Wednesday, August 26, 2009
David Leonhardt's Article in Today's NY Times
Here's a good overview of what's wrong with the present health care financing system in the US.
Monday, August 17, 2009
Remember When Health Insurance Was a Great Idea? By Gustav Schonfeld, MD
A great article with historical perspective that's worth reading (Thanks to Paul Karoll for the tip.)
Friday, August 7, 2009
My Idea for Health Care Reform
Naomi’s Idea
Okay, so I’m just an almost worn-out obstetrician-gynecologist, who, like Notre Dame’s Rudy, is “five foot nothing, a hundred and nothing” and I probably don’t have the qualifications to be giving advice on reforming the US health care system. I practice in the small, upstate NY community of Troy, NY, best known for being the home of both Uncle Sam Wilson and the detachable collar. Along with 5 other OB-Gyn’s (four women and two men, two of whom are African American) and two nurse-midwives, we care for a wide range of patients, from the indigent on Medicaid or less, to the elderly served by Medicare, to NY State employees, who are blessed with outstanding private health insurance. We have delivered thousands of babies, at two local, outstanding but struggling “St. Elsewares” and have tried our best to stay ahead of the ever-increasing patient load, demanding new technologies, declining reimbursements and the ever-lurking trial lawyers.
But despite being very busy, I have tried to keep up on the debate about health care reform. The main concern has obviously been to contain costs, so that consumers will have more money to spend on other goods and services. The major argument regarding reform is whether some modest variant of the present health insurance system should be instituted or rather whether a single-payer system should be imposed by the federal government. In January, 2009, the New Yorker Magazine had an excellent review, Getting There from Here, How should Obama reform health care? by Atul Gawande. The article should be required reading for anyone in Congress, who wants a straightforward briefing on this issue.
In May of this year, Senator Charles Schumer, offered a “middle ground”. He cited four principles that should be used in health care reform:
• The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.
• The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.
• The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.
• To prevent the government from serving as both “player and umpire,” the officials who manage a public plan should be different from those who regulate the insurance market.
It’s good that Senator Schumer has laid down some ground rules, but unfortunately, the inherent nature of our diverse society has made the debate about the alternatives quite protracted.
But let’s put Senator Schumer’s principles aside for a second. On June 6, 2009, the NY Times presented an analysis by Kevin Sack entitled, State Coverage Model No Help for Uneasy Insurance Industry. This article detailed how various state governments have reformed their health care policies and focused on how state governments had provided health care for their employees and pensioners. The article concludes that none of these state health care systems has really made any serious reduction in costs. Political and social progress, these days, generally starts out at the state level and eventually spreads to other states, before finally requiring the federal government to standardize everything. Unfortunately, the article claimed that this dissemination process was not going to work with health care reform. The individual state models that were examined in the article were no better than the present system.
Now, fast forward to the NY Times editorial of June 13, 2009. In it, the Times apparently decided to collectively broadside physicians, probably in response to the American Medical Association’s recently stated position, that it will oppose creation of a government-sponsored insurance plan. The NY Times editorial cited Dr. Gawande and his research showing that physicians have driven up the cost of health care in the US, by ordering unnecessary drugs and tests. Doctors have claimed all along that this “defensive medicine” was needed to preclude unwarranted malpractice suits. The Times thought differently, referring to research showing that in states where malpractice litigation had been restricted, there was no evidence that physicians prescribed either less drugs or testing. In my view, the NY Times is both right and wrong on this issue. First, no matter how much medical liability has been reduced in certain US venues, it is still not enough. The threat of litigation is always on a doctor’s mind, when seeing a patient, even for symptoms as benign as either a nosebleed or a cough.
But the NY Times is correct about there being too much casual dispensing of drugs and too much reliance on expensive medical technology. But watch any of the evening television news shows. Many of the commercials are for prescription drugs, often those that can’t be prescribed anyway, because most health insurers require that physicians prescribe generic drugs. But that doesn’t stop the pharmaceutical industry from spending billions of dollars on promoting their wares. And to whom are they giving the sales pitch? Surely, it’s not the doctors. It’s the patients that see the ads and come in clamoring for the “little purple pill”. And why are so many middle-aged men running to the bathroom and needing a drug to stop that terrible medical condition? Could it be that many of them are also taking a diuretic for high-blood pressure? Nah, probably not, they probably have BPH or some other syndrome that no one had even heard of, twenty years ago. And who pays for these commercials? It’s the patients.
And the lure of the dark side of the technology “force” is strong. It would be hard to find a woman who either doesn’t want regular mammograms or doesn’t want that high resolution, digital ultrasound of their next newborn. But all this extravagant hardware comes with a high cost, almost to the point where most physicians can’t afford to replace their aging equipment.
So I’ve thought a lot about these issues and one day, when sitting with my check book and looking at my ever-increasing electric utility bill, I got an idea. It wasn’t a grand, elaborate idea, but rather a simple one. Back a number of years ago, the electric power industry in the US was heavily regulated. Those days are gone, of course, swept away in a fury of deregulation, mostly done by Republicans, with support from their business allies. Back then, a state like NY was divided into geographic regions and each electric utility had a regional monopoly, like Niagara-Mohawk upstate, Consolidated Edison in the NY City and LILCO on Long Island. These companies couldn’t just raise electric rates on a whim. They literally spent years, justifying to regulators even a modest increase in the rates that they could charge to the consumer. Every aspect of their business model was thoroughly inspected and restricted. They couldn’t build too many power plants or wander away investing in other risky capital projects. The good news was that electric rates remained stable for years. In addition, everyone who invested in the stock market always kept some low risk, utility stocks in their portfolio, to cushion the blow when there was a recession. But the utility company CEOs complained loudly to the politicians. In a matter of years, that stable system, designed for the public benefit and run by private entrepreneurs, was dismantled.
Now what does this have to do with health care? It has lot to do with it. The debate over health care reform has degenerated into sloganeering and as Senator Schumer suggested, someone has to propose a middle ground. Else, we will continue to only hear that a single payer system is “irresponsible, heavy-handed socialism” and the present system is “rampant, self-serving capitalism”. Schumer’s middle ground is embodied in my idea.
Under my proposal, private health insurance companies would bid to the federal government on obtaining a regional monopoly for a specific geographic area. Within that area, there would be no other purveyors of health insurance; no Medicare, no Medicaid and no other private insurers. For those patients who are employed, the employer would pay the geographic insurer. For those patients without employment, the federal government would reimburse the insurance company on a capitation basis and at the private employee rate. In exchange for their geographic monopoly, the government would heavily regulate health insurers’ profits and limit the annual increase in profit to either some small percentage (3 per cent?) or the rate of inflation, which ever was greater. It would be up to each “monopolist” to set insurance costs and provider reimbursement rates within its geographic region, within some guidelines established by the federal government. In addition, these private insurers would pay no federal, state or local income tax. The private insurance company would also bear the burden of paying out any malpractice claims, as both legal liability and malpractice insurance would be eliminated, for individual physicians, hospitals and other health care providers. After all, they are insurance companies. The federal government would monitor various health care metrics within each geographic region, in an attempt to assure that there was some consistency in the quality of care throughout the country. If no private insurance company wished to bid on a particularly "risky" geographic area, the federal government could step in with a subsidized public insurance entity.
That’s the idea, in one paragraph. I’m sure that there are a myriad of reasons, why this middle ground “won’t work”. But in that regard, my idea is no worse than the other proposals that have been floated for reforming the US health care mess. The health care sector in the US is always referred to as “a growth industry”. Investment advisers and economists proudly point to its continued vigor during our present recession. The problem is that it shouldn’t be a growth industry. It should be a stable system, designed for the public benefit and run by private entrepreneurs.
But despite being very busy, I have tried to keep up on the debate about health care reform. The main concern has obviously been to contain costs, so that consumers will have more money to spend on other goods and services. The major argument regarding reform is whether some modest variant of the present health insurance system should be instituted or rather whether a single-payer system should be imposed by the federal government. In January, 2009, the New Yorker Magazine had an excellent review, Getting There from Here, How should Obama reform health care? by Atul Gawande. The article should be required reading for anyone in Congress, who wants a straightforward briefing on this issue.
In May of this year, Senator Charles Schumer, offered a “middle ground”. He cited four principles that should be used in health care reform:
• The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.
• The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.
• The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.
• To prevent the government from serving as both “player and umpire,” the officials who manage a public plan should be different from those who regulate the insurance market.
It’s good that Senator Schumer has laid down some ground rules, but unfortunately, the inherent nature of our diverse society has made the debate about the alternatives quite protracted.
But let’s put Senator Schumer’s principles aside for a second. On June 6, 2009, the NY Times presented an analysis by Kevin Sack entitled, State Coverage Model No Help for Uneasy Insurance Industry. This article detailed how various state governments have reformed their health care policies and focused on how state governments had provided health care for their employees and pensioners. The article concludes that none of these state health care systems has really made any serious reduction in costs. Political and social progress, these days, generally starts out at the state level and eventually spreads to other states, before finally requiring the federal government to standardize everything. Unfortunately, the article claimed that this dissemination process was not going to work with health care reform. The individual state models that were examined in the article were no better than the present system.
Now, fast forward to the NY Times editorial of June 13, 2009. In it, the Times apparently decided to collectively broadside physicians, probably in response to the American Medical Association’s recently stated position, that it will oppose creation of a government-sponsored insurance plan. The NY Times editorial cited Dr. Gawande and his research showing that physicians have driven up the cost of health care in the US, by ordering unnecessary drugs and tests. Doctors have claimed all along that this “defensive medicine” was needed to preclude unwarranted malpractice suits. The Times thought differently, referring to research showing that in states where malpractice litigation had been restricted, there was no evidence that physicians prescribed either less drugs or testing. In my view, the NY Times is both right and wrong on this issue. First, no matter how much medical liability has been reduced in certain US venues, it is still not enough. The threat of litigation is always on a doctor’s mind, when seeing a patient, even for symptoms as benign as either a nosebleed or a cough.
But the NY Times is correct about there being too much casual dispensing of drugs and too much reliance on expensive medical technology. But watch any of the evening television news shows. Many of the commercials are for prescription drugs, often those that can’t be prescribed anyway, because most health insurers require that physicians prescribe generic drugs. But that doesn’t stop the pharmaceutical industry from spending billions of dollars on promoting their wares. And to whom are they giving the sales pitch? Surely, it’s not the doctors. It’s the patients that see the ads and come in clamoring for the “little purple pill”. And why are so many middle-aged men running to the bathroom and needing a drug to stop that terrible medical condition? Could it be that many of them are also taking a diuretic for high-blood pressure? Nah, probably not, they probably have BPH or some other syndrome that no one had even heard of, twenty years ago. And who pays for these commercials? It’s the patients.
And the lure of the dark side of the technology “force” is strong. It would be hard to find a woman who either doesn’t want regular mammograms or doesn’t want that high resolution, digital ultrasound of their next newborn. But all this extravagant hardware comes with a high cost, almost to the point where most physicians can’t afford to replace their aging equipment.
So I’ve thought a lot about these issues and one day, when sitting with my check book and looking at my ever-increasing electric utility bill, I got an idea. It wasn’t a grand, elaborate idea, but rather a simple one. Back a number of years ago, the electric power industry in the US was heavily regulated. Those days are gone, of course, swept away in a fury of deregulation, mostly done by Republicans, with support from their business allies. Back then, a state like NY was divided into geographic regions and each electric utility had a regional monopoly, like Niagara-Mohawk upstate, Consolidated Edison in the NY City and LILCO on Long Island. These companies couldn’t just raise electric rates on a whim. They literally spent years, justifying to regulators even a modest increase in the rates that they could charge to the consumer. Every aspect of their business model was thoroughly inspected and restricted. They couldn’t build too many power plants or wander away investing in other risky capital projects. The good news was that electric rates remained stable for years. In addition, everyone who invested in the stock market always kept some low risk, utility stocks in their portfolio, to cushion the blow when there was a recession. But the utility company CEOs complained loudly to the politicians. In a matter of years, that stable system, designed for the public benefit and run by private entrepreneurs, was dismantled.
Now what does this have to do with health care? It has lot to do with it. The debate over health care reform has degenerated into sloganeering and as Senator Schumer suggested, someone has to propose a middle ground. Else, we will continue to only hear that a single payer system is “irresponsible, heavy-handed socialism” and the present system is “rampant, self-serving capitalism”. Schumer’s middle ground is embodied in my idea.
Under my proposal, private health insurance companies would bid to the federal government on obtaining a regional monopoly for a specific geographic area. Within that area, there would be no other purveyors of health insurance; no Medicare, no Medicaid and no other private insurers. For those patients who are employed, the employer would pay the geographic insurer. For those patients without employment, the federal government would reimburse the insurance company on a capitation basis and at the private employee rate. In exchange for their geographic monopoly, the government would heavily regulate health insurers’ profits and limit the annual increase in profit to either some small percentage (3 per cent?) or the rate of inflation, which ever was greater. It would be up to each “monopolist” to set insurance costs and provider reimbursement rates within its geographic region, within some guidelines established by the federal government. In addition, these private insurers would pay no federal, state or local income tax. The private insurance company would also bear the burden of paying out any malpractice claims, as both legal liability and malpractice insurance would be eliminated, for individual physicians, hospitals and other health care providers. After all, they are insurance companies. The federal government would monitor various health care metrics within each geographic region, in an attempt to assure that there was some consistency in the quality of care throughout the country. If no private insurance company wished to bid on a particularly "risky" geographic area, the federal government could step in with a subsidized public insurance entity.
That’s the idea, in one paragraph. I’m sure that there are a myriad of reasons, why this middle ground “won’t work”. But in that regard, my idea is no worse than the other proposals that have been floated for reforming the US health care mess. The health care sector in the US is always referred to as “a growth industry”. Investment advisers and economists proudly point to its continued vigor during our present recession. The problem is that it shouldn’t be a growth industry. It should be a stable system, designed for the public benefit and run by private entrepreneurs.
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