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Monday, May 25, 2009

The U.S. health care policy morass

Some reform advocates have long argued that we can indeed [1] extend health care coverage to all citizens, with [2] significantly increased quality of care, while at the same time [3] significantly reducing the national (and individual) cost. A trifecta "Win-Win-Win." Others find the very notion preposterous on its face. In the summer of 2009, this policy battle is now joined in full fury. I will try to add some constructive argument to the fray.
This likely will be a lengthy post that will accrue over time, given the complexity and importance of the topic, but,


In the mid-late 1990s, while caring for my terminally ill daughter in Hollywood, I recall reading that there were more MRI machines deployed in the Los Angeles area than in the entire nation of Canada, the inference being that the American economics of hugely expensive sense-extending
diagnostic imaging technologies such as MRI units, CAT scanners, cardiac dynamic stress test machines, etc tended toward the economically problematic. Every medical institution feels compelled to have them to be credible, competitive Players in the market, but everyone also needs to keep them all profitably humming, with viable billable payers at the end of the back office line. And, every additional install exacerbates the billable utilization problem. Damned if you do, damned if you don't.

Well consider a brief true story from several decades ago, written by surgeon and writer Dr. Richard Selzer:

On the bulletin board in the front hall of the hospital where I work, there appeared an announcement. “Yeshi Dhonden,” it read, “will make rounds at six o’clock on the morning of June 10.” The particulars were then given, followed by a notation: “Yeshi Dhonden is personal physician to the Dalai Lama.” I am not so leathery a skeptic that I would knowingly ignore an emissary from the gods. Not only might such sangfroid be inimical to one’s earthly well-being, it could take care of eternity as well. Thus, on the morning of June 10, I joined a clutch of whitecoats waiting in the small conference room adjacent to the ward selected for the rounds. The air in the room is heavy with ill concealed dubiety and suspicion of bamboozlement. At precisely 6 o’clock, he materializes, a short, golden, barrely man dressed in a sleeveless robe of saffron and maroon. His scalp is shaven, and the only visible hair is a scanty black line each hooded eye.
He bows in greeting while his young interpreter makes the introduction. Yeshi Dhonden, we are told will examine a patient selected by a member of the staff. The diagnosis is as unknown to Yeshi Dhonden as it is to us. The examination of the patient will take place in our presence, after which we will reconvene in the conference room where Yeshi Dhonden will discuss the case. We are further informed that for the past two hours Yeshi Dhonden has purified himself by bathing, fasting, and prayer. I, having breakfasted well, performed only the most desultory of ablutions, and given no thought at all to my soul, glanced furtively at my fellows. Suddenly, we seem a soiled, uncouth lot.
The patient had been awakened early and told that she was to be examined by a foreign doctor, and had been asked to produce a fresh specimen of urine, so when we enter her room, the woman shows no surprise. She has long ago taken on that mixture of compliance and resignation that is that the facies of chronic illness. This was to be but another in an endless series of tests and examinations. Yeshi Dhonden steps to the bedside while the rest stand apart, watching. For a long time he gazes at the woman, favoring no part of her body with his eyes, but seeming to fix his glance at a place just above her supine form. I, too, study her. No physical sign nor obvious symptom gives a clue to the nature of her disease.
At last he takes her hand, raising it in both of his own. Now he bends over the bed in a kind of crouching stance, his head drawn down into the collar of his robe. His eyes are closed as he feels for her pulse. In a moment he has found the spot, and for the next half hour he remains of us, suspended above the patient like some exotic golden bird with folded wings, holding the pulse of the woman beneath his fingers, cradling her hand in his. All the power of the man seems to have been drawn down into this one purpose. It is tell patient of the pulse raced to the state of ritual. From the foot of the bed, where I stand, it is as though he and the patient had entered a special place of isolation, of apartness, about which a vacancy hovers, and across which no violation is possible. After a moment the woman rests back upon her pillow. From time to time she raises her head to look at the strange figure above her, then sinks back once more. I cannot see their hands joined in a correspondence that is exclusive, intimate, his fingertips receiving the voice of her sick body through the rhythm and throb she offers at her wrist. All at once I am envious -- not of him, not of Yeshi Dhonden for his gift of beauty in holiness, but of her. I want to be held like that, touched so, received. And I know that I, who have palpated 100,000 pulses, have not felt a single one.
At last Yeshi Dhonden straightens, gently places the woman’s hand upon the bed, and steps back. The interpreter produces a small wooden bowl into sticks. Yeshi Dhonden pours a portion of the urine specimen into the bowl, and proceeds to whip the liquid with the two sticks. This he does for several minutes until a foam is raised. Then, bowing above the bowl, he inhales the older three times. He sets down the bowl, and turns to leave. All this while, he has not uttered a single word. As he nears the door, the woman raises her head and calls out to him in a voice at once urgent and serene. “Thank you, doctor,” she says, and touches with her other hand the place he had held on her wrists, as though to recapture something that had visited their. Yeshi Dhonden turns back for a moment to gaze at her, then steps into the corridor. Rounds are at an end.
We are seated once more in the conference room. Yeshi Dhonden speaks now for the first time, in soft Tibetan sounds that I’ve never heard before. He has barely begun when the young interpreter begins to translate, the two voices continuing in tandem – a bilingual fugue, the one chasing the other. It is like the chanting of monks. He speaks of winds coursing through the body of the woman, currents that break against barriers, eddying. These vortices are in her blood, he says. The last spendings of an imperfect heart. Between the chambers of her heart, long, long before she was born, a wind had come and blown open a deep gate that must never be opened. Through it charged the full waters of her river, as the mountain stream cascades in the springtime, battering, knocking loose the land, and flooding her breath. Thus he speaks, and is silent.
“May we now have the diagnosis?” A professor asks.
The host of these rounds, the man who knows, answers. “Congenital heart disease,” he says. “Interventricular septal defect, with resultant heart failure.”
A gateway in the heart, I think. That must not be opened. Through it charge the full waters that flood her breath. So! Here then is the doctor listening to the sounds of the body to which the rest of us are deaf. He is more than doctor. He is Priest.
I know, I know, the doctor to the gods is pure knowledge you’re healing. The doctor to man stumbles, most often wound; his patient must die, as must he.
Now and then it happens, as I make my own rounds, but I hear the sounds of his voice, like an ancient Buddhist prayer, its meaning long since forgotten, only the music remaining. Then the jubilation possesses me, and I feel myself touched by something divine.
[1976: Richard Selzer, MD, Mortal Lessons: Notes on the art of surgery]

For me, such an inferentially instructive tale goes beyond mere abstract epistemological interest -- achingly so. Several years prior to being diagnosed with fatal liver cancer, my daughter also had encounters with non-western medical diagnostic assessments, one of which might well have saved her life (and this father's now permanently broken heart) had she not blown it off. As I wrote in my "1 in 3" essay, ruminating on this aspect of "alternative medicine":
It was, after all, a Santa Monica Chinese practitioner of acupuncture and herbal medicine, one Dr. Yi Pan, who first called Sissy's attention to a problem with her liver several years prior to her HCC diagnosis. She'd been referred to him by a girlfriend for attention to a menstrual problem. Dr. Pan had a diagnostic acumen requiring no x-rays, CT scans, or blood tests. Yet, the internet medical fraud site dismisses traditional Chinese medicine as "ineffective," as do many other critics of alternative practices.
Tragically, Sissy summarily discounted his prescient admonition. I can only speculate wistfully on the implications of our having known three years earlier.
Indeed. Indeed.

I bring up the foregoing only to pose some questions I ask myself all the time. To what extent is our potentially bankrupting dependence on crushingly expensive and ever more "sophisticated" medical technology at least in part a function of our enslaving cognitive enfeeblement wrought by reliance on such technologies? Would we have ICD-9 or CPT "dx" ("diagnosis") 3rd-party payor billing codes through which to encapsulate (and reimburse for) the (accurate, as they were) evaluative encounters of a Yeshi Dhonden or a Yi Pan?

The answer to the latter question is an unequivocal "no".


I will by no means be the first to note that our medical industry is not really a "system," nor is it predominantly about "health care." It is more aptly described as a patchwork post hoc disease and injury management and remediation enterprise, one that is more or less "systematic" in any true sense only at the clinical level. Beyond that it comprises a confounding perplex of endlessly contending for-profit and not-for-profit entities acting far too often at ruinously expensive cross-purposes.

Another quick personal story:

During my first tenure (early 1990's) serving as an analyst for the Nevada/Utah Medicare Peer Review Agency (they're now called "QIO's" - Quality Improvement Organizations), in addition to our core Medicare oversight work, we had a number of small sidebar contracts, one of which involved ongoing analytical assessments of the Clark County Nevada self-funded employee health plan. One morning I accompanied my Sup, our Senior Analyst Dr. Moore, to a regular meeting of the plan's Executive Committee, wherein we would report on our latest plan utilization/outcomes evaluation.

A portion of the morning
-- perhaps a half-hour, IIRC -- was always devoted to hearing claims denials appeals brought by Clark County employees. This day, two appeals were heard: one regarding an outpatient medical claim, the other concerning a dental encounter. The total sum at issue was about $350. Both appeals were denied, thereby "saving" the plan this nominal amount.

Bored by this administrative tedium, as I sat at the conference table, I did a quick, rough estimate back-of-the-envelope calculation. About a dozen executive/professional people consumed a half hour adjudicating these disputes, or, equivalently, 6 FTE hours. Assume a plausible blended G&A-multiplied cost estimate of the total compensation time for all these folks, plus all of the clerical/administrative time consumed in the processing (and subsequently denying) of these minor claims from the moment of their filing to this very hour.

Clark County easily spent well in excess of an additional $1,000 to "save" $350 at the expense of these two hapless employees, by my reckoning.

Similar scenarios -- public and private -- surely play out every day within our "health care system." Clark County would have been way ahead to have simply vetted the initial claims for fraud and then paid them! (This is one observation implicitly at the heart of the "Universal Coverage / Single Payer" model.)

But, as my Senior Medical Director was fond of pointing out, "every misspent dollar in our health care system goes into someone's paycheck."

"16% OF GDP"

And soon to rise to 20% and beyond, it is asserted -- lest we find the political will to rein in the nationally and personally eviscerating cost of "health care" in the U.S.

Question: in my foregoing Clark County Health Plan anecdote, beyond the two denied employee claims I cited that totaled about $350, is the extra thousand or so administrative outlay also placed on the "health care" expenditure ledger? So that what should have cost $350 (plus minimal initial clerical claim processing overhead) ended up as ~$1,350? (Note that the ~$350, while denied by Clark County, still had to be paid by the respective employees.)

We really have no clear picture regarding episodes such as this. And, we have no clear picture as to how prevalent are such ongoing wheel-spinning, sand-in-the-gears activities, and to what expense ledger they get posted.

Consider some macro stats from the bipartisan National Coalition on Health Care:
By several measures, health care spending continues to rise at a rapid rate and forcing businesses and families to cut back on operations and household expenses respectively.

In 2008, total national health expenditures were expected to rise 6.9 percent -- two times the rate of inflation. Total spending was $2.4 TRILLION in 2007, or $7900 per person. Total health care spending represented 17 percent of the gross domestic product (GDP).

U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 TRILLION in 2017, or 20 percent of GDP.

In 2008, employer health insurance premiums increased by 5.0 percent – two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,700. The annual premium for single coverage averaged over $4,700.

Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families.

National Health Care Spending
  • In 2008, health care spending in the United States reached $2.4 trillion, and was projected to reach $3.1 trillion in 2012.1 Health care spending is projected to reach $4.3 trillion by 2016.
  • Health care spending is 4.3 times the amount spent on national defense.
  • In 2008, the United States will spend 17 percent of its gross domestic product (GDP) on health care. It is projected that the percentage will reach 20 percent by 2017.
  • Although nearly 46 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens.
  • Health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development.
Irrespective of your preferred data source, suffice it to observe for the purposes of this essay that Americans undeniably spend approximately twice per capita on health care than do their comparable industrial nation "consumer"/patient counterparts. I suppose that such would be defensible were we getting twice the "bang for the buck" (in terms of clinical outcomes quality and concomitant public and personal health) but, sadly, the aggregate data suggest significantly otherwise. Consider observations proffered in Malcolm Gladwell's 2005 New Yorker essay "The Moral Hazard Myth."
Americans spend $5,267 per capita on health care every year, almost two and half times the industrialized world's median of $2,193; the extra spending comes to hundreds of billions of dollars a year. What does that extra spending buy us? Americans have fewer doctors per capita than most Western countries. We go to the doctor less than people in other Western countries. We get admitted to the hospital less frequently than people in other Western countries. We are less satisfied with our health care than our counterparts in other countries. American life expectancy is lower than the Western average. Childhood-immunization rates in the United States are lower than average. Infant-mortality rates are in the nineteenth percentile of industrialized nations. Doctors here perform more high-end medical procedures, such as coronary angioplasties, than in other countries, but most of the wealthier Western countries have more CT scanners than the United States does, and Switzerland, Japan, Austria, and Finland all have more MRI machines per capita. Nor is our system more efficient. The United States spends more than a thousand dollars per capita per year—or close to four hundred billion dollars—on health-care-related paperwork and administration, whereas Canada, for example, spends only about three hundred dollars per capita. And, of course, every other country in the industrialized world insures all its citizens; despite those extra hundreds of billions of dollars we spend each year, we leave forty-five million people without any insurance. A country that displays an almost ruthless commitment to efficiency and performance in every aspect of its economy—a country that switched to Japanese cars the moment they were more reliable, and to Chinese T-shirts the moment they were five cents cheaper—has loyally stuck with a health-care system that leaves its citizenry pulling out their teeth with pliers.
And that was four years ago. The numbers continue to worsen.

As this post progresses, I will draw again on Mr. Gladwell's incisive New Yorker piece, along with other relevant works such as Einer Elhauge's in-depth 1994 "Allocating Health Care Morally" [82 Cal. Law Review 1449] and the 1994 JAMA "A Better-Quality Alternative: Single-Payer National Health System Reform," among many others.

Coming shortly, a look at some representative recent top level Health Care CEO compensation. While not exactly Wall Street level oligarchic excess, it'll make your head spin.

Recall: my Senior Medical Director was fond of pointing out, "every misspent dollar in our health care system goes into someone's paycheck."


My first graduate school paper ("Argument Analysis") comprised a required analysis and evaluation of a peer-reviewed journal article. I chose the JAMA article cited and linked above. "Argument analysis" consists of two phases: [1] the "analytical," wherein you work to honestly, fully, and accurately describe the argument at hand as intended by the proponents, followed by [2] the "evaluative," segment within which you detail your forthright logically critical assessments of the relative strengths and weaknesses of the proffers advanced by the author(s) ostensibly buttressing of their aggregate conclusion.

My method was to number every paragraph and sentence therein (and sub-sentence clause where warranted), depicting the textual "if/then/therefore" sub-arguments with flow charts illustrating the premise/assumption/objection/conclusion flow. e.g.,

[dotted lines indicate "objection/counter" clauses such as "notwithstanding" or "despite".]

I tediously slogged through the often dense, heavily footnoted 49 paragraphs of the article, assertion by assertion.

My analytical phase summary-

Argument synopsis:

Notwithstanding public misgivings about making significant public policy driven changes in the U.S. health care industry, there is extensive and persuasive empirical evidence of costly inadequacies in the system-such as lack of access/coverage, uneven levels of quality of service and outcomes, market-driven rather clinical priorities, waste and duplication, etc.-that can best be corrected by a unified approach to improvement driven by a scientific focus on quality issues (broadly defined) rather than those of short-term cost-control, competition, and piecemeal regulatory strategies and tactics. A single-payer health care system reformed by implementation of the ten principles detailed herein would at once extend medical access to all, reduce costs, improve clinical outcomes of the sick and injured, and elevate the overall health status of the nation, resulting in win-win consequences for providers and citizens alike.

The foregoing was simply my assessment of what the authors were driving at. I would subsequently have to critically evaluate the myriad merits and liabilities of every sub-argument (along with evaluating how well they all fit together in fortifying the overall case). My final, aggregate conclusions follow:

Overall Evaluation:

The following alternative courses of action are generally advanced in the health care debate:
  1. Status quo: the system works fine, and normal incremental quality improvements at the provider level will suffice. Get a job.
  2. Insurance reform: prohibit exclusion and enforce community rating to reduce the insurance premium stratification characteristic of the present system.
  3. Expand existing public payer programs such as Medicare to cover the working poor and otherwise uninsurable.
  4. Capitated managed competition, with “employer mandates” to provide choices and beneficiary of alliances for pooled coverage buying power, administered through the workplace.
  5. Tax inducement programs such as the “Medi-Save” approach in which workers use pretax dollars to purchase catastrophic coverage and pay for routine health expenses themselves.
  6. The public single payer system based more or less on the Canadian model.

No one can dispute that the healthcare industry can be improved. Any system can be improved. Problems such as lack of access, arbitrary and often wildly excessive pricing, inexplicable variations in clinical practice and outcomes are well documented and cry out for solution. That tends to rule out Option 1. The question is one of extent; has the case been made that the healthcare industry requires comprehensive national reform?

Option 2: many see the problem as an insurance reform issue rather than a health-care reform issue per se. The debate brings us face to face with fundamental questions about the nature of private insurance. Where do we draw the line on the freedom to assess and underwrite risk? Is health care insurance ethically different from ensuring cargo? Part of the image problem health insurers have is self-inflicted; arbitrary, unscientific risk assessment, payment denials and delays, and the financial imperative to “cherry pick” (attempting to only contract with those posing minimal risk” have made insurers objects of suspicion and resentment). Insurers uniformly bemoan their meager financial returns, yet even a cursory examination of their real estate furnishings portfolios and executive salaries (not to mention their highly visible and aggressive “Harry and Louise” lobbying against reform this past year) tends to discredit their apologies.

Option 3: US Representative Pete Stark proposed exactly this: it was called “Medicare, Part C” and would via Medicare expansion ensure the working poor who are neither eligible for Medicaid nor otherwise insurable. This option would extend more nearly universal coverage but would do nothing about the chronic cost shifting that is prevalent in healthcare financing. It would also fail to address the cost containment problems seen in the existing program. This proposal was seen by the insurance industry as a “Trojan Horse” for an eventual single-payer system, and, as such was successfully lobbied down.

Option 4 is exactly what comprised the Clinton legislative proposal for reform. It proved inscrutably complex. Having seen the 1,400-odd page text of the proposal I am skeptical of its Byzantine complexity. Those 1,400+ pages would have necessitated something on the order of millions of pages of implementing policy regulations, with all the potential for bureaucratic gridlock they might effect.

Option 5: “Medical IRAs” are a favorite of conservatives, and have considerable theoretical merit. The central idea is that, when people directly spend their own money, they tend to be smarter shoppers, and this would control prices. Third-party payment for health services tends to reduce the incentive to ride herd on costs. But healthcare encounters are not the psychological equivalent of shopping for a new VCR, and becoming an informed healthcare consumer is not at all easy. And finally, these may be saved accounts would do nothing for those without jobs (if they are to be funded via pretax employment compensation), or for those whose taxable incomes are so low as to nullify the tax incentive. The Medi-Save approach would have to be supplanted by additional programs or those it would not touch.

Option 6, single-payer: using the Canadian example as a model for US reform has a couple of liabilities. First the US population is roughly 10 times the size of Canada’s; we would be engineering and vastly larger institution, and there may well be unforeseen dis-economies of scale. Our record in the operation of large public bureaucracies is considerably less than stellar. Secondly, there is considerable reputable disagreement with respect to the relative virtues of the Canadian system. Many Canadians (and not only wealthy ones) routinely come to the US for treatment, and there are additional documented signals of increasing dissatisfaction in Canada. It is a more humane system in that it covers everyone by entitlement, but it does significantly impact the cost of living in Canada. There is reason to believe that same or worse would be the case here, at least in the relatively near term.

The envisioned unified computerized data system such an institution would require could well be a development nightmare that might be in many respects obsolete before it went online. The documented in adequacies of both the IRS and FAA computer systems stand as a warning. The sheer volume of health care data proposed for online storage and access is daunting. An article in the byte magazine earlier this year detailed the CPR system (computerized patient record) under development at Brigham and Women’s Hospital in Boston, and revealed that the daily data storage requirement was approximately 3.5 GB! (3.5 billion bytes) Remember, this is for one institution. Constructing a single national healthcare data system would be fraught with a breadth of imposing technical and policy difficulties. It would require the latest hardware, the finest software development teams, and an unprecedented level of policy agreement and guidance.

In sum, the authors’ argument has many strengths, particularly in their exhaustively documented enumeration of the shortcomings of our present health care system – to the extent to which it can be characterized as a “system.” There is, however, a plausible alternative to a public national single-payer system that would meet many of the goals sought by these advocates, and it is not a theoretical one. Utah’s IHC (Intermountain Healthcare) organization is a private, vertically integrated healthcare Corporation serving Utah in western Wyoming residents. It is a large network of hospitals, clinics, physicians, and related operations such as home health services. IHC is essentially a managed care system with subscribers who pay set fees and minimal copayments. Unlike other HMO type operations in the state that typically experience subscriber turnover rates of approximately 15% per year, IHC’s turnover rate is less than 0.5% (that’s 0.005), at competitive prices. They accomplish this by an organization wide, enthusiastic, almost religious commitment to the very CQI principles outlined above. IHC quality improvement programs are directed by Dr. Brent James, a surgeon and nationally respected leader in health care CQI education. Having myself undergone their healthcare CQI training course over the period of the past six months as part of my work, I can attest that IHC, while not yet perfect, effectively applies nearly all of the recommendations cited in this article, albeit on a smaller scale (and that may indeed be a significant virtue). They are in essence a microcosmic single-payer system, but one successful in the private sector, driven not by publicly impose mandates, but by their own thorough knowledge of and dedication to CQI. It is difficult to see at this point whether the asserted advantages of a national public system would add net value beyond the type of operation that IHC represents.

To be fair, IHC operates in a fairly prosperous, culturally homogeneous region enjoying a great deal of social and political unity. Here in Nevada, by contrast, though we share a common border and similar population size and geography with Utah, the social mileau could not be more different. IHC might not encounter the same level of success in other regions, and their successes do not impact those who cannot obtain coverage – and the central issue of this article has been about the significant negative impact of such a deficit. The IHC example does, however, stand in stark relief to both the inadequate business-as-usual attitude, and the proposition advanced above that a national single-payer system is the best path to effective health care reform. Other examples exist around the nation also; one that comes to mind is Northwest Hospital in Seattle, whose presentation at the Annual Quality Congress of the American Society for Quality control this year reveals yet another organization deriving significant cost savings and quality improvement from diligent application of CQI methods.

Rule number one of CQI is “listen to the customer,” and thus far the customers are prohibitively wary of the idea of creating a huge new national program, and political reality that is unlikely to shift anytime soon. The argument provided by shift at Al takes into account an enormous amount of evidence and theory generated from within healthcare and the wider quality sciences, but serious questions remain unresolved with respect to the needs and concerns of health care consumers, whose overwhelming support would be needed to implement a single-payer health care system.
Some of that now seems a bit quaint (in particular my data systems concern; and, what is a "VCR"?). It was, after all, composed 15 years ago, written at a time when health care issues had only been on my cognitive radar for about a year and a half. But, in other respects it continues to resonate well, and reflects to a significant degree how little things have changed for the better.
UPDATE: I just finished scanning, and then uploading the entire 56 page paper here (2.7 meg PDF file). I no longer have the original MS Word document available. Though, I think it's on a 3.5" floppy disk somewhere in a box out in my garage, LOL.
Most visibly of late, "Harry & Louise" have now been exhumed reincarnate in the person of one Rick Scott ("Conservatives for Patients' Rights"), blanketing the airwaves to exhort us to repudiate the putative life-threatening terrors of "government-controlled" "socialized medicine."

My snarky reaction to Mr. Scott's transparent status quo corporate shilling was published by the Las Vegas Sun on May 11th, 2009:

"Regarding any proposed health care reform, I, for one, am not about to allow some federal bureaucrat to interfere with my current CEO-patient relationship."


My latest issue of The New Yorker arrived in my mailbox yesterday, and contains an excellent, lengthy, and timely article on health care policy issues, "THE COST CONUNDRUM" -

Highly recommended. To quote, in summation:
"We will need to do in-depth research on what makes the best systems successful—the peer-review committees? recruiting more primary-care doctors and nurses? putting doctors on salary?—and disseminate what we learn. Congress has provided vital funding for research that compares the effectiveness of different treatments, and this should help reduce uncertainty about which treatments are best. But we also need to fund research that compares the effectiveness of different systems of care—to reduce our uncertainty about which systems work best for communities. These are empirical, not ideological, questions. And we would do well to form a national institute for health-care delivery, bringing together clinicians, hospitals, insurers, employers, and citizens to assess, regularly, the quality and the cost of our care, review the strategies that produce good results, and make clear recommendations for local systems.Dramatic improvements and savings will take at least a decade. But a choice must be made. Whom do we want in charge of managing the full complexity of medical care? We can turn to insurers (whether public or private), which have proved repeatedly that they can’t do it. Or we can turn to the local medical communities, which have proved that they can. But we have to choose someone—because, in much of the country, no one is in charge. And the result is the most wasteful and the least sustainable health-care system in the world."

Indeed. The author cites the cost-and-clinically-effective examples of of both the Mayo Clinic and Grand Junction, Colorado medical communities. I find a striking and gratifying similarity to my 1994 IHC example.


Rewind back to the fall Presidential debate in Nashville, October 7th 2008:
MODERATOR TOM BROKAW: Quick discussion. Is health care in America a privilege, a right, or a responsibility?

Senator McCain?

I think it's a responsibility, in this respect, in that we should have available and affordable health care to every American citizen, to every family member. And with the plan that -- that I have, that will do that. But government mandates I -- I'm always a little nervous about. But it is certainly my responsibility. It is certainly small-business people and others, and they understand that responsibility. American citizens understand that. Employers understand that. But they certainly are a little nervous when Senator Obama says, if you don't get the health care policy that I think you should have, then you're going to get fined. And, by the way, Senator Obama has never mentioned how much that fine might be. Perhaps we might find that out tonight.

SENATOR OBAMA: Well, why don't -- why don't -- let's talk about this, Tom, because there was just a lot of stuff out there.

TOM BROKAW: Privilege, right or responsibility. Let's start with that.

SENATOR OBAMA: Well, I think it should be a right for every American. In a country as wealthy as ours, for us to have people who are going bankrupt because they can't pay their medical bills -- for my mother to die of cancer at the age of 53 and have to spend the last months of her life in the hospital room arguing with insurance companies because they're saying that this may be a pre-existing condition and they don't have to pay her treatment, there's something fundamentally wrong about that.
Mr. McCain's muddled response was clearly an attempt to avoid the clear, direct question and appear to have it all ways. It remained unclear regarding "whose responsibility?" The responsibility of all individuals to fend for themselves and maintain either adequate insurance coverage or sufficient assets via which to pay retail? Or, the responsibility of a society to provide coverage for all, as both a utilitarian and moral matter?

Mr. Obama's response could have been more on point. Access to health care is in fact a "right," but at present it is a qualified right, a "right of last resort" (rather than a presumptive "inalienable" right). It is the right accorded my daughter when she was medically bankrupted on day one of her fatal cancer illness. It the the right (as of now) to Medicaid-funded long-term facility care that will be accorded my currently bedridden / wheelchair-bound nursing home resident Mother should she outlive her finances (now attriting at a "private payer" commercial rate of approximately $6,300 a month).

It is beyond dispute that, should you show up at the hospital ER in life-threatening condition and documentably lacking material resources, you must be treated in the same clinical manner accorded the billionaire. So, in this quite limited sense, health care is a "right." But, beyond such narrow circumstances, access to health care is overwhelmingly a function of your ability to pay, unlike your "rights" to police and fire protection, or to military defense.

There are in fact communities where enforcement of the latter, more fundamental rights are contingent on your ability to pay.

They're known as Tribal Warlord Societies.


We return for a moment to Gladwell's "The Myth of Moral Hazard."

"The issue about what to do with the health-care system is sometimes presented as a technical argument about the merits of one kind of coverage over another or as an ideological argument about socialized versus private medicine. It is, instead, about a few very simple questions. Do you think that this kind of redistribution of risk is a good idea? Do you think that people whose genes predispose them to depression or cancer, or whose poverty complicates asthma or diabetes, or who get hit by a drunk driver, or who have to keep their mouths closed because their teeth are rotting ought to bear a greater share of the costs of their health care than those of us who are lucky enough to escape such misfortunes? In the rest of the industrialized world, it is assumed that the more equally and widely the burdens of illness are shared, the better off the population as a whole is likely to be. The reason the United States has forty-five million people without coverage is that its health-care policy is in the hands of people who disagree, and who regard health insurance not as the solution but as the problem."
Quick recap:" policy is in the hands of people who disagree, and who regard health insurance not as the solution but as the problem."

Well, it might be more accurate to say that large-scale changes to U.S. health policy status quo would be a problem. Say, for people like

  • Ronald A Williams, CEO of Aetna (AET) for 3 years. Mr. Williams has been with the company for 8 years. The 60 year old executive ranks 1 within Health Care Equipment & Services. TOTAL COMPENSATION $38.125 mil, 5-YEAR COMPENSATION TOTAL $77.863 mil
  • Timothy E Guertin, CEO of Varian Medical Systems (VAR) for 3 years. Mr. Guertin has been with the company for 34 years. The 60 year old executive ranks 10 within Health Care Equipment & Services. TOTAL COMPENSATION $9.56 mil, 5-YEAR COMPENSATION TOTAL $23.533 mil
  • Stephen J Hemsley, CEO of UnitedHealth Group (UNH) for 2 years. Mr. Hemsley has been with the company for 12 years. The 56 year old executive ranks 17 within Health Care Equipment & Services. TOTAL COMPENSATION $5.035 mil, 5-YEAR COMPENSATION TOTAL, N/A

  • Michael B McCallister, CEO of Humana (HUM) for 9 years. Mr. McCallister has been with the company for 35 years. The 56 year old executive ranks 25 within Health Care Equipment & Services. TOTAL COMPENSATION $2.39 mil, 5-YEAR COMPENSATION TOTAL $56.91 mil
The foregoing are drawn from the latest data at under the "Health Care Equipment and Services" category.

Then, there's the Top Dog within the "Drugs and Biotechnology" sector:

  • John H Hammergren, CEO of McKesson (MCK) for 10 years. Mr. Hammergren has been with the company for 13 years. The 50 year old executive ranks 1 within Drugs & Biotechnology. TOTAL COMPENSATION $51.29 mil, 5-YEAR COMPENSATION TOTAL $137.78 mil.
You could also peruse the "Insurance" Sector for some equivalently stratospheric numbers.

By way of contrast, consider a current summary of clinical compensation for some of our most advanced physicians:

Median Salary by Years Experience - Job: Cardiac Surgeon (United States)

Those we train with the most demanding rigor in excruciating detail for years, and subsequently entrust to cut us open, fix our hearts, sew us back together, and extend our lives. This comparative disparity is ethically justified exactly how?

Well, corporate "shareholder value," of course.

Regarding which, I heartily recommend an important and illuminating read, Dr. John Abramson's
expose of Big Pharma.


Excerpting Chapter 14:
This is the mother of all sleights of hand: the transformation of medical science from a public good whose purpose is to improve health into a commodity whose primary function is to maximize financial returns. As a result of this sleight of hand, the gap is widening between the scientific evidence that impartial experts (not paid or threatened by the medical industry, not biased by other personal concerns, and granted unrestricted access to all of the evidence) would agree upon and the perceptions that actually drive American health care. This growing gap is at the core of the crisis in American medicine. And why are we surprised? The drug companies have no more responsibility to oversee the public's health than the fast-food industry has to oversee the public's diet.

The substitution of narrow corporate interests for medical progress has produced some dramatic excesses. When the manufacturer of Paxil performs nine clinical studies on the treatment of adolescents for depression and finds that Paxil is no more effective than placebos and, in fact, significantly increases the frequency of "emotional lability" (including suicidal thoughts and attempts), it's no problem. The company publishes one study that shows a benefit, fails to publish the other eight, and markets away. When British drug authorities spill the beans? No problem. A task force of the American College of Neuropsychopharmacolgy is convened, and concludes that the new antidepressants are safe for adolescents after all. Too bad the task force didn't have access to some of the information that was available to the British drug authorities. But perhaps that didn't seem like so much of a problem, because, according to the New York Times, "Critics of the medicines noted that 9 of the 10 task force members had significant financial ties to the pharmaceutical industry..." (However, the task force insisted that no industry money financed their report.) What to do when the FDA epidemiologist in charge of analyzing all the antidepressant studies involving children concludes, just like the British drug authorities, that twice as many children treated with the new drugs (except Prozac, which is available as an inexpensive generic) became suicidal, and that the FDA should therefore discourage doctors from treating children with these drugs? Just bar the expert from testifying at the FDA's public hearing. Then don't make him available for an interview with the New York Times, which reported the story on April 16, 2004

You don't like the way the study of an expensive drug for blood pressure is going? A nonissue -- just stop the study before the results reach statistical significance.

Endovascular Technologies (a wholly owned subsidiary of Guidant, the company that manufactures implantable defibrillators) manufactured a $10,000 device to repair aortic aneurysms that dangerously malfunctioned in a third of the 7600 patients in whom it had been used. Did this frequency of malfunction stop Endovascular Technologies? No. The company reported 7 percent of these events to the FDA and sold on. According to a plea agreement entered into with the United States government in 2003, the company belatedly disclosed another 2628 serious malfunctions and 12 deaths. No problem. It agreed to pay $92 million to cover criminal and civil penalties and then picked up with business as usual on other products.

Your drug company just received an official warning letter from the FDA for the "false and misleading" marketing of Celebrex, Vioxx, Pravachol, or OxyContin? No problem. The FDA's corrective action is unlikely to displace the false information already firmly planted in the public's mind.

And the list goes on. Controlling medical costs in this near free-for all commercial grab is not just impossible, it is a contradiction in terms. Does it make sense to talk about reducing national expenditures for cars or clothes or beer? Medical care, by far the largest consumer commodity in the United States, is now no different.
Again, as my Senior Medical Director was fond of pointing out, "every misspent dollar in our health care system goes into someone's paycheck."


I wrote on my prior post that "It has been fashionable among some "conservative" policy commentators of late to assert that the "problem" with U.S. health care is that we are "overinsured," i.e., that health care insurance induces "moral hazard" by making us sloppy, excessive "consumers" of health care services..."

A link to that entire passage here.

Specifically (citing Gladwell): the past few decades a particular idea has taken hold among prominent American economists which has also been a powerful impediment to the expansion of health insurance. The idea is known as “moral hazard.” Health economists in other Western nations do not share this obsession. Nor do most Americans. But moral hazard has profoundly shaped the way think tanks formulate policy and the way experts argue and the way health insurers structure their plans and the way legislation and regulations have been written...

...“Moral hazard” is the term economists use to describe the fact that insurance can change the behavior of the person being insured...

...If you think of insurance as producing wasteful consumption of medical services, then the fact that there are forty-five million Americans without health insurance is no longer an immediate cause for alarm. After all, it’s not as if the uninsured never go to the doctor. They spend, on average, $934 a year on medical care. A moral-hazard theorist would say that they go to the doctor when they really have to. Those of us with private insurance, by contrast, consume $2,347 worth of health care a year. If a lot of that extra $1,413 is waste, then maybe the uninsured person is the truly efficient consumer of health care.

The moral-hazard argument makes sense, however, only if we consume health care in the same way that we consume other consumer goods, and to economists like Nyman this assumption is plainly absurd. We go to the doctor grudgingly, only because we’re sick. “Moral hazard is overblown,” the Princeton economist Uwe Reinhardt says. “You always hear that the demand for health care is unlimited. This is just not true. People who are very well insured, who are very rich, do you see them check into the hospital because it’s free? Do people really like to go to the doctor? Do they check into the hospital instead of playing golf?”...
To which I observed:
Exactly. I wouldn't go the the doctor were it "free," absent some compelling need. To be sure, you can always come up with the iconic ("anecdotalism fallacy") examples of people who engage health care services irrationally, either simply out of a mundane neurotic social need for "attention," or impelled by the more serious psychiatric clinical condition known as acute "Münchausen syndrome."...

...yes, of course, there will always be people who abuse any type of "entitlement" or "indemnity" system. Whether their sorry, isolated examples should drive policy is quite another matter, at least with respect to health care.

There is another, potentially more troublesome aspect to the otherwise predominantly abstract "moral hazard" issue, one having to do with putative "doctor-patient confidentiality" vis a vis the 3rd party intermediary payor. If you feel that utter candor with your doctor might cost you your insurance coverage, you have an economic incentive to be less than totally forthcoming, i.e., that perhaps you need to "keep your powder dry" until you really need to disclose the extent your clinical problem(s), lest your coverage be arbitrarily dropped by some faceless corporate actuarial designee.

It is a fact that where there is a 3rd party payor in an actuarial-based indemnity arrangement, there will be overriding 3rd party oversight that trumps "doctor-patient confidentiality," the breathless, slickly-produced "concern troll" corporate shill Straw Man / Red Herring disinformation of a Rick Scott notwithstanding.

Your only confidentiality- (and choice) preserving recourse is to pay in cash.

Unless, of course, you are a Medicare beneficiary. The simple reason for that is that Medicare is "social insurance" rather than an actuarial construct. It is a political "entitlement" obligation rather than a means-tested (i.e., welfare, such as Medicaid) or risk-based system (i.e., for-profit insurance).

Again, citing Malcolm Gladwell's Myth of Moral Hazard: is meant to help equalize financial risk between the healthy and the sick. In the insurance business, this model of coverage is known as "social insurance," and historically it was the way health coverage was conceived. If you were sixty and had heart disease and diabetes, you didn't pay substantially more for coverage than a perfectly healthy twenty-five-year-old. Under social insurance, the twenty-five-year-old agrees to pay thousands of dollars in premiums even though he didn't go to the doctor at all in the previous year, because he wants to make sure that someone else will subsidize his health care if he ever comes down with heart disease or diabetes. Canada and Germany and Japan and all the other industrialized nations with universal health care follow the social-insurance model. Medicare, too, is based on the social-insurance model, and, when Americans with Medicare report themselves to be happier with virtually every aspect of their insurance coverage than people with private insurance (as they do, repeatedly and overwhelmingly), they are referring to the social aspect of their insurance. They aren't getting better care. But they are getting something just as valuable: the security of being insulated against the financial shock of serious illness.

Gladwell on the actuarial model:
There is another way to organize insurance, however, and that is to make it actuarial. Car insurance, for instance, is actuarial. How much you pay is in large part a function of your individual situation and history: someone who drives a sports car and has received twenty speeding tickets in the past two years pays a much higher annual premium than a soccer mom with a minivan. In recent years, the private insurance industry in the United States has been moving toward the actuarial model, with profound consequences. The triumph of the actuarial model over the social-insurance model is the reason that companies unlucky enough to employ older, high-cost employees—like United Airlines—have run into such financial difficulty. It's the reason that automakers are increasingly moving their operations to Canada. It's the reason that small businesses that have one or two employees with serious illnesses suddenly face unmanageably high health-insurance premiums, and it's the reason that, in many states, people suffering from a potentially high-cost medical condition can't get anyone to insure them at all.

The salient difference here is that your policy cost rating for car insurance is to a significant degree dictated by your own behavior, relative to that of your lifetime health condition and experience. While there are undeniable "lifestyle" contributory risk factors with respect to health, we are all at risk of injury and disease to a much higher degree by factors beyond our control.


To recap, Americans spend roughly twice per capita on "health care" goods and services relative to our comparable industrial nation counterparts. But, the highly visible anti-reform lobbyist Rick Scott is all over the airwaves of late claiming that "if we have more government involvement we’re going to have dramatically worse health care."

Ponder that for a second. How much worse could it be? For our current financially ruinous expenditures, we get

  • woefully low comparative clinical and public health outcomes rankings vis a vis the rest of the developed world;
  • close to 50 million citizens with no coverage whatsoever;
  • millions more continually at risk of losing their coverage at the profit-motive-driven whim of some anonymous corporate bureaucrat;
  • and/or living in fear of being bankrupted by merely one serious accident or illness, existing "coverage" notwithstanding. [**]
[**] From The American Journal of Medicine, Himmelstein, MD, et al, Medical Bankruptcy in the United States, 2007: Results of a National Study: "Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attributable to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors, the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001."

Another salient point: it must be emphatically emphasized that our counterpart nations that manage to provide adequate health care for all with [1] significantly more nominal "government involvement," at roughly [2] half our cost, do so while also [3] purchasing the very same goods and services overwhelmingly provided by the very same multinational for-profit health care industry corporations from which we buy. The EU countries, for example, don't maintain "socialist" government "Ministries" through which to develop, manufacture, and distribute durable medical goods, hospital and outpatient clinic supplies, and pharmaceuticals. They overwhelmingly buy them from the private sector. I have a difficult time believing that these companies regard the rest of the developed world as "loss leader" markets; that, absent the handsome profits continually accruing from the U.S. market, they would simply all go out of business, leaving the world to clinical destitution.


Mr. Scott has been blanketing the network and cable TV channels of late with his faux-poignant anecdotes portraying the cautionary travails of (randomly?) selected patients who ostensibly encountered serious, frequently life-threatening difficulties in obtaining health care within the Canadian and British systems -- putatively owing to the "government-run" nature of their medical infrastructures. Well, anecdotes do not an empirical policy case make, and in poker parlance, I (like many others) can "call and raise" -
It is the soggy and crushingly sad el Nino L.A. winter of 1998. My now- brain-met stroke-addled daughter is painfully traversing the final months of her life. While admitted to acute care facilities (she has been an acute care patient in seven across the two years of her horrific cancer struggle), she gets the best clinical attention available, no strings attached, courtesy of Medi-Cal (the California Medicaid agency for the poor and otherwise medically indigent). But, outpatient care is another matter. Sissy has ongoing need of follow-up physical and occupational therapy, regarding which Medi-Cal will not authorize reimbursement.

Her therapy team from Brotman Medical Center -- at great individual and aggregate personal and professional risk to themselves -- arrange to have her routinely come in incognito off the books to an outpatient rehab clinic in Beverly Hills where they work on the side, to continue her therapy -- notwithstanding that we all know by that time that she will not likely survive much longer.

That is an utterly unembellished true story. There are numerous unsung heroes within our health care industry, people whose unrelenting focus is "patients first."

Multimillionaire Mergers and Acquisitions Attorney Rick Scott is not among them.


As of today (June 5th), "public option" federal legislative proposals are abuzz, with Republicans predictably loudly decrying them as "price setting" that will impinge on free market competition. "Public option" is that of giving citizens the option of buying health care coverage from a government administered system in lieu of purchasing private sector policies.

Direct universal "Single Payer" coverage seems to be off the table, with a leading legislative policy model now being that of the Ted Kennedy effort -- basically the Massachusetts model writ large (where everyone would be required to buy coverage, but the poor would be accorded tax rebates with which to purchase insurance).

Earlier this year, proposals to expand Medicare surfaced:
Medicare Early Access
Seniors 55 to 64 Could Join Program
Deborah Mitchell

The 5.1 million Americans between 55 and 64 who do not have health insurance will likely be intently watching the outcome of a proposed bill for early buy-in to Medicare. The idea is to permit early enrollment and for these younger participants to pay a higher monthly premium than seniors do, yet be eligible for the same services.

That such a program is much needed is not in dispute. The number of Americans age 55 to 64 will reach 36.2 million by 2010, and an increasing number of them will be without health insurance given the current recession, job losses, and the fact that many employers have cut back on health insurance.

Medicare Early Access Act

This is not the first time that lawmakers have proposed a bill known as the Medicare Early Access Act. John D. Rockefeller IV introduced a bill on July 27, 2006, under Senate bill 3747 (S.3747). Then on November 20, 2008, Rockefeller tried again, and the bill was designated as S.3710.

Senate bill 3710 would amend title XVIII of the Social Security Act and the Employee Retirement Income Security Act of 1974 to allow people age 55 to 65 to access Medicare benefits.In order to be eligible to participate in this program, individuals would have to meet all of the following requirements:
  • Be at least 55 years old
  • Be eligible to receive Medicare benefits if they were 65 years old
  • Currently be ineligible for health insurance under a group health plan or other federal health program
A Medicare Early Access program would be financed by the monthly premiums individuals would have to pay. These premiums would be greater than what people on Medicare pay, but less than they would pay through a private insurance company or their former employer. People could purchase Medicare coverage even if they were in poor health...
Again, such an idea will likely be lobbied down -- as was Pete Stark's "Medicare Part C" idea 15 years ago -- as a camel's-nose-under-the-tent proxy for Single Payer.

Interestingly, the Supreme Court recently ruled that employers could reduce (or eliminate?) health care coverage for older workers once employees reach age 65:

Supreme Court Allows Employers to Coordinate Retiree Benefits With Medicare
[AP, 03-24-2008]

The Supreme Court on Monday let stand a federal policy that allows employers to reduce their health insurance expenses for retired workers once they turn 65 and qualify for Medicare.

The justices turned down an appeal by the 35-million-member AARP to undo a rule that essentially allows employers to treat retirees differently depending on their age.

The rules were put into place by the federal Equal Employment Opportunity Commission, with the support of labor unions and other groups. They worried that employers would greatly reduce or eliminate health benefits for millions of retirees if they could not take Medicare into account when structuring the health benefit packages they voluntarily provide their retired workers.

The EEOC rule makes clear that employers can spend more on retirees under 65 years of age than those over 65 without running afoul of age discrimination laws.

The EEOC said it proposed the rule in response to a decision in 2000 by the 3rd U.S. Circuit Court of Appeals in Philadelphia that held that the Age Discrimination in Employment Act requires employers to spend the same amount on health insurance benefits provided Medicare-eligible retirees as those received by younger retirees.

AARP said EEOC violated the intent of Congress when it proposed the rule. But the EEOC said the same age discrimination law allows it to carve out an exemption to preserve the long-standing practice that allows employers to coordinate benefits with Medicare.

The same appeals court upheld the EEOC policy last year and the new rule took effect in December.

The case is AARP v. EEOC, 07-662.
Gotta love the "coordinate" euphemism. It remains to be seen whether employers will attempt the wholesale "dumping" of older workers onto Medicare in order to eliminate the health care component of their compensation packages. You would think that employers would have an economic incentive to support the idea of a "Medicare Early Access" plan (S.3710), thereby washing their hands of health care benefits for the considerable 55-64 age employee demographic. But, again, "conservatives" are likely to oppose this as yet another incremental stalking horse for Single Payer.

JUNE 7th, 2009 UPDATE

"Public Option" issues today in the New York Times:

...The very point of a federal public plan, as Mr. Obama explained in a letter to Senate leaders, would be to take advantage of an enormous risk pool and efficiencies of scale “to make the health care market more competitive and keep insurance companies honest.” But in projecting how such competition might actually affect the market, the devil is clearly in the details of who Congress would make eligible for coverage, what benefits would be granted and, perhaps most important, how much providers would be paid...

...But critics argue that with low administrative costs and no need to produce profits, a public plan will start with an unfair pricing advantage. They say that if a public plan is allowed to pay doctors and hospitals at levels comparable to Medicare’s, which are substantially below commercial insurance rates, it could set premiums so low it would quickly consume the market...
You see, what's of primary importance (politically), is not adequate, affordable health care coverage and access for everyone, it's competitive "fairness" for the extremely lucrative private intermediary insurance industry.


June 8, 2009 | I poked around Washington Friday, talking with friends on the Hill who confirmed the worst: Big Pharma and Big Insurance are gaining ground in their campaign to kill the public option in the emerging healthcare bill.

You know why, of course. They don't want a public option that would compete with private insurers and use its bargaining power to negotiate better rates with drug companies. They argue that would be unfair. Unfair? Unfair to give more people better healthcare at lower cost? To Pharma and Insurance, "unfair" is anything that undermines their profits...
Yeah, I know, he's one of those Clinton-era "Statist Liberals." Read the whole argument. Decide for yourself.


Enduringly apropos of the current policy struggle, as I asked in my 1994 JAMA paper analysis:

The debate brings us face to face with fundamental questions about the nature of private insurance. Where do we draw the line on the freedom to assess and underwrite risk? Is health care insurance ethically different from ensuring cargo?
A huge component of health care accessibility has to do with Rx affordability issues. In that regard Dr. Abramson's heretofore-cited book "Overdo$ed America" is a compelling read (I will soon quote more of it), focused in particular on the issues of proprietary pharmaceuticals. He ruminates on the development of the Salk polio vaccine:
There was a time not so long ago when breakthroughs in medical science were driven more by health needs than by the search for corporate profits. Perhaps the best example is the research that produced the polio vaccine, one of the truly great breakthroughs of modern medicine. In 1955, amid the great fanfare that accompanied the initial release of the vaccine, Dr. Jonas Salk was asked who own the patent. He replied, “well, the people, I would say. Could you patent the sun?” [Pg 241]
I would take the observation back even decades from there. Consider, for a moment, the increasing clinical scourge of diabetes, an incurable chronic disease responsible for a host of dangerous, even lethal additional illnesses. During my last tenure with the Medicare QIO, I did some studies on its prevalence and impact for the Nevada State Department of Health. We were mostly interested in evidence of disparate treatment impacts regarding "underserved populations" (the poor, and ethnic minority groups), but I also encountered an interesting, worrisome Medicare population trend.

(click the graph to enlarge)

Mining data we'd obtained from the UNLV Center for Health Care Information Analysis, I found a disturbing and steadily elevating proportion ("prevalence") of Medicare patients admitted to a NV acute care hospital for any reason that had a diagnosis code ("dx") for diabetes
(ICD-9 250.nn) somewhere in their claims file records -- a trend that, unchecked, will soon grow to more than 30% (probably later this year).

Uncontrolled diabetes can be a macroeconomically ruinous disease, given the life-threatening additional maladies it can cause. Now, beyond sustained lifestyle countermeasures (e.g., regular exercise and proper diet), a core therapeutic component of successful diabetic management is frequently insulin injection therapy. OK, for a moment, consider the seemingly ad infinitum TV and print ads we encounter for a host of maintenance meds. Again, Dr. Abramson admonishes:

Most of all, immunize yourself from the drug companies efforts to convince you that you desperately need their advertised products. If you really needed the product, it is unlikely that the drug companies would be spending money on advertising. Remember, there aren’t many ads for insulin on TV.
"Many"? I would challenge anyone to show me a TV, radio, or consumer print publication ad for insulin. You cannot. Neither can you show any shortages of it. Hell, I even buy it at the vet, for Max, my 16 yr old diabetic cat.

Insulin was discovered and developed in the early 1920's by a Canadian physician and his medical student (the work subsequently won a Nobel Prize). The University of Toronto was granted the patent for one dollar. It was then licensed to Eli Lilly & Co, which went on to mass-produce it. It continues to be universally available -- I have to assume, at a profit.

Draw your own conclusions.


A few pertinent snips from the lengthy "Allocating Health Care Morally" -

Health Law policy suffers from an identifiable pathology. The pathology is not that it employs four different paradigms for how decisions to allocate resources should be made: the market paradigm, the professional paradigm, the moral paradigm, and the political paradigm. The pathology is that, rather than coordinate these decision-making paradigms, health law policy and employs them inconsistently, such that the combination operates at cross purposes.

This inconsistency results in part because, intellectually, healthcare law borrows haphazardly from other fields of law, each of which has its own internally coherent conceptual logic, but which in combination results in an incoherent legal framework and perverse incentive structures. In other words, health care law has not – at least not yet – established its self to be a field a law with its own coherent conceptual logic, as opposed to a collection of issues and cases from other legal fields connected only by the happenstance that they all involve patients and healthcare providers. [pg 1452]

...To ground my analysis let me assert upfront a concrete proposal, one toward which I believe the national healthcare systems of the world are (from different directions) slowly converging. The analysis of the moral paradigm offered here supports, when coupled with the strengths and weaknesses of the other paradigms, and health-care system having the following elements.

  1. A politically set annual health-care budget with an associated tax not linked to employment.
  2. Free access for all individuals to a care allocating plan.
  3. Individual choice about which plan they wish to join for some significant period. (I suggest three years).
  4. Competition among care allocating plants that each receive a share of the government budget based on the number of individuals they enroll, adjusted for each person’s health risk, and that cannot retain profits from their budget (other than a possible bonus linked to total number of enrollees) but must instead spend it on those enrollees. Plans must accept all who wish to enroll.
  5. Management of those care allocating plans by professionals who have a range of diagnostic expertise to evaluate the healthcare needs of plan enrollees, who have salaries unaffected by spending decisions (other then a possible bonus for an role he), and who have a duty to decide how to allocate each plans budget to purchase those health services that maximize health benefit for the unit’s enrollees. Their sole incentive should thus be to do a good enough job at ration Inc. to keep and attract enrollees.
  6. Maintenance of the vast majority of healthcare providers as private suppliers of procedures, tests, and technologies that compete with each other to sell to the care allocating plans. This should create incentives for cost-effective innovation because suppliers will now face purchasers who have both the knowledge and incentives to trade off the costs and benefits of care.
  7. A politically appointed agency, the members of which are insulated from removal, that has only two tasks: setting risk adjustments and licensing care allocating plans by verifying their diagnostic expertise and fiscal soundness. In particular, this agency would not dictate a uniform schedule of covered services because that would be up to each care allocating plan.
  8. The individual right to purchase additional care outside these plans on the open market. [pg 1453]

The potential role ascribed to the moral paradigm in this article is large. But it’s far from sufficient to guide all health-care decisions that any system must make. It is, after all, of no help in encouraging productive efficiency or in assessing scientific issues about what benefits (if any) of various treatments have. Nor should it have escaped attention that the moral paradigm has still left us with no answer to the question of how precisely to make trade-offs between health care and other social goods. That matter remains largely “incorrigible to moral reasoning.”

To address those issues, we must rely on market, professional, and/or political paradigms for making resource allocation decisions. But why should we have any more faith in those decision-making processes, and what role should we ascribe to which process? Clearly, a full justification for the healthcare system I advocate requires more than an assessment of the strengths and weaknesses of the moral paradigm, which is all this article offers. It requires a comparative assessment of the strengths and weaknesses of the other paradigms. The details of a full comparative paradigm analysis will have to await another day, but a sketch of the argument is probably necessary to provide context to this article’s analysis of the moral paradigm.

As I see it, the strength of the market paradigm are the standard ones: if consumers are knowledgeable, have similar resources, and have incentives to trade off the benefits and costs of each product, then market competition promotes productive efficiency, accommodates varying consumer preferences, and achieves allocative efficiency. The problem of unequal resources is largely external to the market paradigm and potentially remediable through vouchers. But the more fundamental problem of the healthcare market flows from an inherent division between knowledge and incentives. Unlike other markets no decisionmaker exists who has both the knowledge and the incentives to decide when the costs of supplying a particular good or service exceed its social value. Patients lack the knowledge and, even the fact that others (such as insurers or employers) cover much of the social costs, also generally lack the necessary incentives. Physicians and other healthcare providers are knowledgeable about medicine but not about social benefits and costs. Moreover, under current American market systems they either have incentives to provide too much care (if paid on a fee-for-service basis) or incentives to provide too little care (if paid on a capitation basis). Insurance plans generally lack the information to make case-by-case cost than if it decisions and have incentives to provide two little care, or to select for low-risk enrollees unlikely to need much care, because the insurers pay the cost of health care but do not enjoy its benefits…

… Where markets and self-regulation fail, it is natural to turn to the political process. The main advantages of the political paradigm are (1) that it can make the open-ended trade-offs between healthcare and other social goods that do not lend themselves to objective scientific analysis and (2) that, unlike decision-makers under market and professional paradigms, political decision-makers have incentives to weigh benefits against costs because both are experienced by the polity. The disadvantages are that the political process is inevitably too centralized to effectively trade off the benefits and costs of health care in individual cases, and is susceptible to problems of majoritarian bias, intransitive choices, an interest group politics. These weaknesses counsel for limiting the political process to one global issue: how high to set a national (or state) level of health care spending and associated tax. This avoids the political processes in ability to make operational decisions, and lessens the concern of majoritarian bias because funding levels are more likely to affect everyone equally and decisions about which treatments to fund. This way of framing the political decision is also more likely to produce both “single peaked” preferences resistant to intransitivity problems and, more important, Lowell political information costs that render the process less susceptible to interest group dominance. [pp 1542-4]
Yeah, light bedtime reading. (There may be some "typos" in the foregoing; I used MacSpeech Dictate to read it in, given that the PDF file is not text-convertible. I've yet to proofread it.)

I will get to some comments on the foregoing ASAP. My point in posting it is that lot of intelligent people have been giving a lot of serious thought to this issue for a long time, yet we seem to not make much progress, so powerful are the major entrenched private interests.


In the wake of the Elhauge observations immediately foregoing, this might be a good place to focus a bit more on Dr. Gawande's New Yorker article.

Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks. Here’s how this whole debate goes. Advocates of a public option say government financing would save the most money by having leaner administrative costs and forcing doctors and hospitals to take lower payments than they get from private insurance. Opponents say doctors would skimp, quit, or game the system, and make us wait in line for our care; they maintain that private insurers are better at policing doctors. No, the skeptics say: all insurance companies do is reject applicants who need health care and stall on paying their bills. Then we have the economists who say that the people who should pay the doctors are the ones who use them. Have consumers pay with their own dollars, make sure that they have some “skin in the game,” and then they’ll get the care they deserve. These arguments miss the main issue. ..

...As America struggles to extend health-care coverage while curbing health-care costs, we face a decision that is more important than whether we have a public-insurance option, more important than whether we will have a single-payer system in the long run or a mixture of public and private insurance, as we do now. The decision is whether we are going to reward the leaders who are trying to build a new generation of Mayos and Grand Junctions...

Again, citing Dr. Gawande:
Americans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse. For example, Rochester, Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which is eight thousand dollars less than the figure for McAllen. Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s quality ranking tended to be. In fact, the four states with the highest levels of spending—Louisiana, Texas, California, and Florida—were near the bottom of the national rankings on the quality of patient care...

...that’s because nothing in medicine is without risks. Complications can arise from hospital stays, medications, procedures, and tests, and when these things are of marginal value the harm can be greater than the benefits. In recent years, we doctors have markedly increased the number of operations we do, for instance. In 2006, doctors performed at least sixty million surgical procedures, one for every five Americans. No other country does anything like as many operations on its citizens. Are we better off for it? No one knows for sure, but it seems highly unlikely. After all, some hundred thousand people die each year from complications of surgery—far more than die in car crashes...

...In an odd way, this news is reassuring. Universal coverage won’t be feasible unless we can control costs. Policymakers have worried that doing so would require rationing, which the public would never go along with. So the idea that there’s plenty of fat in the system is proving deeply attractive. “Nearly thirty per cent of Medicare’s costs could be saved without negatively affecting health outcomes if spending in high- and medium-cost areas could be reduced to the level in low-cost areas,” Peter Orszag, the President’s budget director, has stated.

Most Americans would be delighted to have the quality of care found in places like Rochester, Minnesota, or Seattle, Washington, or Durham, North Carolina—all of which have world-class hospitals and costs that fall below the national average. If we brought the cost curve in the expensive places down to their level, Medicare’s problems (indeed, almost all the federal government’s budget problems for the next fifty years) would be solved. The difficulty is how to go about it...

...The Mayo Clinic is not an aberration. One of the lowest-cost markets in the country is Grand Junction, Colorado, a community of a hundred and twenty thousand that nonetheless has achieved some of Medicare’s highest quality-of-care scores. Michael Pramenko is a family physician and a local medical leader there. Unlike doctors at the Mayo Clinic, he told me, those in Grand Junction get piecework fees from insurers. But years ago the doctors agreed among themselves to a system that paid them a similar fee whether they saw Medicare, Medicaid, or private-insurance patients, so that there would be little incentive to cherry-pick patients. They also agreed, at the behest of the main health plan in town, an H.M.O., to meet regularly on small peer-review committees to go over their patient charts together. They focussed on rooting out problems like poor prevention practices, unnecessary back operations, and unusual hospital-complication rates. Problems went down. Quality went up. Then, in 2004, the doctors’ group and the local H.M.O. jointly created a regional information network—a community-wide electronic-record system that shared office notes, test results, and hospital data for patients across the area. Again, problems went down. Quality went up. And costs ended up lower than just about anywhere else in the United States.

Grand Junction’s medical community was not following anyone else’s recipe. But, like Mayo, it created what Elliott Fisher, of Dartmouth, calls an accountable-care organization. The leading doctors and the hospital system adopted measures to blunt harmful financial incentives, and they took collective responsibility for improving the sum total of patient care...
I find that all very interesting; it resonates quite well with my 1994 observations above regarding Utah's InterMountain Healthcare (IHC). I continue to waffle in my own mind regarding "Single Payer" in the U.S. Maybe we just don't do bureaucracy nearly as well as other nations, particularly those comprising our EU brethren who don't take being called "socialist" as personal and national insults.

Again, Dr. Gawande:

Dramatic improvements and savings will take at least a decade. But a choice must be made. Whom do we want in charge of managing the full complexity of medical care? We can turn to insurers (whether public or private), which have proved repeatedly that they can’t do it. Or we can turn to the local medical communities, which have proved that they can. But we have to choose someone—because, in much of the country, no one is in charge. And the result is the most wasteful and the least sustainable health-care system in the world.

A NICE FAQ SUMMARY's Christopher Beam has posted a nice, concise article outlining some core issues pertaining to the upcoming reform fight, much of it laying out succinct pro/con summations:

Health Care Reform FAQ
What we argue about when we argue about health care policy.
  • Should the plan include a public option?
  • How do we pay for it?
  • Should it include an individual mandate?
  • Should we model it on the Massachusetts plan?
  • Will health reform actually help the economy in the long run?
  • Should the Senate use "budget reconciliation"?
  • Does it really matter if reform happens this summer?
Well worth your time.

In addition to a proposed "individual mandate," there is trial-balloon talk of an "employer mandate" (requiring by law that all employers provide health care plans), as well as talk of making some existing employer-provided coverage "taxable income" (both of which I would view as politically radioactive).

UPDATE: I'm sitting here at the moment writing while the President is speaking about health care reform to a "town hall meeting" in Green Bay. He's declaring his support for a "public option" component. Yesterday I listened to Speaker Pelosi on the MSNBC Ed Schultz Show declare that "single payer" was not going to happen. Indeed, as reported today by Dana Milbank in the Washington Post:

Socialism is not dead. It has, however, been confined to a House subcommittee.

Congressional Democratic leaders, as they search for a way to revamp the nation's health-care system, have ruled out a "single-payer" model -- the sort of government-run program that opponents ridicule as socialized medicine. President Obama said it would be a "huge disruption." Democratic lawmakers ignored the single-payer crowd so completely that 13 activists got themselves arrested last month protesting at Senate Finance Committee hearings...

"LIVEBLOGGING" UPDATE: The President is now taking questions from the Green Bay audience, and it's clear that he must have read the New Yorker article I cited above -- "The Cost Conundrum" -- , as he offered up the differential examples of The Mayo Clinic vis a vis McAllen Texas (the latter being the 2nd most expensive health care setting in the nation). Interesting.


A quick review of the All-Star fallacies that will likely dominate political discourse:

  • The Slippery Slope: e.g., "Public Option is the first step toward inexorable government takeover of health care";
  • The Perfectionism Fallacy: That your proposal has any arguable downsides means it not even need be debated, it's a non-starter;
  • Line Drawing Fallacy: e.g., "Given that we will never be able to decide where to draw the line on "basic health care" to be publicly funded means we should not even try, it's hopeless. Let the market decide";
  • False Dichotomy (a.k.a. False Dilemma): "The choice, the only choice, is yours: free-market capitalism or socialist totalitarianism";
  • The Straw Man: e.g., this decade's Gold Medalist, the 50 ft tall, world-menacing, nuclear armed Saddam Hussein ready and eager to obliterate the West. Basically, you dishonestly frame a debate with a hyperbolic caricature of the opposition, whom/which you then knock down (in Saddam's case, with lethal force). With respect to health care, it's the omnipresent, always interfering, steely-eyed and stingy Federal Medical Review Board of Rick Scott's fevered imagination, ever at the ready to veto your doctor's decisions;
  • The Red Herring: Any rhetorical device used to lead you away from the true objective evidence and logic at issue. In 'net-speak, this is commonly called the "Bright, Shiny Thing." Corporate shill "conservatives" posing as defenders of "patient-doctor inviolability" are being disingenuous, classic Red Herring. As I stated before, unless you pay in cash, you currently have non-clinical intermediaries interfering with your medical decisions;
  • and, of course the venerable Ad Hominem: "Obama is a Radical Communist who wants to rule every aspect of your life." Attacking the person rather than the proffer.
Many of these overlap conceptually, and in concert comprise the favorite tools of those who feel their factual arguments may not suffice in advancing their ends.


Yesterday The NY Times reported that the American Medical Association had pulled its support for the "Public Option." Now, today, they seem to be backing off that stance a bit. Recall my earlier citation of the 1994 JAMA Single Payer article? Well, there is in fact a national medical organization continuing to call for Single Payer. From their website (lots of great resources there):

Single-Payer National Health Insurance

Single-payer national health insurance is a system in which a single public or quasi-public agency organizes health financing, but delivery of care remains largely private.

Currently, the U.S. health care system is outrageously expensive, yet inadequate. Despite spending more than twice as much as the rest of the industrialized nations ($7,129 per capita), the United States performs poorly in comparison on major health indicators such as life expectancy, infant mortality and immunization rates. Moreover, the other advanced nations provide comprehensive coverage to their entire populations, while the U.S. leaves 45.7 million completely uninsured and millions more inadequately covered.

The reason we spend more and get less than the rest of the world is because we have a patchwork system of for-profit payers. Private insurers necessarily waste health dollars on things that have nothing to do with care: overhead, underwriting, billing, sales and marketing departments as well as huge profits and exorbitant executive pay. Doctors and hospitals must maintain costly administrative staffs to deal with the bureaucracy. Combined, this needless administration consumes one-third (31 percent) of Americans’ health dollars.

Single-payer financing is the only way to recapture this wasted money. The potential savings on paperwork, more than $350 billion per year, are enough to provide comprehensive coverage to everyone without paying any more than we already do.

Under a single-payer system, all Americans would be covered for all medically necessary services, including: doctor, hospital, preventive, long-term care, mental health, reproductive health care, dental, vision, prescription drug and medical supply costs. Patients would regain free choice of doctor and hospital, and doctors would regain autonomy over patient care.

Physicians would be paid fee-for-service according to a negotiated formulary or receive salary from a hospital or nonprofit HMO / group practice. Hospitals would receive a global budget for operating expenses. Health facilities and expensive equipment purchases would be managed by regional health planning boards.

A single-payer system would be financed by eliminating private insurers and recapturing their administrative waste. Modest new taxes would replace premiums and out-of-pocket payments currently paid by individuals and business. Costs would be controlled through negotiated fees, global budgeting and bulk purchasing.

I've emailed every member I could find to ask for commentary.


My July 2009 Harper's came in the mail today. I'm excerpting a portion of the cover article (again via my Godsend MacSpeech Dictate, as it's not yet online) "Barack Hoover Obama: The Best and the brightest blow it again" by Kevin Baker -
"A plan for universal health care that is not universal and doesn’t cut costs will not work."

Three months into his presidency, Barack Obama has proven to be every bit as charismatic and intelligent as his most ardent supporters could have hoped. At home or abroad, he invariably appears to be the only adult in the room, The first American president in at least 40 years to convey any gravitas. Even the most liberal of voters are finding it hard to believe they managed to elect this man to be their president.

It is impossible not to wish desperately for his success as he tries to grapple with all that confronts him: a worldwide depression, catastrophic climate change, and unjust and inadequate health care system, wars in Afghanistan and Iraq, the ongoing disgrace of Guantánamo, a floundering education system.

Barack Obama’s failure would be unthinkable. And yet the best indications now are that he will fail, because he will be unable – indeed he will refuse – to seize the radical moment at hand.

Every instinct the president has honed, every voice he hears in Washington, every inclination of our political culture urges incrementalism, urges deliberation, if any significant changes to be brought about. The trouble is that we are at one of those rare moments in history when the radical becomes pragmatic, when deliberation and compromise foster disaster. The question is not what can be done, but what must be done…

… Much like Herbert Hoover, Barack Obama is a man attempting to realize a stirring new vision of his society without cutting himself free of the dogmas of the past – without accepting the inevitable conflict. Like Hoover, he is bound to fail.

President Obama, to be fair, seems to be even more alone than Hoover was in facing the emergency at hand. The most appalling aspect of the present crisis has been the utter fecklessness of the American elite in failing to confront it. From both the private and public sectors, across the entire political spectrum, the lack of both wheeled and new ideas has been stunning…Obama…has had to contend with a knee-jerk rejectionist Republican Party.

More frustrating has been the torpor among Obama’s fellow Democrats. One might have assumed that the adrenaline rush of regaining power after decades of conservative hegemony, not to mention relief at surviving the depredations of the Bush years, or losing the vestigial tail of the white southern branch of the party, would have liberated congressional Democrats to loose a burst of pent up, and imaginative liberal initiatives.

Instead, we have seen a parade of aged satraps from vast, windy places stepping forward to tell us what is off the table. Every week, there is another Max Baucus of Montana, another Kent Conrad of North Dakota, and other Ben Nelson of Nebraska, huffing and puffing and harrumphing that we had better forget about single-payer health care, a carbon tax, nationalizing the banks, funding for mass transit, closing tax loopholes for the rich. These are men with tiny constituencies who sat for decades in the Senate without doing or saying anything of note, who acquiesced shamelessly to the worst abuses of the Bush administration and whom come forward now to chide the president for not concentrating enough on reducing the budget deficit, or for “trying to do too much,” as if he were as old and indolent as they are…

… President Obama, with a laudable respect for the separation of powers, has left the details and even the main tenets of his agenda to be worked out by the same congressional Democrats. This approach looks like an exercise in democracy drawn from his days as a community organizer, the sort of strategy that helps the neighborhood to decide whether it wants, say, a health clinic or a youth center period. What he doesn’t care to acknowledge is that, in the case of the U.S. Congress, he’s dealing with a neighborhood where maybe half want a health clinic and the rest are holding out for grenade launchers and crystal meth...

…In his masterful February speech before the joint houses of Congress, Obama explained to the country why we cannot afford to continue with a tottering healthcare system that has left 46 million Americans uninsured and that impedes our efforts by adding, for instance, $1,500 to the cost of every GM car…

… we are back in Evan Bayh territory here, espousing a “pragmatism” that is not really pragmatism at all, just surrender to the usual corporate interests. The common thread running through all of Bobby’s major proposals right now is that they are labyrinthine solutions designed mainly to avoid conflict. The bank bailout, And trade on carbon emissions, healthcare pools – all of these ideas are, like Hillary Clinton’s ill-fated 1993 health plan, simultaneously too complicated to draw a constituency and to threatening for Congress to shape and pass as Bobby would like. They bear the seeds of their own defeat.

Obama will have to directly attack the fortified bastions of the newest “new class” – the makers of the paper economy in which he came of age – if he is to accomplish anything. These interests did not spend 50 years shipping the greatest industrial economy in the history of the world oversees only to be challenged by a newly empowered, green economy working class. They did not spend much of the past two decades gobbling up previously public sectors such as healthcare, education, and transportation only to have to compete with a reinvigorated public sector. They mean, even now, to use the bailout to make the government their helpless junior partners, and if they can they will devour every federal dollar available to recoup their own losses, and thereby preclude the use of any monies for the rest of Obama’s splendid vision…

… Barack Obama should not deceive himself into thinking that such interest group politics can be banished any more than can the cycles of Wall Street. It is not too late for him to change direction and seize the radical moment at hand. But for the moment, just like another very good man, Barack Obama is moving prudently, carefully, reasonably toward disaster.

Buy a newstand copy and read it, if you're not a subscriber. It speaks painfully to my concerns. Were I to have to place a sizable bet today, it would be that we are simply going to yet again rearrange the deck chairs, mostly for the continuing comfort of Big Insurance and Big Pharma. Recall: "Every misspent dollar in our health care system goes into someone's paycheck."


As reported in the Wall Street Journal Health "Blog" (June 12th) -

Debate on Public-Health Option Turns to Talk of Co-Op

President Obama says a public health-insurance option to compete with private insurers would help keep private insurers honest. Opponents say a public plan would eventually drive private insurers out of business. Could a member-run health-care cooperative bridge the divide?

Democrat Sen. Kent Conrad of North Dakota is proposing a plan where a co-op — which would be owned and organized by its members — would negotiate rates with providers and would meet the same licensing and regulatory requirements as private insurers, reports the Washington Post.

“I tried to come up with something that is not government-controlled, is a competitive delivery model, but nonprofit,” Conrad said. “It would be on a level playing field with everybody else with, with a different ownership structure.”...
Skeptics have been quick to return immediate and forceful critical fire, characterizing this as a red herring tactic via which to throw cold water on a federal "public option" program (the latter of which is itself viewed by many of the same people as a quarter-measure political distraction away from Single Payer). While it might be tempting to view/spin health care "co-ops" in the same light as, say, not-for-profit, member-owned credit unions, it would be a poor analogy. The vast majority of commercial health insurors exist on a corporate scale comparable to that of our large national banks. There is no credit union counterpart to the likes of a Bank of America or JP Morgan Chase or Wells Fargo. Consequently, the potential bargaining clout of health care co-ops would likely be nil. While financial credit unions certainly fill market niches, they are only marginally more competitive with respect to aggregate customer value relative to that of ordinary banks. My wife and I are members of two. Our deposit interest rates, credit card and HELOC APRs, and transaction fees, while somewhat more favorable, are only slightly moreso.


'Can you or a reader provide a breakdown of just how we are spending the 17 percent of GDP on health care. How much to hospitals, how much on pharmaceuticals, how much on insurance, how much physician fees, how much caregiver wages, etc. There must be a pie chart somewhere, or one of those "for every dollar spent on health care, ten cents goes for..."...'
Well, yes, such summary data graphics are indeed out there, e.g., 2007 data ostensibly from HHS (US Health and Human Services Department)

Aside from the rounding error imprecision (the above sum to 99%, and, 1% of the $2 trillion+ U.S. annual expenditure is ~$20 billion), I find such data of only the most marginal policy advocacy utility, being insufficiently granular, both in terms of likely aggregate ledger accuracy, and lacking necessarily revealing "drill-down/drill out" stratification. For instance, good luck acquiring accurate comparative categorical expense data regarding the proprietary for-profit health care sector. They call such "business intelligence," and are typically not thrilled about sharing it openly, for what should be obvious reasons.

Now, I make no pretense of being a "health care economist." It suffices for purpose of my rumination here that we in the U.S. spend roughly twice the amount on "health care" than do our G7 nation counterparts -- again, for materially inferior overall outcomes -- and that much of that excess outlay has nothing whatever to do with "health care" per se, i.e., direct clinical costs and their concomitant, necessary support costs. But, of course,

"Every misspent dollar in our health care system goes into someone's paycheck."

I find it difficult to see how "Public Option" or "Health Care Co-ops" offer anything beyond the prospect of simply rearranging the paper-pusher intermediary furniture.


Can we achieve

  1. universal health care coverage and effective access,
  2. broad, clinically measurable, significantly higher quality of care, and
  3. materially reduced cost
concomitantly? Some people would say "no." The most charitable among them surely simply feeling that trade-offs are inevitable, that covering nearly 50 million more citizens while delivering higher quality care to all cannot but cost much more -- and we don't have "more" to spend.

The least charitable among them, including those with minimal health care needs (for now, anyway) and/or who have ample financial resources, might be likely to concur with former President George W. Bush's callous, flip observation to a carefully-screened "town hall meeting" on July 10th, 2007:

"The immediate goal is to make sure there are more people on private insurance plans. I mean, people have access to health care in America," he said. "After all, you just go to an emergency room."
This from a man whose every health care need will be fully covered by the U.S. taxpayers for the rest of what will likely be his utterly comfortable quarter-decade or so retirement.


HHS Secretary Kathleen Sebelius appeared today on MSNBC's "Hardball" to assert that the President would not accept health policy reform legislation that fails to [1] provide coverage for all Americans, [2] improve clinical quality, and [3] reduce costs. Single Payer advocates -- as I cited in the 1994 JAMA article -- have long argued that we can in fact have all three (coverage, quality, and savings):
"The health system must work better to extend access and to control costs. In this article, we argue that a single-payer national health program provides a better framework for improving quality. First, we briefly review requirements for quality care. Then, we propose 10 principles that should be integral to reform strategies to augment quality. We contrast our approach with the current managed competition strategy, showing how a single-payer system is more likely to facilitate these 10 interrelated quality features."

The skeptics will doubtless be many and loud.


From the L.A. Times. This is criminal. Or should be.

Blue Cross praised employees who dropped sick policyholders, lawmaker saysWorkers received high marks on performance reviews after policies were rescinded, documents show. The health insurer denies the practice is a factor in evaluations.
By Lisa Girion
11:03 AM PDT, June 16, 2009
Blue Cross of California encouraged employees through performance evaluations to cancel the health insurance policies of individuals with expensive illnesses, Rep. Bart Stupak (D-Mich.) charged at the start of a congressional hearing today on the controversial practice known as rescission.

The state's largest for-profit health insurer told The Times 18 months ago that it did not tie employee performance evaluations to rescission activity. And executives with Blue Cross parent company WellPoint Inc. reiterated that position today.

But documents obtained by the House Committee on Energy and Commerce and released today show that the company's employee performance evaluation program did include a review of rescission activity.

The documents show, for instance, that one Blue Cross employee earned a perfect score of "5" for "exceptional performance" on an evaluation that noted the employee's role in dropping thousands of policyholders and avoiding nearly $10 million worth of medical care.WellPoint's Blue Cross of California subsidiary and two other insurers saved more than $300 million in medical claims by canceling more than 20,000 sick policyholders over a five-year period, the House committee said.

"When times are good, the insurance company is happy to sign you up and take your money in the form of premiums," Stupak said. "But when times are bad, and you are afflicted with cancer or some other life-threatening disease...
Such is the inexorable competitive business imperative of the for-profit actuarial model.


When I see a large "per capita" health care statistic such as "$7,900 per year on average in the U.S." the statistician in me wants to see the rest of the story, in terms of the range (minimum to maximum) and the "shape" of the distribution (e.g., bell-curved vs skewed or multi-modal "lumpy"). The following, while a bit dated (June, 2006, are instructive in this regard.

How Are U.S. Health Care Expenses Distributed?
A Small Proportion of the Total Population
Accounts for Half of All U.S. Medical Spending

As policymakers consider various ways to contain the rising costs of health care, it is useful to examine the patterns of spending on health care throughout the United States. In 2004, the United States spent $1.9 trillion, or 16 percent of its gross domestic product (GDP), on health care. This averages out to about $6,280 for each man, woman, and child.

However, actual spending is distributed unevenly across individuals, different segments of the population, specific diseases, and payers. For example, analysis of health care spending shows that:

  • Five percent of the population accounts for almost half (49 percent) of total health care expenses.
  • The 15 most expensive health conditions account for 44 percent of total health care expenses.
  • Patients with multiple chronic conditions cost up to seven times as much as patients with only one chronic condition.
Further detailed analyses of these spending patterns, how they change over time, and how they affect different payers such as Medicare, Medicaid, private insurers, employers, and consumers shed important light on how to best target efforts to contain rapidly rising health care costs...

...Half of the population spends little or nothing on health care, while 5 percent of the population spends almost half of the total amount. In 2002, the 5 percent of the U.S. community (civilian noninstitutionalized) population that spent the most on health care accounted for 49 percent of overall U.S. health care spending (Chart 1, 40 KB). Among this group, annual medical expenses (exclusive of health insurance premiums) equaled or exceeded $11,487 per person.
In contrast, the 50 percent of the population with the lowest expenses accounted for only 3 percent of overall U.S. medical spending, with annual medical spending below $664 per person. Thus, those in the top 5 percent spent, on average, more than 17 times as much per person as those in the bottom 50 percent of spenders. From 1977 to 1996, the overall distribution of health care expenses among the U.S. population remained remarkably stable (Table 1), according to data from MEPS and its predecessor surveys. In 1977, the 1 percent of the population with the highest expenses accounted for 27 percent of all expenses, the top 5 percent accounted for 55 percent, and the bottom 50 percent accounted for 3 percent. However, the concentration of expenses at the top has decreased in recent years. The total expenses accounted for by the top 1 percent of spenders declined from 28 percent in 1996 to 22 percent in 2002, and the amount for the top 5 percent dropped from 55 to 49 percent in the same time period. The lower 50 percent of spenders remained at 3 to 4 percent of total expenditures during this period...

While one would hope and expect that key legislative policy people would be aware of the implications of data such as the foregoing, you don't commonly find it discussed in the mainstream public media. Reviewing the data and narrative on the AHRQ link above is well worth your time.

"Half of the population spends little or nothing on health care"

Well, that assertion, if relatively accurate, points to a formidable political problem. But, first, a couple of questions pertaining to the "if relatively accurate" part: there are currently approximately 307 million people in this country. Does AHRQ mean half of that number, or half of the adult population overtly or potentially on the hook for payment for medical services (50% of the adult population would be perhaps ~120 million citizens rather than 153.5 million overall)? The "civilian noninstitutionalized" count is not enumerated.

Irrespective of that empirical quibble, for the sake of conservatism, let's assume that it's the paying/voting subset cohort. But, when we say "little or nothing," do we mean that literally, or do we mean that a significant portion of them may indeed have health insurance (paid for by some entity -- usually the employer), but file no claims (though, they do allude to "
exclusive of health insurance premiums" with respect to the higher cost cohort). The "none-to-minimal health care" cohort remains healthy and go uninjured for "x" periods of time -- notwithstanding that the cost of their coverage is a legit "health care" ledger expense. So, the accounting is not entirely clear.

Either way, I suppose, this ~"50%" cohort currently "spends" next to nothing on health care individually ongoing (in their view). It will be a very tough political sell to persuade such a large demographic to explicitly, visibly now pay for coverage going forward, in order that all might be covered.

We don't want to buy it until after we need it, absent some legal requirement. An unsurprising attitude, to be sure, but one at the heart of proposals such as employer and/or individual "mandates."

Your taxes designated for the effective defense of your "rights" to, say, police, fire, and military protection are not voluntary (the rantings of anti-tax tinfoil hat-istas aside). They are simply a necessary cost of doing enlightened, secure civilization. Health care "social insurance model" advocates fail to see the difference -- on both utilitarian and moral grounds.


It is April, 1994. I am sitting in a conference room in Snowbird, Utah for the opening session of what will be six months of intensive health care "Total Quality Management / Continuous Quality Improvement" training sessions provided by my employer and sponsored by Intermountain Healthcare. The keynote speaker is the highly regarded national authority on health care "CQI" (Continuous Quality Improvement), Brent C. James, MD, M.Stat. Dr. James opens with a cautionary admonishment; basically that fastidious devotion to CQI, while undeniably necessary and intrinsically worthy, will not of itself resolve the larger socioeconomic issues surrounding health care. "Delivering optimal, healing/curative treatment today only serves to ironically assure that you will likely face an older, sicker and much more expensive-to-treat patient in the future, and we will inevitably continue to face serious ethical social choices that go far beyond the clinical." Dr. James would go on to point out that perhaps 80% of a person's lifetime health care expenditure would, on average, occur during the last six months of life.

In this regard, the observations of Einer Elhauge [also circa 1994] also come to mind:

Moral absolutism has powerfully emotive appeal. Easy as it may be to reject in the abstract, moral absolutism remains difficult to reject in practice. Indeed, the persistent power of absolutist beliefs in the face of unending escalation of health care costs is the most striking moral phenomenon of health law policy in the past quarter-century.

Nonetheless, moral absolutism is wholly untenable as a societal system of resource allocation. Most knowledgeable observers believe we could today easily spend 100% of our GNP on health care without running out of services that would provide some positive health benefit to some patient. Surely, the most committed moralist must concede that, if these observers are empirically correct, some health care must be denied even though it has a beneficial effect. Otherwise, the extreme a moral vision would require that we fund health care even if that means starving ourselves to death. And once the moralist makes this concession, she acknowledges that at some point trade-offs must be made and that thus the moral principle is not in fact absolute. The moral question then becomes aware, rather than whether, trade-offs are appropriate. ["Allocating Health Care Morally," p. 1459]
I reflect on my own parents, who, like many other retirees, have dwelled in AHRQ's upper-tier of annual expenditures in recent years. Pop (age 80 at the time) was going down with heart valve failure in the fall of 1996. An aortic valve replacement and bypass saved his life, but he never fully recovered cognitively, and declined into increasingly serious dementia. On Sept 12th, 2001, he lurched into cardiac arrest at home, and EMTs, unable to locate a DNR (do-not-resuscitate order, which he did in fact have), paddled him back. After a stint at Melbourne, Florida's Holmes Regional Medical Center, he was transported to a nearby long-term care facility, where he languished in bewilderment until May of 2007, when I brought him to Las Vegas, to a nursing home here. He finally expired on May 6th, 2008, just shy of his 92nd birthday.

My mother started to crash and burn in the fall of 2004. She was found on the floor in her home, alone, in the wake of Hurricane Jeanne. She subsequently spent most of the fall in revolving door trips between Holmes Regional and a local rehab facility. She'd become increasingly cardiac unstable, and finally consented to a pacemaker implant. I moved her out of the house and into assisted living, and in late 2006 took her car keys (BTW- I found Pop's DNR while cleaning out and prepping their house for sale). In July of 2007 I moved Mother here to Vegas, intending to place her in a close-by assisted living facility. She'd spent most of early 2007 in and out of hospitals and rehab, at one point contracting the terrible chronic c-Diff infection.

But once in Vegas, she was not up to assisted living any more; nine days after we'd moved her in, she fell and had to be taken to St. Rose Hospital, where she would subsequently bounce around from hospitals to rehab units. She is now bedridden and wheelchair bound in long-term care, at age 87.

My folks have undoubtedly cost the health care system an aggregate "face amount" of well in excess of a million dollars across the past dozen years. I'm sure this is a quite common story.

Since 2004 I have served with power-of-attorney responsibilities (Mom) and legal guardianship (Dad), and have become quite familiar with the maddening Gordian Knot that comprises geriatric care adminstration and reimbursement. And, I have an acute appreciation for the ethical quandaries alluded to by Dr. James and Mr. Elhauge.


This morning (6-18) I grabbed some data and assembled this quick table in Excel:

Note that the 80+ yr old cohort represents nearly 30% of the total. What if, you might ask, this more elderly stratum alone cost the health care system, say, an average of $20,000 year (about a quarter of my Mom's current outlay) per beneficiary? Do the math. You get $229,432,240,000 -- close to half the U.S. Defense Dept budget -- to care for less than 4% of the aggregate U.S. population.

Yes, we indeed face some vexing socioeconomic and ethical problems going forward on this front. Particularly when you consider that this 65+ demographic is growing rapidly as a proportion of the entire population. No, as Dr. James alluded, we will indeed not "CQI" our way out. It will require in addition both smart, broadly coherent, systemically aligned policy reform and searingly tough ethical choices.

Banal bumper sticker special-interest obstructionist sloganeering such as "Evil Government-Controlled Health Care" and "No To Socialism" will only serve to exacerbate the problem.


I ran across an OpEd today by Marie Cocco that touches directly on many of the summary concerns I'd planned to air in conclusion:

Why Patch-And-Fill Won't Do
June 18, 2009

WASHINGTON -- You can't get there from here.

Not if there is defined as health insurance coverage for everyone in the United States, lower costs for the millions of insured who are being crushed by its price, and relief for employers who are burdened by an expense many wish they could wipe off their books.

And not if here is where the health insurance political debate is stuck...

...the private insurance industry would continue to be the chief source of coverage -- and the only one, if the industry gets its way and Democrats produce legislation that does not create a public insurance plan as one purchase option.

Advocates of a single, national insurance system that would involve explicit cost controls and guidelines for care -- that might put an end to such wasteful practices as over-testing -- have been shunted aside. This is in part because Democrats quiver when Republicans call them "socialists." But Republicans cry "socialist" even when Democrats promote weak reforms that barely nick the vested interests. That's what's happening now.

No one has seriously proposed an overhaul that would achieve what a single-payer system has been shown to accomplish in most other countries: universal coverage with lower costs that delivers better results than we now get in the United States.

Instead, Democrats have all but abandoned the idea that everyone be covered without exception. They've so far avoided endorsing clear cost-containment measures that would pass the budget-scorers' test of legitimacy. The wished-for savings that Obama says he wants the private insurance industry to achieve are exactly that -- wishes.

The winners so far are health-industry lobbyists. They sense that their chances of protecting the interests of big insurers, drug companies, medical specialties, technology companies and the like are improving every day. They're probably right.
That is precisely my concern. This urgent hyper-contentious political push to get legislation through both houses of Congress and on the President's desk by October is likely to result in a mammoth and internally inconsistent bill that most legislators will not even read, and will likely be largely ghost-written by lobbyists out to preserve their lucrative industry interests.


Recall my opening observation: numerous serious, knowledgeable health care reform advocates have insisted for nearly two decades that we can indeed [1] provide health care for everyone in the U.S., with [2] consistently higher quality, while at the same time [3] reducing individual and aggregate expenditures.

Such a dramatic reform of the health care industry would necessarily involve widespread voluntary and involuntary
reallocation of resources (via clinical consensus and legislation respectively), deploying them far more rationally -- with a primary focus on patients before profits. Dr. Abramson ("Overdo$ed America") alludes to Darmouth studies, the implications of which are subsequently confirmed in the Mayo Clinic and Grand Junction examples set forth by Dr. Gawande in "The Cost Conundrum" -
...Dartmouth medical school’s Center for evaluative clinical sciences, headed by Drs. John Whennberg and Elliott Fisher. Their research focuses on the impact of regional variations in the use of medical services on health outcomes and costs. Intuitively, we would expect Medicare patients who receive more care in the higher spending regions of the country to get better care and be healthier…

… Fischer and colleagues specifically studied Medicare patients admitted to the hospital with a first diagnosis of heart attack, broken hip, or cancer of the colon. The cost of caring for the patients was 60% more in the highest spending regions than in the lowest spending regions. The patients in the highest spending regions spent more days in the hospital and the ICU, and had more visits with specialists, more diagnostic tests, and more minor, but not major surgical procedures. The extra services provided to patients in the higher spending regions did not, however, translate into better outcomes. The patients in the lower spending regions had better access to care, higher quality care, and less chance of dying over the five years of the study. The bottom line appears to be that once an adequate amount of care is being provided, as in the lowest spending regions of the country for Medicare patients, more care is worse care. This seems to be particularly true for the kind of care that is pushed into service by supply side pressure. (pp. 180- 181)

If the crisis in American medicine were simply due to the rising cost of ever more effective care, there would be no choice but to cobble together the least noxious combination of increased spending and ration in. But the bad news about American medicine – and, paradoxically, the good news as well – is that the primary problem is not the escalating cost but the low quality of medical care that results when those went health insurance receive too much of the wrong kind of care and those without health insurance received too little of the care that is necessary (p. 248).
He continues on to note that
...the medical industries maximize profits by providing the most care possible to those who pay full or almost full price. As long as the definitions of “quality of care” and the price structure of drugs, devices, and procedures are determined largely by commercial interests, universal health care will continue to appear unrealistic and in some vague way “un – American.”

The prospect of expanding health care coverage to the uninsured would jeopardize the medical industry’s excess profits and almost certainly trigger a demand for accountability: Americans of all political stripes would demand evidence of the real value of that day (and the uninsured) were receiving for their tax dollars…

…The cost of this care, according to the best evidence currently unavailable, would be about one third less than the current cost of commercial insurance or Medicare. The privileged profiteering of the drug, medical device, medical equipment, and hospital industry would be sharply curtailed…

… All Americans would then be winners – the currently uninsured and the insured a light – as the quality of their health care improved and their costs declined as the result of objective standards of medical excellent replacing our current commercially-based standards of care (p. 254).

Notwithstanding Democratic control of the White House and the House and Senate, Congress is still not buying it. An 852 page draft Senate health care reform bill just issued (June 20th, 2009, as yet not numbered) begins this way:



(1) IN GENERAL.—The purpose of this division is to provide affordable, quality health care for all Americans and reduce the growth in health care spending.
(2) BUILDING ON CURRENT SYSTEM.—This division achieves this purpose by building on what works in today’s health care system, while repairing the aspects that are broken.
(3) INSURANCE REFORMS.—This division—
(A) enacts strong insurance market reforms;
(B) creates a new Health Insurance Exchange, with a public health insurance option alongside private plans;
(C) includes sliding scale affordability credits; and
(D) initiates shared responsibility among workers, employers, and the government;
To be fair, the bill proposes to deliver two out of three -- "affordable, quality health care for all Americans" -- but goes on to assume that health care reform costs will continue to rise, and that the best that can be done is to "reduce the growth in health care spending."Assume for the moment -- just for the sake of argument -- that the best we might manage is the status quo in our annual ~$2 trillion "health care" outlay (alternatively and more stably stated as ~16% of GDP). Assume further that the goals of improved quality and universal access might be effected within that budgetary constraint. You then have the circumstance of the "Zero-Sum Game" within which the aggregate allocation is necessarily re-apportioned.

It should be immediately obvious that the multimillionaire CEOs of our major for-profit "health care industry" players are not about to sit idly by and see their respective slices of the pie diminished. Hence the intense lobbying now underway to delve out smaller slices elsewhere, e.g., by legislative tactics such as [1] raising the Medicare eligibility age from 65 to 70 or higher, [2] decreasing yet again Medicare payments to doctors and hospitals, [3] requiring that everyone buy private insurance, and [4] taxing employer-provided benefits. See (3)(D) above. Take the glaring hint.

More regarding the foregoing:

  • 100(a)(2), "building on what works..." President Obama recently alluded to our U.S. "tradition of employer-based health coverage" in arguing that we cannot and should not "start from scratch." My father worked for AT&T/Bell Labs his entire adult life until retirement after mustering out of WWII service. My wife and I have 14 employers between us across our careers to date. Moreover, during my last tenure with the Medicare QIO, during the two years I served, my employer changed benefit providers three times. I had no say in the provider selections, nor the array of services provided. I just had to fill out the requisite lengthy re-enrollment paperwork iteratively. I have no doubt that this is increasingly common, as employers constantly look to reduce employee health care plan costs, jumping in response to one sales pitch after another. Moreover, employer-based coverage is subject to the whims of the job market -- as more than 6 million unemployed Americans are now acutely aware. It is also subject to the whims of bankruptcy courts, as hordes of U.S. retired auto and airline workers have learned to their dismay.
  • 100(a)(3)(A), "...strong insurance market reforms." A for-profit insurance entity simply must have an actuarial business model. Risk-leveling "community rating" reforms, consequently, are likely to prove problematic. Expect the lobbying wrangling here to be especially severe.
    • An interesting irony obtains: the for-profit "actuarial/risk rating" model contains the seeds of its own eventual demise. As predictive diagnostic technologies inexorably improve (e.g., DNA), there will be fewer and fewer people left among whom to profitably "cherry-pick." We are mostly all at risk for some type of possibly expensive clinical malady over the course of our lives. Universal coverage eliminates all of the contention associated with the actuarial model.

  • 100(a)(3)(B) and (C), "...a new Health Insurance Exchange...including sliding scale affordability credits..." Here we smell wafts of weasel-out "co-ops" along with means-testing for "affordability." "Means-testing" in one word? "Medicaid." I fail to see how this differs materially. At best, it augurs nothing beyond assuring more millions hours of of FTE expenditure on administrative eligibility paper-shuffling
When an initial version of this bill first tentatively surfaced some weeks ago, it numbered 615 pages. It is now at 852. By fall it may well rival Ira Magaziner's 1,400+ page Hillary-Care behemoth of the early 1990's. It will likely also rival it in inscrutable (but industry-friendly) cross-purpose, counterproductive complexity.I intend to follow the legislative developments closely going forward. I am not at this time, however, optimistic about the outcome.


Profiteering industry status-quo apologists such as Rick Scott (and his congressional cheerleaders) are everywhere darkly and dishonestly bemoaning the incipient
  • End of The Doctor-Patient relationship: Again, it is simply a fact that, unless you have to resources to pay cash/retail, your medical encounters are subject to both external clinical and non-clinical review by 3rd parties, none of whom in the for-profit sector have your medical best interests at heart. Their allegiances lie with the bottom lines of their employers. Period.

    Corollary to the foregoing is the recent MEGO assertion of GOP Chairman Michael Steele that reform will inevitably lead to the "Federal Health Police" showing up at your door to drag you off to the clinic for your required annual physical and preventive care -- without which you'd be ID'd as "costing the health care system too much." (I'm not making that up.)

    Also corollary to this phony totalitarian spectre is the notion that calls for far more research and transparency concerning effective procedures and promulgation of more uniform clinical practice are really calls for the establishment of the "Federal Medical Review Board" of Rick Scott's fevered imagination -- those anonymous clinical bureaucrats who are ostensibly going to interfere with your doctors' every decision. That this survives the reflexive laugh test is not reassuring.
  • Inevitable rationing: We already have it, and will continue to. It is inescapable (see, e.g., Elhauge and Dr. James). The salient question is whether it should in the service of well-heeled CEOs and stockholders rather than that which promotes "the general welfare" underpinning the very legal (and utilitarian) rationale of our society. You have a say in the latter -- whether you realize it or not.
  • "Millions forced into a 'government-run' system, depriving them of 'choice'": First, Google "The Tyranny of Choice." Reflect at some length on what you find. Second, while I choose to not buy a large-screen HDTV at this time, and while I equally choose to forego caviar and prime rib, my health care needs are entirely another matter. "Choice," while undeniably a good thing, becomes increasingly less so as the smokescreen mantra of "choice" becomes the advertised end in itself. Moreover, in that regard, my wants are fairly mundane; just provide me the array of choices accorded members of Congress and other federal employees. I'll shut up and go away.
Another staple canard revolves around Medicare. It is noted that Medicare pays much less than private payors, and, given that a "public option" is likely to be a de facto "Medicare" model (should it not wind up being the chimerical "co-op"), providers will likely shun it en masse even as millions of Americans "choose" it, leaving those millions without any care.

I recently asked my own physician who his "favorite payor" was (among the 1,000+ 3rd party payors he routinely deals with in the back office). "Medicare" -- without the slightest pause. I'd asked the same question of my daughter's Attending more than a decade ago. "The Medi-Medi," he quickly replied. Meaning, a Medicare beneficiary
also means-test eligible for that other "government-run" Medicaid program. "Medi-Medi's" provided the quickest net reimbursement return with the least hassle, he told me.

The other observation I would proffer for now with respect to putative "Medicare/Medicaid" disdain. It assumes that the relative reimbursement disparity is essentially fixed -- begging the policy reform pie-slicing question. I have to wonder; what if there were no more "uncompensated care" (i.e., for the bottom-of-the-barrel indigent) requiring "cost-shifting" to the privately insured; what if Medicare etc were able to pay realistic compensation for necessary care (with people still free to buy private boutique ancillary coverage)?

What if we could just cut the crap and fix the national problem?


Paul Krugman, writing in the NY Times:

The Republicans, with a few possible exceptions, have decided to do all they can to make the Obama administration a failure. Their role in the health care debate is purely that of spoilers who keep shouting the old slogans — Government-run health care! Socialism! Europe! — hoping that someone still cares.

The polls suggest that hardly anyone does. Voters, it seems, strongly favor a universal guarantee of coverage, and they mostly accept the idea that higher taxes may be needed to achieve that guarantee. What’s more, they overwhelmingly favor precisely the feature of Democratic plans that Republicans denounce most fiercely as “socialized medicine” — the creation of a public health insurance option that competes with private insurers...
BTW, for the record, notwithstanding the foregoing "Republican bashing," I am not a Democrat (notwithstanding my 2008 service as a precinct captain for and frequent contributor to the Obama campaign). My "ideology," to the extent I can be said to have one, is that of attention to facts and logic (and, while I try to do my studious best, I don't always get it right). I recently attended a local Democratic health care reform neighborhood meeting and got lambasted by one angry partisan (who's still obviously irate that Hillary is not President). He basically loudly told me to shut up, implying that my ideas were of no worth because, as he petulantly noted, "you're not even a Democrat."

Whatever. They can carry on without me. I will find other ways to serve.

I have to admit at this point to a net leaning toward the Single Payer concept, potential warts and all. I do not see that happening anytime soon, however -- certainly not this year. We seem to be headed toward an inscrutably hyper-complex re-jiggering of our no-value-adding "health care" paper-pushing industry. I hope I'm wrong.

---- APPENDIX ----

While this post is essentially complete, I will add useful external resources from time to time.


Sarah K. Weinberg, MD said...

I, too, have read Dr. Gawande's New Yorker article. He lays out in very readable fashion how the business model of medicine rules the medical community in McAllen, with the predictable result of overuse of expensive tests and treatments and even the slipping of some physicians into actual bribery to get more lucrative patients. His thesis is that unless the medical profession is forced to control costs it won't matter what kind of health insurance system we have - it will fail.

Dr. Gawande fails, however, to make three important points:
1. It DOES matter what kind of coverage system we have, because the only way to require better use of expensive high-tech stuff is to get NATIONAL control through a unified system. There is no way to get better use of evidence-based guidelines to get better quality care for less expense without that control. Just cutting doctors' pay across the board won't work, and would completely destroy what's left of American primary care. The examples he uses of successful organizations like the Mayo Clinics and Kaiser Permanente are first of all NON-PROFIT, and secondly big enough to function like mini-single payer systems. As does the Veterans Administration, a very successful American government-run single payer system that Dr. Gawande failed to mention. All three systems are based on a high quality primary care system where patients go first before any specialists or fancy tests, etc. are ordered.
2. Dr. Gawande failed to draw the conclusion available from the data in his article that letting the business model and entrepreneurship take over medicine has severely damaged physicians' professionalism and our reputation in our society. We physicians need to remember that we went into medicine because we were called to public service with our special knowledge and skills. That's what the Hippocratic Oath we all swore to at graduation is all about. Medicine is not supposed to be about selling overpriced stuff to gullible patients in order to finance mansions, fancy cars, and foreign vacations.
3. Dr. Gawande failed to draw the conclusion available from the data he presented that a single payer system would pull our health care system together and would create a platform upon which a greatly improved and more cost-effective health care delivery system could be built. That is what is needed if we want to improve the dismal population health statistics in the U.S. as compared with the rest of the developed world (which has almost uniformly chosen some kind of national single payer approach to providing quality health care for all their residents as a matter of human rights and social responsibility).

BobbyG said...

Dr. Weinberg, thank you so much. I really want to hear from all of you. I too am troubled by Dr. Gawande's dismissal of the primacy of the payment structure, and intend to get to that. The continued Balkanization will likely result in more Balkanization of access and outcomes quality.

Again, thank you. Please pay it forward.

Anonymous said...

So sorry to hear about your daughter, but who better to know about the strengths and weaknesses of our health system than someone who has gone through what you have. You must have too much time on your hands to write such a long and comprehensive blog.

Yes, single payer is the best solution. Fears of bureaucracy are there as is waiting lines, but it has to be properly financed or it won't work. Watch Sick Around the World on the PBS website and esp. Taiwan to see how it could work in America.

Marcio de Vasconcellos Pinheiro said...

The people will have to do it: The Single Payer. Sooner or later we will get there like the Canadians did! No other way.

Marcio de Vasconcellos Pinheiro said...

I did not like the article... he goes and goes around the bush but his main goal is to be against the Single Payer.

BobbyG said...

Mr. Pinheiro,

Thanks for your comments -- the 2nd of which indicates a language barrier problem. What you call "beats around the bush" I regard as necessarily examining the considerable detail that comprises this vital issue, and NO ONE can logically infer from what I've posted thus far (as of 6-11) that my "main goal is to be against the Single Payer." In fact, quite the opposite leaning should be evident. That doesn't mean I have to suppress any concerns or fail to give voice to contrary views.

But, again, thanks.

HM Seiler said...

An informative series of posts. I admired the literary retelling of the monk's diagnostic technique--undoubtedly an anciant practice. Then you brought us up to date by reporting on Gawande's research trip to Texas, and the new Harper's.

Can you or a reader provide a breakdown of just how we are spending the 17 percent of GDP on health care. How much to hospitals, how much on pharmaceuticals, how much on insurance, how much physician fees, how much caregiver wages, etc. There must be a pie chart somewhere, or one of those "for every dollar spent on health care, ten cents goes for..." I don't mean the insurance industry's dollar (I've seen that one.).

BobbyG said...

Thank you, Hattie. Very much appreciated.

I've seen those data here and there, yeah, typically in exploded pie-chart format. I could probably find something, but, I have a big problem with the data themselves, so it's not been a priority for me. I think the aggregate accounting is suspect/problematic. We really have no solid idea just how much non-clinical and non-essential administrative/"overhead" expenditures get booked as "health care," and, conversely, how much (like, e.g. my Clark County example) gets booked to some other ledger.

I'll see what I can find, and, if anyone else has any credible links, let me know as well.

Anonymous said...


Let me begin by thanking you for your blog, which I found valuable for the sources you cite as well as for your own clear thinking. I wanted to share my own thoughts on what a health care system should look like.

Some time ago, Donna Shalala, formerly Secretary of HHS and now President of the University of Miami, stopped in briefly at an evening discussion of health care reform at the University. She recounted that at the end of a course on health care reform, she had posed an exam question along the lines of the following: "What one thing would you do to reform our health care system?" One of the students answered, "Reform the campaign finance system." That student got an "A," she said.

I very much like the idea of non-profit integrated health care systems like Intermountain, Geisinger, VHA, Mayo, Kaiser Permanente, etc. Along the same lines, the Einar Elhauge article that you quote from on your blog suggests a system consisting of multiple care-allocating plans. (Of course, you would have to have monopolies in some areas.) The ever-present danger with this approach is that you would end up with a travesty like today’s Medicare Advantage (Medicare HMO) program, where the care-allocating plans are overpaid and under-regulated. Thus the relevance of the Shalala quote.

To entirely avoid the risk of a Medicare Advantage scenario would require going with a fee-for-service system like traditional Medicare. The problem with fee-for-service is that it provides no good way to control costs- in effect it creates an "honor system" for health care providers. On the other hand, if we required our integrated delivery systems to be public or non-profit, we would minimize their ability to use the campaign financing system against the public interest.

I would point out in passing that according to some scholars, only about 15% of the health of our population is attributable in any way to health care. See:

The rest is attributable to genetics, environment and lifestyle. I would go beyond that to assert that much of what we think of as lifestyle choice is also the result of the social environment. See:

In my view, this observation has relevance to the design of a health care delivery system. Thus, assuming that a geographically exclusive integrated health care delivery system would be optimally positioned to observe, record and address all of the environmental (including the social) determinants of health, there might be an advantage in having a system based on local health care service organizations along the lines of the British system.

Larry Thorson said...

Having had the pleasure once of asking the Dalai Lama a question at a news conference many years ago, I appreciate the long anecdote about the Tibetan doctor. Wisdom and perception should be the most highly sought-after qualities in our doctors and national leaders. We have some of that now in Barack Obama, and we must try our hardest to get these qualities into our health system, too.

Unknown said...

It is really informative and encouraging. I like it very much because the description was very realistic.


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