Health Care Stakeholders to Pledge $2 Trillion in Reductions

This from the Wall Street Journal on Sunday:

Major health-care providers are planning to pledge Monday to President Barack Obama that they will work to reduce cost increases in the nation’s health-care system by $2 trillion over the next decade, officials said…

Groups representing hospitals, health-insurance companies, doctors, drug makers, medical-device makers and labor are joining in Monday’s announcement. According to a letter from the groups, reviewed by The Wall Street Journal, they will promise to help reduce the growth of national health-care spending by 1.5 percentage points in each of the next 10 years. “The times demand and the nation expects that we, as health care leaders, work with you to reform the health care system,” the letter says.

Is it possible for these stakeholders to find $2 trillion in excess health care costs over the next ten years?

Are there ice cubes in Antarctica?

During the next ten years, we are on track to spend something approaching $40 trillion on health care in America. The stakeholders need to be proposing something that is more than a rounding error–it needs to actually make a difference toward making entitlements and private health insurance affordable.

According to CMS, the U.S. is projected to spend over $2.5 trillion on health are in 2009—or 17.6% of GDP.

In 1970, U.S. health care spending was about $75 billion—7.2% of GDP.

Health care costs have risen about 2.4 percentage points faster than GDP since 1970.

In 2018, CMS projects that we will spend more than $4.3 trillion on health care—20.3% of GDP.

So, these key stakeholders are going to visit the White House tomorrow and tell us that after 39 straight years of blowing the lid off of GDP they are now going to control costs?

That is if the President and the Congress mandate that everybody buy their health insurance products and therefore get funding to visit their doctors offices and hospitals as well as buy their drugs and devices.


But I would suggest some hard questions:

  1. What measurable and verifiable benchmarks are the stakeholders willing to set?
  2. What consequences are they going to suffer if they don’t make a real difference in controlling costs?

I think Ronald Reagan had it right when he was negotiating disarmament with the Soviets—“Trust but verify.”

Is this $2 trillion offer a big deal?

Is it more than just a rounding error in the grand scheme of things?

Is it is measurable, verifiable, and are there are consequences for falling short.

If the answer is “Yes” to each of these elements, then it is scorable.

If the answer is “No” it’s just good PR.

One other thing is clear–the pressure is building on the Congressional Budget Office to agree on some health care reform savings. Recent post: An Open Letter to the Men and Women Over at the CBO–Hang In There!

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42 replies »

  1. Nate,
    Geez, you are a genius! Perhaps you can be Secretary of HHS in the Palin administration. Seriously, now that I’ve satisfied your Napoleonic complex, your arguments might have more credibility if you didn’t insist upon making them like an abrasive megalomaniacal jerk! There is no doubt that rationing of some sort exists in all healthcare systems. My point is that in U.S. we don’t do it rationally. Furthermore, for all that we spend on healthcare our metrics are abysmal. One third of all patients admitted to U.S. hospitals acquire nosocomial infections or suffer iatrogenic injuries as a consequence of treatment. Other countries may have waitlists for non-emergent procedures, but here, if you don’t have insurance you simply don’t get treatment. Are you of the opinion that a sick or dying labor force enhances our competitive position in the world economy? As regards the auto industry, Lee Iaccoca said last month on Meet the Press that healthcare costs were killing the American car companies. I figure he ought to know. By the way, before berating my intelligence, learn the difference between “your” and “you’re” and “then” and “than”.

  2. Peter, sadly I see your no smarter today then you were last week. Once again I repeat I am not an insurance company and I am not a broker or middleman. If you can’t even figure out what it is I do after telling you 50 times how can you advocate policy for something far more complex?
    Lay off the assumptions no one wants to be an ass.
    “what could be more efficient than one large pool that includes everyone?”
    Well for starters multiple small and medium pools competing with each other to make sure they stay efficent. The thing about large monolitic pools is they tend to kill themselves with bloat. It’s actually pretty common and well known to ANYONE that knows the systems we have. That is why Medicare is so expensive, nothing drives it to stay efficient. Without competition why worry about the cost or quality people don’t have a choice.
    Ron your examples are reaching WAY over your inteligence level.
    “Before the landmark deals between the UAW and the Big Three, Canada was a low-cost alternative to making cars in the U.S. However, the strength of the Canadian dollar and the new UAW-run health care fund has actually made Canada one of the most expensive places to build cars and trucks. Before the new labor deal, U.S. automakers saved about $6/hour per worker by manufacturing cars in Canada. With 1.8 million vehicles being made in Canada annually, the savings really added up. However, that gap has been eliminated due to the new economic climate.
    “What GM, Ford and Chrysler did with the stroke of a pen is eliminate $25 an hour,” said Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ontario. “Canada is now the most expensive spot anywhere in the world for them to manufacture products. That’s a real problem.”
    I’m familiar with UAW health benefits, they are rich, very very rich, better then healthcare benefits any other car builder in the world gets. If the big three offered UAW members the same level of benefits as employees overseas get they would still be around today.
    “Why have so many customer service and tech support jobs been been subbed out to India?”
    Becuase they have millions of english speaking poor working for a fraction of US wages. It has nothing to do with the health insurance cost.
    Name one country that doesn’t ration healthcare by economics, your being naive. Every country rations healthcare, we do it based on the economics of the individual other countries do it based on the economics of the nation, either way both systems deny needed care. Pull your head out of who knows where and acknowledge the truth. In the US 90%+ of the population get the healthcare they need or way more then they need. 5 to 10% are severy denied care they need. In other countries 50-60% are denied some care they need, just not as bad as our 5-10. Thats the difference between freedom and swocialism/communism. As an american if I work my ass off I am entitled to spend my money on all the wastefull HC I desire, just as I am entitled to eat all the junk food, smoke, drink, and F&*# till I’m broke. If you got a problem with that then you ain’t american, it’s the basic principal we founded this nation on. My work earned my money and I’ll blow it how I please.

  3. “what could be more efficient than one large pool that includes everyone?”
    Cutting out the middleman, marketing, and the chain profits and commissions (sorry Nate, we don’t need you) is how single-pay would also save.

  4. Nate,
    How arrogant of you to assume that I don’t know how the U.S. system works. I’ve been a licensed healthcare provider and health educator for the past 30 years. I’ll bet my credentials against yours anytime. I’ve seen people sign themselves out the ER against medical advice worried that the cost of treatment would bankrupt them despite the fact that they had insurance. I witnessed the “drive through” deliveries that were forced upon new mothers by the HMOs and the 24 hour limit on hospital stays following mastectomies. I’ve seen insurers nickle and dime providers and deny legitimate claims hoping that patients would simply determine that fighting with their HMO was more hassle than it was worth and pay out of pocket. My brother-in-law is a family practice physician. The group practice where he works has four docs, two R.N.s, four medical assistants and eight people who do nothing but billing and insurance wrangling. Does this sound efficient to you? I’m certain that you know insurance is all about risk pooling, you’re a broker, what could be more efficient than one large pool that includes everyone? As regards business and health insurance, why do suppose it is cheaper for GM to build a car in Canada than it is in the U.S.? Why have so many customer service and tech support jobs been been subbed out to India? Arguments about UHC and rationing are spurious, we already ration healthcare extensively in the U.S., we simply do it on an economic rather than a scientific basis.

  5. Nate –
    You write:
    “To factually slap you around for having the audacity to cite out right lies off MSNBC and the NYT, please cite any study showing private insurance administrative cost of 30% for any insurance company of any significance. In fact that sort of loss ratio would be illegal in some States.”
    First, I did not say that Insurance companies had 30% administrative costs. Read my post again. What I said was that in the US, about 30% of all expenditures on health care go to administrative costs. This includes, for example, the armies of billing personnel hospitals and physicians’ offices employ to fight for reimbursement with myriad insurers, each with their own forms and procedures, etc.
    Now, you asked for a citation. OK, here is a quote from a peer-reviewed research paper in the New England Journal of Medicine:
    “…administration accounted for 31.0 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada.”
    Note that this 16% for Canada is among the highest for countries that have a public option. In France, Germany, and particularly the UK, administrative costs are far lower, often in the low single digits.
    Here’s the link: http://www.pnhp.org/publications/nejmadmin.pdf
    However, I don’t expect someone who gets their information from the likes of Red Eye to give any evidence a fair evaluation, no matter how impeccable the source.

  6. Nate –
    Right. Insurers add value because only a private insurance company would push for prenatal care. ONLY a private insurer would care enough to do that. You’d never see prenatal care as part of a public health program, now would you. Yep, that would explain why all those countries with Single Payer variants have lower rates of infant mortality and lower rates of birth defects.
    Care to rethink that one?
    Ah, so it appears you work for an insurance company. Surprise surprise. But it’s really only those liberal politicians in favor of a public option who have a huge financial stake in this debate. Certainly, the fact that you work for insurers would never color your views on the debate, nor would insurers or politicians be influenced by the hundreds of billions in profits the insurance industry takes in. Nope. Only something like evil Medicare would generate greed and put self interest and private profit above the public interest.

  7. Barry,
    are entitlement coultures changed or do they die off? I can’t think of any example where a country or even generation of those who feel entitled to something changed how they felt willingly. Societes of entitlement die at the hands of their greed, they are never cured of it.
    No study or national movement is going to change how people consume healthcare, only the inability to purchase it will.

  8. Much of the coverage on blogs and media coverage on this 2 trilllion savings by vested intersts is regarded as a PR at the most. Looks at least for now they are not bearing arms and raising to opposition. They put themselves on spot and the WH is seeking proposals from them by June 1st.

  9. Peter…did you ever hear of State Medical Boards,peer reviews and periodic reviews of insurance companies(to name just a few) ?
    The idea that we need trial lawyers to “keep us honest”
    is absurd.And to imply that doctors are not accountable(if that is what you mean by”questioned”) only shows your bias and ignorance.

  10. People who know a lot more about this subject than I do tell me that among American physicians, the perceived “standard of care” always or almost always maximizes the use of expensive high tech interventions. That’s the culture, but it’s not the culture among doctors in other developed countries. As it happens, this expensive, high tech approach is also the most lucrative for doctors and hospitals and it provides the best protection from potential lawsuits as well.
    With respect to end of life care, nobody will pay for time consuming consults with palliative care specialists to help patients and their families sort through the available options, along with the quality of life implications of each. As a result, inertia drives doctors in the direction of doing more rather than less. Again, doing more pays more and provides the most protection from potential lawsuits. So, part of our high cost healthcare system can be attributed to the culture of high tech intervention being considered the standard of care, part of it is money driven and part is defensive medicine all at the same time.
    The question is how the heck do we change this culture? Even if we got rid of all the insurance companies and implemented a single payer system tomorrow, the dynamic driving the excessive utilization wouldn’t change. I think we are going to need significant payment policy reform driven by existing and prospective comparative effectiveness research. We need to stop paying for drugs, devices, services, tests and procedures that cannot pass a reasonable cost-effectiveness standard or, at the very least, only pay for them at a rate equivalent to the least costly alternative treatment. Episode pricing for expensive surgical procedures would also be helpful. Capitation for the management of chronic diseases like diabetes, heart disease, asthma, depression, etc. is probably a tougher sell because of the difficulty in estimating costs a year in advance. It’s clear to me, however, that we need to get away from the wasteful fee for service payment model which rewards resource utilization and not value.

  11. Ron,
    What system would you propose? I don’t think you can name a single Universal HC System that isn’t having major financial problems. I have yet to see one that is sustainable. Do you not agree it would be foolish to implement a UHCS we know will fail in 30 years?
    It’s unfortuenate you don’t know how the US Healthcare System works, if you had this understanding you could form better opinions on what needs done to fix it. PPOs, UR, Large Case Management, Disease Management, and countless other programs have all come form insurers. It’s really annoying to see people make such ignorant statements with such surity.
    Specifically lets discuss pre-natal programs. I have processed claims for groups with a majority of workers in the lower income bracket. Back in the early 90s we saw way to many premature babies and birth defects. What made it really bad was how preventable these were. Good pre-natal care, vitamins, and regualar doctor visits is all it takes to prevent the majority of them. Insurers seeing this started pre-natal programs and offered them for free to expectant mothers. No cost to the mother. Yes the insurer also saved money but that pales in comparison to the lives saved and birth defects prevented. So when some dumb ass runs around claiming insurers add nothing and only burden the system I feel it necessary to call them what they are and point out what an uninformed idiot they are.
    If that didn’t move you enough look into some of the diabetes management programs, asthma programs, and wellness programs evil insurance companies offer people for free to help them improve their lives.
    “The efficiency of a government run social insurance system” If our government has failed miserably to create this with Medicare and Medicaid what magic wand are you going to wave to create it for your single payor system?
    “U.S. companies will not be able to compete much longer in the global economy unless they can get the monkey of employer sponsored insurance off of their backs.”
    Progressive talking points are so amusing. Please share with us how taking a monkey of American Business’s back and replacing it with a Gorilla would help them? If you save them a trillion in private insruance and raise taxes 1.2 trillion you have not improved the competitiveness of our businesses. Our tax rate and burden already is a bigger drag on international competitiveness then healthcare spending. A handful of industries screwed themselves by giving to much to Unions, are you proposing we break Unions? No European has single payor healthcare benefits like the UAW. I hope you realize it’s the benefits and utilization that make them uncompetitive not the funding of the benefits. A self funded plan is cheaper to administer then any plan in the world. So you seem to be advocating putting in place single payor healthcare so we can ration benefits. We don’t need inefficient single payor to ration benefits we can do that in our current system.

  12. Nate,
    Having spent time in nations with true universal healthcare systems, yes, I would prefer a single payer plan. Insurers add nothing but cost to our system, there are significant demonstrable savings to be had in eliminating this non-contributing layer. The efficiency of a government run social insurance system has AHIP terrified. Furthermore, U.S. companies will not be able to compete much longer in the global economy unless they can get the monkey of employer sponsored insurance off of their backs.

  13. Pontius,
    Have you ever heard that Cheny or Rumsfeld ramble about knowing what we know, knowing what we don’t know and now knowing what we don’t know? Like most people of your ideology your base of knowledge is so lacking you can’t even form basic arguments. To the annoyance of us all we must listen you try anyways.
    Your first major error is making comparison to this fictional US Healthcare system. There is no such thing as a US healthcare system similar in any means to any other country. We have 3-4 distinct Federal Healthcare Systems, 50 Distinct State Healthcare Systems, and thousands of private Healthcare Systems. Only a fool would admonish a system based on the poor results of an entire class of which it is only a small part. Your argument has all the intellectual legitimacy of saying all restaurants in NYC are dirty because a handful received Fs. Poor performers drag down the results of everyone, that doesn’t mean there are not great performers.
    To factually slap you around for having the audacity to cite out right lies off MSNBC and the NYT, please cite any study showing private insurance administrative cost of 30% for any insurance company of any significance. In fact that sort of loss ratio would be illegal in some States.
    Further fact; private insurance on the high side, including state premium tax and compliance, runs 20% overhead or $700 per member per year. Medicare loses almost $700 a year to fraud per member per year. That is before the government processes a single claim or mails a single check it is already less efficient.
    Boy are you looking stupid so far, and I seldom watch Fox except for Red Eye, your going to have to do better with the dismissive arguments.
    Wait time for American’s with Private Insurance is far better then a Canadian. Our poor public hospitals serving our failed public plans drag down the average of your mythical US System. No one is insured by the US Healthcare system so your comparison is meaningless. If you knew what you where talking about you would say Americans enrolled in Public Healthplans have longer waiting times in ER then those in Canada. Americans with Private Insurance and access to Private Hospitals have far shorter waiting times.
    “wait times under Single Payer are triaged based on medical expediency rather than ability to pay.”
    This is just plain ignorance. Again if you knew what you where talking about the correct statement is wait times for necessary procedures, nose jobs can be complicated that doesn’t move you in front of an easy tonsillectomy, in the US are based on the patients ability to pay, in UK and most single payor countries it is based on the Trust or systems ability to pay. Numerous UK trust delay needed care until next year’s funding kicks in.
    “And how does Medicare personally “enrich” any politicians?”
    Um dah campaign contributions from those robbing it blind. BS jobs when they leave office or for family members.
    “And your evidence that a public health insurance option will be more expensive and less efficient is… what?”
    Medicare and Medicaid, what more proof do you need?
    You’re a genius, did you figure out a box of apples cost more then a bag of oranges all by yourself or did you read it somewhere? Come on now be honest. I don’t think you could come up with a more unscientific comparison then our per capita spending to country X per capita spending if you tried. While the comparison will show you what we spend compared to another nation that is all you can deduce from any such effort.
    Show me another country that has our illegal immigrant issues, diverse nationalities, takes the exact same number of Rx per capita, office visits, diagnostic test, etc etc and then you can do a valid analysis of per capita spending as it relates to efficiency.
    Utah spends roughly the same as Western Europe why don’t we model it instead of Medicare which spend 2-3 times as much? That will give you a headache.
    “In just a few years, that spending will top 20% of GDP”
    Driven by public healthplan expenditures not private.

  14. Nate –
    “These are terribly inefficient systems that do nmore to enrich the politicians that control them then to serve their members.”
    And how does Medicare personally “enrich” any politicians? Do you have any real evidence of such kick-backs or other form of direct or indirect remuneration politicians get from Medicare? Or are you just parroting something you heard around the campfire?
    “Ron would you prefer we be forced to a more expensive and less efficient public healthcare system?”
    And your evidence that a public health insurance option will be more expensive and less efficient is… what?
    On the contrary, those nations which have adopted some form of single payer option in addition to private insurance spend an average of about half what we spend on health care per capita, and have better overall health outcomes. (The US currently spends $7,900 per person on health care, while the average across Western Europe is something like $4,000 per capita).
    Even as a percentage of GDP, health care spending in the US under the private insurance system is far higher than other countries with some form of Single Payer. Here in the US, we spend 17% of GDP on health care, while having among the lowest life expectancies and highest infant mortality rates in the developed world. In just a few years, that spending will top 20% of GDP. By comparison, countries with a public insurance system spend between 8 and 14% of GPD.
    And here’s the real kicker. We spend a higher percentage of our federal budget on health care – even though we don’t have a public system – than countries who have Single Payer! Yes, that’s right – in addition to your high private insurance premiums that guarantee you nothing as far as actual care, you are also spending more of your tax dollars on health care than your fellow French, Canadian, or Danish citizens are!
    So as far as the public insurance option being more “expensive”, you are demonstrably wrong.
    Now, what about efficiency? Well, as far as waiting room times, Single Payer again compares favorably to US times. In Canada, patients actually wait a shorter period of time to see a physician at an ER than here in the US. As far as the wait to have a complicated procedure done, wait times under Single Payer are triaged based on medical expediency rather than ability to pay. In other words, the people who have the most dire medical need for a procedure get it first under programs that exist in the rest of the industrialized world. Here in the US, rationing is based on who is able to pay – and those who can’t pay just never get access at all, ever. Forever is an awfully long time to wait.
    Another component of efficiency would be administrative costs. Your default position – faux wisdom handed to you no doubt from the box labeled “everyone knows” over at Fox News – is that administrative costs will be much higher under an insurance system run by the stupid, inefficient government than by private interests. Once again you’d be wrong. Here in the US, under our privatized mess of multiple payers, administrative costs consume an astounding 30% of health care expenditures. Under the government run plans in the rest of the developed world, admin costs typically account for between 2 and 10% of total health care costs.

  15. pontius I don’t listen to Rush or Hannity, I’m to busy working actually doing something about the cost of healthcare to waste the time. I would strongly advise you start listening to anything more factual and informative then what you have been.
    In regards to number 1 I would guess it is the ego of single payor advocates. Who are they to be worthy to sit at the table of the all knowing liberal politicians? They don’t need anything from those people, those people have nothing to offer. Why waste time giving them a seat at the table? If liberals pass single payor it won’t be becuase of anything single payor advocates did. It won’t even be passed as single payor in a form the average person can recognise.
    Medicare wasn’t passed as a social program to cover the affordable cost of healthcare for the average senior citizen. It was sold as a saftey net to protect the 15% of seniors that couldn’t afford their healthcare. What the media failed to inform anyone was it only helped if you got better or died within 60 days. The public was told it would help the old and their familes if someone got seriously ill, an outright lie. At the time that was peoples fear, mom being in the hospital for a year or having to come live with the kids for an extended time. Democrats used these fears, a willing and eager media, and a ton of lies to pass their first step to socialised healthcare.
    the 85% of seniors happy with the current system didn’t have a seat at the table nor did they 15% that needed help and didn’t get it.
    People really should learn their history before they open their mouths and drag the rest of us into repeating it.
    “The American people deserve more from their tax dollars than another corporate welfare program.”
    Yes they also deserve more then another politican welfare program. Medicare, Medicaid, MA, and other such prgrams are the failures dragging down the entire system. These are terribly inefficient systems that do nmore to enrich the politicians that control them then to serve their members.
    Ron would you prefer we be forced to a more expensive and less efficient public healthcare system?

  16. Nate –
    Two things. 1) If liberals and democrats have been plotting to get Single Payer since the 1930’s, then why have representatives of a Single Payer public option been denied a seat at the table by the democrats who control these committees in congress?
    2) for the love of God, please stop listening to Rush and Hannity.

  17. Ron –
    I think your post is exactly right. This thing looks like it is headed towards a “reform” like in Massachusetts or the one proposed in California: mandated purchase of private insurance. Sure, there will be some small concessions to eligibility from insurers, and the government will likely chip in to help those who cannot afford the entire premium. In exchange for these small concessions, insurers are guaranteed that every American will have to purchase their products, and more importantly, are guaranteed that the impetus for true reform will be dissipate for at least another couple decades.
    The American people deserve more from their tax dollars than another corporate welfare program.

  18. The foxes are laughing all the way to the hen house.
    Reminds me of current oil industry ads about their magnificent contributions to energy savings. Remember last summer?
    The CEO of a major oil company went on the Today show to answer charges of price gouging. Unmoved by the economic chaos caused by skyrocketing gas prices, offering no convincing explanation for same, he said his responsibility was to his shareholders. For one moment, unmasked, we saw the true face of power in America. Matt Lauer was flabbergasted. There’s not much to say to a power broker whose response to suffering is “Screw the public. We’ve got ours.”
    Time has no meaning in American political dialogue. These pledges will have no meaning 1 year from now, to say nothing of 10.

  19. It increasingly appears that Americans will be stuck with some pale copy of the Massachusetts “health reform” that forces everyone into the same wasteful and inefficient system of private insurance that we already have. This scheme has no hope of reducing costs or increasing the efficacy of care, it is simply an expansion and perpetuation of the status quo, a non-system that specializes in disease management and wealth extraction. It has become glaringly clear that Max Baucus is AHIP’s man in Washington and that once again U.S. consumers will be sold out to corporate special interests.

  20. Peter,
    the comparison to US tort reform states is useless (I practice in a reformed state).
    Ask any foreign medical graduate with practice experience in his/her own country, and you will see that they report diagnostic overkill of varying degrees by most US based physicians.
    To be clear, it’s not only defensiveness driving this, it’s also the patients (consumers, as some say) preference to see scans of various body parts, independent of the likelihood of finding sthg. useful. But defensiveness is a major factor.

  21. “When you talk about rationing health care shouldn’t you really describe it as starving health care to the 40 million Americans who can’t afford insurance.”
    No you shouldn’t because there aren’t 40 million Americans who can’t afford it, there are roughly 4 million American’s that want insurance and can’t afford it. Arguments go over much better when you get the basic facts right.
    pontius I’ll argue that 90% of single payor advocates don’t know what single payor is. If it was not for an uninformed public we wouldn’t have givernment involvement in healthcare to start with. Medicare was passed by blatant lies to the public, the actual words of the Democrats who passed it was they Hoodwinked the public. Liberals have been proposing single payor since the 1930s, it’s just taken them long to screw up the current system bad enough for anyone to pay them any serious attention.

  22. I read comments like “Many Americans oppose such a system for America recognizing that significant difficulties such as long waiting periods and rationing of care exist in such types of government healthcare systems that currently operate in other countries such as Canada and the United Kingdom”. I live in Canada and I have a ‘single pay’ health care system. I know that I’ll be able to receive health care irrespective of my financial means. I don’t have to worry about pre-existing conditions. I won’t be bankrupt if I need heart surgery or chemotherapy. My children will continue to receive care if I lose my job. I won’t claim our system is perfect but we provide care for everyone and it is done at a lower per capita cost. When you talk about rationing health care shouldn’t you really describe it as starving health care to the 40 million Americans who can’t afford insurance.

  23. Dr Westafer –
    You write:
    “If a nationalized single payer health plan were enacted, every American citizen who became ill or injured – for any reason whatsoever – and incurred significant medical expenses would for the most part have his or her medical bills paid by U.S. taxpayers. Many Americans oppose such a system for America recognizing that significant difficulties such as long waiting periods and rationing of care exist in such types of government healthcare systems that currently operate in other countries such as Canada and the United Kingdom”.
    A couple questions. First, when you say “Many Americans” oppose such a system… how many? More than half? Where did you get this information? I’d wager that most Americans aren’t too aware of what Single Payer actually is – so how can many, or a majority, oppose it?
    Secondly, where is your evidence that Single Payer results in more rationing of care than exists in our current system? Also, show us your evidence that wait times are longer under Single Payer than what we have now in this country. Both of these canards created by the insurance sector, and propagated by a lazy media.

  24. rbare and DrMilan, I guess you’d have to show me considerable savings and reduction in healthcare inflation (not just malpractice premiums) in states that have enacted “tort reform”. There should be enough evidence to relate malpractice reform to health savings and less utilization. On the other side I also need to see what patients, who have suffered from medical mistakes, have had to absorb in costs.

  25. Real Healthcare Reform:
    Changing Priorities, Incentives and the Rules of the Game; Creating an Electronic Health Record for Every Citizen Who Wants One
    If you have the financial resources of Bill Gates or Warren Buffett you needn’t pay money to a health plan each month, since if you get sick or injured – even very seriously – you have more than enough money to pay all your medical bills yourself.
    But those of us who have significantly less financial resources must find some other means of dealing with the thousands or even hundreds of thousands of dollars or more of medical expenses that we might incur should a serious illness or injury be our fate.
    Enter the concept of “health insurance”.
    Large numbers of individuals and/or their employers pay some money each month into one or another big pot called a “health plan”. Those individuals who remain essentially very healthy for many years and then suddenly die or perhaps leave a particular health plan for some other reason – if they have put more money into the pot than was taken out to pay all their medical expenses – wind up helping to pay the medical bills of those members of the health plan who become seriously ill or injured and incur a lot of medical expenses.
    Many Americans covered by some form of health insurance don’t seem to fully understand or perhaps choose to ignore the fact that if they become seriously ill or injured, for the most part their medical bills will be paid by the members of their health plan who have remained healthy. Keeping members of a health plan healthy by preventing illness and injury is critically important, but is something not currently given the high priority and attention it deserves.
    Some Americans believe that healthcare should become a “right” of every American citizen. If a nationalized single payer health plan were enacted, every American citizen who became ill or injured – for any reason whatsoever – and incurred significant medical expenses would for the most part have his or her medical bills paid by U.S. taxpayers. Many Americans oppose such a system for America recognizing that significant difficulties such as long waiting periods and rationing of care exist in such types of government healthcare systems that currently operate in other countries such as Canada and the United Kingdom.
    For any health plan to work which has a large number of people pooling their money to essentially pay the medical bills of whichever members of the plan become seriously ill or injured, rules must be established as to when and how much money may be taken out of the pot e.g. “legitimate” doctor bills and hospital bills. Equally important is keeping track of the amount of money that is being put into the pot each month in premiums paid by health plan members or their employers. If too much is being paid out in expenses as compared with the amount being received in premiums, the pot will soon become empty and the health plan will go broke.
    As previously mentioned, the monthly premiums paid by individuals or their employers go into a health plan’s big pot from which “covered” healthcare expenses are paid. But also from this pot are paid all the health plan’s administrative expenses including what may be big salaries and golden parachutes for CEO’s and other “healthcare executives” – individuals who may be paid to find technicalities of one sort or another in the health plan’s agreements so the health plan can deny or reduce payments, raise premiums, cancel insurance, or in one way or another minimize or exclude “bad risks” from the health plan. All such questionable business practices are done to enable the health plan to make a profit and remain in business.
    Currently we are experiencing continual increases in healthcare costs that are unsustainable and which, if unchecked, will soon seriously threaten the future of the entire American economy. Healthcare costs must be controlled, but how? If a healthcare system made up of health plans is going to have a chance of both meeting the needs of health plan members and simultaneously develop the ability to keep costs under control, priorities, incentives, and the rules by which the game is played all must be changed.
    The good news is that a lot of illnesses and many injuries are actually preventable. But how will prevention ever become a top medical priority when doctors, hospitals, and other providers get paid largely for diagnosing and treating illness and injury, not for preventing it?
    Although health promotion and disease and injury prevention receive fashionable and socially acceptable lip service, the fact is that most of the participants in what should be more appropriately called our “sickness and injury care system” actually have no significant financial incentive whatsoever to spend any significant time and energy in genuinely promoting health and helping to prevent disease and injury.
    Much to the contrary. Other than the actual members of a health plan – patients and potential patients – and their employers and perhaps the employees of some health plans, most participants in our sickness and injury care system – because of the way they are paid – have an enormous (if unspoken) financial incentive for massive amounts of disease and injury – much of which is preventable – to continue to occur in America. Strictly from a financial point of view, for those whose incomes come solely from the treatment – not the prevention – of illness and injury, the more illness and injury that occurs, the better. And if the illness or injury is serious and requires perhaps many expensive tests, multiple surgical procedures, and other very complicated prolonged treatment in an intensive care unit, so much the better; just as long as those unfortunate individuals who happen to be ill or injured are “covered” by “good insurance”, i.e. health plans that are reliable bill payers.
    This is not to say that there are not some excellent very dedicated and hardworking doctors and other health professionals – although they are paid on a fee for service basis to care for illness and injury – who nevertheless attempt to essentially work themselves out of a job by making health promotion and disease and injury prevention a top priority with their patients.
    It should also be recognized that some existing health plans – e.g. Kaiser and Group Health – combine insurance, doctors, and hospitals into a single entity in such a way that provides everyone – including all the health plan’s doctors – a real incentive to spend time and effort with patients on health promotion and disease and injury prevention as well as on early diagnosis and treatment.
    But unfortunately the above examples represent only a small part of the sickness and injury care system that currently exists throughout America.
    For the most part – because of the way they are compensated – the majority of doctors and other professional providers, acute care hospitals and long term care facilities, pharmaceutical manufactures and pharmacists, medical and surgical equipment manufacturers and personal injury and malpractice attorneys – among others – depend mightily on massive amounts of disease and injury occurring in America; and these participants in our sickness and injury care system would be significantly negatively impacted if a lot of the preventable illnesses and injuries were actually prevented. This must be changed.
    Unless the incentives and rules are changed to give as many participants as possible a real financial stake in health promotion and disease and injury prevention, in early diagnosis and treatment, and in maximizing health and minimizing disease and injury, healthcare costs in America will never be brought under control. Making appropriate changes in the incentives and the rules of the game is the real task and challenge of “healthcare reform”.
    What about financial incentives for individual health plan members? Should individuals receive a financial incentive to be healthy? It is well recognized that engaging in regular exercise, abstaining from tobacco, and eating moderately so as to maintain a reasonably normal body weight are all significant factors in helping to promote an individual’s health and wellness. These healthy behaviors can all be confirmed by simple tests performed or ordered in a doctor’s office. Why shouldn’t those individuals who practice these health promoting behaviors and comply with recommended immunization schedules and appropriate preventive screening examinations such as for colon cancer and breast cancer pay significantly less in premiums to their health plan each month than those who don’t?
    To really reform healthcare we must find ways – through changes in incentives and the rules of the game – to actually prevent what is preventable, to maximize early diagnosis and treatment, and minimize disease and injury with all its associated cost. We must find ways for participants to be part of our “healthcare system” and not just a part of our “sickness and injury care system”.
    Significant changes in the rules of the game for our legal system – tort reform – is also critically important so that the gaming of the system now being done by personal injury and malpractice attorneys and their clients can be ended and so that the exorbitant costs to physicians and other professionals for malpractice insurance can be dramatically reduced.
    Truly transforming our “sickness and injury care system” into a “healthcare system” by making significant changes in the incentives and the rules of the game may seem to be a formidable task and one that probably has never really been done before on a large scale anywhere in the world. But it is a worthy task and a critically important task for the future of America and its people.
    One significant part of this process is developing the capability of creating an electronic health record for every American citizen who wants one. We need a standardized framework that will allow every American citizen to have an individual electronic health record – a computerized medical record – that can be accessed by all the doctors who care for a particular individual, regardless of wherever on the planet the doctors or the patients happen to be. It would be like having your own personal online banking account that only you have the password to, but which you can share with the doctors who are caring for you, wherever you or they may be.
    I applaud those who are using their energy and expertise to upgrade our deplorable current paper medical records system and bring medical records in America into the 21st century. Developing a standardized framework for an electronic health record – for every citizen who wants one – created by your doctor with your assistance, with proper security and safeguards – is something that our national government can and should do as a part of healthcare reform.
    If done well, electronic health records will be transformational in helping doctors efficiently and effectively care for patients and will save an enormous amount of time, effort, and money which is currently wasted on needless and frequently inaccurate duplication. And having an accurate electronic health record for an individual will also facilitate appropriate health promotion and disease and injury prevention for that individual. Like the telephone and the computer, someday we will all wonder how we ever got along without individual electronic health records.
    All this requires action, not just words. Now is the time for Americans and their leaders and doctors and other health professionals to step up to the plate and begin the process of transforming our “American Sickness and Injury Care System” into an “American Healthcare System” that is worthy of our great country.
    Robert Westafer M.D.

  26. Great post – puts the $2 trillion in perspective, which is something the media has yet to do.
    But lets not use the word “stakeholders” to describe this grouping of insurance companies, pharmaceuticals, device manufacturers, labor, etc. It’s probably more accurate to describe them as “vested interests”, who have a lot to gain from preserving the status quo. The “stake” these “holders” hold is the current “business as usual”. The true stakeholders for reform are the American people, who have been tragically under-served and overcharged by this wasteful and inhumane system that the vested interests are seeking entrench.
    The vested interests seem to realize that the impetus for reform today is greater than ever before. They know then that they cannot be seen as merely seeking to sabotage reform. Instead, they must put on the veneer of actually embracing reform, as industry and GOP strategist Frank Luntz recently advised. Promising to shave $2 trillion over the next 10 years is a rather small and relatively painless belt tightening, especially when there is so much administrative waste to trim. But it allows the vested interests to limit the terms of the reform debate, possibly resulting in a faux-solution that leaves the current state of private insurers (with no public competition) largely intact.
    Beware, beware, beware.
    Meanwhile, advocates for Single Payer cannot even get a seat at the table. The solution most employed throughout the developed world does not even get an airing? Where’s the competitive market here for ideas? It seems the vested interests are so afraid of competition from a public option that they won’t even allow this idea to compete in the debate – because in an open and full debate on an even playing field, they’d lose.

  27. I too think this is toothless charade. If there was ever a time in our recent US history to NOT trust industry to voluntarily do what is right without strong regulatory oversight this surely is the time.(Especially with something as so important as health care)
    I am quite surprised that the White House, at least today, spun these developments so positively.
    Dr. Rick Lippin

  28. My thinking is that if you have honest accountants and managers from companies like UPS, Walmart and a few other outfits, then finding 2 trillion dollars in savings is just the beginning. Companies like UPS and frugal people like myself adopt a version of the Demmings approach to expenses. Where Demmings and a company like Toyota for example strive for continual, incremental improvements in quality, UPS and myself look for every last incremental cent in cost reduction and savings.
    Combine both and you have less costs and less repeated mistakes which cost you a fortune.
    In radiology where I work, we began using digital Xray equipment in 2002 and have evolved from using film, dark rooms, chemicals, chemical waste, endless water, monthly servicing to once a year servicing of the equipment, no dark room, processor, plumbing, chemical waste removal or thousands of gallons of water a month going down a drain.
    Film was all but eliminated and studies are placed on CDs. In the near future, the CDs get chucked and the images are all stored on line for viewing. What impact is that on the total cost of health care because some MDs do not want to “fiddle” with a disc and insist on printing a hundred dollars of film a pop to throw up on a view box for two minutes and then refuse to pay postage to return them anywhere?
    Why do the same companies which make scanning equipment which is cheaper in overseas markets still market much more expensive hardware in the USA? Because they can ,and until recently , there was no reason to try to lower costs of hardware.
    The manufactures, distributers of many medical devices have no incentive for cost control and I have always wondered how long a model in which every improvement seems to cost more and more then what it replaced can be sustained . Well, if there is a bottomless well to charge, then why bother trying to be cost conscience? Is it any wonder that organised crime got into medicine every which way possible?
    My own adventures in health care with a family members ER visit with HCA had an intial bill of nearly 9 K which I fought down to 4.5K of which there were still inflated costs in imaging billing which could be reduced. I have as much respect for HCA as I do for a AIG and ENRON with their bookeeping and hocus pocus pricing.
    Honestly, the whole health care industry reminds me of the Big three in auto who had few worries when no one asked why there can’t be better quality cars at certain price points which were inexpensive to run. The industry spent most of it’s time living the good life with very high margin behemoths which no one can afford now or not figuring out that that the returns for repeated failure would drive consumers away.
    The next crop of health care suppliers should brag about how their product will save money and gain market share instead of proudly inventing a product or service which no one can afford to use or cover.
    I have always maintained that you will only get universal health care when you piss off every one in health care and everyone decides that a piece of the affordable pie is better then none of the overpriced pie. That includes, suppliers, lawyers, doctors, patients, hospitals , insurers and employees.
    In a strange , yet predictable way, the crazy bookeeping, excesses and inflated costs of health care helped kill the crazy bookeeping, excesses and inflated costs of the Auto makers by killing them .
    Yes, watch Obama like a hawk, but we are closer to our goal then ever before in my lifetime.

  29. I am not Dr. Milan, but I, too, think that this is a major driver, completely underestimated by the public health establishment.
    Remember (I tried to make this point already): doctor’s care of any patient may be evaluated by a lawyer with hindsight knowledge; that is: is there anything in the past that could have prevented the bad outcome my clinet suffered? Instead of asking the reasonable question: what is appropriate to do in that situation of that encounter?
    This mindset leads to absurd lawsuits (such as litigating an ER physician (seen for other reasons) for an MI years later because incidental hypertension was not treated at that ER visit.
    Do these lawsuits succeed? They may on occasion, especially at the east coast … and they continue to happen, and guess what effect they have on most physicians, even if these lawsuits don’t succeed? The practice of defensive medicine. This results in diagnostic overkill, combined with the fact that very many patients do want a lot of testing and fancy scans, “just to make sure”.

  30. Is this enough of a crisis yet?
    “I can save a lots of $ if I am not forced to practice defensive medicine.”
    DrMilan, will hospital budgets be able to suffer the loss of billings? As we are seeing now the recession is creating it’s own form of reduced utilization and hospitals are suffering. And who pays for errors/low skills/negligence/omissions/malpractrice – the patient? Is there any point at which the doc should be questioned? Do you really see this as the major driver of healthcare inflation?

  31. Notice how the providers aren’t giving anything up in their concession – that’s big of them. I agree that Obama needs to be watched on this one as his political pragmatism may be his undoing, or at least his disappointment to supporters. Premium payers better be prepared for more suffering while this builds to an affordability crisis worth solving.

  32. Excuse my cynicism, but I think it is all a charade. Senators are already offering up concessions to strip a public plan of access to tax subsidies (why when we currently use tax dollars to subsidize private insurance?!) And, industry is sauntering up to the table with a list of demands to compensate for their losses. In its infancy stages, this already looks to me a trading game that will leave us right where we are now. When health care is tied to profit, sick patients will never win. So who cares how much money we save?
    Kairol Rosenthal
    blog: http://everythingchangesbook.com/

  33. This is all a PR exercise. This will not even begin to dent this huge problem. As for Obama, he’d better be careful.

  34. That is if the President and the Congress mandate that everybody buy their health insurance products and therefore get funding to visit their doctors offices and hospitals as well as buy their drugs and devices.

  35. One wonders how much cost could be eliminated from the system if everybody simply stopped advertising.

  36. This is nothing more than a baldfaced attempt to prevent even bigger cuts and control the agenda. Plus, as already noted,if it’s so easy then where the h___ have they been all this time??!! Although Obama will listen to them (another benefit – free lobbying directly to the Prez), he should be extremely wary.

  37. I can save a lots of $ if I am not forced to practice defensive medicine.If my malpractice insurance(currently 20 thousand $/year) is reduced I will be more than happy to pass that savings to my patients.
    Otherwise I cannot”save” a cent…..

  38. 2 trillion dollar is nothing in 10 years. It is like sales..you raise the price to give 50% discount. In addition, without adjusting for inflation, it is less than 10%.
    There is a significant cost saving in the healthcare sector…those are possible only if one looks at the entire business model, supply chain, organizational setup, and compliance, compensation, bureaucracy, quality, waste….to name few.

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