nos-trum. pronunciation: \nos'-trum\. noun. Etymology: Latin, neuter of noster our, ours.
1. a medicine of secret composition recommended by its preparer but usually without scientific proof of its effectiveness.
2. a usually questionable remedy or scheme.
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Friday, August 28, 2009


I don’t know if you all want to see this, but I spent a lot of time doing the research and analysis. So, rather than have it go to waste, I’ll just throw it out here and you can read it or not.  IT’S WAY TOO LONG, BUT…

It only scratches the surface.  Every day I see claims from proponents and critics that don’t make sense, along with a few things that do.  I just can’t cover it all.

The overall situation on healthcare reform is as follows.  (1) What little discussion there was in the beginning over the cost and benefits of proposed plans has been drowned out by hyperbole and misrepresentation, from both sides.  More on this below.  (2)  The tactic used so successfully with cap-and-trade, to rush quickly (and poorly) written draft legislation through a one-party Congress without at least some internal reflection on its contents by supporters, much less by the critics, has created a morass of factions and split opinions.  Some of the public is losing faith.  (3) What could have been done very simply with existing resources was foregone in favor of a massive undertaking.

If you want to see more reasoned discussion, I recommend the Senate Doctors Show at  Both Senators are Republicans, but unlike the President, the President’s Health Policy Advisor, and the Secretary of Health and Human Services, they have actual experience of how patients get taken care of.  They conduct a session twice a week.

I.                    WHAT’S NEEDED

The problems to be addressed were these:  Access and cost. 

(1)     ACCESS

(a). There are millions of Americans who are chronically uninsured or under-insured.  Estimates of the number vary, but most are in the range of 8-15 million (roughly under 5%).  I’ve talked about the “47 million uninsured” figure in the past:  it includes the wealthy, those who do not desire insurance, illegal immigrants, and those who are between jobs and without insurance for (on avg) 4 months.  (RULE OF THUMB #1:  Statements by anybody who still uses the 47M figures should be discounted.  They know it’s not a valid figure, but are willing to use false data to make their advocacy stronger.)

(b). Of the remaining insured population, 80% consider their coverage and quality to be “good or excellent.”  This is ~120 million people (obviously kids don’t have insurance).

(c).  One of the lessons from the Massachusetts experience is, if you add a bunch of demand (new patients) to the system when the supply (doctors and hospitals) is unchanged, then price (healthcare costs) will go up.  Anybody who graduated from high school knows about supply and demand, and can do the arithmetic.  This is why MA is broke, many patients are experiencing delays, the state is exluding ~109,000 beneficiaries (kicking them out, “temporarily” they say), and Commonweatlh Care is raising limits on who gets financial support for their healthcare (a higher income threshold for when and how much you’re expecting to pay).  

(d) None of the Congressional bills currently under consideration deal with the supply side (doctors) realistically.  The President has said they will make more Primary Care doctors and pay them more.  Great idea, but we will see the first doctor in eight years, depending on how quickly medical schools can expand (not easy).  By that time the “doctor-deficit” will have continued to grow, and input to the provider population will need to accelerate.  Further, none of the estimates by the Administration include data from recent studies that a greater percentage of doctors are planning to leave clinical practice earlier than past generations did (the worst-case projection is 40% by the age of 55…I expect it be considerably less than that, though:  doctors are whiners).

(e)  The Massachusetts experience is also instructive in another respect, and corroborates what’s been found in other countries with single-payer systems:  when people don’t have to consider expense in order to seek medical care, they access the system (approx) twice as often.  This is human nature.  As one of the commanders in the military’s healthcare system, we were always getting beat up by the green eyeshade bureaucrats about why our population sought care 1.8 times more than the civilian population, even though a substantial part of the population was arguably more healthy than the civilians—that is, the active duty population.  My population would always say, “well, we weren’t sure we needed to see the doctor, but even if we didn’t, why not?” (RULE OF THUMB #2:  When people have no motivation to decide whether to seek medical care or not (no “skin in the game” as the media says), the decision will be to seek more.)  When the number of medical appointments available in the community is constant, then access goes down, and waiting times go up.

(f)  On the other hand , proponents of universal coverage say that all the people who are now uncovered and seeking emergency room care will, when covered, go through the primary care system and relieve demand on emergency services.  This would free up emergency resources for primary care.  While this works in principle, it didn’t in Massachusetts:  the ER’s are overflowing even more, because now it costs less, more people seek care, and they can’t get an appointment.  So, back we go to the ER…

So how do we ensure access to 5% of the population?  (1)  Add people to the system incrementally.  Current resources could absorb a percentage of the uninsured each year, spread out over several years.  Use the time to crank up more providers.  Cover the most needy first.  (2) Use triage systems and telephone consults:  the patient calls a specially trained nurse, who deals with minor issues over the phone, and arranges for a visit when the nature of the problem requires it.  This keeps things like refills and infant diet questions from taking up valuable clinical time.  I’ve done this before, successfully…there just need to be very strict safeguards in place:  if the triage nurse has ANY doubt, refer to an appt.  (3)  Make sure everybody contributes (except the disabled) to their care, even if it’s a token amount, and it doesn’t have to be money.  (RULE OF THUMB #3:  people value those things they invest in; free things are taken for granted.  If this is not intuitive for you, see the history of public housing)

None of these things are a part of the any draft legislation under consideration.

(2)     COST

(a).  It’s mind-boggling that somewhere between 70  and 100 billion dollars a year are wasted due to Medicare and Medicaid Fraud, Waste and Abuse (FWA).  I’ve written before on this, but here’s why this huge amount goes down the drain.  The Fraud division of the Centers for Medicare and Medicaid Services (CMS), has the resources to investigate less than one percent of all potential fraud and waste.  Increased funding has been denied for at least the last five years.  Bad on Congress for this…

(b)  Tort reform has been a great success in Texas.  It brought down malpractice insurance premiums between 20-50% depending on the specialty since its enactment in 2003.  Also, since 2003 Texas has the fastest growing population of physicians and scarce subspecialists in the country (before 2003, about 1000 new doctors a year…now about 3000 in 2008).  About 30 Texas counties now have obstetricians that did not before.  Malpractice suits have fallen by a third (are you surprised, based on who makes the money out of malpractice suits?).  Institutions who have recouped insurance premiums from falling liability, like Kelsey Seybold in Houston, have poured the money into new equipment, new clinics, and rural healthcare projects.

LEST YOU MISUNDERSTAND TORT REFORM:  (1) Note that patients only receive, on average, 15 cents out of every dollar of their malpractice award; the rest goes mostly to the trial lawyers.  And (2) note that the reform does not limit “economic” damages (the harm done to the patient).  It only limits “punitive” damages (that is, the money that could be awarded to punish the transgressor) to $250,000.  In the past you would see an economic award for $3M and a punitive award for $10M.  Juries did this knowing that 85% would go to the lawyer, and they wanted a way to give a substantial amount to the patient (in this example, only 2M of the 13M).  The Trial Lawyers Association has been attacking Texas tort reform unrelentingly since 2003, arguing that it cheats the patient who was harmed.   Do you buy that?   Anyway, so far, the legislature has seen the benefit of reform and has stayed the course, despite the lawyers spending millions lobbying them.  The courts have also repeatedly upheld the legislation against challenge…including the US Supreme Court.

If expanded to the entire US, it’s estimated that between $10-20B will be saved per year.  In a revealing statement this week, Howard Dean (Dem ex-Gov, and physician) said that “the enemies it would make to do tort reform would be worse than the money gained.  He’s talking about rich trial lawyers here:  the Administration (a lot of whom are lawyers) don’t want to piss them off.  That’s pretty sad:  political allies benefit over the health of Americans.

(c). Cost containment in other countries with single-payer systems is breaking down.  A few weeks ago it was reported in the London Times that Britain is facing an empty treasury for healthcare.  The National Health Service has, in response, found that there were 60,000 steroid injections given last year in GB, and decided that they will authorize payment in the coming year for only 3,000 of them.  I’ll admit that in past decades we shot people with steroids too much, but that era is over.  The patients who would have received the remaining 57,000 will suffer inappropriately, or take narcotics, or do other sub-optimal things to relieve the misery of degenerative disease.  When you look at the current draft US legislation, boards created to decide on standards for coverage and panels of experts who decide on standards for medical care, should give you pause:  not that they couldn’t be used to great benefit in a perfect, non-political world, but are they structure and staffed in such a way that they could be used perversely.  However, if Britain’s actions don’t meet your concept of “rationing,” then I give up.

(d)  Proponents of the current legislation argue that we ration care in the US already.  That’s true, we do it by price.  That needs to be addressed.  However, the government’s pockets are not deep enough to sustain future cost increases…as these other countries have found.  They can reduce reimbursement to doctors and hospitals, making them less likely to accept government patients, or reduce what things they will authorize for reimbursement.  But none of those things get at the root cause of cost increases.

(e)  While all the components of the healthcare system contribute to the rise in cost, no one part is more responsible, in my opinion.  Doctors’ incomes have been flat for 10 years.  Healthcare insurers rank 86th among all other sectors of the economy in profit.  US drug companies are almost the only ones investing in research and development of new drugs, with a fixed cost of $1-2B per medicine they develop.   For my money, the analysis done by the economist Arthur Laffer is the most fundamental about cost.  You may remember Laffer from ECON 101.  He proposed that tax rates and tax revenues form a bell curve:  increase taxes and up to a point, the government gets more money; increase further and revenue to the government starts to fall.  Almost all economists agree…they just argue over where the top of the bell curve is.  Laffer’s report is here:  The short summary is that we have

a large and growing government healthcare wedge—an economic separation of effort from reward, of consumers (patients) from producers (health care providers), caused by government policies. Rising government expenditures on health care are the main factor driving the growth in the wedge. The wedge is a primary driver in rising health care costs, i.e., inflation in medical costs.

Recall that almost 50 cents of every dollar that’s spent on healthcare already comes from the government (Medicare, Medicaid, SCHIP, WAC, military, etc).  And this is exactly the situation of those other countries who are have problems with their government-run healthcare systems.  I recommend Laffer’s report.

SO, WHAT’S THE ANSWER TO ALL THIS?  We’ve got millions who need coverage, and we need to pay for it.   Let’s do a calculation.  Assume 12 million people are the target population.  Assume that if we could only recoup about 80% of the total that’s out there in fraud and waste, and tort reform.  Use a median figure for both of those, and you get (15B + 80B)X (.80) = 76 billion dollars.

Now, divide by the number of people we need to provide for and you get :   $80B / 12M  = $6,700.00 in cash to pay for each and every person OR $26,800.00 for every four persons (a “family” of four)  The current cost of healthcare in 2009 for a family of four is ~$13,000.00.

Note that this was done without taxes, without regulations, and without panels, boards, task forces, agencies, and committees.  Nor does the government need to get engaged, except to establish portability (between jobs) and administer the new coverage.  If you don’t like these two sources of revenue, there are a number of others that could pay for what we want to do.  Admittedly, my example is simplistic and maybe not practical, but the bottom line is that there’s plenty of money in the system right now without creating new government or spending a lot more.

But none of this is under discussion by the Administration or Congress.  Instead we get a massive overhaul of the entire system, with huge costs in the out-years, and if not control, at least oversight, by an institution that has failed to show that it knows how to manage anything effectively.

Oh, and one last thing.  For those who say that “opponents have not offered any alternatives, they just want to kill reform,” there are alternatives that have been offered by both Democrats and Republicans that include these elements and others.  It’s disingenuous to control what legislation can be considered and then accuse people of not offering any proposals.  (RULE OF THUMB #4:  Anyone who makes the “no other alternatives offered” argument, can’t be trusted.  They are more interested in what they’re pushing than in what’s best.)


The following is a collection of statements people have made about healthcare reform legislation.  The President is right that there’s misinformation, but he doesn’t get off scott-free in the process.

(1)     The America I know and love is not one in which my parents or my baby with Down Syndrome will have to stand in front of Obama’s “death panel” so his bureaucrats can decide, based on a subjective judgment of their “level of productivity in society,” whether they are worthy of health care.” (Sarah Palin, Facebook, 7 Aug).

This is pretty laughable, but unfortunately, rhetoric like this results in people showing up at meetings with Obama/Hitler posters.  In retrospect, I think she did it on purpose:  throw out an inflammatory statement to get visibility,  Because her follow-up Facebook note contains a more thorough and grounded criticism of end-of-life counseling.  My objection to the draft legislation is two-fold:  first, this counseling is already being done, so why ensconce it in the legislation and provide deadlines and content for what it entails.  The legislation has several pages of what must be included in the counseling.  The government doesn’t need to get into this business.  Second, it flies in the face of attempts to reassure people that no bureaucrat will come between you and your doctor:  in fact, it tells the doctor exactly what he has to counsel the patient in great detail.

The part of Palin’s statement that is quoted at the end, “level of productivity in society,” is a periphrasis of work by Dr. Zeke Emanuel, a physician who is a healthcare advisor to the President.  He was talking about how to allocate scarce resources, and made the argument that infants and the elderly should be lower in priority for those resources.  He was writing about things like organ transplantation, which have always been scarce.  But I think it’s right to suggest that he would feel no different if the “scarcity” was money for healthcare, leading to lowered priority and funding for expensive care later in life.  Scarcity won’t necessarily be confined to just organ transplants:  you’ve seen the plans for novel H1N1 vaccine, which will be “scarce” initially, and the priorities set for that situation.

(2)     Under the reform we’re proposing, if you like your doctor, you can keep your doctor.  If you like your health care plan, you can keep your health care plan.”  (President Obama, NH Town Hall, 11 Aug, and on occasions)

It’s hard for me to understand why he keeps making this statement.  For the people who have employer-based insurance (the largest segment of the industry), it may come as a surprise that they don’t control their plan:  the employer does.  And if the employer decides not to buy a plan, the employees don’t keep their plan…or their doctor.  Any new plan they enroll in may not have that doctor in its network.  The proposed legislation levies an 8% fee on employers that don’t offer insurance to their employees.  I’m being told of employers (businesses and institutions) who have already made the decision that the trade-off is in their favor to cancel their plans.  If you ran a business and 8% of an employee’s compensation is less than what you are paying in premiums and administrative costs, wouldn’t you unload that burden?  And in fact, most employers DO pay more than 8%.

I can’t give you a figure for how many people this will dump onto the market, but estimates have run from 10-100 million.  We’ll see. 

I suspect the President knows this.  He will just claim that it wasn’t him that did it…it was those evil ________ (add your favorite culprit:  insurers, employers, etc).  But, Americans aren’t stupid.  They will know that it was set up this way.  And, ask yourself why Congress chose 8%, instead of a higher figure.  I hate to say it, but these are the shenanigans we have to live with.

(3)     In answer to a question from someone who couldn’t get the medicine he needed without going trying the ones that the government would pay for, but that didn’t work, first, the President said, “It may be that it wasn’t as efficient – it wasn’t as smooth as it should have been, but the result is a good one.”

This was someone who was prescribed an expensive cholesterol-lowering drug that Medicaid had decided was unnecessary, since there were others that were less expensive.   He went through separate trials with each of the two medicines that are authorized.  My guess is that each trial was about 3 months, since it takes that long to know the full effect of the medicine.  Both didn’t work.  So, he had to go through a waiver process to obtain the original drug prescribed…which worked.  Not only had the President assured people earlier in his talk that patients “won’t have to wait in line,” he also thought that this man’s experience was a “good result.”  The example is instructive because it’s exactly how one goes about discouraging cost, and clearly puts a central decision in between this patient and his doctor.

(4)     “Prevention saves money in the long run.”  (many sources:  the President, politicians, media, even some doctors)

Prevention is good because it makes people healthier.  It usually doesn’t save money in the short run or the long run.  I’ve talked about this before:  just because you exercise and eat right, which delays the onset of arthritis or heart disease, doesn’t mean that it eliminates it forever.  You may live longer and it catches up with you later…increasing costs.

But there’s another issue:  in the short run it may not save money.  Imagine we have a test that costs X dollars, but we have to test 10,000 people before we prevent one person from getting the disease.  We did the right thing, but do you think we saved money?

There are dozens of prevention programs in the proposed legislation, with no validation of what we expect to accomplish with the investment in any of them.

(5)     “First of all, I said I won’t sign a bill that adds to the deficit or the national debt.  Okay?” (President Obama, NH Town Hall)

Once again, I’m not sure why he says this.  Everything that’s on the table is a deficit back-breaker.  You all know the Congressional Budget Office estimates; I won’t repeat them.  And this doesn’t pass the sniff test with most Americans.  There’s a healthcare pie, and people get a slice.  Now we’re going to add a bunch more people, and while we can’t make more pie, everybody is going to get the same size slice as before.  Say that again…?

(6)     “…we will do this without adding to our deficit over the next decade, largely by cutting out the waste and insurance company giveaways in Medicare that aren’t making any of our seniors healthier.”

The president has insisted that the cuts to pay for reform won’t affect Medicare “benefits,” only “insurance company giveaways in Medicare.”   In another Town Hall he referred to these as “Medicare subsidies.”  This is the biggest chunk of what he expects to gain in order to make the claim that reform won’t add to the deficit:  $238 billion.  The problem is that few realize that he is talking about the Medicare subsidy involved in the Medicare Advantage programs which provide the elderly with low cost medications.  It’s wildly popular, and 22 million have enrolled.  Further, over 40% of African-Americans over 65, and almost 30% of Hispanics over 65 are in the program:  these tend to be the lower income groups.  He believes he can cancel that program and force the drug companies to sell for much less.

Good luck with that, Buddy.  As soon as seniors figure this out….look out. 

The President has argued that the subsidy is not competitive and thus is a “giveaway”.  Unfortunately, it’s the only federal healthcare program to have come in under its projected cost. 

But, guess what happens to his no “adding to the deficit” promise if he doesn’t get the moola from canceling this program?

Here’s what I think will happen.  He will keep his promise, but when the bill lands on his desk he’ll turn to his staff and say “tell me this doesn’t add to the deficit or debt” and they will say “Yes, sir, Mr President, it doesn’t” and he will sign it.  If tasked with contrary evidence, he will just say that he doesn’t believe it.  There will be a little damage control, but the Administration will decide he can weather it.  In my military service in DC I saw this kind of thing happen over and over again.

(7)     “Private insurance companies can’t compete with the government.”  (many sources in the media, Congress, and the Administration)

Here’s a list of activities where private companies have been, or are in the processing of being, pushed out by the federal government:  Flood insurance, FHA, Fannie Mae and Freddie Mac, terrorist insurance, guaranteed college loans, the Tennessee Valley Authority.  Each area has its unique elements and pressures, but in all cases the government intervened with an “option” because it felt that private sources were not giving enough of a break, or a low enough rate to the population the government was interested in.   The federal government used its appropriation authority to fund their option at non-competitive rates, and the inevitable occurred.  The process with FHA and college loans is not yet complete; private lenders are leaving the field as we speak.  (RULE OF THUMB #5:  Where the government can exercise its authority to obtain an outcome it wants politically, it will do so.)

III References

A number of studies have been published in the last few months.   Laffer’s, above is one.  Here are a few more:

The Congressional Budget Office’s analysis of the current bill (HR 3200):

From the medical community:

The studies are mostly critical.  Most of what I saw on the positive side is not analytical.  But you can go to here to see the President’s political organization’s view:   or here for Democratic Party’s platform:  

All of this stuff can get very confusing.   The legislation doesn’t cover illegals, although we’ll pay for them anyway when they go to the ER, since federal law prohibits turning anyone away.  There is no public funding of abortion but the courts have said that where this is not specifically excluded then it’s covered.  The numbers people toss around can always be criticized by someone else.  Legislation is drafted by Congressional staffers who are people who have a BA in political science or some related field, and know someone, so they get hired.  Many of them consider themselves experts, but aren’t.  What they are experts at, is the politics and the ideologies and leanings of their member or committee.  They are sometimes lawyers.   This is why we have such an incomprehensible mess to decipher what they’ve drafted.

I don’t know what the final result from all this will be.  Given the political pressures, the President’s need to pass “something,” the lawmakers lack of knowledge, and the Law of Unintended Consequences, I’m not optimistic that our original impulse will be realized:  cover the uninsured and reduce the cost.  It’s a simple task, really, made complex by political parties and vested interests…who want their own vision to prevail, instead of what benefits us the most.

Doc D


Anonymous said...

I'm glad I found this post on HCR since, frankly, I didn't see any real arguments provided in most/all the others.

But, it seems like you still don't have real solutions to cost reduction or containment.

Tort reform, which was truly the only suggested made by the GOP, is a drop in the ocean - not saying we shouldn't turn off the spigot to the lawyers.

It would seem that the only way to stop medicare fraud is to kill medicare... and yet you end by supporting the Medicare Advantage program. Please explain how we 'recoup that 80%".

I would like a reference for your 5% uninsurred/underinsurred figure. My employer (small/tiny-business - and you'd freak if you knew who they are)can't provide affordable insurance, by a long shot. The 'group' is too small. So my old and frail wife works minimum wage to provide our families coverage... for now.

Your list of government takeover of markets, such as Fannie Mae, presents good examples of how not to do things, I agree (though both parties sure love to create bubbles to (like housing) to 'solve' their term's fiscal problems. The School loan one is disingenuous though. The 'private' handling of school loans was nothing of the kind, with government guarantees backing them. In fact, I think governemtn subsidizing (taxpayer) of education is a good thing, but I sure don't want that money going to banks who take zero risk.

So, in conclusion, I'd like to hear more of your thoughts on exactly how to contain costs and how to provide coverage to all - especially for small businesses. I will return in hopes of find a response.

ps: I think the biggest cancer of the current system is the mega-corps. We don't have free market competition.

pss: Whats wrong with forcing private companies to aggregate giant 'pools' of people, rather than give corporate health plans mega discounts at the expense of small business. I think the US economy needs MORE small business and less mega corps.


Doc D said...

Stand by. Blogger says my comment is too long, and I can't figure out how to insert links. Will post tomorrow after re-editing (sigh).

Doc D said...

Great comment. Back in mid ’09, I didn’t include links to previous posts where I presented the data analysis. Bear with me.

Tort reform has two aspects. One is liability costs: costs that benefit lawyers more than those harmed, and doctors’ costs that get passed on to insurers and patients (I saw last month in a Kevin MD post that OB docs in Chicago pay $180,000 in malpractice premiums: see my post here: ). But the elephant in the room is defensive medicine costs--I discussed only the liability costs. I practiced ER medicine in the late 70’s; back then I examined patients with a head injury and made a judgment as to whether further testing was needed (imaging). Only about 10% (anecdotal) needed it: I’m not aware that I ever sent anyone home erroneously with a significant cerebral injury. Today the mantra is “every bump on the head gets a CT.” This example doesn’t scratch the surface of what gets ordered that’s “medicolegally” necessary. Estimates of what could be saved through a reduction in defensive medicine are difficult to quantify. However, researchers have made the attempt (the Administration, depending on lawyers’ input, make it a low figure; doctor advocates make it high, so it’s hard to weed through the “political” estimates.) A substantive study was published in 1996 in the Quarterly Journal of Economics that tried to put it all together (15 years ago). They estimated that total tort reform reduction would be about 5-9% of total costs ($70-126 billion a year)

Add in Medicare fraud that most agree is in the range of $70-100 billion a year…all but 1% of which goes uninvestigated. Medicare’s enforcement arm is under-resourced to go after these criminals, but with a modest part of the fraud saving you could fund a whole Medicare-FBI. Some of these fraud cases are unbelievable.

These two items alone are $140-220B. If we recouped only half that amount, there would be enough available to cover everybody that was uninsured or under-insured.

Part 2, below.

Doc D said...

You asked about the “5% uninsured figure.” I got that from the Kaiser Foundation database. I posted on how that was arrived at here:, (near the bottom). If you look at the Kaiser tables, it turns out that, of the 47M figure everybody tossed around, 9 million are people who qualify for Medicaid but never signed up, 14 million had just started a new job and would be covered under the new job soon (avg period uninsured was 4 mo), 8 million were illegals, etc. Take a look. When you get down to the real number that need help it’s about 12M. That’s only 4% of the total population, but there are some special cases that make the 12M actually 5% of the total need.

If you take the savings I outlined above and divided by 12M there’s plenty of money in the system. So, no spending cuts needed, no taxes needed (and no >100 new agencies).

CBO has said that Medicare Advantage-- not perfect--is the only social program to have come in under budget. The reason: market competition. Over a hundred drug companies compete, and prices went down—a free market solution. Democrats wanted the close the gap in coverage, and were willing to toss away a cost-effective mechanism in the process.

On college funding, I’d rather banks did it. The interest they earn gets invested, which grows the economy, and creates jobs. If the government gets the interest they just spend it, not necessarily on college loans.

All this aside, I really dislike where we are in medicine today. A journalist named Maggie Mahar wrote a book about the corporate business of medicine: Money Driven Medicine. I agree with her “diagnosis” about US medicine; I don’t agree with the “treatment”…she’s pushing a British-type system.

I agree there’s not a free market system. We’ve not had one since 1950. We don’t want to go back to that, but ever since then, the government has driven the costs (see my here:

Giant pools work when insurers can levy low risk against high: you need lots of young healthy people to pay in so there’s enough money to pay for the sick. Congress put a limit on what insurers could charge the healthy v sick. So more money needed, and premiums go up.

My program for HCR has four elements: Coverage, Cost, Quality, and Access (all interdependent)

I encourage a look at the Nostrums archive. I just saw an article today that discussed a “new” finding in the HCR law that only people with health plans that don’t change coverage or cost (up or down) can keep their plan. I wrote way back in the beginning that the President was wrong to say you can keep your plan, for this very reason—it was in the language of the bill. Voila.

Thanks for some great thoughts. Sorry for the length—discussing your comment could be a book.

Anonymous said...

Thank you for your courteous response. I will now spend some more time reading your archives. I find several of your arguments especially persuasive. In particular, a patient should be exposed to some clear cost so as to not over-medicate and waste money and resources. I also understand your point about defensive medicine. There sure is a lot of different 'facts' out there wrt. Tort reform benefits. I've always been fiscally conservative, but can no longer stomach the tone of the mainstream GOP. Having 'paid in' to the private insurance companies for over 30 years, I feel cheated now to be unable to participate.

A couple quick questions, If you please.
- Do you think any particular country has implemented a good health care system Netherlands, Switzerland, France?
- Are mandates bad (to make sure there are plenty of young healthy participants)? So what is the alternative? People have no problem with auto insurance benefiting some more than others.... depending on how the dice roll.

Doc D said...

I read today that the AMA is coming apart over HCR. Most of my friends were against this version of reform, while the AMA leadership got suckered with a promise of a fix to Medicare. AMA is only 17% of docs and hasn't really been the voice of medicine for decades; the public doesn't realize that. Their membership roles dropped 3.4% last year and expected to lose another 7% this year (see here:

All the countries you mention have universal access and government-run care. They control costs by limiting certain types of care. Even so, they are all running out of money. See this report on Health Care System Around the World: They are a pro-universal care project but give a balanced view of each system's problems.

I read today that France, touted as the best, is facing a health care financial crisis, trying to decide what they can cut back on.

The govt-run countries also benefit from new treatments, devices and drugs developed in the US. We finance 90% of world-wide medical advances. I think HCR will gut innovation.

Margaret Thatcher once said that "Socialism works until you run out of other people's money." They are running out. And that leads into your last question.

Mandates are crucial if you expect to have a govt-run system. Despite claims of high admin costs in industry, govt costs more (when they did the math they left out labor costs the govt pays that private doesn't, like career job security and pensions).

I would "prefer" a system without mandates...and it's possible (private competition--real, this time; incentives; patient responsibility for value, etc).

Lastly, auto insurance is not a good analogy. You don't "have" to buy auto insurance; driving is optional, and millions of Americans don't. There is no escape or opt-out for the HC mandate. The constitutionality is an interesting question: a fine for not buying a product that you decide you don't want.

Thanks again. Good discussion.

Anonymous said...

Thanks for the link - way behind on my reading now :) This reply ends with a philosophical question.

re. Netherlands and Switzerland - Is not 'government run' overly simplifying their program. I assume you have read this:

They seem to address at least some of your concerns, such as exposing patients to some level of co-payment cost to discourage waste. Further, they include considerable private sector infrastructure. Government screws things up, quite often, but lately, so are the corporations. The 'American values' rhetoric proclaiming hard-work and competition is the solution to our problems like health care, etc seems undeniably flawed to me.

I also see statistics showing the US current health care cost/spending per person is considerably higher than most first world countries (will find sources, numbers may be off), and with no higher longevity, infant mortality, etc to show for it. This isn't all due to lawyers. Suppose its mostly defensive medicine? Probably also obesity???

Finally, I don't buy the 'driving is optional' argument one tiny bit. That is no more true than eating is optional. I can not ride my bike 22 miles a day, nor can I pay $85 ++ a day in taxi service. There is no bus.

We need a solution that provides lots of competition, discourages waste, prevents fraud, is available at equal cost to individuals, small businesses, and corporations alike, regulated to prevent the outrageous abuses we see today (denial of service, non portability of coverage /pre-existing conditions). Doesn't discourage R&D. Provides for an adequate number of GPs, specialists, nurses, clinical assistants. What else should be in this list. How the heck do we do it. Is anyone genuinely and a-politically trying to solve this?

The current system is far from sustainable. The health care corporations have financial interest in making things worse (e.g. leasing scanning equipment to encourage doctors to over-prescribe diagnostic testing for mutual profit, selling unnecessary medications, albeit to fund R%D but also to fund giant salaries and investors.

I guess I'd also like to know if you feel we should just kill medicare/medicaid and social security. Plenty of folks do, they just won't stand up and spell it out in public - that people starving and dying is FAIR and consistent with hard-working American values - no reason for the rich(er) to help out the poor - after all they are all crack-baby-lazy-liberals. Survival of the fittest. Everyone has the same opportunities to work and be educated. /sarcasm off. I use this 'extreme' rhetoric to get people's position out on the table, though they rarely will tell the truth. The opposite of entitlements is indeed starving and dying - or at least misery. Charities and churches can't help everyone. Sad that such an advanced species can't sort this out. I want answers and not trite Obama/liberal bashing (not addressed to you personally).

Thanks for your thoughtful comments and for listening. I know I've thrown out way to many points to address. Off to read the reference you provided.

Doc D said...

Haven't read it but I will, and get back to you. A quick scan, subject to revision, suggests the difference between the two is centralized v decentralized, not whether government-run or not. If govt says what you can charge, who and what you must cover, for how long, and who gets subsidies, and regulates competition between insurers, I don't see how this is less than "run" by the govt, whether there are private firms or not, and whether the government manages things centrally, or distributes a budget to each canton or province.

The Dutch had to reform their system in '06, due to failing finances. Their minister wrote in Health Affairs last year (see their archive). Jury is still out on whether it will work; he was very frank that they aren't sure.

On auto insurance, a good % of New Yorkers and residents of other big cities would disagree with you. They could buy a car if they wanted to, but prefer to use public transportation and therefore don't have to buy insurance. You need it, they don't. HCR doesn't recognize need. Under HCR you have to buy insurance whether you have any health needs or not (assuming we're still allowed to decide what health care to seek). Euro countries don't have as strict an analogue to our 9th Amendment, limiting govt power. We may have to agree to disagree.

The reference I gave you is great on comparative structure, but a little dated on current finances (2008). I just plug in "Health care financing France (or wherever)" to the search engine to see more up to date stuff.

Cost is the biggest flaw I see in what we're doing. Let me draft a more thoughtful reply, because the spending per person comparisons are incomplete. Medicolegal costs, huge by comparison to other countries, and defensive medicine, are a part of the reason, but it's my opinion that government is responsible for the spiralling cost. For a head start I recommend Arthur Laffer's report on HCR economics (remember the Laffer Curve?). It's here: He makes a great case for the HC "wedge" that government creates.

One last thought of my own. Philosophically we are confronted with the tension between individual liberty and social justice. While I may lean a little Right here, I recognize that the best HC solution is a balance between the two. However, I firmly believe that the individual is primary, and "an end in themselves" (yeah, it's Kant).

More later. Thanks.

Doc D said...

I'm about half way through the Commonwealth Fund report. A couple more comments. Both countries require more "skin in the game" than the US and I'm in favor of this. There are certainly people at the bottom of the economic ladder who can pay anything substantial, but both countries make the subsidy-cutoff threshold lower than in US HCR. 40% v 60%. Also, NL concentrates more on a standard pkg of benefits with supplementals for those who want more, and are willing to pay for it. These are good things. But in the long run, it may just postpone the time when they run out of money. Maybe not. For me, the jury isn't in on this.

Anonymous said...

Short followup on the auto insurance analogy. The benefits of a mandate in HCR is clear. It can lower the cost of insurance for everyone, on average. But because HCR also prevents denials based on pre-existing conditions, people would of course opt out, given the choice, until they are sick. Show me an auto insurance policy where I can start paying my premium after I have an accident. Seems the only viable solution to allowing people to opt out is a complete denial of the added protections offered under HCR for the person opting out, going forward from a set enrollment date (and at some age where entering the mandated program is required). Let the 'free market' name their price when this person does get sick. Any issue with that? I suspect only the stinking rich (that can self-insure their cancer treatment) would chose to opt out.

Thanks again for the discussion. I'll be back:)

Doc D said...

If there's anything everyone agrees on in the current HCR, it's that the mandate is essential to pay for it. A program where the young and healthy can say, no thanks, can't be sustained. You need their dollars to pay for the sick.

Opting-out until you're sick is still possible even with the mandate. Massachusetts showed us that. To date, people there are still avoiding enrolling until they need, say, their gallbladder taken out. They then enroll, get the surgery, wait until the state pays the bill, then dis-enroll. They pay a couple of months in premiums and the taxpayer pays for the operation. That's only one of the reasons MA premiums are going up much faster than the rest of the country. I haven't seen anything in the US law that would prevent gaming the system. Yes we could hire an IRS police force, but I think its unenforceable. I could imagine people enrolling just prior to filing their tax return, then disenrolling for the rest of the year.

The problem with the mandate is partly with the principle of the govt forcing people to buy a product they may not want. The bigger practical issue is that the politico's needed it to pay for the govt expansion, versus actual care. My counter-argument is that there were other ways to do that, and it perpetuates a costly, inefficient government program.

We're all appalled that it costs so much to insure people in this country, and the media is always quoting figures. I read a CBO report today that said it costs about $4800 a year per person in 2010 in the private sector. But the media never talks about the govt cost. The CBO says we pay $9800 per person on Medicaid. And half of the uninsured covered under HCR will go into this program.

I suggest that rather than forcing a mandate to pay for the program (which in the long run, I believe, won't Europe's problems), (1) stop the govt from "managing" the competition, so real competition can occur. (2) Make everyone have some skin in the game, so over-utilization won't drive up costs (even controlling for poverty, co-morbid conditions, etc, Medicaid recipients use the system twice as often...because they can). I've seen patients come in solely for a prescription for tylenol so they can get it free--they probably spent more in gas by coming to the hospital. (3) Get patients engaged in their care choices, and most important to #3, (4) make health care data totally transparent: how good is your hospital, your doctor; how much does it cost here v. there, etc.

The stinking rich (altho I could stand the stink to be rich :-) ) don't buy health insurance. It's not cost-effective; if they're healthy it's a waste to pay premiums. If something happens they have plenty of money to pay cash. OR, they get a cadillac plan from their employer. I read yesterday that some of these robber executives who make millions, get $40K health plans as a part of their deal.

Economist Arthur Laffer talks about what drives health care cost in his report from last year. I think it makes sense. It's not the players involved who are stiffing us all, it's the system that precludes patients making choices about value. My solution is called patient-directed care (search my posts).

Best wishes,

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What I'm Reading - Updated 3 May