $6,000 deductible. The $6,000 premium will obviously be lower than the first dollar premium coverage.

The argument against community rating among many healthcare policy wonks is that young people are subsidizing the sicker citizens. Therefore the healthy people will be unwilling to pay the premium and will not participate in a community rated system. I believe this is a porous argument if we look at what is happening today with corporations that are self-insured.

We need to look at some of the principles of pricing life insurance and auto insurance. People at risk pay a higher premium than people with little risk for death or auto accident . This principle should be applied to healthcare insurance in the ideal medical savings account model. We need to convert the healthcare insurance model to a true insurance model.

In reality, community rating is the way large corporations are charged by healthcare insurance companies to administer their self insurance plans. The corporations are charged according to the healthcare insurance experience. If the healthcare experience was $1 million dollars last year the corporation deposits $1,100,000 in a healthcare trust fund the following year. If the employees spend more than $1,100,000 during that year, the corporation either adjudicates the trust fund for the insurance carrier’s administration at the end of the year or that difference is added to the next year’s trust fund payment. General Motors was self insured. It was screaming about their healthcare cost. With their new contract they have now dumped the insurance relationship off to the automotive unions. This move is not that bad for either side. It gets ownership of the healthcare dollar closer to consumers, the autoworkers. However it is less than perfect.

Human Resource officers are experiencing how their self insurance trust is priced by the third party administrator, the healthcare insurance company, and are unhappy. They are realizing the healthier their company is the lower the premium cost will be. They are beginning to set up contests among employees to lose weight, control their blood sugar if they are diabetic, and control their blood pressure if they are hypertensive, to avoid the complications of those diseases.
The reality is that large and small businesses’ healthcare insurance premiums are determined by that businesses community healthcare experience. Large and small businesses try to get rid of their sick people. However, there is great liability to this maneuver. I sense most corporations have walked away from trying to fire these people.

The issue of healthcare insurance has not been the concern of young healthy people when the corporations were paying for their healthcare insurance. Healthcare insurance coverage has become expensive. The argument is more young healthy people will elect to be uninsured if they were required to buy their own healthcare coverage. However, more and more employers are limiting benefits. Many young people are finding out that they have inadequate insurance if they get sick. Additionally, many employers are dropping their healthcare insurance coverage for all employees.

If we think it out in the ideal medical savings account, the corporation provides $12,000 to the employee. $6.000 is put in the medical saving account and the next six thousand pays for first dollar coverage above $6,000. If the employee does not spend the $6,000 that employee keeps that money in a trust fund for his retirement. The young employee would actually have incentive to purchase healthcare insurance and try to protect the health of his family.

If the healthcare system converted the present corporate community rating formula to a city wide or regional community rating system the risk would be spread to the entire area covered. It could result in a lower premium cost. If the individual communities or regions encouraged the creation of systems to encourage good health, community pressure would be put on the citizens to lose weight, control blood sugar and blood pressure similar to procedures currently being used by corporations. The communities would be encouraged to decrease local environmental hazards including restaurants, in order, to decrease the community healthcare costs and risks.

Local regions could encourage our restaurants not to serve 3,500 calorie meals. We have to support the efforts of TGI Friday. We need to have community pressure on us because we are responsible for our healthcare dollar and indirectly responsible for our community’s healthcare dollar.

Everyone should have the ability to buy a community rated ideal medical savings account with pre tax dollars. They should also have the right to buy any other healthcare insurance policy with pre tax dollars. This policy would increase competition among healthcare insurance policies even more. Some might have noticed that this quarter UnitedHealthcare’s profit went from very grotesque to extremely grotesque. It increased 15% taking advantage of their control of the healthcare premium and provider payments while increasing premiums for the employer.

If someone chooses to be uninsured he would have to negotiate the payment on his own and not enjoy the tax benefits of the ideal medical savings account. At the same time the government through regulation, would require the healthcare insurance industry, hospitals and physicians to have complete and accurate price transparency based on cost. If the facilitator stakeholders did not participate they would lose the privilege of insuring and serving the public in that state. If the government supplemented the insurance premium of people who could not afford the ideal medical saving account healthcare insurance policy the government would save money and enable the patient to have incentive to control their healthcare costs. It would inspire a new paradigm of competitive healthcare insurance and medical care. The consumer would control his healthcare dollar, have incentive to control his healthcare spending and demand a competitive environment necessary for a true market economy.

Stanley Feld M.D.,FACP,MACE

The three examples of the involuntary uninsured have been described in my previous post. They are real and must be addressed. The actual number of uninsured does not matter. Whether the number of uninsured is 47 million or 18 million is irrelevant. Either number is a national disgrace if the people understand they need healthcare insurance and cannot get it for one or more reasons. Both sides of the debate present the number of uninsured. They do not present the causes or the solutions to cure the problem. One side lumps all the causes of lack of insurance and gets a big number (47.5 million). The other side divides the causes into small numbers without the defining the subsets for the cause.

Everyone should have the opportunity to purchase affordable healthcare insurance. This presupposes that the inefficiencies of the healthcare insurance companies, hospital systems and physician practicesthat we have discussed be eliminated. It also presupposes that preventative medicine be supported, and that efficient systems of care be promoted to decrease the complications of chronic disease. This also presupposes that the patient is motivated to actively participate in preventing the complications of chronic disease. It also presupposes that the patient can afford to adhere to the medication and drug therapy prescribed.

It is important to remember that 90% of the Medicare healthcare dollar and 80% of the private insurance dollar is spent on the complications of chronic disease. The complications of chronic disease cannot be handled by an inefficient healthcare system that penalizes prevention and the care of chronic disease.

With the encouragement and support of the development and execution of systems of care for chronic disease we could decrease the complication rate by at least 50% and decrease the total cost to the healthcare system by 45% for Medicare and 40% for private insurance. This savings should certainly be passed on to the consumer by the government and the healthcare insurance companies in the form of affordable premiums.

Citizens should have the right to choose to be uninsured in a society where affordable insurance is readily available. However, they should bare the responsibility and burden of being uninsured. The burden of their cost of care is currently being paid for by local tax money. A motivational deterrent against lack of insurance can be constructed.

The New York Times covered the issue of the uninsured by lumping everyone together to try to precipitate change.

“The bureau reported a large increase in the number of Americans who lack health insurance, data that ought to send an unmistakable message to Washington: vigorous action is needed to reverse this alarming and intractable trend.”

It is clear that fear leads to political action but not necessarily logical and common sense change.

“Last year, the number of uninsured Americans increased by a daunting 2.2 million, from 44.8 million in 2005 to 47.0 million in 2006. That scotched any hope that the faltering economic recovery would help alleviate the problem.”

If more people lost jobs there would be more uninsured. There are more people coming into the system yearly. If they can not get healthcare insurance an illness could be disastrous to them and our economy.

“The main reason for the upsurge in uninsured Americans is that employment-based coverage continued to deteriorate. Indeed, the number of full-time workers without health insurance rose from 20.8 million in 2005 to 22.0 million in 2006, presumably because either the employers or the workers or both found it too costly.”

This is true. The inefficiencies in the system and the outrageous profit in the healthcare insurance industry has generated unaffordable premiums for an individual who would qualify to buy insurance. Additionally, the individual has to buys insurance with after tax dollars while his employer buy insurance with pretax dollar. This makes the healthcare insurance even more costly.

“The challenge to the White House and Congress seems clear. The upward trend in the number of uninsured needs to be reversed because many studies have shown that people who lack health insurance tend to forgo needed care until they become much sicker and go to expensive emergency rooms for treatment. That harms their health and drives up everyone’s health care costs.”

Again true, true and related. The emergency room fees are also outrageous because of the billing system. The healthcare insurance companies get a deep discount from the retail bill for emergency room care. The uninsured are responsible for the entire retail bill. The above paragraph does not get to the issue about why so many people are uninsured. It simply is a scare tactic to try to precipitate a solution. As pointed out previously, the heathcare insurance industry does not want a solution. They are not the stakeholders in pain. They are the stakeholders in control. The result will be the government will take over and be a single party payer. This is socialized medicine. It will be a disaster as we have seen illustrated over and over again
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The other side of the argument has a different number for the actual uninsured. They claim” the increase in the number of uninsured largely due to immigration, population growth and choice.”

Our nation has provided for the immigrants in the form of Medicaid. It is difficult for an English speaking person to negotiate the system. It is even more difficult for a person just learning English. The other two issues seem lame because healthcare insurance is unaffordable.

“Nearly 18 million uninsured Americans live in households with annual
incomes above $50,000, and could likely afford health insurance.”

Many of these people have jobs but their companies have stopped insuring them. Many are uninsurable as individuals. Many could buy insurance with unaffordable deduction and intolerable exclusions using after tax dollars.

“More than 84 percent (250.4 million) of U.S. residents were
privately insured or enrolled in a government health care program,
Such as Medicare, Medicaid or the State Children’s Health Insurance
Program (SCHIP”).

The number seems correct. There are over three hundred million people in this country. Therefore, 47 million uninsured is a probable number.

” In addition, a recent BlueCross BlueShield Association report on the uninsured estimated nearly 14 million adults and children qualified for government programs but did not enroll.”

The story of the 42 year old Hispanic U.S. citizen whose children where dropped from Medicaid happens over and over again. It cannot be dismissed with a slight of hand. If it was simple to obtain Medicaid and keep it, I know this man would have it. It is not simple to negotiate the system. The solution to this problem is to make it simple.

“Although immigrants (including naturalized U.S. citizens) make up slightly less than 12 percent of the population, they make up 27 percent of the uninsured.”

I can believe this number is true. It is difficult for these people to work their way through the bureaucracy, especially when they are afraid that any complaint they have can get them in trouble. The solution is easy. We can make it easier to get the coverage, we as a nation, have committed to provide.

“By this count, nearly 10 percent of uninsured Americans theoretically have access to some form of insurance but have chosen to forgo it.”

The reason this 10% choose to be uninsured must be defined. I would guess it is because the premium is intolerable or the exclusions end up providing little coverage. It sounds like a good argument. However the insurance that they can get is usually worthless. Insurance that is worthless is not insurance. The goal should be to make good healthcare insurance affordable!

“Approximately 75 percent of uninsured spells last one year or less.”

This number could be significant in exaggerating the number of uninsured people.

Both sides of the uninsured argument exaggerate the issue to defend their position. They never answer the essential questions. They do not offer solutions. The articles that exaggerate the high number of uninsured do not break down the reasons for the lack of insurance. They do not study the reasons for those subgroups. They are convinced the solution is a single party payer.

The conservative health policy wonks try to defend the free market economy. The problem is the healthcare system in its present form is not a free market economy because the consumer is not in control creating competition. The insurance industry is in control and is abusing its privileged position. I believe in a true free market healthcare economy with the consumer owning his healthcare dollar and forcing competition among the other stakeholders. This is the only way to solve the problem of the uninsured.

Stanley Feld M.D.,FACP,MACE

Another example of the government trying to improve the healthcare system is Medicare Part D. The Medicare Part D benefit was created to help senior citizens pay for their medication90% of the Medicare healthcare dollar is spent on the complications of chronic diseases.

The goal was to enable the senior patients to buy their necessary medication at affordable prices. If a person has an illness that needs medication that person has to be able to afford the medication. Taking the medication is important to prevent the complications of chronic diseases. It is well established that

I believe the government’s intentions were good. However, after vested interests manipulated the rules and regulations, Medicare Part D has turned out to be less effective and more costly than anticipated.

Medicare Part D was created to enable free market competition to regulate the pharmaceutical sector of the healthcare system. The government could have opted for a single party payer system for drugs for Medicare recipients. The structure of Medicare Part D created opportunities for innovations and entrepreneurship on the part of the healthcare insurance companies and large pharmacy chains. They could have been creative and proven that a free market economy works to the advantage of all. However, they have figured out how to manipulate the system to their advantage and the disadvantage of the consumer.

The government program created specific pricing rules. These companies figured out how to get around the pricing rules. The government has recognized the defects. Yet it has been slow to act to repair them. Slow reparative action is not unusual in a hierarchical bureaucracy.

In the most affordable Medicare Part D policy the premium is Humana basic costing $24 per month. It started at $14 per month. The premium provides coverage until patients reach $2510 in drug costs. After $2510 the patient pays 100% of the drug cost until the drug cost reaches $4050. Thereafter patients pay 5% of the drug costs. The co pays varies depending on the drug and the healthcare carrier. At Humana, generic drugs co pay is $4, branded drugs $25, and non healthcare insurance company’s preferred drugs have a co pay of $54.

The $87 Humana Medicare Part D per month plan only improves the generic drug payments.

The $2510 doughnut hole (coverage gap) had been inserted after much lobbying by the healthcare insurance carriers. This is a loophole. It created a great disadvantage for the patient. The doughnut hole (coverage gap) is to the advantage of the healthcare insurance companies.

Humana had a “My Annual Cost Calculator” posted on their web site at one time. From that calculator you could figure out how much they charged your account for each drug. When I used the calculator it looked as if they were charging the patient’s account the retail price for the generic and brand name drugs. You can be certain that Humana was not paying the pharmacy the retail price. This served to get the patient into the doughnut rapidly. At that point patients pay 100% of the price for the medication. The details of the program are complicated and aggravating.

When faced with a complicated issue the consumer would look for help from a consumer advocate. AARP would be the natural consumer advocate for senior citizens. Mr. Richard Jellicoe’s comment about AARP suggested that AARP was not as dedicated a consumer advocate as we thought. “What amazes me is that AARP endorsed this company when it was time for 2007 Medicare sign up and it was not till many months later that AARP acknowledged that it’s endorsement of UnitedHealth care was a paid endorsement. They offer drugs with co-pay almost twice what you can get the same drug via cash. I guess that is how they can pay it’s fired CEO $5 million in retirement. And AARP is supposed to help the seniors.”

Dennis Kucinich said. “According to published reports, the American Association of Retired Persons (AARP) “will net AARP $4.4 billion over seven years from the insurance giants United Healthcare and Aetna” with whom the organization signed agreements earlier this year. Under the AARP brand name, the organization will promote Aetna insurance policies to its members between the ages of 50 and 64 and United Healthcare policies for Medicare-eligible members”.

Kucinich emphasized that he was not taking issue with the 38 million members of AARP. “Millions of trusting AARP members has bought Medicare-supplemental and prescription drug insurance plans from AARP, believing that they were getting a good deal. The ‘AARP name’ was like the ‘Good Housekeeping Seal of Approval.’ It turns out, however, that AARP is taking a $4 billion cut by steering its members to profiteering private insurance companies trying to capitalize on fear and confusion.”

Wal-Mart four dollar pricing of generic drugs promises to put a big hole in the Medicare Part D shame. Physician will be more than willing to co-operate if the generic substitute is equally effective as a brand drug.

If the Medicare Part D healthcare insurance policy was driven by the patients’ vested interest and not the secondary stakeholders’ vested interest, Medicare Part D would be a great thing. It would go a long way to help repair the healthcare system. It would serve to decrease the money spent on the complications of chronic disease. (Medicare part A and Medicare Part B). I would say the healthcare insurance industry was entrepreneurial in its influence over the construction of Medicare Part D. I suspect that both the administration and much of congress had difficulty understanding the complexity and possible defects in the plan. Now the key is to force the administration and congress to fix Medicare Part D.

Stanley Feld M.D.,FACP,MACE

There are oceans of information and data describing our options in the healthcare system. Neither the consumer nor agents for the consumer (typically Human Resource officers) have had an easy time distinguishing between good and bad information. Health insurance companies have large departments that “craft” its message to the media and for the sale of its healthcare insurance products. The goal is to increase the number of healthcare insurance policies it sells. They also have entire departments that negotiate them through the maze of rules and regulations. They also have multiple prices for multiple customers. All of the above increase the healthcare insurances companies’ inefficiency and overhead leading to an increase in premium pricing. All of these actions are entrepreneurial.

There are many rules and regulations imposed by government bureaucracy that distracts physicians from their duty of delivering medical care. The easiest thing for physicians to do is do their job the best they can. Physicians cannot fix our broken healthcare system. Our medical care system is not broken. It is inefficient in delivering care for chronic diseases. Physicians can and do deliver excellent medical care. We lack systems and motivation to deliver excellent preventative care. Preventative care goes beyond the annual physical examination. It is essential that the healthcare system create incentives to develop systems to deliver continuing care for chronic disease. This includes the patient being activity responsible for the self management of his chronic disease. This concept can be understood by reviewing the AACE’s “Management of Diabetes Mellitus A System of Intensive Self Management .”

Organized medicine has been dormant and ineffective in creating innovative ideas in order to teach physicians how to develop systems of care for chronic diseases. The government and insurance industry have been uninterested in supporting the development of these systems of care because I believe they do not have an understanding of its importance to the long term cost of healthcare. The attitude prevails despite the fact that we know that ninety percent of the healthcare system’s cost are spent on the complications of chronic diseases. If you are a company interested only in short term results, I can understand the attitude toward long term reduction of chronic disease complications. It would be an entrepreneurial activity to develop systems of care for chronic diseases that would teach physicians how to care for chronic disease. Additionally the incentives to execute that care would have to be provided.
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The healthcare system as opposed to the medical care systemis extremely complex. The multiple small “political steps” taken over time to help repair the healthcare system have not generated effective change. As Nietzsche said, “sometimes small steps make the situation worse’.

It seems that everything that is done to improve the healthcare system ends up harming it even more. A recent example is the windfall profits provided by a defective DRG payment system for hospital systems. It took a couple of years for the hospital systems to figure at the loopholes in the DRG system. Once they did, hospitals’ profits soared. This was entrepreneurial on the part of the hospital systems.

CMS recognizes the defect and wants to implement a new DRG system based on hospital system costs rather than hospital system charges. This change implies true price transparency. Price transparency should be available to the consumer to choose the hospital. Price transparency should not be developed into a form of fovernment price controls. If a hospital experiences more overhead or delivery costs they should charge more. However, if they were forced by competition to become more efficient they would be able to reduce their prices. The result would be a decrease in cost. Hospital systems should make the cost of a band aid clear. It is simply wrong to charge $11 for a five cent item. However, hospital systems’ lobbyists successfully fought for a one year delay in the implementation of a new DRG payment formula based on cost and not charges.

I suspect Dr. Mark McCellan resigned as director of CMS out of political frustration. He was not interested in price controls. He was interested in accurate pricing. It is one thing for the government to know what to do. It is another thing to get it through the tangled way our government bureaucracy does business. To me, the only way to reduce the obscene hospital fees is by knowing the hospital costs for the service or item and not accepting the grossly inflated price and then negotiating a discounted price.

Hospitals should be paid on a cost plus basis in relationship to the average hospital cost per disease in the state or county. Allowances should be made for variation in overhead in different parts of the country. This methodology would force the hospital systems to become more efficient and be competitive. They would be forced to learn how to increase their profit margin as prices would decrease.

The present payment system encourages hospitals to be less efficient and incur higher fees and more costs. It would force hospitals to be entrepreneurial for the benefit of all the stakeholders and not simply themselves. I would guess implementing a new system will be delayed even longer than one year, especially with the change in administration in the next year. Hospital systems are not interested in real price transparency. They will fight it. I believe they are blindly encouraging government price controls. Price controls historically make things worse in every area of our economy.

If we as consumers do not force the secondary stakeholders to get smart we will end up with a single party payer system. Hillary Clinton’s new healthcare plan is heading us in that direction. Her 2007 words are crafted differently than her 1993 plan. Her 2007 healthcare plan will evolve to a single party payer plan. She has changed her direct approach. She has gotten her strategy from organizations like the Commonwealth Fund who are advocates of a single party payer being the only solution to our healthcare systems problems.
A full discussion of Mrs. Clinton’s plan will follow shortly.

I believe the government wants to help the people. What is the reason government initiatives misfire? They misfire because of the inefficiencies in hierarchical bureaucracies. The hierarchical bureaucracy is imbedded in all of our government agencies and in our body politic. Governmental decisions are influenced by vested interest’s lobbying and not by common sense.

There are a lot of very smart people in America. We have figured out the solutions to many problems in the past. Winston Churchill said “the American government always does the right thing after they have tried everything else. He might be right. “

The public can overcome the archaic bureaucratic structure of our government. We need an entrepreneur to step forward, recognize the patterns, be innovative, make the repair, and profit from his innovation. The repair will be driven by our knowledge based economy. The healthcare system can to be a healthcare system for the public good without price controls that do not work, single party payer systems that do not work and government restrictions on access to care that does not work.

We as consumers must become concerned enough and disturbed enough at the present healthcare system to generate the will to act in a constructive way to improve the system to the advantage of everyone. We have an excellent medical care system. We have a dysfunctional healthcare system. I believe the American consumer is getting there. We have at least forced a change in Hillary Clinton’s rhetoric but not in her policy. The solution in a free market system is to construct a system that will function for the consumers’ benefit and not the vested interests’ benefit.

Stanley Feld M.D., FACP, MACE

The public education system is just as broken as the healthcare system. The concept of “No Child Left Behind” is in reality empty rhetoric. In my opinion, it is a well intended but simplistic concept. It is a naïve view of the meaning of education.

In my view the purpose of education is to teach children how to think. The goal is not to memorize material to pass a standardized test. Once you understand the concepts effective reading, and arithmetic, reading comprehension and mathematical abstractions are easy. In our world we should be teaching people how to think in order to prepared them for our knowledge based economy.

Alvin and Heidi Toeffler nailed it in their recent booke “Revolutionary Wealth” which explains the nuances of education in the knowledge based economy.

“In the early 20th Century, business in short had a crucial stake in massifying armies of young to help build the mass-production economy of the industrial age.”

“Sir Ken Robinson, senior advisor on educational policy to the president of the famed Getty foundation in Los Angeles and author of Out of Our Minds: Learning to be Creative stated” The whole apparatus of public education has largely been shaped by the needs and ideologies of industrialism…predicted on old assumptions about the supply and demand for labor. The keywords of this system are linearity, conformity and standardization.”

“There are many forces that are for changing the dysfunctional public education system. They are the teachers, the parents, and the students who all recognize that our public education system is broken. They are the ones, the consumers of education, which are going to have to force the controller of public education to change the system.”

Does this sound familiar? It also relates to the healthcare system.

The Tofflers’ then quote Bill Gates who they say finally laid it on the line in 2005:

“America’s high schools are obsolete. By obsolete, I don’t just mean that our high schools are broken, flawed, or under funded. By obsolete I mean that our high schools-even when they’re working exactly as designed-cannot teach our kids what they need to know today… This isn’t an accident or a flaw in the system: it is the system”.

When I was at Columbia College the courses were very different than those at William Howard Taft High School in the Bronx. The high school curriculum in the mid twentieth century taught facts. It was up to the student to figure out how to integrate and abstract these facts into the real world if he had any chance of being successful and creative. The same was true when my children were in high school in Texas in the 1980s. All of us went to public high schools. These high schools were considered excellent public high schools at the time. The same obsolete teaching methods prevail in excellent public high schools today.

At Columbia College in New York, I was not taught any specific facts. I was taught concepts. Even in the pre medical courses we were taught concepts and few facts. I believe the facts are easily figured out if one understands the concepts behind the facts. When I was in medical school the same thing was true. The concepts were critical to learning the facts. It has little to do with memorization of facts. An excellent example is our final exam in pathology. The only question on the final pathology exam was a request to write ten important pathology questions and then answer them. I wrote ten questions that I thought were the most important questions about pathology. When is came time to answer them I was stumped. I wrote the best answers I could. I walked out of the test convinced that I failed my own test. Some of the people in the class were bragging about how easy the test was. I kept chiding myself for being so stupid as to ask such hard questions.

It turned out I got honors in the course and most of the others got a passing grade. Some failed their own test. Subsequently, I discovered it was a test of understanding the concepts and not regurgitating facts. I wrote the best questions in the class. The concepts had to be concepts that prepared you to be a competent critical thinking clinician.

Thursday August 16th was launch day for TechStars at the Atlas Institute on the campus of Colorado University. I have been talking about the need for innovative thinking in healthcare in this blog. David Cohen, Brad Feld, Jared Polis and David Brown developed the concept of TechStars. They published a call for applications from technology start up companies on their blogs. They received applications from 300 start-up companies from around the country. TechStars selected 10 teams from the 300 applicants. They provided funding of $15,000 per team, free office space, operational support, and a three month mentorship curriculum with Boulder Colorado venture capital firms, entrepreneurs and business leaders. The course content taught the start up entrepreneurs how to think about, execute and get funding for their new start up company.

TechStars Inc. received 5% equity position in each company for the educational process and ability to relate to these successful Boulder mentors. If the companies failed the venture capitalist lost $15,000. The goal was to stimulated smart young entrepreneurs to think critically about the development of their company. They were also taught to develop street smarts by entrepreneurs that have been through the start up process. If one or two of the companies succeeded TechStars Inc would more than make its money back. David Cohen did a magnificent job leading the troops and developing the course curriculum.

This morning’s presentations included Eventvue, Intense Debate, SocialThing, J-Squared Media, MadKast and Searchtophone, StickyNotes, Villij, FiltrBox , KBLabs, and BrightKite. I bet you will hear about these companies in the future. If a couple of these companies do not succeed you will hear from its entrepreneurs as they develop other companies.

The lecture hall was packed with venture capitalist from as faraway as California and entrepreneurs, mentors and friends from all over Colorado. Each presenter did a great job in pitching his company. The presentations were crisp and clear. They all knew what they wanted and made very compelling cases to get the funding they needed. Brad told me when they started putting their presentations together almost all of them did terribly. They were all fast learners.

I spoke to most of the founders of the companies after the meeting. They all felt this was the best educational experience they have ever had. Most were in their 20’s, and many had completed business school. The overriding theme that excited them was they learned the concepts necessary to develop a successful business. These concepts plus the mentors’ practical experience was not available in business school.

Every one of the companies has a great idea. However, that is not the point. These young entrepreneurs have learned an incredible amount about how to start and run a business in the trenches from mentors who are and were in the trenches. Every person has been energized. They have also energized the mentors.

This is how our public education system, which is just as dysfunctional as our healthcare system, needs to function in order to be effective in our knowledge based economy.

The people who control the healthcare system have to start thinking of concepts that will benefit all the stakeholders and not simply the stakeholders in power. I am certain the stakeholders in power are threatened by the potential for change just as the controllers of the educational system are. We now live in a knowledge based economy. The legacy thinking in healthcare has to change. It is presently proprietary and opaque. It is dominated and controlled by the insurance industry. It has to be transparent and beneficial to all.

Only the consumer will change the healthcare system. It will start with the demand to change the insurance paradigm to the ideal medical saving account.

We have seen the failures of the government as a single party payer in the VA Healthcare System. I suspect we are only seeing the tip of the ice berg. I cannot understand why politicians think it will be any better when a single party payer system is applied to the entire population.

I know the consumer does not want that system.

I believe it will not be the baby boomers that change the system. It will be young people who were brought up on computer technology such as the Tech Stars and their mentors who will make the innovative changes necessary to establish a new paradigm for medicine in a knowledge based economy.

Stanley Feld M.D.,FACP,MACE

Alex Berenson’s article “Sending Back the Doctor’s Bill” in the July 27,2007 NYTimes demonstrates the problems the mass media is having in a world of changing communication. Unfortunately, articles such as Mr. Berenson distort and misrepresent the facts.

Mr. Berenson says “Americans generally do not seem to mind the fact that doctors are well paid. In public opinion surveys, doctors usually rank as the most trusted professionals. Congress has repeatedly blocked Medicare’s efforts to reduce the amount it pays for each procedure doctors perform, even though overall Medicare payments to doctors are soaring and the cuts are legally required to keep the program’s budget balanced.”

It is important to study Mr. Berenson’s words carefully. He says “doctors usually rank as the most trusted professionals.” I believe that is true and is deserved. However, he and others are doing their best to destroy that public trust. The trust between a patient and physician (patient/physician relationship) is part of the therapeutic effect. Effective medical care is not a commodity. The therapeutic effect has a personal component that is being destroyed by our present environment.

Mr. Berenson implies that the government must “reduce the amount it pays for each procedure doctors perform.” He ignores the fact that the hospital charge for a procedure done in the hospital is greater than the physician charge to do the procedure. The hospital’s reimbursement is greater than the physician’s reimbursement for his skill and intellectual property. Recall the insurance company paid the hospital twice as much as they would have paid Dr. Westbrock if he was allowed to do the same x-ray.

Mr. Berenson’s last sentence is a warning. It should alert us to what we are in for with universal coverage, and single party payer system. It is socialized medicine.“Congress has repeatedly blocked Medicare’s efforts to reduce the amount it pays for each procedure doctors perform,” This is not true. Congress has decreased the percentage of reimbursement reductions sort by Medicare. Significant physician fee reductions have occurred yearly.

Mr. Berenson goes on to say “even though overall Medicare payments to doctors are soaring and the cuts are legally required to keep the program’s budget balanced.” Physician reimbursement has not been soaring. It has been declining. Hospital costs and administrative payments to the insurance industry have soared. The last phrase portends what we have in store for us with socialized medicine. We will see limitations to access of care, restriction of care and longer waits for care because it has to fit in a budget. We need only think of the examples of England and Canada.

The wonderful Surgeon’s Blog by Sid Schwab touched on this the other day in a post called “Times Two.”

Dr. Schwab is a general surgeon nearing retirement age who writes about the challenges in surgery. He has an excellent and informative blog.

He writes,
“Working hard for its own sake, striving for excellence without any tangible recognition will be seen in some — but hardly most– doctors if they go on a salary. Because, unsurprisingly (or maybe surprisingly, to pundits) that’s not how it works in real life. I’ve been in the military, and I’ve worked at VA hospitals. Try getting a case on after three p.m. Try getting a lab test or Xray thenabouts. Work another patient into a crowded schedule? Stay through lunch, after hours, come in early? Sorry. That’s what ERs are for. If Alex Berenson (the NYT editorialist) is ok with it, so am I. Sleep, I’ve discovered, can be a pleasant thing.”

Princeton University economics professor, Dr. Uwe Reinhardt, pretty much the “go to guy” for health care economic theory responded with a letter that was published two days latter:

In “Sending Back the Doctor’s Bill” (Week in Review, July 29), you compare the incomes of American physicians with those earned by doctors in other countries and suggest that American doctors seem overpaid.A more relevant benchmark, however, would seem to be the earnings of the American talent pool from which American doctors must be recruited.

Physicians are the central decision makers in health care. A superior strategy might be to pay them very well for helping us reduce unwarranted health spending elsewhere.”

I believe you have heard that from me repeatedly. Someone should be paying attention.
I have followed Dr Reinhardt for years. He has finally figured it out. Bravo Dr Reinhardt! Maybe we have a chance. Maybe everyone will figure it out. Maybe a presidential candidate will figure it out.

Stanley Feld M.D., FACP,MACE

Question 1 – I, too, don’t like single payer. I don’t like single anything. Monopolies are bad, governmental or otherwise. But I believe we must get to true universal health care. How do we force the payers to do the right thing by the patients and doctors?

You can not force anyone to do anything. The effective method to create change is through motivation. I do not like single party payer either. The healthcare system needs a dose of innovative thinking. The healthcare system is way behind other business sectors in the use of information technology to create innovative and competitive systems of care. The two major stakeholders in the system are the patients and the physicians. All the other stakeholders should be facilitators for the patients’ and physicians’ needs. Presently, the insurance industry dominates the healthcare industry. The government pays for a good deal of our healthcare costs. If the government was wise, it would create an environment whereby consumers could own their healthcare dollar and drive their healthcare costs. Bureaucracies can not be successful. Both the government and the insurance industry have failed to control costs. If fact, due to escalating costs they have driven the consumer to become uninsured. Neither the government nor the insurance industry wants to give up control to the consumer. The excuse is the consumer is not smart enough and needs to be protected.

The insurance industry has also made grotesque profits because it controls the money, as well as access to care. It has taken advantage of the healthcare system at the expense of the patients. The insurance industry’s only interest is to maximize profit. If it was smart it would be trying to educate and motivate the consumer to promote innovation by the physicians. The insurance industry should provide incentive for patients to utilize medical care effectively and efficiently. The simplest way to do it is to let patients own and control their healthcare dollar.

If the government controlled the system with a single party payer we would have other troubles. We would have the usual cumbersome bureaucracy that we have in other areas of government. The cost of medical care is escalating partly because of the burden of bureaucracy and administrative costs. As the government is forced to reduce the increasing cost of care it is going to be forced to decrease access to care. The weakest link in the chain is the physicians. Physicians will continue to be blamed for the increasing costs. They will have reimbursement decreased even further. Patients will continue to have access to care restricted. The government seems unable to control hospital fees.

The solution should be to let patients make the decisions about their care with their own money. This is the beauty of my Ideal Medical Savings Account. Patients own the first $6,000 of the insurance premium. The insurance company can administer that money. It is the patient’s job to spend the money wisely. Consumers spend their salary on food and clothing themselves. Insurance for medical care should function as true insurance.

Wikipedia’s definition of insurance is:

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

The insurance industry obviously doesn’t want to give up the power over patients and physicians nor the power over excessive money they accumulate from the present forms of insurance. However, they have priced themselves out of business. Excessive premiums to large and small companies have led to the 46 million uninsured consumers. You may recall the salaries and bonuses healthcare insurance executives collect for creating so much profit for their company. They make most of the money restricting access to care, reducing physician and hospital reimbursement, and holding the float. Naturally, the insurance company retains all the excess monies.

An innovative business group with sufficient information technology infrastructure will figure out how to instantly adjudicate claims for the patients and help patients manage their $6000 deductible. If patients want to spend money stupidly they will not have the opportunity to accumulate money in their Medical Saving Account for retirement.

The government should not be thinking of creating another entitlement they can not manage. They should be figuring out how to teach the patients how to take care of their medical care needs and spend their money wisely on medical care. The government should subsidize patients who are retired and have paid into the system already. They should also subsidize patients would can not afford the high deductible insurance. If a patient spends the money wisely and avoids a complication of a chronic disease he should receive a bonus from his employer or the government. The bonus should be deposited into his Medical Savings Account.

Question 2 “It seems like the system we have now is all about saying no. Can we have an affordable system that is about saying yes?”

My answer to the question is yes. You will recall 90% of the money is spent on complications of chronic disease. Decrease the complication by 50% and you can save $900 billion dollar in a 2 trillion dollar system without saying no to anything. The patient has to be the one that makes the decision and not the insurance company. If you empower patients through education to take care of their chronic disease and give them the appropriate financial incentives they will act to spend their money wisely. Any money saved in the healthcare system presently belongs to the insurance company. It is no wonder the insurance industry restricts the access to care. Their reasoning is that if the patient develops the complication of a chronic disease after they are no longer insured by that company, the complication of that disease is the new insurance company’s problem and not theirs. Where is the motivation for the insurance company to spend money now to prevent complications later? The complications will not be their problem today. The patients get stuck with the complications of the chronic disease. The entire healthcare system is stuck with the bill.

Consumers driving the system will force physicians and hospitals to become price efficient in order to compete with other physicians and hospitals. Every other industry is becoming innovative and efficient through the use of information technology. This has occurred because the consumer has driven these industries to compete. If they do not, they will vanish. The Healthcare System can also make the adjustment if the consumer has a chance to drive the system.