POLICY: Why Healthcare reform won’t work

I’m up at Spot-on with a few thoughts about the current state of the healthcare reform movement. You’ll get the gist of my argument from the title. The piece is called  "Why Healthcare reform won’t work."  As usual, return to THCB to leave your comments. If you want more, go look at my last column "The Bush Health plan."

It’s taken quite a bit of the time. But the efforts by Republicans George Bush, Arnold Schwarzenegger, and Mitt Romney have finally convinced the national press that the rash of cancellations in the individual insurance market is a story worth writing. Perhaps it’s because we’re now discovering that this is a national phenomenon.

It’s somewhat older news here in California where it looks as though the state may decide that any retroactive cancellation of policies needs to be reviewed by an independent official. One Californian insurance company, Kaiser Permanente, caught with its hand in the cancellation cookie jar has already proposed something similar but it’s less likely that competitors WellPoint (Blue Cross of California’s parent), HealthNet and Blue Shield of California will be quite so thrilled.

Blue Cross of California, one of several plans being sued in California, says that it rescinds an average of 1,000 policies each year out of about 260,000 new individual enrollments — less than one-half of 1%, says spokeswoman Shannon Troughton.

WellPoint is strictly speaking right to say that less than 1% of its applications get canceled. But it’s evident from the various testimony already leaked from depositions of Blue Cross of California’s employees that the applications of any individual policyholders submitting high claims were routinely subjected to a review looking for the slightest excuse to cancel the policy. But that’s not the heart of the matter.

The issue is that we have an individual insurance market which is designed to stay away from the care of sick people. And that’s why healthcare reforms, as they are currently proposed won’t really work. Continuez

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  1. Hi All:
    Very interesting and intelligent discussions regarding health reform. I am playing catch up on some your past posts. I recently started a non-profit healthcare think tank called Global Voices of Health in which we are trying to effect health policy change from a grassroots perspective. Its value is derived from the aggregate insights, opinions, and solutions as put forth by the think tank members. We have a discussion regarding this topic (and many, many others) which I believe could utilize the valuable insights you have all contributed. We could use your help to get a running start as we have some lofty goals.
    When you get a chance, please visit the site and join for free at http://www.TheTippingVoice.org. Additionally, if anyone is interested in getting involved, please let me know. The more the merrier. Speak Loudly!

  2. By now, we have all heard about the tragic case of Nataline Sarkisyan.
    In case you haven’t, she is the young lady that died recently after her father’s insurance company refused to pay for a liver transplant.
    The company, CIGNA, said the transplant was experimental. After a flurry of protests, the company relented, but by then it was too late, and Nataline died.
    Enter Mark Geragos. The fame-seeking attorney of Michael Jackson has filed suit against CIGNA, and has tried to get the District Attorney to file manslaughter charges against them.
    It is one thing to file a suit for a breach of contract, but the way this story—and all stories similar to this one–is being portrayed it’s as if CIGNA denied health care to this young woman.
    Let’s be clear here: CIGNA is an insurance company—they do not provide health care.
    The hospital denied health care to Nataline. For them, money was more precious than her life.
    That is the problem with health care.
    There is no incentive to control profits. Of course not. We live in a capitalist society. However, that doesn’t mean that “socialized” medicine would be any less expensive—in this country anyway.
    On the other hand, what would be so wrong with non-profit medicine?
    I have never had a doctor tell me he or she was in it for the money. I have never heard a nurse say that either. It seems though, that everyone else associated with the field is.
    Have you ever thought about that?
    Have you ever pondered the idea of making billions of dollars off the pain and suffering of others?
    Think about it, if pain and suffering are profitable, then where is the incentive to reduce either?
    I’m just spitballing here, but if diabetes is a 350 million-dollar-a-year business, could that be why “Big Pharma” and their minions in Congress do nothing to outlaw the diabetes-causing high fructose corn syrup?
    Are profits the reason the AMA opposes using marijuana as medicine? A ton of money would not be made if this easy-to-grow medicine were allowed to compete on a level playing field.
    We will never solve the health care “crisis” in America until we change the paradigm.
    When we, as a society, decide that human life is more precious than money, we will have true health care reform.

  3. Health care reform isn’t working because it is configured to conform to the new attitudes of business where paternalism has been abandoned as much as possible, and low profile employees are covered to the extent that it doesn’t appear as abuse.
    Family plans, though, have been hard hit as employers attempt to relieve themselves of the burdens of old style paternalism. Why should it remain the same when employers are simply free to outsource rather than hire?
    The employer who doesn’t cut benefits to his employees is the one left behind, the sap, the sucker – in today’s business profile.
    Like highjackers, employers attempt to extract all possible benefit from employees today while minimizing any costs that are deemed burdensome.
    That government makes the illusory perception that deceives the public into thinking it is doing anything but aiding and abetting this unconscionable scheme is more likely the accurate state of affairs. Group by Group is being attacked in their own back yards, and forced into pre-Revolutionary feudalism while high rollers enjoy the comfort of their luxuries.
    Wow, how America has changed its attitudes of egalitarianism and paternalism! The pay as you go method of health care today more nearly reflects America’s mismanagement and desperation, and callous indifference to their own nation of citizens, a byproduct of treating corporations as persons to compete with other citizens for advantages.

  4. ”Why should the last years of our lives be any less the joyous then the early years?”’
    How to Save Our Health care System
    By Phillip Ghee
    Dear Healthcare provider, Organization and Concerned Citizen, included in this package is information critical to your quality of life as an individual and to the survival of American health organizations and perhaps that of the Nation.
    After reviewing this document, you should imagine what numbers would fill in the blanks relating to cost incurred by your organization, institution or health insurance plan. Then once again, review the innovations I am proposing. We need to mount a campaign to promote new modes of thought in this nation. Armed with the new facts and figures that you have deduced, I would suggest that you demand of Politicians, Medical Agencies and, Consumer groups to take note of what I am proposing.
    By no means do I intend to imply that the vast majority of Americans would opt for the alternative options, plans and method of treatment that I will introduce in this article. However, I do contend that based on human nature alone, a significant number of customers would select, if offered, the alternatives am I putting forth; such would generate savings enough to offers greater access to medical care for all and, at reduced cost.
    Our Healthcare System in Collapse
    We stand at a crux in our history as a nation perhaps, the most crucial juncture it has faced since the division and calamity brought on by the Civil War threaten to rip it apart. As David Walker, the Comptroller General of the United States (Government Accountability Office) purported in his July 8, 2008, interview on ‘60 Minutes’, the biggest economic peril facing the nation is being ignored and, as Walker sees it, the survival of the republic is at stake. Walker cites that the first baby boomer will reach 62 and be eligible for early retirement of Social Security January 1, 2008. They’ll be eligible for Medicare just three years later.
    Those of us, like Mr. Walker, who are observant enough and cognizant enough to see the proverbial death blow descend as such an influx, will undoubtedly collapse an already weak, overburden and rapidly deteriorating healthcare system. These massive healthcare entitlement programs we can no longer afford, as Mr. Walker concludes, which I contend alone could reek havoc, are but a fraction of the combined obligations, liabilities and medical incursion that, unlike the Civil War, will be triumphant in ripping the nation apart and send it spiraling into despair and chaos. The United States spend 16% of Gross Domestic Product on Healthcare. Those healthcare cost have been tracked at rising two thirds the rate of inflation. Currently (2007), the WHO lists the United States at 1st in Healthcare cost and 37th in quality of care and service.
    Even the most stubborn and delusional optimist among us should be moved to take their heads out of the sand when other crippling financial legacies are thrown into the mix, such as (the seemly never ending) War in Iraq and other catastrophic instabilities facing our nation i.e. Depletion of Natural Resources and/or the escalating cost in obtaining them, Weather Related Disasters and Climatic Disruptions and, the Decline of America as the chief player in the world market of finance, industry and commerce and trade. Surely even a stead fast optimist should be moved to question whether or not we are marching towards the perilous cliffs of doom, like lemmings, wearing rose colored glasses, inebriated in a lotus induced stupor.
    Fortunately, there are many out there among us who heed the cries and appeals of respectable renowned prophets like Mr. Walker. And I would assume that there are others out there in positions of leadership, who are able to cast their sphere of influence and, who are willing or, may at this very moment, be calculating the impending healthcare disaster and are making efforts to alert the citizenry. Hopefully after reading this article, you will become one of them.
    However, being informed of a problem does not inherently imply that they have the necessary ideals and solutions to address it. Because you have taken you head out of the sand is of but little avail if you simply run around the peripherally of your dug hole, in circles, as your disaster, your annihilator, advances ever so stead forward to your path.
    Seldom are problems, of this scope and magnitude, which have never been faced before, appeased by exercises, tactics or methods used in the past, no matter how seemly successful they may thought to have been at that time. For if they truly had been successful, the prevailing situation calling for their address, may have never been birthed. In fact, often, it is those very attempts to address such problems that may have indirectly or adversely contributed to their growth and sustainability.
    What is often needed is fresh measures and tactics, a new way to encounter the problem and in the best case, a new paradigm shift in not only how we look at the problem but evaluate trends which contribute to the formation of the problem and alternate patterns of lifestyle and modifications of thought that will lessen its impact on society and finally teach us to embrace bold new concepts and creative ideology in solving the problem.
    I would like to put forward such a concept and foster such creative ideology. At its core, lies a simple concept: CHOICE. However unlike several other ideologies that also involve the word’ choice’. I hold that this usage does not, nor is its intention to, cross over, invalidate or to challenge spiritual references and their mandates. I hold that use of the word ‘ choice’ in this context is not a ruse for setting precedent in order to lead the way to exalt more extreme topics such as Euthanasia or Right to Die. I am using the word’ choice ‘as to explore other ways we look at treating terminally ill and end of life stage patients, or rather Persons.
    I believe that by offering the individual new creative choices as to how they choose to manage that transitional phase of their lives’ will be the most crucial element in diffusing the ticking time bomb of healthcare collapse whose fuse even now singes the blast point. Monies saved in one area of healthcare especially one that is as draining as treating the terminally ill (in the methods that we use today) and End of Life Stage patients can be used to affect better treatment and care to other areas of healthcare demanding our attention i.e. State Children’s Health Insurance Program (SCHIP), Medicare and Medicaid, and the teeming masses of the under and uninsured.
    What I propose is take the proven concept of Hospice care to new level of appeal and a new dimension of implementation. What if as a consumer, as a person with choice, was given the option to elect on their insurance coverage, a plan that would allow them, if diagnosed with a terminal disease or condition, where the prognosis of life expectancy is given at ten years or best, with the most intensive modalities of treatment available at the time or, five years at best with compassionate treatment; to Live the remainder of their days on an island retreat, in the fashion the Club Med members of the 80’s were entreated to when they elected to use Club Med as their Vacation Plan preference of choice.
    A recipient of such plan would choose to forgo mind boggling expensive treatments such as Chemotherapy, Radiation Therapy and the likes of Investigational Drug Treatments. Pre-existing conditions, not related to the terminal illness would (if customer so desire) be treated via outpatient medications.
    Such recipient would have also elected to forgo mechanical and artificial life sustaining equipment and services if they do not impact or enhance the quality of life.
    These Persons of Choice would be allowed to complete their transition in dignity and in comfortable surroundings devoid of Emergency Medical Intervention aside from Comfort Measures Only.
    Although not an accountant, healthcare administrator or number cruncher, I have enough presence of mind and insight to ascertain that the cost of providing such luxury accommodations as those offered by Club Med to its patrons would be but a mere fraction of what it would cost that terminally ill or end of life stage patient to manage their transition, given only the current options available to them today. Let’s explore some of those options.
    _______________________ ___________________ ___________________
    Fee-for-service plans: If you have this type of health insurance, you can choose any doctor, change doctors any time and you can go to any hospital anywhere in the United States. You pay a monthly fee, called a premium. Every year, you have to pay a certain amount of money (known as the deductible) before your insurance will pay your medical expenses. After you have met your deductible, your insurance will pay a set percentage of the bill.
    Projected cost of providing 5 years of aggressive treatment for terminally ill and/or end of life stage patient(s)
    This is a suggestion of the financial reference points that should be taken into consideration when doing your evaluation:
    Cost to individual___ Cost incurred by plan’s host__ Cost to Hospital _____
    Outpatient Prescription Cost_______
    Cost in projected Medical Litigation_____ Ancillary Medical Cost due to Condition___
    Emergency Room visits etc.___________
    Health maintenance organizations (HMO). The HMO will usually cover most expenses after a minimal co-payment. HMOs may also limit your choice of providers to those within their approved provider network.
    Point-of-service plans (POS): A point of-service plan is a type of HMO. The primary care doctors in a POS plan usually make referrals to other doctors in the plan..
    Cost of providing 5 years of aggressive treatment for terminally ill and/or end of life stage patient(s)
    Preferred provider organization (PPO): The preferred provider is selected by plan holder.
    Cost of providing 5 years of aggressive treatment for terminally ill and/or end of life stage patient(s)
    Also not a Hospital Administrator or Medical Planner, I am just a common Joe, and I will offer this proposal to those mentioned parties for the finer details but, this is how I foresee the establishment of such a facility geared to match the amenities afforded in a Club Med like vacation package to those individual customers electing to choose such newly offered insurance options.
    As a collaboration between various Insurance companies and their hospitals of preference and, with the backing of and the protection afforded by the Federal Government these institutions will combine their resources to purchase, rent or commander tropical or resort friendly Island chains, Island or, large portions of Island(s) to establish a Hospice Paradise environment for recipients of such services.
    Depending of the level of the plan opted for; the recipient would be allowed to take or to have paid-for visits of a specified number of family members to that location as such option of the plan entails.
    The arrangement at the facility would allow for varying degree of service and lodging to the customer depending of the level of service and need required by the customer or once again, by the level of service opted for in the option of the plan selected.
    All accommodations on the island would be provided free of charge to members and their selected guest. This would include airfare to and from the island by member and selected quest. Airfare is also included and flights will be arranged for those members who have completed their transition and have made it known that they wish their final resting place to be elsewhere’s. Members who wish their final resting place to be on the island would have such services performed as an adjunct to their coverage (regardless of plan selected).
    This would include all meals provided by dinning facilities maintained by the plan although great effort would be made to encourage restaurants and a host of private institutions to locate on the island, including shopping venues and other forms of entertainment. Patronage of private establishments would be the financial responsibility of the member.
    Other free accommodations and amenities would include: RECREATIONAL ACTIVES (Fishing, Scuba Diving, Hiking, etc. and a whole host of other less exhausted activities for those more impaired. Group Activities, Counseling and Religious services. All of these services and amenities would extend to the guest, as long as they are in attendance with the member at the time of the activity.
    As stated earlier, the island would host various living arrangements and accommodations depending of type of coverage selected. Such arrangements could run the gamut from Beachside Bungalows to Assisted Living Apartments to Community Hospice settings. Full nursing services as condition(s) dictates.
    The island would host a full service hospital but the intent of the hospital would be to treat those conditions pre-existing of the terminal illness and those mishaps and occurrences that might befall the customer during their stay i.e. slips and falls, first aid care, colds and flues, etc. In the event some major mishap, requiring some sort of extensive medical attention would befall the member while during their stay at the island, for which they wish to be treated for; transportation would be provided free of charge but member would be financially responsible to the treating facility for such care. Guest of members would be entitled to the same free transportation off the island but, they would be financially responsible for any care administered to them while on the island.
    Emergency Management and Disaster Planning
    Due to the beneficial impact upon the nation and the significant saving afforded the Federal Government (for they may even elect to send terminally ill patients under their care to such Island(s) i.e. Veterans – recipients of various Federal Entitlement Plans. I would hold that not only should they financially participate in the establishment of such Islands but under the auspices of Homeland security that they patrol the waterways surrounding such Island and be ready to implement evacuations and/or services in the event of natural or man-made disasters.
    Simple, act now, act a new, and thwart off the descending crisis.
    As I stated earlier, I am just a common Joe. There are limits to the amount of research that I am able to conduct or willing to do. Filling in the blanks for the requested stats should come from those Individuals and organizations much more creditable than I.
    Also this year has shown, within my own city, the ideas of creativity and major innovations geared towards a new future that I have put forth (in some cases) have been either adopted or modified to fit into the programs of politicians or other interest and sadly to say, I have barely received any credit or even a decent thank you, not to mention any compensation what so ever.
    Yet being a person with insight and revolutionary and innovated ideas, I still continue the cause of educating the educated and perhaps saving this nation of ours. Maybe one day history will remember the source?
    Please circulate, keep the ball moving and the conversation going, we got a nation to save here, get involved so one day you can proudly say that you participated in changing not only the way we changed healthcare but the way we view living our live and facing our mortality. Variations of this entry can be read at:
    How to Save Our Healthcare System. By Phillip Ghee. We stand at a crux in our history as a nation perhaps, the most crucial juncture it has faced since the …
    http://www.insurancebroadcasting.com/072707.htm – 100k – Cached – Similar pages
    How to Save Our Healthcare System. By Phillip Ghee ….. Independent Agents seek reform of regulatory system via targeted federal legislation…
    http://www.managedcareinfo.com/current_news.htm – 118k – Cached – Similar pages
    To the Media, Press and other Healthcare sites evaluating the publish ability of this article:
    Wikipedia:Articles for creation/2007-08-16 – Wikipedia, the free …
    Please now follow the link back to Wikipedia:Articles for creation. ……NEWSCAST How to Save Our Healthcare System. By Phillip Ghee. …
    en.wikipedia.org/wiki/Wikipedia:Articles_for_creation/2007-08-16 – 236k – Cached – Similar pages
    To the Press, Media and other Insurance and Healthcare sites
    Look I am trying to do what the Political Leaders, Academia and, The Intelligentsia has failed to do; Wake Up the People and possibly save the nation. If the article is not sanctified or grammatically pleasing enough for your taste, clean it up (use what *Vonnegut would have sarcastically referred to as “your big brains”) then print it anyway. What’s more important form or function?
    *Read Kurt Voonegut’s ‘ Galapagos’ in your spare time, a humorous fictional account of how so called big brained thinking failed to avoid a disaster of monumental proportions. Let’s hope in this real life account of an impending disaster that life doesn’t imitate art.
    Phillip Ghee
    p.s. Please print in its full or greater length, if that does not meet your guideline as a letter than may I suggest that you print as an article or opinion piece, a 250 word limit is much too! limiting on the magnitude of what I am trying to accomplish here.
    Comments and request for reprints can be sent to author at: Phillipghee@yahoo.com

  5. You know, it’s so funny… people talk so much about taxes and health care, retirement… but we all know.. such systems can’t promise what people would like to have in future…
    freetomanifest.com team; place you can learn how income taxes really work.

  6. RE: Seniors drug supplemental plans
    Here’s what happened to my mom. She signed up with Humana for $7.50 in the first year. Looked like the best deal out there. Now, it’s gone up to $17.50 — well, just because it could.
    They forced the competition out of the market, then raised rates. Why was this not deemed fraud? Or, whatever illegal term is appropriate. Does anyone know what the ramifications are if my mom tries to change to another plan now?
    I guess, just that this is so confusing, complicated & gives, if nothing else, the ‘appearance of deceptive business,’ why are none of our US Attorneys (those still employed, that is) looking into this? Is it really legal? Is there a viable option for my mom? Can anyone tell me, please? Thanks in advance — Linda

  7. Hi, Jack, et al. This is my first post, so please be patient with me. I admit, that for the longest time, I felt as you do, that only a single-payer government system could fix the healthcare problem. But I’ve done some research (see my website: http://www.the-pi.org for details) and found that no one seems to be able to make that kind of system work.
    Belgium has the single-payer system that’s the most successful and most envied by all of Europe & Canada. However, even they have’ve had to cap spending on healthcare. If other changes aren’t made, I’m afraid the single-payer system will simply lead to more rationing of services.
    Also, I started reading a book (Redefining Healthcare, Creating Value-Based Competition on Results) by Michael Porter (strategy prof. at Harvard) and Elizabeth Teisberg (assoc. prof. Darden Grad. School of Business) in which they pointed out something so obvious, I can’t believe I’ve never heard it before. In short:
    We need results based on medical condition, risk-adjusted for patient condition so doctors (and patients) can evaluate what works best. This info should be widely available to all (via the web, most likely). What they call: valued-based competition shifts the competition from passing the buck (ultimately, to us patients) to rewarding medical professionals who take care of their patients’ health in the long term.
    Now I found this particularly pertinent as I searched for information on compression fractures. My mom is 76 years old, and although an active person, she hasn’t exercised regularly. She’s got osteperosis bad.
    Anyway, I was trying to figure out if she should have 1 of 3 different surgical procedures or go the pain therapy route. Guess what: each specialist sang the praises of his or her or specialty — what a surprise! But when I looked for comparative facts — zero. It would have been so helpful to be able to compare actual results before having to choose.
    I could go on & on, but I’ll be civil. However, I would appreciate hearing your point of view on the subject of gathering results (particularly in MA & CA where healthcare is becoming mandatory) for all medical conditions. I’m trying to get people interested in starting a petition for a referendum on the subject. Your thoughts and comments would be most welcomed! Thanks in advance for your time and consideration — Linda

  8. You are really clever John. A pricked balloon now? You must have saved that one up.
    It all started with “You should go on the road with Jay Leno. Really. You should.” Don’t start the blasts unless you are prepared to get them back. And since you’ve given me the last word, which I really appreciate, I’m assuming that will be the last we’ll hear from you. Good riddens.
    To the rest of you guys, sorry for the childishness. A search of the posts will show that I never cast the first stone.

  9. “your arrogance”
    That’s from YOU?
    Just another laugh from THCB’s undefeated, untied king of comedy.
    Am I arrogant because I disagree with you? Or do I disagree with you because I’m arrogant? Bated breath all ’round, I’m sure.
    BTW, in my company the Insurance Department has about the same amount of work helping retired employees with Medicare problems as it has helping active employees. I wonder why that would be?
    It’s not much fun pricking a balloon after the air is let out, so I have nothing more to say to you. And since you crave taking the the last word as a sign of winning the intellectual struggle you imagine a message board to be – please now take it. Do your best to include another good joke, hear?

  10. I am not real sure as to the likelihood of getting a Medicare for all system. I do think that those people not getting insurance through their employers should be able to buy into Medicare. One of the best things for the solvency of Medicare would be to increase the pool and get younger and healthier people into the mix, as this would bring down the overall tab of the Medicare program.

  11. John, at least your arrogance is consistent, and as a benefits manager a Medicare-for-all system would likely reduce the need for benefits managers as well. So while throwing your darts at a threat is quite understandable, there are a lot of other things a Medicare-for-all system would eliminate too. I would hope that pointing them out does not offend you. But if so ….

  12. “But then again, with a national Medicare-for-all system we wouldn’t have to worry about . . . ” [insert something random here, such as fraud or overbilling or administrative cost or bureaucracy or whatever pleases you to be grandstanding against today].
    Jack you bravely express your faith and risk all in speaking truth to power. Indeed, your statements are worth repeating.
    Oh, you already did . . . never mind.

  13. Excellent points. I do believe in the concept of a nationwide informational database for resolving ractice variations and etc, but tied to the patient name only by a local ID code that can be released only by the patient and only to another physician. Proper security would prevent it from being used for red-lining. But then again, with a national Medicare-for-all system we wouldn’t have to worry about the BCBS tricks or those brobers who sell worthless policies

  14. Excellent points. I do believe in the concept of a nationwide informational database for resolving ractice variations and etc, but tied to the patient name only by a local ID code that can be released only by the patient and only to another physician. Proper security would prevent it from being used for red-lining. But then again, with a national Medicare-for-all system we wouldn’t have to worry about the BCBS tricks or those brobers who sell worthless policies

  15. The problem with charging different rates for Medicare part B is that you are creating a foundation for increasing the rates for many more people later. See the link I posted earlier about what the rates will reach.
    To address the other topic on the board here, what Blue Cross is doing here with post claims underwriting is criminal. They claim they only cancel 1 in every 200 policies per year, but how much do you want to bet that all of these cancellations are due to claims that cost $50,000 or $100,00 and maybe even more. Do the math and calculate 2000 cancelled policies by $100,000 per claim, and you will see their bottom line. This way they can increase their profits on the back of the most vulnerable people. I am glad attorneys like William Shernoff go after them and make them pay, but I would not expect their behavior to change one bit, unless they are forced to do so by both legally and through new government oversight.
    We also needs to be addressed here are the federal government’s efforts to build and computerize interoperable medical records that are to be accessible from all health care providers accross America without adequate privacy provisions. If you think what Blue Cross and others do now is bad, just wait until they can get acess to your Electronic Health Records in the Nationwide Health Information Network that the Bush administration is trying to develop. The health insurance companies will love this as they will be able to find more reasons for cancelling your individual health insurance plan by combing through all of your electronic medical records. The drug companies will datamine this system and then use your prescription history to do more marketing to you. Worst of all, your employer will sift through the NHIN and can determine whether to promote or fire you based upon your medical conditions. HHS continues to develop the NHIN without adequate privacy safeguards and rejects criticisms of this saying they will deal with privacy later.
    Congress and the states need to step in and assert the following. Patients have the right to control who is able to access their medical records. They can opt in and opt out of Health Information Netwoks and Health Information Exchanges. The patient should be able to segregate their medical information, if they choose to participate in these networks. Frankly, I do not want anyone accessing my private medical information, as it is part my own private affairs.
    Matt, you are an ACLU member. Why do you not object to the NHIN and all of the privacy violations being carried out by the Bush administration by repealing the privacy provision of HIPPA and their plans for the NHIN? Health IT could lead to better medical care, but it will not do so if people do not trust the health care system to protect their privacy.

  16. “I don’t know what Medicare’s Part B premium penalty rules are if one declines it initially but wants to sign up later after getting sick.”
    10% per year for every year when you are eligible but don’t participate.

  17. Anonymous,
    Believe it or not, I don’t have a problem with the new Medicare Part B premium rules even though, in all likelihood, I will be affected by them when I become Medicare eligible in four years. I think it does less economic harm than raising marginal income tax rates, and, even at the highest income levels, there is still a 20% subsidy. I don’t know what Medicare’s Part B premium penalty rules are if one declines it initially but wants to sign up later after getting sick. I hope they’re stiff. In all likelihood, I’ll still participate even if I have to pay 80% of the true cost of Part B instead of 20%. That, of course, assumes I’m still here!
    By the way, on Social Security, if it were up to me, I would tax 85% of all benefits regardless of income, which would put Social Security on the same tax footing as all other pension income — fully taxable once your personal lifetime contribution (if any) has been recovered (in nominal dollars without interest).

  18. John,
    Thanks, That’s great. If it’s not much trouble, perhaps you could include the data on costs above $25K as well. Also, just to clarify, If a given individual has, say, $12K in claims, I’m looking for data that would show $5K in the $5,000 and under bucket and $7K in the above $5,000 bucket as opposed to all $12K in the over $5,000 category. If the latter is how you have the data, that’s OK if we can get a headcount of how many individuals are in the high claims group vs how many are in your total pool.

  19. Barry, I think I have all the information you mention, but it’s in my office. I’ll dig it out for you next week. The break point on large claims is normally 25,000 and above but there are distributions by size that just may show amounts above 5,000 also. The info I have also includes benchmark data which consists of data from groups having similar demographics to ours – I can provide that too but it would not necessarily apply in general because of the selection based on demographics.

  20. Medicare for all may be a viable option, and it would still allow for a supplementary insurance market to cover what A&B do not pay as well as prescriptions in Part D. However, there are several problems with the Medicare Modernization Act of 2003. In addition to prohibiting the governement from negotiating discounted pricing on prescriptions, it also will begin to charge people different rates for Part B based on their incomes for the first time in the history of the Medicare program. Here are all of the details.
    This will undermine Medicare as a program for all elderly people irrespective of income and social status, and it will turn it into a means tested program that eventually becomes a welfare program only for “the poor”. As was predicted, the structure to charge increased premiums will then allow for them to be increased on others. President Bush now has a plan to further means test Medicare, as is detailed here. I am sure that American seniors are going to be real happy with this.
    “Social Security reform ” will be the next snow job done on the American public, and there will be attempts to cut your benefits simply because one has assets. My overall point here is that we should have Medicare plans that are available for every American that are equitable and charge every person the same rate irrespective of income earned or social status. Otherwise, we will end up with only a welfare program for the “poor”, and Americans will simply opt out altogether.

  21. John,
    A question for you. For the health plan that you manage, out of curiosity, I wonder if you could answer the following questions: (1) How much is the average healthcare spending per member, (2) how does that break down between what insurance pays vs the employees’ deductibles and co-pays, (3) how much of the combined spending is attributable to the first $5,000 per member of costs, and (4) how much is for costs beyond $5,000? I’m looking for an allocation of costs between catastrophic coverage (which I define as costs above $5,000 per year) and insulation (the first $5,000 of costs). If you have similar information for the non-Medicare and non-Medicaid population at large, that would be even better. Thanks in advance for any help you can provide.

  22. “John, you are being utterly stupid . . . Try the kid’s channel.”
    Now you’re talking like the adult you think you are.
    What a marvelous insight into the workings of a first-rate mind: Jack Lohman. Tweak him just a little, and watch the personal insults come rolling out.
    Keep it up, Jack, and Matt will be obliged to turn this blog over to you. If the volume of humorously self-important words counted, that would have happened already.
    Ironic isn’t it that the funniest people have no sense of humor at all?

  23. John, you are being utterly stupid. The firsthand example didn’t even get a mention?
    You don’t belong on a blog where serious writers are discussing seriousd problems. Try the kid’s channel.

  24. “John, I’m not treating this as a “funny,” and you shouldn’t either.”
    Meanwhile the laughs (from you) just keep on coming.
    Of course, I forgot – underlings from Elbonia administer Medicare for the government.
    I haven’t seen anyone so utterly, so humorously confused as you, since Stan Laurel.
    Thankd Jack. I mean it – thanks.

  25. John, I’m not treating this as a “funny,” and you shouldn’t either.
    When I owned my own cardiac event monitoring lab we had a competitor (another private lab) that appropriately charged Medicare for ONE thirty day monitoring period because the CPT code called for one thirty-day period. But they found they could get away with charging private insurers for 30 thirty day periods because the private insurers were ignorant of the procedure and they stupidly paid the money. What the hell, 30 units sounds like it fit within the guidelines of the 30-day code, so the ignorant clerks paid it. For two years they got away with charging Medicare $400 and private insurers $3000. They felt that as long as they billed Medicare within the law they would not get busted. Until someone turned them in and the FBI busted them on mail fraud and state charges.
    The point is that they would not willfully overcharge Medicare but did willfully overcharge private insurers.
    I do not care about all of the fraud cases you did NOT see. I care about the ones that I DID SEE.
    Perhaps if you were a little closer to the fire you’d feel differently, and maybe not as entertained.

  26. “Under a Medicare-for-all system we’d not have as much fraud and overutilization ”
    You should go on the road with Jay Leno. Really. You should.

  27. First of all Barry, we’d eliminate the unnecessary expenses that are consumed but not spent on health care, like insurance company marketing, broker commissions, high costs of the 100,000 insurance underwriting jobs, and risk management, high executive salaries and profits. Under a Medicare-for-all system we’d not have as much fraud and overutilization because the penalties for felony fraud include jail time and exclusion from the system. I see that as the major savings and accounts for 20-30% of todays health care costs. With that savings we’d be able to cover the 45 million people without coverage today. Net gain (or loss): zero dollars and 45 million people. There would be no such thing as uncompensated care or cost shifting. A medium sized doctor’s office could eliminate 2-3 billing clerks.
    There are many other areas of savings: Reducing auto insurance by half, reducing worker compensation costs by half, reducing bankruptcies by half and eliminating the bureaucracies needed to manage Medicaid. I’d even fold in the VA patients as well and eliminate those bureaucracies. I’d also like to see the certificate of need program reinstated and require docs to send patients to hospitals for testing rather than to their own labs. (Sorry Eric.)
    But then I’d like to see part of the savings used to develop a national database that would further reduce overutilization, reduce practice variations, provide transparency and reduce prescription drug conflicts. I’d also like to see some of the displaced administrative personnel retrained in monitoring the system and for nursing and medical technician jobs.
    I don’t think you should ask: “If you look at all of the care you provided in the last 12 months, how much would your revenue change (either up or down) if you collected Medicare rates from everyone?” Medicare rates are not always fair and should be tweaked, some up and some down.
    You are right in that utilization would increase in the beginning as people without insurance would be brought onto the roles. But their utilization would ultimately level out as they got caught up with their ills. There are two schools of thought on deductibles and co-pays: That they reduce overutilization but also deter care until it is more costly. I would not object to starting with a means-tested co-pay and tweaking it as we learn more.
    I simply don’t agree with your “bottom line.” As long as we are willing to throw 15% of GDP at the system, wait times will not be an issue. Yes, we will redistribute the payments, but that does not equate to wait times.

  28. Jack,
    Perhaps you could provide some more insight into exactly where the savings would come from under a Medicare for all system, which, presumably would be at least sufficient to cover the currently uninsured.
    I think it might be useful, if the information doesn’t already exist somewhere, to have a sample of hospitals, doctors (both PCP’s and specialists), and nursing homes go through the following exercise: If you look at all of the care you provided in the last 12 months, how much would your revenue change (either up or down) if you collected Medicare rates from everyone? In the case of hospitals, for example, Medicare rates would, presumably, be higher than Medicaid rates as well as a big improvement over uncompensated care but would be lower than commercial rates and self-pay rates (from the few who could pay). For doctors, uncompensated care probably isn’t as much of an issue, but commercial rates are most likely uniformly higher than Medicare rates. For nursing homes, Medicare rates (for the limited circumstances under which it pays for nursing home care) are considerably higher than Medicaid rates but lower than private pay rates. Next, assuming you are now operating in the simpler world of one set of coverage and payment rules (Medicare’s 130,000 pages of regulations), how much could you take out of your organization or practice cost structure in administrative savings? Combining the answers to those two questions, what is the net impact on your income after exepnses?
    I suspect that the biggest potential for savings under Medicare for all is not administrative savings. It’s squeezing provider payments, especially for specialists and, probably, drug companies. At the same time, potential utilization could easily skyrocket because (1) 47 million people would now have insurance who didn’t have it before, (2) all 300 million of us would be relieved of deductibles and co-pays, and (3) long term care would be covered. The potential adverse longer term effect on innovation from squeezing drug companies is a whole different set of issues to which your answer is: NIH can do the research better and cheaper.
    Bottom line: it doesn’t add up and it won’t work, at least not without the same wait time and/or rationing issues that every other taxpayer funded system wrestles with constantly.

  29. This is a timely artticle, John, but I’d ask “Why didn’t he avail himself of the superior healthcare in the states? Instead he chose a country with socialized medicine?
    Here we have a disagreement between patient and doctor, with the patient saying “I don’t care what the costs and I don’t agree with your assessment of success. I want the operation now!”
    This may point to a problem arising from underfunding, not systemic. Had Canada been properly funded and he could have been treated promptly, he may not have faced this problem.
    Let me also add that for $2 trillion per year we could enroll every Ameican in a Medicare-for-all system, and we have zero wait times for Medicare patients. This will also answer Barry’s question re “I’m not so sure about there already being plenty of money already in the system.”
    >>> “I think most of the “information” being dispensed about waste and insurer profiteering is, to be blunt, crap.”
    Barry, give me a break. How many people like Johns Hopkins and others must you hear it from before you’ll believe it? How about from the medical profession itself? See http://www.throwtherascalsout.org/WSJGovernment-Funded-Care.htm

  30. Someone above posted something about BCBS supposed to be ” not for profit “…. um…. yeah…. where did THAT come from? They are the worst of all the carriers when it comes to hiding profit from the public.

  31. >>> “At the same time, in rural areas, FFS is the only game in town, because there is often only one hospital for miles around, “
    I wasn’t clear about this. The rural hospitals accept Medicare rates. The large private insurers, who can sometimes negotiate reimbursement rates lower than Medicare cannot do so with rural hospitals because of the absence of competition. So, they pay the same rates as Medicare under their MA programs.
    I’m not so sure about there already being plenty of money already in the system, and I think most of the “information” being dispensed about waste and insurer profiteering is, to be blunt, crap. There is an article in the most recent issue of Health Affairs that discusses both who pays for healthcare and how the money is spent for the following years: 1970, 1980, 1993, 1997, 2000, 2003, 2004 and 2005. The data comes from CMS, Commerce Department (Bureau of Economic Analysis) and the Bureau of the Census.
    According to this data, total healthcare spending in 2005 was $1.988 trillion (call it $2 trillion in round numbers). Of that amount $695 billion or about 35% was paid by private insurance companies. Another $249 billion of 12.5% was paid by consumers for out-of-pocket costs (everything from deductibles and co-pays to long term care, dental, vision and other services often not covered by insurance plus spending by the uninsured).
    All this talk about waste is the same talk we hear from politicians when talking about the budget. Show me a before the fact example of waste, and maybe we can eliminate it. In the individual insurance market that serves about 17 million people, administrative costs are high to pay for medical underwriting, broker commissions, etc. However, the young, healthy people who are able to buy in that market cheerfully pay them because, at the end of the day, they can buy health insurance at far lower cost than they could under community rating.
    Even if a single payer system could save a few bucks of administrative costs, the huge increase in utilization that would come from eliminating deductibles and co-pays and trying to cover long term care for the literally millions of people who are currently being cared for by family members at no cost to taxpayers will swamp your administrative savings many times over.
    I repeat my contention that our costs are higher than elsewhere because our doctors and other providers earn higher incomes, we supply more care at the end and very beginning of life even when the prognosis is poor, and our jury based unpredictable litigation system fosters a culture of defensive medicine among doctors.

  32. >>> “Any politician will tell you that there is a limit to how much people are willing to pay in taxes.”

    Barry, you know as well as I do that the money is there without the need to raise taxes. With all of the BS flying 70% of the American public can see through it and want universal health care. Now! It’s funny how you guys can argue for the widespread intelligence of the American patient when deciding on a treatment regiment, but they can’t tie their own shoelaces when it comes to sorting out the political garbage.

    >>> “Under Medicare Advantage, insurers are providing additional services such as disease management and cost management that is not included under basic Medicare.”

    Then their rates should be lower, not higher.

    >>> “At the same time, in rural areas, FFS is the only game in town, because there is often only one hospital for miles around, ”

    Wow. What a perfect opportunity to open a government-owned hospital to compete with the locals that refuse the fairness of Medicare. Isn’t this the point at which you injected that “Competition means more choice and more innovation.”
    Let’s let the government serve as that competitor, like the US Mail does.

  33. Jack,
    You keep using the term, “properly funded.” Any politician will tell you that there is a limit to how much people are willing to pay in taxes. Remember the attempt to provide more complete catastrophic coverage under Medicare for retirees in exchange for somewhat higher taxes on the better off seniors? They stormed Dan Rostenkowski’s car in Chicago, and the legislation was repealed soon after passage. There is also a limit to how much provider payments can be squeezed. At the same time, there is essentially no limit to the demand for services, especially if you eliminate co-pays and deductibles and try to cover long term care.
    Under Medicare Advantage, insurers are providing additional services such as disease management and cost management that is not included under basic Medicare. At the same time, in rural areas, FFS is the only game in town, because there is often only one hospital for miles around, and other services are also likely to be in short supply. Also, under Medicare Advantage, CMS can and does adjust payments to individual insurers both up and down depending on how the health risk of their overall pool of enrollees compares to a benchmark level.
    Competition means more choice and more innovation. If it also means slightly higher administrative costs, that’s fine by me.

  34. Tom, as you know, Medicare Advantage is simply Medicare contracted out to a private provider like the United Healthcare managed care plan. And I don’t have a real problem with that except that those “private” Medicare services are costing 12.5% more than the same “public” Medicare services. So much for private industry being more efficient than the government, huh?
    As well, with the Advantage program you are limited to physician and hospital choices; only those who have a contract with the carrier. But I’d be willing to give up the 12.5% loss just to get something positive in the works and provide an option. Since the two Medicare programs are in essense competing with each other in terms of services, I think that’s a positive. In both of these cases the FFS remains, and both need better oversight.

  35. Eric, in all cases I mean A&B, but a properly funded A&B. I don’t know what C is, and D should be disbanded and turned back over to the drug stores, where it should have been in the first place.
    If they are going to starve Medicare, then of course they will run out of money and people will complain. That’s what the for-profit interests are hoping for in Canada; get the public pissed off so they clamour for the for-profits to step in and save the system.
    But I think we’ve been there before.

  36. > which “medicare”? A,B,C, or D?
    I vote for “E” == Medicare Advantage, which contains already elements of Enthoven’s ideas that help align incentives. More of the same FFS industry organization will not help very much.

  37. Jack- which “medicare”? A,B,C, or D? Or do you mean all of them? Remember, the government RAN OUT OF MONEY this past year and could not pay providers under part B for the last 11 days of the fiscal year.

  38. Jack and others. Here is a link to a situation in Ontario Canada where a women sought U.S. care for her cancer. http://www.thestar.com/News/article/176463
    >>>She needed a drug treatment which apparently was only available in the U.S. Here’s a bit in the article which shows a single pay system makes mistakes but that it can respond in a very different way than a private insurance company. I’ve para-phrased here a little (if that’s the right term) to ease understanding.
    >>>”She found out last week a deal was in the works and got a call Tuesday confirming she’d be paid (by the provincial government) $76,018.23 for medical bills, expenses and legal fees.”
    >>>”Did (Health Minister George Smitherman) speak to me directly? No. Did I get a chance to tell them more about the struggles that I have? No. But do I get my money back and do I get a system that’s going to change for the better? Yes, and that’s what’s important.”
    >>>”Marin said (Ontario’s ombudsman Andre Marin) he was thrilled he could help Aucoin and called it a perfect case of “slavish adherence to rules at the expense of common sense.”
    >>>”When they found out they committed a faux pas by misunderstanding her application for drugs, they had an opportunity there to fix the problem, compensate her for what she had incurred… but they fought her tooth and nail, they spent a large amount of money fighting her off and putting her through the ringer.”
    >>>He said there’s a veil of secrecy surrounding how approvals for out-of-country care work and patients, physicians and even some government officials don’t understand how the rules apply.
    >>>”It’s very much like throwing these cancer patients a Rubik’s Cube and saying, `figure it out … to get your funding.”
    >>>”Health Minister George Smitherman said in a statement that advice from Marin will lead to a review of how the province provides out-of-country health coverage for patients.”
    >>>”He said the government will take immediate steps to provide physicians with better information.”
    So where is an uncaring bureaucracy putting more patients at risk – looks like the private insurance system in the U.S. and not the dreaded single pay system in Canada. She did not win without a fight, but see how she helped make the system better for future patients.

  39. No SBD, the appropriate remedy is a Medicare-for-all system. And to all those who are tired of hearing that, please ask, every time a stupid problem with our health care system comes up, would this have happened in Canada?

  40. “It is clear to me that we have to have some independent oversight,” Ehnes said.
    That quote from the LA Times from the Director of the DMHC is an understatement of the actual facts. The DMHC was formed to provide that independant oversight, unfortunately the DMHC has become a tool for the insurance company.
    I was in LA on Monday for the DMHC public hearing. Here is part of what I had to say.
    Dear DMHC:
    On January 13, 2006, I had a full body scan because my father was having health issues and he told me “I’ll do the scan only if you do it with me”. On Friday, December 8, 2006, I received a decision from the DMHC regarding the cancellation of my policy by Pacificare who had accused me of fraud because I did not list this scan on my application. This was the second time in so many months that the DMHC had decided with Pacificare. The first decision incorrectly denied me my right to an IMR and left me with over $65,000 in medical bills. I have attached copies of both decisions for your information.
    I am of the opinion that the problem with “postclaim underwriting” as well as any of the other issues that the DMHC attempts to resolve are unfair and do not leave those who are seeking help with any sense that their problem was adequately investigated. Those seeking help from the DMHC have no idea what the insurer has sent to the DMHC and if that information was actually even the correct information. The fact that the decisions made by the DMHC are final leaves those like me with a feeling of betrayal from a Department that was formed to protect us. This became clear to me when I sent a registered letter to Director Cindy Ehnes with return signature receipt and never received even an acknowledgement that my letter was read by anyone at the DMHC. I have attached this letter for your information.
    Pacificare’s Underwriting Manual Admits to Post Claim Underwriting
    For purposes of this section, “postclaims underwriting” means the rescinding, canceling, or limiting of a plan contract due to the plan’s failure to complete medical underwriting and resolve all reasonable questions arising from written information submitted on or with an application before issuing the plan contract.
    From Pacificare’s Underwriting Manual
    Subsequent to enrollment in a PacifiCare Individual Plan, PacifiCare reviews all claims submitted to identify medical conditions which may have not been accurately disclosed at the time of application. All such claims are referred to PacifiCare’s underwriting department for further investigation. While an investigation is being conducted, the original claim and all subsequent claims from all providers will be pended until the underwriting investigation is completed.
    The first sentence above admits to “postclaim underwriting”.
    My Proposed Solution to “Postclaim Underwriting” Issue
    I believe that my problem with “Postclaim Underwriting”, as well as my problem with the other decisions made by the DMHC could be easily resolved in the same manner that other Government agencies solve them, through an Administrative Law Judge. Anyone who has received an adverse decision from the DMHC should be given the opportunity to present their case in front of an Administrative Law Judge. A representative from the DMHC, the insurer, and the person who received the adverse decision would present their side of the issue and if the ALJ decides with the DMHC then the decision is final. If the ALJ decides against the DMHC and the insurer, then the Director of the DMHC should review the decision and use these decisions to make the process better for future problems. The Director and/or the insurer could also appeal the decision either in court or through some board setup for these appeals. An excellent example of how the process works can be found at the EDD. I have attached their process for your review.
    § 1342.Legislative intent regarding the duties of DMHC
    (d) Helping to ensure the best possible health care for the public at the lowest possible cost by transferring the financial risk of health care from patients to providers.
    (e) Promoting effective representation of the interests of subscribers and enrollees.
    (h) Ensuring that subscribers and enrollees have their grievances expeditiously and thoroughly reviewed by the department.
    I am sad to say that I do not believe that the DMHC has followed the intent of the Legislature and that review of DMHC decision by an ALJ is the appropriate remedy.
    Thank you,

  41. Matt, excellent article hitting the nail squarely on the head. Any healthcare reform plan that does not address the issues of the individual market is only half a plan. The plans coming from our politicians and market-based policy think tanks routinely ignore this issue. It’s apparent to me that they are all safely ensconced in their group health plans and don’t understand what’s happening in the real world.

  42. I’m glad Blue Cross is included in this story. They are supposed to be the good “non-profit” guys. This is the reason I cancelled my insurance with BCBS – an attempt to screw me on a claim (first one) while jacking up my premium almost 40%. If you see ads for BCBS of North Carolina their target market is young people. They sell fear and deliver false promises about financial protection if you get sick, then steadily raise premiums beyond affordability as you get older forcing you to go without insurance when you really need it. I wonder if the 1% of patients that these companies say they cancel account for 80% of the costs coming out of their premiums? One more example why private insurance in healthcare does not give value for price and contributes nothing to solving health affordability. Single pay folks.

  43. Damn. What could be simpler than a single-risk pool Medicare-for-all system with no tricks of the trade, 100% coverage, no pre-existing disease issues, no wait times when changing jobs or even becoming unemployed, no COBRA, no employee questionairres to be later used to rescind an individual or group policy, and etc etc etc?
    Will we ever get to be that smart?

  44. The other problem with indivdual insurance, even in states with community rating and guarantee issue, is that the plans are usually age rated. Even with a high deductible plan, indivdual premium for those over 50 easily exceeds $500 a month. You will find that the uninsured would shift from largely the young and healthy to an older sicker population. This is not because they are denied insurance because of underwriting, but because of extremely high cost of insurance as one ages.

  45. Matt, BCBS CA is also publicly announcing it will cancel any agent who sells HDHP in conjunction with any type of self funding plan, other than it’s EOP plan. Amazing. Sell our cars, but if the buyer puts premium unleaded in it instead of regular we will cancel you and not pay you commission for the sale.
    They have no right to even KNOW that an employer is self funding… ANYTHING… that’s the DOL’s turf as far as I know, since self funded plans usually are regulated by the DOL, not the DOI. Yet, they sent out this message awhile back to all brokers. I have a copy of it in print if you haven’t seen it.

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