Health Plan CEO Georganne Chapin believes managed care can evolve with universal coverage! I thought her money quote was pretty amusing.
So then, if Americans are interested in universal coverage, the industry supports it, and the money is already in the system, when will it happen? “In 1996, I said it would come in 10 years,” Chapin says. “We still have four more months.”
Of course she runs a non-profit Medicaid HMO, so her attitudes may not represent those of a typical AHIP member CEO!
Barry, it is impossible to tell the difference between a stress test that was done because of legal concerns versus one that is done because it is profitable as hell. Even IF it were done to protect your hindside, it certainly doesn’t hurt that it is profitable as hell. There will never be a prosecution here because of overuse, because malpractice concerns will always be used as an excuse.
>> “Besides, since cardiac procedures are among the most well compensated under Medicare, CMS has not been able to control utilization very well among the Medicare population either.”
Medicare is not where these overcharges most often occur; it is usually on the private side.
>> “I think this is an area where improving information technology can be very helpful in flagging individual doctors and group practices that are ordering or performing significantly more services, tests and procedures than peers.”
If the majority are over-utilizing, whether mildly or wildly, the only thing they can do is flag the extreme examples and send a letter of warning. I think the analytical procedures you suggest would help; I’m just not sure if they have them.
I think there is a big difference between performing totally unnecessary surgery and, say, being too quick to order a stress test based on a defensive medicine mentality. The former should be treated as a crime and prosecuted to the full extent of the law.
Besides, since cardiac procedures are among the most well compensated under Medicare, CMS has not been able to control utilization very well among the Medicare population either.
I think this is an area where improving information technology can be very helpful in flagging individual doctors and group practices that are ordering or performing significantly more services, tests and procedures than peers. If the information technology and the auditing staff and capibility are up to the job, we should be able to materially increase the perceived probability that overutilizing providers will be identified, challenged, and, if appropriate, sanctioned. New York City in the early 1990’s showed that it is possible to drive crime down a lot by employing sophisticated analytical techniques paired with adequate law enforcement manpower. I think the same principles can be applied successfully to this aspect of healthcare.
I looked back on the Redding Medical Center comment, Barry, and if the doctors on this thread are willing to comment you will learn that it was NOT a rare event and indeed it occurs all too frequently. We had one cardiologist in our town that was investigated by the FBI after complaints from other physicians about his excesses and over-utilization, and why he did not end up behind bars is beyond me.
I haven’t read it yet Barry, but have it on order. I appreciate your comments and will look at it carefully.
I will probably view it differently, I suspect, because of my 35 years in the industry and first-hand knowledge of the shenanigans and abuses that I’ve witnessed. But I’ll report back after I’ve had a chance to read it. It has had good reviews elsewhere.
I read her book a couple of months ago and am unpersuaded. The Redding Medical Center episode was an extreme, rare and newsworthy event but hardly typical or representative of the system.
The more I learn about this industry, the more convinced I am that the power of information from price and quality transparency to electronic medical records to home monitoring can lead to material improvements in care quality while controlling costs.
From a book review of: Maggie Mahar’s
…. Her book offers a guided tour to the medical landscape few patients like
to envision—the one where profit, not health, guides the actors.
Money-Driven Medicine is really an investigation into the ways the quest
for cash infects and distorts every level of the health-care system.
…. And did you know that your hospital is likely a private institution,
dedicated to improving its bottom line by lowering labor costs, which means
dangerously overstretching your anesthesiologists and surgeons? Or that senior
administrators in the FDA consider the pharmaceutical industry, rather than the
American people, their clients? Money, Mahar believes, is destroying the
quality, integrity, and efficiency of the American health-care system, leaving
it prey to all manner of incentives and imperatives decent people would be
repulsed by if they understood.
…. What Mahar excels at is finding the instances where that market failure
turned deadly in a routine way. We hear about plenty of corruption and evil, but
her innovation is to clearly lay out how the pursuit of profit, conducted in
ways that would be neutral and natural in any other industry, turns deadly when
transposed to medicine. One of her many examples concerns California’s Redding
Medical Center, one of the best cardiac-surgery centers in the state. At the
head of the Heart Institute was a pair of hotshot surgeons, Dr. Chae Hyun Moon
and Dr. Fidel Realyvasquez Jr., renowned in the field and respected by their
colleagues. At least until the FBI raided their offices, charging them with
forcing hundreds of unneeded surgeries upon unsuspecting patients.
About half of their operations were found to be unnecessary; a quarter were
performed on patients with no serious heart problems whatsoever.
Thirty-eight-year-old rancher Steven Hunt made the mistake of setting foot into
their unit in late 2001. He was opened up for a bypass operation two days later.
Not long after, the incision developed a hernia, and his upper-body strength
deteriorated, ending his work as a rancher. The tragedy of it all was that Hunt
suffered from nothing more than high blood pressure, easily controllable through
medication and diet. When you buy an unnecessary widget, you risk your garage
space. When you receive an unnecessary heart surgery, you risk your life and
livelihood. But what Moon and Realyvasquez were doing—increasing their volume by
aggressively pushing their product—is the most natural method of increasing
profits around. The problem, as Mahar explains, is that though it’s easy enough
for a customer to pass on the widget, it’s far harder to argue with a trained
medical professional warning that any delay on the implementation of his
solemnly intoned recommendations could mean death.
Mahar also adds a level of macroanalysis too often absent in this sort of tome.
She smoothly lays out how each level of the system has ceased operating in the
checks-and-balances style in which it was conceived, and has instead fallen prey
to capitalism’s irresistible push towards aggregation and reinforcement. As an
example, you’d expect, possibly, that the hospitals and doctors would be kept in
check by the insurers in a sort of countervailing powers arrangement, as it’s in
the insurer’s interest to limit the treatments offered to its members. But, as
Mahar explains, the insurers make their money before the treatments are
delivered, by denying insurance to those likely to need it. Unable to really
fight at the point of care, insurers have grown adept at passing on the costs,
squeezing employers and individuals with double-digit premium hikes at the same
time the insurance industry enjoys double-digit profit growth.
… The question, of course, is why this goes on. Conservatives, enmeshed in
their current push for so-called consumer-driven medicine, would have you
believe that patients are to blame—they demand the surgeries, excited as all
get-out to spend a couple weeks on a luxurious hospital cot. Under this
analysis, all the system needs is more patient vulnerability. As Arkansas
governor and likely 2008 presidential candidate Mike Huckabee puts it, “One of
the reasons we have a health-care crisis is because, as a consumer, I don’t have
that much skin in the game. A lot of us feel there needs to be a transformation
from a third-party [insurance] system to more [financial] participation by the
Mahar neatly dispenses with that excuse, reminding readers that patients don’t
actually know what they want. The doctor-patient relationship, indeed, is built
on a trust akin to deification—we rely on their extreme training and vast
knowledge to navigate an organism that we inhabit but don’t understand, and we
take their recommendations as the unswerving expressions of their education and
oath. Forgotten in this analysis is that medicine is a business like any other,
and profit matters. Even the motto of non-profit hospitals has become “No
margin, no mission,” to express the reality that their capital comes from bond
investors, and if the investors aren’t happy, there won’t be a hospital left to
treat either the poor or the rich.
But that, of course, is the way of things in a system where the richest
stakeholders have created a poor healthcare system but an excellent business
model that generates massive profits, a certain portion of which are funneled to
legislators across the country in order to convince them that the preservation
of our free-market system is of the utmost importance.
It always amazes me how people who disagree on an issue can view the same set of facts so differently. Simple semantics also can get people arguing past each other.
With respect to the Massachusetts plan, what you see as nibbling around the edges, the powers that be in Massachusetts view it as a significant effort that can make a considerable difference in sharply reducing the number of people in the state without health insurance, and, at the same time, cutting the number of free riders that drive up costs for everyone else and pay for it by more prudently spending the money already in the system, including federal Medicaid dollars. The biggest disappointment in the plan is that they were not able to eliminate many of the expensive mandates except for the population between 19 and 26 years old. For example, expensive invitro fertilization is still a mandated benefit, which strikes me as ludicrous. The most important single objective of any health insurance plan should be to cover catastrophic events so families will not be bankrupted by high medical bills.
The concept of choice is another interesting topic. You seem to think that the only thing that matters is provider choice, though, even here, more and more people are finding it harder to find doctors who will accept new Medicare patients, especially when those people move to a new geography and leave behind all of their established medical relationships. To me, choice also includes plan design choice — differences in deductibles, co-pays, out of pocket maximums, scope of coverage, network access and customer service. One size does not fit all.
Even existing Medicare’s plan design is far from ideal. It has an unnecessarily low deducible of $125 for Part B services and then pays 80% of covered charges WITH NO OUT OF POCKET MAXIMUM. Most people, as a result, find it necessary to buy a Medi-gap policy at considerable expense where a higher deductible of, say, $1,000 and a reasonable out of pocket maximum of $2,000-$2,500 might serve them better. Seniors could still buy a Medi-gap policy, but I suspect many would opt to absorb the higher deductible themselves.
On Part D, most insurers have been amazed at how good a job seniors have done in figuring out what the best deal is for them. At the same time, program costs are coming in below expectations. Choice is a good thing, and satisfaction rates are now high after some initial start-up problems. It is a top priority at CMS to make comparing plans easier by the next open enrollment period. I also point out that Medicare itself had plenty of startup problems when it was first launched in 1965.
The most frustrating aspect of the current healthcare system to me is that it has never been allowed to function like a true market because of the absence of price and quality transparency. That is finally starting to change. Before long, Wellpoint, for example, hopes to be able to offer its insureds a package price for a total episode of care including hospital, surgeon, anesthesiology, rehab, drug fees, etc. That would be a huge leap forward if they can make it happen.
Barry, Massachusetts is an example of trying to trim around the edges without
cutting into the meat. Here’s a piece on it by
Robert Kuttner. In time it may become workable but will it be better than
Medicare-for-all (which, contrary to Glasscock’s view, already has lots of
physician and hospital choices). That’s the kind of choices the public wants, not
the mish-mash of plans we have today and most certainly not the 45 Medicare drug
plans. Ask Glasscock’s public what they want and give them a choice of Medicare for all
and they’ll jump at the option.
But I can see that HE would not like that, because he makes money on higher
I’m surprised that Dr. William Mcguire, the CEO of United HealthGroup, even
showed up. Did he mention his $1.6 billion stock package?
But that he thinks we should require that everyone has at least bare bones
catastrophic coverage is interesting. Who will pay for it? Will it keep them out
of bankruptcy court? Is it any better than something that works (Medicare)?
At a healthcare sector investor conference I attended over the last two days, the luncheon keynoter today was Governor Romney who gave a very polished and articulate presentation about the Massachusetts healthcare reform plan. One interesting point that he made is that once the plan is implemented on October 1st, we will probably find that we made some mistakes that we will address and fix as best we can. He also commented that neither he nor his legislature got everything they wanted even though the combined vote in the Massachusetts House and Senate was 198-2! How’s that for bipartisanship?
Karen Ignagni, the lobbyist for America’s Health Insurance Plans, commented in her presentation that probably 18-20 states will look carefully at the Massachusetts plan and may adopt parts of it. Nobody will adopt all of it. One clever idea that they came up with is something called The Connector, which basically allows an individual to buy health insurance with pretax dollars by running the money through an employer’s payroll deduction apparatus. Ms. Ignagni also commented that Massachusetts started from an advantageous position with only 7% of its population uninsured (vs 15% nationally) and a well above average median income making it possible for more people to afford insurance.
I asked the CEO of Wellpoint, Larry Glasscock, about the possibility of Medicare or Medicare Advantage for all over the next five years. He insisted that our culture demands lots of choice and, thus, prefers a hybrid system (public and private) even though it means somewhat higher administrative costs.
Dr. William Mcguire, the CEO of United HealthGroup, thinks we should require that everyone has at least bare bones catastrophic coverage and find a way to provide that, especially for the one-third of the currently uninsured that make too much to qualify for Medicaid by not enough (<$50K) to afford health insuance.
There are lots of ideas floating around, but nobody will get everything they want. The key is to find common ground that will move us toward universal coverage and slow the rate of cost growth.
It makes no sense for us to get pissed at each other, but we must also realize that we are not going to solve this here. It’s a good debate, and without disagreement we have no debate anyway; just a discussion. As a member of the Wisconsin Health Coalition my efforts are being put into getting something pushed through at the state level. The stakes are lower (only $1.4 million in industry campaign contributions to battle).
I’m glad Dr. Jekyll is back, I like him much better.
“you wouldn’t like working for me and I wouldn’t like working for you.”
Maybe, but don’t be too quick to conclude that we couldn’t work together. (BTW, I have held more senior positions than you may think – I got into benefits management at the end of my career, after two prior retirements, because I had the opportunity at a huge non-profit organization in New York whose name you would instantly recognize. I was a consultant before that – surely a thinker’s role not a doer’s role.) Here are some points to consider:
First, doers and thinkers need one another. Both will fail to achieve all they can without the other’s help. Every Steve Jobs needs an administrative whiz, so he does not have to worry about details – but he needs to listen to his administrative whiz. Every administrative whiz needs a Steve Jobs because that’s where the big ideas come from. The administrative whiz makes ideas work with the backing of the entrepreneur. No question, pairing the two types in a constructive relationship is a huge business asset – provided each is willing to listen to what the other brings to the table.
Second, nothing can be sustained that isn’t practical to begin with. I applaud your disdain for money in health care politics. You describe this as a threshhold problem. I think it may not be a threshhold problem at all. My opinion? The influence of money is not a problem that can be “solved” but is instead an intractable fact of life that must be lived with and managed as best as one can.
Third, and related to the second, human nature is a huge factor in health care, and human nature has not changed in recorded history. Human nature is self-serving. That would have to change before political chicanery or greed or the influence of money on health care decisions could be suppressed. My opinion? It ain’t gonna happen. Human nature is a fact of life that must be accepted and worked with. T.S. Eliot once said “It is folly to dream of creating a system so perfect that no one needs to be good”. That’s wise advice.
Finally, it’s my belief that a choice between a quick fix now vs. a gradual transition over the next 20 years is a false choice as regards our health care system, er, industry. I think the more practical path is an evolutionary one, in which decisions are made in the presence of firm knowledge – even if slower – rather than made more quickly in the absence of knowledge.
It must also be kept in mind in mind that there may actually be no “solution” to the “problem” of health care costs, as “solutions” are often framed. In fact, it may be that the U.S. public actually prefers medicine delivered and structured the way it is, if only their access to it could be guaranteed. I believe that it is always unwise to force a solution on a majority of unwilling adults, whatever the issue.
John, we may see in our lifetime a heath care system that works for the public. It may be your way with less government or my way with more government. I don’t trust for-profit CEOs and you seem to. But I am mad as hell and don’t want to wait the 20 years I think it is going to take if we do it your way.
Sometimes I jump when taking it slowly is wiser, but I usually get there, and get there faster than others. Clearly I am a doer and you are a thinker. You don’t like my aggressive approach and I don’t like your cautious approach. I want it fixed overnight and you are satisfied with a time-tested approach. We differ in opinion. No, you wouldn’t like working for me and I wouldn’t like working for you. The bottom line is that neither of us will win this on this blog!
You ask what I think is the solution, and frankly, it has nothing at all to do with health care. It has to do with our moneyed political system. Get the money out of politics and we’ll see politicians working on behalf of the voters instead of their campaign contributors. Get the $100 million in campaign contributions out of the picture and we’ll see the health care system fixed overnight.
The sad part is that this affects all issues, not just health care. If I had an employee that was taking money on the side in exchange for company assets, I’d have him jailed. In our political system we just re-elect them, because cash-on-the-side has been made legal. Follow the money and you’ll see exactly why GATT, NAFTA, CAFTA and the WTO are a part of our daily lives.
I don’t care what the issue, even ones I agree with, I don’t want my US or state representative’s vote sold to the highest bidder. I prefer public funding of campaigns like they have in Arizona and Maine. With a Congress funded by the public we would have seen a solution to this problem (and most others) virtually overnight. For $10 per taxpayer per year it’d be a bargain at 200 times the price.
I’m sure we disagree here too, because it is a government solution. And though I am a fiscally conservative Republican I see this as the only way to balance budgets, reduce taxes and fix our health care system.
But I’ve seen what privatization of our political system has achieved, and it is not a pretty sight. There are certain things the “free market” can solve, but neither funding the political system nor running our health care system fall into that category.
Thank you John.
So Jack, your true nature emerges. Doctor Jekyll vanished like – what is the phrase? – a fart in the wind. Welcome, Mr. Hyde.
I did not realize that radical change to 17% of the U.S. economy is the equivalent of starting some private small business somewhere. I did not realize, as a big-time CEO of course would, that having the big idea is sufficient and planning is not required from the guy who has the big idea. My apologies to you sir. You probably taught the management courses I had to study for.
But I do not mock you because I dislike you. I’ve mocked some of your comments because I think they are richly deserving of mockery. You show scant interest in proof of concept – except for repeating the equivalent of “aw, Ma, all the guys are doing it”. You show little curiosity toward implications of your ideas that you consider boring – for example, ignoring the question I posed about comparing over-65 populations in U.S. vs. other countries. Your very first statement on this thread was
“The truth is, universal health care is being blocked by the for-profit health care interests . . . our government is bought and paid for by the highest bidder.”
But you suggest no solution for those problems, rather go on and on as though Medicare-for-all will not be blocked by these same interests. Sure vested interests are worth fighting. But how do you propose to defeat them? Leaders don’t just point – they know the way. I don’t think you know the way any better than anyone else, which leaves us right where I said we are:
“There is no shortage of intelligence or knowledge. There is no shortage of ideas. There is no shortage of debate and differences of opinion. Everyone who has an idea about what the elephant really looks like advocates their idea and finds fault with other ideas. Almost no one admits to changing their mind. What specifically does this illustrate? That one of the main obstacles to resolving our “crisis” in health care is the presence of so many rival constituencies, which has assured a majority to oppose any suggested solution. I don’t see that changing, do you?”
You have become hostile when pressed even a little bit. But then again, you are the big-time CEO, and I’m just me. I’m sure all the people who agree with you think you are brilliant as far as you know.
A long time ago you picked your poison, and you picked government poison. You may get your wish. But it won’t be because you just wished for it.
Best of luck to you.
Gee, John, no mention that my sarcasm was right out of your post to me on Sep 6, 2006 7:03:26 PM? What a shame. You did that one so well.
But your stonewalling is not productive. You sound like the kind of guy that needs to create a committee to move the water cooler. It is silly to continue discussion with someone intent on delaying the successful overturn of a flawed system. What in the hell makes you think Americans are so different than Canadians? If I started my company 28 years ago with your posture of investigating every nook and cranny I never would have opened the business. We can start the ball rolling with Medicare for all and actually – get this John – innovate and make corrections as needed! Perhaps foreign to you, but that’s what successful CEOs actually do.
Jack, I admire your discipline in avoiding the hard questions.
A consultant from Laputa would have at least as much practical advice as you offer. (And, I’m pretty sure, could be much more easily located than panels of nonconflicted physicians, economists and industry experts in the field that are neither in practice, receive funds from the industry, or are part of any political party. Oh, hell, a unicorn would be easier to locate than that.)
So after all, you are unpersuasive, because you suggest no practical ideas to implement the grand scheme you advocate. Oddly enough, you are airily unconcerned. And all along I thought you were a serious man.
Yeah sure right whatever you say John. Maybe we need that consultant from Laputa.
“Did I not answer that when I quoted the Johns Hopkins study? “”
No you did not.
My question pertains to the over-65 population, not the entire population. You answered with data for entire populations in which the over-65 segment is not separately identifiable. Medicare is a single-payer arrangement for the Medicare population. How does the actual experience for the Medicare population compare with the experience for the over-65 populations in other single-payer systems?
I think a lot of work remains to be done to demonstrate the suitability of a Medicare-for-all scheme. Practical tests in the states represent part of that work. So is knowing in advance how per capita costs for the Medicare population compare with the per capita costs for a similar (i.e., over age 65) population in other single-payer system. Understanding the effect of single-payer vs other factors is highly relevant to Medicare-for-all. It seems to me we should be looking at this data.
I do not agree Medicare is perfect, even for patients. It is expensive, not only as to its premiums, but as to its direct cost-sharing in the form of copays, deductibles, and coinsurance. It is bureaucratic and cumbersome. It is arbitrary. It has not controlled fraud. To point out that private systems display most of these characteristics is not an argument for Medicare.
On the other hand, you say Medicare is perfect for patients. Thus our difference.
There may be many people who agree with you, and I know there are many people who agree with me. That is another reason that practical testing of Medicare-for-all in the states is necessary: it will replace many assumptions with facts, will generate information in place of theory, and will allow people a better chance to base conclusions on what is known rather than what is not known but theorized to be true. Testing is the rational way to go – in my opinion.
You want to test in Wisconsin, fine; and let’s have more than one test. And no, this is not testing “Medicare” it is testing Medicare-for-all.
“As a physician I would want the reimbursements set more fairly and consistent.”
Who can be against fairness and consistency? But when it comes to details of how to achieve these desireable outcomes, you seem uninterested. I would like to know before Medicare-for-all becomes law, who will decide what is fair and consistent? Panels of nonconflicted physicians, economists and industry experts in the field that are neither in practice, receive funds from the industry, or are part of any political party? Once Medicare becomes Medicare-for-all, politicians will have a significant say in coverage policy decisions and in reimbursement decisions. That is the way it works in other single-payer systems. It would not be different here – regardless of the incumbent political party.
And exactly how will such decisions translate into dollar copays and coverage of provider charges? I can assure you that many companies who presently pay the bills for their benefit plans feel that provider charges are too high. I think Uwe Reinhardt recently concluded “It’s the prices, stupid”. So will it be more fair if government administers Medicare-for-all and pays docs more-for-all?
Higher provider reimbursements increase health care costs. With Medicare-for-all, even assuming Medicare is perfect-as-is, there will be a large cost-shift onto the backs of insured people under 65 because of the high Medicare copays, deductibles and coinsurance. Is that fair?
I simply don’t think you have thought your ideas thru below some very high level. You wish to set policy and leave details to others. Very well. But details will make or break the plan. That’s yet another reason for testing variations in the States.
“I have no problem with disclosing your profession and biases.”
I have no problem with people knowing my profession. However, you wish also to assign “biases” and I do have a problem with that.
See, Jack, sarcasm is one thing – it either hits the mark, or it does not. But asserting that others are biased is another thing. It is a means to dismiss others’ points of view without having to deal with their point of view; it’s a less-than-honest tactic, and that’s my honest opinion.
Barry, This is a completely fair assessment of where we want to move our system. The trick is, of course, finding a way to accomplish it, given the political system we are stuck with. I contend that we need a major turnover in congress, and that may just happen in November. I speak as a (generally) Republican voter, the current crop has to go.
Correction: Seven major areas, not four.
In any healthcare reform model, everyone agrees that we want to acheive universal coverage at a cost the society can afford. The four major areas that could be impacted in significant but uncertain ways are:
1. Adminstrative costs.
4. Competition and Choice
5. Innovation (useful new drugs, devices, etc.)
6. Rationing and Wait Times
7. Affordability and Cost-effectiveness
#1 and #3 need to be minimized, #2 balanced, #4 and #5 maximized, and #6 the society needs to reach a connsensus as to what is acceptable and reasonable in order to achieve #7.
Personally, I would be willing to accept somewhat higher administrative costs in order to insure that we do the best possible job on #4 and #5 which will require maintaining a strong role for the private sector even with full taxpayer funding. Medicare Advantage for all could work depending on the reimbursement rates and assuming the option to buy private insurance for those who want it and can afford it were also available. This would be the equivalent to paying to send your kids to private school even though you are also already paying for the public school system.
None on this thread seem to recognize or care about the direction of the dominoes as they are now falling. Both physicians are patients are sitting ducks, and the guys with the trigger are the employers. He who has the cash, rules.
Employers are banding together to work out a solution, and it’s only a matter of time before they start buying and owning their own physicians and hospitals. And then physicians will start getting reimbursed what the profit-making CEO wants to pay them versus a government that typically pays more than the private sector.
Even today they are outsourcing cardiac surgery to India, and companies that are self-insured are splitting the savings with the patients. Soon they will be doing that in their own facilities.
Wake up, Guys!
>> "How do Medicare per capita costs compare vs single-payer plans for a similar
population? This question focuses on the over-65 populations in the U.S. vs.
single-payer countries. Please advise if you know where relevant comparative
data can be found."
>> "I say again, there should be real-world testing of Medicare-for-all
schemes to see how they will actually work in the under-65 populations, and how
different variations of Medicare actually perform in the real world. I think the
states are perfect laboratories for this. "
>> Is it necessary to try different variations? Yes. Unless, that is,
Medicare is perfect as-is. Jack do you believe Medicare is perfect as-is?"
>> "Do you believe it’s possible to control utilization while not deterring
people from utilizing the plan? ….. please advise what copay dollar amounts
are necessary, in your opinion, to achieve the desired balance between
utilization and utilization control."
>> "To what expenses do you recommend the copays be applied? If not all,
which would be excluded?"
>> "I think you should trust your own argument more, and refrain from
denigrating those who may disagree with you.
Barry, Medicare bases its reimbursement on a cost formula with a regional
multiplier to offset cost of living variances. Whether Reinhardt’s estimate of
10%-12% of income (on top of existing taxes) is correct I don’t know, but I do
know that employer costs for health care represents about 15% of wages, and I do
know that these costs are passed to the consumers anyway in their product
prices. So I’d rather see us eliminate the middleman and pay them up front at
Whether the co-pay is $10 or $20 for doctor’s visits, or $100, is not the real
issue. There are some who argue that any co-pay at all simply deters people from
getting care until the disease has worsened, and in fact co-pays cost more to
administer than they save. Though I lean toward them, this is not an issue that
I would battle.
>> "That’s why we need real world experience. There are plenty of people who
will go to the doctor for very minor issues"
>> "With respect to doctors who only take cash and not Medicare, I don’t
think this adds any administrative complexity to speak of."
>> "I don’t see where fraud has anything to do with a doc who chooses to
operate outside of Medicare."
>> "I think we would be well served if everyone’s medical ID card contained
both a picture and a fingerprint."
>> "Regarding end of life care, many people already have living wills"
>> "I noticed in your take on taxes that you did not indicate what percentage
of income the flat tax should be that you would apply to the $25K – $150K income
group or how much we should confiscate from upper income people under your
>> "How much more do you think we can take from them before we destroy their
incentive to work, invest and take risks?"
>> "I cannot think of a single government entitlement program dating back to
Social Security’s passage in 1935 that turned out to cost less than the
so-called experts estimated it would."
Jack you asked
“If it is missing why don’t you simply repost the question?”
Here it is:
How do Medicare per capita costs compare vs single-payer plans for a similar population?
This question focuses on the over-65 populations in the U.S. vs. single-payer countries. Please advise if you know where relevant comparative data can be found.
“How many years would you like to retry Medicare before you are satisfied that it works?”
You misrepresent my position by stating that I want to “retry Medicare”. Medicare now applies only to the Medicare population. I say again, there should be real-world testing of Medicare-for-all schemes to see how they will actually work in the under-65 populations, and how different variations of Medicare actually perform in the real world. I think the states are perfect laboratories for this.
Is it necessary to try different variations? Yes. Unless, that is, Medicare is perfect as-is. Jack do you believe Medicare is perfect as-is?
I agree with Barry Carol and, I am sure, others, that cost control won’t be achieved with your idea to “control utilization with co-pays that are not so high it deters usage in the early days of an illness”. What is one to make of that statement? Do you believe it’s possible to control utilization while not deterring people from utilizing the plan? Please clarify. Also, please advise what copay dollar amounts are necessary, in your opinion, to achieve the desired balance between utilization and utilization control. To what expenses do you recommend the copays be applied? If not all, which would be excluded?
For what it may be worth, the present cost of Medicare, to the enrolled individual, is as follows:
For most Medicare participants, the monthly premium for Part A – hospital expenses – is $0 and the premium for Part B – ambulatory expenses – is about $90. A retired individual and spouse thus pay almost $180 per month for Medicare A and B. For this premium, the participants get a benefit plan with several different kinds of copays. For Medicare Part A the copay is almost $1,000 per admission. For Part B there is a deductible of $125 per year, after which Part B pays 80% of “allowable charges” where the “allowable” amount is based on data collected in the second prior year. (that is, the premium for 1 January 2007 will be based on 2005 utilization experience). Part D – pharmacy expense – is horribly complex, but for a person whose covered drug expenses amount to $2,500 per year, Part D will reimburse just under $1,700; that leaves $800+ in unreimbursed out-of-pocket expenses not even counting the monthly Part D premium.
Medicare is expensive because the Medicare population are high-utilizers. The same Medicare benefits for the non-Medicare population would cost less than Medicare because the non-Medicare population are lower utilizers. Beyond that, if the Medicare benefits were adopted for the non-Medicare population, everyone should recognize that some significant additional reduction in cost would occur because the Medicare benefits are more restrictive on average than the typical private plan. Reducing the benefits always reduces cost, but it’s not easy to do because it becomes a political issue. That is no less true in the private sector than it is in the public sector.
“Of course you will have to change careers under a Medicare-for-all plan.”
“But maybe by then, when you need it, we’ll get your support.”
These are the kinds of insinuations I mean. You insinuate that I hold the opinions I do because of my job, and that I oppose what you want, because I don’t need it.
As it happens, I retired at the end of June. My opinions did not suddenly change, because they were honest opinions to begin with. That may astonish you, but it’s true nevertheless. Here’s another honest opinion: I think you should trust your own argument more, and refrain from denigrating those who may disagree with you. You would not get away with that in a social setting, and you know it.
Any universal system would, presumably, base premiums on a community rating model, so the young and healthy would pay the same as the old and sick. I believe I remember reading that several years ago, Princeton’s Uwe Reinhardt estimated that it would probably cost approximately 10%-12% of income (on top of existing taxes) to provide Kaiser-like healthcare to the entire population. That estimate may have to be revised upward somewhat to reflect the last several years of experience.
If you think utilization could be controlled by a modest $10 or $20 co-pay for doctor’s visits, I think you will be disappointed, but, of course, I can’t prove it. That’s why we need real world experience. There are plenty of people who will go to the doctor for very minor issues, and they may be even more inclined to go if they feel that they are already paying for healthcare through taxes as opposed to premiums.
With respect to doctors who only take cash and not Medicare, I don’t think this adds any administrative complexity to speak of. Either they take Medicare or they don’t, and if they are shifting costs to anyone, it is the patient who volunteers to spend his or her own money (above Medicare rates) by seeing them. Suppose there is a lengthy wait to see a doc who takes the insurance but I could see on who takes cash (at a higher rate) much more quickly. If I see enough value added in that to want to spend my own money, why shouldn’t I be allowed to do so?
I don’t see where fraud has anything to do with a doc who chooses to operate outside of Medicare. If we do ever go to a taxpayer funded universal coverage model, however, I think we would be well served if everyone’s medical ID card contained both a picture and a fingerprint. I think this would be very helpful in deterring fraud in all government entitlement programs. Besides, even the 9/11 Commission recommended a national ID card program, but the civil liberterians are very uncomfortable with it.
Regarding end of life care, many people already have living wills and advance directives that declare that they don’t want certain care under end of life circumstances. Numerous others opt for hospice care or palliation rather than a do everything possible to keep me alive as long as possible no matter what the cost, which will be paid by someone else anyway approach.
On funding this or any other government program, I noticed in your take on taxes that you did not indicate what percentage of income the flat tax should be that you would apply to the $25K – $150K income group or how much we should confiscate from upper income people under your progressive approach. I know many high income people in New York City who are already paying more than 50% of gross income in combined federal, state and local taxes. How much more do you think we can take from them before we destroy their incentive to work, invest and take risks?
Finally, regarding trying to estimate the cost of entitlement programs, I cannot think of a single government entitlement program dating back to Social Security’s passage in 1935 that turned out to cost less than the so-called experts estimated it would. Given this history, please forgive me if I’m a bit skeptical about how much money we can save under a Medicare (or Medicare Advantage) for all system.
Never mind John, I see where your dog is in the race:
Fembup: “I’m a benefits manager, my organization contracts with several insurance companies and I definitely want them competing with one another on the administrative, claims, and risk-management services they provide. I’ll contract with those that are most competitive regarding the cost/benefit of their services for my situation.” Source: http://www.signalhealth.com/node/492
Of course you will have to change careers under a Medicare-for-all plan. Why would corporations need your services if they are no longer providing insurance to employees?
But corporations should not now nor ever should have been required to be in the business of providing insurance for employees. It is driving manufacturing and jobs off shore. And if corporations do stay in the business of providing insurance, it will soon be an HMO-for-all system.
Barry, my concern with a mixed bag rather than a one size fits all approach,
is that the sick and elderly will cost more and the young and healthy will cost
less, until they too become sick and elderly (unless we are only talking about
reasonable co-pays). But if we had a Medicare-for-all system the individual
wouldn’t have to even worry about opting out for a lower premium elsewhere. I’d
rather see the total costs spread over the entire population and control
utilization with co-pays that are not so high it deters usage in the early days
of an illness. But the decisions are surely out of our control. The real issue
is how to protect physicians and hospitals with fair but not exorbitant revenue.
>> "To the extent that there are doctors and other providers who do not want
to accept Medicare in favor of an all cash model (at higher rates), I would like
the opportunity to go to one of them and be reimbursed by Medicare at Medicare
rates, assuming I have already met my deductible."
>> "There should be an option to consciously opt for a more restrictive set
of services in an end of life situation in exchange for a lower premium."
>> "Premiums paid by beneficiaries (as opposed to revenue from broad based
taxes) should cover approximately 25% of total program costs as is currently the
case for Medicare Part B. We could provide subsidies for low income people and,
perhaps, cap the premium at some reasonable percentage of income."
Trust me, Barry, advocacy groups like AARP influence politicians with votes,
not money. They don’t have the latter or you can bet your bottom dollar they
would be giving cash instead. They know that that is what gets the attention of
politicians. Money buys votes (via TV time and fostered by lazy voters who won’t
or can’t research political votes and are left only with rhetoric to judge
politicians). The rich can vote only once, but their cash can buy gobs of other
votes this way.
>> "If by any chance you know where data exist that are responsive to the
question, please clue us in."
>> "Trying in the states first is being careful"
>> "Why aren’t you eager for more states to experiment with the single-payer
concept you advocate, to demonstrate that your theories do, in real life, work
as you say they will? What are you afraid of? Another TennCare? Beats me."
>> "you will not succeed by insinuating that anyone who disagrees with you is
unintelligent, dishonest, and obstructionist."
I think it is absolutely essential that any Medicare or Medicare Advantage for all system be tested at the state level first. It is a virtual certainty that there will be surprises in how the program actually works in the real world. Versus expectations, there are likely to be differences in cost, utilization, supply/demand imbalances, etc. I strongly believe that you are making a fundamental analytical error in assuming that a Medicare for all system will work the same way as the current Medicare for some system, and to implement this without real world testing at the state level as a substitute for the current healthcare system that currently consumes 16% of our GDP would be irresponsible, in my view. If we do test it at the state level, it will not take long (perhaps a year or two) to get the answers we need as to what works and what doesn’t. We could then make the necessary refinements before proceeding further if it, in fact, proves to be a viable solution.
Jack, you say
“John, I didn’t misunderstand the question, I interpreted as being a simple effort to cloud the issue.”
But you interpreted wrong, and you did misunderstand the question. The citation from your book is factual but not relevant to the question I posed.
If you can find my post (it disappeared, imagine that . . .) you should re-read the question. If by any chance you know where data exist that are responsive to the question, please clue us in.
“We and South Africa are the only two industrialized countries in the world without a universal health care system. And you want to try it in the states first to see if it will work? That’s simply obstructionist.”
Not at all. Trying in the states first is being careful – and it best leverages one of the strengths of a federal republic. It is a superior proposal to yours, because it is not an all-or-nothing bet.
With all the spin about health care, I do not believe that Jack Lohman alone is the sole voice without spin. Even your statement about South Africa is spin – to which the correct response is a shrug. Why aren’t you eager for more states to experiment with the single-payer concept you advocate, to demonstrate that your theories do, in real life, work as you say they will? What are you afraid of? Another TennCare? Beats me.
You have now stated your positions and arguments over and over; some people agree with you and some don’t. If your purpose is persuasion, you will not succeed by insinuating that anyone who disagrees with you is unintelligent, dishonest, and obstructionist.
Tom and Jack,
I think Medicare Advantage for all would be clearly superior to one size fits all basic Medicare for the reasons Tom mentioned. I would also like to see any such system include the following:
1. The opportunity for the individual to take on a higher deductible in exchange for an actuarially neutral lower premium (WITHOUT a contribution to an HSA). Since taxpayers would be guaranteeing funding for the sickest patients, the problem of healthy people draining the risk pool would be mitigated. Any financial risk than can be voluntarily shifted from taxpayers to the individual who wants to take it on is a good thing, I believe.
2. To the extent that there are doctors and other providers who do not want to accept Medicare in favor of an all cash model (at higher rates), I would like the opportunity to go to one of them and be reimbursed by Medicare at Medicare rates, assuming I have already met my deductible.
3. There should be an option to consciously opt for a more restrictive set of services in an end of life situation in exchange for a lower premium. Perhaps QALY metrics could be useful here. This would be somewhat similar in concept to no fault auto insurance with limited rights to sue for pain and suffering being offered at a lower premium than a policy that includes an unlimited right to sue.
4. Premiums paid by beneficiaries (as opposed to revenue from broad based taxes) should cover approximately 25% of total program costs as is currently the case for Medicare Part B. We could provide subsidies for low income people and, perhaps, cap the premium at some reasonable percentage of income.
I share the goal of universal coverage, but I don’t trust one size fits all government solutions. Anything that someone with the expertise and experience that Alain Enthoven supports should, at the very least, be evaluated carefully and thoroughly.
Finally, regarding the influence of money in our political system, it is not just greedy corporations that are driving this. Advocacy groups like the AARP who want as much taxpayer funded coverage as possible for their members wield plenty of influence as well. If they can, most people will try to get someone else to pay for things they want instead of paying for it themselves, and, to the extent that “someone else” (taxpayers) wind up with the bill, costs are likely to be higher than expected, and resource allocation will be sub-optimum.
John, I didn’t misunderstand the question, I interpreted
as being a simple effort to cloud the issue. But here’s a paragraph out of my
book that has those details:
Eric, I don’t have the transition costs and wouldn’t
worry about them anyway given the evidence of the yearly savings. But to argue
that we need to keep our current inefficient system so we can keep tens of
thousands of people employed doing busy-work does not seem real sound. You argue
for free market — that’s NOT what the free market would rally behind. Let’s
retrain the best of them for high-level nursing and medical technician jobs, and
the balance as nursing aides.
You paint a very dismal picture of some diverse group
deciding to defund a hospital’s this-or-that. That has never happened in
Medicare and would not. I would propose, however, reinstituting the
Certificate-of-Need program (which flies in the face of entrepreneurial
physicians and administrators), but the free-for-all in buying expensive MRIs
and then driving tests up to pay for them is a major part of the abuse in both
the public and private systems.
>> "Would you change the medical liability system too?"
>> "Would you change the funding of medical education?"
>> "Would you admit that Medicare Part B — cannot
currently pay its bills as CMS has declared a "payment holiday" for the last 9
days of the fiscal year in 2006?"
>> "PNHP …. is short on details…."
Jack- saying that medicare for all would save hundreds of billions is good political theater — but it would not happen.
Please tell me what the transition costs would be?
What would you do with the, literally, tens of THOUSANDS of people who make their living in various facets of the healthcare industry today?
What would happen when some unelected (but I’m sure very diverse) group determines that the hospital down the street or the mri in town or the xray in the doctor’s office is unnecessary and defunds it summarily? Who should pay the outstanding debt?
Would you change the medical liability system too?
Would you change the funding of medical education?
Would you admit that Medicare Part B — cannot currently pay its bills as CMS has declared a “payment holiday” for the last 9 days of the fiscal year in 2006?
If you cannot provide some degree of reasonable answers to these basic and very limited questions (the list could go on and on), then your plan is not a plan — but rather merely hopes and dreams.
PNHP members are not bad people. They are well intentioned. Just woefully long on hope and magical thinking, and very short on details and the responsibility of individuals in the utopian government run system. (You can check out my interview with Steffie Woolhandler at www. ericnovack.com under past shows)
The difference between Medicare and Medicare Advantage can be seen at
http://www.medicare.gov/Choices/Overview.asp. I’m not sure I like them (or
for that matter dislike them). I think the devil is in the details. If Advantage
relies on for-profit HMOs/PPOs I’d say no. I’ve had experience with both and
they often make their profits by not providing services they are paid to
provide. If they are non-profits that get reimbursed for their costs, I’d look
seriously at them. But I have asked a retired doctor friend who serves with
Physicians for a National Health Plan (http://www.pnhp.org)
and will let you know his experience.
“Could you point me to the data you have seen regarding Medicare per capita costs vs single payer plans for a similar population?”
As I mentioned, I have seen almost no data on this and what I have is not directly on point (it is from France, which is not truly single-payer).
BTW, the post in which I raised this matter seems to have disappeared. Matthew??
I think the question is a good one, as are are all your reactions to it. I just don’t know were (or if) such comparative information may exist. When I asked Jack Lohman if he had any such comparative information, his response was “Only the cost data from every other industrialized nation” which suggests he misunderstood the question.
Guys, I’ve read the article by Michael Cannon of the Libertarian Cato Institute, and I think Cato does some good work in uncovering the excesses of government spending. However, they invariably fail to connect the dots between the “spending” and the political contributions made by the industry leaders and they absolutely oppose the campaign reform that would stop the excessive spending in the first place. Thus I have a hard time agreeing with any of their outcomes. And I’m sure their opposition has a great deal to do with those who fund them, which is corporations (one of which is Philip Morris) who milk the political system.
So the agenda they push is the corporation’s agenda. Why else would they have not tied the $780 billion Medicare Part D government giveaway to the $50 million in campaign contributions of the pharmaceutical industry? The same can be said of the oft-quoted American Enterprise Institute. So you’ll excuse me if I slough off the source.
Barry, you are trying to correlate political promises of 1965 with today’s actuality, and they don’t compute. I’m sure the promises of private health care, if there were any, would be equally distorted.
I think what we have to look at is: what would the alternative costs be if we eliminated the 1500 for-profit insurance companies and put everybody on single-payor Medicare. The current per-capita costs for Medicare are indeed higher than normal — because of coverage for seniors and end-of-life — but if we folded into that system all of the healthy and mildly sick citizens who consumed zero or little care, plus the uninsured, then the per-capita number would be at worst the same as overall spending today or at best lower than today’s costs.
I’d hope for the latter but would accept the former.
Tom, I don’t know what Medicare-Advantage-For-All is, but I will look into it.
The point is that for the same $1.7 trillion we are spending to cover 85% of the population today we could be providing the same level of service to 100% of the people.
I do support (I think it was John’s contention) that we should not be providing designer drugs and medical procedures, and I would even support a reasonable co-pay (with help to the needy).
The Fox News link Barry had provided is evidently outdated. Cannon’s article is also available here, on the Cato website.
John Lohman says “Our choices for the future are Medicare-for-all or HMOs-for-all, and I’ll take the former any day.”
There is a third choice: something like Medicare-Advantage-For-All which I personally think is more likely than simply “Medicare-for-All”. This kind of thing preserves space for individual initiative, competition, and at least short-term profit; can provide for universal coverage; sets expectations among the public; helps align incentives; and can have very strong oversight from the government. As best I understand it, this is approximately what Alain Enthoven has described.
Part of my skepticism about a Medicare for all system relates to a long history of entitlement programs costing far more than their advocates advertised. For example, when Medicare was first enacted in 1965, advocates estimated that hospital expenses (the most costly single piece of the program) would cost $8 billion annually by 1990 (25 years from enactment). The actual cost turned out to be $66 billion in that year or over 8 times higher. Meanwhile, the payroll tax that finances part of the program is twice what was initially projected and was most recently raised in 1994 when the cap on wages that were subject to the Medicare portion of FICA taxes was eliminated. At the same time, general federal tax revenue now covers almost 45% of total program cost with the payroll tax and beneficiary premiums accounting for the rest.
I am also concerned that every medical provider group under the sun will lobby hard with campaign cash in hand to get its particular service included in any basic benefits package.
For an interesting article by Cato’s Michael Cannon on the chronic underestimation of the cost of entitlement programs see:
Could you point me to the data you have seen regarding Medicare per capita costs vs single payer plans for a similar population? To the extent there are differences, it would be interesting to see a breakdown of how much of the difference is explained by (1) deliberate restriction of supply of things like imaging equipment, hospital beds and specialists (2) difference in approach to end of life care, (3) how much providers are paid for like-for-like services, tests and procedures vs the U.S. as well as differences in prescription drug costs, (4) general medical practice patterns related to testing and prescription drug use, and (5) fraud. Presumably, administrative costs would be roughly comparable.
>> “But do you really need to come right out and say that Medicare-for-all isn’t practical, when you list so many impractical conditions that must be met for it to work…. ”
John, all of the problems I list already exist in the health care system, in both the public and private sector. Changing the payor will not make them worse, it will make them better.
>> “starting with eliminating the “moneyed political system”.
It will be many years before we eliminate political corruption. In the meantime our only chance is to get the Republicans out of power. I voted for them, and I’m not happy with what I got.
>> “I said it won’t happen because of out moneyed political system” And I think that’s a meaningful practical obstacle,”
It is, but that doesn’t mean that we stop fighting for it.
>> “The Canadian system has serious flaws just as Medicare does.”
On the NEJM take on the Canadian system, they are a little right. The moneyed interests in Canada (and those in the states waiting at the border with NAFTA in their hand) have been lobbying the parliament to cut funding, with the sole purpose of turning the public against their system. It is partially working, but still 90% favor their system to ours. (Oh, did it decline to 80%? Proper funding will fix it!)
>> “Canada’s high court recently found that “delays in the public healthcare system are widespread, and that, in some serious cases, patients die as a result of waiting lists for public healthcare.”
Oh. Physicians at a university hospital in LA complained about the same thing, in THEIR hospital, when they couldn’t free up beds for patients. And I waited two months to see my eye doctor and am still in a 2-month queue on my knee surgery. Waiting times? Don’t talk to me about that.
The Canadians will now get their chance at private health care, and if they don’t continue to erode the public system it will languish.
>> “demographic, cultural, and behavioral reasons are also significant drivers of cost – much more significant than adminstrative costs or savings that might be realized from a single-payer bureaucracy.”
Give me a break. Don’t try to soft-soap this. They have more administrative personnel in Boston than they do in all of Canada!
>> “Is Medicare cost-effective or just cheap? I say in most cases, the latter. Medicare demands “best price” from physicians and hospitals, but has not shown meaningful control over utilization or fraud.”
Neither has the private system reduced fraud, abuse and overuse, but that has nothing to do with a single-payor system.
>> “Its total costs have grown about as fast as the private sector’s, despite Medicares frequent increases to deducibles, copays, coinsurance, and premiums.”
Medicare’s costs have grown because the life expectancy of the elderly has grown, and they’ve taken on handicapped citizens (though I don’t know to what extent).
>> “If as you suggest Medicare-for-all will produce 33% lower cost for the working population, wouldn’t one expect to see some evidence of that? Do you have any such data?”
Only the cost data from every other industrialized nation. We and South Africa are the only two industrialized countries in the world without a universal health care system. And you want to try it in the states first to see if it will work? That’s simply obstructionist.
What is it about campaign cash that you don’t understand? I didn’t say Medicare-for-all isn’t practical; I said it won’t happen because of out moneyed political system. Aside from the underfunding, it WORKS in Canada. And they spend 50% less than we do. So do the 36 other countries that the World Health Organization has ranked before us.
“And John, TennCare is not Medicare, so you would do well not to confuse the two, whether it worked or not.”
Well Jack, none of the present state universal coverage initiatives is “Medicare”. You would do well to observe that I did not confuse Medicare with Tenncare. I spoke of “universal coverage”. YOU are the one who brings up Medicare.
Even more interestingly, you continue to insist that Medicare in its present form would actually work for everyone, if only money were eliminated from politics, if only politics were eliminated from health care policy, and if only Medicare were directed by nonconflicted physicians, economists and industry experts in the field that are neither in practice, receive funds from the industry, or are part of any political party.) If only, if only, if only.
When there are too many “if onlys” the scheme is not practical, and you seem to agree:
“There is absolutely nothing that will be done by congress”
Practicality is not the only issue, but it’s necessary. I agree with Barry Carol that various states’ initiatives to provide universal coverage to their citizens represent important practical laboratories. Let’s see how they work. TennCare failed. And so far none of these initiatives has been a “Medicare-for-all” approach, so maybe the dogs just won’t eat it.
Barry, thanks for the correction. I frequently reverse them; you’d think I’d learn. But my point stands: The Democrats did it at a time the Democrats were not getting as much campaign money from industry as they are today.
Anyway, you will nonetheless get your way. There is absolutely nothing that will be done by congress because of, as I mentioned before, the $100M in campaign contributions from the health care interests. So the states will have to find a way do it on their own. It won’t be as good, but it will have to do. And at the risk of setting off John again, I do not consider our moneyed political system “strengths of a federal republic.” I consider it bribery and payola.
But money is also in play when you say that physicians are reluctant to take on too many (or any at all) Medicare patients. Why should they, when they can get two to four times the amount of dollars from private insurers? Your dollars, I might add.
Indeed there are some Medicare codes that pay too much and others that pay too little. But the majority of doctors I have communicated with invariably say that if Medicare reimbursements were fair and consistent, they’d prefer the simplified system.
And John, TennCare is not Medicare, so you would do well not to confuse the two, whether it worked or not.
“Let’s prove (or disprove) the viability of universal coverage under a single payer model at the state level first.”
Barry you are 100% correct, in fact this is one of the strengths of a federal republic.
The policy wonks have already found a few states willing to take this on. So, OK now, let them climb to the top of the tower and drop their freakin cannonballs. Let’s see if the 10-pound ball falls any faster than the 1-pound ball. (Surprisingly enough in Tennessee, the answer seems to have been “yes”. Did the wonks learn anything useful from TennCare? How will we know unless there are more experiments at the statewide level?)
First, one small correction. It was Social Security that was passed under Roosevelt in 1935. Medicare (and Medicaid) did not become law until 1965 under LBJ.
Second, with respect to Medicare working well, that is far from a unanimous opinion. Nonetheless, I want to briefly challenge this on the basis of what economist’s call the fallacy of composition. Examples would include: a few people could leave a crowded arena easily but if everyone tried to leave at the same time, it would take a lot longer. Or, I could sell a few hundred shares of, say, Pfizer without moving the market, but if 1 billion shares were suddenly for sale at once, it couldn’t be sold without a price decline sufficient to clear the market. With respect to Medicare, a doctor or group might be willing to have 20% or 30% of its patients on Medicare but not 100%. Plenty of people are reporting difficulty in finding doctors who will accept Medicare, and even fewer will accept Medicaid. Hospitals might accept compensation at Medicare or Medicaid rates for 50% of their admissions but may not be able to survive without the ability to charge the other 50% somewhat more.
We all know that Medicare overpays for some services and underpays for others. Primary care physicians seem to be in the underpaid category. If they all had to suddenly accept Medicare rates for all patients, we might see a wave of retirements and, longer term, maybe fewer applicants to medical school or lower quality applicants. Even if Medicare could somehow get everyone to accept its rates without serious problems, it still cannot control utilization. I would not underestimate the cleverness of providers in figuring out ways to sustain their income — probably by ordering still more tests and doing more procedures that tend to be much more highly compensated per unit of time than a consult.
Let’s prove (or disprove) the viability of universal coverage under a single payer model at the state level first. The consequences of being wrong are too severe to risk imposing it on the whole country. Besides, even with their lower reimbursement rates, the current Medicare and Medicaid systems have not been able to control their costs either.
Barry, you certainly have more confidence in our money-driven political system than I do. First, when Medicare passed under Roosevelt, the amount of money passing to politicians was miniscule compared with today, and the Democrats weren’t being bought off as they are today. Look at how they are trying to gut the system today compared to building it then.
But the Dems are now dipping into the same trough as the Republicans. To believe that the $100 million that passes from health care interests to politicians is not going to warp the way they “fix” the system is just wishful thinking. It already has, and significantly. It is because of this money that they’ve not just kept hands off; they’ve actually lifted rules that made once-fraudulent practices totally legal today.
As to having the states experiment, I think we are stuck with that because Congress is too bought off. But the states have difficulty because they’ve been shorted by the Bush administration in so many ways (fiscally).
But we don’t have to experiment; we already have a system in place. It’s better than all others, and it’s called Medicare. We need politicians with balls and who are not beholden to the cash crowd in order to get it expanded to cover everybody.
Here is a corrected link to my disclosure.
If I might paraphrase some of your earlier comments, you remarked on some problematic experiences with TRICARE, and because of that you don’t put much faith in government involvement in solutions for healthcare.
Your skepticism appears well-earned, except that TRICARE is run by a private company, Humana, under contract to the government.
If I can use a totally loaded metaphor, distrusting government involvement in healthcare because of your experience with TRICARE is about like me not trusting the Army to fight a war because of the way Halliburton gouged us for shoddy service to the soldiers.
The Halliburton problem, we can fix, perhaps by giving some of their private-contract duties back to the soldiers. And I’ll support our soldiers, quite literally, since my son is just back from his first tour with the 3ID.
For TRICARE, same-same. Perhaps we just need fewer shoddy private contractors.
I’m sure there are numerous people on this blog far more qualified than I am to speak with real expertise and authority on this issue. Hopefully, we will hear from some of them.
I would like to say two things about healthcare reform generally. First, it is a good thing that at least a couple of states are trying to come up with a system for moving toward universal coverage. With healthcare costs consuming 16% of GDP, I think it is wise to test possible solutions on a pilot (state level) basis first and get some real world experience before we turn one-sixth of the economy upside down. One thing I’ve learned about risk in my business (money management) is that one has to be very sensitive to the consequences of being wrong. The Massachusetts experiment will likely provide us with some valuable lessons and information regarding what works and what doesn’t.
Second, with respect to our money driven political process that you feel is not serving us well, it is this same process that produced Medicare (and Medicaid) 41 years ago. At that time, the retired elderly lacked employer provided healthcare and were being bankrupted by high healthcare costs as they aged and their health deterioriated. While the process will be messy and time consuming, I am highly confident that our political and economic system will move toward a consensus solution that is consistent with our economic system and our culture, not Canada’s, not the UK’s and not Western Europe’s. This will likely be one of the most important issues over which the next presidential election will be fought, and I think we will see substantive changes by 2010-2012. At least I hope so.
Thanks for the thoughtful response Barry.
First, NIH would not be responsible for doing the work, just funding it and contracting it out to the same qualified university and scientific centers that are currently doing the work. These researchers would be beholden to the NIH and making sure the tests and product meets necessary safety standards, rather than being beholden to the drug company that in the past has wielded the purse strings. Hopefully this would result in fewer Vioxxes of the world. The product’s effectiveness would be determined just as it is today, with an FDA scientific review panel but one without any conflicts of interest.
The scientific teams’ effectiveness would be measured by the NIH and they’d all be compensated well — but with money from NIH rather than from drug companies. NIH would have a committee of nonconflicted scientists to perform this and other functions.
Drug research IS extremely expensive and the public is already funding the research (and at extraordinarily high dollar amounts). Having taxpayers fund this totally and up front would be cheaper and would eliminate the unnecessary funding of me-too drugs that represent perhaps 1/3 to 1/2 of the new drugs that hit the market today. Some might even peg it at 80%. This is where drug companies change one molecule, retest the same drug, and release the “new and improved” version with an additional 20 years of patent protection. (Though when you read Marcia Angell’s book above, you’ll find that the one-molecule change could have instead made the product less effective. This is because the new drug is again tested against placebos rather than against the old drug.)
This latter technique/scam easily doubles pharmaceutical costs throughout the world, and in the hands of a scientific committee would not as easily pass muster as they do when in “corporate investor’s” hands. I trust doctors a hell of a lot more than I do CEOs and shareholders. Fewer bad products will reach the shelves this way.
Keep in mind that current industry profitability is AFTER they deduct for their R&D and everything else. And doing the job right would also reduce the harm, deaths and legal costs that result from the current system’s problems.
To ensure that US citizens are not covering the R&D costs for the rest of the world, some sort of export duty could be applied.
You are indeed correct that drugs have been “helpful in shortening hospital stays for certain conditions or even replacing surgery as a treatment option in some cases.” What I propose would not impact that, and may indeed make better drugs more readily available.
You are also right in your assessment of me. As I said earlier, I trust doctors more than I do CEOs and shareholders. I’ve seen too much corporate greed, and when an industry rips off the public as Big Pharma has and continues to do, they do not deserve to remain in control. They will remain in the system and continue to make good money, just not the windfalls they have in the past.
As an aside, I’ve posted a disclosure so you can see that I do not have a dog in this race.
I’ll be an early responder to your latest post. I have absolutely zero confidence in the ability of NIH or any other government funded entity to do drug research whose objective is to develop commercially useful and viable products. How would their budgets be set? How would their effectiveness be evaluated? What mechanism would they have for pulling the plug on projects that are not working out? How would they measure, reward and compensate the relative contributions of individual scientists and scientific teams?
Furthermore, drug research is extremely expensive these days. There are lots of failures at various stages of the development process, and the successes have to pay off handsomely to compensate investors for the risks they undertook. That said, I do think current industry profitability is somewhat higher than it needs to be (though not hugely so) to attract the capital it requires.
I do think there is a problem with drug companies selling in other developed countries at far lower prices than they demand here. This is blatant free riding by Canada, UK, Western Europe, Japan, Australia et al. and needs to be addressed. U.S. citizens should not have to cover the R&D cost for the whole world. On the other hand, I don’t have any problem with selling, say, AIDS drugs at deep discounts to poor countries.
Finally, prescription drugs only account for 10%-12% of total healthcare spending in the U.S. (even at high prices), and there are a considerable number of big selling drugs that are about to go off patent over the next couple of years with two (Zocor and Prvachol) already having done so and Plavix under dispute. To some extent, drugs have been helpful in shortening hospital stays for certain conditions or even replacing surgery as a treatment option in some cases. At the same time, some conditions that used to be death sentences several decades ago can now be managed by medications, albeit at considerable cost.
I guess, at bottom, I am biased toward market solutions and you tend to favor government solutions, at least with respect to healthcare.
We may get as much (dis)agreement on
the pharmaceutical issue as we have on
universal health care, but let me
propose a possible solution to this
issue. What draws my ire is the industry
is one of the most profitable in the
world, even AFTER deducting for its high
R&D, advertising, and remarkably high
executive salaries. This, all while
politicians extend their patents by 3
years (to 20) to lock our generics, and
all while patents divert ridiculously
high funds from families to the drug
companies. The docs on this thread can
probably add a lot more horror stories
In my mind, what we have allowed is
criminal. I’d like to see a complete
revamp of the drug research program.
Since the taxpayers are paying one-third
the costs anyway, through NIH funding,
let’s have the taxpayers fund 100% of
drug research, own the patents
themselves, and license the right to
make the drugs to at least three
qualified manufacturers to market the
product throughout the world.
Drug companies can still create ideas
and run tests on animals, but if
successful they’d have to turn the idea
over to the NIH who would first assess
it and then contract out the patient
trials to a nonconflicted medical
university and scientific team. The
originating drug company would receive
royalties but not have sole rights to
That’s what the Neocons would call
"free-market" (wink, wink).
We’d need other rules too:
I don’t like royalties on the
final product because they are
regressive and only affect the sick,
so I’d license them royalty-free
(except for those going to the
If a company decided to do an
end-around and avoid this system, a
20% tariff would apply to all
imported drugs and they’d
nonetheless not receive US patent
All advertising would be
prohibited, except for that directed
to physicians. (Unless advertising
carried the NIH license info so
patients could opt for a competitive
product of the same formula).
Remove Medicare restrictions and
let them bargain for the lowest
price from the three manufacturers.
Prohibit drug companies from
selling outside the US at a price
lower than their US price.
Prohibit physicians with a
conflict of interest from sitting on
the FDA and NIH approval boards.
Controversial? Of course. But I
thought it would be worthwhile to bounce
the idea off this group of diverse
opinions. Any comments?
William, my list is full. You’ll have to start your own 🙂
“perhaps we should mandate no-codes on those over 90”
If you are taking names, I know a couple of old sob’s I want no-coded.
And Eric, I can understand why a group of osteopathic surgeons would find having an x-ray in the office handy, but if it has any margin at all, what would be wrong with a group like yours contracting with an independent service to own and operate the system in your office? That would eliminate all hint of a conflict.
Have you ever heard docs say “Well, now that we’ve purchased this expensive equipment, we’ve got to get our volumes up to pay for it”? That translates to doing more tests than are necessary, and that’s the issue I have.
My field is cardiology, and I know physician groups that own their own nuclear cardiology, echocardiographic and stress testing systems. Why? Because they are profitable as hell. Sure it’s handy to have the patient in the office the minute the test is completed, but before that they performed these tests in the hospital and had the patient immediately available there too.
One local hospital contracted with an MRI van to come in once or twice a week. Their volumes got to the point that they could buy their own system and canceled the service. But then that MRI service went to the local clinic, the hospital’s referral base, and now service them once or twice a week, thus robbing the hospital of the volume needed to pay for their system. So its costs now must increase elsewhere.
I’ve seen many abuses of this type in my 35 years in the health care industry, and that’s only one pair of eyes.
You are absolutely correct on the elderly and end-of-life issue, and as I mentioned earlier, perhaps we should mandate no-codes on those over 90, unless the family is willing and able to pay for all future health care of the person saved.
Eric, I support what 60% of physicians support, a Canadian style system that is properly funded to eliminate the wait times. Hospitals would negotiate a flat yearly budget of operating expenses and another for equipment purchases. Medicare D should stand for Drugstores. Patients should be able to buy their drugs with reasonable co-pays, and the needy should get help with those. Medicaid patients would be included, as would worker comp patients.
I don’t have a problem with the top docs making $1M and the rest well into the 6 figures (sans the bad docs who should be removed from the system). I also don’t think there’s a CEO in the country worth over $1M, but that’s a story for another day.
see Physicians for National Health Program
Jack- saying ‘I know some doctors who make $4 million/ year’ reflects poorly onsome of your previous statements. Please tell me what percent of the several hundred thousand practicing doctors in this country make even half of that amount. The number will be so low as to be negligible (and they would be in the cash-only side of the business to be sure).
Few doctors, as a percent of the total, profit from the tests they order today. We have xray in our office– in order to be able to have an efficient office and take care of people effectively. Our margins on this are negligible. Some doctors may abuse the system— but this is not the problem.
20% of the population is responsible for $1.6 trillion in healthcare costs this year. One solution will not solve the problem. Better disease management- on both the part of the doctors and patients would help. End of life care is a nearly impossible issue in the country– too politically heated– and I do not have the solution there.
I am disappointed to hear you promote a medicare-for-all plan when you do not appreciate the points I made above about the different parts of medicare. So, in your system — what would you do first? and then second? and how would you deal with the fact that Medicaid in many states is in unmanageable arrears and Medicare Part B cannot pay its bills this fiscal year?
“Maybe we should have health care or Big Pharma lobbyists do it, as Bush has done in the energy and “healthy forrests” legislation?”
Yeah sure right whatever you say Jack. That fits right in with
“a panel of nonconflicted physicians, economists and industry experts in the field that are neither in practice, receive funds from the industry, or are part of any political party.”
A consultant from Laputa is still a much better idea.
“Physicians are going to rue the day they turned their profession over to the MBAs.”
Since I made that statement, Jason, I’ll respond.
I of course disagree, and stand by the claim. Physicians started the ball rolling when they started hiring MBAs to run their clinics at greater profitability, maximizing reimbursements. And they will indeed rue that day. Yes, the MBAs have taken advantage of their positions and increased their own control. Physicians by and large do not want to deal with the business side of medicine and welcome a business manager. But it’s like the old saying; be careful of what you ask for.
Like Barry, I do not deny good physicians the opportunity to make good money, and feel that the best of them should easily make in the 6 figures, but they should not make it on the basis of how many tests they order. You are right that the private sector looks at the Medicare rates as a guideline, but very loosely. They still, perhaps blindly, pay claims that are multiples higher than Medicare rates. Rates which, incidentally, take into consideration the value of the equipment, personnel and overhead. Most of them are pretty fair, but some are lower than they should be, and I think Medicare is aware of the cost shifting that occurs when they underpay.
I know physicians that are making $4 million per year. Perhaps a rarity, but I won’t take out the violin just yet. Clearly physicians are more on the line because patients often feel at their mercy, and when the orders for tests increase they bite their tongue. Alert patients will sense the conflict.
Many physicians, incidentally, support the Canadian-style system because it does eliminate the business side of medicine, and it cuts their staff requirements by an estimated 75%.
While I certainly don’t begrudge doctors a level of compensation that reflects their skill and the investment in time and money they had to make to acquire the education and training to do the job, there are considerable differences vs lawyers and accountants.
The key difference is that people don’t buy medical services because they want to but because they have to, and then they have little or no control over how many services they “consume” and then have to find a way to pay for.
Doctors, for their part, are free to remove themselves from the insurance system and go to an all cash model, relocate to where they can make more money and their malpractice premiums are lower, restrict the number of Medicare patients they are willing to take on, etc., etc.
Most middle class people rarely interact with a lawyer except to buy a house, prepare a basic will or advance directive, maybe when getting divorced or if they need to file for bankruptcy (usually due to high medical bills). Millions of people can probably count the number of times they require the services of a lawyer in their entire lifetime on one hand.
As for accountants, preparing a simple tax return is a pretty inexpensive proposition. Even for small business people who need accountants and lawyers more on an ongoing basis generally find the cost of those services to be quite manageable. Wealthy people and bigger businesses requiring more sophisticated and expensive services can easily fend for themselves.
Having said all that, if doctors want more freedom to charge what they think they are worth, they would be well served if they work to provide more robust price and quality transparency so patients are in a better position to make informed choices with the help of unbiased, objective infomediaries if necessary.
“Physicians are going to rue the day they turned their profession over to the MBAs.”
Doctors didnt “turn it over” to the MBAs, it was taken from them by the marketplace and by the government.
Medicine is a curious business. Unlike other professionals, there is something that our society deems “disconcerting” about doctors trying to maximize their salary.
We dont hold other professionals to that same scrutiny. Lawyers are allowed to charge whatever they can get away with. Accountants, and engineers likewise. There is no national outrage over other professionals charging as much as they can possibly get away with, but for some reason with medicine we hold doctors up to a weird standard. Its the only job in which they are disdained for trying to make as much money as possible.
Doctors are the only occupation in the United States in which salary is dictated by a federal committee in Washington DC. Medicare rates set the industry standard, because Medicare currently controls 60% of all healthcare dollars spent in the US< giving them sufficient market share to establish it as a de facto monopoly.
Even firefighters and policemen, occupations which are traditionally tied MUCH MORE CLOSELY as "government employees" dont have a federal committee that dictates income. Firefighters and police are free to travel from city to city, and cities compete for their services by offering higher wages and benefits.
I’m glad you found that to be funny. Maybe we should have health care or Big Pharma lobbyists do it, as Bush has done in the energy and “healthy forrests” legislation? You’d be okay with that, I suppose.
“The basis upon which they would decide is by creating a panel of nonconflicted physicians, economists and industry experts in the field that are neither in practice, receive funds from the industry, or are part of any political party.”
Thanks, I needed a good laff at the end of the day.
>> “Well, Jack, if there is an abundance of competing ideas, none of which can overcome other ideas on its own merits, then on what basis would politicians decide the issue – even if they received no cash from anyone?”
And John, I didn’t fully answer your question. The basis upon which they would decide is by creating a panel of nonconflicted physicians, economists and industry experts in the field that are neither in practice, receive funds from the industry, or are part of any political party.
They should take a ground-up approach and look at the best approach for funding the system, which should include WHO should fund it. In my view it should not be employers, who currently cannot compete with manufacturers from countries that have universal health care (which is all of them except the US). It should be the taxpayer who pays (and who already funds it through their product purchases, when employers add HC to the price of their products and they pay at the cash register). We should eliminate the middlemen and pay for it up front using the Canadian model (but without the wait times).
Thanks for the links. The United Seniors Association (USA) lawsuit was stupid. Section 4507 regulates vendors to the government (i.e. you) not, as they argued, Medicare beneficiaries. If you’re going to find a remedy in the courts I think you’ll need a much different legal theory. Maybe you can convince the American College of Surgeons to challenge Section 4507.
>> “Well, Jack, if there is an abundance of competing ideas, none of which can overcome other ideas on its own merits, then on what basis would politicians decide the issue – even if they received no cash from anyone?”
John, it’s real simple. If the pharmaceutical industry did not give politicians $50 million per year in campaign contributions, we’d likely not have a Part D program that is going to drain the Medicare system of a $780 billion giveaway to the drug companies over the next decade. We’d not have had a prohibition on Medicare negotiating for lower prices. We’d not have had laws passed to block reimportation of drugs from Canada — the same drugs, incidentally, that are sold by the companies at a lower price than they sell to US citizens. We’d not have had the patent protection extended by three years (from 17 to 20) thus locking out competitive generics for an additional 3 years so they can gouge the public even further. We’d not have had rule changes that shortened the drug approval process and created drugs like Vioxx. We’d not have laws that pass taxpayer funded research to drug companies so they can patent them and lock out lower priced generics. We’d long ago have changed the FDA rules to prevent conflicted scientists from sitting on the approval boards of drugs from companies they receive consulting fees from.
Let me assure you of one thing: If cash were not transferring between the drug companies and the political campaigns, our politicians would have fixed this problem long ago.
And the same is true with our so-called for-profit free-market health care system. And the rules that permit hospitals to hire their own referring physicians and the rules that now permit physicians to have ownership in hospitals that they refer patients to (the latter of which were at one time considered fraudulent).
The bottom line is that the competing idea that is accompanied by the most political cash will get passed into law. Live with it; that’s the way it is.
Here are four excellent books to read on the subject, three of which are from physicians willing to speak out:
The Whistleblower: Confessions of a Healthcare Hitman (Paperback) by Peter Rost ISBN: 193336839X)
The Truth About the Drug Companies – How they deceive us and what to do about it. By Marcia Angell, M.D. ISBN: 0375760946)
Critical Condition: How Health Care in America Became Big Business—and Bad Medicine (by Donald L. Barlett, James B. Steele ISBN: 0385504543)
On the Take: How Medicine’s Complicity with Big Business can Endanger Your Health by Jerome P. Kassirer, M.D. ISBN: 0195300041)
I have suggested in the past that all constituencies — hospitals, doctors, lawyers, patients, taxpayers, labs, insurers, drug companies, device manufacturers, etc. need to be challenged to suggest systemic changes that will cost them money and/or power in the short run in exchange for building a better, more cost-effective, more sustainable system that covers everyone in the long term. For example, I have said numerous time that, as a taxpayer, I would be prepared to give up the tax preference for employer provided healthcare even though it would cost my family several thousand dollars per year of incremental taxes because I believe it would lead to a much more efficient allocation of resources. Each group can either put forth useful ideas or be exposed as selfish hippocrates whose attitude amounts to: Don’t tax you, don’t tax me, tax that fella behind the tree!
“if politicians weren’t taking campaign cash from the various constituencies, they’d find a very workable solution virtually overnight”
Well, Jack, if there is an abundance of competing ideas, none of which can overcome other ideas on its own merits, then on what basis would politicians decide the issue – even if they received no cash from anyone?
“When many cures are offered for a disease, it means the disease is not curable” -Anton Chekhov, M.D.
Maybe worth thinking about . . .
Barry, I think an hourly rate might be very useful, and the only thing I can think would be a drawback is that I don’t trust the hours my lawyer bills me for.
And John, your point of “so many rival constituencies” is right on target. That’s why I made the comment earlier that if politicians weren’t taking campaign cash from the various constituencies, they’d find a very workable solution virtually overnight.
You can blame George Bush, and he certainly gets his share, but it is all of congress and guilt resides on both sides of the isle.
This thread seems to me a microcosm of the whole debate about health care. There is no shortage of intelligence or knowledge. There is no shortage of ideas. There is no shortage of debate and differences of opinion. Everyone who has an idea about what the elephant really looks like advocates their idea and finds fault with other ideas. Almost no one admits to changing their mind.
What specifically does this illustrate? I think one of the main obstacles to resolving our “crisis” in health care has been the presence of so many rival constituencies, which has assured a majority to oppose any suggested solution. I don’t see that changing, do you?
There has been a “crisis” in health care costs since the early 1970’s. What is different today that will drive the parties to a solution? From the discussion on this thread, I conclude – nothing. Makes one wonder if hiring a consultant from Laputa might actually help.
It only took Moses 40 years to get out of the Sinai wilderness. OK, so health care is a harder problem. But still.
And so (what else?) I blame George Bush.
If a doctor or group of doctors has a variety of diagnostic testing equipment available in their office, it does make it possible to render a more complete diagnosis quickly. It also creates the temptation to order tests that are profitable to the doc or group but may not be completely necessary. I think the conflict of interest problem could be mitigated if doctors switched to time based billing like lawyers and accountants. That is, if I need to see the doc for a hour, regardless of the mix of testing and consultation, charge me for an hour of your expertise and price that hour at a level that will provide an adequate return on both your time and your equipment.
Suppose, Doctor Group A has all the necessary equipment to do a complete diagnosis and the whole process takes an hour. They bill me $500. Doctor Group B consults with me for 15 minutes, charges $100 and sends me to an independent lab for the same tests Group A did in house. The lab bills $500 for a total cost of $600 and greater inconvenience for the patient as well as a longer lead time to determine results. Even if the lab charged only $400 so the total cost to the patient was the same $500 either way, Group A would have a competitive advantage based on time and convenience.
Time based billing would be much simpler and neatly resolve the pricing transparency problem. They could post a sign saying our hourly rate is: $_____. Of course, any testing that the integrated doctor group could not perform in house would have to be referred out (blood chemistry, etc.) and prescription drugs would also cost extra. Both of those categories of costs, however, easily lend themselves to pricing transparency.
The corrected links to the above are:
Dollars for Doctors
Government Funded Care
Health Care Articles
Thank you for sharing your experience. Obviously, a crime was committed and they should be prosecuted to the fullest extent of the law. However, to punish the majority of physicians for the acts of a few is not right and will ultimately hurt patient access. I believe that the future of medicine is in the physician’s office with dramatic technological aids at the physician’s finger tips, allowing rendering of a diagnosis on the spot. This cannot be stopped and patients are already demanding it.
I will read your links and get back to you if I have any further comments.
As well, I made this offer earlier and for those just joining the discussion I will make it again. I’ve just published a book that has one complete chapter on the current health care mess. I’d be happy send anybody on this thread a complementary copy (limit 10 copies). It isn’t on Amazon yet but you can review it at http://www.MoneyedPoliticians.com and use the email address there to send me your mailing address.
The point is, the health care system is in deep disarray, and if our politicians weren’t benefiting to the tune of $100 million per year in campaign contributions, they’d fix it in one damned hurry. And it would be in the best interest of the public and physicians, and the fat cats would be on the outside looking in.
Physicians are going to rue the day they turned their profession over to the MBAs.
PgbMD, I’ve avoided specifics to this point, but maybe one will demonstrate my case. For 35 years I was in the business of selling medical equipment and cardiac monitoring services, and never once was I able to sell a product/service that was not reimbursable and profitable, or at the very least a break-even. Once a hefty cash flow was realized the physicians and hospitals would buy in a heartbeat. Otherwise, except for rare occasions, it simply didn’t matter that it helped the physician provide better patient care.
I mentioned before that one of our competitors was over-billing private insurers for, in this case, a 30-day cardiac event recorder. It had a single CPT code for the entire 30 day period, but this independent lab was billing 30 times (30 units) for the same 30-day test and paying the physician $500 for his interpretation (which otherwise would have appropriately been about $50).
I refused to do that knowing that it was at least unethical and at most insurance fraud. With my attorney I created a newsletter warning physicians and the industry that the scheme was illegal and we wouldn’t participate. In spite of that this company grew tremendously, until my newsletter got into the hands of other competitors, and the Feds ultimately stepped in and are now prosecuting them for mail fraud. And one insurer has sued the now ex-owners for $40 million.
Interestingly, because of Stark they did not bill Medicare in this fashion and that may be used as evidence that they knew it was illegal. Except for the mail fraud the rest will be state insurance fraud charges.
But the point is that hundreds of physicians may go down with them because of stupidity and greed, and this greed exists in their own lab as well. It is beyond me that physicians would put themselves in this position, but they want to be rich just like the next guy.
I encourage you to read these two articles from physicians:
Dollars for Doctors
Government Funded Care
And finally a list of interesting articles at
Health Care Articles
Here are a couple of links that give you the history of the 2 year physician opt-out window. Apparently Bill Clinton required the injection of the 2 year opt-out window prior to the passage of the balanced budget act in 1997. This has been taken to court in the past with the backing of the ACLU but the court failed to judge on the constitutionality issue.
This issue probably in the end needs to be fixed from the legislative side.
This whole conflict of interest thing really has got me thinking and I just believe you and Mr Stark are wrong. I foresee a physician’s office of the future (very near future) that includes a wide array of high tech devices that can help the doctor render a definitive diagnosis on the spot and recommend treatment immediately. Again I see no problem with having labs, imaging, and whatever else the physician needs in his/her office to diagnose the patient. There may be cases of over utilization out there but I don’t think they are as dramatic as you would like us to believe.
Additionally, here is a study that shows that when patients are divorced from the costs of medicine spending rises dramatically.
I guess I don’t understand either, Eric. Are you suggesting that we ration care for the elderly?
When I was a young Buck and playing racquetball five times a week, I never saw a doctor and could easily have been sold on a high deductible HSA. Despite all threats from my mother, I somehow got to 68 and my body isn’t what it used to be. Like an old automobile, I got worn out and now see the doctor once or twice a year. I’m sure that will get worse, and it will happen to all of you.
So I guess I am or will become “a high healthcare user.”
The doctors are trained clinicians, and if I request too many tests they should educate me. But they don’t, because these tests are profitable cash cows and they love it. At least 30% of all tests in both the Medicare and private sector are unnecessary. The best way to control this is to make sure that doctors do not profit from the tests they order. That goes back to the disagreement pgbMD and I had earlier.
This can happen with a single-payer or any other system, though not necessarily with any of them. It is a function controlled by the structure, not who the payor is, and the political money that has transferred from the health care industry to politicians have altered the rules to permit these abuses.
Eric, you write:
“The only reliable way to reduce costs is to apply techniques to reduce utilization of the high healthcare users and make mroe thoughtful and intelligent the low healthcare users. Neither of which will happen with a single payer system”
So, is this how every other industrialized nation keeps its healthcare costs about 50% lower than US costs? If that isn’t what they’re doing, what in the world are you talking about?
And if you think this is what they’re doing, please explain, because I don’t see utilization reduction and thoughtful low utilizers as more than a fraction of the difference….probably less than half. They also charge a lot less for most things and have much lower administrative overhead. It is these latter two factors that universal healthcare most directly addresses.
I agree we need to look at utilization, value-based decision-making, and health promotion as well. But those things are neither made more or less likely by universal coverage itself.
Jack- you are a brave soul!
I am glad you put your energy where your convictions are!
You are totally mistaken, however, to put the solution in a ‘crackdown on unnecessary tests’. Simply not true.
The only reliable way to reduce costs is to apply techniques to reduce utilization of the high healthcare users and make mroe thoughtful and intelligent the low healthcare users. Neither of which will happen with a single payer system
Perhaps I do underestimate the patient, Barry, and you do describe the perfect example. But few are going to be perfect examples. As well, I fear that physicians and hospitals will become selective on the cases they take on and avoid the tough cases that may negatively affect their costs or stats.
DRGs also discourage treatments. I prefer the Canadian model where hospitals are given a fixed operating budget and a separate equipment budget, but even they can turn out to disadvantage the patient.
In the end I think we are going to provide better care by paying hospitals a per diem that is all-inclusive, but it will take someone smarter than me to figure out what that should be. I’d like that committee to be independent of corporations and politicians and instead be patient advocates. But in our moneyed world that may be too much to expect.
I think you (and many others) underestimate the ability and willingness of people to act rationally and in their own best interest. In the case of healthcare pricing transparency, there is also a need for unbiased objective intermediaries to help patients sort through the risks, benefits and cost-effectiveness of various treatment options.
I live in a county of about 500,000 people and five hospitals, four of which call themselves medical centers and one community hospital. Most surgeons have privileges at two or more of them. Suppose a patient with a very high deductible health plan or no insurance at all (but can afford to pay) needs, say, gall bladder surgery. He has a choice of three Board Certified general surgeons, all of whom receive above average quality ratings from the infomediary. The surgery could be done at one of three local hospitals, all of which have good OR’s, up to date equipment and competent support staff. Hospital A offers a total package price (including surgeon and anesthesiology fees) of $10,000, Hospital B wants $15,000, and Hospital C charges $20,000. I think Hospital A is the best choice. If my insurer told me that their case rate at all three hospitals is $8,500, then I would be indifferent and would probably go to the one closest to home or the one the surgeon preferred.
This is what I mean by robust pricing transparency — clear all-in package pricing and unbiased quality assessments of both the surgeons’ capability and track record as well as the quality of the hospitals. I don’t think you have to be a genius or a healthcare expert to make an informed, rational choice if you have adequate information available to you.
BTW, I don’t understand your concern about case rate or per diem contracts. Medicare uses the DRG system (case rates) for hospital charges and has since 1983 after the earlier cost plus scheme was turning out to be far more expensive than anyone expected.
Barry, the theory is right but it will not happen in practice.
>> “to the extent that greater competition and robust pricing transparency can drive greater efficiency and force the high priced providers to either lower their prices or exit the business, the overall system will benefit from lower costs to provide a given set of services.”
I know very few people sharp enough to take advantage of the “transparency” issue when they “shop” for a lower-cost provider, but I know multiples more who would fear going with the lowest bidder when putting family health care in their hands. As well, hospitals now employ their own physicians and give them “production incentives” that can have a detrimental effect on care and cost. Transparency will be a terribly complex system, sort of like building a robot to put sugar in your coffee. Worse, it can have just the opposite affect when patients pick the higher-priced physician because “he must be better” than the rest, and actually result in higher pricing.
The higher charges to private insurers are well known and physicians on this thread might even confirm that point.
I know they exist but I don’t like “case rate or per diem contracts,” nor do I like capitation. These encourage the cutting of corners.
I certainly agree that “society needs to face reality and focus on reining in utilization, especially at the end of life.” End-of-life is where the highest costs are realized, but short of euthanasia I’m not sure what the answer is. If it is my family member I want whatever works, but perhaps we ought to implement a mandatory no-code for those above 90.
I think the HSA myth articles miss several points. First, it is true that a small percentage of people account for a large share of healthcare costs. For Medicare, the sickest 5% account for about 50% of cost in a typical year. United Healthcare says 7% of its insureds account for 70% of costs. However, they are different people from year to year. High deductible plans may work fine even for these people in most years. Furthermore, many health insurance policies (including my own) have lifetime benefit caps. Thus, even after a given individual’s spending moves beyond the deductible, if there is a lifetime benefit cap, price / cost is clearly a relevant issue. In addition, to the extent that greater competition and robust pricing transparency can drive greater efficiency and force the high priced providers to either lower their prices or exit the business, the overall system will benefit from lower costs to provide a given set of services.
I don’t know who these private insuers are who are paying up to four times Medicare rates that you allude to. For the large insurers like United and Wellpoint, well over 80% of their hospital admissions are on case rate or per diem contracts. Perhaps Tom Leith can shed some light on how much more than CMS private insurers are paying, especially for expensive surgeries and other hospital related costs.
I think it would also be helpful going forward if doctors (especially surgeons) and anesthesiologists cooperated with hospitals to make it easier for hospitals to offer complete package pricing, especially for the majority of surgical procedures, either inpatient or outpatient, that are scheduled in advance.
Finally, instead of just focusing on trying to reduce administrative costs, force doctors, hospitals and labs to accept lower reimbursement rates, and squeeze the profitability out of the drug, device and insurance industries, the society needs to face reality and focus on reining in utilization, especially at the end of life.
On HSAs I’d recommend reading “HEALTH SAVINGS ACCOUNTS UNLIKELY TO SIGNIFICANTLY REDUCE HEALTH CARE SPENDING” at cbpp.org
And review the bibliography at HSA myths
I generally do not like government solutions, but I have lately developed a strong distaste for corporate CEOs and the for-profit health care model. At this point I’d rather have a system controlled by politicians I can vote out of office rather than by unelected CEOs whose bottom line is high profits and greater wealth. Sorry, but we are dealing not with refrigerators but with the health of unsuspecting patients.
pgbMD: It is a conflict of interest when physicians order tests that drive up the profitability of their clinic, and that profitability affects their yearly income. Stark got it right.
On the database there can be privacy issues on both sides and your concern about electronic access are valid. But the answer is stronger security, not disbanding the idea. I prefer a federal database because it would carry stronger penalties for intentional hacking.
Eric: I have no love for California’s SB840. Haven’t even followed it. But passing bills first and following with funding mechanisms is not unusual.
My only experience has been with Part B, though Part A seems to be working (albeit in financial distress). But the private industry is not going to solve this. Only a crackdown on unnecessary ordering of tests will, which affects the private side even more that the Medicare side. That’s a result of our so-called “free market” health care system.
And yes, during my 30 years in the health care industry I did express outrage and even traveled to Washington on three occasions to get reimbursement rules changed so that those in my corner of the industry could not overcharge the system or use less-than-accurate technology and get the same payments. And I published exposes on a major rip-off that ultimately led the Feds to indict people in my industry. It is not easy going against your colleagues, and no, I didn’t win any friends doing it.
I do not have a financial stake in this, as I am already covered by Medicare. But I still do care about the outcome, which likely none of us will affect. Though we disagree, I think the discussion is useful.
Dr. Borboroglu writes:
> the constitutionality issues I keep bringing
> up are never addressed by any respondents here.
I think its because you are simply wrong about the constitutionality issue, but nobody wants to try to convince you of it.
A better legal strategy might be to claim that some or other of Medicare’s contract provisions are egregiously tilted in favor of the government, the contract is offered on a take-it-or-leave-it basis, that you have no ability to negotiate, and that the power imbalance is great. The contract therefore should be interpreted against the government as a Contract of Adhesion and certain of its provisions invalidated. But this will be a stretch because you are the “seller” and not the “buyer”.
Of course, if by some miracle the courts agree with this interpretation, you can make a claim that the issue is a constitutional one. I think its better characterized as a common law contract issue if there’s an issue at all. Maybe there’s a contract lawyer around here who can elaborate. I’ve had one teeny tiny course in business law a long time ago, and contracts with the government were barely mentioned. This is the extent of my knowledge on the topic. I’d love to see a lawsuit over it…
Jack- great opinions! (Though I completely disagree).
1. your love of sb840 — have you read the entire bill? Guess what is missing, and intetntionally so — a FUNDING MECHANISM! Yes, they claim about 11-12% of payroll taxes, but depend upon getting all of the money out of the private system and the federal programs and have very diverse committees that are long on sensititvity, but short on accountability to voters and specifics. Read the bill and come back to comment.
2. I ask you the same question I ask all ‘medicare for all’ advocates: which medicare do you love? Part A, Part B, Part C (medicare advantage plans), Part D? As I am sure you know, these are totally different programs when it comes to financing. Part A is on track to have unfunded liabilities that far exceed Social Security, Part B already cannot pay its bills even in 2006, part C requires an approx 11% payoff to private companies to be successful, and part D is too new to know (but likely suffers from the problems of A,B,and C combined over time).
So, again– which part of medicare do you love?
3. I presume you made your living over the prev 30+ years in the private sector in healthcare… where was your outrage before you became a participant in Medicare?
Barry:”Interestingly, as high deductible health plans increase in popularity, the industry is starting to respond in meaningful ways.”
This is the direction we need to head in. I would rather see this than dumping the whole system onto some Medicare czar. If I had a choice between the government administering and dictating my medical decisions versus myself making my own decisions, there is no question which I would chose. I believe most Americans would agree.
Jack:”What is it about conflict of interest do you not understand here?”
This is not conflict of interest. Again smoke and mirrors. If I go to a lawyer’s office and he has a notary working there and I am billed for using that service is that conflict of interest? If I go to a hospital and get a CT and the radiologist then recommends an MRI, is this conflict of interest? Come on now. The whole Stark law is a joke and needs to be repealed. If the AMA had any spine they would have taken the Stark Law and the 2 year Medicare opt-out to the SCOTUS by now.
Jack:”We need a national database of medical records and drug history with real time cross checking”
I agree with a national database of medications, but making a national database for medical records is dangerous. I don’t want my personal medical history plastered into cyberspace. Although, since I am in the military, it is already there and by no means well protected by evidence of the SSN disasters recently. In fact, I just got notice that my military DEA number along with thousands of other physicians DEA numbers have been compromised as well.
Jack:”But I’d rather see my records not in the private domain.”
The government domain is obviously no safer as evidence of the above mentioned fiascos. Bottom line is that we need to be very careful with what personal information we are allowing the government to keep electronically. Medical records, in my opinion, should not be electronic for this very reason.
Jack:”High-deductible plans are also no utopia as they discourage patients from obtaining care in the early stages and paying dearly when their diseases progress. Or then opting into the Medicare system that pays it all.”
This is just a cop-out. I have many friends with HD plans that use them well. Much to your chagrin these plans are exploding.
Barry, in Wisconsin alone we have 400 private insurers and one Medicare administrator. The 400 insurers take a big piece of the pie; the Medicare administrator takes a small piece. I prefer that.
Debit cards are no utopia. What’s the difference between this and simply writing a check or paying cash? None. Next they’ll have their own Visa card that charges interest and they’ll be able to follow patients directly into bankruptcy court. Leave it to United Healthcare to come up with this idea.
High-deductible plans are also no utopia as they discourage patients from obtaining care in the early stages and paying dearly when their diseases progress. Or then opting into the Medicare system that pays it all.
The Medicare prescription drug plan is a $780 billion giveaway to the drug industry over the next ten years. I would probably have supported something in this area had I known that $50 million in campaign contributions had not changed hands, but nothing good for the public occurs when political cash flows. Besides I used to go to one pharmacy. Now I have to choose between 45 different drug plans, all with a doughnut hole? I don’t think so. I opted out.
I am concerned about drug interactions and incorrect prescriptions and doses. We need a national database of medical records and drug history with real time cross checking, and Medicare is best suited to provide this. Can we outsource it to private industry? Of course. But I’d rather see my records not in the private domain.
Admittedly, mine is a left-wing view of the issue, and though I am a center-right Republican and a fiscal conservative, this is the best way I can see of conserving health care dollars.
pgbMD: Under a Canadian style system — IF it is properly funded — I’d have no problems with an opt-out feature. However, if it is properly funded and uses the same physician base, people would have no reason to opt out, would they?
Physicians banding together only spreads the pain over many. Why mitigate it when you can totally eliminate this unnecessary and costly intrusion into the system that unnecessarily diverts financial resources? You should check the group Physicians for National Health Program at http://www.pnhp.org. If you don’t want to hear it from a non-physician perhaps they can convince you.
>> “Do you have a problem with multi-specialty groups having their own labs and imaging?”
What is it about conflict of interest do you not understand here? I can see that you might want to enjoy this income string when you leave the Navy, but is this any different than the “production incentives” hospitals provide their own employed physicians? I don’t think so.
Physicians should be paid well, even in the hundreds of thousands of dollars per year. But they should not be paid on the basis of how many tests they order.
I don’t know where your figure of 1,500 insurance companies comes from. There has been a lot of consolidation within the industry over the last 5-10 years to the point where just four large insurers — United Healthcare, Wellpoint, Aetna and Cigna insure approximately 87 million people. For any given doctor, in most markets, there probably aren’t more than 5 or 6 companies plus Medicare and Medicaid to deal with. While that may not be any picnic, it’s a far cry from 1,500.
Interestingly, as high deductible health plans increase in popularity, the industry is starting to respond in meaningful ways. For example, United Healthcare hopes to have a debit card within the next 12-18 months that will allow the patient to pay his or her share of the bill at contract rates at the time of service. This will require real time claims adjudication which United (and probably others) are working toward. It’s not there yet, but it’s apparently coming soon.
Even within Medicare, seniors seem to like the prescription drug plan choices available to them. They are careful price shoppers and many will fill their scrips at different pharmacies depending on which one is cheapest for a given drug because the co-pay is a percentage of the cost, not a flat dollar amount. Major drug plans like Medco can easily keep track of all this and stay alert for adverse interactions. For all the initial criticism, the cost to taxpayers is coming in below initial estimates. Even the much maligned donut hole is affecting fewer beneficiaries than expected. The bottom line is that choices, despite initial confusion, are preferable to a one size fits all benefit structure.
“But the VA system has higher patient acceptance than the private system.”
The VA system caters to a specific subset of the population and does not come close to translating to the population as a whole.
“But if you really want to experience quagmire and bureaucratic nightmare, get into the real world of dealing with 1500 different insurers with 1500 different sets of rules.”
In response to the paperwork/billing issues, many physicians are now banding together and forming multi-specialty groups around the country. This significantly mitigates such paperwork issues affording patients more convenience by allowing then to be seen by different specialists in the same building often utilizing EMRs. I see this trend picking up speed in many metropolitan areas. Do you have a problem with multi-specialty groups having their own labs and imaging? Many in fact have radiologists and pathologists on staff.
What would be your physician/patient opt-out window in a Medicare for all system?
I do not condemn simple outpatient surgeries in the doctor’s office, and in fact support them and prefer them. But this is a far cry from in-office MRIs and other cash cows.
I am also not advocating Tricare, which you’ve apparently had bad vibes about. But the VA system has higher patient acceptance than the private system. But I am not proposing that either.
I support Medicare-for-all, which utilizes our existing independent network of private physicians and private hospitals. Medicare-for-all is neither a quagmire nor bureaucratic nightmare. It works! Although it has some work to do on overuse, so does the private system. But if you really want to experience quagmire and bureaucratic nightmare, get into the real world of dealing with 1500 different insurers with 1500 different sets of rules.
A simple surgical procedure performed in an office setting is considerably less then if the patient was admitted to a sameday surgery unit in a hospital. Not to mention all the aggravation and paperwork saved the patient. This is just a simple fact. Many surgical specialty offices are heading in this direction. In regards to in-office imaging, I don’t think patient convenience is a smoke screen. The only smoke screen I see here is someone advocating that turning over the entire healthcare system to the government will somehow result in better care. Sounds more akin to smoke and mirrors to me. Obviously you have not experienced TRICARE yet. Just go down to your local recruiting office and they will be more than happy to introduce you. If you get your wish, then you and every American will be thrown into the quagmire of a beaurocratic nightmare.
I have never heard of physicians charging less than the prevailing rate or passing ANY savings on to the insurer. They charge what they can get and often more so.
The big problem with physicians owning their own testing equipment is that every test they run is a self-referral. Sorry; “convenience” is a smoke screen. Perhaps not in a Navy setting, as you are, but get into private practice where the bottom line is your bottom line and you’ll feel the difference in your monthly income.
Actually, there is a severe shortage of physicians in Florida, especially surgeons and surgical subspecialties.
Many physician offices are encouraged by the insurers and Medicare to install ancillary services b/c they are cheaper than hospital charges. I see no problem with a large physician office installing a CT scanner/MRI. Much more conveniant for the patient and cheaper for for the payer.
I understand what you were saying, Barry, and I did misinterpret. These are excellent reports.
In essence Florida has a glut of physicians compared to the patient population and they have found a way to offset that through more ordering of tests and getting the patients back more frequently. After all, when they say “I’m concerned about your condition and would like to see you back in 90 days,” patients, especially the elderly with a “pay all” plan like Medicare, are more likely to comply. I’ve also seen physicians very adept at building need for tests that turn out to be very profitable. With a quick feel of the pulse they can detect a harmless premature contraction and go on to order an ECG, a 24 hour Holter monitor, a stress test, and maybe even a CT heart scan.
That is indeed a difference in practice patterns that drive up the costs, and Medicare has ways to detect over-utilization and they should do so. (Actually, they do, but not enough.) Physicians who violate the limits should be suspended or removed from the program, which isn’t done often enough.
But I still feel more comfortable having Medicare monitor this stuff than a for-profit private insurer. Medicare has a greater percentage of trained clerks.
But I am also an advocate of taking these tests out of physician offices so they cannot be used as cash cows. All patients should be referred to hospitals or independent clinical labs for testing.
I was having headaches and was referred to have an MRI. Instead of going to the hospital where they were previously done, my clinic had installed their own MRI in competition with the hospitals’, which now of course has lower utilization and higher costs. The clinic is where my physician referred me, and my clinic is doing quite well with that decision. They own the referring docs and the hospital has none, so it must live with what other referrals it gets from the community.
I guess my opinion in this ongoing argument is in line with Barry. I don’t trust the government to run a healthcare system for all. The government beaurocratic track record in other entitlement programs should be just an idea of how such a system would bankrupt the country. My 12 year experience with the TRICARE system would not be acceptable to mainstream America.
Additionally, the constitutionality issues I keep bringing up are never addressed by any respondents here. In fact, the current Medicare opt-out window of 2 years is illegal but no one has challenged it further since 1998. If brought to the SCOTUS, the opt-out window would likely be abolished.
For geographical cost differences, there was an interesting article published several years ago in the Atlantic Monthly which can be found at:
For additional resources, Google: Medicare +Miami +Minneapolis +cost
The cost differences have to do with utilization, how many specialists are seen, how many days are spent in the hospital, etc. and not differences in how much any given doc is paid for a particular service, test or procedure.
I haven’t seen those numbers, Barry, but I would seriously question them. Medicare reimbursements are adjusted to locality and they are no where near triple in Miami. If they were I would have located my independent lab there in a heartbeat.
It certainly wouldn’t surprise me if physician practice patterns result in a higher usage of tests in Miami or anywhere else, because tests are in most cases cash cows. But that means physicians should be monitored more, not that patients are sicker. If you can point me to that study I’d sure appreciate it.
It is true that some physicians turn away Medicare patients because they can make double and sometimes quadruple the amount when billing the private sector. But if they had only Medicare patients they’d still make a decent living.
The total health care costs in the states is $1.7 trillion, and for that amount of money we could be covering the 45 million citizens that have no coverage at all, and we could upgrade the coverage of the additional 45 million who are underinsured. Of course that additional coverage would eat into the profits of our “for-profit” providers, but they are exorbitant anyway.
Overall Medicare costs are higher per patient because Medicare covers the elderly and end-of-life patients, and the handicapped that need more care. But those cases are going to remain nonetheless. If we were to fold into that system all patients, even the healthy that now consume nothing, our overall costs will at least remain at $1.7 trillion or at best go down.
Like John, I just don’t trust government to be able to provide anything efficiently, especially something as important as healthcare. Even within Medicare today, it has been pointed out numerous times that CMS spends three times more per beneficiary in Miami than it does in Minneapolis with no difference in longevity or outcomes generally. There are huge differences in practice patterns, yet CMS is doing little or nothing to address the overtreatment in Miami as compared to Minneapolis.
Regarding reimbursement rates, the large private insurers are generally bargaining up from Medicare rates these days and don’t pay anything near list prices. When I see my urologist in New York City for a checkup, for example, the consult, ultrasound and other tests are generally billed at about $1,500 whereas my insurer (Highmark Blue Cross) pays about $500. I don’t know what Medicare would pay for the same services, but I suspect at least $400 in a high cost market like NYC. Whether my doc, who is approaching retirement age, would continue to practice if he received no more than Medicare rates from all of his patients is uncertain. I suspect there would be a lot of retirements, and many PCP’s would probably drop out of the insurance system completely in favor of an all cash model.
As for necessary taxes to implement Medicare for all, if we left existing Medicare and Medicaid unchanged, we would probably need at least $1.2 trillion to cover everyone else. That is in the range of what is raised by the entire current federal income tax. We would probably need something like Germany’s 13% payroll tax and, perhaps, a 5% or so dedicated Value Added Tax as well. No matter how a payroll tax is split between the employer and employee, every reputable economist will tell you that the employee bears the entire burden of any employer share in the form of lower wages than would have been paid if the tax weren’t there. My own combined federal, state and local tax burden has averaged about 38% of gross income over the last 35 years, and that does not even include the employer’s share of FICA taxes or corporate income and property taxes which are built into the prices of the goods and services I buy. I really don’t want the government as the senior partner in my life (tax burden above 50% of gross income).
There is plenty wrong with the Canadian system, and it is not a good fit with our culture. I strongly believe that our system can be improved enormously without turning it over to the government through taxpayer financing and dictated reimbursement rates.
pgbMD: “Bad idea for taxpayers. Our taxes are already high enough.”
Of course everybody will rally to cries of “lower taxes.” But no matter how you cut it, Canada’s health costs are taking 50% less out of their economy than is ours in the states, and if our taxes go up slightly to cover the costs of a more efficient health care system, the public will prefer it (as the majority of Americans already do and 90% of Canadians do). The nation’s overall disposable income would also go up in return. We talk about patient responsibility, yet I have not met one person that relishes the idea of sitting in a doctor’s waiting room unnecessarily. Co-pays are still on the table, but studies have shown that they cost as much to administer as they save.
So health care is already a taxpayer burden, and at a far greater amount than if we simply paid for it up front and eliminated the middlemen and inefficiencies. Taking it off of the employer’s plate will increase competitiveness and reduce their need for locating offshore. More Jobs and taxes will result. Requiring employers to provide any kind of health care, affordable or not, will simply drive jobs offshore.
Not all physicians agree, and you are obviously one who does not. But over 60% do, because of the complexity of dealing with 1500 different insurances. When you get into private practice and find that you need four times the office personnel to handle the mish-mash of paperwork, you may join the call from greater simplicity.
And John, a Medicare-for-all does not alter the choices and in many cases improves them; you’ll have to find another reason to not like it.
Barry:”I think we would be better served if we had a system that required employers to provide a true affordable bare bones policy with a high but manageable deductible, covered catastrophic expenses completely but did not cover expensive extras like invitro fertilization, chiropractors, massage therapy, drug and alcohol rehab, etc.”
Well said. There must be patient responsibility brought into the equation otherwise we’ll end up broke like Europe.
John:”(recall Hilarycare would have outlawed private health care)”
Glad someone remembers. Fortunately, outlawing private contracts b/w a physician and patient is clearly Unconstitutional, but would not put it past the Hillabeast for trying.
Jack:”Health care should not be an employer burden. It should be paid for by the government (taxpayers) and leave employers free to compete with foreign product that does not have health care built into their product price.”
Bad idea for taxpayers. Our taxes are already high enough.
John:”I still prefer the private health industry over a governmental system.”
Well said. From my vantage point, as a Navy physician (of note: nearing the end of my educational debt), TRICARE (military HMO) is a joke. Horrible customer service (just as a small example: patients typically wait on the phone for 30-45mins to make an appointment and unsupervised/uncertified medical techs typically perform duties outside their scope of knowledge). Just to point out how bad it is, had my wife deliver our babies outside of the TRICARE system in a civilian hospital (had to pay a little extra of course).
“While the US is ranked 37th in the world by the World Health Organization, Canada’s life expectancy is two years longer than ours, and its infant mortality is 35% less than ours because mothers do not have to forego prenatal care.”
It is an error to assume the cause for our higher infant mortality in the US compared to Canada. That was not the conclusion of the study. There are many variables that account for this (drug abuse, obesity, prematurity, higher multiple gestation rate, etc). Similarily, you can not make assumptions on the life expectancy issue either. Again many variables are involved.
John, I expect things are going to have to get much worse before politicians are forced by the voters to change the rules. We are on the untenable side of the pendulum swing, and at some point we are going to have to bring it back to center.
I am not supporting socialized medicine, as we currently have in our VA and armed forces hospitals, but let’s not sell them short. Recent surveys give the VA a significantly higher patient-satisfaction rate than found in the private sector. But nonetheless, a Medicare-for-all system still leaves “responsiveness and caring” in the competitive equation of maintaining patient satisfaction, and without that the Medicare-for-all provider will still lose patients to those who are more responsive and caring.
Look at the Canadian system for a moment. While the US is ranked 37th in the world by the World Health Organization, Canada’s life expectancy is two years longer than ours, and its infant mortality is 35% less than ours because mothers do not have to forego prenatal care. And they cover 100% of their population compared to 85% in the states, and do it all at a cost 50% less than ours. Why? Because they have eliminated the inefficiencies of the 1500 insurance companies we have, and cut profit and administrative costs by well over half.
“But you miss the point: private sector health care fosters rip-offs of patients who are at the mercy of the system.”
. . . and patients – as well as doctors – are not at the mercy of government systems, and are not ripped off by government waste, fraud, and indifference?
Who is being naive here Jack?
By the thin edge of having more choices, I still prefer the private health industry over a governmental system. I’m one of those ornery ordinary people who have doubts whether a governmental single payer bureaucracy would be efficient, responsive, and caring – i.e., that somehow a healthcare bureaucracy could be made to function totally unlike other branches of government.
That’s my story, and I’m stickin to it.
Anyway, thanks for the conversation.
John, I have no desire to hold onto private sector health care, but that would be a likely bargain that would be made. I am not in favor of outlawing it; I favor funding Medicare appropriately so private care is not necessary. Having had private care for the 48 years preceding my last three years on Medicare, I do not consider private care superior. It is virtually identical. I see the same doctors and go to the same hospital as before. If horror stories exist, there are even worse ones in the for-profit HMO systems that we both agree will be where this will all settle out to.
You may be right on McGuire’s actual “salary,” but his “compensation” in other forms is outrageous. Remember that “compensation” packages are tweaked to minimize taxes, and that’s why the Google twins take only $1 per year “salary.” The taxes on salary are much higher than capital gains, as I am sure McGuire with his $1.6 billion stock package will attest.
But you miss the point: private sector health care fosters rip-offs of patients who are at the mercy of the system. My assessment is not limited to my three years on Medicare; it is on the 35 years I was employed in the industry prior to that.
Barry, fraud exists both in the Medicare and private sectors, but I would project that it is higher in the private sector because it means jail time when Medicare fraud is committed. I saw one competitive cardiac monitoring service, through a quirk in the CPT procedure description, bill private insurers 7 times the amount they billed Medicare, knowing full well that Medicare would come after them and it meant a federal indictment. So, private insurers are at much greater risk of fraud. (The Feds ultimately did nail the company on state insurance fraud charges and mail fraud, so the executives nonetheless got their due.)
The IRS comparison is interesting because they audit low-wage earners at a much higher rate than they do high-wage earners, but there again it is because of our moneyed political system. The latter gives and the former do not. However, I support zero taxes for those under $25K, flat taxes for those in the middle, and a progressive tax for those over $200K or so. That would dramatically cut IRS overhead, but I won’t expound further on a health care blog.
Your mention of large companies is interesting because at the moment they simply move offshore. GM and Ford now make more cars in Canada than in Detroit because that country’s Medicare-for-all system costs them $800 per employee per year compared to the $6500 they pay in the states. The US and South Africa are the only two industrialized countries that do not provide universal health care, thus our so-called “free market” health care system is driving jobs and taxes out of the US. But again, you can thank our corrupt political system for that.
Medicare pays lower rates because those rates are developed by a financial cost committee that has calculated the actual costs of providing the service (taking into consideration providers’ actual cost of equipment, labor and overhead costs). Private insurers pay “usual and customary,” which is interpreted by medical providers as “whatever I can get away with.” They can raise their fees as frequently as they want, and if enough do that it becomes the new “customary.” Private fees are driven by private greed, which has increased significantly with the new “for-profit” health care market. That’s why health care has been increasing at five times that of inflation.
But understand this, if a doctor or hospital took only Medicare patients they’d still make a decent living. They’d have no private sector to bill at exorbitant rates and they’d not receive million-dollar-per-year salaries, but they’d still make over $100K per year.
And don’t you fret about the drug companies, whose profits are the highest in the world even after deducting for their R&D costs and extensive marketing and out-of-sight executive salaries. And instead of the NIH paying a third of R&D costs as they do today, that should be increased to 100% and the patents then owned by the government and leased to qualified manufacturers. If the private sector can’t contain greedy rip-offs, the government must. Mothers should not have to forego their high blood pressure medicine in order to put food on the table for their children.
“I think we would be better served if we had a system that required employers to provide a true affordable bare bones policy with a high but manageable deductible,”
Here I disagree. Employers will simply move off shore, and that’s already happening at alarming rates. The public is already paying for 100% of the health care costs anyway, at the least through deductibles and co-pays, but the rest when health care is added to product price and 100% is reimbursed to the employer at the cash register. Let’s eliminate the costly middlemen. Health care should not be an employer burden. It should be paid for by the government (taxpayers) and leave employers free to compete with foreign product that does not have health care built into their product price.
“robust price and quality transparency would give consumers the information they need to make wiser and more rational choices.”
This would be a futile experiment. The vast majority of patients cannot assess price, and some will even go with a higher priced service because they fear the lowest bidder got there by skimping on technology and service. As well, physicians would begin turning away the more difficult cases because of the negative affect it would have on their outcomes.
I disagree with the assertion that high executive compensation does not affect services being withheld from patients. It flies in the face of what the for-profit corporate structure are legally required to provide shareholders. Corporations are by law required to maximize profits, and that means minimizing costs.
I’ve just published a book that covers much of what we’ discussed and I’d be happy send you or anybody else on this thread a complementary copy (limit 10 copies). It isn’t on Amazon yet but you can review it at http://www.MoneyedPoliticians.com and use the email address there to send me your mailing address.
Health care is just one of the many industries that are eating away at our national assets, and as a point of disclosure I am retired and receive no income other than from Social Security and investments. I also author the web site at http://www.ThrowTheRascalsOut.org/
OK, Jack, its clear you like Medicare. I don’t. I have been “face to face” with Medicare perhaps more than you would like to acknowledge. I don’t want it.
“If the Medicare system fails me totally I will buy services from the private sector”
. . . provided a private sector remains in existence. A private sector would remain only so long as it were (a) legal (recall Hilarycare would have outlawed private health care) and (b) there remained some economic reason for its continued existence (e.g., the public program failed to meet the needs of the public).
I think your wish to hold on to a private sector, just in case, illustrates (a) that patient choice in health care is desireable, and (b) that private health care is still considered a superior vehicle for providing choices.
“But what about his $72 million yearly salary? Is that not patient money not going to patient care?”
By the same token, the money any physician spends for groceries, a car, a house, or his kids’ clothes is “patient money not going to patient care”. Maybe patients are much worse off than even you think?!?
United pays Bill McGuire an annual salary of about $8 million – which anyone with a desire to know could easily find out in 30 seconds. Once again, that’s a lot of money and you need not misrepresent the fact to make your point – such as it is.
If we had a Medicare for all system, I do not think its famed low administrative costs necessarily equates with efficiency. It could be that its oversight is grossly inadequate, and fraud is a much bigger problem than it is for the private sector. Nobody has a good quantitative handle on the fraud issue with respect to either Medicare or Medicaid. In theory, the IRS could reduce its administrative costs by firing all of its auditors and making it clear that no returns would ever be audited but would rely on the honesty of taxpayers instead. What do you think would happen to taxpayer compliance if it did so? Under the current system, large employers (5,000 employees or more) all self-insure and cover a total of 50 million people out of about 175 million who get their health insurance through their employer. The administrative costs per employee associated with these 50 million lives are about comparable to Medicare, I believe, though they are higher as a percentage of total healthcare spending.
Second, Medicare and Medicaid already pay lower reimbursement rates than everyone else yet still cannot control their costs. Since the two programs together account for something less than half of our total healthcare costs, providers still have the opportunity to cost shift to the private sector to achieve reasonable overall profitability. If all providers (and drug companies) had to make due with Medicare’s dictated prices, I fear that there would be a chilling effect on innovation as well as long waits for elective procedures as there are in the other countries with taxpayer funded healthcare.
I think we would be better served if we had a system that required employers to provide a true affordable bare bones policy with a high but manageable deductible, covered catastrophic expenses completely but did not cover expensive extras like invitro fertilization, chiropractors, massage therapy, drug and alcohol rehab, etc. Employers could compete for employees by offering enhancements beyond the basic policy as an additional fringe benefit but without today’s tax preference and/or people could buy these extras on their own with after tax dollars. The unemployed would be receive a taxpayer funded voucher or refundable tax credit sufficient to buy the bare bones catastrophic coverage policy, and the current tax preference given to employer provided healthcare could be eliminated to free up the necessary funds.
To futher enhance the efficiency of the system, robust price and quality transparency would give consumers the information they need to make wiser and more rational choices. And, as I’ve said numerous times before, we need to rethink our approach to expensive and often futile care and the end of life.
As an aside, the cost of Dr. Maguire’s (or any other executive’s) stock options are part of compensation and are built into the premiums that insurers charge their customers. It has absolutely nothing to do with how much care is or isn’t provided. Well over half of the lives that most large health insurer’s cover are for self-insured customers with the employer just providing administrative services for a fee (ASO contracts).
“If your government cannot or will not provide you the care you want, where will you turn?”
In the Medicare system, John, the government acts only as the funder. All doctors and hospitals are independent. If one refuses me service I will go to another one. If the Medicare system fails me totally I will buy services from the private sector, just as you describe you would. If you saw the private system up close and personal, as I did for 35 years, I suspect that you may feel the same way I do today.
As for McGuire’s stock options, so be it. But what about his $72 million yearly salary? Is that not patient money not going to patient care?
“HMOs make their money not only on the care and tests they perform, but also on the care they are paid to provide but do not.”
Yeah, and as the cost of health care continues to grow, the government will reduce benefits and increase user fees in the same ways as HMO’s; it will also ration care as only a governmental programme can do; all in order to meet its budgets and mitigate tax increases. That’s what other nations do and that’s what Medicare does. It would not suddenly be different if Medicare were expanded to the entire population.
Anyway, you picked your poison, and it’s government poison. I wish you good health. If your government cannot or will not provide you the care you want, where will you turn? In a private setting, one can choose among service providers. By that thin edge, I still prefer the private health industry. I’m one of those ornery ordinary people who still have doubts whether a governmental single payer bureaucracy would be efficient, responsive, and caring – i.e., that somehow a healthcare bureaucracy could be made to function totally unlike other branches of government.
BTW, you (and many others, you are not alone) misrepresent Bill McGuire’s stock options. The 1.6 billion will come from investors who buy United stock when McGuire exercises the options; not from “patients”, not from United customers and not from United itself. I do think it’s an obscene amount of money, but to arrive at that conclusion it is not necessary to misrepresent where the options money comes from.
If we agree that HMOs-for-all are coming, John, and we are right; we are in deep trouble. If it comes to the option of having the private sector manage them versus the government, I’ll take the staid old government any day. The last thing in the world I want is for some executive — whose salary is based on his HMO’s profitability — to be deciding whether a particular test or surgical procedure is appropriate for me or a loved one. HMOs make their money not only on the care and tests they perform, but also on the care they are paid to provide but do not. Cutbacks for the sake of the bottom line are not an attractive option.
Remember that Wm McGuire, the CEO of one of the largest private sector HMO’s, is the guy who just got a $1.6 billion stock package. That’s a “B” as in billion. This is patient money going to unwieldy executives rather than to patient care.
“The Medicare-for-all system is practical, John.”
In its present form Medicare is highly impractical, Jack.
As to “HMO’s-for-all” IMO that is surely what we will have, no question about it. The only question is whether the government or the private sector will manage the HMO’s for all. Medicare is, after all, becoming the government’s HMO. In the private sector, an HMO accepts only certain physicians. In Medicare, only certain physicians accept Medicare. The patients’ experience is about the same either way – more and more restriction of choices. Implicit if not explicit rationing of care will follow, just as it has in Canada, UK, Germany, etc. Pick yer poison.
BTW, I don’t expect HMO’s-for-all to be “practical” no matter who manages them. I just expect them.
The Medicare-for-all system is practical, John. They have it in Canada and 90% of their people prefer it over our system. But you are correct that it is politically difficult to pass, and that makes my earlier point: follow the money. I could take the passing of even a bad health care bill if I knew that campaign cash were not being exchanged in the process. Without the driving force of campaign cash I think our politicians would pass a bill that would be in the best interest of the public. Good legislation does not need cash to pass, but bad legislation does. So when you introduce cash into the political system you can be assured of bad laws.
That said, the Canadian system is not perfect — but it is better than what we have. They spend only 10% of GDP compared to our 15%, and if they’d increase their investment by 10% — to 11% of GDP – they’d be able to cut their wait times as well. However, having just come off a two-month queue for a cataract appointment and another two-month queue for knee surgery, you’d have a hard time convincing me that we don’t have wait times too (though neither of us have wait times for urgent care).
But follow the dominoes. Indeed, if Corporate America has anything to say about it, and I believe they do, HMOs-for-all will be the only service available to the under-65 sector when that last domino falls. They may even force Medicare patients there too.
“Our choices for the future are Medicare-for-all or HMOs-for-all”
Well, IMO, neither of these is palatable or practical or politically feasable in this country. The problem is not “you”. The problem for 60 years has been that the presence of so many rival constituencies has assured a majority to oppose any suggested solution. I don’t see that changing. There has been a “crisis” in national health care costs since the 1970’s. What is different today that will drive the parties to a solution? I say nothing. And that is what we will continue to get – nothing.
The private physician is not the problem in our current health care mess. Many physicians support a single payer system because:
1. It is simpler to understand for everyone
2. The proposed California reform bill (SB840) on the Governors desk, would promise payment to physicians in 30 days or less after billing.
3. The savings will pay for the current uninsured Californians.
4. Primary care physicians, who seem to be decreasing in numbers, would be encouraged to practice preventative medicine.
Having just retired after 35 years in the health care industry, the last 25 as owner of an independent cardiac monitoring lab, I have seen the transition from humanitarian medicine to for-profit health care. It is not a pretty sight. You are correct with your list of interested entities, though independent labs and diagnostic centers are not the problem. They are at the bottom of the food chain and have no patient referral or test ordering powers; they just provide the service to hospitals and clinics as ordered by the physicians.
Of course the for-profit hospitals and clinics and HMOs, and especially the pharmaceutical industry, like things just as they are and want no intervention of any type. They like the “free market” approach though make no mistake about it; there is no such thing as competition in the health care industry. Patients go to doctors because they are scared and will usually follow their advice. They do not second-guess when it affects their health or that of a loved one.
Doctors are more divided on the issue. According to http://www.pnhp.org, over 60% prefer a single-payer system. I already belong to one; it’s called Medicare and it is great. Private everything, including the administrator of the system. The money comes from the government, and Medicare has some rules to follow. But I have not seen them hamper good medical care. There is Medicare fraud and overuse, just like in the private care system. And both need to be controlled. But even then the administrative costs are a fraction of the private system
Our choices for the future are Medicare-for-all or HMOs-for-all, and I’ll take the former any day.
“universal health care is being blocked by the for-profit health care interests”
You are not specific, but I take it you include hospitals, doctors, pharmacies, and other health care corporations – such as labs, diagnostic centers, imaging centers, long term care facilities, etc.
“What is terribly puzzling to me is that corporations, who would benefit tremendously from a Canadian style system, have not been smart enough to detect this”
Amazing, isn’t it, that the managements of these companies aren’t smart enough to understand what you see so clearly? And that members of congress are willing to be bought off so cheaply? And that the hospitals, physicians, etc would actually resist threats to their autonomy and incomes in a government single-payer system? And that this very issue could have been debated in the U.S. for more than 60 years without reaching the position that you find so obvious? And even that any ordinary citizen might have doubts whether a governmental single payer bureaucracy would be efficient, responsive, and caring – unlike other governmental branches?
Tis a puzzlement.
The truth is, universal health care is being blocked by the for-profit health care interests that contribute $50 million per year to congressional politicians who are willing to carry their water. Sad to say, but our government is bought and paid for by the highest bidder.
What is terribly puzzling to me is that corporations, who would benefit tremendously from a Canadian style system, have not been smart enough to detect this and outbid the health care interests. Yeah, I know. That means bribing politicians with higher amounts of money. But that’s the way the system works, and until we have full public funding of campaigns, that’s the only thing that will get attention.