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What Is Wrong With Obamacare? It Won’t Work!

July 21, 2010
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
• Leave a comment

 

Stanley Feld M.D.,FACP,MACE

Obamacare is already proving it is going to fail. By President Obama’s own admission, it will not achieve universal coverage. It will not provide affordable coverage because the healthcare insurance industry is already raising the price on private insurance and the fees it charges the government to administer service for Medicare and Medicaid.

Seniors will notice that their Medicare premiums for Part F has increased starting August 1st. Seniors can also expect premiums for Medicare Part D, Ordinary Medicare and Medicare Advantage to increase on January 1st 2011.

Why would premiums increase? Physician reimbursement has decreased.

There will be an increase in the fee the government pays administrative service providers (healthcare insurance industry) to subsidize Medicare and Medicaid. The reason for these increases will be non- transparent.

To many the name Newt Gingrich is a dirty word. Nonetheless, he is perceptive. In his recent book “Real Change: A Fight for America’s future”, he explains why the current third party payment system for healthcare is inefficient, ineffective and leads to fraud. I will amplify his model in order to point out the dysfunction in the healthcare system and its solution.

He explains why a “buyer-seller model” in healthcare is more efficient than a" “buyer-seller-receiver bureaucratic model”, whether it is a public or private system.

In the third party payer system (buyer-seller-receiver system), the buyer (insurance company, employer or government) receives no direct value for its payment. Its goal is to pay as little as possible. The seller (physicians or hospitals) knows the buyer suspects the seller of greed, and incompetence. The relationship is adversarial.

The receivers (patients) have little concern of cost. They have first dollar coverage. They have no incentive to save money. They have been conditioned to believe the medical care is an entitled service. Patients want more service with more convenience. They have no accountability for their habits. They have no incentive to lose weight or exercise consistently. Obesity leads to chronic disease and its complications. Patients have no incentive to care for their chronic disease.

President Obama’s healthcare reform plan does not provide these incentives. Yet the key to repairing the healthcare system is patients being the keeper of their health and the manager of their disease.

On the other hand, in a buyer-seller system, the buyer (patients) can be given incentive and educated to be a wise buyer of a service (medical care). The buyer (patients) has freedom of choice. Patients decide whether a service is worth the price. They decide whether they want to avoid the cost by taking care of their health.

The sellers (physicians, hospitals, or pharmacies) can choose to sell at the offered price or refuse to sell. The seller has a free choice. The seller’s freedom is not shackled by government regulations. The price is determined by previously negotiated prices. Prices are transparent.

Patients must be made aware of the negotiated prices by the government.

The buyer-seller-receiver bureaucratic model with the government being the buyer in a single party payer will lead to;

1. Fraud, abuse and administrative waste.

2. Lack of individual freedom of patients to choose their medical care.

3. Bureaucratic control of healthcare which undermines personal responsibility for health and medical care.

Fraud, abuse, and administrative waste.

There are many examples of fraud. The easiest examples to comprehend are the occasional physician or physician’s clinic billing for services not performed.

There are examples of hospital systems overbilling Medicare and Medicaid for non-rendered services. These actions seem to have political overtones. It is usually private hospital corporations or management companies and not faith based non-profit hospital systems that are accused of this level of fraud.

Medicare and Medicaid outsource the administrative services to the healthcare insurance industry. There are many examples of the fraud and abuse by the healthcare insurance industry.

The public perceives the largest cost is physician abuse. Physicians are the weakest stakeholder. However, if the government looked closely enough it would find the largest area of fraud and abuse comes from the healthcare insurance industry.

A popular notion in congress is that 40 cents of every healthcare dollar goes for administrative costs to the healthcare insurance industry. I believe this is a low estimate. Some economists have demonstrated that administrative services expenses are 60 cents of every healthcare dollar.

Congress has chosen not to change the accounting rules used by the healthcare insurance industry. These defective accounting regulations lead to the largest area of fraud and abuse. An estimate is $250 billion dollars a year.

The Government Accounting Office estimates that 10% of Medicare and Medicaid spending is lost to fraud and abuse. Ten percent of Medicare and Medicaid cost is $80 billion dollars a year. Over the next decade, the cost would amount to $800 billion dollars if both programs were not expanded. With the entitlements being expanded it could be 2 to 3 trillion dollars over the decade.

I believe if we created a buyer seller system, the fraud and abuse would decrease to less than 1% of healthcare expenditures. Every patient would be a police officer for his own healthcare dollar.

Lack of individual freedom to choose.

Bureaucracy can only function by creating rules and regulations to control the receiver and the seller. This leads to an increase in the number of regulatory agencies. The result is many unenforceable and conflicting rules and regulations. The rules and regulations usually lead to unintended consequences and greater budget deficits.

The receivers’ (patients’) medical needs might be unfulfilled by these rules and regulations.

Americans love the free market and their ability to make choices. We love to be consumers and admire incentives, bargains, and choices. One only has to look at consumer products such as electric products and automobiles. Consumerism drives our economy not centralized bureaucratic control. Healthcare should be driven by consumers and not by the system, which President Obama and Dr. Donald Berwick advocate.

Bureaucratic control of healthcare will undermine personal responsibility for health and health maintenance.

The buyer (the government bureaucracy) pays for the receiver (patient) to receive care from the (physician). The patient is forced into a passive position. The government defines what care the patient can receive. The physician must provide the care the government dictates.

Patients are conditioned to believe that someone besides themselves is responsible for their health and healthcare.

The government should provide the appropriate information and education for the patients to make wise hea
lth decisions. These wise decisions must be encourage by giving patient control and ownership of their own healthcare dollars.

This can be accomplished through the ideal medical savings account.

Patients should make healthcare and medical care decisions for themselves.

Patients must play an active role in the management of their health and disease.

I believe the bureaucratic single party payer system will not Repair the Healthcare System.

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

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Healthcare Reform Should Be About Motivating Self-Responsibility Not Dependence

June 6, 2010
inMedicaid, Medicare, Medicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust, Summary Blogs, Universal Healthcare
• Leave a comment

Stanley Feld M.D,FACP,MACE

Last week I heard a lecture about Accountable Care Organizations by a physician leader working for one of the major hospital systems.

His discussion made me realize that large physician organizations and hospitals are spending lots of time solving problems of quality medical care. In my opinion quality medical care has not been adequately defined.

A working definition right now is to decrease hospital stays, efficient medical care for a disease at lower cost, avoidance of medical errors in the hospital, and avoidance of hospital acquired infections.

These are important goals. They must be attached to monetary incentives. Many of these problems can be solved now. The solution demands the development of processes of care. An important question is how much money will process improvement save? I estimate that this process improvement could save an estimated 7 to 10% of the healthcare dollar.

The real question should be focused on how to repair the healthcare system by decreasing costs while improving the health of Americans.

This problem is not only about hospitals and medical practices reimbursement. It is about problems created by all the stakeholders. It is about aligning all the stakeholders’ incentives. The solutions to the healthcare system’s dysfunction must be initiated at the same time. You cannot try to fix one problem because it will result in a problem getting worse in another area.

The key to the solutions is to incentivize consumers of healthcare to control their health and be in charge of their healthcare dollars. Consumers can force secondary stakeholders to adjust swiftly to their demands and make them compete for consumers’ healthcare dollars.

Consumers must have incentive. They should be able to keep anything they do not spend of the first $7500 dollars of healthcare coverage. In our present healthcare system consumers do not control their healthcare dollars. They get first dollar coverage with variable deductible expenses. If the deductible is too high they will avoid necessary care and medications.

Society should not want that to happen because patients will get sicker and cost more to treat. Third party payers control the healthcare dollar. This control has contributed to increase the cost of healthcare. .

Some claim the only incentive consumers (patients) should need is to maintain their health. This claim has turned out not to be true.

Where do all the healthcare dollars go?

1. 65% of each healthcare dollar goes to the healthcare insurance industry for overhead for administrative services and insurance reserves whether it is private or government insurance.

image

2. Only 35% of the healthcare dollar is actually spent on medical care.

3. 80% of the healthcare dollars spent for medical care is spent by 20% of the people.

4. Most of those 20% have chronic diseases.

5. 80% of those dollars are spent on the complications of their chronic diseases.

6. Some claim there is 40% waste in the healthcare system due to uncoordinated care and duplication of care.

7. Much of the excess testing is due to the fear of malpractice claims and the practice of defensive medicine.

Let us follow the healthcare dollars with consumers being in control of their healthcare dollar.

If a moderate size company of 67 employees were willing to pay $15,000 dollars per employee for healthcare insurance it would cost $1,000,000 dollars. If the employer did not provide healthcare insurance the government penalty ($2,000 per employee) would be $134,000 dollars. This would represent a savings to this moderate sized company of $866,000 dollars per year. It would be the logical path to take. The formula I propose will work for the individual buying insurance.

Assume employers were willing to buy healthcare insurance for their employees. They would put $7,500 per year in a trust for each employee. The employee would be responsible for his healthcare dollars. The fees would be pre-negotiated fees by the government as the healthcare insurance industry does presently with physicians and hospitals. Hospitals and physicians might even want to compete among each other for the consumers’ dollars.

If the employee did not spend all the healthcare dollars in a year the remaining dollars would go into his retirement fund. It would not be used for future medical care.

A new equation for driving healthcare costs would be born.

There would not be a 65% overhead for administrative services for the first $7500 dollars because the healthcare insurance industry would not be administering the first $7500 dollars. The savings would be $4875 dollars.

Patients and physicians would have an additional $4875 dollars working toward direct medical care. The 65% overhead for administrative services for the remaining $7,500 of high deductible coverage could remain the same. The high deductible insurance would provide first dollar coverage after $7,500. The risk to the healthcare insurance industry would be less and so its insurance reserves could be less.

The government pays the same amount for administrative services to the healthcare insurance industry. The government could use the same formula for Medicare and Medicaid.

Consumers would have a monetary incentive to decrease their risk of getting sick (preventing obesity and increasing exercise). If consumers drove the healthcare system the consumption of snack foods and fast foods would decrease with proper education. Those fast food companies would be forced to sell healthy food to stay in business. Consumer would be driven by monetary incentives to stay healthy.

The onset of chronic disease would decrease. The complications of chronic disease would also decrease.

If a patient had a chronic disease at the onset of this new system and controlled their disease well in order to avoid acute and chronic complications of the chronic disease the healthcare system could reward them with a bonus at the end of the year. They would avoid costly hospitalizations.

Consumers would demand and pay to be properly educated to avoid complications of their chronic disease

An added benefit is that there would be less doctor visits and hospitalizations. This would increase healthcare capacity. It would enable the country to provide care for the entire population rather that force the healthcare system to abs
orb additional patients and create shortages resulting in rationing and decreasing access to care.

When people are motive by monetary incentives they are innovative. Innovation stimulates efficiency and decreases costs. It is important to have consumers be responsible for themselves and not dependent on the government.

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

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Accountable Care Organizations

May 9, 2010
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
• Leave a comment

Stanley Feld M.D.,FACP, MACE

Accountable Care Organizations (ACO) are supposed to manage Medicare cost. Policymakers are desperate to control costs. Proponents of ACO want to test it along with such alternatives as patient-centered medical homes, pay-for-performance and payment bundling.

President Obama’s practice models pilots are going to be a great waste of money. Each model has major defects.

None of the models offer patients the ability to control of healthcare dollars. None of the models provide incentives to patients to be responsible for their own health.

The models replace individualism with collectivism. They replace individual self-responsibility with community governance. Bureaucracy stifles initiatives and innovation, two characteristics that have been the engine of progress in medical advances.

The models subject medical care to the deadening hand of bureaucracy. The net result is a more costly healthcare system and increasing federal deficits. Bureaucracy always has loopholes. The advantaged vested interests always game the system to the disadvantage of consumers.

What are Accountable Care Organizations (ACO)?

“The goal of ACO is to encourage physicians and hospitals to integrate care by holding them jointly responsible for Medicare quality and costs.”

 

A typical Medicare ACO would include a hospital, primary care physicians, specialists and potentially other medical professionals. Services would still be billed under fee-for-service. The ACO’s members would coordinate care for their shared Medicare patients.

I do not know when hospital systems have not tried to profit from its physicians’ intellectual property. What will suddenly get them to not take advantage of physicians intellectual property?

“Because ACO members are held jointly accountable for this care, they would share in any cost savings that stem from the quality gains.”

Cost overruns would be deducted from the fees billed. Realistically surgeons have always dominated the primary care physicians. It is unrealistic to believe surgeons would relinquish this position passively. Surgeons would not agree to increase compensation to primary care cognitive physicians at their expense

“The goal of ACOs is to pay providers in a way that encourages them to work together, to pay providers in a way that does not encourage supplier induced demand, and to create an organization that is rewarded for providing high quality care.”

The Medicare Advantage program pays a lump sum to private insurers. The government holds the healthcare insurance industry accountable for all medical care. The healthcare insurance industry is in control of the healthcare dollars.

Medicare pays the healthcare insurance industry a $3000 premium per patient above and beyond the average cost of $6600 per patient. Patients pay on average 33% of the total $9600 premium. The healthcare insurance industry decreases physician reimbursement to increase its profitability.

Medicare Advantage looks good to the patients because premiums are low. Patients do not realize restriction to access to care exists. Patients are happy.

The government was happy despite the large subsidy because it had a fixed cost. The insurance industry was happy because its profit increased.

The problems with ACO are:

“Accountability rests with the providers.  Providers or provider groups, rather than insurance companies, are evaluated on the quality and efficiency of care.”

Physicians are unhappy. They are being judged on utilization without concern for medical risk their patients present or the need for defensive medicine to avoid malpractice liability.

Patients’ responsibility for their health and medical care is not considered. Obesity, substance abuse, or noncompliance are not considered as a patient responsibility in this or any other model considered by President Obama’s healthcare team.

Eighty percent of healthcare dollars are spent on treating the complications of chronic diseases. When the risk of disease and complications of disease is high the risk management is the responsibility of physicians and not patients.

“ACO allow for flexibility in the type of organization.  Some regions may prefer independent practice associations (IPAs) while others may prefer a physician-hospital organization (PHO).”

The ACO is a fixed reimbursement system. Cost overruns will occur at the expense of physicians. Physicians and hospital systems will not know how to price reimbursement in advance. Utilization of medical care services is dependent on both patient and physician behavior. If patients were healthy there would be great cost savings. There are no incentives in ACO for patients to remain healthy.

“The physician-centered organization makes much sense to many policymakers because “the resources that flow from the decisions physicians make with patients account for a major portion of overall health care costs, regardless of where the care actually takes place.”

Physicians are good at treating illness. They are not good at risk management. Patients must be incentivized and taught to manage the risk of complications.

Many physicians will get stuck with high-risk patients. Medicare will have to increase payments to those physicians or risk losing them as providers. ACO will become insolvent. This will increase the deficit.

 ” If participant believe that ACOs are essentially tightly managed ‘HMOs in drag’ that are going to restrict their choices, undermine the doctor-patient relationship, and result in cheaper but lower-quality care, the concept will be met with skepticism, if not overt opposition.”

Physicians and patients should view ACO for what they are. ACO are HMO in disguise. They represent a fixed reimbursement for variable amounts of necessary service.

Physician groups and hospital systems are allergic to HMO because they did not know how to price the reimbursement adequately. They also do not know how to price risk and manage risk.

Neither the healthcare insurance industry nor the government knows how to manage or price risk. The healthcare insurance industry compensates for overuse by increasing the premium next year.

How can they expect physician groups to price risk? Many physicians’ practices and hospital systems lost money on HMO. This resulted in non participation in HMO.

Many patients hated HMO because medical care became commoditized, choice was restricted and the doctor-patient relationship was undermined. The resulting cost was not lower.

The HMO were a failure. ACO will be a failure. The result will be opposite of the intent with increasing cost, increasing deficits and decreasing quality of care.

The only way to manage risk is to
motivate consumers to manage risk. This is the definition of consumer driven healthcare using the ideal medical savings account.

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

Permalink:

Did Americans Get Any Healthier Over The Past Decade?

January 10, 2010
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
• Leave a comment

Stanley Feld M.D.,FACP,MACE

 

President Obama finally admitted that we are at war with terrorists. He said there are problems in the massive intelligence bureaucracy.

It “failed to connect the dots of intelligence.” If the agencies were coordinated Umar Farouk Abdulmutallab, a known terrorist, who paid cash for his ticket, did not carry luggage and did not have a proper visa would not have been permitted to board the plane to Detroit on Christmas Day.

It was not a failure to connect the dots. There are systems defects in the bureaucracy. The intramural politics of bureaucracies prevents important information from moving up the food chain.

Robert Baer makes this point clear in his book “See No Evil 1988”. The CIA does not have agents in the field that understand local politics.

.

The author, working in the Counter-Terrorism Center when it was just starting out, has an extremely important story to tell and every American needs to pay attention. Why?

“Because his account of how we have no assets that are useful against terrorism. There are four other stories within this excellent book, all dealing with infirmed bureaucracies.”

The administration’s response to the potential terrorist attack demonstrates Robert Baer point.

“The National Counterterrorism Center’s NCTC and CIA—have a role to play in conducting (and a responsibility to carry out) all-source analysis to identify operatives and uncover specific plots like the attempted December 25 attack. . . .”

The agencies were not coordinated and missed the obvious terrorist.

How does this relate to the Healthcare Reform debate?

The Democrats in congress and President Obama’s administration are about to pass a terrible healthcare reform bill. The bill misses the obvious. An example of an ineffective bureaucratic agency is the Healthy People Project

The goal of healthcare reform should be to help Americans receive effective healthcare. I have contended that increasing bureaucracy and the cost of maintaining a bureaucracy does not deliver better healthcare or make Americans healthier. President Obama’s healthcare bill expands government bureaucracy.

“ Worse, all of this bureaucracy is packed into a monstrous package without any regard to each other. The only thing linking these changes — such as the 118 new boards, commissions and programs — is political expediency. Each must be able to garner just enough votes to pass. There is not even a pretense of a unifying vision or conceptual harmony”

 

Real repair of the healthcare system is missing:

Real healthcare education,

Real cultural changes in eating and self responsibility,

Real enforceable food production legislation,

Real tort reform,

Real healthcare insurance reform,

Real chronic disease management systems education for both physicians and patients.

These real changes will help decrease the cost of medical care.

Unfortunately none of these changes are in President Obama’s healthcare reform bill. Instead there are 118 new boards, commissions, and programs doing its thing to generate reports and pilot studies.

Atul Gawande in a recent New Yorker article pointed out that President Obama’s healthcare reform bill offers pilot studies.

“So what does the reform package do about it? Turn to page 621 of the Senate version, the section entitled “Transforming the Health Care Delivery System,” and start reading. Does the bill end medicine’s destructive piecemeal payment system? Does it replace paying for quantity with paying for quality? Does it institute nationwide structural changes that curb costs and raise quality? It does not. Instead, what it offers is . . . pilot programs.

Where we crave sweeping transformation, however, all the current bill offers is those pilot programs, a battery of small-scale experiments. The strategy seems hopelessly inadequate to solve a problem of this magnitude.”

I have pointed out in the past that poorly designed pilot studies are a waste of money.

Dr. Gawande tries to illustrate the potential value of a pilot study and justifies President Obama’s healthcare reform bill.

The federal government published preliminary results of the Healthy People Project health goals for the nation from 2000 to 2010. Its healthcare goals have not been achieved.

“There are more obese Americans than a decade ago and not fewer. We eat more salt and fat, not less. More of us have high blood pressure and diabetes. More of our children have untreated tooth decay, obesity and diabetes.”

The lack of control of these diseases result in their complications.

"We need to strike a balance of setting targets that are achievable and also ask the country to reach," said Dr. Howard Koh, the federal health official who oversees the Healthy People project. "That’s a balance that’s sometimes a challenge to strike."

This is bureaucratic jargon. It is one thing to ask the country to achieve these goals. It is another thing to get people to change their habits. The Healthy People Project has been in existence since 1980.

After more than 30 years, the goals aren’t well known to the public and only a modest number have been met.

“About 41 percent of the 1990 measurable goals were achieved. For the 2000 goals, it was just 24 percent. Worse, the nation actually retreated from about 23 percent of the goals.”

I would say this expensive bureaucratic pilot study was a failure.

Healthy People 2010 called for the percentage of adults who are obese to drop to 15 percent. In 2000, 25% of all adults were obese. Now, about 34 percent of adults are obese. Twenty eight percent of Americans had hypertension in 2000. Today 29% of Adult Americans have hypertension. The Projects goal was to reduce hypertension to 16%.

“To many health officials, simply making progress is a victory. An analysis of 635 of the nearly 1,000 targets for the past decade shows only 117 goals have been met. But progress was made toward another 332. In other words, there was improvement in 70 percent of the measures.

"That’s evidence of a healthier nati
on," Koh said.”

You have got to be kidding!! Is this what we want from President Obama’s Healthcare Reform bill, 118 new bureaucratic agencies? There is something wrong here.

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

Permalink:

Did Americans Get Any Healthier Over The Past Decade?

January 10, 2010
inUncategorized
• Leave a comment

Stanley Feld M.D.,FACP,MACE

President Obama finally admitted that we are at war with terrorists. He said there are problems in the massive intelligence bureaucracy.

It “failed to connect the dots of intelligence.” If the agencies were coordinated Umar Farouk Abdulmutallab, a known terrorist, who paid cash for his ticket, did not carry luggage and did not have a proper visa would not have been permitted to board the plane to Detroit on Christmas Day.

It was not a failure to connect the dots. There are systems defects in the bureaucracy. The intramural politics of bureaucracies prevents important information from moving up the food chain.

Robert Baer makes this point clear in his book “See No Evil 1988”. The CIA does not have agents in the field that understand local politics.

.

The author, working in the Counter-Terrorism Center when it was just starting out, has an extremely important story to tell and every American needs to pay attention. Why?

“Because his account of how we have no assets that are useful against terrorism. There are four other stories within this excellent book, all dealing with infirmed bureaucracies.”

The administration’s response to the potential terrorist attack demonstrates Robert Baer point.

“The National Counterterrorism Center’s NCTC and CIA—have a role to play in conducting (and a responsibility to carry out) all-source analysis to identify operatives and uncover specific plots like the attempted December 25 attack. . . .”

The agencies were not coordinated and missed the obvious terrorist.

How does this relate to the Healthcare Reform debate?

The Democrats in congress and President Obama’s administration are about to pass a terrible healthcare reform bill. The bill misses the obvious. An example of an ineffective bureaucratic agency is the Healthy People Project

The goal of healthcare reform should be to help Americans receive effective healthcare. I have contended that increasing bureaucracy and the cost of maintaining a bureaucracy does not deliver better healthcare or make Americans healthier. President Obama’s healthcare bill expands government bureaucracy.

“ Worse, all of this bureaucracy is packed into a monstrous package without any regard to each other. The only thing linking these changes — such as the 118 new boards, commissions and programs — is political expediency. Each must be able to garner just enough votes to pass. There is not even a pretense of a unifying vision or conceptual harmony”

Real repair of the healthcare system is missing:

Real healthcare education,

Real cultural changes in eating and self responsibility,

Real enforceable food production legislation,

Real tort reform,

Real healthcare insurance reform,

Real chronic disease management systems education for both physicians and patients.

These real changes will help decrease the cost of medical care.

Unfortunately none of these changes are in President Obama’s healthcare reform bill. Instead there are 118 new boards, commissions, and programs doing its thing to generate reports and pilot studies.

Atul Gawande in a recent New Yorker article pointed out that President Obama’s healthcare reform bill offers pilot studies.

“So what does the reform package do about it? Turn to page 621 of the Senate version, the section entitled “Transforming the Health Care Delivery System,” and start reading. Does the bill end medicine’s destructive piecemeal payment system? Does it replace paying for quantity with paying for quality? Does it institute nationwide structural changes that curb costs and raise quality? It does not. Instead, what it offers is . . . pilot programs.

Where we crave sweeping transformation, however, all the current bill offers is those pilot programs, a battery of small-scale experiments. The strategy seems hopelessly inadequate to solve a problem of this magnitude.”

I have pointed out in the past that poorly designed pilot studies are a waste of money.

Dr. Gawande tries to illustrate the potential value of a pilot study and justifies President Obama’s healthcare reform bill.

The federal government published preliminary results of the Healthy People Project health goals for the nation from 2000 to 2010. Its healthcare goals have not been achieved.

“There are more obese Americans than a decade ago and not fewer. We eat more salt and fat, not less. More of us have high blood pressure and diabetes. More of our children have untreated tooth decay, obesity and diabetes.”

The lack of control of these diseases result in their complications.

"We need to strike a balance of setting targets that are achievable and also ask the country to reach," said Dr. Howard Koh, the federal health official who oversees the Healthy People project. "That’s a balance that’s sometimes a challenge to strike."

This is bureaucratic jargon. It is one thing to ask the country to achieve these goals. It is another thing to get people to change their habits. The Healthy People Project has been in existence since 1980.

After more than 30 years, the goals aren’t well known to the public and only a modest number have been met.

“About 41 percent of the 1990 measurable goals were achieved. For the 2000 goals, it was just 24 percent. Worse, the nation actually retreated from about 23 percent of the goals.”

I would say this expensive bureaucratic pilot study was a failure.

Healthy People 2010 called for the percentage of adults who are obese to drop to 15 percent. In 2000, 25% of all adults were obese. Now, about 34 percent of adults are obese. Twenty eight percent of Americans had hypertension in 2000. Today 29% of Adult Americans have hypertension. The Projects goal was to reduce hypertension to 16%.

“To many health officials, simply making progress is a victory. An analysis of 635 of the nearly 1,000 targets for the past decade shows only 117 goals have been met. But progress was made toward another 332. In other words, there was improvement in 70 percent of the measures.

"That’s evidence of a healthier nation," Koh said.”

You have got to be kidding!! Is this what we want from President Obama’s Healthcare Reform bill, 118 new bureaucratic agencies? There is something wrong here.

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

clip_image002

  

Permalink:

Did Americans Get Any Healthier Over The Past Decade?

January 10, 2010
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
• Leave a comment

Stanley Feld M.D.,FACP,MACE

 

President Obama finally admitted that we are at war with terrorists. He said there are problems in the massive intelligence bureaucracy.

It “failed to connect the dots of intelligence.” If the agencies were coordinated Umar Farouk Abdulmutallab, a known terrorist, who paid cash for his ticket, did not carry luggage and did not have a proper visa would not have been permitted to board the plane to Detroit on Christmas Day.

It was not a failure to connect the dots. There are systems defects in the bureaucracy. The intramural politics of bureaucracies prevents important information from moving up the food chain.

Robert Baer makes this point clear in his book “See No Evil 1988”. The CIA does not have agents in the field that understand local politics.

.

The author, working in the Counter-Terrorism Center when it was just starting out, has an extremely important story to tell and every American needs to pay attention. Why?

“Because his account of how we have no assets that are useful against terrorism. There are four other stories within this excellent book, all dealing with infirmed bureaucracies.”

The administration’s response to the potential terrorist attack demonstrates Robert Baer point.

“The National Counterterrorism Center’s NCTC and CIA—have a role to play in conducting (and a responsibility to carry out) all-source analysis to identify operatives and uncover specific plots like the attempted December 25 attack. . . .”

The agencies were not coordinated and missed the obvious terrorist.

How does this relate to the Healthcare Reform debate?

The Democrats in congress and President Obama’s administration are about to pass a terrible healthcare reform bill. The bill misses the obvious. An example of an ineffective bureaucratic agency is the Healthy People Project

The goal of healthcare reform should be to help Americans receive effective healthcare. I have contended that increasing bureaucracy and the cost of maintaining a bureaucracy does not deliver better healthcare or make Americans healthier. President Obama’s healthcare bill expands government bureaucracy.

“ Worse, all of this bureaucracy is packed into a monstrous package without any regard to each other. The only thing linking these changes — such as the 118 new boards, commissions and programs — is political expediency. Each must be able to garner just enough votes to pass. There is not even a pretense of a unifying vision or conceptual harmony”

 

Real repair of the healthcare system is missing:

Real healthcare education,

Real cultural changes in eating and self responsibility,

Real enforceable food production legislation,

Real tort reform,

Real healthcare insurance reform,

Real chronic disease management systems education for both physicians and patients.

These real changes will help decrease the cost of medical care.

Unfortunately none of these changes are in President Obama’s healthcare reform bill. Instead there are 118 new boards, commissions, and programs doing its thing to generate reports and pilot studies.

Atul Gawande in a recent New Yorker article pointed out that President Obama’s healthcare reform bill offers pilot studies.

“So what does the reform package do about it? Turn to page 621 of the Senate version, the section entitled “Transforming the Health Care Delivery System,” and start reading. Does the bill end medicine’s destructive piecemeal payment system? Does it replace paying for quantity with paying for quality? Does it institute nationwide structural changes that curb costs and raise quality? It does not. Instead, what it offers is . . . pilot programs.

Where we crave sweeping transformation, however, all the current bill offers is those pilot programs, a battery of small-scale experiments. The strategy seems hopelessly inadequate to solve a problem of this magnitude.”

I have pointed out in the past that poorly designed pilot studies are a waste of money.

Dr. Gawande tries to illustrate the potential value of a pilot study and justifies President Obama’s healthcare reform bill.

The federal government published preliminary results of the Healthy People Project health goals for the nation from 2000 to 2010. Its healthcare goals have not been achieved.

“There are more obese Americans than a decade ago and not fewer. We eat more salt and fat, not less. More of us have high blood pressure and diabetes. More of our children have untreated tooth decay, obesity and diabetes.”

The lack of control of these diseases result in their complications.

"We need to strike a balance of setting targets that are achievable and also ask the country to reach," said Dr. Howard Koh, the federal health official who oversees the Healthy People project. "That’s a balance that’s sometimes a challenge to strike."

This is bureaucratic jargon. It is one thing to ask the country to achieve these goals. It is another thing to get people to change their habits. The Healthy People Project has been in existence since 1980.

After more than 30 years, the goals aren’t well known to the public and only a modest number have been met.

“About 41 percent of the 1990 measurable goals were achieved. For the 2000 goals, it was just 24 percent. Worse, the nation actually retreated from about 23 percent of the goals.”

I would say this expensive bureaucratic pilot study was a failure.

Healthy People 2010 called for the percentage of adults who are obese to drop to 15 percent. In 2000, 25% of all adults were obese. Now, about 34 percent of adults are obese. Twenty eight percent of Americans had hypertension in 2000. Today 29%
of Adult Americans have hypertension. The Projects goal was to reduce hypertension to 16%.

“To many health officials, simply making progress is a victory. An analysis of 635 of the nearly 1,000 targets for the past decade shows only 117 goals have been met. But progress was made toward another 332. In other words, there was improvement in 70 percent of the measures.

"That’s evidence of a healthier nation," Koh said.”

You have got to be kidding!! Is this what we want from President Obama’s Healthcare Reform bill, 118 new bureaucratic agencies? There is something wrong here.

 

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

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The House And Senate Bills Are Terrible Bills For Medical Care And The Economy. Part 5

November 21, 2009
inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
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Stanley Feld M.D.,FACP,MACE

I have asked readers to write to the President and their representatives. I have had several requests asking for an outline of the note. Below is a letter outlining the points to make if you oppose the bills in congress. The note should be sent to the President and your Senators and Representatives. The political party they belong too does not matter. If Congress receives 100,000 letters it might understand the sentiment of the people it is suppose to represent.

All you have to do is copy the text and paste it into an email to the President and your representatives. The email address can be found at;

http://www.whitehouse.gov/CONTACT/

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

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

Dear Representative, Senator, or President Obama

I am asking Congress and the administration to use common sense to repair the healthcare system. Enough is enough. The Democratic dominated Senate and House have constructed bills that will increase spending, increase the deficit, increase bureaucracy, increase government power over our lives and decrease our freedom of choice.

The Democratic controlled Congress continues to use creative bookkeeping to present bills it claims are budget neutral. The claim is fooling no one. Despite all the protests, Congress is ignoring the will of the people.

The universal healthcare strategy in Massachusetts has failed. President Obama’s healthcare strategy (with similar defects as the Massachusetts plan) with fail and cost the nation dearly.

The healthcare policies in both bills will not achieve the goals of universal care, affordable care and increasing the quality of care. It will commoditized medical care and destroyed the patient physician relationship. I am afraid the President and congress are about to compound past errors in healthcare policy at a very high cost to taxpayers and our economy.

Our present problems in the healthcare system are the result faulty regulations piled upon faulty regulations in an attempt to correct the previous defects. Stakeholders have been driven to adjust to these faulty regulations to protect their vested interests. These actions have lead to ever increasing costs and more defects in healthcare policy.

Willie Sutton (bank robber) told us to go where the money is. In healthcare the biggest waste of money is in:

  1. Healthcare insurance industry administrative services waste and healthcare insurance industry abuse; The wastes amounts to $200 billion dollars per year. Appropriate rules and regulations could eliminate the problem of administrative services waste. The public option will not eliminate the administrative services waste. It will add to it. http://www.lijit.com/search/stanleyfeld?type=blog&q=administrative+cost+and+the+healthcare+insurance+industry&x=0&y=0
  1. Ineffective chronic disease management: 80% of the healthcare dollars spent ($1.6 trillion dollars per year) is spent on treating the complications of chronic disease. These diseases include hypertension, diabetes mellitus, asthma, osteoporosis, and obesity. CMS estimated that the cost is even higher at 90% of the healthcare dollar spent for chronic disease complications. The obesity epidemic across all age groups. It is going to bankrupt us all. There is in the bills to combat the obesity epidemic. http://www.lijit.com/search?uri=http%3A%2F%2Fwww.lijit.com%2Fusers%2Fstanleyfeld&start_time=&p=g&view_id=tT5oCgpkPEUAABEzQ0UAAAAh&q=chronic+disease+management&x=0&y=0
  2. Defensive medicine: As a result of the malpractice systems in many states the cost of defensive medicine is somewhere between $460 billion and $750 billion dollars a year. Putting a cap on malpractice awards and appropriate education of physicians and consumers could eliminate the $750 billion dollars of unnecessary expense. The is nothing in the bills that addresses the malpractice reform issue. http://www.lijit.com/search?uri=http%3A%2F%2Fwww.lijit.com%2Fusers%2Fstanleyfeld&type=blog&q=defensive+medicine+and+malpractice+reform&x=0&y=0
  1. A universal electronic medical record is essential to reducing healthcare costs. Lack of a universal EMR costs the healthcare system at least 100 billion dollars a year in medical errors and duplication of testing.

The $30 billion dollar subsidy in the economic subsidy package will not solve the problem. The average physician’s cost for a universal record is $60,000 dollars. A $20,000 dollar subsidy does not help many primary care physicians afford an EMR.

A universal electronic medical record could be distributed by the government free of charge. Physicians would be charged by the click for its use. EMR software and maintenance service fees would be included. Presently less than 10% of physicians and hospital systems have fully functional EMR’s. http://www.lijit.com/search?uri=http%3A%2F%2Fwww.lijit.com%2Fusers%2Fstanleyfeld&type=blog&q=ideal+electronic+medical+records&x=21&y=8

The administration should be going to where the money is rather than developing a more complex bureaucracy with increased potential for waste and abuse. Repair of the healthcare system should be consumer directed with the help of the government and not government directed.

Instead the President and Democrats controlled congress will increase taxes and out of pocket expenses for everyone. The taxes will be imposed four years before the benefits are instituted in order to decrease the real deficit spending. During a recession penalties imposed on employers will decrease employment. The only job growth in this recession so far has been government related or government created jobs. The tax increases will lengthen the recession and inhibit job creation and innovation.

The bill will decrease freedom of choice, result in an increase in rationing of care and intensify the doctor shortage.

Please listen to the people who elected you.

Please do everything in your power to fix what is broken and not destroy our innovative spirit and inhibit our freedoms.

Sincerely

Please write to the President, your Representatives, and Senators before it is too late. The Democratic controlled government has decided to ram this bill through without bipartisan participation. You can stop them one vote at a time.

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

.

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President Obama’s Trick Plays Are Blind-sided By Healthcare Insurance Industry

October 25, 2009
inMedicine: Healthcare System, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
• Leave a comment

Stanley Feld M.D.,FACP,MACE

President Obama’s healthcare reform plan will not repair the healthcare system. It will not provide universal coverage. It will not provide affordable coverage and it will not increase the quality of care.

The main reasons are:

1. It does not deal with malpractice reform.

2. It does not deal with the administrative services fees charged by the healthcare insurance industry to the private sector and Medicare and Medicaid.

George Stephanopoulos spoke with David Axelrod on the This Week program on October 18,2009. The interview revealed an administration blind spot as President Obama pulls tricks to sneak through a healthcare reform bill that the public does not want and the government cannot afford.

STEPHANOPOULOS: So — so you reject this argument that he has to draw more lines in the sand, twist the arms of his opponents, now tell people what he wants and expect it to get it done?

AXELROD: Let’s take the issue of health care, because that’s, obviously, one of the things that people are referring to. We are farther along than we’ve ever been in passing a comprehensive health insurance reform in this country. It’s something we’ve discussed for 100 years. We are on the doorstep of getting that done, and that’s because of the approach this president has taken.

President Obama has been ramming a healthcare bill through congress. Rahm Emanuel has been having meetings behind closed doors without Republican participation. He is even trying to sneak in the Public Option in the Senate bill the Democrats plan to bring to the floor.

This is not the definition of bipartisan agreement on legislation. David Axelrod’s remarks to prove his point is incomprehensible.

STEPHANOPOULOS: And yesterday, the president in his radio address suggested that he might be willing to take away their antitrust exemption.

Why would the healthcare insurance industry have an antitrust exemption to start with? The healthcare insurance industry’s pricing is non transparent to both the government and the private sector. Actuary calculations are a mystery, an inaccurate estimate and an easy way to cook the books.

STEPHANOPOULOS: Was he saying that he would sign a bill that would take that away and open the door to premium caps by the Congress?

David Axelrod avoided the question because it was a threat to the healthcare insurance industry. I think he knows the healthcare insurance industry wins no matter what kind of healthcare reform bill passes and the public loses.

AXELROD: Let’s talk about the insurance industry for a second, because most of the stakeholders in this health care debate are at the table, they’re trying to produce real reform, because everyone knows the current system is unsustainable.

Everyone is at the table because they want their pet dog to be included in the enormous injection of money into the healthcare system.

David Axelrod is also perpetuating the myth that Health Insurance = Health Care. Health Care really is medical care. We have excellent medical care in our country when you are sick. We have few systems at all levels of society to deal with prevention of disease.

Two prominent examples are the food industry and obesity and air pollution and chronic lung disease.

Health Care (Medical Care) is what your Doctor does for you.
Health Insurance is a third party’s promise to pay Doctors out of that third party’s own funds.

The healthcare market is unsustainable because of the pricing in the healthcare insurance industry. This is very different than medical care.

AXELROD: “The insurance industry has decided now at the 11th hour that they don’t want to go along with this. One of the problems we have is we have a health care system now that functions very well for the insurance industry but not well for the customers. In the last 10 years, healthcare premiums have doubled.”

David Axelrod is correct here. He fails to say that Medicare and Medicaid is outsourced to the healthcare insurance industry.

STEPHANOPOULOS: President Obama is saying, if they don’t play ball, they’re going to lose their antitrust exemption?

AXELROD: 10 years ago, 15 years ago, the healthcare insurance industry spent 95 percent of their premiums on health care. Now it spends 80 percent with a 20% profit. More of the money is going to bonuses, salaries, administrative costs.

George Axelrod got the numbers wrong. The healthcare insurance industry keeps more than 20% of every healthcare dollar. It buries its fees in the Medical Loss Ratio calculations.

AXELROD: One thing we ought to do, the House bill has in it provisions that — that says that if they fall below a certain level of return of these medical loss ratios — in other words, the amount of money that they spend on actual health care, that they — they need to rebate some of that money to consumers. That seems like a good idea.

If anyone believes that the healthcare insurance industry will refund premiums I have a bridge to sell you.

Medical Loss Ratio = Incurred Claims / Earned Premiums

The Medical Loss Ratio reflects what Insurers spend on Doctors and Hospitals, ignoring the accounting standards that direct inclusion of all claims against the entire insurance company ( including its shopping centers, blimps, skating rinks, billboards, management salaries "and so on") in the category called "Incurred Claims" – not just medical claims.
This is accounting slight of hand – including non-medical expenditures in a calculated value called "Medical Loss Ratio". President Obama is not fixing the accounting standards that generate enormous profits for the healthcare insurance industry at consumers’ expense.

The greater the incurred expenses, the less money there is available to cover medical expenses. The result is greater than the Medical Loss ratio. The artificial Medical Loss Ratio justifies increases in premiums by the healthcare insurance industry even as physician and hospital reimbursement decrease.

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http://www.state.mn.us/mn/externalDocs/Commerce/Hospital_Medical_Dental__Indemnity_Corp_Non_Profit__111403105213_HMDI.pdf

President Obama should be focused on the Medical Loss Ratio accounting standard. If he did the fair thing there would be no need for this disastrous healthcare reform legislation.

President Obama’s hea
lthcare reform plan is not for the people by the people. It is for special interests. The special interests are government and its control as well as the profit of the healthcare insurance industry. If is not for patients and affordable costs and improvement in the quality of medical care.

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

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Nothing New: Same Old Stuff Spun Slightly Differently: Part 3

September 19, 2009
inMedicine: Healthcare System, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust
• Leave a comment

 

Stanley Feld M.D.,FACP,MACE

There are many disconnects between President Obama’s goal and his strategy to reach the goal of universal coverage, affordable coverage and increase in quality of care.

Universal coverage is a critical element in healthcare reform. Who is going to pay for universal coverage? Should it be the government? Should the “richer” taxpayers pay for the poor? Should physicians pay for it?

Should we ration care? Former Mayor Ed Koch (New York City) is a vigorous 82 year old male with coronary artery disease. Should he be able to decide on treatment for his coronary artery disease or should the government panel make the decision? Mayor Koch, a Democrat, is upset that the governments panel will decide for him under President Obama’s healthcare reform plan.

Affordable coverage is another goal of President Obama’s healthcare reform. Can America achieve affordable premiums without increasing deductibles, increasing taxes or rationing care? If a citizen cannot afford the deductibles who is going to pay it?

It is not plausible.

Increasing the quality of care is another important goal of President Obama’s healthcare plan. What is the definition of quality of care? Is the definition of quality what the government panels decide is quality care? Should quality medical care be defined as treating people back to health and having them satisfied with the service? Quality healthcare has not been adequately defined.

The healthcare system is dysfunctional and wasteful. How much waste is in the healthcare system? Where is the waste?

President Obama is not attacking the factors that add to the majority of the waste? He is proposing a healthcare system that is destined to create more waste. Stakeholders are profiting from the waste. Those who are profiting do not want to eliminate the waste. The healthcare insurance industry profits most from the systems’ waste.

Waste should be defined as non value added services to medical care;

 

Even with all this inefficiency and unnecessary care the average costs for the entire Medicare population including end of life issues is $6,600.00 per person. This includes the healthcare insurance industry’s administrative services fee.

Medicare Advantage was design by the government and the healthcare insurance industry to help the government unload its Medicare entitlement liability and cost over runs. The government pays an additional $3,000.00 subsidy or $9,600.00 per person for the Medicare Advantage program..

If President Obama and his administration concentrated their efforts on eliminating this waste they would not have to concentrate on reducing costs by decreasing reimbursement of physicians and hospitals.

What exactly are we paying for when we pay insurance premiums? Figure 1 is the breakdown of the percentage each segment costs. Notice in 1988 the out of pocket expenses(17.4%) for private insurance policies almost matched the entire Medicare costs(18.8%). Increased deductibles with President Obama’s healthcare plan will double this percentage. The result will not be affordable coverage. It will result in a rationing of care for everyone but predominately seniors.

DOUBLE CLICK ON EACH FIGURE TO ENLARGE

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Figure 1 Sixty five percent of private insurance dollars in Minnesota went to administrative services including brokerage fees. Only 15% went to physicians and 20% to hospitals. Figure 2

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Figure 2

"The social contract for medical care should be between the physician and patient. Private Insurers aggregate 32.6% of the dollars that Americans pay in the hope of getting care, and insurers pay out only 4.9% of the money collected from the nation’s Consumers to physicians. Insurers pay out only 6.5% to hospitals.  Administrative service fees could not possibly add 15% value to the care of a patient. The administrative service fee can and must be reduced markedly."

http://www.state.mn.us/mn/externalDocs/Commerce/Blue_Cross_anfd_Blue_Shield_of_Minnesota_051606085017_BCBSM.pdf

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Figure 3

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Figure 4

President Obama has been accused of putting the healthcare insurance industry out of business. He will not. He will continue to pay it an inflated administrative services fee. The healthcare insurance industry will be more profitable because it will have more customers and make a greater profit.

Critics of President Obama’s healthcare reform plan made these statements.

 

“The half-dozen leading overhaul proposals circulating in Congress would require all citizens to have health insurance, which would guarantee insurers tens of millions of new customers — many of whom would get government subsidies to help pay the companies’ premiums.”

"It’s a bonanza," said Robert Laszewski, a health insurance executive for 20 years who now tracks reform legislation as president of the consulting firm Health Policy and Strategy Associates Inc”.

 

The insurers are going to do quite well," said Linda Blumberg, a health policy analyst at the nonpartisan Urban Institute, a Washington think tank. "They are going to have this very stable pool, they’re going to have people getting subsidies to help them buy coverage and . . . they will be paid the full costs of the benefits that they provide — plus their administrative costs."

In his speech to congress President Obama essentially repeated his generalities. He did not get to the essence of creating affordable healthcare reform. His plan will fail to Repair the Healthcare System if it is passed by congress just as the Massachusetts plan has failed.

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