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Why? How? In Healthcare Reform

Stanley Feld M.D.,FACP,MACE

“Why” and “How” are the two most important questions to ask when revising a business model for healthcare reform.

“Why” the healthcare system has to be reformed is easy to answer.

The present business model for healthcare reform has failed. No one would dispute the fact that the healthcare system is dysfunctional and is failing because of the increasing cost of care.

Medical care is still excellent, although, with the changes in "Obamacare" up to this point it is becoming questionable.

The healthcare system’s costs are unsustainable.

President Obama’s healthcare reform act has accelerated costs. The healthcare system is rapidly headed toward total collapse.

The collapse will occur when the government cannot produce funds to pay the costs. We have heard that Medicare and Medicaid will run out of money by 2016 or 2024.

In reality, Medicare and Medicaid have no trust fund money. The federal government has borrowed the monies paid into the trust fund.  

The initiatives introduced by "Obamacare" with pilot studies have failed or are failing. Initiatives such as chronic disease management, pay for performance, electronic medical records, accountable care organizations and revisions of coding have all failed or in the process of failing. These initiatives were performed by hand picked practices, hospital systems and clinics.

How could we expect ordinary medical practices to carry out these initiatives?

The problems increase daily. Nancy Pelosi was right when she said, “We would know what is in the healthcare reform act when we pass it.”

Nancy Pelosi was right. The more we learn the worse it gets.

“The Affordable Care Act impose much stiffer financial penalties on hospitals with higher 30-day readmission rates than for hospitals with higher 30-day mortality? Isn't preventing death, the ultimate bad outcome, much more important to incentivize”

Let us assume the goal of President Obama’s healthcare reform act is to increase quality of care at affordable cost with improving access to care.

Perverse incentives are created for hospitals to avoid hospital readmissions for sick people in order to be penalized less than if the patient dies in 30 days. The incentive is bizarre.

The penalty for having higher rates of risk-adjusted readmissions starts at 1% of a hospital's Medicare DRG rates for heart failure, pneumonia, or acute myocardial infarction patient discharges as of Oct. 1, 2012 and increases to 3% in 2015. 

But hospital 30-day mortality, which moves into the formula in FY 2013, is just one of more than 20 quality elements that make up the 1% to 2% of the value-based purchasing incentive payment hospitals with higher mortality will lose. 

The result could be a decrease in healthcare expenditures in a community because there would be less sick people in the community. The community would be healthier because the sicker people were not readmitted to the hospital and died. The result might be lower healthcare costs.

Is this what Americans want to do to fulfill President Obama’s goals?

The wrong incentives are being advocated with Obamacare.

A perfect example would be Beth Israel Deaconess Medical Center in Boston. According to Medicare's current Hospital Compare spreadsheet Beth Israel is "better than" other U.S. hospitals in 30-day mortality rates for all three measured disease categories—heart attack, pneumonia and heart failure.

On the other hand Beth Israel is "worse than" other hospitals in 30-day readmission rates in the same disease categories.

Beth Israel Deaconess will be vulnerable to steep penalties for readmissions starting October 1,2012. 

Any business would be crazy to continue a practice that would cause them to lose money. The hospital would start realigning resources in favor of avoiding readmission at the cost of improving survival rate.

Dr.Ashish Jha, , a Harvard School of Public Health policy researcher and practicing internist said,

"I don't know any patient who would say, 'Oh, well, I'll take a higher risk of dying as long as I don't have to be readmitted,' "

"It's hard to fathom that now avoiding readmissions are more important than mortality rates.”

I could visualize the Obama administration confessing that this was an unintended consequence.

This is just one of the unintended consequences resulting from President Obama’s healthcare reform act.

The “How”  in President Obama’s healthcare reform in many circumstances is all wrong.

It is time Americans said enough is enough.

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

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Health Policy Wonks Confused By Physicians Resistance To Adopting Electronic Medical Records (EMRs).

Stanley Feld M.D.,FACP,MACE


Electronic Medical Records (EMRs) for physicians’ offices and hospital systems could be great for patients’ care and physicians’ education. Remember, patients and physicians are the primary stakeholders in the healthcare system.

If the deployment of EMRs were directed toward the benefit of patients and physicians, they would be more readily adopted. If they were used to teach physicians how to be better doctors and patients to be more educated about their disease physicians would accept EMR’s more readily.

Instead, the fully functional EMR is designed to be punitive to physicians and patients. 

President Obama’s motives are obvious to me. He wants to have total control over the healthcare system. Obamacare will be punitive to physicians, hospital systems and patients when fully implemented. The fully functional EMR will be a principle tool.

The government has tried to spin the news about EMR adoption.

 “The most recent CDC data would seem encouraging for EMR adoption. It claims EMR use has finally been adopted by 50% of physicians and hospital systems.”

Actually less than 11% of physicians and hospital systems have adopted fully functional EMRs. The fully functional EMR is so vital to President Obama and his Healthcare Reform Act and government control over the healthcare system.

If the VA systems’ EMR and the Kaiser systems’ EMR were excluded, the percentage is lower than 11%. The administrations of the VA system and the Kaiser system have full control over how medical care is delivered in their system.

Their computer system’s purpose is to direct physicians’ care and tell them what they can and cannot do.

A  “fully functional EMRs mean the payers’ (government or healthcare insurance company) can have full control over the physician’s work-flow.  A fully functional EMR along with 68,000 ICD-10 codes (vs. 18,000 codes in ICD-9) and adoption of the 5010 billing system would put the government in full control of patient care.

I do not think physicians and hospital systems have fully thought out President Obama’s fully functional EMR.

They know from their installation of non-functional EMRs that EMRs are disruptive to workflow at first. They know EMRs do not increase their quality of care and have not decreased the cost of their care.

 A major reason for non-adoption is physicians and hospital systems cannot afford the $60,000 per physician for a fully functional EMR plus the annual maintenance and services fees.

The government is using a carrot and stick to get physicians to adopt the fully functioning EMR.

The stick is the threat of decreasing physician reimbursement if they do not adopt the EMR.

“Important! For 2015 and later, Medicare eligible professionals, eligible hospitals, and CAHs that do not successfully demonstrate meaningful use will have a payment adjustment in their Medicare reimbursement. 

The carrot is President Obama’s $19 billion dollar  meaningful use incentive program. His meaningful use incentive program will not come close to paying for a functioning EMR.

Eligible professionals can receive up to $44,000 over five years under the Medicare EHR Incentive Program. There's an additional incentive for eligible professionals who provide services in a Health Professional Shortage Area (HSPA).

Eighty-eight hundred dollars a year for 5 years will not hack it when you have to pay at least $60,000 upfront. The only way it will work is if the government had the ability to take away a physician’s license to practice medicine if they did not comply with the government’s wishes.

President Obama included funding for this program in his economic stimulus package (trick play) and not toward the cost of Obamacare.  

Why? If deployed the meaningful use incentive program is a key element in its ability to control physicians’ behavior and judgment. It will restrict also patients’ access to care.

 Jonathan Bush, the Founder-CEO of AthenaHealth (a major EMR supplier)  said,

 “It’s healthcare information technology’s version of cash-for-clunkers,” and because it is actually all about control.”

 “The goal of EMRs is to wrestle control of healthcare away from the doctor-patient relationship into the hands of third parties who can then implement their policies by simply removing a button or an option in the EMR.”

 If a treatment option is not available in the computer program physicians can’t select it.  If the appeal process is difficult and time consuming the tendency for physicians is to not fight the system.

Patients will only be able to get the healthcare that they “qualify” for according to a bureaucracy and a non-elected committee. (IPAB)

Physicians will become the instrument of government rationing of care by the use of a fully functioning EMR.

It will eliminate physicians’ need to think. It will destroy the physician patient relationship. It will increase the cost of running the practice and in turn the cost of medical care.

The ideal fully functioning EMR should be provided free to physicians and hospital systems. The software should be cloud based with physicians having the option to own the data or keep it stored privately in their offices.

It should be a teaching tool for physicians and not a tool that threatens punitive actions if physicians do not get the coding right.

Most physicians might not have consciously thought out the threat to their clinical judgment and the physician patient relationships. They nevertheless subconsciously feel something is wrong.

Once President Obama understands this reasoning he might understand the resistance of the medical community.

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

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Lindzonpalooza 5

Stanley Feld M.D.,FACP,MACE

I have just returned from San Diego and Lindzonpalooza 5

Howard Lindzon is one of Brad’s friends.

Howard is an entrepreneur and angel investor. He also has a Venture Fund. One of his companies is Stockwits a stock discussing social network.

His venture fund is called SocialLeverage. Howard describe himself as follows,


“My current start-up is called Stocktwits and I am a co-founder and CEO.

I also manage a hedge fund and have done so since June of 1998.

I make early stage investments though Social Leverage.

I am a partner in two other funds called Knight’s Bridge Capital Partners .

My hobbies include driving my kid’s around and staying awake.

I am in pursuit of the perfect sleep solution.

Endless bad ideas – trust me!

Howard Lindzon"


Brad was an early investor in Stockwits after one call to Howard.

As the story goes Fred Wilson met Howard and invested in Stockwits. Fred told Brad he ought to talk to Howard. He said, Brad, “you will like him.”

The next year my wife and I were in Phoenix. Howard lived in Phoenix at the time. Brad told me to call Howard and go to lunch. Brad said, “I would like him.”

 I fell in love with Howard’s attitude toward life and business. Howard is the absolute rainmaker.

Howard is bright, witty, balanced. He keeps life in perspective. Howard started  Lindzonpalooza  five years ago after he moved to Coronado California.

He invites entrepreneurs, angel investors, venture capitalists and me to the event.

I am none of the above. I believe I was invited because Brad told Howard he should invite me. I would enjoy the meeting. The age range of the attendees is 21-46. I beat everyone by at least 28 years.

It is an invigorating weekend. Everyone just hangs out and networks. Howard does not believe in agendas. He believes in letting things happen.

Each year the Lindzonpaloza has grown in number. Howard says if you are invited and do not attend you will not get invited for a few years.


There are many repeat attendees who would not dare to miss the Lindzonpaloza, me included. The “kids” I have met here are some of the brightest people on the planet. Most of them have been successful monetarily with large exits from their technology. Most are in the process of building another company. 

They say they do it because they have a passion for technology. They don’t do it for the money.

All have crossed paths with Howard.

None are on the hunt for venture money.

All are on the hunt for ides and opportunities.

All work at least 80 hours a week.

All work that hard because they love their business.

All want to make a difference.

Many of the companies they represent or represented made a transformational difference to society.

This year Howard formalized Lindzonaloza. He had newly discovered companies present their products.


Each company presented a new tool to enhance one’s experience on the Internet using a smartphone, computer or tablet. Each company could potentially have a disruptive effect on legacy institutions.

Their innovations were intellectually stimulating to me.

A great thing happened to me during the meeting. I have had trouble getting my blog, (Repairing The Healthcare System), to be followed by young, successful people.

The younger generation must pay attention to what is going on in the healthcare system.

At the end of one of the presentations Brad pulled me up to the front of the room.  He announced that, “my dad needs some help in getting his blog viral.”

 “My Dad has not used Twitter effectively.” Brad then asked everyone in the room to become a follower @sfeld and retweet his address to all their followers.

Brad and Stan 2 4 14 2012

Interlude: Brad Feld of the Foundry Group gets up to the podium with his dad, Stan.  These guys are two of the most legendary venture investors of our era.  Brad is a Jedi.  Stan is hilarious.  Brad pleas with us to help his Dad – over 70 and "the oldest member of the Lindzonpalooza gang" – get more followers and go viral (he is @sfelfd). 

Well, I’ll be dammed. The followers are pouring in. I promised to keep them entertained with photo’s using Instagram.  I will also be sending them a link to my blog post at every posting on Twitter.

My blog will provide them with the true poop and even provide some viable business opportunities.

Thank you, Howard and Brad for giving me the opportunity to enable my blog to become viral using social media. I thank everyone for signing up. 

Howard, thank you for inviting me to Lindzonpalossa 5. 

I love you Brad.


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

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  • AndySwan

    As attendee I can confirm that all of the above is true and that this is the best summary of the event posted so far.

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An Excellent Reader Comment On P4P (Pay for Performance)


Stanley Feld M.D., FACP, MACE

The costs of healthcare system have become unsustainable. There are many ways to reduce the costs in a sensible way. Pay for performance is not one of them.

President Obama and others have concluded that the way to reduce the costs is to change the way physicians are reimbursed.

President Obama is ignoring the fact that physicians receive only 10 to 15% of the healthcare dollars spent.

Who is the rest of the money going to?

Pay for Performance (P4P) is stupid idea to me. It sounds good to some.

P4P failed to produce cost savings during the major pilot program by undefined criteria. President Obama is rolling out the program to the rest of the country because he and his healthcare staff believe in it.

In my opinion P4P will only increase the cost of healthcare.

I offer President Obama a piece of advice. He should listen to retired physicians who practiced medicine for many years and understands patients’ wants and needs.

It is entirely possible that President Obama wants to collapse the healthcare system and have the government become the payer of last resort. Then he can create his beloved “single party payer” healthcare system.


Medicare is a “single party payer” in its present form is unsustainable and will disappear in 2016 or 2021. The addition of another 30 million people to its roles will make it less sustainable.

The problem with a single party payer system is that it will not work in America. It is turning out that it does not work in England and many other countries.

A retired radiation oncologist sent me this comment about the Pay For Performance (P4P) concept.



Now there's an excellent example of a term that sounds good but, absent a definition of the second "P", has no meaning at all.

I haven't heard anybody address that issue in a way that could be understood and accepted by all of the parties at interest.  Patients, physicians, hospitals, and insurance companies might be considered in the same light as the proverbial blind men describing the elephant of performance.

Perhaps, instead of "evidence-based medicine" we could look at developing the concept of "goals based medicine". 

Yogi Berra is credited with the thought, "If you don't know where you're going, any road will get you there". 

If the second "P" stands for performance, the question is begged, "Whose performance?" The assumption is made that the party doing the performing is the physician, I suppose. 

If that is the case, how is performance to be measured? 

Patient satisfaction? (pretty subjective).

Compliance with some set of guidelines? (If so, whose guidelines?)

Restoration of health of the patient?  (Now there's an interesting idea, that sounds pretty good, but must take into account the state of health being experienced by the patient before the current illness began.) 

 Quality of life? (Who defines that?) 

 Relief of symptoms?  (Pretty easy to assess, but different patients will define the severity of symptoms differently, and nobody else's definition really matters to each one of them.  People "suffer" differently, and some of their suffering is culturally derived.)

 Extension of some number of life-years?  (Quality adjusted, or just more years?  Who can tell?) 

Almost never, in the initial transaction between a physician and a patient and family is there any conversation about the goals or expectations to be accomplished in the experience the "system participants" are entering into and sharing. 

I would suggest that such an interaction might be the place to begin to define "performance".  Were the expectations met?  If they were, we have done our job.  If they were not met, there is either more work to be done in the current relationship between physician and patient, or there is a need for the formation of a new relationship between the patient and a new physician. 

Left unsaid is that such a discussion of goals and expectations, if held as early as possible in the relationship, may be the time for the physician to share with the patient what is capable of being accomplished, in contrast to what is expected to be accomplished.

Only when these terms are understood by all of the parties, can "performance" be adequately measured,

If "P4P" becomes the way services are valued, it is the only rational process through which the transaction can result in fair compensation. 

Bureaucrats sitting in offices far away cannot do this, only those directly involved in any clinical situation can. 

And, to makes matters more difficult, every clinical situation will differ from every other clinical situation in one way or another.


This physicians comment is an excellent argument for a Consumer Driven Healthcare System. Consumers must have the right to pursue their own destiny and be responsible for their own choices.

Consumers must own their healthcare dollars even it those dollars are given to them by the government. Consumers must have a financial incentive to be responsible for their own health and healthcare needs.

My Ideal Medical Savings Account accomplishes this. It can provide first dollar coverage to all at a lower cost to the healthcare system presently and motivate Americans to have a healthier life style further reducing the cost.

Mandates do not work!

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

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Pay For Performance (P4P) Pilot Project Fails

Stanley Feld M.D.,FACP,MACE

The CBO announced that the P4P pilot project did not reduce the cost of providing healthcare nor yielded long-term gains in mortality.

"Tying financial incentives to performance, often referred to as pay for performance, has gained broad acceptance as an approach to improving the quality of health care.1-4 

The Centers for Medicare and Medicaid Services (CMS) recently completed a 6-year demonstration of pay for performance for hospitals through the Premier Hospital Quality Incentive Demonstration (HQID), and the Affordable Care Act calls for CMS to expand this program to nearly all U.S. hospitals in 2012. 

P4P sounds good theoretically. The government paying more money for better outcomes sounds logical from the payer’s point of view.  It is not logical from the payees’ (physicians’) point of view.

The emphasis of P4P is on physicians and hospitals practice process to improve quality through the use of evidence based medicine.

The evidence based medicine guidelines are determined by the Independent Physician Advisory Board (IPAB). The evidence based medicine should improve quality and lead to better patient outcomes and decrease healthcare costs..

This pilot project showed that P4P does not produce the desired result. The hope was to inspire poor performing centers to improve and good performing centers to perform better in order to receive incentive pay for performance as a bonus.

"In summary, we found little evidence that participation in the Premier HQID program led to lower 30-day mortality rates, suggesting that we still have not identified the right mix of incentives and targets to ensure that pay for performance will drive improvements in patient outcomes.

  Even though Congress has required that the CMS adopt pay for performance for hospitals, expectations with regard to programs modeled after Premier HQID should remain modest."

This last sentence is great advice.

Congress and President Obama should reexamine their premise.

Patients’ performance is left out of the P4P program. Patients’ attitude toward their disease, adherence to taking medicine prescribed, compliance with prescribed therapy and patients ability to make rapid therapeutic adjustment of medications depends on patients and not physicians or physicians’ practice process.  

There is no question that the process of care is important. There is no question that processes based on evidence must be learned by all physicians. There is also no question that processes based on evidence rapidly change and must be swiftly adjusted.

The most important determinant in patients’ outcome depends on patients. Physicians’ practices should not be judged disregarding patients’ behavior.  

It is the physicians’ responsibility to teach patients how to be “Professors Of Their Diseases.”

Just imagine how many re-hospitalizations could be avoided for congestive heart failure if patients were motivated and educated to detect the onset of congestive heart failure and how to increase the dosage of medication to abort the episode.

Think of all the heart disease that could be prevented if obesity was prevented.

Think of all the acute asthma attacks and uncontrolled diabetes whose hospitalizations could be prevented.

Think about all the complications of diseases could be prevented if patients were incentivized to lead a healthy lifestyle.

At present the administration is trying to change incentives. It will not work.

The reason is simple.

I have written several blogs on why P4P will fail. 

When will someone listen?

I clearly explained the reasons for predicting P4P’s failure in a blog written in April 2007.

 Pay for Performance(P4P): Another Complicated Mistake.


April 15,2007

Stanley Feld M.D.FACP,MACE

The intuitive meaning of Pay for Performance (P4P) is the better you perform the more you get paid. This is true in many industries. The concept is well advertised in the well publicized salaries of professional athletes. Recently we have heard of grotesques salaries of fired CEO that get hundreds of millions of dollars in termination salaries for doing a bad job. They are getting paid well for poor job performance.

The underlying assumption is that with P4P, physicians should be responsible and accountable for medical outcomes. The physicians will be reimbursed for medical outcomes. The reimbursements made to the physicians are under the control of the government or insurance industry. These entities are interpreting the criteria for the quality of medical outcomes.

We have seen what happened to Dr. Petak even though his treatment is correct and saves money for the health care system. Many physicians feel P4P is simply code for reducing physician reimbursement. In an environment of existing mistrust between all the stakeholders, the potential is great for generating more mistrust. The growth of the mistrust will result in more dysfunction in the healthcare system and increased cost.

The definition of quality medical care has not been made clear by the secondary facilitators while proposing the P4P rollout. Organized medicine has not been outraged by the proposal. No one has analyzed it with all the potential for unforeseen consequence. Can P4P prevent the onset of disease or decrease complication rate for chronic disease? Who are the responsible stakeholders for increasing quality? The stakeholders responsible for medical quality care are the physician and the patient. If the patients do not adhere to the medical regime prescribed, the quality of care will not improve. Many studies have shown that compliance rates are as low as 30% for certain treatments. Patients will not have improved medical outcomes if they do not follow a treatment plan. Why should the physician be penalized? Why doesn’t the government and the insurance industry declare that patients are equally responsible for both good and bad medical outcomes? The structures of bureaucratic systems would not permit it because not only would it be judged to be insensitive it would be socially incorrect and result in a public outrage.

Patients have to be educated and become professor of their disease, be responsible for their health behaviors such as filling their prescriptions, exercising , decreasing obesity, not smoking or drinking. All preventive measures must be promoted. Patient need to be responsible their behavior and adherence to therapy. The physicians should not experience all of the brunt of poor outcomes or the credit for good outcomes. The P4P movement is misguided.

They are misguided when they think this is the fix. P4P represents another false hope and complicated mistake that in my opinion will lead to great cost to the healthcare system without improvement in medical outcomes.

I have defined quality medical care in a measurable way. None of these criteria are individual indicators of quality medical care. The system of quality of care should be the quality measure of prevention of medical complications and not the measurement of the parts on the path toward quality medical care. The patients’ activity is at least half of the quality equation to reduce the complications of chronic disease.

However, the secondary stakeholders are making a mistake with P4P. They have developed artificial quality indicators that do not measure quality medical care accurately. They want to force physicians to follow their indicators rather than use their medical skill and medical judgment. The way to improve quality is not to be punitive to the physicians. They are only one half of the quality equation to reduce medical care cost. The way to do it is to set up a competitive environment.

Lasik surgery is a perfect example. It stated with all ophthalmologic doing Lasik for $3000 an eye. Insurance did not pay for Lasik surgery. Some ophthalmologists’ developed focus factories that did just Lasik surgery. They developed economies of scale and expertise that enabled them to reduce the price. Patients chose these focused factories on the bases of price, and outcomes rather than the local opthalmologists. The price in some cities is now $250 an eye. Remember patients are not stupid. However, they are the 50% of the quality care equation. They will spend their money wisely and drive quality, if they own their healthcare dollar. It is our job to teach patients how to make the correct decisions. It is not the insurance industry or the government to restrict access to care and judge what is best. I believe the market place can do it.

In diabetes the healthcare system sends 15% of the healthcare dollar on 5% of the population and rising. Ninety percent of those dollars is spent on the complications of diabetes. If patients with diabetes were given control of their healthcare dollar and were rewarded for avoiding complications of diabetes we would be on our way to a competitive environment for the treatment of diabetes. The patients would search for physicians that had economies of scale and expertise to help them improve their quality of medical care. They would drive the creation of focus factories in diabetes as well as any other chronic disease. The system would then be stimulating competition and improving quality medical care not punishing physicians and patients. A negative and faulty penalty system (P4P) will not solve any of our problems. I predict it will only make it worse for the patient and the physician and more profitable for the insurance industry and hospitals. The physician and patient community ought to be outraged. They are not because we are a sound byte society and do not pay attention to the details of issues.

The P4P fad is simply another reason why patients need to be in control of their healthcare dollar. They should be rewarded if they avoid complications and improve their health. Physicians should compete to develop focus factories in order to generate economies of scale and improved medical outcomes. All of this has to be done in a price transparent environment.


April 15, 2007 in Medicine: Healthcare System | Permalink

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CBO Revises Obama’s Savings Estimates

Stanley Feld M.D., FACP,MACE

President Obama has continually tricked the Congressional Budget Office with erroneous assumptions about the projected costs of Obamacare. 

On March 20,2010, Douglas Holtz-Eakin former chief of the CBO wrote that “the Congressional Budget Office reported that, if enacted, the latest health care reform legislation would, over the next 10 years, cost about $950 billion, but because it would raise some revenues and lower some costs, it would also lower federal deficits by $138 billion.”

This statement was written shortly before passage of President Obama’s healthcare reform act.

The accounting for the CLASS Act (Community Living Assistance Services and Supports) was one of President Obama’s tricks to the CBO’s scoring. It was an additional entitlement. Premiums from the CLASS act were supposed to decrease the deficit by $123 billion over a decade.

Realistically, the CLASS Act costs should have been estimated to be of an additional $70 billion per year and not a profit of $70 billion a year. 

The CBO was given an estimate of cost and revenue that indicated that the CLASS act would offset a substantial amount of the deficit created by Obamacare. 

In November 2011 the CLASS act was shut down by the government.

“CLASS quietly became an amendment to President Obama’s healthcare reform act at passage. There was little discussion about CLASS when the Democrats in congress passed President Obama’s healthcare reform act. There was little discussion until Kathleen Sibelius’ announcement to discontinue CLASS. “ 

 She said,

 “ the administration was shutting down Class. After 19 months of research and consultation, “we have not identified a way to make Class work at this time.”


Douglas Holtz-Eakin predicted in March 2010,

"In reality, if you strip out all the gimmicks and budgetary games and rework the calculus, a wholly different picture emerges: The health care reform legislation would raise, not lower, federal deficits, by $562 billion." 

Gimmick 1.  The bill front-loads revenues and backloads spending. Taxes and fees for the bill would begin immediately. The new subsidies would be deferred so that the first 10 years of revenue would be used to pay for only 6 years of spending.

Gimmick 2.  Operating costs for Obamacare were estimated to be $114 billion annually for the decade.  These costs were designated as discretionary spending and were excluded from the Congressional Budget Office’s scoring.

Gimmick 3. The CLASS act was expected to generate $70 billion annually totaling $700 billion in premiums over the first 10 years.  The $700 billion was counted as reduction in the healthcare budget deficit. Benefits the premiums were supposed to finance were assumed to be zero over the first 10 years. An estimate of the cost of the benefits does not appear in the CBO scoring creating the $700 billion of healthcare reform budget deficit reduction.

This was a nice trick.

Gimmick 4.  The administration and legislation anticipated higher Social Security tax revenue of $53 billion to offset Obamacare spending.

Social Security revenues were expected to rise as employers shifted from paying for health insurance to paying employees higher wages plus the penalty.

How this supposed increase in Social Security payments could be use to lower the deficit created by healthcare reform is beyond me.

 Gimmick 5.  The legislators put a provision in the bill to have corporations’ deposit $8 billion in higher estimated tax payments in 2014. The goal was to meet the budget targets of the President Obama’s healthcare reform bill for it first five years.

The corporations’ actual taxes would be unchanged in 2014 and 2015. The extra estimated taxes would need to be refunded to the corporations in 2015. The net effect is simply to shift dollars from 2015 to 2014 to lower the deficit created by Obamacare in 2014. The 2015 deficit would simply be increased.

Gimmick 5. The government proposed takeover of all federally financed student loans is rolled into the healthcare bill. The government expected to generate $19 billion in deficit reduction. The student loans have nothing to do with healthcare or deficit reduction that would be attributable to Obamacare.

Gimmick 6. The last bite of unrealistic accounting is the proposed trimming of $463 billion in Medicare spending. The $463 billion in “savings” was to be used to finance new healthcare insurance subsidies granted in the healthcare insurance exchanges.

This notion is where the double counting comes in.

The government cannot afford to cut payments for physicians’ services to Medicare patients. Medicare would lose its physician work force. Seniors would be burdened with much higher healthcare bills if physicians dropped out of Medicare. This increase in expense would be in addition to the ever-increasing Medicare premiums.

There are no convincing innovations in Obamacare that would decrease Medicare’s operating expenses.

All of the pilots studies for innovations have failed to be executed or save money. 

The CBO’s scoring of Obamacare in March 2012 is closer to the truth. It is still a long way from reality.

Obamacare deficit is estimated to be $1.762 trillion dollars. Included expenses reduce the deficit 1.253 trillion dollars. Figure 1



The problems with the CBO estimates are that costs will rise for three reasons.

First is the increase in baby boomers becoming Medicare age will increase Medicare spending.

Second is the expansion of Medicare, Medicaid and the SCHIP programs to 32 million uninsured people.

Third is the increase in enrollees in the subsidized healthcare insurance programs through healthcare insurance exchanges.

Surveys have shown that as many as 60% of employers a going to or thinking about dropping healthcare insurance and paying the penalty. Sixty percent is much higher than the estimates included in this CBO scoring.

 America is developing a gigantic budgetary mess as a result of President Obama’s Healthcare Reform Act.

Innovative thinking with an entirely new strategy is necessary to avoid an impending catastrophe and dissolution of Medicare.

All of President Obama’s “innovative programs” are failing at a huge cost to taxpayers.

Wake up America.

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

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    Repairing the Healthcare System: CBO Revises Obama’s Savings Estimates

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Why Obamacare Will Not Work

Stanley Feld M.D.,FACP,MACE

If Obamacare’s mandate is declared unconstitutional by the Supreme Court, the Obamacare’s nightmare for the future of medical care in America is over quickly.

If the Supreme Court declares Obamacare constitutional, it will not take a long time for Obamacare to fail on its own.

Obamacare will fail because it is out of touch with the needs of the primary stakeholders (patients and physicians).

Obamacare does not address some of the big problems causing the healthcare system to be so expensive.

It does not cure the healthcare insurance industry’s exorbitant administrative fees or administrative waste.

President Obama’s healthcare reform plan has ignored dealing with tort reform to help solve the practice of defensive medicine.

It does not provide reasonable incentives to for physicians to be innovative. It does not provide incentives for patients to be responsible consumers of healthcare.

The Accountable Care Organizations shared savings is too risky, too complicated and unreliable. It does not address consumers’ responsibility for adhering to treatment plans.

Primary stakeholders do not need and most do not want to be dependent on and controlled by a central government. Consumers want freedom of choice. Consumers do not want unelected officials making choices for them.

President Obama is using the wrong strategies in developing policies to Repair the Healthcare System. He is telling participants what has to be done. He should be providing incentives to get stakeholders to enthusiastically do the right thing.

Obamacare has already produced hundreds of thousands of pages of new regulations and constructed a costly bureaucratic structure that is guaranteed to be wasteful and inefficient.

The delays in implementing proposed programs attest to the fact that stakeholders are not interested in being forced into these programs.

President Obama’s deadlines have passed and been extended for Accountable Care Organizations, implementation of meaningful use EMR, ICD-10 coding conversions, 5010 billing requirements, chronic disease management implementations, pay for performance pilots and health-insurance exchange delays just to name a few.

All these delays are not only costly but they indicate a passive resistance to these programs. The media has not put these facts together for consumers.

Recently, the Congressional Budget Office (CBO) reported that Obamacare would increase the deficit more than one trillion dollars over the next ten years rather than saving $500 million dollars as Obamacare originally scored by tricky accounting. A McKinsey study reported that Obamacare would generate an even greater deficit.

I believe these deficit estimates are low compared to the eventual real cost. The increased Medicare costs of baby boomers is going to send the deficit out the roof. Medicare is unsustainable in its present form. Medicare must become an incentive driven program.

Otherwise Medicare will disappear completely for all seniors..  

Why is this happening? President Obama is charming man and a good talker.  The media is a gullible listener.

The media has refused to connect the dots for the American public. They have also not reported many of the dots toward failure.

I believe the media really has bought into President Obama’s disinformation campaign. It believes he is doing the right thing.

A close inspection of President Obama’s programs show nothing has worked so far.  All of his pilot programs have failed to this point.

I have shown in past blog posts that either the programs are wrong or the designs of his pilots are faulty.

The public is waking up to President Obama’s phony accounting and manipulated budgets.

People are waking up to real causes of the dysfunction in the healthcare system that Obamacare is not addressing. They are starting to understand that the secondary stakeholders add little value to their care. President Obama’s Healthcare Reform Act does not attack the abuse of the secondary stakeholders.

The bottom line is Obamacare is a failed concept. It is going to greatly increase  our deficit and hasten America’s path to insolvency.

I believe the basic underlying problem, which is not being address, is that none of the stakeholders in the healthcare system want to be serfs under the central control of the government.

The government has to find a way to put control of consumers’ health and healthcare destiny in the consumers’ hands.

Government’s job should be to help consumers become educated buyers of healthcare. Government should not make consumers’ healthcare choice for them.      

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

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Great Questions!

Stanley Feld M.D.,FACP,MACE

A reader wrote,


If the Supreme Court watchers are correct, it appears the court will strike down parts or possibly all of Obamacare later this spring.

If that happens, it is a good thing?

And if so, where do we go from here?” 


The court should overturn Obamacare. In my view Obamacare is unconstitutional.  President Obama deceived the congress, the public and the Congressional Budget Office about the true costs and intent of the law.

I hope the Supreme Court overturns Obamacare. Obamacare will be a disaster. Obamacare will destroy healthcare in this country. The public, media, and congress cannot yet understand it.

Many congressmen said they did not read the entire bill. Nancy Pelosi said “Don’t worry, we will understand what is in the bill once it has passed.”

 Democratic spin-doctors and the traditional media accused the Internet page-by-page summaries of the bill as being anti-Obama propaganda.

President Obama disguised the costs and intent of Obamacare in a deceptive and clever way. It is a bill that puts America on Hayek’s Road to Serfdom.  

Obamacare promotes dependence on the central government as it expands a failed entitlement.

It eliminates initiatives and incentives.

It decreases freedom of choice.

It expands an entitlement that America cannot afford.

America cannot afford to keep paying for the entitlement (Medicare) at the present enrollment. The states cannot afford the Medicaid entitlement much less its expansion.

President Obama ignores this enormous cost burden whose real cost estimates   increase monthly by the CBO as the impact of Obamacare’s rules and regulations increase. Non-elected officials without a congressional oversight mechanism make rules and regulations.

How would you like to be told which doctor or which hospital you can go?

How would you like your physician to treat you in a certain way dictated by the federal government?

Medical science is changing rapidly. Best practices change quickly. The bureaucratic machinery implements change very slowly. Decisions for best practices and payment will be made by committee and not individualized by your physician using his best clinical judgment.

How would you like to put your health and healthcare needs and decisions in the arbitrary hands of some government institution that is being forced to save money? 

How would you like to be forced to purchase a government insurance policy that has the right to restrict access to care and ration care?

How would you like the government to make all your healthcare decisions for you?

How would you like to not have freedom of choice and the right to participate in decisions about your health and healthcare decisions?

How would you like to be paying taxes for a very inefficient bureaucracy that does all these things to you?

Obamacare has already demonstrated that it is inefficient, wasteful, plays favoritism at the government's whim with no recourse by the individual.

An overriding goal of President Obama is central control of one sixth of the economy. He is pasting his healthcare reform act on top of a doomed 2011 business model. 

Obamacare is accelerating the collapse of this doomed business model. Obamacare must be repealed or eliminated.

This has been healthcare journey so far.



Figure 1 shows the path of the healthcare business models since 1945



Figure 2 describes the hairball of interference by the government and the healthcare insurance industry in the physician patient relationship. It also describes the fragment view of the patient as a result of this hairball.

 If the reader is interested in the reasons this all came about click on the underlined heading to read the source material in figure 3.



Figure 3: This is an easier figure to click on the source material and reference. The chasm between the patients and physicians must be eliminated in order to have an effective healthcare system.



Figure 4: America is at the critical turn now. All of the mistakes President Obama is making to Repair the Healthcare System are listed. He is going to accelerate the collapse of the healthcare system. The mistakes are referenced in the underlined headings. The references can be read by double clicking on the underlined headings.



Figure 5: My proposed future direction can be seen in this figure. The detail below these headings can be read by double clicking on each heading. Some of the headings are included in Obamacare. President Obama’s problem is he is going about implementing them in the wrong way.



Figure 6: The spokes of the business model that must be implemented in the correct way are outlined in this figure. Details of the future state business model have been described in previous blogs.


I hope I have answered the reader's questions

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

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