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Obamacare Post Mid-Term Elections

Stanley Feld M.D.,FACP,MACE

The mid-term elections are over. The Republicans captured majorities in the House and Senate. The election was a clear repudiation by the people of President Obama’s policies.

President Obama has denied this reality. He has pledged to pursue his ideological goals that have hobbled the people and the country so badly.

 The polls have indicated that the public is opposed to Obamacare and all of its unintended consequences.

We ain’t seen nothin yet. The unintended consequences are going to escalate starting with the delayed open enrollment season on November 15 2014. This opened enrollment was unnoticed, so Democrats did not suffer any blowback from Obamacare during the mid-term elections.  

Larger categories of people and businesses will be affected by Obamacare’s rules and regulations on January 1,2015. Last year only people in the individual healthcare insurance market were affected.

President Obama continues to mock Republicans by telling them he will be happy to listen to them to see if they have a better idea than Obamacare.

Everyone knows he has no interest in changing or repealing his legacy healthcare law.

The majority of people are dissatisfied with Obamacare. All the Republicans have to do is come up with an idea that is compelling to all of the public. The power of public opinion can demand that Obamacare must change.

 It has to be a simple idea. It has to teach consumers how to be responsible for their health and their own healthcare dollars. It has to educate consumers on how to drive the healthcare system and remove government from controlling their healthcare choices.

The basic problem with our present healthcare system is medical care is fragmented. In addition, all the stakeholders’ vested interests are misaligned. 

President Obama, with his forced passage of Obamacare, has added to the dysfunction of the healthcare system.  .

 Obamacare is meant to be a step toward a single party system. 

 The government cannot afford, and the nation will not accept, a government controlled single party payer system. 

Obamacare does not do anything to repair the distortions of to the system that have led to the dysfunction of the healthcare system pre Obamacare.

The most important stakeholder in the healthcare system is the consumer. Obamacare has marginalized consumers/patients even further.

It was hard for consumers to have notice the dysfunction in the healthcare system because only 20% of consumers use the healthcare system at one time. The remaining 80% thought their healthcare insurance was fine.

Since Obamacare was passed into law it is affecting everyone directly and they are starting to complain.

The current state problem are shown in the figure below.

Barriers

 A dizzying array of stakeholders is all fighting for a competitive advantage, or at the very least survival, in the dysfunctional current state.

Obamacare’s rules and regulations have made the current state more difficult for everyone.  This is leading to the impending collapse of the healthcare system.

Republican Party should not tinker with legislation to try to fix Obamacare.

It should step in right now and educate the consumers about their consumer power. Republicans need to present a market driven solution that is easy to understand.

 My ideal medical saving account can provide the financial incentives for consumers to act and drive the new healthcare systems.

Once the public understands what they can do, it will change its attitude from the helplessness and hopelessness to an empowered reaction to do something to change the system.  

There are many other things that need to be demanded by the public. I believe empowering the public to demand a market driven system is crucial to a viable and affordable healthcare system.

Almost all the stakeholders believe something must change. The centrally controlled healthcare system’s business model will not work or be sustainable. All one has to do it look at the VA Health System.

Consumers and businesses are becoming frightened and beg the government for help.  The government will institute a single party payer system.

 The result is that consumers will not be able or willing to tolerate a centrally controlled healthcare system.

 As I see it, the nation has two choices: Alternative 1 and Alternative 2.

Alternative 1:

  Alternative 1 future state

 If we extend the course of our present healthcare system to a single party payer system (Alternative 1) the costs will escalate, and access to care will decrease. It is inevitable the rationing of care will occur.

 Alternative 2

Alternative 2 Future state
 Alternative 2 would be a market-based system that would put the consumer in the center of the healthcare system.

Provider systems and administrative systems would have incentive to make its products attractive to consumers at the lowest price possible with the highest quality of care.

Consumers, by owning their healthcare dollars, would have the freedom and resources to choose. Government and its bloated and inefficient bureaucracies should not be making medical care choices for consumers. 

Two things must happen. Republicans must teach consumers the advantages of a market based business model.

 The Republican congressional majority must start teaching all the other stakeholders (physicians, hospital systems, the government, the healthcare insurance industry and Big Pharma) the advantages of this market-based system to their vested interest.

 The alignment of vested interests must start right now and not down the line.

 The Obama administration will dismiss the possibility of a successful market based system. Republicans must not be intimidated. Didn’t they win the election this time?

The Obama administration’s conclusions are based on ideology not past history, logic, fact or evidence.

 The Obama administration and its followers will reject the possibility of success for an incentive driven system instead of a government controlled system.

 A market-based system can be presented in a way where all the stakeholders can buy into a successful consumer driven future state.

 

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

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Going In The Wrong Direction

Stanley Feld M.D.,FACP,MACE

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Strange things happen in California.  

In 1975,California Governor Jerry Brown signed into law the Medical Injury Compensation Reform Act (MICRA). It converted California from the worst state in the union to practice medicine into the best state to practice medicine by changing the limit on economic and non-economic damages to $250,000.

Malpractice insurance rates dropped, as did malpractice lawsuits. MICRA ruined the litigation business for California’s plaintiffs’ attorneys.

 Many malpractice attorneys and a number of researchers say that of the various med-mal tort reforms, the caps on noneconomic damages have had the greatest impact. (Anderson says that to be successful, a cap must be around $250,000.)”

In 2003 Texas followed, lowering economic and non-economic damages to $250,000. It decreased the malpractice business for defense attorneys in Texas.

Twenty-six states have now followed California’s lead. 

In 1975 physicians and consumers applauded Jerry Brown as a hero for this minimal reform.

Physicians stopped leaving California after the cap was placed on economic and noneconomic damages. The cost of medical care declined in 1975.

This year Jerry Brown is governor of governor of California and running for an unprecedented fourth term.

The California’s plaintiff attorneys are pushing for the cap on damages to be lifted to $1.1 million, from $250,000. Its provisions are embedded in Proposition 46. Proposition 46 also includes physician drug testing.

The malpractice insurance companies, hospitals and physician groups are warning that consumer healthcare costs will soar and doctors will flee to other states.

 Paul Phinney, a pediatrician and former president of the California Medical Association, said drug testing is a legitimate issue, but the proposal before voters is not the answer.

Phinney and other opponents have pointed to the disclosure that the testing provision was included as a political sweetener, with the intent of making Proposition 46 more appealing.

He said the initiative was designed to trick voters into supporting “something the consumer attorney lobby has wanted to do for a long time,” lifting a ceiling on damages for clients that has been in place since the 1970s. The lawyers “stand to benefit, personally and financially,” he added.

Dr. Ezekiel Emanuel, an author of Obamacare, believes tort reform is not necessary because it has little impact on healthcare costs. Dr. Emanuel ignores the facts just as Paul Krugman and many Obamacare advocates do. Dr. Emanuel has never been in private practice.

He says,

“ A useful threshold for savings is 1 percent of costs of healthcare, which comes to $26 billion a year. Anything less is simply not meaningful.”

One percent is arbitrary. It permits Dr. Emanuel to dismiss tort reform as a significant issue.

 Dr. Emanuel says only $1.3 billion results from the lack of tort reform. His source is not given. He also ignores physician over-testing, actual cost of malpractice insurance, the cost of lawsuits and the emotional impact on practices physicians and their practices.

He says,

“Health care spending in the United States typically increases by about $100 billion per year. Cutting a billion here or there from something that large is undetectable and meaningless. In health care, you have to be talking about tens of billions of dollars before you are talking about real money.

A study, closer to truth than just an opinion, disclosed:

The truth is a full accounting reveals that more than 10 percent of America's health expenditures per year are spend on tort liability and defensive medicine.

This study concludes that $242 billion a year extra spent because of the lack of tort reform.

The $242 billion is well above Dr. Emanuel’s fictitious threshold.

Physicians have admitted to over testing in the Massachusetts Medical Society survey . Physicians fear having to defend themselves against frivolous malpractice suits for potentially missing a diagnosis. The result is expensive over testing.

Most physicians love practicing medicine but cannot understand the unbelievably wrong direction President Obama is taking to reform the healthcare system.

Physicians are becoming disillusioned by politicians’ stated intentions to create a better healthcare system.

Two specific issues consistently agreed on by physicians were malpractice concerns with the need for tort reform and the lack of cohesive leadership among all physician groups to represent the vested interests of physicians and their patients.

The lack of tort reform is reflected in the percentage of healthcare costs by the Massachusetts Medical Society survey.

The amount of money wasted on defensive medicine can be extrapolated from this survey.

 I have written a series of blogs analyzing the impact of the Massachusetts Medical Society’s survey.

The extrapolated costs turn out to be about $700 billion a year. The real cost of defensive medicine is somewhere between $242 and $700 billion dollars a year.

 In 2003, Texas Governor Rick Perry and the Texas legislature unenthusiastically changed tort reform laws in Texas.

Rick Perry and the Texas legislature rewrote the medical malpractice laws, ending plaintiff attorneys’ practice of venue shopping for friendly judges. They also put a cap of $250,000 on noneconomic damages.

These reforms have changed the malpractice legal climate in Texas. The reforms limited plaintiff’s attorneys profitability on frivolous liability claims.

Texans believe that because of these reforms and the lack of a state income tax, Texas is the country's best state for economic growth and job creation.

A Perryman group report concluded,

“Perhaps the most visible economic impact of lawsuit reforms is the benefits experienced by Texans who have better access to high-quality healthcare.

Doctors and hospitals are using their liability insurance savings to expand services and initiate innovative programs; those savings have allowed Texas hospitals to expand charity care by 24%.”

The medical malpractice business for plaintiff’s attorneys has dried up in Texas. They are moving to other states. Physicians are applying for licenses to move to Texas away from high medical malpractice states. 

 “In 2001, according to the American Medical Association, Texas’ ranking in physicians per capita was a dismal 48th out of 50.”

“Beginning in 2003, physicians started returning to Texas. The Texas Medical Board reports licensing 10,878 new physicians since 2003, up from 8,391 in the prior four years.”

 “Dr. Perryman, subsequent to the issuance of his Report, informed TLR Foundation that at least 1,887 of those physicians are specifically the result of lawsuit reform.”

 The Texas Hospital Association reported a 70% reduction in the number of lawsuits filed against the state’s hospitals.

Medical liability insurance rates declined. Many doctors saw average rates drop between 20% to 50%.

The Perryman Group during the course of this study suggests that premiums are declining even further in 2008.”

The American Medical Association removed Texas from its list of states experiencing a liability crisis; marking the first time it has removed any state from the list.

 A survey by the Texas Medical Association also found a dramatic increase in physicians’ willingness to resume certain procedures they had stopped performing, including obstetrics, neurosurgical, radiation and oncological procedures during the Texas malpractice crisis.

Two simple changes in the tort laws made malpractice suits unprofitable for plaintiff’s attorneys.

Rick Perry has been so impressed with the results of his tort reforms that he now wants to extend his state's impressive tort reform record.

Mr. Perry is proposing a British-style "loser pays" rule, which would require plaintiffs to pick up the legal costs of their targets if they lose their suits.

 Almost all of America's economic competitors in the world follow this standard. “Loser Pays” as a deterrent to law suits decreases the cost of doing business resulting in lower prices and a competitive advantage for business. “Loser Pays” would deter frivolous lawsuits.

If President Obama really wanted to do something sensible about lowering the cost of healthcare, Texas style tort reform should become the law of the land, including loser pays all.

I hope California votes down Proposition 46. It is going in the wrong direction. It will not Repair the Healthcare System for California.

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

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Election Time! Obamacare Is Not Working

Stanley Feld M.D.,FACP,MACE

Despite the proclamations of President Obama and Paul Krugman Obamacare is not working.

However, if you tell a lie enough times it becomes the truth. This is especially true if you have enough traditional media coverage of the lie.

The reality is consumers cannot keep their own doctor, access to care is decreasing, and you cannot keep your healthcare insurance plan if you liked your  plan because of Obamacare’s imposed rules and regulations.

Healthcare insurance premiums are increasing despite President Obama’s proclamation that healthcare insurance premiums are affordable. Consumers’ out of pocket costs are increasing despite President Obama’s claims.

The narrow and ultra-narrow new networks on the federal health insurance exchanges are decreasing consumer choice of physicians. The access to quality healthcare at a reasonable price is vanishing.

Consumers are feeling these negative affects on their quality of life already. They will not forget it at the polls on Tuesday despite the efforts of the Democrats to keep Obamacare a non-issue.

President Obama wishing that Obamacare is working does not make it so. He cannot simply decree lower prices. He cannot simply say I want better quality. Neither happens out of thin air. Obamacare’s rules and regulations are disastrous.

The reality is government cannot do a thing about the negative affects Obamacare is having on consumers except repeal it.

Neither federal nor state government can tweak Obamacare and fix the negative affects. These affects are here already. Federal and state government cannot hide the avalanche of negative affects that are coming.

Consumers don’t believe President Obama or the government’s spin anymore.   

The mid-term elections are two days away and the progressives Democrats are trying to make Obamacare better with propositions on the mid-term ballot.

They are trying to improve Obamacare in their states and disguise its goal of increasing government control of healthcare. Increasing the rules and regulations in order to control the healthcare system does not work.  

In the process, progressive in various states are contradicting each other. The bottom line is none of the propositions will work.

Progressives have become prisoners of Obamacare as well as prisoners of their own thinking.

California liberals (progressives) are always the leaders in progressive propositions that make no sense. On Tuesday November 4th California’s propositions 45 and 46 stand out.

Prop. 45 would give the healthcare insurance commissioner the power to reject rates he deems “unreasonable,” with no reference to actuarial or solvency standards.

Anthem Blue Cross is raising small healthcare insurance group premiums 9.8% in 2015.  This is happening even though Obamacare guarantees the healthcare insurance industry an adequate profit through the federal government’s reinsurance plan for healthcare insurance carriers.

 Who is paying for this guarantee and this rate increase? Consumers are through higher taxes. The California commissioner is going to try to reduce the increase to 2.1% through added power given to him by Prop. 45. 

What is the commissioner going to do about it?  Nothing! If he does not permit the raise the exchange will not have healthcare insurance companies providing administrative services for its healthcare coverage. The government cannot provide administrative services.  Any attempt at price control has not worked in the past and will not work in the future.

The healthcare insurance industry’s alternative is to have narrower networks and less coverage. The consumer will have to cover the cost of better coverage.

Proposition 45 also gives trial lawyers the right to challenge rates in court. It is a good deal for trial lawyers on both sides of the price control issue. It is a terrible   deal for taxpayers on both sides of the issue. It will increase the cost of healthcare resulting in higher taxes.

A logical proposition would be to develop a competitive system for consumers and insurance companies so that insurance companies fight for consumers’ business rather than impose the bureaucratic practice of selective contracting. The bureaucracy provides a list of demands and then picks a few compliant winners. The losers are excluded from the federally subsidized exchange.

Government would dictate what products consumers are allowed to buy and use its clairvoyance to decide what businesses can charge.”

Why wouldn’t you let consumers decide what they want rather than bureaucrats telling consumers what healthcare policy they can have?

Proposition 46 is another disastrous proposition.

In 1975 the then Governor Jerry Brown limited medical malpractice awards to $250,000 for non-economic injury. It decreased the medical malpractice business for lawyers in California.  Lawyers would not take cases that did not make them enough money.

Proposition 46 is proposing to lift the $250,000 restrictions for non-economic damages on medical malpractice awards to $1.1 million dollars. The affect will be more medical malpractice lawsuits because lawyers once again can make some serious money from frivolous malpractice suits with minimal effort.

Physicians’ malpractice premiums will rise once again, and once again doctors will be forced to raise their fees or leave the state. The availability of physicians will decrease. Consumers will suffer again suffer from a proposition that was not thought out.

It does not make sense. I hope the citizens of California are paying attention to the implications of these two propositions.

The common denominator is the propositions are great for trial lawyers and terrible for consumers. The propositions will not be effective in making Obamacare better for consumers.

The goal should be to lower the cost of healthcare for consumers not increase it.  

South Dakota has a proposition (Prop IM-17) which, rather than limiting networks expands networks.

Prop IM-17 is trying to regulate back into existence the access to medical providers that ObamaCare destroyed.

Patients expecting to keep the doctor they liked continue to discover that the narrow networks offered on the exchanges resemble the standard of care in Medicaid.

“Measure-17 would force insurers to accept “any willing provider.” All doctors and hospitals licensed by the state that met certain de minimis conditions must be covered by all plans, regardless of cost or quality.

“IM-17’s cure is worse than the Obamacare disease.”

Healthcare prices will increase. Healthcare insurance premiums will increase. The conflicts among providers will intensify. Consumers’ access to care will be diminished.

The California and South Dakota referenda reflect liberal health-care confusion.”

America is supposed to be a government by the people for the people. The government should not be a government dictating what can have.

Progressives are prisoners of their ideology.

I hope the American people understand this on November 4,2014 and vote to stop progressives“stinkin thinkin.”  

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

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An Obamacare Ineffective Premise

Stanley Feld M.D.,FACP,MACE

Obamacare’s goal is to improve the quality of medical care while reducing the costs of medical care. Big government believes it can accomplish this goal by controlling medical care using rules, regulations and guidelines.

My fear is Obamacare is just creating opportunity for secondary stakeholder to rip off the healthcare system.

The result will be higher costs of delivering medical care while lowering its quality.

President Obama and his administration must reexamine their premises and start thinking pragmatically.

Patients’ adherence to recommended treatments is a huge issue in assessing the cost of care. Obamacare does not provide incentives to patients to adhere to recommended treatments. If patients do not adhere to recommended treatment they will get sicker and cost the healthcare system more.

Obamacare’s emphasis is to change the payment paradigm to medical outcomes based system. Physicians and hospitals will be responsible for the patients’ outcome and be penalized for poor outcomes.

Patients’ adherence to treatment is less than 50%. Physicians have little influence on patient adherence.

“Physicians have always had to deal with patients who refuse to follow treatment recommendations, but this age-old quality and patient-care issue is about to become a pressing financial concern for doctors.”

The non-adherence rate of patients to treatment is anywhere from 30-60% depending on the disease, complexity of the treatment, duration of the treatment and side effects of the treatment.

The adherence rate also depends on the psychological state of patients at the time of treatment.

Patients who don't take their medications or don't adhere to treatment recommendations are at risk of getting sicker and requiring more services.

The added cost of care would come out of physicians’ reimbursement unless physicians know how to get around the rigid but inaccurate rules that measure outcomes.

Adherence to treatment is a vital part of correctly measuring outcomes. Nowhere in Obamacare’s rules and regulations is patient’s adherence to recommended care dealt with.

Some patients have perfected the art of non-adherence. I learned this early in my medical career.

Forty-six years ago I was working in the hypertension clinic at Parkland Memorial Hospital in Dallas. I had just arrived from the Massachusetts General Hospital where most of the clinic patients were caucasian Irish or Italian. There were a small percentage of black people in that clinic.

Ismelin was a popular antihypertensive drug in America at that time.  Physicians did not have much else with which to treat hypertension. The problem with Ismelin was 25mg could cause patients to have orthostatic hypertension (blood pressure drops to very low level when standing) causing patients to pass out.

When I got to Parkland there was a high percentage of black male patients. Many were on up to 200 mg of Ismelin a day. I could not understand it. I got friendly with a couple of patients and told them that in Boston the dose needed was only 25 mg to treat high blood pressure. In Dallas patients received up to 200 mgs a day and were still uncontrolled. I asked if they had an explanation.

Three guys told me what the problem was. The chief of the hypertension clinic was very smart, a very good person, and very concerned about their health. He also had the pharmacy calculate the time these patients needed a refill.

The patients loved him for his sincere concern for their health. They would do nothing to hurt his feelings.

One 25 mg Ismelin pill would lower their blood pressure to intolerable levels. They would not take the medication or take it every other day or every third day. They knew he was counting the pills they took. They always refilled their medication on time. The medication was free to them at Parkland.

When they came into the clinic for an office visit their blood pressure was high. The chief would increase the dose to 50 mg a day and doses of up to 200 mg per day.

 The chief did not understand why he could not control their blood pressure with these massive doses.

They told me after many months of friendship that 25 mg would affect their nature (sex drive and ability to have an erection). They did not take any of the medication even though they refilled it.  

The moral of the story is patients will not tell you the truth at times and sophisticated measurements can fool you. The result will be bad outcomes and higher costs to the healthcare system.

This is only one example of non-adherence affecting outcomes. Uncontrolled hypertension is the primary cause of heart attacks and strokes.

Should physicians be penalized financially for patient non-adherence when there are many factors that affect patient non-adherence? Physicians will try to avoid treating non-adherent patients to avoid negative outcomes.

The growth of concierge medicine is the result of physicians desire to avoid government regulations, government decreases in reimbursement and government penalties.

Physicians will be cherry picking for the best and most adherent patients. The result will be a further shortage of physicians to care for the expanding Medicaid and treatment population resulting from Obamacare.

President Obama, please re-exam your premises and your policy wonks’ premises.

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

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Incentives and Mechanism Design

Stanley Feld M.D.,FACP,MACE

Why are Obamacare’s initiatives failing? There are several reasons.

1. Government is inefficient. It outsources all of its administrative services.  

The contractors, in turn, subcontract out most of the work. The overhead for each function increases non-transparent costs. The execution of tasks decreases.

2. President Obama’s healthcare policy advisors are academics. They have little clinical experience. It is clear they have little experience in the trenches.

The healthcare policy advisors have no idea how to create incentives for physicians and hospitals.

They have no idea how destructive to clinical practice the lack of tort reform is.

3. Without clinical experience the policy advisors do not know how to create effective incentives for patients.

I have emphasized that patients must be responsible for themselves and their diseases. They must become professors of their diseases. They have to be provided with adequate incentives to become professors of their diseases.

Physicians must be provided with incentives to teach patients to be professors of their diseases.

4. The government outsources the administrative services to adjudicated Medicare and Obamacare billings. The government has little idea of the actual profits built into the fees the insurance companies charge the government. At intervals insurance companies are required to enter another bidding process. The government probably picks the lowest bidder.

It is not an efficient way to pick an insurance company. This is especially true when the government guarantees the insurance company‘s profit. The government does not know what the insurance company’s profit actually is. The profit is about 40% of the healthcare dollars.

President Obama’s ideological goal leads to these errors. His only concern is for the government to control the healthcare system.

Government control of a healthcare system has not been successful. The V.A. healthcare system is on example. Medicaid and Medicare’s increasing deficits has been another example.

None of the countries in the developed world have a financially viable universal healthcare system except Switzerland.

A few years ago I learned about “Mechanism Design.”  My first reaction was “what is that?”

Leoid Hurwicz, Roger Meyerson and Eric Maskin received a Nobel Prize was  for this economic theory in 2007.

Mechanism Design is a brilliant economic theory. If the theory was applied to the healthcare system it could solve much the system’s dysfunction.

When I wrote about Mechanism Design I felt that few people understood it.  

What is it?  Mechanism Design is the art and science of designing rules of a game to achieve a specific outcome, even though each participant may have a separate vested self-interest.

The design of the game is to align all the stakeholders’ vested self-interests.  

 Each stakeholder has an incentive to behave as the game designer intends. The game can then implement the desired outcome.

 The strength of such a result depends on the solution concept used in the game.  

None of the stakeholders’ vested interests are aligned in Obamacare except the vested self-interest of President Obama and his ideology.

The healthcare insurance industry thinks it has President Obama over a barrel.

Some of the hospital systems have figured out that they will be at the mercy of Obamacare.

 Physicians already feel they are at the mercy of President Obama’s ideology.

Medical device companies and pharmaceutical companies have figured out they are dead already. It is only a matter of time until they cannot move. They are working around the system to come back from the dead.  

None of the stakeholder’s vested interests are are aligned. This non-alignment will lead to destruction of the healthcare system.

Mechanism designers commonly try to achieve the following basic outcomes for stakeholders: truthfulness, individual rationality, budget balance, and social welfare.

 With those four outcomes for stakeholders in the healthcare system one could get close to aligning stakeholders incentives.

Lodi Hurwicz’ point is the way to get as close to the most efficient economic outcomes is to design mechanisms in which everyone does best for themselves.

He says this can be achieved by sharing information truthfully (Price Transparency). It is easy to understand that some people can do better than others by not sharing information or lying in the short term. It will not serve all the stakeholders’ vested self-interest in the long term.

If everyone’s incentives are aligned you have a much more efficient economic system.

The example given in the military is defense contracting. If you agree to pay on a cost plus basis you have created incentives for the contractor to be inefficient.  

If you do not you have incentives aligned and truthful information you create the incentive to be overcharged. Most people can do better by not sharing truthful information.

Many have observed that Obamacare has not been transparent or truthful.

If the rules of the game require truthful information you can get close to an efficient market driven solution.

The concept of Pareto efficiency means no one can be made better off without someone becoming worse off.  

Hurwicz observed, as had others, that the dispersion of information was at the heart of the failure of a planned economy.

He observed that the free market economy can get us closer than central planning to incentive compatibility because in the end the consumer can drive the discovery of truthful information

A free market economy is by no means immune to the Pareto efficiency concept.

However, the free market mechanism was far less afflicted than central planning bureaucracy. A consumer driven system serves to force truthfulness.

Empowering consumers is the key to an efficient system. Customers determine success of an enterprise by creating demand. In a transparent environment they can get closer to incentive efficiency. They create the rules of the game for compatible incentive.

How does Mechanism Design relate to the Repairing The Healthcare System?

The rules of the games can align all the stakeholders’ incentives without one stakeholder taking advantage of another.

In our healthcare system everyone is pursuing his vested interest in a game that has rules that do not lead to “incentive compatibility.”

Some politicians think central planning will straighten out the rules. Historically, central planning has not worked. These Nobel Prize winners in economics have proven this fact.

A  consumer driven healthcare system using the ideal medical saving account. Will be a good start in achieving alignment of all the stakeholders.

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

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President Obama Doesn’t Listen

Stanley Feld M.D.,FACP,MACE

President Obama does not listen to the thoughts of the people who elected him. The middle class and independent voters under great economic distress and are frightened.

They are not better off than when President Obama took office.

They have no confidence in President Obama’s promise or desire to help them even though he continues to say he is out to protect the welfare of the middle class.

He claims to be for income equality, yet income inequality has increased in the last six years.

The people do not trust President Obama to make good decisions for them.

The people are scared stiff about the Ebola virus. They do not believe his explanations for letting people into this country from countries that have the Ebola epidemic are logical.

 

Why would he take the chance of letting more cases into the country? It is completely illogical to me.

People have felt the hysteria spreading throughout the nation because of one case. They are feeling the economic effects of so many people quarantined and held in isolation for 21 days. They see economic activity slowing down while they are experiencing a weak recovery after six years. Shopping malls are disserted.

The more he does the less the people trust him. The appointment of a public relations person as the Ebola czar is a mind blower to most people.

The Ebola czar knows nothing about medicine, or transmission of viral disease or human illness.

The Ebola czar knows everything about spinning disinformation.

This is not a good formula for increasing confidence and trust in President Obama’s ability to handle this crisis.

The people are noticing and reacting to crisis after crisis and scandal after scandal. President Obama calling an obvious scandal a phony scandal makes things worse for his being able to convince the voters that he knows what he is doing.

President Obama does not listen to the people who got him into office.

Is his agenda to ignore the people, the constitution and the law in order to basically transform this country?

Last January he said Obamacare would not be an issue in the midterm elections. He keeps on misleading the public about Obamacare.

 He and his henchman keep saying Obamacare is working. Obamacare is a success. The evidence that it is not working is abundant. The people who voted for him are feeling its failure.

All these people are feeling the pain of President Obama’s policies. They also recognize that their wishes are being ignored.  

People do not know what they need.  Voters now know President Obama is ignoring them.

Yet he and Michelle have the audacity to travel around the country telling people “to vote for Democrats for congress to give Barack a chance to finish his work.”

A series of articles have appeared that express voters’s concerns about Obamacare’s failures.  

Radius Global Market Research (Radius GMR did a survey that showed two-thirds of those insured via Obamacare will change healthcare plans in 2015.

 “The survey stimulated competition among healthcare insurance companies to capture this two-thirds of Americans that are dissatisfied with their healthcare insurance policies for 2014.”

The two thirds of the people surveyed wanted,

  • Lower premium and deductible costs
  • Improved access to doctors
  • Improved quality of care by doctors and hospital systems
  • More than half of respondents expect their healthcare premiums to increase
  • More than one-third of those who switched primary doctors after joining ACA plans did so because their doctor was not on the new plan.
  • Twenty five percent of households are visiting their doctor less frequently and/or experiencing longer office wait times.
  • Only 44% of Americans feel they are adequately about the benefits provided by Obamacare.

At present, eighty percent of people who get healthcare insurance through Obamacare receive government subsidies. These subsidies help with the healthcare insurance premiums for people earning up to $50,000 a year.

However, those people are responsible for the deductible under Obamacare. The least expensive coverage is for a bronze plan.  

The average deductible from the Health Insurance Exchange is $5,081 for an individual and $10,386 for a family, according to HealthPocket.

A Silver plan (the next higher plan) had average deductibles of $2,907 for an individual and $6,078 for a family. The initial premiums are higher.

An average family making less than $50,000 cannot afford either deductible. A family making more that $50,000 per year without subsidy cannot afford the premium or the deductible.

People having a pre-existing illness will eat into the deductible that they cannot afford. Therefore they will avoid medical care.

The impact of the deductible is a surprise to people with preexisting illness. They do not have coverage until the deductible is met.

This creates stress on these individuals. It also represents a form of deception for these people. They thought they had good insurance coverage. President Obama promised them good healthcare coverage. He lied to them. They will remember the lie at the voting booth.

Insurers must cover certain preventive services, like immunizations, cholesterol checks and screening for breast and colon cancer, at no cost to the consumer if the provider is in their network.

 But for other services and items, like prescription drugs, marketplace customers often have to meet their deductible before insurance starts to help.”

Physicians have been deceived as well.

Forty-six percent of doctors give President Obama's healthcare law a "D" or an "F,according to a new survey from the Physicians Foundation. In contrast, just 25 percent of those surveyed gave the law an "A" or a "B."

A number of doctors complained about the vast amount of bureaucracy that has been added to the medical profession.

"Get government OUT of healthcare," one doctor wrote.

Another physician wrote in the survey

"The system is broken and I am out of here as soon as I can. I am tired of being used, abused and lied to. Has anyone here woken up to the fact that we are always the last ones to be considered in the equation of change?"

It is clear the primary stakeholders in the healthcare system (patients and physicians) feel deceived by President Obama.

I do not think they are going to let him finish his work. They will stop him at the voting booth in November.

It will be difficult for the country to survive another two years of Harry Reid’s obstruction if the Democrats hold the senate.

Obamacare remains a big issue among many people despite President Obama’s promise that everyone will like Obamacare by the November election.

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

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Caving In

Stanley Feld M.D.,FACP,MACE

As time goes by the implementation of Obamacare (ACA) becomes more bizarre.

The start of the 2015 enrollment period in Obamacare’s health insurance exchange program was delayed from October 1, 2014 until November 15, 2014.

The reason for the delay is obvious. The Obama administration fears another disastrous enrollment rollout just before the midterm elections.

President Obama is protectingDemocratic candidates who voted for Obamacare from the political fallout.

The enrollment period is supposed to end December 31, 2014 in order for insurance coverage to start January 1, 2015.

This enrollment period is very short. The Thanksgiving and Christmas holidays will make it even shorter.

President Obama will probably delay the end of the enrollment period once again by executive order.

The Obama administration must also deal with people who lied about their enrollment qualification. Hundreds of thousands could not show proof of income or eligibility for government subsidies for their insurance for 2014.

The government has not published any data about the number of people who have been disqualified for providing false information.

These people owe the government money. They cannot afford to pay the amount owed. Is the government going to let these underpayments disappear?

The Obama administration also announced that anyone who was enrolled last year does not have to do anything. They will be enrolled automatically in 2015.

At what price?  Premiums will be higher than last year. Enrollees might not be able to pay the higher or unsubsidized premiums.

Insurance premiums in the health insurance exchanges are going to increase at least 10% in 2015 despite the Obama administrations guarantee, through its reinsurance plan, that it will cover any of the healthcare insurance industry’s claimed losses.

Problems were compounded this week by a CMS announcement that they will not publish the health insurance exchange premiums until November 15,2014.

Medicare premiums are also going to increase dramatically in 2015. Many seniors will not be able to afford to pay them. Senior might not notice the increase until they receive their first social security check.

On January 1, 2015 Obamacare’s “employer shared responsibility reporting requirement”  goes into effect.

“Starting in 2015, applicable large employers will need to identify whether eligible employees have been offered employer-sponsored health care coverage and whether that coverage meets the standard for minimum essential coverage, among other requirements.

Employers will also be required to track employee eligibility for health care coverage, including number of hours worked, etc.”

There is no way employers can track this information manually anymore. They will have to hire a benefits manager to keep track of something that is so fluid as to will be impossible to keep track of.

Employers’ overhead will rise. The large employers will decide it is cheaper to pay the Obamacare’s penalty and force their employees to buy insurance on the federal health insurance exchanges.

How can all these people buy insurance wisely between November 15, 2014 and December 31, 2014 to be insured in 2015.

This will create havoc in the healthcare system.

Creating havoc is the goal of President Obama’s plan to transform America. It follows Saul Alinsky’s game plan precisely. It will lead to population fear. Population fear will lead to a government controlled single payer healthcare system.

The public is presently experiencing a great deal of fear with the potential for an Ebola epidemic. The resulting hospitalizations and deaths that might occur from an epidemic will intensify this fear.

This CDC and the Obama administration keep giving us illogical reason for why they refuse to stop flights from West Africa to the U.S.  

The airport screenings’ protocols are illogical. The training protocols have been unsuccessful.

Havoc will intensify if the United States experiences an influenza outbreak this winter. People will not know whether they have the flu or Ebola. People will overrun the nation’s hospital ERs.

Public and private health insurance policies might not cover the care needed to diagnose and treat these patients.

People will be put in isolation in the hospitals. The patient’s contacts will have to be quarantined. The economy will come to a standstill.

The only option remaining is for the people to beg the government to take over the healthcare system.

I do not know if President Obama and his administration are brilliant or incompetent.

I suspect he is brilliant.

 In either case his goal of socializing medicine will be achieved

Are President Obama and his administration competent enough to control and run the healthcare system?

What is your guess?

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

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Fantasy vs. Facts

Stanley Feld M.D.,FACP,MACE

President Obama is continues to mock the critics of Obamacare who predict failure even as Obamacare is obviously failing.

He knows the media is the message even if his message has nothing to do with the facts.

 

President Obam's first victory lap.

 There had been three failures at the time he declared Obamacare a success this month.

1. The Obama administration announced that accountable care organizations (ACOs) in the Pioneer ACO model and Medicare Shared Savings Program (MSSP) have generated more than $372 million in total program savings for Medicare ACOs over the program’s two-year span.

The details of the Pioneer ACO models’ savings are difficult to follow.

  • An estimated total model savings of over $96 million and at the same time qualified for shared savings payments of $68 million
  • Eleven Pioneer ACOs earned shared savings, 3 generated shared losses, and 3 elected to defer reconciliation until after the completion of performance year three.
  • The organizations showed improvements in 28 of the 33 quality measures and experienced average improvements of 14.8 percent across all quality measures.
  • The mean quality score among Pioneer ACOs increased by 19 percent, from 71.8 percent in 2012 to 85.2 percent in 2013.

 

Can anyone make any sense out of this word salad?

One week later three of the 22 remaining Pioneer ACOs dropped out of the program. The program originally had 32 members. 

The Franciscan Alliance, Genesys PHO and Renaissance Health Network have exited the Pioneer ACO program, which is now in its third year.

Only 19 of the original 32 ACOs remain.

Sharp Healthcare, a San Diego-based health system, dropped out August 2014, saying that the ACO model was “financially detrimental.”

The Mayo Clinic and Cleveland Clinic were invited to be in the Pioneer ACO program but rejected the offer. It was clear to them that ACO’s meant taking on too much uncontrollable financial risk.

The ACOs were supposed to deliver a higher quality of care through their integrated hospital systems. The hospital system would also experience greater profits.

At the onset of the program some hospital systems and integrated medical practices recognized they would lose money and possibly be penalized.

The thirteen integrated systems that quit the Pioneer ACO model recognized their losses after they started the program.

I predicted ACOs would fail and provided detailed reasons. I predicted that ACOs would fail because of the financial risks to the ACO. The job of risk is an insurance issue. A healthcare provider cannot control the confounding variables influencing risk.

“Genesys PHO received a $2.5 million penalty in the program's first year and a $1.9 million penalty in the program's second year (Evans, Modern Healthcare, 9/25; Leventhal/Hagland, Healthcare Informatics, 9/25; Beck, Wall Street Journal, 9/25).”

One could conclude that Genesys’ ACO was becoming an improved integrated better because it experienced a smaller loss the second year. It was not Genesys’ conclusion. It withdrew from the program.

2. Last week President Obama predicted that enrollment in Obamacare increase this year. The web site is fixed and enrollment will be easier.

At the same time at least 300,000 people in last years group of enrollees lost their subsidies or coverage because they did not offer proof of their eligibility by September 30th.

There has been little media coverage of this event. This is not the definition of success.

3. In addition, the insurance industry announced that thousands will lose health insurance their current insurance policy with their employer by the end of 2014.

They will have to apply for which will probably be more expensive through the health insurance exchanges. Insurers are cancelling the private healthcare insurance policies because they no longer make business sense.

Of course, it makes no business sense when the insurance company can make more money from the federal health insurance exchange plans. The Obama administration is guaranteeing the healthcare insurance company’s profit and eliminating its risks.

All this appeared at the time President Obama called Obamacare a success and mocked his critics who predicted failure.

The media is the message. If President Obama can manipulate the media enough he can help the Democrats maintain a majority in the Senate with two more years of Harry Reid control.

I do not think the American public is going to fall for President Obama’s disinformation campaign once again.

I hope not.

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



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A Bureaucratic Thinking Disorder

Stanley Feld M.D.,FACP,MACE

The Hospital Readmissions Reductions Program (HRRP) is an attempt to decrease healthcare costs by curbing hospital readmissions rates. The program was launched in October 2012.

Hospital reimbursement by Medicare could decreased the following year by 1-3% because of hospital readmission   

It is another alphabet soup program that was not well thought out. It cannot work as envisioned because of the many unintended consequences.

Hospital readmissions are very costly. If patients are readmitted within 30 days after discharge the assumption is patients were not treated effectively as an inpatient so that they could stay out of the hospital.  

Therefore hospitals should be penalized until their treatment improves.

There are other reasons for patient readmissions within thirty days of discharge.

  • Patients might be too sick to be completely healed at discharge from the hospital. If a patient remains in the hospital too long for his diagnosis the hospital is also penalized.
  • Patients did not pay attention to the outpatient treatment regime they were given.
  • Patients did not take the medication they were prescribed.
  • Patients were too depressed from their illness to take the medication and comply with follow-up treatment.
  • Patients were not smart enough to understand the instructions given at discharge.

The measurement of all these metrics would be very complicated even though I think patient adherence to treatment regime is the most significant cause of readmission.

The sicker patients are the more likely adherence to outpatient treatment  is a problem.

The Obama administration chose the easiest measurement to make to this complex problem. CMS would withhold 1% of reimbursements in 2012 and 2% in 2013 to hospitals that have too many patient readmissions within 30 days of discharge for three conditions: heart attack, heart failure and pneumonia.

This is foolish thinking.

One cannot measure a outcome using one variable when you have so many confounding variables that are not evaluated.

The results will also yield unintended consequences. One such consequence is the increase in outpatient observational admissions for 48-72 hours.

Medicare will not cover the outpatient observation admission.

In May 2014 I wrote “Seniors Should Be Madder Than Hell About Obamacare And Not Take It Anymore.”

 “It is all about money. It is about the government spending less, the hospital collecting more and the patients getting stuck with the bill.

Government officials realize that Medicare costs are unsustainable. CMS creates rules and regulations to expose Medicare to less liability.

Unfortunately the unintended consequence is that CMS exposes Medicare patients to more liability in the process.”

Once more President Obama lied to seniors.

“People are shocked when they receive the bill. Nobody is required to tell them they’re outpatients.”  

Those patients who have been outpatient observation admissions do not qualify for the rehabilitation benefits.

Patients can be responsible for many thousands of dollars for the first 20 days of rehab (nursing home) services.

 “I just found myself in the middle of a medical situation that made it very clear that "the affordable care act" is neither affordable, nor do they care.” 

In 2014 CMS has increased the maximum fine to 3% and added chronic lung problems and elective hip and knee surgery to the list of conditions.

Hospitals are not taking any chances. They are putting everyone they can on outpatient observation status.

Hospitals are also having problems collecting these non-Medicare covered bills from seniors.

Most seniors simply cannot afford to pay and the stress created is not good for their medical condition either which could result in re-hospitalization.

Seniors are increasingly distrusting the government and President Obama about Medicare changes.

President Obama promised them that Obamacare would not affect Medicare or harm one single senior.

Despite hospitals gaming the system with outpatient observational admissions 2,610 hospitals are facing readmission penalties in 2015.

The 2015 fines and penalties affected about three-quarters of the hospitals subject to the programs. The number of hospitals receiving penalties has increased each year from 2,217 in 2013, 2,225 in 2014 to 2,610 in 2015.

CMS also exempted 1800 hospitals from these penalties.

As more conditions are added more hospitals will be receiving penalties. Hospitals will adjust or go bankrupt. The result will be increased cost, a shortage of hospital beds and a weakened and less effective healthcare system.

Many of these readmissions are not the hospitals’ fault. They are the patients’ and their diseases fault.

These policies are just a fraction of the policies that are creating chaos and havoc in America’s healthcare system. They will lead to the demise of, not the improvement in, a cost effect healthcare system.

President Obama’s policy makers have a bureaucratic thinking disorder.

Part of the reason for this disorder is they do not understand problems in the healthcare systems. Their policies are also getting the healthcare system further and further away from creating a cost effective solution to the healthcare system’s problems.

A market driven system along with a consumer driven system can drive down costs down and create happiness for all the stakeholders involved in the healthcare system except the healthcare insurance industry.

I have presented the steps necessary in this slide presentation entitled The Ideal Future State of the Healthcare system.

Obamacare is forcing the healthcare system to turn into not out of the skid.

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

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