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How To Neutralize The Healthcare Insurance Industry’s Attack. Part 1

May 27, 2009
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Mistrust
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Stanley Feld M.D.,FACP,MACE

Yesterday Blue Cross and Blue Shield of North Carolina started rolling out the healthcare insurance industry’s attack on President Obama’s National Health Insurance Exchange. The 1993 Harry and Louise attack campaign will not work in 2009. Consumers do not trust the healthcare insurance industry to look after their needs. President Obama is playing off this mistrust and counter attacking. He sent an email to 20 million consumers asking them to join his call. He wants us ask congress to pass real healthcare reform in 2009. He asked us to join and donate money. After we join his cause we could then tell our story about the dysfunction in the healthcare system. He said your voice will make a difference. He says nothing in specific terms about how he will Repair the Healthcare System.

“Stanley –

You will note every email is personalized.


“The chance to finally reform our nation’s health care system is here. While Congress moves rapidly to produce a detailed plan, I have made it clear that real reform must uphold three core principles — it must reduce costs, guarantee choice, and ensure quality care for every American.”

Healthcare insurance premiums are constantly increasing while coverage is decreasing. Most healthcare insurance policies do not have a choice of physicians (physician networks). Quality healthcare (undefined) is not available for every American (universal healthcare). The healthcare insurance industry’s control of the healthcare system is responsible for most of these defects.

“As we know, challenging the status quo will not be easy. Its defenders will claim our goals are too big, that we should once again settle for half measures and empty talk. Left unanswered, these voices of doubt might yet again derail the comprehensive reform we so badly need. That’s where you come in.”

President Obama invites us to fight those who would derail the comprehensive reform we so badly need. He does not define the reform (Hillary Clinton’s 1993 reform?). He does not describe the route to reform. It sounds good is meaningless.

When our opponents spread fear and confusion about the changes we seek, your support for these core principles will show clarity and resolve. When the lobbyists for the status quo tell Congress to hold back, your personal story will give them the courage to press forward.

President Obama’s message is clear. The call to action is to neutralize the healthcare insurance industry’s attack.

Join my call: Ask Congress to pass real health care reform in 2009.

“After adding your name, please consider sharing your personal story about the importance of health care reform in your life and the lives of those you love.”
“I will be personally reviewing many of these signatures and stories. If you speak up now, your voice will make a difference.”


http://my.barackobama.com/HealthCareOrganizing

When I tried to tell my story there was only one place to tell my story to President Obama. The space was to donate and join the call to action. He promises to personally review my story yet he has not listened to my call for a system of patient responsibility or patient reward. He has not listened to the plea for major tort reform. He has not listened to the need for a free electronic medical record in the cloud paid for by physicians by the click. President Obama does not have a clear the way to achieve his goals. He is going to get a bill passed that is worse than the Massachusetts plan.

In our sound bite society one, he wins using the new media. The healthcare insurance industry does not get it.

http://my.barackobama.com/HealthCareOrganizing

“Last November, the American people sent Washington a clear mandate for change. But when the polls close, the true work of citizenship begins. That’s what Organizing for America is all about. Now, in these crucial moments, your voice once again has extraordinary power. I’m counting on you to use it.”

Thank you,
President Barack Obama

clip_image001

President Obama followed up with another email call to action. He is organizing People Power, one block at a time, one neighborhood at a time and one city at a time. His costs are minimal.

President Obama, using the new media, has the healthcare insurance industry on its heels. He used the old media to declare that the healthcare insurance industry made a commitment to reduce healthcare costs by 2 trillion dollars in the next 10 years. His sound bite is “ you’ve made a commitment; we expect you to keep it.” Now the healthcare insurance industry has backed down. Implied is how can it be trusted?

Patient power and the new media will not let this happen. “When our opponents spread fear and confusion about the changes we seek, your support for these core principles will show clarity and resolve.”

“On June 6th, in thousands of homes across the country, we’ll gather to launch our grassroots campaign for health care. We’ll watch a special message from the President. We’ll build the teams and draw up the plans for winning health care reform the same way we won the election: Building support one block, one neighbor, one conversation at a time. And we’ll put those plans into action.” “Please sign up today to host or attend a kickoff near you.”
http://my.barackobama.com/HCkickoff

This time the healthcare insurance industry must do better than Harry and Louise.

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

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Dr. Feld. Why Only Pick On The Healthcare Insurance Industry?: Part 2

May 28, 2008
inMedicine: Healthcare System, Summary Blogs
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Stanley Feld M.D.,FACP,MACE

This post continues my reply to Matt Modleski’s comment. If one views the dysfunction in the healthcare system as a gradually evolving process is it clear that all the stakeholders have contributed to its dysfunction. As each stakeholder adjusted to the changes, the healthcare system became more dysfunctional.

“ The number of scans, tests and procedures that are done each year unnecessarily because the facilities that are built (many Physician owned) are put to use is also a big part of the problem. This has been documented in study after study (some of them conducted by physicians).”

In the studies Matt refers to patients going to these testing clinics could be getting better care than the non physician owned clinics? Remember quality of care has not been clearly defined by policy makers or the healthcare insurance industry.

Physicians in academic medicine have not precisely defined quality medical care. However, everyone talks about it. I do not believe you can assume physicians are doing the test simply to make a profit.

I do think there are a lot of unnecessary procedures done in many hospital outpatient facilities and physician owned facilities. Many of the procedures are done because physicians are forced to practice defensive medicine. There are many law suits in the pipeline presently because of missed diagnosis.

Patients with vague symptoms at the time of physician visits need to be tested to detect possible disease. Almost everyone experiencing automobile accidents with the slightest head trauma automatically undergoes a CAT scan to rule out a cerebral bleed. President Reagan did not get an automatic MRI or CAT scan when he had his subdural hematoma.

Diagnoses that would not otherwise be made are made early through testing using new technology. Clinical judgment has lost its place in the defense of malpractice suits. The costs of using new technologies has an enormous impact on the cost of medical care. Yet no one has precisely defined quality medical care . Nonetheless, physicians have been accused of over testing when they control their intellectual property.

A significant number of malpractice suits would disappear if the government changed some liability rules. The rule change would make malpractice claims less attractive to malpractice attorneys. Malpractice attorneys receive one third to one half of any settlement. A change in the contingency rule would decrease lawyers’ incentives and frivolous malpractice claims. The government has to put limits on damages for certain claims and change the adjudication process. Plaintiffs attorneys’ have resisted these changes.

The state of Texas has made these changes. there has been a marked reduction in malpractice claims as well as malpractice premiums.

The reasons for the overuse of the healthcare system have not been publicized in the media or by organized medicine. Overuse of the healthcare system makes a sensational story for the media and it is easy to blame physicians. I am not interested in defending physicians. However, one should give physicians the benefit of the doubt since you trust them to deliver the best medical care possible. If you do not like what they suggest pick another physician. I would not rely on a healthcare insurance company’s employee looking at the computer screen to make a medical treatment judgment about my health.

There are also lots of unnecessary tests done because of increasing patient demand. Patients learn from the media and online what needs to be tested. Cholesterol testing and bone density testing are increasing. When the compliance rate is analyzed only 30%- 50% of people who should be tested are tested. When they were tested only 30-50% treated stayed on the medication after 1 year. Think about it. If everyone was tested and treated appropriately the cost of testing and treatment would increase while the cost of the complications of these chronic diseases would fall precipitously. The greatest cost is the cost of treating the complications of chronic diseases.

Matt complains about physicians owning the facilities to test patients. Why should physicians give their intellectual property away to hospitals when they can do the test more conveniently and cheaper in their office?

Physicians detect, treat and teach patients how to become professor of their chronic disease so patients can be knowledgeable in managing their disease. This is the definition of cognitive therapy. Cognitive therapy is not reward by the government or the healthcare insurance industry. Isn’t this a perverse circumstance since 90% of the healthcare dollar is spent of the complications of chronic disease?

“The system is broken and commoditized reimbursement, regardless of the quality of care, is a key component, but so is the overtreatment of patients by financially driven providers. Every now and then you hint as much, but you would be helping everyone by giving it equal airtime with your perspective on the woes created by the insurance companies.

Physicians’ intellectual property has been discredited and devalued. Physicians are intelligent people who have accepted the fact that their credibility is challenged. They are trying to figure out way to make a living taking caring for patients in the best possible way. They also want to figure out how to protect their intellectual property. They try not to react to a healthcare system that has challenged their skills and integrity.

Patients are at fault by believing medical care is a right. Obesity is an epidemic and generates chronic disease and the complication of chronic disease. The adherence to hypertension therapy is less than 50% leading to strokes and myocardial infarction. The adherence to diabetes treatment is less than 40%. Shouldn’t society be putting energy and money into solving this problem?

The question is where did the dysfunctional behavior start? It started when the healthcare insurance industry started gaming and controlling the healthcare system for profit after the government instituted price controls.

My solution is my ideal medical savings account putting the patient in control under the appropriate set of rules. The consumer is the only stakeholder that can force the government to make the correct rules!

"Keep doing what you do, I read your stuff every day".

"Cheers,

Matt"

Matt, thanks for your comment.

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

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Dr. Feld, Why Only Pick On The Healthcare Insurance Industry?: Part 1

May 25, 2008
inMedicine: Healthcare System, Summary Blogs
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Stanley Feld M.D.,FACP,MACE

Matt Modleski of Stovall Grainger Inc a company that “ maximizes people's potential through the application of strategy in sales, leadership and life" wrote the following comment.

"Dear Dr. Feld,

I believe many of your points are right on the mark, but your credibility is undermined when you speak so infrequently about the “supply side” of healthcare delivery as if the insurance companies were always wrong."

I will divide my comments into two articles. I assume Matt means the patients, physicians and hospitals on the supply side. You may recall that I have blamed all of the stakeholders for the dysfunction of the healthcare system. The physicians, hospitals, the government, the healthcare insurance industry, pharmaceutical companies, malpractice attorneys and patients are all at fault. The questions are who started this dysfunction?, who made it worse?, and who can fix it?

The answers to the questions are the government started it; the healthcare insurance industry made it worse. and continues to make it worse. The only stakeholder that can fix it are consumers.

The government initiated the dysfunction of the healthcare system in the early 1980’s. It imposed price controls to combat rising costs. The rising costs were the result of increased technological advances leading to procedure based diagnoses. Some hospitals, physicians and patients took advantage of this diagnostic procedure based shift in medical care.

Historically, price controls never work. They usually create stakeholder incentives to develop innovative methods to get around the price controls. This leads to increased dysfunction and greater costs to the system.

The dynamics between hospitals and the healthcare insurance industry became perverse. The more spent for medical care the more the healthcare insurance industry could charge employers. The result was increased hospital and healthcare insurance industry profit at the expense of the employers and patients.

Employers started providing healthcare insurance to their employees after WWII as an employment benefit. This led to post war healthcare price inflation. In 1965, Medicare healthcare coverage for all seniors over 65 increased healthcare price inflation.

When the government decreased Medicare reimbursement in the early 1980’s increased prices (price shifting) for employer provided healthcare was rampant. Price shifting led to the healthcare insurance industry increasing healthcare premiums to employers.

In the late 1980’s employers said they could not afford to pay healthcare premiums costing 18% of their gross revenue. The insurance industry asked what they could afford. The answer was 12%. The insurance industry said no problem. Managed care and all of the managed care problems were born.

Managed care is managing costs. It is a form of price controls. Managed care introduced another form of stress into the healthcare system. Patients experienced limitations on access to care. Physicians experienced increased paper work, bureaucratic interaction with a defective care approval system, and decreasing reimbursement. Physicians’ frustration increased as non medical related time and overhead increased and reimbursement decreased. The managed care system interfered with effective care. It also led to increase mistrust for the administrators of the healthcare system.

Hospitals experienced the same pressures. Hospital administrator figured out how to creatively adjust to the new system.

The healthcare insurance industry changed some rules in order to manage costs. It started paying for out-patient procedures rather than paying exclusively for in-patient procedures and hospital bed days. The bed day cost at that time was $100-$200 a day (as opposed to $1,000 to $10,000 today). In-patient procedures were two to three times the cost of outpatient procedures done in a physician’s office. Managed care companies wanted to take advantage of this savings in order to manage costs.

In the early 1980’s with surgical and technological advances, the legal profession saw an economic opportunity to make quick money. There were no limits on liability. Malpractice suits and malpractice insurance premiums escalated for both hospitals and physicians. These costs were passed on to the consumer. Malpractice suits also led to an increase the practice of defensive medicine. CAT scans, MRI’s and other expensive tests were ordered by physicians to protect themselves from malpractice suits. The cost of medical care further increased.

Hospitals captured most of this increase in revenue production at an inflated price. Some physicians were unhappy they were giving away their intellectual property and not sharing in the revenue production. Additionally, they could do most procedures at half the hospital charges thereby saving money for their patients and the healthcare system. They started opening their own clinics, and testing facilities in order to capture the revenue from the new technology. The hospitals and the giant national laboratories were upset because their revenue production was threatened. They accused physicians of over testing in a well executed public relation campaign. Some physicians did abuse the system. However, the percentage of physicians’ abuse was small. I believe the reality of the situation is physicians did the procedures and testing more carefully and more conveniently for patients than hospitals or the national testing laboratories.

Physicians’ use of increased testing became necessary in order to protect themselves from malpractice suits. Physicians’ testing facilities charged substantially less than the hospital facilities. The healthcare insurance industry encouraged physician owned clinics because it was able to save money. The healthcare insurance industry then abruptly cut them off.

The Stark Laws slowed the proliferation of these facilities but only as applied to Medicare. Pete Stark created a restriction that most figured out how to get around. The price of procedures increased. The dysfunction in the healthcare system increase by Pete Starks own admission of the failure of his legislation

Matt, you might have thought the answer to your comment was simple and physicians are at fault. Unfortunately, the sound bite is usually not the answer. The stakeholder that has intensified the dysfunction is the healthcare insurance industry.

I will continue to answer your comment in Dr. Feld. Why Only Pick On The Healthcare Insurance Industry?: Part 2.

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

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The Health Insurance Mafia

May 18, 2008
inHealthcare Insurance Industry, Medicine: Healthcare System
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Stanley Feld M.D.,FACP,MACE

Jonathan Kellerman is an M.D.. He is telling it like it is even though no one asked. His story is clear. I believe many physicians understand the problems in the healthcare system more clearly than most of our politicians. I also believe it is our obligation to describe to consumers the real problems and dismiss political babble.

However, when physicians are in positions that represent many physicians they themselves become politicians and abandon the purpose of the medical care system which is to put patient care first. For some reason physicians do not articulate the problems of every day medical practice.

“Most discussions about the rising cost of health care emphasize the need to get more people insured. The assumption seems to be that insurance – rather than the service delivered by doctor to patient – is the important commodity.”

The healthcare insurance industry has kept the discussion focused on insurance and not on the patient physician relationships and services delivered by physicians to their patients, namely cognitive services. It also does not focus on the patients adherence to the recommended treatment and the exploding obesity epidemic.

“You don’t need to be an economist to understand that any middleman interposed between seller and buyer raises the price of a given service or product. Some intermediaries justify this by providing benefits, such as salesmanship, advertising or transport. Others offer physical facilities, such as warehouses. A third group, organized crime, utilizes fear and intimidation to muscle its way into the provider-consumer chain, raking in hefty profits and bloating cost, without providing any benefit at all.”

The healthcare insurance industry is the middleman that controls the healthcare system. The government through Medicare depends on the healthcare insurance industry to be the third party administrator for Medicare. The healthcare insurance industry sets the prices and the benefits using a unscientific social science called actuarial science.

“The health insurance model is closest to the parasitic relationship imposed by the Mafia and the like. Insurance companies provide nothing other than an ambiguous, shifty notion of “protection.“

In order to control the healthcare system the healthcare insurance industry has managed to control the process of authorized treatment and reimbursement.”

“ But even the Mafia doesn’t stick its nose into the process; once the monthly skim is set, Don Whoever stays out of the picture, but for occasional “cost of doing business” increases. When insurance companies insinuate themselves into the system, their first step is figuring out how to increase the skim by harming the people they are allegedly protecting through reduced service.”

Insurance is all about betting against negative consequences; the insurance business model is unique in that profits depend upon goods and services not being provided. Using actuarial tables, insurers place their bets. However actuarial science is not an exact science. Therefore, to be safe a percentage is added to the potential pricing error guaranteeing an increase in profit.

“Health insurers have taken steps to avoid that level of surprise: Once they affix themselves to the host – in this case dual hosts, both doctor and patient – they systematically suck the lifeblood out of the supply chain with obstructive strategies. For that reason, the consequences of any insurance-based health-care model, be it privately run, or a government entitlement, are painfully easy to predict.”

Jonathan Kellerman nailed it. It is not about the patient, society’s health or the value of physicians’ intellectual property, it is about the healthcare insurance industry’s profit.

” There will be progressively draconian rationing using denial of authorization and steadily rising co-payments on the patient end; massive paperwork and other bureaucratic hurdles, and steadily diminishing fee-recovery on the doctor end.”

The result is obviously more profit for the healthcare insurance industry and more out of pocket expenses for patients.

In the olden days: “ The doctor had to look you in the eye – and didn’t need to share a rising chunk of his profits with an insurer – the cost was likely to be reasonable. The same went for hospitals: no $20 aspirins due to insurance-company delay tactics and other shenanigans. Few physicians became millionaires, but they lived comfortably, took responsibility for their own business model, and enjoyed their work more.”

The idea is to get the dollar out of the hands of the healthcare insurance industry and let the patient manage his own money and keep the money he does not spend in a trust.

Healthcare insurance must be converted to true insurance that is needed for expensive procedures.

Both physicians and patients need to be active in liberating themselves from the notion that insurance will pay. The healthcare insurance industry has figured out how to control the premiums and the reimbursement. They have now figured out how to neutralize the innovative concept of patient control of the healthcare dollars with Medical Savings Account and converted them to Health Savings Accounts with healthcare insurance industry control.

“Physicians and other providers need to liberate themselves from the Faustian bargain they’ve cut with the Mephistophelian suits whom now run their professional lives. Because many doctors are loath to talk about money, they allowed themselves to perpetuate the fantasy that “insurance is paying.” It isn’t. There is no free lunch and no free physical exam.”

One solution is for physicians and patients to abandon the traditional healthcare insurance grip.

Government (local,state or national) or employer associations (third party payers) set up their own healthcare insurance companies. They set rules in favor of the patient with the patient having control over their first six thousand dollars. The patient does not contribute the first 6,000 dollars. One of the third party payers contributes the insurance premium. Self employed people would contribute their own money with pre-tax dollars. If they could not afford the premium, they would be subsidized by the government. This is not an entitlement. This is pure insurance with motivation to save money.

I wonder how many politicians would be willing to past legislation to permit this to happen. It could easily be done on a state level. Consumer would then be able to control the system. We would be able to get rid of what Dr. Kellerman calls the Healthcare Insurance Mafia.

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

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Medicare Insurance: It is Not Cheap-Part 1

February 20, 2008
inMedicare
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Stanley Feld M.D.,FACP,MACE

The Democratic Presidential candidates have promised the country affordable healthcare insurance for all. With the structure of our present healthcare system it would be difficult to have effective universal healthcare for all.

The common impression is Medicare is excellent healthcare insurance coverage for the elderly. It is advertised as affordable healthcare insurance for everyone.

In reality Medicare is not affordable for all. Many contend providing affordable healthcare coverage for the elderly is the reason Medicare is expected to be bankrupt in the next ten years. Medicare is an entitlement program that is unaffordable for both government and many of its elderly recipients.

Advocates of single party payer universal healthcare system refer to Medicare as the ideal healthcare insurance model. One claim is Medicare is extremely efficient. Its overhead is only 2% of the insurance dollar. Private healthcare carriers’ administrative overhead consumes 20% of the healthcare dollar. Another publicized myth is in the last 30 days of life patients spend 50% of their total lifetime medical expenses.

Medicare outsources its administrative services to private insurers. On Medicare’s books it only spends 2% for administration. Private healthcare insurance carriers such as Aetna and Blue Cross are the administrator service providers for Medicare. The overhead of administrative services for Medicare is buried in the fees charged to Medicare.

The Medicare has stated that 90% of the healthcare dollar is spent on the complications of chronic disease and not the last 30 days of life.

What does Medicare healthcare insurance coverage cost a 65 year old husband and wife? Basic Medicare cost is $93.50 per month per person or $187 per couple per month and $2,244 per year. This insurance covers 80% of Medicare’s allowable fee.

If an allowable office visit fee is $100, Medicare will pay $80 and the patient will be responsible for the $20 co-pay. Medicare also pays 80% of allowable hospital fees after the $992 deductible is met by the patient. A $20,000 allowable hospitalization bill will cost the Medicare recipient $4999. The retail price on that hospitalization might be $40,000. Hospitals are committed to take the allowable fee as adequate reimbursement for services rendered. Many of you know it is very easy to incur a $40,000 hospital bill in a couple of hospital days.

Medicare has recently imposed an added assessment to the basic Medicare premium. It is called the Modified Adjusted Income Calculation. The IRS supplies Medicare with a senior’s previous year income tax returns. Capital gains, dividends, tax free dividends, and salaries are including in the Modified Adjusted Income calculation.

A married couple with a joint return and income from all sources are going to have an additional assessment of between $51.60 and $284 dollars per person per month depending on their Modified Adjusted Income calculation assessment. The assessment starts at $160,000 and ends at $410,000 per year. The husband and wife pay the assessment of between $25.80 and $142 per month or $619.12 to $3408 per year.

A widow with dividends, capital gains, an annuity and rental income of $164,000 per year is assessed and additional $103.30 per month or $1239.60 per year.

This assessment is paid with pre tax dollars. It gets deducted from the Social Security payment. If a person has earned income in addition to passive income the person is also paying additional tax on his Social Security check.

The deductible of 20% of the allowable fee and the initial $992.00 deductible for a hospital admission becomes expensive quickly.

In order for the Medicare recipient to have full coverage for the deductibles they have to buy Medigap insurance. There are seven Medigap insurance policies. The best and most complete is the Medigap Part F. Several private healthcare insurance sell this coverage. For persons under 70 years the cost of the policy is $140 dollars per person per month in after tax dollars. The effective cost per month is $200 per person or $400 per couple. The yearly after tax dollar cost is $4800 per year.

If you add Medicare Part D for prescription drug coverage, it adds another $24 per person or $34.28 dollars in after tax dollars per month per person or $822 dollars per couple per year. This cost does not consider the extra cost of the infamous doughnut hole.

The total premium for adequate Medicare insurance is $2244 plus $4800 plus $822 or $7866 per year. This calculation excludes the modified adjusted gross income. The modified adjusted income can add $619.20 to $3408 per couple per year to the premium. The MAGI creates a means adjusted premium. The maximum means adjusted premium is $11,274. per year per couple.

I believe in the concept of a maximum means adjusted premium for those who can afford to pay higher premiums.. However, I have two problems with the claim that Medicare is affordable insurance and universal. It order to be fully covered a Medicare couple would have to spend at least $7866 per year. Let us assume a couples’ only income is Social Security. They collect a maximum of $30,000 per year. It would be difficult to afford healthcare insurance of $7866 per year. It would be foolhardy not to have it. The couple would not qualify for a government subsidy.

The government, on the other hand, is subsidizing the insurance premium because the inefficiencies in the healthcare system. This is leading to a bankrupt system.

Visualize the premium necessary for an entitlement program for everyone. The government could not afford it unless services were severely curtailed. The only viable solution is to create a transparent, competitive market place for an informed consumer. It is essential that patients manage own healthcare dollar. If not, the government will be stuck with an entitlement for the benefit of the private healthcare insurance carrier with unaffordable coverage and an inefficient system.

We only have to look at the Massachusetts experience for confirmation. The cost of a high deductible ideal medical saving account with appropriate incentives for consumers would reduce the cost of healthcare.

It is time the Democratic Party stopped believing that universal healthcare with a single party payer would fix the healthcare system. It will simply generate shortages of physicians’ and hospital services’ while generating higher costs in an unaffordable system.

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

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Is Health Insurance A Racket?

March 4, 2007
inMedicine: Healthcare System
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Stanley Feld M.D.,FACP,MACE

Paul Krugman (PK) wrote an article entitled “Is The Health Insurance Business A Racket?” Yes, literally — or so say two New York hospitals, which have filed a racketeering lawsuit against UnitedHealth Group and several of its affiliates.
I don’t know how the case will turn out. The two hospitals accuse UnitedHealth of operating a “rogue business plan” designed to avoid paying clients’ medical bills. For example, the suit alleges that patients were falsely told that Flushing Hospital was “not a network provider” so UnitedHealth did not pay the full network rate.

UnitedHealth has already settled charges of misleading clients about providers’ status brought by New York’s attorney general: the company paid restitution to plan members, while attributing the problem to computer errors.

But whatever happens in court, the lawsuit illustrates perfectly the dysfunctional nature of our health insurance system, a system in which resources that could have been used to pay for medical care is instead wasted in a zero-sum struggle over who ends up with the bill.”(PK)
Mr Krugman has said exactly what I have been saying in “Repairing the Healthcare System”. I believe this behavior occurs regularly with UnitedHealth.

I do not believe the people who run the insurance companies are bad people. It is simply that they will do many things to maximize their profit while destroying their cash cow, the healthcare system. Obviously, it is very short sighted on their part and very bad for the delivery of medical care. It seems they have no interest in improving the delivery of medical care.

“It is a fact that insurers spend a lot of money looking for ways to reject insurance claims. And health care providers, in turn, spend billions on “denial management,” employing specialist firms — including Ingenix, a subsidiary of, yes, UnitedHealth — to fight the insurers.”(PK)

You have heard all this before. However, I think it is important to repeat the obvious so people remain aware of what is going being done by facilitator stakeholders in the healthcare system.
One could say this is happening in every industry in America. They would be correct.

We can name many other industries where the same things are occurring. I have pointed out similar behavior of TXU and the Dirty Coal Burning Plants in Texas. Both industries seem to have a total disregard for the health and welfare of the common good as they price their way out of the market in order to maximize profits to the detriment of their customer, the American people. At the same time they are weakening the valuable American Healthcare System’s infrastructure. If the insurance industry and hospital were far sighted, we would not be in a healthcare delivery. Wouldn’t it be better for everyone to have all 46.7 million uninsured Americans’ have healthcare insurance in an environment that is competitive and provides constructive incentives to make the healthcare system better? Presently we have destructive incentives that make healthcare more costly and unaffordable.

“So it’s an arms race between insurers, who deploy software and manpower trying to find claims they can reject, and doctors and hospitals, who deploy their own forces in an effort to outsmart or challenge the insurers. And the cost of this arms race ends up being borne by the public, in the form of higher health care prices and higher insurance premiums.” (PK)

This arms race did not start yesterday. It started in the 1980’s when a distorted Medicare system caused industry to adjust to the price controls of the government. Everyone tried to figure out how to maximize profits at the expense of the patients, the healthcare system and the entire population. One compensating adjustment led to another distortion. The system became more and more dysfunctional.

“Of course, rejecting claims is a clumsy way to deny coverage. The best way for an insurer to avoid paying medical bills is to avoid selling insurance to people who really need it. An insurance company can accomplish this in two ways, through marketing that targets the healthy, and through underwriting: rejecting the sick or charging them higher premiums.”(PK)

Thus, the distortions that has lead to 46.7 million uninsured and an insurance industry that is paying its CEOs 2-10 million dollars a year, while the successful hospital CEO’s are busy justifying their $1 million plus salaries. The tragedy widens as Family Practitioners are barely making a living and the specialty of Internal Medicine is on the brink of extinction. The drivers of the healthcare system, the patients and the physicians, are in pain, while the life blood is being sucked out of the healthcare system by the insurance industry and hospitals.

“Which brings us back to the racketeering lawsuit brought against UnitedHealth by the hospitals. UnitedHealth is America’s second-largest health insurer, has a reputation for playing even rougher than its competitors.”(PK)

Even Mr. Krugman knows about UnitedHealth and the $1.8 billion payout to its former CEO. Ask any physician not working for UnitedHealth. They will tell you how rough UnitedHealth plays.

“ But the larger problem isn’t the behavior of any individual company. It’s the ugly incentives provided by a system in which giving care is punished, while denying it is rewarded.”(PK)
The same way People Power got the attention of the entire Texas population in the TXU case and TXU stock started to crash, People Power is the only thing that is going to turn this perverse Healthcare System mess around. You out there are the people!

Shel Isreal co author of Naked Conversations: How Blogs are Changing the Way Businesses Talk with Customers They say “we live in a time when most people don’t trust big companies. wrote a comment on January 20,2007 “Thanks for being so gracious. I enjoyed the conversation that it spawned between by email. repairing the medical system (Healthcare System) in America is a lofty goal and about 98 percent of the American people see the need. The rest work for insurance companies.”

I believe our democratic system works. The internet and blogosphere are democratizing organs. As soon as a critical mass of people are aware of the etiology of the problems in the healthcare system the Healthcare System will be Repaired with the consumer driving the change, not the government, or the insurance industry.

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The Health Insurance Solution

October 12, 2006
inMedicine: Healthcare System
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Stanley Feld M.D.,FACP,MACE

The patients and their ability to be an effective free market consumers have to lead the way. I believe a system controlled by the government will not work. A Healthcare System has to be market-driven by consumers in order to work.

Presently, our healthcare system is any thing but consumer or market-driven. Price and access to care are totally controlled by facilitator stakeholders. Price is opaque. Despite calls for transparency change is very slow. The rate of change from price opacity to transparency will remain slow until State governments mandate price transparency. State agencies control licenses for hospitals, the insurance industry and physicians.

Presently, patients have no idea of the quality of the healthcare product they are purchasing. They also have no idea of the price until service is completed. Access to care and services are also restricted by the government and the insurance industry.

The various parts to the solutions to the insurance issue have to occur very close to one another on a time line in order to be effective. The two main repairs are price transparency and high deductible insurance policy.

A Healthcare System without price transparency and a high deductible option such as Health Savings Account represents a false hope and will fail.

The employer’s average healthcare cost for a family is twelve thousand dollars per year. Employers are providing medical insurance for the employee for $12,000 per year.

The Medical Saving Account plan would provide a six thousand dollar trust fund and a first dollar high deductible coverage plan for $6,000. The total $12,000 could be administered by the insurance industry. The plan could satisfy the insurance industry. It would not provide them with ownership of the first $6,000. However, it would save them spending the second $6,000 because patients would be motivated to be effective shoppers. The patients would retained some of the first $6,000 in their individual trust accounts by seeking cost-effective care and avoiding the complications of chronic disease.

The insurance industry is interested in primarily in two things. They want to control the first insurance dollar for investment. They are also interested in retaining the unspent insurance premium dollar. The original concept of health insurance was to provide an inexpensive job benefit to the employee and provide protection for the employee against the costly expenses generated by complications of chronic illness.

Presently the medical insurance industry wants to keep as much of the insurance premium as it can. It profits by the income generated from the money float of the insurance premiums and unspent premiums. It, therefore, makes the decisions on how the premium dollar is spent. The result is the restriction of access to care.

In my ideal formulation, patients would be motivated not to waste their insurance dollar. The insurance industry would still negotiate fees with hospitals, physicians and other healthcare providers. These fees would be available and transparent to the patient. Patients would make their own decisions on medical care spending.

If the patients do not spend the $6,000 in their trust, that money would accumulate tax free and be available at retirement. The six thousand dollars per year would serve as an incentive for patients to be careful consumers in a price transparent environment.

If the patient had a chronic illness, we have seen average costs as high as $20,000 to $300,000 dollars a year for the treatment of complications of the disease. This is not only a burden to the patient but also to the insurance company. Hospitalizations like recurring congestive heart failure could be totally avoided with the development of systems of care that teach the patient self-management. The patient could then avoid slipping into congestive heart failure and avoid hospitalization. The cost of care would then decrease.

The average cost incurred by a patient with diabetes mellitus is presently $15,000 per year. Some patients with diabetes mellitus do not go to the doctor. Those patients cost nothing that year to the insurance company. The next year each could cost $200,000 to treat the complications of their diabetes mellitus. If a patient with diabetes mellitus could avoid complications with maintenance of the disease the cost should be $4,000 to $5,000 per year. If the patients trust fund owned the first $6,000, the patient might be reluctant to spend the money on preventive maintenance of the disease. However, the insurance company or their employer could easily credit $2,000 back to the trust account complications were avoided. The insurance company would then be able to keep the remaining $6000 of the insurance premium as pure profit. It also would have access to managing the cash in the trust account until the patients retirement.

The government can make this happen with legislations and regulations. It can be done on the state level because states regulate licensure of the insurance industry, hospitals, and physicians.

I will next discuss how this plan can be implemented for Medicare, Medicaid, the unemployed and the self-employed. By increasing the insurance pool the insurance industry could increase profit rather than face increase cost, increasing premiums and decreasing lives covered.

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What Should Be Done to Repair the Healthcare System?

March 4, 2020
inConsumer Driven Health Care, Medicine: Healthcare System
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What Should Be Done to Repair the Healthcare System?

Stanley Feld M.D.,FACP, MACE

On March 10, 2020, Obamacare will be ten years old. Obamacare has had many failures. Obamacare’s biggest failure is the resulting distortion of the healthcare delivery system. The distortion is the result of all the stakeholders adjusting to Obamacare’s new rules and regulations.

All of the stakeholders had to adjust the way they delivered or priced healthcare to their individual advantage.

Primary care physicians started moving toward the model of Concierge Medicine. In order to have a primary care physician, consumers must pay primary care physicians between $2,000.00 and $38,000.00 annually to be in their panel.  The movement toward Concierge Medicine is the result of the Obamacare regulations, the healthcare insurance company’s reimbursement cuts, and the increase in malpractice insurance premiums.

Primary care physicians found that in order to make a living and pay their increasing overhead, they must become Concierge Physicians. This is to the disadvantage of consumers since they must continue to buy healthcare insurance.

The insurance industry has adjusted to Obamacare’s regulations by lowering reimbursement to physicians and hospitals while raising premiums. Insurance companies and Medicare Advantage programs have restricted enrollees to only certain physicians in their network and restricted certain treatments and access to certain specialists and groups.

It all goes back to President Obama’s statement, “If you like your doctor you can keep your doctor. If you like your hospital you can keep your hospital.” To my disappointment the AMA accepted President Obama’s obvious lie in 2010.

As the the government and the insurance industry decreased reimbursement physicians have had to increase the number of patients they see in one day in order to make up for their decreased revenue.

Malpractice claims and malpractice payments for claims have increased in most parts of the country. This resulted from a lack of tort reform by congress and the Obama administration. Physicians then increased diagnostic testing in order to cover all possible illnesses.  The increase in testing led to an increase in healthcare cost.

Obamacare has also increased the cost of insurance by requiring payment for additional coverages. The first dollar insurance coverage after deductibles are met has resulted in the overuse of the healthcare system. The government and the insurance industry are trying to decrease the overuse of the system by increasing deductibles.

In fact, some Obamacare insurance plan deductibles are so high that insurance payment never kicks in. People who buy Obamacare insurance plans cannot afford the deductibles and do not use the insurance until they are so sick, they cannot avoid being hospitalized.

It is impossible to figure out how health insurance premiums increases are calculated by the private healthcare insurance sector or the government healthcare insurance sector. It is impossible to figure out how the multimillion-dollar salaries for insurance and hospital executives are calculated. These expenses are part of why insurance premiums are rising.

It is also impossible to determine how hospital systems price their care. The government also pays hospital systems a premium for outpatient hospital care in an outpatient setting. The fees are at least 20% higher than in a free-standing private practice office.  

Hospital systems are figuring out how to manipulate their reimbursement systems to have an advantage over their competitor.  In New York City, Columbia Presbyterian Hospital System has accumulated ownership of many hospitals inside the city and its suburbs. With that ownership, they have acquired many in-patient and out-patient hospital salaried physicians. The hospital system is now demanding increased payment from healthcare insurance companies and the government in order for patients to use their system. The hospital system has hired many of the physicians’ patients desire to see. Columbia Presbyterian has gained control of the reimbursement levels in those markets.

There is an encouraging trend that was started by Keith Smith M.D. in Oklahoma City. Dr. Smith started a cash-only outpatient surgical clinic several years ago. He charges less for procedures than a patient’s deductible from some insurance companies.

This gives us some insight into how much fat is in the healthcare system expenditures.  Dr. Smith and physicians working in his outpatient clinics are happier and are making more money than they were working for local high-cost hospital systems in town. The patients are happier because there are no hidden or surprise costs.

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Dr. Smith’s clinic is drawing patients from all over the United States. He has also inspired the formation of many similar clinics in the U.S.

This is not new. Specialists such as gastroenterologists have opened freestanding centers. They charge less for colonoscopy and endoscopy than the hospital systems. Radiology clinics have done this for many years. The hospital systems have, somehow, worked out payment for their higher costs with the insurance industry and the government.

Dermatology is a specialty that does not need a hospital system. Large physician-owned

dermatology clinics have opened. They charge less than the dominant local hospital system.  

Many of these large specialty centers have sold their clinics to venture capital firms.  

How the venture capital firms are going to leverage their investment is unclear to me.   

Emergency rooms all over the country are overcrowded because primary physicians cannot see all of the patients in their offices in a timely manner. Hospital system emergency rooms are inefficient and overpriced. The ER is an unpleasant experience for many patients.

Venture capital firms have opened free-standing Urgent Care and Emergent Care centers all over the country. (Doc-In The Box). Many of these centers are covered by nurses, nurse practitioners, and physician assistants. All physicians have to do is co-sign with the provider to get reimbursement by the government and the healthcare insurance industry.

This is not my idea of developing patient-physician relationships.    

If a patient has to be admitted to a hospital his primary care physician is not permitted take care of him in many hospital systems. Hospital systems have hired hospitalists to care for patients. A patient might see a different hospitalist each day of the admission.

What happened to the therapeutically valuable physician-patient relationship? This relationship is critical for curing much morbidity from chronic illness. 

 I have covered the Repair of the Healthcare System in great detail in the past.

 I have also covered the errors in the structure of Obamacare leading to the distortions in the delivery of healthcare and the increased costs of the healthcare system.

The stakeholders are physicians, patients, hospital systems, insurance companies, pharmaceutical companies, and the government.

All patients want is to get the best medical care when they get sick. The interest in disease prevention is slowing growing events though many millions of dollars have been spent on programs that could help prevent chronic disease.

All hospital systems, insurance companies, pharmaceutical companies are interested in are maximizing profits and minimizing expenses.

All physicians are interested in is delivering the best care possible.

Patients and physicians are the most important stakeholders in the system.

The government wants to spend the least amount of money possible to enable the best care at the lowest price.

There has been little attempt by congress, the bureaucracy or previous administrations to remedy the defects I have pointed out.

 I have not seen any attempt by Congress to lower the price by decreasing the bureaucratic impact on the price of healthcare. Nor have I seen the exposure of the clandestine deals hospital systems make with insurance companies or the government.

I have not seen any movement toward decreasing the malpractice crisis in America. Tort reform has been vitally necessary for the last thirty years. It has been totally ignored by government officials.

These are some of the basic reforms necessary to start repairing the healthcare system. All our politicians do is kick the can down the road to the advantage of the secondary stakeholders and not the consumers.

These are some of the main reasons the system has to convert to a consumer-driven system that I have outlined previously.

Consumers must control their health and their healthcare dollars. They must be provided with an education that will help them control costs. They must be provided with financial incentives to control costs.

Copywrite 2006-2020  

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



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A Single Party Payer System Will Not Work

August 2, 2017
inDisinformation and the healthcare system, Medicine: Healthcare System
• Leave a comment

Stanley Feld M.D.,FACP, MACE

Why am I opposed to a single party payer healthcare system?

I am concerned about America’s $20 trillion dollar deficit and $180 trillion in unfunded liabilities.

I am also concerned about China being a reliable buyer of American debt.

The deficit should be viewed as a house of cards that might crumble at any time.

Our country has suffered a massive increase in the deficit the last eight years under Barack Obama and Obamacare. The public knows the debt has increased at lease 1 trillion dollars a year.

No one has seen a good accounting the deficit increase. Everyone knows we have had massive inflation even though we have been told that inflation is only one percent.

The public knows Obamacare is imploding.

The public knows about the waste incurred during the Obamacare website roll out and the scandalous contracts to venders. The public knows about the massive increasing in insurance premiums and the massive subsides that were not anticipated.

The Democrats that the people have elected to congress do not seem to care about the deficits created. Now, we have finally realized that the Establishment Republicans do not seem to care about Obamacare failures either.

These officials do not care how much money the government wastes on bad deals at all levels of the economy. Obamacare has made terrible deals with the insurance industry, the pharmaceutical industry and hospital systems.

It has not made a good deal for the middle class or their primary providers namely physicians.

I do not think American healthcare policy makers or congress can afford to make another mistake.

Winston Churchill’s famous quote about Americans stands out here.

“You can always count on Americans to do the right thing after they’ve tried everything else.”

America cannot try something that is destined to fail. Socialism, especially in healthcare, does not work. Our government officials refuse to believe this even though it is demonstrated by our own failed entitlements such as the VA Healthcare System, Medicare and Medicaid.

Government officials refuse to believe that the socialistic universal healthcare systems in the rest of the world are unsustainable.

Britain is the perfect example of this as the system is crumbling.

Socialism does work in the long term.

Winston Churchill said it again.

“Socialism does not work because it is not consistent with fundamental principles of human behavior. The failure of socialism in countries around the world can be traced to one critical defect: it is a system that ignores incentives.”

The key to the solution of the healthcare system problem is to provide incentives to all the stakeholders, especially the consumers.I believe “My Ideal Medical Saving Account” will work to provide universal coverage at an affordable cost.

http://stanleyfeldmdmace.typepad.com/repairing_the_healthcare_/2012/05/my-ideal-medical-savings-account-is-democratic.html

America does not need a healthcare system that makes consumers dependent on government. It needs a system that makes them independent of government.

Butch Mazzuca is a local Vail Valley Resident who wrote this article about socialism and the healthcare system that appeared in the Vail

Valley News on July 9, 2017.

Mr. Mazzuca has given me permission to republish his article.

“When it comes to socialism, will they ever learn?

http://www.vaildaily.com/opinion/vail-daily-column-when-it-comes-to-socialism-will-they-ever-learn/ 

Editor’s note: Find a cited version of this column at http://www.vaildaily.com.

“Several weeks ago on ABC’s Sunday morning talk show “This Week,” Senate Minority Leader Chuck Schumer told host George Stephanopoulos, “The democrats need a strong, bold, sharp-edged and common-sense economic agenda. … That’s what’s been missing.”

So I find it a bit ironic that seven months after losing the 2016 presidential election, Schumer feels the Democratic Party is still struggling to articulate a coherent message. Meanwhile, the Bernie Sanders-Elizabeth Warren wing of the party delivers a very clear message. Unfortunately for their constituency, it’s about a failed ideology — socialism.

Sanders and Warren are advocates of redistributing wealth; lax immigration rules, governmental intervention into health care, energy and business; and the acceptance that Washington should be the final arbiter of all problems.

SOCIALISM HAS INHERENT DEFECTS

While socialism is antithetical to the ideals of the Founding Fathers, it tends to gain its strongest support among the young and those who are uninformed. On the surface, socialism sounds great; it has always sounded great and will continue to sound great within certain precincts. The only problem with socialism is that history exposes it as a bankrupt ideology.

But rather than describing socialism’s failures tenet by tenet, the following apocryphal story illustrates socialism’s inherent defects in an easy-to-understand way.

An economics professor at a local college made a statement that he had never failed a single student before but had once failed an entire class. The class insisted that wealth redistribution, aka socialism, worked because then no one would be poor and no one would be rich — a great equalizer.

The professor then said, “OK, let’s try an experiment.” Henceforth, all grades would be averaged; everyone would receive the same grade, and no one would fail.

After the first test, the grades were averaged and everyone received a B. The students who studied hard were upset but the students who studied little were happy. As the second test rolled around, the students who had studied little now studied even less and the ones who studied hard decided they wanted a free ride, too, so they too decided to study little. The second test average was a D.

Now no one was happy. When the third test rolled around, the class average was an F; and from that point forward, the scores never increased, as bickering, blame and name-calling all resulted in hard feelings with the result that no one would study for the benefit of anyone else and the students all failed the class.

The professor then told them socialism as a form of government always fails because of human nature, i.e., when the reward is great, the effort to succeed is great, but when government takes the rewards away, no one will try to succeed.

HUMAN NATURE IS PART OF IDEOLOGICAL EQUATIONS

Similar to the aforementioned students, the far left consistently overlooks the fact that human nature is part of any ideological equation. They fail to understand that socialism has never and will never work because it’s based on a premise that’s inconsistent with human behavior.

When people work, they expect to be compensated commensurate with their effort and skill level. And capitalism does that more effectively than any economic system yet devised by man. Capitalism provides an incentive for people to achieve because they know their efforts will be rewarded.

Conversely, socialism is a disincentive to achievement because people also know their work is valued only collectively, rather than being valued individually.

Quote of the day: “The inherent vice of capitalism is the unequal sharing of blessings; the inherent vice of socialism is the equal sharing of miseries.” — Winston Churchill.”

Butch Mazzuca, of Edwards, writes regularly for the Vail Daily. He can be reached at bmazz68@comcast.net.

Our politicians should stop fooling around with America’s healthcare system, our fiscal viability, and the welfare of our citizen.

It is time to try something that will work, and not another thing that is doomed to failure.

Elizabeth Warren and Bernie Sanders, you are both dead wrong.

 

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

All Rights Reserved © 2006 – 2017 “Repairing The Healthcare System” Stanley Feld M.D.,FACP,MACE

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