Stanley Feld M.D.,FACP,MACE

President Obama has declared over
and over again that no one has presented ideas better than Obamacare. 

I believe he has no interest in
listening to anyone.

I sent him 6 letters between 2008-2009
presenting my solution to repairing the health care system. These ideas were
from a practicing physician’s perspective. President Obama paid no attention.

President Obama fooled many people
with his intentions, including me. The traditional media is finally catching on
to him. 

All of the stakeholders are at fault
in causing the dysfunctional healthcare system. The dysfunction is the result
of all the stakeholders trying to adjust to ever changing government regulations
during the last 48 years

Obamacare is making that dysfunction
worse.

A consumer driven healthcare system
is the only way to Repair the Healthcare System.

I think President Obama wants the
healthcare system to fail. He wants to prove that the free market cannot
succeed.

He is deaf to the fact that the
healthcare system is not a very free market system.  Government regulations, tax favors, and tax
barriers over the years have interfered with the free market in healthcare.

The Affordable Care Act (Obamacare) intends to transform the
health-care system, extend coverage, reduce costs and increase quality—all
without asking anything of the patients.

 Consumers will pay
with higher taxes, of course, but otherwise will face no incentives to make
wise choices, compare price with performance or shop for value.

 Doctors, hospitals,
insurers and, most of all, the government will do that for them, which is
hardly reassuring.

 This reflects what I
call the "impossibility theorem" in health care. The impossibility theorem maintains that patients cannot
make good choices, but, rather, must be dependent on the well-intentioned
decisions of others.

Policy makers believe this theorem by
definition. But, just to make sure, they have structured the health-insurance
system to ensure that patients are never asked or allowed to make
price-conscious choices.

The arrangement underlies the innumerable
rules, subsidies, entitlements, mandates and prohibitions that collectively
make health care the least efficient part of the economy.

 ObamaCare makes it worse.

I do not think consumers believe or trust President
Obama. Consumers certainly do not believe “the impossibility theorem.”

Consumers are ready for some common sense healthcare
policy. They just do not know what to do.

Consumers must be given incentives to control
healthcare costs. This can be done in several ways.

Consumers must be put in charge of their health and
healthcare dollars.

The
central pillar of effective healthcare reform is the creation of a system that
forces the healthcare insurance industry to be competitive and answerable to
consumers.

Consumers
must have incentives to control costs. This, in turn, would force hospital
systems and physicians to be competitive and reduce costs.

The government’s
role should be to empower consumers to have greater control over their
healthcare decisions, their health, their healthcare dollars and their
healthcare coverage.

The
government should teach consumers to make educated choices in their healthcare
decision-making.

Price
transparency of healthcare fees and parity of tax deductions between the individual
insurance market and the group healthcare insurance market is essential.

It is fool
hearty to assume that the redistribution of wealth, raising taxes by means
testing and price fixing will solve the problems in the healthcare system.

  “Why on earth would we want a system,
especially with something as personal as health care, where all of these free market
signals are lost, and insurers responding to regulators, not to us?”

Entitlement programs have never produced free market
efficiencies. Entitlements have created unsustainable, unfunded liabilities.

Leadership must face this problem not add to the
problem.     

In the past seventy years medical advances through
research and technology have improved medical care and medical outcomes. Medical
advance has focused on fixing diseases after they have occurred.   

Consumers are the only ones that can prevent most
medical and surgical problems.

They can prevent most chronic diseases such as Type 2
Diabetes, heart disease, lung disease and others. 

Consumers are also the only ones that can prevent the
costly complications of a chronic disease.

A healthcare system must be constructed to incentivize
consumers to be responsible for their health and healthcare dollars.

Eighty percent of the healthcare dollars spend on
diabetes care is spent treating the complications of diabetes.

A healthcare system must be developed to align all of
the primary and secondary stakeholders’ incentives.

Only consumers can align all the stakeholders’
incentives.

Government control of the healthcare system cannot and
has not aligned those incentives.

Right now we are seeing bureaucracies making a $634
million dollar error with healthcare.gov. This is only the tip of the iceberg
for the problems in store for Obamacare.

The solution is not a single party payer. We will have
the same problems or worse because of the expansion of Medicaid. President
Obama’s hope was the cost of increasing Medicaid would be shifted to the
states.

The increase in cost will increase the federal deficit
and unfunded liabilities.

A healthcare system must be constructed to empower
consumers. I have written in detail about my ideal medical savings accounts.

I have pointed out that it can be very democratic.
Everyone can be insured while decreasing the costs.    

The ideal medical
saving accounts will motivate and empower consumers to save money by staying
healthy, staying out of the emergency rooms, and decrease over testing and over
treatment.

Consumers would be
motivated to shop for the top value and quality care.  

The government would
require providers to publish the discounted prices paid by the government and
the healthcare insurance companies to all consumers.

My ideal medical
saving account would incentivize consumers to save money. It would be the
responsibility of consumers to shop for the best price at the best quality.

Consumers would
carry their medical records digitally on a flash drive or on their smart phone
to avoid over testing. They would reap the financial benefits of these cost savings.

Consumers, after
the initial $6,000 dollars was spent, would receive first dollar healthcare coverage.
 

I have always been
satisfied with the front-end incentives. I have never been satisfied with the
catastrophic coverage. It does not provide financial incentive for consumers to
save.

I finally figured
it out. Consumers would continue to receive first dollar coverage if they spent
over the initial $6,000 after the initial stakeholders.

The discounted
hospital, surgical and medical device costs would be published along with
outcomes.

Discounted prices
for services could also vary for the same services. The outcomes could be the
same.

A hospital system
with better outcomes should receive more. If the hospital system negotiates a
higher fee than another hospital system but has the same outcome the consumer
should be liable for the difference.

 In this way the decision for choosing the
provider is in the hands of the consumer.

Combining my ideal medical saving account and “reference
pricing” will incentivize consumers to be in control of their healthcare costs
and their health and healthcare dollars.

Consumers should receive pretax dollar treatment for
all expenditures.

Consumers will then shop for price and quality to
their financial advantage.  This will
incentivize providers to compete on both price and quality.

The Oklahoma Surgical Center has forced local
hospitals to do just that. The Surgical Centers’ online prices were one half to one
fifth the prices of the local hospital.  The hospital centers are now starting to
compete on price and quality.

 The combination
of the ideal medical saving accounts and reference pricing will incentivize
providers to be aligned with consumers’ goals.  

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

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Stanley Feld M.D.,FACP,MACE

It is getting harder and harder for me to read the New York Times. The half-truths are glaring. The bias is becoming more and more transparent.

 Dr. Ezkiel Emanuel’s article in the New York Times on November 3^rd continues with these half-truths and bias.

“According to many on the left, health insurance companies are sleazy and unethical, making obscene profits by charging high prices to sick people, giving physicians and patients the runaround to avoid paying bills, and rescinding policies just when people who paid in good faith get cancer, while their executives often walk away with millions in compensation.”

All of the above is true. The main issue is how the healthcare industry can continue to get away with it.

Dr. Emanuel has not bothered to learn how to read the healthcare insurance industry’s financial statements.

The individual state’s Board of Insurance is in charge of regulating the healthcare insurance industry. The stated goal is to protect consumers.

 All state boards issue licenses to sell healthcare insurance yearly to healthcare insurers.

Few of the state Boards of Insurance have enforced their own regulations. The state insurance boards could easily refuse to issue a license to a company that doesn’t follow the regulations

Dr. Emanuel takes the healthcare insurance industry’s bottom line literally, while ignoring the financial facts.        

 “Last year, health insurance companies did rack up big profits, but it turns out that the combined profits of the country’s five largest for-profit health insurance companies — United, WellPoint, Aetna, Humana and Cigna — were $11.7 billion, only 0.5 percent of total health care spending.”

 “Even confiscating every penny of those profits would add up to less than half of the cost-saving threshold. And even not-for-profit insurance companies need to have an operating margin — a profit by another name. There just isn’t enough money there to make a dent in health care spending.

 Dr. Emanuel’s obvious conclusion is $11.7 billion profit is not meaningful. It should not be considered to influence the total cost of healthcare or future healthcare policy.

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

 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 is meaningless. In health care, you have to be talking about tens of billions of dollars before you are talking about real money.

  The bottom line figure after expenses might be published as only $11.7 billion dollars but the real profits are buried into the profit built into the administrative expenses that do not get added into the bottom line.

The truth is,

 Over 20 percent of consumers who purchase coverage in the individual market today are in plans that spend more than 30 cents of every premium dollar on administrative costs. 

An additional 25 percent of consumers in this market are in plans that spend between 25 and 30 cents of every premium dollar on administrative costs. 

And in some extreme cases, insurance plans spend more than 50 percent of every premium dollar on administrative costs.  

President Obama thinks his law will decrease these expenses. The public has also been lead to believe that Medicare’s administrative overhead is 2.5%. The 2.5% is the overhead to maintain a CMS department outsourcing administration services to the healthcare insurance industry and generating new regulations.

The percentage of overhead has to be higher much higher now with the development of Dr. Berwick’s bloated bureaucracy.

CMS outsources its administrative services to the healthcare insurance industry. The healthcare insurance industry adds an additional 20-30% to the bid price for services claims.

A large administrative service provider (Trailblazers) in Texas was just outbid for its administrative services by an east coast administrative service provider (Highmark) confirming the bid pricing mechanism.

Strangely, both Trailblazers and Highmark are subsidiaries of Blue Cross/ Blue Shield. This is the place that 20-30% is taken off the top of the Medicaid and Medicare budget and is not included in the bottom line.

The healthcare insurance industry is required to maintain the Medical-Loss Ratio at 80-85%. Medical Loss Ratio means it has to spend 80 to 85 percent of premium dollars on medical care and health care quality improvement rather than on administrative costs.

Healthcare insurance companies have been permitted, by the government, through the influence of its lobbyists, to shift certain expenses from administrative expenses into the patient care expenses.  The result is less money spent on direct patient care.  

          The cost of verifying the credentials of doctors in its networks.

1. The cost of ferreting out fraud such as catching physicians over testing patients or doing unnecessary operations.
2. The cost of programs that keep people who have diabetes out of emergency rooms.
3. The sales commissions paid to insurance agents.
4. Taxes paid on investments.
5. Taxes paid on premium income.

These expenses are designated as direct patient care expenses. Each expense is a profit center. This profit is not reflected in the healthcare insurance company’s bottom line. These are the reasons the net income figures are bogus.    

Aetna made $4.8 billion dollars in profit on Medicare Advantage and Medicare Part D alone two years ago.

“Citigroup research group estimates that presently the overall healthcare insurance industry’s net profit is about $56.5 billion per year. The addition of 16 million enrollees will add $40 billion dollars in net profit to the healthcare insurance industry’s bottom line.”

“Gail Boudreaux, UnitedHealth's executive vice president, told investors last month that: "The Medicaid space is a significant long-term growth opportunity for us. It's a big market that's getting even bigger." UnitedHealth pegs the value of new bids or expansions over the next three years at $40 billion.” 

The net profit of $11.9 billion dollars is a bogus figure. Dr. Emanuel has to know this. The healthcare insurance industry is cooking its books.  

President Obama and his administrative advisors are pretending to believe the numbers produced by the healthcare industry.  

The administration in turn is using the media and its power of the pulpit to convince the public to believe it.

The bizarre thing is that the scheme is working as reflected in the comments to Dr. Emanuel’s article.

This is disinformation are its best.

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

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