Preparing to Stick It to Doctors

Listening to the federal conversation about healthcare "reform" as it takes shape, one notices that some of the problem, specifically with the shortage of primary care doctors, appears to have been the government's handling of its own piece of the industry:

The disparity results from Medicare-driven compensation that pays more to doctors who do procedures than to those who diagnose illness and dispense prescriptions. In 2005, for example, Medicare paid $89.64 for a half-hour visit to a primary-care doctor in Chicago, according to a Government Accountability Office report. It paid $422.90 to a gastroenterologist who spent about the same amount of time performing a colonoscopy in a private office. The colonoscopy, specialists point out, requires more equipment, specialized skills and higher malpractice premiums.

Given the proclaimed movement of most doctors toward specialties, one would expect the law of supply and demand to make up some of that 472% difference all on its own. Instead, the government looks intent on fighting that economic law:

In the various legislative proposals under debate, Congress and the administration have moved toward providing incentives for doctors entering residency programs to pursue careers in primary care. Most residency slots are funded through Medicare, giving the government a stick to wield over residency administrators, and changes in Medicare reimbursement alluded to by Obama on Monday could be the carrot that makes primary care more attractive.

The promise is to increase both the supply and the pay of primary care doctors. We don't have to perform extensive analysis to suspect that there might be market repercussions to that sort of distortion. (That assumes, of course, that the government doesn't try to cover all of the increased remuneration with new money for the industry.)

Here's the general shape of what I would suggest: Decouple health insurance from employment, remove coverage mandates, reform tort law, and require catastrophic coverage. Some consumers will use the increased money from their employers to finance similar plans to what they currently have, while others will go for the minimum coverage. Competing for those dollars, insurance companies will design plans to attract individuals, with healthier individuals being especially desirable; one aspect may be a certain number of routine visits (i.e., primary care) for free, or for low cost. The focus will shift from insurers' catering to payers to their having to address the desires of consumers and accommodate the doctors whom consumers wish to see.

At the same time, since insurance will become insurance again (rather than something more resembling a healthcare financial management service, as it is now), some portion of consumers will need or want to pay directly for routine visits. Doctors will have more responsibility, therefore, for setting their own fees, and they'll develop a base of clients whom neither insurers nor government payers can use as a stick to dictate payments or behavior.

More people will leverage primary care service, driving up the demand and, therefore, the doctor's fee. Increased demand, pay, and regularity will give primary care doctors more control over their practices and their lifestyles and will attract more practitioners.

Meanwhile, demand for the services of specialists will go down because people will catch more during primary care visits. They'll also have a more direct sense of how their health affects the cost of their healthcare. They'll also be less inclined to turn to specialists at every possibility.

Something Not to Forget on Rising Healthcare Costs

There are more problems with our healthcare system than this allows, but Thomas Sowell's point is well worth remembering:

Just as medical care, houses, and cars were all cheaper when they lacked things that they have today, so medical care in other countries is cheaper when it lacks many things that are more readily available in the United States.

There are more than four times as many Magnetic Resonance Imaging units (MRIs) per capita in the United States as in Britain or Canada, where there are government-run medical systems. There are more than twice as many CT scanners per capita in the United States as in Canada and more than four times as many per capita as in Britain.

Is it surprising that such things cost money?

The cost of developing a new pharmaceutical is now about a billion dollars. Neither political rhetoric nor government bureaucracies will make those costs go away.

We can, of course, refuse to pay these and other medical costs, just as we can refuse to buy air-conditioned homes with built-in microwave ovens. But that just means we pay attention only to prices and not to the value of what we get for those prices.

Taxing Health Care

One idea that has been floated as part of comprehensive health care reform is to tax health care benefits as income. I recall Senator McCain's plan contained such a provision for example. Well, it looks like the Senate is considering going with it, too. Except for union workers.

The exception, which could make the proposal more politically palatable to Democrats from heavily unionized states such as Michigan, is adding controversy to an already contentious debate. It would shield the 12.4 percent of American workers who belong to unions from being taxed while exposing some other middle-income workers to the levy.

“I can’t think of any other aspect of the individual income tax that treats benefits of different people differently because of who they work for,” said Chris Edwards, director of tax policy studies at the Cato Institute, a Washington research group that often criticizes Democrats’ economic proposals. Edwards said the carve-out “smacks of political favoritism.”

Sheesh. There's no way to see this as other than fundamentally unfair. But some unions think it's fine:

Gerald Shea, an AFL-CIO official lobbying for health-care reform, said grandfathering benefits negotiated in a collective bargaining agreement is a “common thing when there is a big change in federal law.”

“Once a collective bargaining agreement is set, employer’s budgets are set, workers expectations are set. It doesn’t make sense to go back in the middle of the contract and change it,” he said.

Union groups and workers said Congress shouldn’t target contractually negotiated benefits.

Anna Burger, secretary-treasurer of the Service Employees International Union, said in an interview that workers have often traded salary increases for better benefits in agreements.

Taxes “shouldn’t be taken from the backs of workers who have bargained away wages and other things for their benefits over the years,” Burger said.

We're quite familiar with that mindset, aren't we? However, there are some unions who do oppose the idea:

Other unions say they’re opposed to a tax on some employer- provided benefits, regardless of whether collective bargaining agreements are exempt.

“Either way, we are against a tax on health-care benefits in whatever form it takes,” said Jacob Hay, spokesman for the Laborers’ International Union of North America. The union represents 500,000 workers, largely in the construction industry.

Interesting.

When the Government Faces Healthcare Reality

Put aside aspersions against health insurers, whether for-profit or (ahem) non-profit, because it simply isn't credible to assume that government bureaucrats won't be corrupt and selfish. What, then, will the government response be when it faces these forces as a (or the) national healthcare financier:

"We understand that many of our members are suffering in the current economic conditions, but the fact is that rising medical costs and increased utilization of services are climbing faster than our rates," James E. Purcell, president and CEO, said in a statement. "Quite frankly, the OHIC [Office of the Health Insurance Commissioner] is putting the state's oldest nonprofit health insurer at financial risk by denying our filing. We simply cannot afford to lose $125 million."

Cost controls. Service limitations. Tax increases. The government can't make human nature what it is not, and it cannot mandate an end to market forces. What it can do is jail those who don't follow its instructions, so people will try to play along, no matter how detrimental certain policies are.

Who's the Boss of Primary-Care Doctors?

I've read the editorial several times, and it still isn't clear to me how or why the Projo writers avoided mentioning the problem of liability insurance for primary-care doctors.

Shortly after I moved to Tiverton and found a nice local doctor to visit, he packed up and left the state for sunnier climes. My understanding is that the cost of insurance and the threat of being sued in Rhode Island were motivating factors. (It worked out, though, because it got me on the list of the practice's senior doctor, who hadn't been accepting patients when I inquired.)

Primary-care physicians seem to mirror a small-business model more than specialists do. People will travel farther for specialists, and their work is more likely to come to them via the referrals of other professionals. I'm sure there are other distinctions (such as the closeness of relationships with hospitals), but I don't want to delve too deeply into guesswork. The point is that, as our society considers healthcare policy, we ought to think of primary-care providers in the same way that we think of other self-employed professionals.

Market and deregulatory incentives can encourage the occupation without bureaucracies meddling, as the Projo winds up suggesting:

Alan Sager, a health-policy expert at the Boston University School of Public Health, has suggested paying primary-care doctors $250,000 a year to work under a capitation system. The doctors would be earning considerably more than they do now. And because they would treat a set number of patients at a fixed yearly cost, adjusted for medical risks, the doctors would have no financial reason to offer more care than necessary.

Question number one is who will set and process the numbers of patients and income? By default, it would have to be the government, which means that doctors will no longer work for themselves, but for the folks who can give them raises and who can cut their pay or increase their work burden. I'd worry about the sorts of practitioners such an arrangement would attract, as well as the institutional focus that would shift to lobbying the authorities for more.

Question number two is what would provide incentive — given the rigid quota and salary deal — for doctors to resist the human urge to do as little as possible? If the five patients whom I have to see in an afternoon (hypothetically) don't pay me and their return is not really my problem, I might just take the opportunity of a sunny day like today to rush through my itinerary and get out of the office. (Of course, for a reality check, I get to be outside all day anyway... digging post holes and mixing concrete.)

As I said, the editors don't provide the "who," but what they propose amounts to another increment of socialization, and in that respect, it provides another instance of the plain inadvisability of such a system.

"The Federal Government ... Is the Health Care Equivalent of Bigfoot"

Fred Thompson pointed out this afternoon that even the Chicago Tribune has doubts about President Obama's proposed expansion of the federal government as a health care insurer.

But we do know a few things about government-run health plans. We draw upon decades of experience with Medicare, the government's plan for the elderly, and Medicaid, which provides coverage for the poor.

We know those plans pay bare-bones rates and yet still are busting the federal budget. One part of Medicare will be insolvent in 2018 if nothing is done. States are staggering under Medicaid costs. We know, as the president said in his AMA speech, Medicare and Medicaid spending will "grow over the coming decades by an amount almost equal to the amount our government currently spends on our nation's defense." And that "it will eventually grow larger than what our government spends on anything else today."

That's scary. Costs clearly need to be controlled. But the Democrats' solution to all this government excess is to create . . . another government-run health plan.

The Worms Come Out When It Rains on Healthcare

These people aren't fit to lead:

[A citizen] opposed the [health insurance] rate hikes, as did other speakers including Lt. Gov. Elizabeth Roberts and state Rep. Edwin Pacheco, D-Burillville. Roberts, who has been working with business leaders, opposed any hikes until the state can develop a plan for affordable health care. Pacheco and Assistant Attorney General Genevieve Martin, speaking on behalf of Attorney General Patrick C. Lynch, both criticized Koller for not holding a formal rate hearing, in which evidence for and against the rate hikes is presented and witnesses testify and face cross-examination. The lack of such a hearing, said Martin, "is an injustice to the people of this state."

Her suggestion of explicitly freezing hikes until Rhode Island legislators institute significant reform is perhaps the strongest argument that Roberts has made against her candidacy for governor. If anything, such a policy would delay reform, as unrest fizzles in the face of steady rates.

More important, however, is the utter lack of leaders with a clue as to the appropriate shape of reform. Why not suspend policies that are contributing to escalating costs? Why not investigate the reason that Rhode Island has as many branches of government as healthcare insurers?

Every week it becomes more incomprehensible that Rhode Islanders continue to vote the way they do.

The Only Reason to Put Government in Healthcare Is to Put Government in Healthcare.

A healthcare reform suggested by Sen. Kent Conrad (D, ND) sounds reasonable, but I'm not sure why it should be so limited:

The Conrad proposal is modeled after rural electricity, farming and telephone cooperatives that are owned and organized by members. The entities would negotiate rates with health-care providers and would have to meet the same licensing and regulatory requirements as private insurance companies, the senator said.

"I tried to come up with something that is not government-controlled, is a competitive delivery model, but nonprofit," Conrad said in an interview. "It would be on a level playing field with everybody else with, with a different ownership structure."

Sen. Charles E. Grassley (Iowa), the ranking Republican on the finance panel, said he likes the Conrad plan, and said Obama raised no objections when the issue surfaced at the Wednesday White House meeting. Sen. Mike Enzi (Wyo.), the ranking Republican on the Senate health committee, the other panel with jurisdiction over reform legislation, said he is seeking more details. He said the co-op approach could "increase the level of competition, if it were done right."

We're over-thinking this. Sure, let such co-ops form. Let insurance companies develop ready-made products for them, if they like. More broadly, though, we should open up healthcare beyond employers (largely by repealing or adjusting ERISA) and allow any group that wishes to offer health coverage do so. Churches, charities, social groups, whomever — if it serves a group's mission to help its members or others to procure health coverage, let them do so.

There's no need to involve the government in medical services beyond a mild regulatory hand — unless, of course, expanding government is actually the first priority.

A "Safeway" Towards Health Care Reform?

Safeway CEO Stephen Burd explains:

While comprehensive health-care reform needs to address a number of other key issues, we believe that personal responsibility and financial incentives are the path to a healthier America. By our calculation, if the nation had adopted our approach in 2005, the nation's direct health-care bill would be $550 billion less than it is today. This is almost four times the $150 billion that most experts estimate to be the cost of covering today's 47 million uninsured. The implication is that we can achieve health-care reform with universal coverage and declining per capita health-care costs.

What was the "Safeway"? First, they focused on encouraging healthy behavior:

Safeway's plan capitalizes on two key insights gained in 2005. The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.

Thus, they designed a voluntary "Healthy Measures" program, which requires employees to be tested for the aforementioned chronic conditions. If they "pass" all four tests--the information is not shared with management--they receive a rebate. If they don't pass, they can make adjustments and retake the test (so to speak) in a year. According to Burd, "the numbers speak for themselves."

Our obesity and smoking rates are roughly 70% of the national average and our health-care costs for four years have been held constant. When surveyed, 78% of our employees rated our plan good, very good or excellent. In addition, 76% asked for more financial incentives to reward healthy behaviors. We have heard from dozens of employees who lost weight, lowered their blood-pressure and cholesterol levels, and are enjoying better health because of this program. Many discovered for the first time that they have high blood pressure, and others have been told by their doctor that they have added years to their life.

Sounds like a win all around.

Healthcare Reform: Easy as One, Two, Minus Three

Who knew finding twelve digits of savings in the healthcare industry would be this easy?

The administration expects to achieve the lowered hospital payments in two major ways. First, said Obama's budget director, Peter Orszag, payments to hospitals will be reduced to try to encourage them to work more productively and efficiently.

Orszag said hospitals could figure out ways of treating patients "more effectively, through health information technology, a nurse coordinator instead of an unnecessary specialist," for example. These "productivity adjustments" would account for $110 billion in savings.

If you cut it, they will innovate! Or maybe cease to provide, but we won't dwell on that. We also won't consider why price controls on hospitals will spur desirable efficiencies, but reducing the burden on patients to pay more directly for the services that they use won't exacerbate waste on their part. (The key, we can imagine, is in the consumption controls that are visible a few more steps along the process.)

"We're From the Government and We're Here to Help"

James Poulus observes:

I’ve said elsewhere that our vision of politics is being corrupted by a well-meaning but misguided epistemology of compassion: increasingly, we consider the person or group demanding a right to be the most trustworthy source of information about whether they deserve it. Anyone aggrieved, we think, must really be suffering grief, and since suffering is the worst thing and cruel is the worst we can be, justice is served when the law — that is, judges — fast-track the claims of the aggrieved and grant them instant — that is, legislature-circumventing — relief.

This is pretty transparently a medical way of viewing social relations. But our big medical brains are wired into big therapeutic hearts. And so what is happening in ‘politics’, which is actually the evacuation of politics by law on the one hand and desire on the other, is happening in medicine itself.

This leads into an observation by Keith Hennessey on private industry competing with government (ie; as proposed in the proposed health care reform):

I think that government cannot compete on a level playing field with the private sector. Government always has advantages because of its sovereign power. I also think that in most markets there is a range of private health insurance plans competing for business, and so the addition of one more plan is not worth the downsides of government involvement. (I believe that competition is flawed because for most people their employer shops for health plans. I prefer a system in which individuals are shopping for health plans.)

The government cannot compete on a level playing field with private firms:

* Fannie Mae and Freddie Mac had competitive advantages relative to their purely private counterparts. They leveraged those advantages to the gain of their management and shareholders until they collapsed and jeopardized the entire financial system.
* Ford Motor Company was not bailed out. It is now disadvantaged relative to GM and Chrysler, which benefited from government oversight, funding, and effective rewriting of bankruptcy rules.
* Government-provided terrorism reinsurance is preventing private reinsurance from returning to the marketplace.
* Most physician- and hospital-reimbursement structures are based on the methodologies of the largest payor in the market, Medicare.
* Government-run direct student loans are now crowding out the guaranteed student loan program, in which private banks and financing firms offer loans. The government advantage comes from control over small details of the program that give direct loans a competitive advantage.

The ultimate fear of having a government-run “public” option is that it will crowd out private health insurance, and that ultimately most Americans will be getting their insurance from the government.

In other words, when government is involved--whether as a service provider itself or with a vested interest in particular entities within a given business sector--private companies without government help are at a disadvantage. Yet, some may welcome government intervention, according to Poulos:

Big Pharma has a vested interest in comprehensive government regulation, too, you know — the better to squeeze out competition, get institutionalized with an unkillable monster of market share, and permanently hedge, by way of unremittant lobbying and revolving-doorism, against market risk or corporate accountability.

What both illustrate is that the while government doesn't always actively pick winners, its insertion into markets results in preferred policies and "suggestions" that ultimately lead to losers: Either businesses that don't benefit from government largesse (Ford) or consumers who are affected as services are adjusted to comport with the new business model.

A Prescription for Me Time

That's being a Congressman, for ya. Patrick Kennedy hopes to get back to work from a mental health retreat "in time for the... debate on a national health-care overhaul later in the summer." Presumably, he needn't expend any hope on whether the checks from his $174,000 salary will keep arriving, whether or not he manages to participate in the healthcare debate.

Look, without any information about what inspired Kennedy's decision, one can still say that it was probably the intelligent one to make. A person's health is paramount. The idea that somebody who holds an ostensibly important job can just "step away" like this raises questions about what they do, and who should be doing it.

Frankly, having stood on the incisors of alcohol abuse and stared into a dark psychological gullet, I see far too much permissiveness in this prescription explained by Kennedy friend Ronald Smith:

Smith said medical research has found increasing evidence that in early recovery, which he defined as two to three years, it is essential for addicts to recognize when they face "stressors" such as fatigue or illness or family problems. "You have to go back, take a couple of days off and renew your sobriety," he said.

As a matter of principle, I don't believe a solution calling for the avoidance of problems fosters the necessary change in outlook. Moreover, to the extent that a person is in the precarious position of having to avoid "stressors," his first step should be away from a high-stakes job like U.S. legislator.

Analyzing the Healthcare Reform Proposals

Blogger Keith Hennessey, a former White House Senior Economic advisor, has been providing details of the various Federal healthcare reform proposals under consideration, as they become available.

His summary of what he's seen so far is…

• The government would mandate not only that you must buy health insurance, but what health insurance counts as “qualifying.”
• Health insurance premiums would rise as a result of the law, meaning lower wages.
• A government-appointed board would determine what items and services are “essential benefits” that your qualifying plan must cover.
• You would find a tremendous new disincentive to switch jobs, because your new health insurance may be subject to the new rules and would therefore be significantly more expensive.
• Those who keep themselves healthy would be subsidizing premiums for those with risky or unhealthy behaviors.
• Far more than half of all Americans would be eligible for subsidies, but we have not yet been told who would pay the bill.
• The Secretaries of Treasury and HHS would have unlimited discretion to impose new taxes on individuals and employers who do not comply with the new mandates.
• The Secretary of HHS could mandate that you provide him or her with “any such other information as [he/she] may prescribe.”

The Coming Healthcare Monster

It isn't difficult to predict the effects of this. On one side:

A first-ever tax on employer-provided health benefits also figures prominently among options under consideration in Congress, but Obama campaigned against that last year and its inclusion in the bill would require him to reverse course. ...

... Private companies would be barred from denying coverage or charging higher premiums because of pre-existing conditions.

Both bills would require individuals to purchase insurance if they could afford it, with waivers available in hardship cases. The Senate measure provides for an unspecified penalty for anyone refusing to obey the so-called mandate, and House Democrats are considering a similar approach. ...

... the House approach would require employers to purchase insurance for their workers or pay a penalty. ...

To cut down on the ranks of the uninsured, the Senate bill stipulates that children up to the age of 26 could remain on their parents' insurance policies.

And filling in the other:

Individuals would be able to purchase insurance from new exchanges operated by the states or federal government. ...

On a hotly contested issue, the emerging House plan would give individuals the option of buying insurance provided by the federal government.

The president's assertion that the healthcare plan will be "revenue neutral" is an Orwellian kind of insulting. The tax on employer health benefits and all these penalties (paid to whom?) for failure to provide or to procure mean that the plan is — by design — not "revenue neutral" for anybody but the regime in Washington. Apart from the direct confiscation of money, they will lead to decreases in pay (as employers compensate for the greater cost of benefits) and increases in the price of goods and services (as companies try to make up for costs of producing them).

Moreover, the inability of insurance companies to adjust prices to account for pre-existing conditions and the ability of young adults to remain on parents' plans to the age of twenty-six are only two predictable ways in which this legislation will drive up the cost of insurance. Since the aforementioned penalties will hardly keep up with inflation, an increasing number of companies will opt to pay them rather than to provide the benefit, and an increasing number of individuals will have no plausible option but government care. So, the government program will grow, and if it remains "revenue neutral" by desire or by fiscal reality, price controls will be ramped up and rationing will begin. If it does not remain "revenue neutral," it will drive Americans into the ground.

Those who've pined for government healthcare are going to get a good look at it within the next decade, and I doubt they'll like what they see... at least when they find themselves needing to rely on it.

A Taste of the Future of Medicine?

Long wait times will likely be more characteristic than lotteries, but somehow this strikes me as an extreme vision of the future of healthcare for the average American in a government-run system:

At 4 p.m., volunteers from the clinic came out with a roll of carnival-style paper tickets. They handed each person a ticket and asked them to put their name and number on the stub.

Someone else handed out sheets of paper with the rules in English and Spanish: the Free Clinic is only for people who have no health insurance. They must prove that their income is less that 150 percent of the federal poverty level — that is, less than $2,200 a month for a family of three. The Free Clinic does not care for children 18 and younger, nor does it provide obstetrical care to pregnant women.

Lynne Urbani, the president and chief executive officer of the Rhode Island Free Clinic, addressed the group, saying she would be drawing 14 names in a few minutes, about half as many as usual because there were fewer volunteer doctors available this night. With a translator, she asked them to affirm that they have no insurance and have a ticket in their hand. They nod in agreement. Those whose names are pulled should expect to stay till 9 p.m. Those who aren’t chosen will get a call offering them an appointment; the next opening is in July.

If prices are set, the medical industry will attract fewer professionals. If tax dollars (in one form or another) are the method of payment — filtered through the government bureaucracy — there will be rationing and long delays as financing and demand fail to balance.

In healthcare, we've got a product that people tend to see as an inconvenience when they're healthy and as a dire necessity when they're not. The more the system separates those who pay from those who receive, the more effort paid employees will have to allocate for determining priorities or the more they'll disregard that responsibility and rely on cold process and chance.

Government Doesn't Count as a Monopolist?

What's vexing is that Herchell Talan of North Kingstown has the basic principle right but comes to a statist conclusion anyway:

In the past 13 years, health-insurance companies have merged with each other at a frightening rate, and now a small number of companies dominate local markets. Rhode Island basically has two insurers: Blue Cross and Blue Shield of Rhode Island and United HealthCare. The data in the report show how much of states' markets are controlled by one insurance company. Indeed, 94 percent of insurance markets in America are controlled by one or two companies, a near-monopoly under Department of Justice definitions.

We need more competition. By giving us a choice of a public health-insurance plan that's available to everyone, Congress can break the insurance industry's monopoly.

A choice of public health-insurance plans is good for consumers. It will let us choose the plan that meets our needs the best. More competition and choice means more efficiency as insurance plans compete and prices go down.

The government doesn't operate like a private company; competitive forces don't affect it the same way, and neither does its activity affect those forces in the same way. For one thing, a given activity of government doesn't have to be profitable to persist, which is why statists like it so much, because it enables the perpetuation of favored policies even when those policies prove a drain.

The remedy for monopolies (as we've seen in other industries) is to break them up, not to introduce a larger player that doesn't have to meet basic competitive standards. It is all but inevitable that government healthcare will draw the market toward itself until it is a true monopolist. Somehow, I suspect that's not an outcome that Talan fears.

John J. Loughlin II: Socialized Medicine - Let’s Look Before We Leap

Our healthcare system is on life support. While the career politicians in Washington have done little, too many Rhode Islanders remain underinsured or uninsured. The system is characterized by rising costs, quality concerns and a lack of patient control. These problems hit the poor and the elderly hardest.

One of the chief reasons is that our healthcare system is governed by a complicated system of laws and regulations forcing patients and doctors through a maze of red tape. You’ll hear a lot in the coming weeks about a new administration socialized medicine program supported by Congressman Kennedy. More government can’t solve this problem because government is the problem.

Socialized medicine resulting in government-run healthcare is exactly the wrong direction for Rhode Islanders. If you think a government-run health system would be easy to use and efficient, I would encourage you to stop by the Registry of Motor Vehicles to see what a government-run system to deliver services would look like. Not a pretty picture. Socialized medicine would bring on more red tape, healthcare rationing and your medical decisions made by Washington bureaucrats rather than doctors. This would all come at an enormous cost in higher taxes and even more money borrowed from foreign governments on the backs of our children and grandchildren.

There are some common sense alternatives that I would encourage Congressman Kennedy to seriously consider as an alternative to government run socialized medicine. One such alternative is called the Patient’s Choice Act. This proposal would allow patients, not government bureaucrats, to choose their health insurance plans and their doctors. Patient’s Choice features preventative measures rewarding Rhode Islanders for choosing healthy lifestyles, with real incentives for states to reduce rates of chronic ailments such as heart disease and diabetes.

Our healthcare system should be easy to navigate and provide integrated care. The best way to achieve this is to create a vibrant health insurance market that is consistent, fair and affordable. New consumer protections would ensure that every Rhode Islander has access to the same benefits that have been enjoyed by Congressman Kennedy for the past 15 years.

The Patient’s Choice Act would protect the most vulnerable Rhode Islanders and ensure that no individual would be turned down based on health or age. Allowing states to pool their healthcare resources and creating reinsurance markets and risk adjustment mechanisms would provide coverage for those Rhode Islanders most at risk. By modernizing Medicaid and Medicare we would give low-income families the same access to high-quality care through direct assistance.

Creating Medicare Accountability Care organizations would also improve payment to our physicians, hospitals, pharmacists and nurses for demonstrable improvements in quality and patient satisfaction while reducing costs at the same time.

Our current legal system does a poor job at compensating patients for medical mistakes in a fair and efficient manner. Instead of creating an environment where medical professionals can openly learn from their mistakes, our legal system often forces doctors and patients into contentious and expensive courtroom disputes. This drives up the costs of health care with staggering costs for medical malpractice insurance we all pay for. Why not put in place a panel of medical experts, patients and healthcare providers to resolve disputes without costly legal fights?

Lastly, our current tax system is stacked in favor of the wealthy and those who get their health coverage through their employers. This discriminates against the self-employed, the unemployed, and small businesses. We need to provide advanced and refundable tax credits in order to increase the amount of money Rhode Islanders can contribute to their health savings accounts.

In short, we need to be very cautious about jumping headlong into a costly and infective socialized medicine government-run system like the one Congressman Kennedy is proposing. Let’s look before we leap and build an affordable system that makes the most of the doctor-patient relationship. We can craft a system to provide universal access to affordable and effective health care, without allowing our well being to be rationed by Washington bureaucrats.

State Representative John J. Loughlin II (R) represents District 71 (Little Compton, Portsmouth, and Tiverton).

Oops - Cancel that Projected $2 Trillion in Health Care Savings

Remember that big announcement by President Obama earlier this week that got a ton of coverage?

Barack Obama praised the health care industry's promise to cut $2 trillion in costs over 10 years Monday, taking a sharply different course than President Bill Clinton did 16 years ago in an opening bid to overhaul the U.S. health system.

Drawing skepticism from lawmakers, Obama summoned representatives of the insurance industry, doctors, hospitals, pharmaceutical companies and labor groups to the White House for what he called "a watershed event in the long and elusive quest for health care reform."

Actually, not quite. Will the correction get the same widespread coverage?

From Politico via Thursday's Charleston Gazette; h/t Kathryn Jean Lopez at The Corner, National Review Online.

The president of the American Hospital Association said Thursday that a deal with the White House to cut the growth in health care spending has been “spun way away from the original intent.”

* * *

... in a conference call Thursday, President Richard Umbdenstock told 230 member organizations that the agreement had been misrepresented. The groups, he said, had agreed to gradually ramp up to the 1.5 percentage-point target over 10 years – not to reduce spending by that much in each of the 10 years, .

So what went wrong? It seems that someone wanted to rush the announcement before the details of what is clearly a difficult, complicated goal had been ironed out.

The comments from Umbdenstock cap a week in which some in the Washington health care world struggled to make sense of the surprise White House announcement Monday. The group of six organizations with a major stake in health care – the Service Employees International Union, the American Medical Association, America’s Health Insurance Plan, Pharmaceutical Research and Manufacturers Association, the American Hospital Association and Advanced Medical Technology Association – had been working in secret for several weeks on a savings plan.

But they learned late last week that the White House wanted to go public with the coalition. One health care insider said: “It came together more quickly than it should have." A health-care lobbyist said the participants weren’t prepared to go live with the news over the weekend, when the news of a deal, including the $2 trillion savings claim, was announced by White House officials to reporters. The fact sheet they distributed at the time offered general categories from which the savings would come, but few specifics on how they would be achieved.

The First Murmurs of a Healthcare Debacle

It's all very hush-hush, at this point, but our nation's brightest minds — those in the U.S. Senate, of course — are set to point their considerable intellectual prowess in the direction of universal healthcare. Currently, three general plans are on the table:

_Create a plan that resembles Medicare, administered by the Health and Human Services department.

_Adopt a Medicare-like plan, but pick an outside party to run it. That way government officials would not directly control the day-to-day operations.

_Leave it up to individual states to set up a public insurance plan for their residents.

The Medicare for all discussion has been ongoing for quite some time. Roland Benjamin took a look at it, for example, about a year and a half ago on Anchor Rising. The first link above provides a couple of scenarios that ought to enable any rational person to begin to see the fatal flaws of such plan:

If the public plan were open to all employers and individuals — and if it paid doctors and hospitals the same as Medicare — it would quickly grow to 131 million members, while enrollment in private insurance plans would plummet, the study found.

By paying Medicare rates the government plan would be able to set premiums well below what private plans charge. Employers and individuals would rush to sign up.

But the results would be far different if the government plan was limited to small employers, individuals and the self-employed.

In that smaller-scale scenario, the public plan would get from 17 million to 43 million members, the study said. It found that a government plan could be effective in reducing number of uninsured.

In either case, the system would lower incentives and motivation among healthcare providers and surely diminish services and quality. Insurance companies would begin struggling, and folks who maintain private plans will see prices float right past affordability, pushing them into the government net.

If the government outsources administration of this same plan, it achieves no end but creating an additional layer in the process and generating the friction inherent in a system that leaves one group (politicians) to set rules and standards and another to make the numbers work. In other words, it would exacerbate trends that are already too prevalent. And if the feds punt the issue to the states, it would do what big government does best and find the worst of all worlds in the name of expediency.

What to Make of the Swine Flu?

It's difficult to know how to react to the swine flu news blitz. Cases around the globe are broadly scattered, but not extensive. The death rate in Mexico, while certainly concerning and, moreover, tragic for those who've lost loved ones, doesn't seem all that high. Yet, the World Health Organization (WHO) has raised its warning level to one step below doom, the story's been on the front page of the Providence Journal for two days in a row (today including a map of the disease's reach), North Kingstown high school has shut down, and several cases have emerged across New England.

Reasonableness would seem to suggest that people not take more extreme precautions than increased hand-washing and such until those maps begin showing hundreds of cases where there are currently a few, but at that point, it could be too late if we're looking at a deadly pandemic. (Although, again, the fact that the peak seems to have been reached in Mexico suggests that it's not a doomsday virus.) We're certainly fortunate, however, to live in a time during which news can spread more quickly than the disease that is its topic.

Without delving into partisan criticism, I will say that this logic, which the president has echoed, strikes me as odd (from the first link above):

"Closing our nation's borders is not merited here," said Homeland Security Secretary Janet Napolitano at a mid-afternoon briefing, echoing comments she made earlier in the day while being pressed by senators at a hearing.

She said closing borders or U.S. ports would have enormous adverse economic consequences and would have "no impact or very little" to help stop the spread of the virus.

"This virus is already in the United States. Any containment theory ... is really moot at this time," Napolitano said.

That doesn't really jibe with my notion of containment. Fewer than a hundred people spread across a nation of more than 300 million is substantially less of a threat than travel to a country in which thousands of cases have been confirmed. It's not as if we're a single body that has been infected.

A Typical RI Solution for "Solving" a Nursing "Shortage"

Our state is in dire financial trouble based on structural deficits, is on the wrong end of just about every state-by-state comparative list, and is losing its "productive class" by the thousands every year, but the matter of concern for a special legislative commission is, in the words of its Co-chairman Sen. James Doyle (D., Pawtucket):

Even if there are nurses without jobs now, the shortage of nurses, Doyle said, "is going to be a serious issue some day."

Some day. Okay. Let's take that as a plausible reason for at least strategizing methods of increasing the state's supply of nurses. What are some of the problems that must be addressed? Well, there's a reluctance to work more comfortable shifts and in more prestigious locations:

But many graduates want to work only the day shift in a hospital or don't want the less-prestigious nursing-home and home health-care jobs.

Meanwhile, employers are wary of investing in the training of young new hires:

In the hospitals where there are jobs, officials don't want to hire new graduates because they can be expensive to train and there is a fear that, once trained, they will leave to take another job, said commission Co-chair Lynne M. Dunphy, of the University of Rhode Island's College of Nursing.

Perhaps Ms. Dunphy's profession partially explains why the commission contrived such a peculiar means of addressing these specific problems:

A special legislative commission formally unveiled its proposal to give educators in the state's nursing schools an annual $3,500 tax credit, an attempt to keep them teaching so they can make a dent in what the panel said is a looming shortage of nurses in the state.

So, if there's a problem in the nursing profession life cycle, it has to do with matching candidates with difficult-to-fill positions; there's no indication that nursing schools are suffering a lack of students for whose educations they are unable to find teachers; and a legislative commission co-chaired by a nursing educator thinks shaving another "half-million dollars" out of the annual budget to benefit this extremely select class of citizens is the solution.

Yup. That's Rhode Island for ya.

The Energy and Healthcare Issues Come Together

Throw in environmentalism, too, because William Tucker's thoughts on windmilled energy bring some possibilities to mind:

The major limitation, of course, is wind's intermittency -- its lack of "dispatchability." Quite simply, you can never count on it. You can't even predict it from hour to hour with 100 percent accuracy and the windiest sites can go calm for days. On a national electrical grid, where supply and demand must be kept within 5 percent or each other in order to maintain voltage balances, this becomes very disruptive. ...

The utilities' generating capacity, as McCracken points out, generally falls into two categories -- base load and peaking. Base load runs day-and-night, week after week, to meet the underlying demand. It is almost universally provided by coal plants, which run for weeks at a time before shutting down for maintenance, and nuclear reactors, which can go almost two years between refueling. Peak loads, on the other hand, are generally met with natural gas turbines, which do not boil water and can be started and stopped almost instantaneously.

Unfortunately, as McCracken notes, wind falls into neithercategory. "As wind provides neither baseload nor peaking plant it has no impact on reserve capacity," he writes. ...

In other words, thanks to government mandates and subsidies, wind will be there to throw power onto the market any time the wind blows. This will not replace base load plants but will only drive down prices, cutting into their revenues. Nonetheless, base-load nuclear plants will have to remain in operation, both because they will be needed as back-ups in case the wind doesn't blow or -- in the case of nuclear -- because it doesn't make sense to keep stopping and starting a plant that runs best for two years at a time.

For some reason, this problem joined, for me, with Senator Sheldon Whitehouse's suggestion on Newsmakers that one of the healthcare issues that government must address is obesity. If government takes ultimate responsibility for the healthcare of its citizens, it will gain some right to regulate individual health. What if we put overweight Americans to work generating energy?

Perhaps when the wind dies down, human treadmills could be hooked up to the generator to keep it going. Or, for an even more cartoonish suggestion, perhaps those in need of exercise could turn the wind propellers themselves by dangling off the edge.

Healthcare Controls Can Be Natural or Unnatural

In the abstract, there's a dollar amount at which our healthcare system would hum along, factoring in how much employees would demand to do their jobs, how much supplies and operations cost, the expectations and requirements of consumers, their willingess to conserve, and so on. The more we drift from that ideal, the more we'll hear this sort of news:

The study for the Robert Wood Johnson Foundation found that nearly 1 in 5 workers is uninsured, a statistically significant increase from fewer than 1 in 7 during the mid-1990s. The problem is cost. Total premiums for employer plans have risen six to eight times faster than wages, depending on whether individual or family coverage is picked, the study found. ...

About 20.7 million workers were uninsured in the mid-1990s. A decade later, it was 26.9 million, an increase of about 6 million, the study found.

In the 1990s, there were eight states with 20 percent or more of the working age population uninsured. Now there are 14.

The article notes that workers ultimately fund the health insurance of the elderly, the young, and all of those who receive subsidized healthcare, and it doesn't take extensive consideration to understand that increasing costs make it less likely that employers will offer the benefit and increasing coshares lead fewer employees to accept it. The more the system removes natural incentives to conserve and price shop for select groups, the higher the price will go for the rest.

A fiat that mandates the removal of risks and benefit-cost-cutting will skew the system further. The excesses and waste will come out somewhere — probably in rationed services and reduced quality.

Tying Workers to Their Employers

The other day, a coworker and I had a discussion — while we worked, of course — about the many ways the law seems intended to lash us to our employers, in turn providing them with a measure of protection from competition. If they go out on their own, carpenters in Rhode Island must register with the state, which requires an application and fee as well as proof of liability coverage. Also on the form is a requirement of proof of continuing education, although that requirement is currently waived pending somebody's figuring out what carpenters could possibly need to know that they don't learn on the job.

Then there's the tax side. The self employed must pay income tax and self-employment tax, for which (as I understand) they are required to make quarterly estimated payments, all of which begins to make the hiring of an accountant an advisable option.

Then there's hiring employees. With a single hire, the new business must adjust for thousands of dollars in insurance and various payments, which leads many small players in the construction industry to hire employees as subcontractors.

And then there's health insurance, with which Congress looks likely to cinch employees a bit tighter:

Three powerful House committee chairmen have agreed to work together on legislation to overhaul the health care system, starting with the view that most employers should help finance coverage and that the government should offer a public health insurance plan as an alternative to private insurance. ...

Many issues, including the question of how to pay for it, are unresolved. But the House chairmen said they had informally agreed to plow ahead on the assumptions that individuals would be required to carry insurance and that most employers would be required to help pay for it.

Of course, that required "healthcare assistance" will come right out of employees pay, yet it will create that much less incentive for employees to take educated risks to break out on their own, and providing it will create one more barrier to growth for the striving entrepreneur. All of which will increase employers' power over their employees, while increasing the financial benefit to most employees not at all.

Furthermore, as regulations seek to provide workers protection, they create incentive for employers to behave in ways that would leverage loopholes. With Rhode Island's unemployment insurance system, employers have reason to motivate employees to quit (or to trick them into doing so, as I have seen done).

Eventually, we can hope, Americans will figure out — and elect representatives who appreciate — that freedom and opportunity are the best protections against abuse, poverty, and healthcarelessness.

Corderre Opens the Socialist Umbrella Wide on Healthcare

In a healthy political state, a legislator would be scared for her political life to propose such policies in a high tax state during a painful downturn:

Legislation introduced by Representative Coderre, (2009-H5519), would extend the reach of the RIte Track program, and establish a new "All Kids Health Insurance Program" to provide access to health insurance for an additional 1,000 to 2,000 or more children in the state.

The bill, which is before the House Committee on Finance, would extend RIte Care eligibility to children from families earning 300 percent of the federal poverty level, an increase from the current 250 percent. There are approximately 1,900 uninsured children in this income bracket, and the legislation would enable these children to enroll in RIte Care for an annual monthly premium of $135.

The bill also implements a buy-in program for children living in families with incomes over 300 percent FPL. Families taking advantage of the buy-in option would pay the full cost of the premium (which would include administrative and medical costs), to be determined by the Department of Human Services. It is estimated that 4,900 children in Rhode Island live in families with incomes above 300 percent FPL who don't have health insurance.

The legislation also reinstates coverage for immigrant children under age 10 who are lawful permanent residents in Rhode Island, restoring eligibility for about 1,100 legal permanent resident children who lost coverage during under last year's state budget, and including an anticipated 200 children per year in the future.

Three times the poverty level would be $52,800 for a family of three, $63,600 for a family of four, and $74,400 for a family of five. I've got the personal perspective that this legislation would bring my family within the coverage umbrella, and I'll admit that the only reason I'm struggling is a burden of debt, and my preferred solution to solving that problem would be to increase the opportunities for advancement available to my wife and me. Growing government would do the opposite, as the government seeks somebody to pay the expanding bill.

If we really want universal healthcare coverage, the solution is to decouple insurance from employment, chip away at the growing body of mandates and regulations, and make base-line coverage mandatory. Solutions like Coderre's will push us all closer to the pit.

Ken Block: A Painful Lesson in Rhode Island Health Insurance

My dermatologist dumped me this past Monday.

I was fairly new to her practice. Due to too many sunburns as a youngster, I need to see a dermatologist every three months. My previous dermatologist of many years had left the state, leaving me scrambling to find a doc who could take me right away. Many dermatologists don't take new patients or make you wait a year for your first appointment.

My dermatologist dumped me because my health insurance carrier changed from Blue Cross/Blue Shield of RI (BCBSRI) to United Health Care (UHC). On the day of my appointment, the receptionist took one look at my sparkling new health card and snarkily informed me that her office does not accept UHC coverage.

The fact that a doctor's office accepts insurance coverage from one carrier and not another is understandable. It is a bit bewildering that a doctor's office would not accept coverage from one of the largest insurance carriers in the United States — one of only three operating in the state.

As an employer, I was forced to change from BCBSRI to UHC due to cost; my annual renewal premium jumped almost 25% with BCBSRI. I asked for quotes from three carriers for my eight employees. Tufts is newly returned to the market after an absence of many years and came in 5% higher than BCBSRI, which in turn came in 5% higher than UHC.

How is it possible that a state-chartered non-profit like BCBSRI comes in higher for annual premiums than a for-profit carrier? You have to figure that the for-profit outfit is looking for 20% margins or so, which should translate into a significant rate advantage for the non-profit, and therefore a far less expensive cost for the purchaser of the insurance. Is the brand new skyscraper being constructed in downtown Providence for BCBSRI being financed by what I can only call over-charging for their services?

A large chunk of this year's premium increase was courtesy of our General Assembly, which decided to abolish the "healthy company" discount given to companies that used their health insurance less frequently than "less healthy" companies.

Isn't the whole point of insurance to price a policy based on the likelihood of that policy being used or not? Now, the pricing for all small businesses in RI, regardless of carrier, is determined based on the entire pool of covered employees of small businesses. Call this semi-socialized health insurance — whose net effect was a monster price hike for my company's coverage.

The General Assembly has passed mountains of health insurance regulations, many of which directly interfere with an insurance company's ability to operate profitably in the state. This is one of the main reasons that Rhode Island has such a lack of competition among carriers. This lack of competition leads to uncompetitive pricing and heavy-handed doctor tactics like refusing the insurance coverage of a large percentage of the population.

Our system of health coverage in this state is extraordinarily broken and is yet another disincentive for companies investigating moving to our state. The beaches aren't the only place to be burned in Rhode Island.

Ken Block is the chairman of the Moderate Party of RI

The latest example of Obama's disdain for liberty

On Obama:

A ditch, not a summit.

More on Obama's support for socialized medicine.

The Healthcare Trojan Horse in the Porkulus Bill.

From general election.

On healthcare policy issues:

On importing drugs.

How government created the problem in the first place.

More on drug costs and government allocation of healthcare services.

So drug costs - the frequent target - are roughly 10-12% of total healthcare costs. The socialists want to reduce their costs when they are only a small portion of the total cost of delivering healthcare services. Not only is that an action which will stifle new drug innovation, thereby adversely impacting the health of future generations, but the lesser/non-use of drugs will often result in more and longer hospitalizations when the symptoms managed by drugs are under less clinical control.

Hey, Obama's historically ignorant and, at a minimum, economically illiterate. So why not add foolish about healthcare services to the growing list?

Get that man a Tele-prompter quickly so he will know what to say!

The Public/Private Disconnect

What takes up 10% of my weekly paycheck? Family health care, that's what. And that's just my share. My employer kicks in some, too.

Like so many other employees of small businesses, my company had to health-plan shop again this year to find a way of keeping costs down. In our case, the health care costs went up, just not as much as they would have if we hadn't switched plans. So now, like so many others, I take home a little less than I used to. That's just the way it is.

I'm not alone. You see, in the private sector, yearly reassessment of benefits is the norm. There's no locking in with contracts, no long term "promises." Be flexible or be out of business. Right now, tens of thousands of Rhode Islanders who work in the private sector are taking the hits, sucking it up and living with a little less. In many cases, it is necessary that employees recognize that they can either make a little sacrifice or say goodbye to their job or that of some of their co-workers and friends. I know of a few cases where people have taken pay cuts to stay employed. Or companies that have instituted mandatory furloughs to keep their doors open and avoid further layoffs. Imagine that? That's the simple reality in today's economy.

This is why the compassion meter is just about pegged at "0" when we hear public employees complaining about deals "made in good faith" being broken because they may have to endure reductions in their generous benefit packages or increases in their relatively minuscule co-pays and co-shares. There is no money. And politicians, wisely, are reticent to go to taxpayers asking for more. Everyone else is making sacrifices, now it's their turn.

Small-business owners and their employees are used to cinching their belts and spreading the hardship amongst themselves. That way, hopefully, we can help keep more people employed. Making a little less is better than none at all. The question we keep asking is, how come the public sector isn't willing to do the same for their "brothers and sisters" or the communities they serve?

The Healthcare Trojan Horse in the Porkulus Bill

Betsy McCaughey writes:

...Tragically, no one from either party is objecting to the health provisions slipped in without discussion. These provisions reflect the handiwork of Tom Daschle, until recently the nominee to head the Health and Human Services Department.

Senators should read these provisions and vote against them because they are dangerous to your health. (Page numbers refer to H.R. 1 EH, pdf version).

The bill’s health rules will affect “every individual in the United States” (445, 454, 479). Your medical treatments will be tracked electronically by a federal system. Having electronic medical records at your fingertips, easily transferred to a hospital, is beneficial. It will help avoid duplicate tests and errors.

But the bill goes further. One new bureaucracy, the National Coordinator of Health Information Technology, will monitor treatments to make sure your doctor is doing what the federal government deems appropriate and cost effective. The goal is to reduce costs and “guide” your doctor’s decisions (442, 446). These provisions in the stimulus bill are virtually identical to what Daschle prescribed in his 2008 book, “Critical: What We Can Do About the Health-Care Crisis.” According to Daschle, doctors have to give up autonomy and “learn to operate less like solo practitioners.”

Keeping doctors informed of the newest medical findings is important, but enforcing uniformity goes too far.

New Penalties

Hospitals and doctors that are not “meaningful users” of the new system will face penalties. “Meaningful user” isn’t defined in the bill. That will be left to the HHS secretary, who will be empowered to impose “more stringent measures of meaningful use over time” (511, 518, 540-541)

What penalties will deter your doctor from going beyond the electronically delivered protocols when your condition is atypical or you need an experimental treatment? The vagueness is intentional. In his book, Daschle proposed an appointed body with vast powers to make the “tough” decisions elected politicians won’t make.

The stimulus bill does that, and calls it the Federal Coordinating Council for Comparative Effectiveness Research (190-192). The goal, Daschle’s book explained, is to slow the development and use of new medications and technologies because they are driving up costs. He praises Europeans for being more willing to accept “hopeless diagnoses” and “forgo experimental treatments,” and he chastises Americans for expecting too much from the health-care system.

Elderly Hardest Hit

Daschle says health-care reform “will not be pain free.” Seniors should be more accepting of the conditions that come with age instead of treating them. That means the elderly will bear the brunt.

Medicare now pays for treatments deemed safe and effective. The stimulus bill would change that and apply a cost- effectiveness standard set by the Federal Council (464).

The Federal Council is modeled after a U.K. board discussed in Daschle’s book. This board approves or rejects treatments using a formula that divides the cost of the treatment by the number of years the patient is likely to benefit. Treatments for younger patients are more often approved than treatments for diseases that affect the elderly, such as osteoporosis.

In 2006, a U.K. health board decreed that elderly patients with macular degeneration had to wait until they went blind in one eye before they could get a costly new drug to save the other eye. It took almost three years of public protests before the board reversed its decision.

Hidden Provisions

If the Obama administration’s economic stimulus bill passes the Senate in its current form, seniors in the U.S. will face similar rationing. Defenders of the system say that individuals benefit in younger years and sacrifice later.

The stimulus bill will affect every part of health care, from medical and nursing education, to how patients are treated and how much hospitals get paid. The bill allocates more funding for this bureaucracy than for the Army, Navy, Marines, and Air Force combined (90-92, 174-177, 181).

Hiding health legislation in a stimulus bill is intentional. Daschle supported the Clinton administration’s health-care overhaul in 1994, and attributed its failure to debate and delay. A year ago, Daschle wrote that the next president should act quickly before critics mount an opposition. “If that means attaching a health-care plan to the federal budget, so be it,” he said. “The issue is too important to be stalled by Senate protocol.”

More Scrutiny Needed

On Friday, President Obama called it “inexcusable and irresponsible” for senators to delay passing the stimulus bill. In truth, this bill needs more scrutiny.

The health-care industry is the largest employer in the U.S. It produces almost 17 percent of the nation’s gross domestic product. Yet the bill treats health care the way European governments do: as a cost problem instead of a growth industry. Imagine limiting growth and innovation in the electronics or auto industry during this downturn. This stimulus is dangerous to your health and the economy.

The actual article has all the links.

Welcome to the beginnings of socialistic medicine in the United States. Brought to you by your favorite community organizer. It's not like he didn't tell us his intentions in advance.

Think about it: If you oppose the porkulus, Obama says you are a partisan. And if you don't cave to these terms asap, Obama says it will turn into a catastrophe.

Isn't hope and change simply wonderful?

A Taste of the Healthcare Future

Quite apart from the question of whether Governor Carcieri's Medicaid waver plan is the right move for Rhode Island at this time, it certainly provides evidence of the future of government-funded healthcare:

To save $200,000 in the 5 1/2 months remaining in this budget year, the Department of Human Services intends to seek bids to determine where a patient can go for the cheapest non-emergency surgery, a tonsillectomy being just one example cited by DHS Director Gary Alexander yesterday. A hospital? A surgical center? A doctor’s office?

The "selective contracting" of surgical services was just one of several money-saving plans that came to light yesterday after a second day of hearings on legislation to require General Assembly approval before the administration can use its new powers to limit, redesign or raise the patient share of the cost for any medical service covered by Medicaid.

Governor Carcieri is banking on at least $2 million in Medicaid savings this year to help avert a massive state deficit, and Alexander acknowledged this is also hinged on "selective contracting" with companies willing to provide the least expensive prescription drugs and medical equipment; a previously disclosed $10,000 liquid-assets maximum for adults to qualify for the state-subsidized RIte Care health-insurance program, and the "diversion" of 196 nursing home patients to alternative settings.

For some, there's no thinking beyond the immediate desire to make healthcare "fair"; they'll turn a blind eye to the water flowing onto the deck as they decry changes to government programs. They're willing both to let the state sink and to shove greater and greater numbers of the population a lifeboat that's already proven to have holes (probably because their whining can have some effect on a handful of politicians, whereas the market does what it does).

Just So Will Healthcare Fall

It amazes me that we can watch these things, which should have been entirely foreseeable, and never return to our initial premises:

Some of the big-name Boston teaching hospitals that have managed to extract higher insurance payments include Children's Hospital and the members of Partners HealthCare, a group including Massachusetts General and Brigham and Women's. As a result, they may be paid two or three times more than a community hospital for the same procedure. ...

In addition to helping raise the average Massachusetts family's premiums by 78 percent since 2000, the 800-pound-gorilla hospitals are using their enhanced profits to expand into the suburbs and take business from smaller hospitals. For example, Partners has built a $43 million outpatient clinic in Foxboro, not far from Caritas Norwood Hospital. The objective is to drain day-surgery patients from Caritas, which because of its lower insurance reimbursements, is $4 million in debt. Caritas asserts that were it paid the same rate for delivering babies as the Partners hospitals, it would have lost no money in the third quarter.

Ensure funding for anything, and prices will go up. Increase the distance between the customer and the payment, and advantaged suppliers and middlemen will leverage their power for even greater dominance. And then comes the predictable reaction:

In response to these revelations, Governor Patrick has proposed having state insurance regulators stop excessive premiums. And he has convened a panel to embark on cost-containment steps in Massachusetts, something that is long overdue.

So now prices will ultimately be determined by a government whose interest is more directly in the payments than the service provided, conducted by a panel whose power is appointed, overseen by politicians whose underlying job is to raise money and be reelected.

What do you suppose will happen next?

When Sin Trumps Conscience

Rhode Island is one of seven states that would prefer that citizens with moral reservations about procreation-related procedures and drugs have fewer rights:

Seven states sued the federal government Thursday over a new rule that expands protections for doctors and other health care workers who refuse to participate in abortions and other medical procedures because of religious or moral objections.

Connecticut Attorney General Richard Blumenthal filed the lawsuit in federal court in Hartford on behalf of the states.

They claim the federal rule, issued by the Bush administration last month and set to take effect Tuesday, would trump state laws protecting women's access to birth control, reproductive health services and emergency contraception.

Blumenthal said the regulations "are flawed and defective" and would "unconstitutionally and unconscionably interfere with women's health care rights."

Note that the rule does not ban any procedures. It merely gives the individual provider the right to choose what he or she provides.

The end of rights and freedom will come proclaiming the sanctity of both.

The Benefit of a Word

It's may be a small thing, but it always bothers me when the word "benefit" is used to describe welfare-type payments and services, as in:

"This is to make the system better," [Governor Carcieri] said yesterday, noting that nursing home residents could more easily use Medicaid funds to live with family or friends under the new plan. But when asked about a separate proposal to limit the "benefit package" for thousands of low-income health-care recipients, Carcieri referred questions to a department head.

The connotation of one's "benefit package" at work seems to me to be that it is an extra benefit of doing something — namely, helping to move the company forward. In the case of insurance (not necessarily of the healthcare kind), one receives "benefits" for having invested in the plan.

If language matters, and I believe that it does, we ought to come up with a new term for receiving public largess, taken under penalty of legal repercussions, based purely on perceived need. Maybe "graft."

When Doctors Define Health

Such arguments become deep precipitously, but there remains something disconcerting about the method by which society determines the behaviors that are considered within the bounds of normality and those that justify treatment:

The book is at least three years away from publication, but it is already stirring bitter debates over a new set of possible psychiatric disorders.

Is compulsive shopping a mental problem? Do children who continually recoil from sights and sounds suffer from sensory problems — or just need extra attention? Should a fetish be considered a mental disorder, as many now are?

Panels of psychiatrists are hashing out just such questions, and their answers — to be published in the fifth edition of the Diagnostic and Statistical Manual of Mental Disorders — will have consequences for insurance reimbursement, research and individuals' psychological identity for years to come.

The process has become such a contentious social and scientific exercise that for the first time the book’s publisher, the American Psychiatric Association, has required its contributors to sign a nondisclosure agreement.

The debate is particularly intense because the manual is both a medical guidebook and a cultural institution. It helps doctors make a diagnosis and provides insurance companies with diagnostic codes without which the insurers will not reimburse patients’ claims for treatment.

The judgment of normality and disorder ultimately falls to the individual and to those who interact with him or her. The difficulty (and political jockeying) increases in proportion to the compulsory assistance of those whom consensus acknowledges as having problems — and compulsory acceptance of those whom "consensus" denies as having problems.

We are called, I believe, to help those who need help and to accept those whose challenges do not bear directly on our specific relationships with them. The current structure for psychological diagnoses, however, seems to be drifting toward ever more infringement on our own ability and right to judge those around us for ourselves.

Wagner v. Taylor

Michael Barone of U.S News and World Report has an interesting capsule history of how labor/management relations through the 20th Century have brought the U.S. auto industry to where it is today…

Mickey Kaus, pretty much alone among the commentators I've been reading, indicts "Wagner Act unionism" for the decline and fall of the U.S. auto industry. The problem, he argues, is not just the high level of benefits that the United Auto Workers has secured for its members but the work rules—some 5,000 pages of them—it has imposed on the automakers. As Kaus points out, unionism as established by the Wagner Act is inherently adversarial. The union once certified as bargaining agent has a duty not only to negotiate wages and fringe benefits but also to negotiate work rules and to represent workers in constant disputes about work procedures.

The plight of the Detroit Three auto companies raises the question of why people ever thought this was a good idea. The answer, I think, is that unionism was seen as the necessary antidote to Taylorism. That's not a familiar term today, but it was when the Wagner Act was passed in 1935. Frederick Winslow Taylor was a Philadelphia businessman who pioneered time and motion studies. As Robert Kanigal sets out in The One Best Way, his biography of Taylor, he believed that there was "one best way" to do every job. Industrial workers, he believed, should be required to do their job in this one best way, over and over again. He believed workers should be treated like dumb animals and should be allowed no initiative whatever, lest they perform with less than perfect efficiency.

It is interesting to note that "Taylorism" was a part of the general trend occurring in the first half of the twentieth century, where the old classically liberal ideas were considered passé and the idea that the common folk needed strong management by an elite, in every area of their lives that mattered held a strong foothold.

We should be trying to move past Taylorist attitudes, the collateral damage they've caused in the past, and a possible revival of them in the near future, in as many places as possible.

Healthcare Shouldn't Work This Way

Tied to employment, that is:

As jobless numbers reach levels not seen in 25 years, another crisis is unfolding for millions of people who lost their health insurance along with their jobs, joining the ranks of the uninsured. ...

About 10.3 million Americans were unemployed in November, according to the Bureau of Labor Statistics. The number of unemployed has increased by 2.8 million, or 36 percent, since January of this year, and by 4.3 million, or 71 percent, since January 2001.

Most people are covered through the workplace, so when they lose their jobs, they lose their health benefits. On average, for each jobless worker who has lost insurance, at least one child or spouse covered under the same policy has also lost protection, public health experts said.

Most people who are unemployed for a time manage to continue making payments for cars and auto insurance, houses and home-owner's insurance, and so on. There is no reason that employers ought to have the power of life and death over their employees. And there's no reason that we should take that power from them and give it to the government.

Why Should Their Moral Rights Be Trampled?

The Bush administration is entirely right to permit healthcare providers to refuse tasks that they find objectionable:

The outgoing Bush administration is planning to announce a broad new "right of conscience" rule permitting medical facilities, doctors, nurses, pharmacists and other healthcare workers to refuse to participate in any procedure they find morally objectionable, including abortion and possibly even artificial insemination and birth control. ...

Health and Human Services Department officials said the rule would apply to "any entity" that receives federal funds. It estimated 584,000 entities could be covered, including 4,800 hospitals, 234,000 doctor's offices and 58,000 pharmacies.

If private organizations wish to require particular procedures to be done, that's within their purview, but the government's position should be in line with the rights and freedoms that it guarantees to its citizens.

Common Ground: I Don't Want David Cicilline Making Decisions About My Healthcare Either

To the members of the six Providence municipal unions who, in the words of Philip Marcelo of the Projo, “[oppose] the city’s decision to change its health care benefits manager”, let me one more time pitch the most obvious solution to your dilemma…

1. Your health insurance should be separated from any direct employer involvement; David Cicilline should have zero say who any individual has as their health insurer.
2. The money now going to pay for a city-negotiated healthcare plan would then be distributed to the individual employees, in the form of increased salary. It’s your money anyway.
3. Employees could then pool their money together and have their union negotiate directly with the insurer or insurers of their choice, to get the deal they want.

A slightly more detailed explanation of how this would work is available here.

Work and Health Should Be Only Indirectly Linked

I'm with Jeff Jacoby:

De-linking medical insurance from employment is the key to reforming healthcare in the United States. McCain proposes to accomplish that by taking the tax deduction away from employers and giving it to employees. With a $5,000 refundable healthcare tax credit, Americans would have a strong inducement to buy their own, more affordable, insurance, rather than relying on their employer's plan. As millions of empowered consumers began focusing on price, price competition would flourish. And as employers' healthcare costs declined, most of the savings would return to employees as higher wages.

For 60-plus years, a misguided tax preference for employer-sponsored health insurance has distorted America's healthcare market. The price of that distortion has been paid in higher costs, fewer choices, and mounting anxiety. The solution is to restore market forces by fixing the tax code, and liberating Americans from an employer-based system that has made everything worse.

Healthcare Intrigue

Granted, they devoted some time to debate talk, but it says something encouraging that Andrew and Matt Allen actually pushed past the time slot on Wednesday to further discuss healthcare. I, for one, would have liked a whole hour of that conversation. Stream by clicking here, or download it.

Emulating Fannie Mae in the Health Insurance Industry; Yes We Can!

Democratic Presidential nominee Barack Obama’s health plan has the Federal government getting directly into the health insurance business. He wants the government to create "a new public plan" for health insurance that would compete with existing private insurers. Senator Obama also wants the administrators of this new plan, or some other government-created insurer, to assume nationwide responsibility for catastrophic health insurance -- creating a government monopoly over one segment of America's healthcare economy.

If the idea of a targeted, government-backed monopoly sounds vaguely familiar, it's because another government created monopoly, the Federal National Mortgage Association (Fannie Mae, for short) has been in the news lately, and not in a good way. Fannie Mae was the "government sponsored enterprise" that held a virtual monopoly in the secondary mortgage industry whose mismanagement and collapse helped trigger the current worldwide financial crisis.

Fannie Mae collapsed because it was allowed to take risks that regulators would have quashed had they been attempted by a company identical in every way to Fannie Mae, save for the government backing. As blogger Mickey Kaus has noted, the unsound financial practices were accepted because of Fannie Mae’s aggressive advocacy of its social agenda -- increasing the rate of homeownership -- when challenged and because Congress and executive branch regulators responded to Fannie Mae's lobbying with a collective cognitive non-sequitur: because the organization’s intentions were good, no one needed to pay serious attention to its financial situation. Enmeshed in a culture that denied the need for oversight, warning signs were missed and Fannie Mae’s problems built up until a multi-hundred billion dollar bailout (separate from the much publicized $700B bailout of private institutions) became necessary to keep it and the mortgage industry which it dominated functioning.

Here’s the question for the future: why, in the long run, should the public expect the fate of Barack Obama's government created insurer to be any different than that of Fannie Mae? Like Fannie Mae, Barack Obama's new insurance company will be created in pursuit of a social goal (expanding access to health insurance). Like Fannie Mae, the government created insurer will be inextricably tied to the Federal government. And like Fannie Mae, the government created insurer will almost certainly be given regulatory advantages over its private competitors -- which may or may not make fiscal sense -- to help it achieve its social goal.

If you view government entities as organizations created and staffed by the same flawed humans that exist in every other walk of life, the potential danger here is obvious; allowing an organization, in this case, the Federal government, to create and run a national scale monopoly and then expect it to effectively regulate itself is an invitation to more Fannie Mae levels of mischief.

Will government remember this lesson by the time it takes up an Obama healthcare plan? Or is an assumption the government-does-it-better, no need to think this through, all that Democrats need to know when formulating their health plans?

On Obama's healthcare policies

From The Corner:

Obama says we shouldn't allow people to shop for insurance across state lines because some states allow health insurers to exploit nefarious loopholes.

Doesn't this argue for, not against, letting people in shop across state lines to get more favorable coverage?

In other words, if you are trapped in a state where these dubious entities are duping innocent policy holders, shouldn't you have the freedom to get on the Internet and escape to another plan?

Obama is in effect saying no. We have to be trapped in the tangle of our state's regulatory mess even if there is a better deal just over the fence.

I would ask Obama if he supports generic prescription-drug importation. I suspect the answer is yes, in which case he is saying we can get our drugs from Mexico, but we can't get our health insurance from Michigan. Pills from Canada "yes." Policies from Connecticut "no." Does that make any sense?

More:

The Cabinet of Dr. Obama: Dissecting the health care proposals of Obama and McCain

The Dems’ Health-Care Distortions: Seeing through the Obama smokescreen

Obama’s Glass House: It’s his health-care plan that would push people out of job-based coverage

ADDENDUM

By contrast, McCain in today's Daily Standard:

McCain's remarks on health care in his speech today are worth highlighting: "I will provide every single American family with a $5000 refundable tax credit to help them purchase insurance. Workers who already have health care insurance from their employers will keep it and have more money to cover costs. Workers who don't have health insurance can use it to find a policy anywhere in this country to meet their basic needs."

Few know how ironic it is that post-WWII government actions created the problem in the first place where health insurance was "owned" by your employer instead of the insured person.

Meanwhile, Don Boudreaux shreds E. J. Dionne's equally stupid thinking on healthcare policy.

The "Advantage" of Universal Healthcare

In response to my question on the Medicaid waiver being sought by the Carcieri administration, commenter "mrh" responded…

I'd say that in general, "liberal Democratic" plans for universal health care don't promise to "put people on waiting lists for treatment, and limit the duration and scope of services."

…to which commenter "bobc" responded…

You're right they don't "promise" to "put people on waiting lists for treatment, and limit the duration and scope of services." But of course they will!

Let me further Bobc's point with a few examples…

1. This is from New York Times columnist Paul Krugman, who I believe is considered mainstream (maybe even a centrist!) by most liberals…

A national health care system will also be better at rationing when the time comes, but that hardly seems like the prime argument for adopting such a system today.

Krugman is for having government limit access to medical care, as he says, "when the time comes", but doesn't want people to know about this rationale for getting government into the healthcare business until it's too late. Many problems here.

2. A little more locally, Froma Harrop of the Projo recently wrote this about the Massachusetts universal healthcare mandate…

There have been glitches, the main one being that the plan will cost $129 million more than projected. That sounds like a lot of money, but bingo, the state could save $160 million simply by enrolling all its Medicaid members in managed-care plans. Shortfall averted with $30 million left over.

If the point of "managed care" in this setting isn't to give government bureaucrats the power to deny treatment, then how exactly does it work to control costs? (And remember, specifically for this example, Froma Harrop doesn't believe that preventative medicine does anything to lower costs, so that can't be the answer).

3. Moving out a bit towards the fringes, William Saletan of Slate Magazine believes the government-run healthcare should be used to reduce age inequality, i.e. the fact that genetics allow some people to live longer lives than others. I don't think this is mainstream thinking, but that doesn't mean that someone who believes as Saletan does couldn't end up in charge of a rationing or managed care system, once one was constructed.

We can always argue how much any subset of liberals is speaking for all liberals, if it's possible to speak for all liberals, etc. However, it is abundantly clear that an intersection does exist of people who 1) vote "Democrat" on a regular basis 2) want government to be more strongly involved in setting an individual's range of healthcare options and 3) want that stronger influence to be there to control costs by denying care.

If this is truly fringe thinking (even beyond Saletan), the wider world of liberalism should be more vocal about it.

The Times and the Medicaid Waiver

The New York Times editorial board says the Carcieri administration's plan to redesign Rhode Island's Medicaid program is risky…

Under the proposed waiver, the federal government would contribute a fixed annual amount for the next five years (roughly what it was projected to spend anyway), but Rhode Island would limit its contribution to 23 percent of its general revenue budget….

The state is hoping to make up the difference, without harming patients, by providing health care more cheaply. It wants to require most long-term care patients to get treatment at home or from community-based services rather than in expensive nursing homes and would put virtually all beneficiaries in managed care.

If that isn’t enough, it wants flexibility to charge higher co-payments, put people on waiting lists for treatment, and limit the duration and scope of services.

My question is, perhaps with the exception of the higher co-payments, how are the actions cited in the Times editorial substantively different from standard liberal Democratic plans for implementing universal healthcare?

There Is a Right Path

Just a pause to affirm that one doesn't have to push the boundaries of ethics to extend the boundaries of medical science:

The cell identity switch turned ordinary pancreas cells into the rarer type that churns out insulin, essential for preventing diabetes. But its implications go beyond diabetes to a host of possibilities, scientists said.

It's the second advance in about a year that suggests that doctors might be able to use a patient's own cells to treat disease or injury without turning to stem cells taken from embryos.

Of course, some folks give the impression that, deep down, they believe that ethical absolutes are the greatest disease facing humanity, with all mere ailments as subsequent considerations.

Obama's Healthcare Detailing

Supposedly, this was "detail" offered by Barack Obama, in his nomination acceptance speech, on his plans for reforming healthcare…

Now is the time to finally keep the promise of affordable, accessible health care for every single American. If you have health care, my plan will lower your premiums. If you don't, you'll be able to get the same kind of coverage that members of Congress give themselves. And as someone who watched my mother argue with insurance companies while she lay in bed dying of cancer, I will make certain those companies stop discriminating against those who are sick and need care the most.

So an Obama administration is going to lower premiums for people who currently have health insurance without altering the scope of their coverage and create a massive new entitlement program for people who currently don't have insurance -- all without raising taxes on anybody but "big" business and the top 5% of the working population.

Going beyond the speech, Senator Obama claims he can achieve his goals through increased regulation and through something called the "National Health Insurance Exchange"…

The Obama plan will create a National Health Insurance Exchange to help individuals who wish to purchase a private insurance plan. The Exchange will act as a watchdog group and help reform the private insurance market by creating rules and standards for participating insurance plans to ensure fairness and to make individual coverage more affordable and accessible.

It's not economically possible for anyone, even Barack Obama, to lower prices and expand access to healthcare through increased regulation, without reducing the range of medicine covered by insurance. And while a "National Health Insurance Exchange" could, in theory, help expand access by allowing people who are self-employed or who work for companies that don't offer health insurance to get the same tax-benefits that people who work for companies with health insurance currently get, it's doubtful that such a program can help lower prices, unless policies sold through the exchange are given regulatory exemptions that non-exchange programs don't get, which is the kind of thing that a government does when it's trying to run non-government endeavors out of business. This is all pretty straightforward economics, unless there's some major detail about what a "National Health Insurance Exchange" would do that I'm missing.

Related: I thought this part of Senator Obama's speech was blatantly dishonest…

How else could [John McCain] offer a health care plan that would actually tax people's benefits, or an education plan that would do nothing to help families pay for college, or a plan that would privatize Social Security and gamble your retirement?

John McCain supports a universal tax credit for health insurance, regardless of who your employer is…

While still having the option of employer-based coverage, every family will receive a direct refundable tax credit - effectively cash - of $2,500 for individuals and $5,000 for families to offset the cost of insurance. Families will be able to choose the insurance provider that suits them best and the money would be sent directly to the insurance provider. Those obtaining innovative insurance that costs less than the credit can deposit the remainder in expanded Health Savings Accounts.

How exactly is that "taxing benefits"?

Evidence of the Problem Is Not Always Proof of One's Solution

I'm sure there are examples on the Right, as well, and taking my own biases into consideration, I wouldn't be confident declaring an imbalance. But it does seem as if the Left has a habit of assuming the soundness of its solutions and seeing any evidence of the initial problem as explicit proof for its assumption. Consider Ian Donnis:

Speaking of Carcieri, our governor has been an energetic supporter of what proponents call medical malpractice reform. Yet those who believe the medical system is plagued by unwarranted lawsuits might want to watch a segment aired last night on 60 Minutes, featuring actor Dennis Quaid.

The interview with Quaid is certainly chilling. In brief, his newborn twins were given adult dosages of a blood thinner, resulting in a thousandfold overdose that nearly killed them. The reason was that, at three steps between the receipt and administration of the drug, nobody read the label on the vials carefully enough, and the different shades of blue on the two versions' packaging were not sufficient to raise alarms.

A few details worth noting: According to 60 Minutes, there have been two similar incidents over a span of several years, one before and one after Quaid's experience. After the first, the pharmaceutical company that manufactures the drugs "issued a nationwide safety alert" and modified the packaging. Curiously, Quaid is suing the drug company (for failure to recall), but not the hospital, because:

"I'd like to see Cedar Sinai take the lead in doing something to change what's going on in what I consider to, in the end, a broken healthcare system in patient medical care."

All of which leads one back to Donnis's curious insertion of our governor into the story, which requires him to ignore the fact that the agent for dramatic change in the 60 Minutes report wasn't litigation, but the involvement of a wealthy and famous man. Moreover, of the five components of Carcieri's favored tort reform that Ian cites, only one — limits on non-economic damages and reimbursable attorneys' fees — would have any implications whatsoever for legitimate complaints in the service of rapid change. To insist on the necessity of eye-popping awards from lawsuits, one must imagine that some millions of dollars would add substantial motivation on top of the possibility of killing children to avoid the decisions and mistakes that ushered the wrong drug into Quaid's newborns. One must imagine, in other words, that the packaging designers, pharmacy technicians, nurses, and managers along the line understood, on some level, the possibility of being responsible for deaths and shattered lives and still took less care than they would have in the face of financial liability.

Keep in mind, too, that the financial liability is mostly borne by others: insurance companies, proximately, and policy holders and their clients, ultimately. Therein lies the cognitive dissonance of Donnis's juxtaposition. Malpractice insurance is driving up costs and driving out doctors, and as fewer medical providers are available — working in an environment of ever-tighter margins — mistakes will likely become more common, not less.

Then, true to form, the Left will up its rhetoric in the push for government healthcare... without questioning government workers' capacity for mistakes or government leaders' tolerance for high-profile, high-price-tag litigation, let alone taxpayers' ability to absorb new costs that come with the backing of police power.

Just Because It's the Rational Solution Doesn't Mean I'm Going to Stop Talking About It

AFSCME Council 94's President, as reported by Katherine Gregg in the Projo, has named his union's immediate goal in the wake of Judge Patricia's Hurst's decision allowing the Governor's imposition of contract terms to go forward, as least as far as executive branch employees are concerned…

Our number-one goal is to stop the administration from taking money out of the paychecks of the people we represent without negotiations,” Council 94 president J. Michael Downey said.

Just keep in mind, if healthcare were decoupled from employment, the administration wouldn't be able to take money out of anyone's paycheck without "negotiation" to pay for insurance or most anything else, just like they can't take money out to make house payments or rent payments or car payments on your behalf.

How RI's State Employee Unions And Everyone Else Would Be Helped By a More Rational Healthcare System

If there are any union folks still reading this site, let me use the Council 94 situation as the basis for explaining to you how conservatives would like to reform healthcare. Non-union folks might be interested in this too!

1. Instead of negotiating a plan and spending money with a health insurer, your employer would take the thousands of dollars currently spent per employee on health insurance, and give that money directly to the employees. In operational terms, every employee gets a multi-thousand dollar bump in their paycheck.

2. The employee can then use that money to buy an insurance plan directly from an insurance company. The laws would be changed so that people would be free to purchase insurance plans from any insurer in any state, and so that other government-created factors that artificially increase the price of non-employer health insurance would be removed.

2A. Most importantly, the tax-code would be changed so that individuals who purchase health insurance would get the same tax-break that companies who purchase health insurance for their employees currently get. Right now, businesses that buy health insurance for their employees are allowed to deduct that money from their corporate income tax calculations, but individuals who spend money directly from their paychecks on the exact same plans are not allowed to deduct from their personal income taxes.

(I'm not sure how the current employer tax-break works in the case where the state is the employer, but that only helps make my point: In the reformed system, the self-employed, the corporate-employed, and the state-employed will all be treated the same, which makes sense, as people's health needs don't fundamentally vary based on who their employer is.)

3. Finally, in this new system, a union like AFSCME could still use its negotiating prowess to go out and secure a preferred deal from a health insurance company for its members. AFSCME would bargain directly with the health insurers, choosing whatever health insurer in the country offered them the best deal, and not having to rely on the Governor to negotiate the details of its deal.

The night that Council 94 rejected the current contract offer, WJAR-TV (NBC 10) reporter Bill Rappleye interviewed state employee Sharon Moreno, who expressed a reasonable position about what she would like from the new contract...

Leave me where I am right now [in salary, but] don't touch my coverage.

The strength of the plan outlined above is not only that the state wouldn't have to touch health-coverage benefits during contract negotiations, but that the state would not be able to touch health-coverage benefits during negotiations. Unions and employees would talk salary with their employers, and talk health coverage with their health insurers.

I know it's too late for this kind of plan to help with the current situation, but this is the system that makes the most economic sense, the most political sense, and that gives workers the most direct control over their futures. This is the kind of system we need to be looking at moving towards for everyone.

How RI's State Employee Unions And Everyone Else Would Be Helped By a More Rational Healthcare System

If there are any union folks still reading this site, let me use the Council 94 situation as the basis for explaining to you how conservatives would like to reform healthcare. Non-union folks might be interested in this too!

1. Instead of negotiating a plan and spending money with a health insurer, your employer would take the thousands of dollars currently spent per employee on health insurance, and give that money directly to the employees. In operational terms, every employee gets a multi-thousand dollar bump in their paycheck.

2. The employee can then use that money to buy an insurance plan directly from an insurance company. The laws would be changed so that people would be free to purchase insurance plans from any insurer in any state, and so that other government-created factors that artificially increase the price of non-employer health insurance would be removed.

2A. Most importantly, the tax-code would be changed so that individuals who purchase health insurance would get the same tax-break that companies who purchase health insurance for their employees currently get. Right now, businesses that buy health insurance for their employees are allowed to deduct that money from their corporate income tax calculations, but individuals who spend money directly from their paychecks on the exact same plans are not allowed to deduct from their personal income taxes.

(I'm not sure how the current employer tax-break works in the case where the state is the employer, but that only helps make my point: In the reformed system, the self-employed, the corporate-employed, and the state-employed will all be treated the same, which makes sense, as people's health needs don't fundamentally vary based on who their employer is.)

3. Finally, in this new system, a union like AFSCME could still use its negotiating prowess to go out and secure a preferred deal from a health insurance company for its members. AFSCME would bargain directly with the health insurers, choosing whatever health insurer in the country offered them the best deal, and not having to rely on the Governor to negotiate the details of its deal.

The night that Council 94 rejected the current contract offer, WJAR-TV (NBC 10) reporter Bill Rappleye interviewed state employee Sharon Moreno, who expressed a reasonable position about what she would like from the new contract...

Leave me where I am right now [in salary, but] don't touch my coverage.

The strength of the plan outlined above is not only that the state wouldn't have to touch health-coverage benefits during contract negotiations, but that the state would not be able to touch health-coverage benefits during negotiations. Unions and employees would talk salary with their employers, and talk health coverage with their health insurers.

I know it's too late for this kind of plan to help with the current situation, but this is the system that makes the most economic sense, the most political sense, and that gives workers the most direct control over their futures. This is the kind of system we need to be looking at moving towards for everyone.

Using Government-Run Healthcare to End Age Inequality

William Saletan of Slate Magazine's Human Nature Blog says one of the purposes of government run health care system should be to reduce age inequality. And he's not just talking about making people with shorter lives live longer (h/t Mona Charen)…

Isn't health, like wealth, an unequally distributed asset? Isn't it, in fact, the ultimate asset? And if that's the case, should we means-test people on Medicare not just for wealth, but for age?

Actually, means testing is the wrong term. Age isn't really a means; it's more like an end. So let's call it an ends test. The theory is that just as some people have enough money, others have had enough time.

If you make it to 100 and can fund your own surgery, that's terrific. But Medicare should focus its resources on people who haven't been as lucky as you. Living to 99 is no tragedy. It's a blessing.

Remember, if you ever get stuck in a Medicare-for-all or other fully socialized type of healthcare system, the people who have ultimate control over your healthcare access could end up being people like William Saletan, who believe that it is a function of government to decide how much life is too much.

One of the reasons I chose healthcare as the topic for Anchor Rising's most recent appearance on the Matt Allen Show is that regular people need to start thinking about these kinds of arguments right now, as there is a very high probability that the next President of the United States is going to put some kind of major healthcare before Congress, and people need to be aware of how much "if there are fewer people living shorter lives, the people who are left will be better off"-type thinking is influencing American policy makers -- and whether that thinking needs to be vigorously challenged.

Finally, it is my sincere hope that Saletan's item makes a few people on the left ponder, even if just for a few moments, whether it is a good idea to always uncritically accept "ending inequality" as a legitimate goal for government policy.

Healthcare on the Radio

Andrew brought the healthcare conversation to the Matt Allen Show, last night; stream the discussion by clicking here or download it.

Confront Healthcare Inflation or Die: A Broad View of Healthcare Reform

This past Sunday, the Projo ran a contrarian Froma Harrop column, where she questioned the conventional healthcare reform wisdom that a focus on preventative care will lower costs in the long run…

The word “prevention” has a nice ring in any health-care discussion. Thus, many politicians argue that programs to stop smoking, improve diets and otherwise promote wholesome living save money in the long run. A healthier population at less cost. Sounds like a win-win situation.

Unfortunately, that formulation is a pleasant fantasy…

Let’s put it bluntly: Longer lives cost money. Those who make it to 90 thanks to exercise and six daily servings of vegetables are more likely to suffer the expensive ravages of old age. Everyone dies of something. So he who avoids a fatal heart attack at 70 is more at risk of cancer at 80. Those extra 10 years can mean extra CT scans, hip replacements and physical therapy, even for those in relative good health.

There is fodder for many important discussions here, but for now, I want to focus on just one aspect -- the costs of those extra CT scans.

Later in her op-ed, Harrop makes reference to the exorbitant rate of medical inflation…

Rapidly rising prices for health-care also add to the expense of moving big-ticket medical procedures into later years, explains [Arthur Garson Jr., provost at the University of Virginia Medical School]. “In today’s world, where the rate of medical-care inflation is twice the rate of regular inflation, anything done 10 years from now is, in real dollars, 25 percent more expensive.”

There are two ways to deal with that problem, according to Garson. Get medical costs down, and “keep people as healthy as possible as long as possible so that they don’t spend as much money being sick.”

But why should hyper-inflation in healthcare prices, for decades at a time, be accepted as some unalterable force of nature? As technologies mature, why shouldn't the costs of producing and using medical hardware come down in exactly the same way that hardware costs in other economic sectors do; for example, think of cell phones or printers, which were once expensive luxury items, but are now affordable to nearly everyone. And then consider the CT-scans. A medical facility that has recently purchased CT equipment should be able to charge a lower price to each patient while paying off the costs of the equipment off just as quickly if they can treat 100 more of Froma Harrop's longer-living people per year than they would have if people were dying off more quickly. Why aren't these kinds of effects bringing the rate of healthcare inflation down to reasonable levels?

It is not possible to improve the combination of healthcare quality and access in the U.S. without grappling with the economic irrationality of continuing, runaway medical inflation. If policy makers involved in healthcare reform ignore the inflation question, declaring it to be some kind of iron law of modern society, the "best" they are going to be able to come up with is -- by definition -- a permanent regimen of forcing people to pay more for less, aka a program of rationing.

Of course, to do the right and effective thing, healthcare policy makers are going to have to confront the problems that have been created by poorly thought out government interference with individual medical choices. Health and Human Services Secretary Michael Leavitt wrote about a particularly egregious example earlier this month in the Wall Street Journal…

For years, the Government Accountability Office and the Department of Health and Human Services' inspector general have been saying Medicare is paying too much for Durable Medical Equipment (DME). Just compare what Medicare pays to the prices of equipment for sale on the Internet.

DME prices are based on a fee-schedule established by law in the 1980s and subsequently updated for inflation. But the fee-schedules weren't based on competitively determined market prices. It is a price-fixing program, and the equipment suppliers like it because they get overpaid and don't have to compete.

An oxygen concentrator, for example, is a device that delivers oxygen through a tube to patients, and it costs about $600 on the open market. Medicare beneficiaries typically rent the machines. The rental period, set by statute, is up to 36 months. The monthly rental payment, also set by statute, is $198.40. So renting an oxygen concentrator for 36 months costs $7,142.

As with most items and services in Medicare Part B, beneficiaries pay 20% of the costs, and Medicare pays the remaining 80%. The government, therefore, pays $5,714 – almost 10 times the free-market price of purchasing a concentrator outright. The patient pays $1,428 – more than twice the free-market price of purchase. Even allowing for the costs of setting up equipment, training and fitting the beneficiary, and other things, the rental fee is way out of line.

Do you think this is the only case where the cost of medical hardware has been grossly inflated by strange government priorities, or just the worst?

What Hospitals Want Isn't Necessarily Good For Everyone Else

I don't find anything persuasive in Charles Kinney and Fred Allardyce's Sunday Projo op-ed arguing in favor of legislation that would make insurance companies responsible for the uncollected debt related to the unmet deductibles and co-payments of their subscribers. Mr. Kinney and Mr. Allardyce begin by immediately linking uncollected debt to preventative care...

Our health-care system is undeniably broken. Insurance premiums are soaring, putting preventive health care out of reach for many. Employers and insurers are shifting costs to others by turning to plans with higher deductibles and co-payments. The result is a physically unhealthy society and a fiscally challenged health-care system overburdened by increasing numbers of people facing health-care crises with no means to pay.

One of the major issues hospitals are facing is the increase in bad debt — patients who do not pay their bills. For patients who do not have the means to pay, we provide free care.

But in any rational economic analysis, preventative care is an odd area to single out if you are concerned about "dangers" of consumer driven healthcare. As we've gone through in detail before here at Anchor Rising, it does not make fiscal sense to use an insurance-style system to pay for preventative medicine; it never has and never will. If you are really interested in seeing everyone be able to take advantage of preventative care opportunities, paying for them through the insurance system is an especially bad idea, as insurance programs can only increase costs to consumers when they include services that are widely used.

By linking uncollected debt and preventative care, Mr. Kinney and Mr. Allardyce are functioning as standard-issue, risk-averse big-business executives in search of ways to separate individuals from their money as quickly and as predictably as possible. The most efficient way for a hospital to do this is to force people to pre-pay for the services most likely to be used. That's good for organizational financial planning and good for the cash-flow and balance sheet of a hospital, but has nothing to do with controlling health care costs or making healthcare affordable.

What is especially egregious about Mr. Kinney and Mr. Allardyce's argument is that, at the same time they are pursuing a government-created fiscal advantage of dubious (and probably negative) value to the healthcare consumer, they are also advocating for their organizations to be insulated, by law, from the practical financial realities of their business…

If a patient has private insurance, such as United Healthcare or Blue Cross, and he or she doesn’t respond to reasonable collection efforts for co-payments and/or deductibles, we have to write off 100 percent of that loss at the present time. The role of the hospital turns from caregiver to debt collector. This burden should not be placed on the shoulders of non-profit hospitals; debt collection should be the responsibility of the commercial insurance companies.

The fundamental flaw in this argument is that hospitals aren't caregivers; nurses and doctors are. Contrary to Mr. Kinney and Mr. Allardyce, it is precisely the primary job of a hospital and its administrative staff to do the mundane, daily things that need to get done so that the primary caregivers have an environment where they can function with maximum effectiveness. The hospital worries about keeping the lights on and the water running and making sure that supplies are delivered to the right places, while the nurses and doctors worry about the caregiving. A hospital administrator who says he shouldn't have to worry about collecting the money to pay the bills makes about as much sense as one who says that he should be given land for free, because hospitals shouldn't have to worry about the details of financing and mortgage payments when deciding how best to expand their facilities to provide improved care.

Healthcare is a people business. If you don't want to deal with people, you should be in a different business.

ADDITIONAL INFORMATION

Roland Benjamin, who knows as much about the relationship between employers and insurance companies as anyone in Rhode Island, offers more detail on why making insurers responsible for uncollected hospital debts is a bad idea, in the form of a letter he sent on this issue to the House Corporations Committee...

Relieving hospitals from the most fundamental of business processes (collecting fees from users) is simply continuing the trend of requiring more from our insurance carriers and the employers that pay them. In effect, House Bill 7057 and Senate Bill 2414 referred to House Corporations on 3/18 will require insurance carriers that currently have no direct financial relationship with individuals to establish one from the ground up. The cost of doing so will present in premiums passed through to employers

Of particular note are three concerns:

1. Assuming the carriers can seamlessly transition to a broad financial arrangement with members, the costs of administering these relationships will be born more heavily by Consumer Directed Plans. While these plans are the subject of contention from the provider side, they represent the most viable means of applying consumer dynamics to the health care economy.
2. Should a patient fail to pay a bill from a hospital, the hospital will go after the carrier, who in turn will go after the employer, since they will have a statutory obligation to keep insuring the individual and thus no collection effort leverage. The result, should an employer refuse to make this payment on behalf of an employee (and due to privacy requirements will not know for whom or what they would be paying), the employer's account could be affected, thus leaving the entire employment base without insurance.
3. There is no indication that failure to collect payment from privately insured individuals represents a significant burden to hospitals as a percentage of total operating expenses. Thus, a solution attempting to solve this issue, at the expense of a massive administrative restructuring in the industry, will only serve to escalate overall costs.

As a studied buyer of insurance products for more than 100 participants in my plan, I simply do not want to pay for this coverage. I urge that the House Corporations Committee not recommend passage of this bill.

What?

This component of the RI House budget plan is nuts:

he plan also includes funding for 100 of 400 slots slated to be eliminated from the early childhood education program, Head Start. In addition, the budget restores health care coverage for all but 1,000 of more than 7,000 adults slated to lose coverage under a plan released by Governor Carcieri earlier in the year. ...

... it generates $5.6 million in new revenue by increasing the health insurer tax on medical premiums from 1.1 percent to 1.4 percent. Costantino said he hoped the increase wouldn't be passed on to health care consumers, although that's what happened when the tax was expanded last year. The tax, previously only applied to health insurers, would now apply to Delta Dental as well.

So the budget will continue to pay for the healthcare of a few thousand adults who can't afford it, but it most definitely increase the price paid by everybody else. It would seem that the state's budget is not constructed with much by way of strategy — instead by picking and choosing various numbers to call the result "balanced."

Stacking the Healthcare Deck

The state of Rhode Island likes monopolists, it would seem:

The other condition that Tufts needs to change is a state law that says only health plans that did business in Rhode Island in 2001 can take the health status of members into account in setting rates for small groups. As a result, only Blue Cross and United can increase premiums for groups whose members are less healthy.

Changing that rule ought to be an obvious step.

Readers should note that such regulations — questions of bias in their application aside — are one of the reasons that healthcare costs so much.

Toward Universal Healthcare

In a comment to my recent post about being a doctor in Rhode Island, Old Time Lefty asked (among some insults, statements seeped in common spin, and other junk that I'll ignore):

Health insurance should not be joined to employment. It should be a right. If it’s not a right, do you think it’s a worthwhile endeavor to establish program or programs to cover them all? What program to do this are you espousing?

I'm always hesitant to assent to calling something "a right" in the presence of left-wingers, because the definition of what a given right might entail is generally more expansive and fluid than I believe to be appropriate. However, I'll express general agreement with the proposition that access to healthcare is a right, mainly in order to draw attention to my disagreement with the proposition that health insurance is a right.

Plainly put, "healthcare" and "health insurance" shouldn't be considered synonymous in this discussion. There's a reason you don't use your auto insurance card every time you get an oil change, buy new seat covers, and have your car detailed. Insurance ought to be bought against that which is rare and harmful, not that which is habitual and foreseeable.

So, with this distinction made, how would I provide everybody with access to healthcare?

The first step would be to end price-raising regulations and mandates. That would include all laws that push health insurance into the employee agreement. (Ask Andrew about ERISA.) It would also include requirements that insurance cover viagra, sex-change operation, and a whole medicine cabinet of more common procedures and drugs. Make it possible, in short, for the average citizen to purchase his or her own catastrophic coverage, for use in such illnesses and injuries as ought to bring one to the emergency room or the life-saving surgeon.

The second step would be to make that insurance mandatory. Once we've agreed upon a bare minimum of coverage (taking into consideration severity as well as cost to the public of uncovered treatment). The price really shouldn't be that much, considering the rarity of the use, and perhaps those who still cannot afford it could be covered under a government-negotiated plan with a private provider.

The third step would be to create health savings accounts for every American, created upon birth or naturalization. Each citizen (or his or her parents) would select a firm to administer the account, with the government's role being mainly in establishing the account number and other minor start-up requirements. (The administration would be more akin to bank practices, as opposed to investment practices.) Over a person's lifetime, the individual, employers, charities, and so on could put money into the individual's account (tax free), and he or she could use it solely for medical expenses, including doctor visits, medicine, perhaps even plastic surgery and other electives.

At a certain age, the money could be withdrawn to enhance retirement income, and the full remaining dollar amount could be bequeathed to others, placed in their accounts.

This is just a summary, with some debatable points and specifics to be added for a full-throated policy discussion, and there are a variety of costs and benefits (notably an increase in pay when employers are no longer "responsible" for insurance costs) to such a program that would require more time than a lunch half-hour provides.

Lack of Freedom a Threat to Health

Periodically, somebody on the Left will throw in some anti-corporate rhetoric and sneer about the "free market." Mark Patinkin's column on the state's difficulty attracting doctors provides yet another example illustrating that one can hardly point to our problems in condemnation of economic freedom:

I began by asking where he’d rank us nationally in fees paid for medical procedures.

"In many if not most areas," he said, "it's 49th or 50th in the country."

The reasons are complicated, he said — one factor being restrictive laws.

What kind of laws?

He mentioned several typical procedures for which Medicare will pay a doctor around $300, almost below cost, he said. In some states, top doctors can charge an extra few hundred for patients happy to pay for their expertise. Here, as in Massachusetts, the law forbids that.

"In other businesses," he said, "when you get seniority and experience, you raise your prices. I make the exact same fees as the doctor fresh out of residency. The only way I make more money than that doctor is by seeing more patients. I'm not allowed to charge more for procedures."

Here's a stunning bottom line for doctors:

He gave the real example of a 30-something cancer doctor who recently finished his training. His offer in Rhode Island was $125,000 with three weeks vacation and being on call every third night — being available for patient calls or going to the hospital. On the West Coast, The Doctor said, this same candidate was offered $250,000, eight weeks vacation and "call" every 10th night.

Rhode Island's much touted (but selectively described) "quality of life" is surely threatened if our battle against the free market drives away high-end professionals.

The McCain Healthcare Plan

Presumptive Republican Presidential Nominee John McCain has sketched out his healthcare reform plan in the (electronic) pages of National Review Online…

I believe the key to real reform is to restore control over our health-care system to the patients themselves. To that end, my reforms are built on the pursuit of three goals: paying only for quality medical care, having insurance choices that are diverse and responsive to individual needs, and restoring our sense of personal responsibility.

American families know quality when they see it, so their dollars should be in their hands. When families are informed about medical choices, they are more capable of making their own decisions, less likely to choose the most expensive and often unnecessary options, and are more satisfied with their choices. Health Savings Accounts are tax-preferred accounts used to pay insurance premiums and other health costs. They put the family in charge of what they pay for, and should be expanded and encouraged.

Americans also need new choices beyond those offered in employment-based coverage. They want a reformed system so that wherever you go and wherever you work, your health plan goes with you. And there is a very straightforward way to achieve this.

Under current law, the federal government gives a tax benefit when employers provide health-insurance coverage to American workers and their families. This benefit doesn’t cover the total cost of the health plan, and in reality each worker and family absorbs the rest of the cost in lower wages and diminished benefits. But it provides essential support for insurance coverage. Many workers are perfectly content with this arrangement, and under my reform plan they would be able to keep that coverage. Their employer-provided health plans would be largely untouched and unchanged.

But for every American who wanted it, another option would be available: Every year, they would receive a tax credit directly, with the same cash value of the credits for employees in big companies, in a small business, or self-employed. You simply choose the insurance provider that suits you best. By mail or online, you would then inform the government of your selection. And the money to help pay for your health care would be sent straight to that insurance provider. The health plan you chose would be as good as any that an employer could choose for you. And if a church or professional organization wishes to sponsor insurance for its members, they should be able to do so. The bottom line: Health insurance would be yours and your family’s health-care plan to keep without worrying that it will go away along with your job.

The Other Problem with the Roberts Healthcare Plan

There is very little chance that the core of Lieutenant Governor Elizabeth Roberts' healthcare plan, if passed into law, would survive a court challenge. The doomed element, described by Cynthia Needham of the Projo, is the requirement that…

Businesses with more than 10 employees would be expected to purchase insurance for their workers, or face fines.

Here's the technical description of the employer mandate from the legislation itself…

28-43-8.7. Health security assessment. – (a) Each employer, except those employers employ ten (10) or fewer employees, subject to the provisions of this chapter shall be required to pay, in the same manner and at the same times as the director prescribes for the other required by this chapter, in addition to any other contributions required under this chapter, a health security assessment of each employee of eight percent (8%) of the taxable wage as defined in section 28-43-7, in addition to any other payment which that employer is to make under any other provisions of this chapter…

(b) An employer may deduct from the amount owed for each employee under subsection (a) its average expenses per employee for providing health insurance coverage or other health care benefits for its employees, allowable for the current quarter by the Internal Revenue Service as a deductible business expense;

The problem is that the Federal courts have consistently struck down state attempts to mandate health insurance by private employers for conflicting with the Employee Retirement Income Security Act of 1974 (ERISA), which makes it illegal for states to regulate employee benefits any more stringently than the Federal government does. Last year, the Fourth Circuit Court of Appeals nullified a Maryland law that would have required employers bigger than a certain size to pay a certain percentage of their payroll towards health benefits. The Fourth Circuit's ruling did not depend on the details of the mandate, who was affected or how much they had to pay. Just the fact that Maryland was trying to require a particular employee benefit was enough to run afoul of Federal law…

Because Maryland’s Fair Share Health Care Fund Act effectively requires employers in Maryland covered by the Act to restructure their employee health insurance plans, it conflicts with ERISA’s goal of permitting uniform nationwide administration of these plans. We conclude therefore that the Maryland Act is preempted by ERISA and accordingly affirm [the lower-court decision to strike it down].

Bottom line: because of ERISA, whether you like it or not, states are not allowed under current Federal to mandate any employee health benefits.

The Roberts Paradox

Cynthia Needham reports in today's Projo on the beginning of Lieutenant Governor Elizabeth Roberts' statewide tour to promote her proposed new healthcare mandates…

Lt. Gov. Elizabeth Roberts last night kicked off a statewide tour in South Providence to promote her health-care plan, making the first of 15 stops…

Similar to the Massachusetts system, the Roberts plan would require nearly all Rhode Islanders to have health coverage. Businesses with more than 10 employees would be expected to purchase insurance for their workers, or face fines. Individuals making at least $40,840 and families making $82,600 would be asked to purchase their own health care. The plan would also create a HealthHub, a quasi-public agency to help coordinate purchasing and regulate plans…

Roberts made only brief mention of the immigration issue. “This week I’ve been discouraged with how we do things in this state. But I still have confidence we can work together,” she said, segueing back to the evening’s conversation.

With respect to the illegal immigration issue mentioned by Ms. Needham, Lieutenant Governor Roberts has adopted the position that it is out-of-bounds for the state of Rhode Island to verify the citizenship/legal residency status of its new hires, believing it either to be too big a job for the government to handle, or maybe just unreasonable to ask. Yet at the same time, according to her healthcare legislation, Lt. Governor Roberts also believes that state government is ready and able to take on the burden of verifying the health insurance coverage status of every Rhode Islander...

44-30-101. Qualified coverage required -- (c) Every person required to file an individual income tax return as a resident of the state of Rhode Island, either separately or jointly with a spouse, shall indicate on the return, in a manner prescribed by the tax administrator, whether such person, as of the last day for the taxable year for which the return is filed:
(i) has qualified coverage in force as required under subsection 44-30-101(a) whether covered as an individual or as a named beneficiary of a policy covering multiple individuals; or
(ii) claims an exemption under section 44-30-102.

(d) If a person required to obtain and maintain qualified coverage under subsection 44-30-101(a) above who files a tax return in Rhode Island does not indicate on the return that he or she had such coverage in force, or if the person indicates that he or she had such coverage in force but the tax administrator determines, based on the information available to him or her, that such requirement of subsection 44-30-101(a) was not met, then the tax administrator shall compute the tax for the taxable year based on one less personal exemption, as set forth in section 44-30-2.6, than would otherwise be allowed….

44-30-103. Review -- An individual subject to section 44-30-101 who disputes the determination of applicability, as enforced by the department of revenue, may seek a review of this determination through an appeal established by the division of taxation under section 44-30-89; provided, however, that no additional penalties shall be enforced against an individual seeking review until the review is complete and any subsequent appeals have been exhausted.

Tell me, which sounds like an easier job to do, verifying the health insurance status of every Rhode Islander every year, or verifying the citizenship status of new state employees, one time, at the time of hire? The contrast emphasizes an obvious reality, that enforcing immigration law is something that certain politicians don't want to do, not something they believe can't be done.

I suppose that you might reach the conclusion that government doesn't have the time or resources to take the steps to prevent foreign nationals from breaking the law, as Lt. Governor Roberts apparently has, if you subscribe to the idea that the most important function of government is managing as tightly as possible the lives of law-abiding, gainfully employed citizens and residents. Still, it is legitimate to ask the Lt. Governor why she believes that government is competent enough to track the health insurance coverage of 1,000,000 Rhode Island residents on a year-to-year basis, but unable to reasonably determine the citizenship status of new state hires one-time.

Or does she just believe that illegal aliens are entitled to state jobs?

What the Numbers Show

Unfortunately, neither Community Catalyst nor RIte Care Works, the author and promoter respectively, seem interested in providing the full details behind a press release from The Clarendon Group that appears to support the conclusion that every dollar of RI government money taken from RIte Care comes with a 12¢ cost in economic activity but save Rhode Island — overall, not just its government — 14¢:

The report from the national non-profit advocacy organization Community Catalyst, broke down where the dollars cut from the RIte Care program would go:

• 52-cents of each dollar stays with the federal government rather than making it to Rhode Island in the form of federal matching funds.
• 35-cents of each dollar is shifted to the private sector in the form of high-cost uncompensated care that’s ultimately left to hospitals, insurers, and premium payers to pay.
• 6-cents of each dollar is lost in reduced state tax revenue that is no longer being collected on the economic activity associated with the lost federal matching funds.
• ONLY 7-CENTS REMAINS AT THE DISPOSAL OF THE STATE AS "SAVINGS."

Clearly, the authors are measuring "the state" more broadly than just its government, because they include the cost "shifted to the private sector," and surely a failure to merit matching funds doesn't shift to the expense column (for the government) in addition to being erased from the revenue column. What's notable about the findings is that money is saved even with this broad analysis.

On the other hand, they don't give the cost of lost economic activity, just the taxes on it, so the proper interpretation is probably that our analysts stirred a bunch of quick calculations in an activist pot until they arrived at a mixture that they thought to be salable.

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The Behavior Gap

Let me say right up front that access to healthcare must be improved and expanded, although it goes beyond the scope of this post to delve into the different understandings of the whats and hows of that mandate. Even were that goal to be achieved quickly, however, I suspect that the life expectancy gap between rich and poor would continue to increase, because I think the behavioral explanations play a large role and would bleed into matters of access:

While researchers do not agree on an explanation for the widening gap, they have suggested many reasons, including these:

¶Doctors can detect and treat many forms of cancer and heart disease because of advances in medical science and technology. People who are affluent and better educated are more likely to take advantage of these discoveries.

¶Smoking has declined more rapidly among people with greater education and income.

¶Lower-income people are more likely to live in unsafe neighborhoods, to engage in risky or unhealthy behavior and to eat unhealthy food.

¶Lower-income people are less likely to have health insurance, so they are less likely to receive checkups, screenings, diagnostic tests, prescription drugs and other types of care.

As you can see, New York Times reporter Robert Pear offers four examples, evenly split between behavior and "the system," but the former can be as numerous as the attributes of life. Here's another, which touches on an area about which I've written copiously (from an article to which I linked yesterday):

Hymowitz points out that all classes of Americans once followed the same life script of marriage before children. When divorce rates started soaring in the 1970s, everyone was fleeing their marriages. But then the classes started diverging. The Economist cites statistics that show among college-educated women married between 1990 and 1994, only 16.5 percent were divorced 10 years later. Among those with a high-school education or less who married in those same years, about 40 percent were divorced after a decade.

Advocates for government-propelled fixes tend to believe that forcing an expansion of access to a service will yield equal gains across groups, but that's certainly not true. Ask yourself: Would a class with a higher percentage of smokers, poor diets, and divorce be more or less likely, on average, to make full use of even completely prepaid medical services?

As I said, our healthcare system is most definitely in trouble, but change must begin with the culture.

Speaking of Illegal Immigration...

... and other budget draining policies in Rhode Island, I'd suggest that most of the solutions for this problem are of an indirect nature:

The heads of four Rhode Island hospitals testified yesterday that their medical institutions are teetering on the brink of financial disaster.

And they pleaded with key lawmakers to help — or at least not hurt — their hospitals in the 2008-09 state budget being debated before the House Finance Committee.

Governor Carcieri's proposed budget would force hospitals to pay $32.7 million more for their licenses in the coming year, a move his office said is necessary to help close a deficit of at least $348 million. The proposal, along with the rest of the governor's cost-cutting plans, now rest with the General Assembly.

"We need your help. The budget that we're looking for is a life preserver. The one that's out there now is made out of concrete," Charles S. Kinney, president and chief executive officer of Westerly Hospital, told the committee. "The entire budget ... is just going to have a further denigration on the finances of the hospitals, which are precarious."

We will never achieve the right formula for providing affordable healthcare unless we retune our overall policies to decrease the number of people who are a drag on the system and increase the number of people who are not.

Healthcare Consumer Question of the Day

Here is a question for the sage and practical-minded readers of Anchor Rising:

Recently, a friend of mine had an appointment with a doctor who has a policy requiring a $40 payment for appointments cancelled on the same day. Said friend arrived on time. Said doctor did not, not seeing the patient until 45 minutes after the scheduled appointment time.

The question is: in a completely fair universe, shouldn't the patient get $40 knocked off of the bill in circumstances like these?

Just Stop It!

Why do our legislators have such difficulty seeing the problem with bills like this:

Already successful in securing enactment of legislation to increase the level of hearing aid coverage in health insurance policies, Rep. Robert B. Jacquard (D-Dist. 17, Cranston) has introduced a bill aimed at assisting more hearing-impaired citizens.

Under Representative Jacquard’s bill, health insurance providers in Rhode Island would be required to provide coverage for cochlear implant surgery. A cochlear implant is a small electronic device that is used by individuals who are severely hard-of-hearing. Rather than amplifying sounds as a hearing aid does, cochlear implants bypass damaged portions of the ear and stimulate the auditory nerve, which sends a signal to the brain, enabling deaf people to hear speech more clearly. More than 35,000 children and adults in the United States have received a cochlear implant, and the number of surgeries performed grows each year by about 30 percent. ...

Costs for the implantation procedure have a price tag of between $45,000 and $55,000. If there are complications with the surgery or the patient requires extensive rehabilitation, the total costs can amount to over $80,000. Although many health insurance companies cover the surgery in their policies, some are reluctant to pay for the procedure due to the high up-front cost.

From where does Jacquard think the reluctant insurance companies will get the money to pay for these expensive procedures? They'll tack it on to everybody's premiums, and if they can't get away with that, they'll stop providing health insurance in Rhode Island.

Perhaps the point isn't simple enough for members of the General Assembly to comprehend: what we need in healthcare more than anything is competition. We need more providers, and to manage that, we may need to allow for a non-cochlear-inclusive program or two.

First, the Stick

Amazingly, even as they stumble into understanding of that which is making it hard to breathe in Rhode Island, they continue to tighten the noose:

In an effort to slow down the steep rise of health insurance costs in Rhode Island, Sen. Joshua Miller has introduced legislation that would prohibit health insurers in the state from increasing subscribers' premiums by more than 10 percent a year.

"Huge increases in premiums are pushing health insurance out of reach for more Rhode Islanders every year. Even people who have good jobs and decent salaries are struggling to pay their share of it, let alone those who aren't insured through their employers and have to pay the whole cost on their own," said Senator Miller, a Democrat who represents District 28 in Cranston and Warwick. "Of course insurers have to be able to raise their prices to cover costs, but average Rhode Islanders simply can't afford the size of some of the increases that have been proposed. There has to be a limit on them." ...

He says those experiences have made him aware of the pressures on the insurance industry, and also of the possible solutions that are available to make rates more reasonable.

"We've been examining both sides of this issue, and there are many underlying components that contribute to increased costs for health insurers. There are a wide range of solutions available, but until consensus has been reached within the industry about implementing them, the state should step in with some limits. In fact, these limits may accelerate the implementation of those reforms," said Senator Miller.

So, the legislator understands that there are "solutions" that we ought to pursue, but in the meantime, he's just gonna go ahead and continue with the approach that has had such wonderful results in Rhode Island thus far. Do these people think that if they mix a bit of "I know we shouldn't be so demanding" into their rhetoric, then folks will cease to be concerned about the increasing demands?

(Let whining about "right-wingers on the side of corporations" begin.)

Cross-Purpose Reform

Lt. Governor Elizabeth Roberts's healthcare proposal (PDF) strikes me as a hodgepodge with components at odds with each other. There doesn't appear to be a guiding principle, creating the risk that the good points of the program would put a reform-like light on the bad parts, potentially without even passing themselves.

New representative Frank Ferri (D, Warwick) today put forward a bill advancing one of the better suggestions:

The legislation (2008-H 7493) — which Representative Ferri is submitting in conjunction with Lt. Gov. Elizabeth H. Roberts as part of her "Healthy Rhode Island" health reform act — would allow health insurers licensed in Massachusetts and Connecticut to offer insurance products in Rhode Island without having to get any additional licenses.

This reciprocal licensing would make Rhode Island a more inviting market to insurers, and could increase the number of insurers in the state. Currently, Blue Cross & Blue Shield of Rhode Island and United HealthCare of New England are the only insurers licensed in Rhode Island.

But other parts of Healthy RI increase state government involvement, fine employers that don't provide health insurance coverage $1,000 per employee per year. and layer on mandates, such as the requirement that all dependent "children" up to age 25 may be covered under their parents' policies whether they're in school or not. Representative (D, Providence) Edith Ajello's mandate appears to be additional:

A state mandate already requires insurers to cover fertility treatment for women between the ages of 25 and 42 who are otherwise healthy but are unable to achieve or sustain pregnancy for a period of a year or more. But under current law, the mandate applies only to married women.

Arguing that that the stipulation is discriminatory and would not be permissible in other areas of state law, Representative Ajello has submitted legislation (2008-H 7239) to eliminate the word "married" from the mandate and extend coverage to all 25- to 42-year-old women, regardless of their marital status.

So the state is seeking to attract insurers to Rhode Island, and it may force employees to finance the policies, and it's going to require everybody over four times poverty to have a plan, while layering on regulations that will drive the price up — all under the increasingly pervasive watch of the nation's most corrupt and (arguably) incompetent government. Shouldn't health-conscious politicians be attempting to lower citizens' stress levels?

Well, Maybe if the Doctor's Office Was in the Mall....

I gotta say, even I was surprised to learn that somehow RIPTA depended on Medicaid money to keep running.

A federal clampdown on the state’s Medicaid program will cost as many as 18,000 needy Rhode Islanders their free bus passes and will force the state to make up for millions of dollars in lost transit money to avert wreaking havoc on the state’s bus system, state officials say.

The state is also expecting an attempt by the federal government to demand repayment of millions of dollars in past Medicaid money that was spent on transit. Those payments, reaching back to 1995, total more than $60 million, according to figures from the Rhode Island Public Transit Authority, although state officials say they expect the amount sought by the federal government in “recoupment” to be much smaller, between $4 million and $5 million.

The development means that the state, which paid an increasing amount of the cost of running the state bus system with Medicaid money, will now have to pick up that expense or face a major disruption, probably including bus service cuts and perhaps layoffs, at RIPTA.

Only a bureaucrat and/or the most committed government=mommy proponent could possibly think that a blanket ride-the-bus-for-free pass (versus a certain allotment per year, for instance) was a legit use of Medicaid funds.

DHS Director Gary Alexander said the change will affect about 18,000 of the 27,000 RIte Care members who now get bus passes, worth $45 a month. He said the other 9,000 will continue to get passes through the Family Independence Program, formerly the welfare program.

The reason for the change is that Medicaid doesn’t pay for general transportation, only for transportation related to medical treatment, according to the Centers for Medicare & Medicaid Services, which runs the Medicare, Medicaid and related programs.

Hey, I can understand the need to pay for transportation to the doctor or hospital and how there is some justification for Medicaid dollars to be used to subsidize such transport. But how did they ever think that Medicaid could be legitimately used to pay for unlimited trips to the mall, too? I guess so long as they could get away with it, it was OK, right? And now 18,000 people will be ticked off because their "right" to free transportation will be yanked. Thus does the enablement of the entitlement mindset end up hurting those who are supposed to benefit from the "helping hand." At least until the money (about $10 million) disappears.

Redefining Corporate Welfare

Ian Donnis points to a "strong post" (alluded to earlier) which illustrates how approximately $11.2 million of taxpayer dollars are going to government supplied health care for workers who don't get health care through their jobs.

Where is that money going, you might ask….

It is going to Bank of America, and their 382 employees on RIte Care / Rite Share/ or Medicaid. It is going to the 610 employees of Citizens Bank that are getting our taxes. It is only 310 folks at CVS (plastic bag, anyone) but 500 Wal Mart employees are paid for by the State. In total more than 4,000 workers for these corporations get us to pay for the health insurance. That, my dear reader, is corporate welfare.

First, a correction. The numbers above are taken from the Public Health Access Beneficiary Report and are equal to the combined total of employees + dependents covered by RIte Care / Rite Share / Medicaid, not just the employees as was claimed. In reality, the numbers of employees of Bank of America, Citizens Bank, CVS and Wal Mart that qualify for the aforementioned programs are, respectively, 112, 179, 86 and 140 (not 382, 610, 310 and 500).

Regardless of all that, underlying the charge is the false premise that companies should be obligated to provide all employees (including part time and temporary workers) health care. Last time I checked, there is no such law or rule. So companies aren't shirking their responsibilities--and taking "corporate welfare" from the government--if they never made the promise in the first place.

Additionally, as the Health Insurance Commissioner Christopher F. Koller explained in his overview of the 2005 Rhode Island Employer Survey Report (both referenced in the Public Health Access Beneficiary Report):

Faced with annual double digit premium increases, small employers are being forced to decide between increasing cost sharing with employees, dropping health benefits altogether, or taking a hit to core business performance. Employees are forced to decide between the risks of going uninsured or sharing in the rising costs.

Thus, even if employers had offered generous health care benefits in the past, the economics have changed and adjustments had to be made so that companies could remain competitive. (Something the public sector seems to have a hard time grasping, incidentally). This includes reducing their ability to subsidize employee health care plans (or offer defined benefit pension plans for that matter). So long as we continue to rely on an employer-centered health care system, that is the way it will continue to be. Such reductions don't mean employers are shirking their responsibilities. Often times it's just the opposite: they're trying to remain competitive and continue to employ people.

Willful Naivete on Healthcare

Although I'm fully sympathetic with the inclination to ignore complications, I find it hard to believe that syndicated columnist Froma Harrop hasn't heard the basic argument against the following assumption, spoken this time with reference to health insurance (emphasis added):

You see, health care has become just another racket by which clever operators can scoop up fortunes. There's a ton of money to be made nickel-and-diming doctors and hospitals while making sure you don't sell insurance to sick people — and that's the legal part. Once government offers coverage, it's Game Over for the manipulators — and more of our health-care dollars go for health care.

She can't really believe such a bromide as "once government offers coverage, it's Game Over for the manipulators," can she? The manipulators just shift gears, becoming part of the government, pulling its levers, and pushing for laws favorable to them. It's a peculiarity of the liberal mind that identical problems transported to government somehow obtain a sheen of good intentions. Companies are evil because they cut corners and pressure providers in order to make a profit to sustain themselves; government is simply doing the best it can when it shaves corners through legislation and rations services to fit budgets.

From my experience, those greed-inspired businessmen are at least more likely to cut corners internally than the government, with its unionized and well-entrenched interests. The reason Harrop doesn't "hear Medicare beneficiaries clamoring for a return to private coverage" is that government services — financed systematically by somebody else's money — are more generous and less risky. They can only be so, however, at the expense of the rest of the industry and must, therefore, remain a relatively small percentage of the market.

Alzheimer's Research Breakthrough and the RI Economy

Take this with a grain of salt--it's early research after all--but there may have been a substantial breakthrough in Alzheimer's research:

A drug used for arthritis can reverse the symptoms of Alzheimer's "in minutes".

It appears to tackle one of the main features of the disease - inflammation in the brain.

The drug, called Enbrel, is injected into the spine where it blocks a chemical responsible for damaging the brain and other organs.

A pilot study carried out by U.S. researchers found one patient had his symptoms reversed "in minutes".

Other patients have shown some improvements in symptoms such as forgetfulness and confusion after weekly injections over six months.

The study of 15 patients with moderate to severe Alzheimer's has just been published in the Journal of Neuroinflammation by online publishers Biomed Central.

The experiment showed that Enbrel can deactivate TNF (tumour necrosis factor) - a chemical in the fluid surrounding the brain that is found in Alzheimer's sufferers.

When used by arthritis sufferers, the drug is self-administered by injection and researchers had to develop a way of injecting it into the spine to affect the brain cells.

Sue Griffin, a researcher at the University of Arkansas for Medical Sciences, said: 'It is unprecedented to see cognitive and behavioural improvement in a patient with established dementia within minutes of therapeutic intervention.

'This gives all of us in Alzheimer research a tremendous new clue

about new avenues of research.' Enbrel is not approved for treating Alzheimer's in the U.S. or the UK and is regarded as highly experimental, said Dr Griffin.

'Even though this report predominantly discusses a single patient it is of significant scientific interest because of the potential insight it may give into the processes involved in the brain dysfunction of Alzheimer's,' she added.

Lead author of the study Edward Tobinick, of the University of California and Director of the Institute for Neurological Research, said the drug had 'a very rapid effect that's never been reported in a human being before'.

He added: 'It makes practical changes that are significant and perceptible, making a difference to his daily living.

'Some patients have been able to start driving again. They don't come back to normal but the change is good enough for patients to want to continue treatment.'

For any who have been effected by Alzheimer's, this could be great news. What does this have to do with Rhode Island? The manufacturer of Enbrel--the drug used in the study--is Amgen and the drug is made right in her in its West Greenwich plant. The same facility has experienced a rough patch lately as Amgen attempted to make up for losses other areas by implementing cost-cutting measures (read: job cuts) here in Rhode Island (it appears to have worked). This new use for an established drug could mean an economic boon to the company and perhaps--eventually--more jobs here in Rhode Island.

RE: Rhode Island's Literal Depressed Status

There may be a reason the state as a whole is so depressed: not enough Republicans!

Republicans are significantly more likely than Democrats or independents to rate their mental health as excellent, according to data from the last four November Gallup Health and Healthcare polls. Fifty-eight percent of Republicans report having excellent mental health, compared to 43% of independents and 38% of Democrats. This relationship between party identification and reports of excellent mental health persists even within categories of income, age, gender, church attendance, and education.

***

What are the implications of these findings?

Correlation is no proof of causation, of course. The reason the relationship exists between being a Republican and more positive mental health is unknown, and one cannot say whether something about being a Republican causes a person to be more mentally healthy, or whether something about being mentally healthy causes a person to choose to become a Republican (or whether some third variable is responsible for causing both to be parallel).

Previous analysis...shows that a number of variables are related to self-reported mental health -- including, in particular, income. Because Republicans have on average higher incomes than independents or Democrats, part of the explanation for the relationship between being a Republican and having better mental health is a result of this underlying factor. The same is true for several other variables.

But the key finding of the analyses presented here is that being a Republican appears to have an independent relationship on positive mental health above and beyond what can be explained by these types of demographic and lifestyle variables. The exact explanation for this persistent relationship -- as noted -- is unclear.

OK, I can hear the wisecracks coming. But I'll see your "blissfully ignorant" and raise you an "optimistic about the future." Regardless, I think the path to a happier state is clear, don't you?

Rhode Island's Literal Depressed Status

The number and kinds of lists that Rhode Island is placing near the bottom of is starting to get just plain ridiculous. Here is yet another one from an organization called Mental Health America…

Using data from nationally representative surveys conducted by the United States government, Mental Health America created two different rankings of the states: one showing the state rankings of depression and one showing the state rank in terms of suicide rates.

Four different measures of depression and mental health status were used to develop one composite measure of the level of depression in a given state. The four measures were: (1) the percentage of the adult population experiencing at least one major depressive episode in the past year, (2) the percentage of the adolescent population (ages 12 to 17) experiencing at least one major depressive episode in the past year, (3) the percentage of the adult population experiencing serious psychological distress, and (4) the average number of days in the past 30 days in which the population reported that their mental health was not good….

• (12) Vermont
• (16) Massachusetts
• (20) New Hampshire
• (38) Connecticut
• (41) Maine
• (48) Rhode Island

A Note for Our Dialogue

Well, if we're all going to sit around the table and resolve the healthcare crisis in Rhode Island, as Lt. Gov. Elizabeth Roberts wishes, I'd like to make sure that this sort of testimony doesn't slip out of sight onto the floor:

Unfortunately Sicko is a dishonest film. That is not only my opinion. It is the opinion of Professor Lord Robert Winston, the consultant and advocate of the NHS. When asked on BBC Radio 4 whether he recognised the NHS as portrayed in this film, Winston replied: "No, I didn't. Most of it was filmed at my hospital [the Hammersmith in west London], which is a very good hospital but doesn't represent what the NHS is like."

I didn't recognise it either, from years of visiting NHS hospitals. Moore painted a rose-tinted vision of spotless wards, impeccable treatment, happy patients who laugh away any suggestion of waiting in casualty, and a glamorous young GP who combines his devotion to his patients with a salary of £100,000, a house worth £1m and two cars. All this, and for free.

This, along with an even rosier portrait of the French welfare system, is what Moore says the state can and should provide. You would never guess from Sicko that the NHS is in deep trouble, mired in scandal and incompetence, despite the injection of billions of pounds of taxpayers' money.

Making It Your Job to Stay Healthy

The economics of changing insurance rates based on demonstration of a healthy lifestyle are simply to understand. Still, do we really wish to make it the responsibility of employers to enforce those lifestyles?

[State Health Insurance Commissioner Christopher F.] Koller explained that HEALTHpact was created, at the direction of Governor Carcieri and the General Assembly, as an alternative to high-premium, high-deductible, reduced-coverage health insurance that small-business owners have shunned.

It requires managers and workers to be more engaged in the process of buying health insurance.

To qualify for the least-costly policy under HEALTHpact, a worker must complete a “health risk assessment” that includes a pledge to lower body weight, stop smoking and participate in disease/case management. After that, there are regular assessments, and if the employee does not comply with the requirements, the deductible goes up — significantly.

It seems far more rational, to me, to make health insurance an individual thing and then to offer discounts — adjust premiums — to those who live healthily. Lowering my blood pressure and cholesterol shouldn't be a concern of my employer, at least inasmuch as it doesn't affect my performance.

Roland Benjamin: The Problems with Medicare-for-All

Hyperbole aside, Robert Whitcomb’s Projo op-ed from October 19 can be summarized by his one statement:

In short, extend Medicare to everyone.

He proceeds to use exaggerated estimations of private insurance overhead costs and completes his argument by saying:

Then we would not have to hang our heads in shame that Americans are the most unhealthy people of any developed nation.

The administrative assumptions of Whitcomb’s argument are suspect at best, and fatally flawed at worst. A white paper from the Manhattan Institute, published a few weeks ago, analyzes the holes in the Medicare-for-All debate. To support his claim of efficiency, Whitcomb estimates that non-benefit expenses in the private insurance market are near 25%, while the same expenses are only 2% for Medicare administration.

The Manhattan paper cites all the usual sources from both sides of the debate like Krugman, Council on Affordable Health Insurance, Rand, Commonwealth, Kaiser Family Foundation, etc. and points out a few interesting analyses. Notably, administrative costs of Medicare are nowhere near the 2% Whitcomb describes in his piece (nor are private costs anywhere near the 25% number). The paper uses conservative estimates of 14% private (while citing estimates as low as 11%) and 6% Medicare to make the claim that the theorized savings by transition are impossible to realize. Private carrier rates are confirmed locally by a study from the Rhode Island Office of the Health Insurance Commissioner citing total benefit payouts by carriers at 85.2% of premiums (or 14.8% non-benefit spending, including some percentage for taxes). The Medicare rate shifts dramatically, for example, when fraud expenses are classified as non-benefit expense instead of actual benefit spending. An apples to apples comparison using consistent accounting methods shows the true cost of Medicare between 6% and 8%.

The Manhattan study then goes on to describe the evolving nature of spending by those who would be newly insured under the policy and underscores the deficit that will be realized based on static assumptions. Finally, the white paper describes the response to tax policy that will inevitably result. Migrating the funding system to a Medicare style payroll tax will increase explicit labor cost in the US.

Currently, payroll taxes cover Medicare, private insurance premiums cover the health care of active employees and dependents and some income taxes cover another portion of health care spending. In the three buckets (or more), the costs tied to labor are less explicit and more dispersed. Take all of those costs and apply them in one bucket that is explicitly tied to labor and there will be a problem. Like it or not, corporate behavior responds to tax policy with amazing agility and immediacy. Increase the cost to employ directly, and work will move to regions where labor costs less. Or in the best case, capital investments facing a lower ROI bar will be exploited where labor can be replaced with automation. Reduce the workforce, or the value of a skilled workforce, and the tax base drops, perpetuating the spending deficit in an otherwise well intentioned policy.

The economic argument of Medicare for All has the underpinning that the cost of the uninsured is at the root of the health care inflationary problem. Yet I have not seen convincing data that this is true. No studies that I have seen refute either of these two facts:

• Uncompensated care to the uninsured is not a top tier cost driver. Kaiser shows uncompensated care around 2.05% of all health care spending, while others show the impact at less than one percent. Defensive medicine accounts for anywhere from 3 to 10 times that amount depending on the definition. Rx sales of the top 15 drugs alone exceed the total amount of uncompensated care. And so on and so on…
• Uncompensated care to the uninsured has not inflated at the same pace as overall spending. In fact, the inflation rate of spending by the uninsured has kept pace or lagged behind normal inflation since 2000 (this comes right from the Medical Expenditure Panel Survey MEPS). Meanwhile, the spending by the insured has increased at alarming rates. The economic problem lies with those currently insured. Bringing more individuals into that system, and providing the same or more insulation from real prices will only aggravate the situation.

Since most of the uncompensated care is funded by government sources, the real uncompensated costs are relatively small. So the economic case for Medicare for All makes some pretty big leaps. There is little evidence that supports the economic urgency argued by Medicare for All advocates.

The only argument to be made for insuring all via Medicare type arrangement then is a moral one. While well intentioned, the demographics of the uninsured suggest that the moral argument may be shaky as well. With 93% either opting out of available insurance for non-affordability reasons, without insurance for less than 4 months, or without citizenship status, there may be as few as 4 million people who would truly benefit from the coverage. These are the people that are at or beyond their ability to afford or access coverage today. This would also be the population most likely impacted when the inevitable labor shifts occur in response to changing tax policy. To use the same hyperbole that Whitcomb employs, would it be moral to give someone insurance, only to have their job become prematurely obsolete or permanently displaced?

Behold the People's Glorious Five Year Plan

I wonder, when Lieutenant Governor Elizabeth Roberts proposes a five-year plan for healthcare reform, followed by Projo columnist Charles Bakst writing approvingly of it…

It was a pleasure to hear Lt. Gov. Elizabeth Roberts deliver a thoughtful speech Tuesday calling for a program of compulsory, affordable health insurance for Rhode Islanders....

"Where is the vision? Rather than whittling away at our safety net and trimming at the edges of the personnel budget, we should be thinking about the long-term role of government", [asked Lt. Governor Roberts]....

She pledged to work to bring interested parties together to devise a five-year plan;

…is it the result of a lack any sense of historical irony, or of a sincere belief that government-created five-year plans are unquestionably the best way to do things, but have never properly been tried?

Behold the People's Glorious Five Year Plan

I wonder, when Lieutenant Governor Elizabeth Roberts proposes a five-year plan for healthcare reform, followed by Projo columnist Charles Bakst writing approvingly of it…

It was a pleasure to hear Lt. Gov. Elizabeth Roberts deliver a thoughtful speech Tuesday calling for a program of compulsory, affordable health insurance for Rhode Islanders....

"Where is the vision? Rather than whittling away at our safety net and trimming at the edges of the personnel budget, we should be thinking about the long-term role of government", [asked Lt. Governor Roberts]....

She pledged to work to bring interested parties together to devise a five-year plan;

…is it the result of a lack any sense of historical irony, or of a sincere belief that government-created five-year plans are unquestionably the best way to do things, but have never properly been tried?

Just One Thing, Mr. Whitcomb

In a signed editorial that doesn't appear to be online, Providence Journal Editorial Pages Editor Robert Whitcomb suggests that the simple solution to America's healthcare problem is to expand Medicare to encompass everybody:

The Republicans will do anything but go to thye simplest, most cost-effective reform — putting everyone into Medicare. The latter's overhead: 2 percent; for-profit insurance companies': 25 percent. Why must everything in health care be done in such complicated and expensive ways? The reason is simple: Because rich and powerful people profit from the current arrangements. ...

... Americans are hungry for such reform. As it is, America has the worst healthcare system in the developed world — it's unfair, unbelievably inefficient and complicated, and grossly expensive. The best way to reform it is to disconnect health insurance from the workplace and to make sure that everyone is in the same national pool — the healthy and the unhealthy. That's what makes insurance plans fair and efficient, not the current cherry-picking arrangements.

In short, extend Medicare to everyone. And for minor medical problems, people should pay out of their own pockets, which would act as an economic discipline. The invisibility of real costs to many people with insurance has driven up overall costs. Medicare, like all insurance, should be for serious problems.

Clearly, Mr. Whitcomb is not proposing just an extension of Medicare, as it exists, to everybody. He would limit insurance to "serious problems" (I agree). He would require people not to insulate themselves from the process that turns their money into the health services that they use (again, I agree). He would disconnect health insurance from employment. Ah, now there's the thing.

A quick refresher on how Medicare is funded:

The two parts of traditional Medicare are funded in very different ways. Part A, which covers in-patient hospital bills, is financed by a trust fund known as the Hospital Insurance Fund (HI Fund).

The 1.45 percent that the government deducts from your paycheck -- and also from your employer -- is placed in the HI Fund to cover Part A services. This payroll tax provides the bulk of the money that flows into the HI Fund; that money is in turn used to cover Part A expenses.

Part B, which covers doctor appointments, is run by a separate trust fund, called the Supplemental Medical Insurance Trust Fund (SMI Fund). Enrollee premiums and funds from the general budget supply the SMI Fund, which then pays for Part B services.

So, for Part A, you currently pay 1.45% of your salary and your employer pays the same amount again on your behalf, as it were. The link between healthcare and employment remains as a function of Medicare's structure. Now consider that this money associated with your salary currently covers just over 25% of a senior's healthcare. By 2075, every two workers will be paying for a single retiree, so the percentage of salary will have to go up to roughly 6% (employee and employer contributions) to maintain the equivalent services.

Were everybody to dive into the Medicare pool, the ratio would become approximately 0.8 workers per recipient, making the percentage contribution a little under 13% of salary. Sharp readers will have noticed that I've forgotten an additional consideration that I haven't the time to work through, just now: If Medicare covered everybody, each worker would also be paying for those who are unemployed, whether they are adults or children. My guess is that the percentage of salary would increase to an amount at least as high as the combined contribution that my employer and I currently make to my healthcare. In other words, "including everybody in Medicare" isn't but so different from requiring all employers to offer healthcare to their employees' families, with an additional fund for unemployed and retired adults.

And nothing above addresses the increased cost of "enrollee premiums and funds from the general budget" that would have to be raised via taxes for Part B. I don't know from where Whitcomb took his overhead numbers, but it isn't at all clear to me that my cost — taking myself as an example of exactly the sort of head of struggling household whom healthcare costs could easily break — would improve, as an absolute matter or in relation to services.

Worse yet, the risk is surely tremendous that the system would change when it shifts from covering a minority to being the only game in town — and one run ultimately by politicians. Who will decide what are "minor medical problems"? Who will decide from whom it is proper to demand payment for non-emergencies? The answer cannot be other than "rich and powerful people," back again, but with a government-sanctioned monopoly.

S-CHIP Veto

The President vetoed the bill that sought to expand the S-CHIP program and our usual suspects piped up with the same old hyperbole:

“Playing politics with the health care coverage of 10 million children is unacceptable, but that is exactly what President Bush did today when he vetoed H.R. 976, the reauthorization of the State Children’s Health Insurance Program, better known as RIte Care in Rhode Island,” Rep. Jim Langevin said.

Langevin called it a "bipartisan plan" that would help more than 30,000 low-income Rhode Island children while not changing eligibility rules.

"I look forward to the opportunity to cast my vote to override this unfortunate and misguided veto," Langevin said.

Sen. Sheldon Whitehouse said the veto “is a stunning rejection of one of America’s most deeply-held convictions: that every family, and every child, must have access to health care they can afford."

Rep. Patrick Kennedy said it is “unconscionable" that Bush would veto something "aimed at providing 10 million children the health care they deserve. The President’s veto of the State Children’s Health Insurance Program is a slap in the face to families all across America."

The fact is, the President would support a reauthorization, just not at the level Congress wants. And they knew it, so this is being played for political points, nothing else. Sure, there are some Republican Senators who are playing along, but I think it's because they like the idea of expanding government health-care into the middle-class for, shall we say, electoral reasons...Here's the President's explanation:

First of all, the intent of the S-CHIP legislation passed previous to my administration is to help poor children's families buy the children health care, or get them on health care. That's what it is intended to do. Poor children in America are covered by what's called Medicaid. We spend about -- this year -- about $35.5 billion on poor children's health insurance....The S-CHIP program was supposed to help those poor families, the children of poor families have the ability to get health insurance for their children. I strongly support the program. I like the idea of helping those who are poor be able to get health coverage for their children....As a matter of fact, my budget -- the budget request I put in said, let's increase the spending to make sure that the program does what it's supposed to do: sign up poor children for S-CHIP....

I want to tell you a startling statistic, that based on their own states' projections -- in other words, this isn't a federal projection, it's the states saying this is what's happening -- states like New Jersey, Michigan, Minnesota, Rhode Island, Illinois and New Mexico spend more money on adults in the S-CHIP program than they do on children. In other words, the initial intent of the program is not being recognized, is not being met.

It is estimated by -- here's the thing, just so you know, this program expands coverage, federal coverage up to families earning $83,000 a year. That doesn't sound poor to me. The intent of the program was to focus on poor children, not adults or families earning up to $83,000 a year....

Some have run the numbers and discovered the extent of the bloat:

This would involve expanding the program to cover 4 million more children and adding $35 Billion to its cost, over the next five years. Assuming the dollars are base year and uniformly phased, the Senate version of S-CHIP makes the annual cost of the program increase from $4 Billion to $11 Billion. This would increase program costs by 175% on the top line.

The unit cost per child insured also increases dramatically. The original program insured 6.9 million children, at a price of $4 Billion a year, for a unit price per child insured of approximately $580. The Senate program extension would insure roughly 11 Million children at approximately $11 Billion per year, for a cost of $1,000 per child. This is an increase of $420 per child, or a unit cost growth of 72%.

Finally, one of the sponsors of the original S-CHIP legislation is against this new expansion:

“I want to thank Majority Leader Henry Reid for recognizing that I cast the only correct vote about SCHIP in the state of Maryland,” said Congressman Roscoe Bartlett upon learning that the Senate Majority Leader mentioned today there was only one vote in Maryland to sustain the President’s veto of the SCHIP expansion.

Congressman Bartlett added, “I’m proud that I voted to create the SCHIP program in 1997. I want to help the working poor, but Democrats are demanding that SCHIP be expanded to have government-controlled, taxpayer-paid health care for millions of children who already have private health coverage.”

And so are some Republicans.

Poor Diagnoses, or Munchausen by Proxy?

Rhode Island Kids Count's Jill Beckwith is correct that Rhode Island is "heading in the wrong direction" when it comes to healthcare. According to Projo Medical Writer Felice Freyer, fewer Rhode Island workers have healthcare coverage, a higher percentage of children are without it, and yet:

Rhode Island spends a higher proportion of its economy and its state budget on health care than the rest of New England and the nation.

Why, then, do three of the four recommendations that Freyer reports from "a first-of-its-kind report" by the state's health insurance commissioner, Christopher Koller, call for increased public aid, with the fourth suggesting that the state "require employers to offer health insurance and individuals to buy it"? Either the problem is being misdiagnosed, or the care-for-you community in the public sphere has a social manifestation of Munchausen by proxy (the disease that led that mother in The Sixth Sense to spoon Pine-Sole into her daughter's soup).

Don't misunderstand: requiring people to buy their own health insurance is a key component of the solution that I've increasingly been favoring, but in typical Rhode Island fashion, it looks as if the powers that be are fixin' to get it all wrong. Expanding the number of people who can claim publicly funded insurance while leaning on companies and slightly wealthier individuals (such as those at three times the poverty level), and while taking no steps to decrease regulations or draw additional insurers to our local market, will only reinforce the trends that are killing the state.

If, for instance, RI Senate Majority Leader Teresa Paiva Weed should decide to act on her observation that (in Freyer's words) "it may be difficult to regulate large employers because many are self-insured," large employers will have one more incentive leave, even as disproportionate handouts continue to spur the needy to come.

Never Know Unless You Ask

There's an odd omission from Steve Peoples's article about the new medicine copays for impoverished recipients of state aid. We get the policy's numbers:

McCaffrey is among 14,000 impoverished Rhode Islanders on fee-for-service Medicaid who will be asked to shoulder a portion of their prescription drugs — $1 for generics and $3 for brand-name drugs — as of Oct. 1. The fees were enacted by the General Assembly in the state budget, part of a larger effort to close a massive budget deficit.

State officials say the copays will save state taxpayers nearly $600,000.

McCaffrey, who is disabled and receives $680 each month, estimates her monthly drug costs will grow to about $16.

We get the sad story:

McCaffrey, 47, needs medicine to function. The disabled Providence woman takes eight medications each day for a list of ailments that include major depression, asthma, diabetes and posttraumatic stress disorder.

We get the incensed calls for the government to spend money advertising a loophole:

"It's outrageous, shameful really, that DHS made a deliberate decision ... not to tell people that, under federal and state law, the drugstore has to fill their prescription if they are unable to afford the copay," Mary Curtain, a paralegal with Rhode Island Legal Services, said at yesterday's hearing.

We even get the Rhode-Island-suffers-in-a-national-comparison factoid:

In charging copays for this program, Rhode Island is not unique. More than 40 states already do, according to the federal Center for Medicare and Medicaid Services.

But nobody in the story offers — nor does Mr. Peoples ask about — suggestions of familial or community charity. Apparently, nobody worth quoting for the story is able to come up with creative ideas for helping the most needy among us drum up sixteen bucks a month for medicine. How about a jar at the pharmacy counter? How about a community fundraiser? What if kids — under the heading of Civic Participation — volunteered for short bursts of work (either in pharmacies or elsewhere) and donated their pay to a copay fund?

Why, in this state, must it always be career advocates pushing the government to find ways of forcing one group of citizens to bankroll another? Sure, the extra government spending for this program, set apart from the rest, amounts to very little for the average taxpayer, but it is not set apart, and the very littles add up. As for the costs to the individual in dependency and to the community in apathy, those are incalculable.

United States Leads All Developed Countries -- Even Those With Universal Health Care -- In Cancer Survival

According to a study published in The Lancet Oncology medical journal, the United States has the best cancer survival rate in the developed world. The tables below are from an article on the study published in Britain's Daily Telegraph (h/t Andrew Stuttaford)…

"Survival rate" was defined as "the number of patients who are alive five years after diagnosis".

The Telegraph article, focused on Britain's poor showing in the study, contains a couple of notable observations…

1. For women, England was the fifth worst in a league of 22 countries. Scotland came bottom. Cancer experts blamed late diagnosis and long waiting lists.… Prof Richard Sullivan at Cancer Research UK said: "Cancer is still not being diagnosed early enough in all cases."

   But wait – I thought this wasn't possible in a country with a "universal" health care system. Don't universal health care proponents promise that universality guarantees that everyone will have their illnesses diagnosed early?

2. A second article, which looked at 2.7 million patients diagnosed between 1995 and 1999, found that countries that spent the most on health per capita per year had better survival rates.

   Britain was the exception. Despite spending up to £1,500 on health per person per year, it recorded similar survival rates for Hodgkin's disease and lung cancer as Poland, which spends a third of that amount.

   Contrary to what the folk-Marxists out there argue, not every problem can be solved by increasing the resources controlled by government. How money gets spent matters. And big government bureaucracies are simply not the best option for making medical decisions that will have life or death impacts on individual people.

ProJo: Teacher Benny's "All over the board"

The ProJo reports that teacher benefits in RI are "all over the board" and gives some stats in the differences among plans by district and differences in buyback options. It's an old and familiar tune around here, but the central point is worth repeating:

Last year, after a decade in which health insurance emerged as a critical and contentious contract issue, 33 of the state’s 36 districts required some form of cost sharing. But teacher contribution still trails private sector workers in the state by a wide margin — although in some communities teachers are paying far more than other public employees.

Hey, school boards and city councils are as at fault as the unions here, folks. In the world of collective-bargaining, they haven't been up to snuff (even granting their amateurish experience versus those employed by unions solely to bargain). But maybe going forward, they can take Rhode Island Federation of Teachers President Marcia Reback statement--that “to the people I represent, health insurance is as important — if not more important — than salaries"--as a way to prioritize negotiable line-items. But perhaps the biggest line-item that can be dispensed with is the asinine "buy back" options that are still included in nearly all state contracts--teacher and otherwise. It can't be that difficult to determine if an employee is covered by their public-employee spouses health insurance, can it?

The Wisconsin Universal Coverage Plan

Today’s OpinionJournal has an editorial describing a universal health care plan proposed for Wisconsin. To borrow a phrase from Ian Donnis, the budget numbers are eye-popping…

Democrats who run the Wisconsin Senate have dropped the Washington pretense of incremental health-care reform and moved directly to passing a plan to insure every resident under the age of 65 in the state. And, wow, is "free" health care expensive. The plan would cost an estimated $15.2 billion, or $3 billion more than the state currently collects in all income, sales and corporate income taxes. It represents an average of $510 a month in higher taxes for every Wisconsin worker.

Employees and businesses would pay for the plan by sharing the cost of a new 14.5% employment tax on wages. Wisconsin businesses would have to compete with out-of-state businesses and foreign rivals while shouldering a 29.8% combined federal-state payroll tax, nearly double the 15.3% payroll tax paid by non-Wisconsin firms for Social Security and Medicare combined.

Pro-rating the total dollars spent by population (5.5 million in Wisconsin, versus about 1 million in Rhode Island), the cost of a similar plan for Rhode Island would carry an estimated price tag of about 2.7 billion dollars, or about 80% of existing general revenues.

Basically we’re talking about making state governments into giant health insurance companies and making all other state government functions into side-operations of the super-insurers.

Wisconsin officials realize that many people aren’t going to be satisfied with their state-controlled coverage (especially if it’s run with the same competence that states have applied to say, public pension funds), so they’re moving immediately to block alternatives…

The plan is also openly hostile to market incentives that contain costs. Private companies are making modest progress in sweating out health-care inflation by making patients more cost-conscious through increased copayments, health savings accounts, and incentives for wellness. The Wisconsin program moves in the opposite direction: It reduces out-of-pocket copayments, bars money-saving HSA plans, and increases the number of mandated medical services covered under the plan.

So where will savings come from? Where they always do in any government plan: Rationing via price controls and, as costs rise, waiting periods and coverage restrictions.

Wisconsin officials are conceding that that their plan will force many people to pay high prices for coverage that doesn’t make sense for them and therefore are denying access to plans that would give people better ability to tailor coverage to their individual needs. It’s a perfect example of the standard excess of big-government: If you don’t have the imagination or skill or desire to build a better mousetrap, then make building new styles of mousetrap illegal!

Too Many Sperm Being Injected in Rhode Island

Anecdotal evidence of the unintended consequences of insurance mandates and bureaucratically-set healthcare pricing, courtesy of the Associated Press…

Fertility clinics are overusing a laboratory technique and costing infertile couples and some insurers hundreds of extra dollars, a new study suggests.

At issue is a procedure that injects a single sperm into an egg. The method is considered the best option for couples in which the man has defective sperm or extremely low sperm counts.

But many clinics are using it for other infertile couples, even though it often doesn’t work as well as the standard lab dish method, according to a study in Thursday’s New England Journal of Medicine.

Sperm injection adds about $1,500 to the $12,400 average cost of an in vitro fertilization treatment cycle, the authors said.

“This paper is particularly troubling because we’ve got a major shift in practice that isn’t evidence driven. The paper suggests it may be driven by money,” said Arthur Caplan, director of the University of Pennsylvania’s Center for Bioethics and a contributing writer for MSNBC.com's Breaking Bioethics column....

The research team reviewed a decade of results that hundreds of fertility clinics reported to the federal government. In 2004, about 58 percent of treatment attempts included sperm injection — up from 11 percent in 1995.

But the proportion of couples who have trouble conceiving because of the man’s sperm has stayed constant, at around 34 percent. This suggests that the sperm-injection technique is being urged on many couples who do not need it and might be better off with traditional lab dish, or in vitro, fertilization, Caplan said.

Sperm injection does not increase overall success rates for healthy births. The researchers found that among infertility treatment attempts with successful egg retrievals in 2004, about 31 percent of those involving sperm injection resulted in a live birth. The percentage was higher — 33 percent — for those that did not use the sperm injection....

They also noted that sperm-injection rates were higher in three states — Illinois, Massachusetts and Rhode Island — that mandate coverage of the technique than in states without such a requirement.

Now, I know there are some critics of the current healthcare system will say this is clearly a result of the evils of for-profit medicine, but that argument doesn't fly here.

Prices for medical procedures in America today are set by a mixture of private and public insurance bureaucracies. (And if you don't like the price specified by your insurer, too bad; you have little opportunity to go elsewhere, because of our employer-based healthcare system). Since insurance companies set the reimbursement rates, it’s doubtful that doctors can be blamed for conspiring to establish a bigger profit margin for the injection versus the lab dish procedure. And since the insurers don't provide the actual service, they can't be making more money by encouraging higher-priced treatments.

That leaves at least two explanations, in the absence of evidence of medical necessity, for the growing preference for injection treatments...

1. There are different profit margins for the two procedures, resulting from the fact that bureaucratically established prices have not responded efficiently or rationally to the true costs of providing treatments, and some doctors are indeed getting greedy.
2. Alternatively, note that the AP story states only that the price of the injection treatment is higher, not that the profit margin is higher. The increase in injections could also result from the fact that some patients figure the higher-cost treatment must be the better treatment, and since they're paying the same amount for either treatment (assuming the price of both treatments exceed their deductible), that's the treatment they choose.

Either way, what reason is there to believe that a situation like this will improve if health insurance becomes more stringently controlled by government bureaucracy?

Truth: An Antidote to Sicko

Having watched Michael Moore's latest bit of propaganda — Sicko, about the evil of American healthcare in comparison to saintly socialism — a bit more closely than is probably healthy, David Gratzer felt compelled to offer another view:

Consider, for instance, Mr. Moore's claim that ERs don't overcrowd in Canada. A Canadian government study recently found that only about half of patients are treated in a timely manner, as defined by local medical and hospital associations. "The research merely confirms anecdotal reports of interminable waits," reported a national newspaper. While people in rural areas seem to fare better, Toronto patients receive care in four hours on average; one in 10 patients waits more than a dozen hours.

This problem hit close to home last year: A relative, living in Winnipeg, nearly died of a strangulated bowel while lying on a stretcher for five hours, writhing in pain. To get the needed ultrasound, he was sent by ambulance to another hospital.

In Britain, the Department of Health recently acknowledged that one in eight patients wait more than a year for surgery. Around the time Mr. Moore was putting the finishing touches on his documentary, a hospital in Sutton Coldfield announced its new money-saving linen policy: Housekeeping will no longer change the bed sheets between patients, just turn them over. France's system failed so spectacularly in the summer heat of 2003 that 13,000 people died, largely of dehydration. Hospitals stopped answering the phones and ambulance attendants told people to fend for themselves.

No wonder, Gratzer observes, single-payer systems worldwide are beginning to make way for private healthcare, even as Western dead-enders push for the only fair system — one in which the wealthy can travel great distances and pay high prices for rapid service while the average shmoe is forced into compliance with Darwin's prescription.

Sheesh! What do we plebs think "privilege" means?

Another Argument for In-Store Health Clinics

In an op-ed in today's Projo about CVS' proposed network of in-store health clinics, Joann Fitzpatrick (a retired editor for the Quincy Patriot Ledger) argues that much of what appears to be a healthcare "crisis" is really the result of an inflexible system that poorly aligns available resources with people's needs...

Our confusing, overpriced health-care system needs a lot of changes and high on the list is flexibility. That means flexibility in the attitude of health-care providers — including medical professionals and insurers — and in the delivery of health care. Too often patients must negotiate a labyrinth of rules and requirements just to see a doctor for a simple ailment....

[CVS MinuteClinics] answer the needs of working families and of those who don’t necessarily have a primary-care physician, or insurance. For a parent, taking a child with a sore throat or cough to a clinic rather than a busy pediatrician’s office can mean the difference between being an hour late for work or missing half a day. For a twenty-something without a personal physician, having a rash looked at and treated for $59 is the cost of a few drinks at a downtown bar....

Consumers need to become their own advocates for good health care. We can’t expect everyone to navigate insurance rules and increasingly complex modern medicine with ease. But consumers should be seeking value for their health-care dollar as much as they do with grocery bills.

The Financial Times on Walk-in Health Clinics

Eventually, the big international business papers are able to catch up to Anchor Rising’s coverage of an issue. Here’s the Financial Times on the movement towards in-store health clinics by companies such as Wal-Mart and CVS…

Walk-in clinics represent one of the most advanced and aggressive attempts by US business and entrepreneurs to drive reform of the healthcare system.

This year hundreds will be opened in some of the US’s largest drugstore and retail groups, and thousands of clinics could be running in the next decade.

Advocates say the clinics will improve access to healthcare and reduce costs; that they will reduce more expensive visits to hospital emergency rooms; and that they will catch some illnesses before they become serious and costly. As a result, physicians will have more time for complex cases….

More than anything, however, the retail clinics show that business is pushing for change on its own without waiting for government. And walk-in clinics could do for US healthcare what low-cost Southwest Airlines did for the airline industry, by making healthcare better, faster, and cheaper.

Here’s the anti-clinic arguments presented in the article, which I’ll admit, I don’t find very convincing…

First, despite US business’s push to inject and increase consumer principles into healthcare, it is still unproven whether people understand how to shop for medical care like other products, or even whether they want to do so. Clinics also could be a controversial way for employers to push more health costs on to employees.

Second, retail clinics claim they will increase doctors’ business by referring new patients or allowing them to spend more time on higher-value tasks. But experts agree that they could be sapping high-margin, easy tasks like vaccinations from doctors’ businesses, and that clinics do not yet generate significant referral business to doctors.

Third, the clinics are for-profit businesses. Dr Osborn, of Illinois, says: “They’re not at this to increase doctors’ business; they’re in it to make money. That’s a smokescreen.”

Not to make too much of a direct comparison, but isn’t the philosophy that it’s OK to have a system that doesn’t really work as long as nobody makes money the philosophy that killed the old Communist bloc?

Re: Warwick City Council Rejects $1 Million in Budget Savings

Dan Yorke just had Warwick City Councilman Steve Merolla on to talk about why the City of Warwick has eschewed an additional $1 million in cost-savings by deciding to stay with Blue Cross/Blue Shield instead the cheaper United Healthcare as manager of the City's employee healthcare plan. (The "manager" distinction is important--Warwick pays its own claims, the healthcare provider only administers it. That means a claim rejected by the provider can be appealed to the City, which can decide to pay it anyway).

Merolla stated there were many city employee union members in attendance at the meeting and they made it clear they would be unhappy if United was chosen. Merolla himself was threatened by someone in the gallery at the meeting (he's filed a police report). It's Merolla's belief that this intimidation was a factor in why the majority of the City Council ignored the recommendation of it's own, appointed consultant and voted to stay with BC/BS and cost the City of Warwick nearly $1 million.

Finally, Yorke asserted that BC/BS is bought an paid for by unions. Currently, there are three union members on the BOD, including Chairman of the Board, Frank J. Montanaro, President of the Rhode Island AFL-CIO.

Wal-Mart to Open In-Store Health Clinics Nationwide

Blogger Mickey Kaus calls a news item directly impacting multiple blog-topics a "harmonic convergence" of issues. I think it’s fair to consider this news from Wal-Mart a harmonic convergence within the Rhode Island blogosphere…

Wal-Mart Stores, Inc., intends to contract with local hospitals and other organizations to open as many as 400 in-store health clinics over the next two to three years, and if current market forces continue, up to 2,000 clinics could be in Wal-Mart stores over the next five to seven years, Wal-Mart president and CEO Lee Scott will say in a speech later today at the World Health Care Congress in Washington, D.C. The clinic program's expansion is just the latest in a series of moves by Wal-Mart to help implement customer solutions to America's health care crisis, including the $4 generic drug prescription program, health information technology and participation in a major coalition supporting comprehensive healthcare reform by 2012.

Wal-Mart puts appeals to all kinds of health policy wonks into their press release…

Scott notes that surveys in existing clinics revealed more than half of those who visited a clinic said they were uninsured. Nearly 15 percent of customers said they would have gone to a hospital emergency room for their care -- thus increasing the burden on already strained community health care institutions -- if they could not have gone to the clinic inside a Wal-Mart.

The providers running the clinics will determine what services to offer, which will generally include preventive and routine care for conditions such as allergies and sinus infections, as well as basic services such as cholesterol screenings and school physicals at affordable prices. They will be staffed by either certified nurse practitioners or physicians.

(Note that this part of the Wal-Mart proposal is different from CVS's description of its in-store clinic plan, which mentions only nurse practitioners.)

"We also think there is tremendous potential with local hospitals as partners for some or all of these clinics. Patients trust the role hospitals play in providing quality medical care. They have the medical experience and expertise -- and the larger network if more serious treatment is needed," Scott says.

The clinics will post clear prices for services and procedures, helping to bring much-needed price transparency to the American health care system.

Scott highlights Wal-Mart's work on health information technology, pointing to Wal-Mart's partnership with other corporations to start Dossia, an independent, non-profit group that will provide safe and secure electronic medical records to their employees and retirees. Wal-Mart recently joined with the University of Arkansas and Blue Cross Blue Shield to create the Center for Innovation in Health Care Logistics, a new research center focused on improving health care delivery through information technology.

Wal-Mart is also working with leaders in business, government, labor and public policy on the "Better Health Care Together" coalition. The goal of the coalition is to assure that affordable, quality health care is accessible to all Americans by 2012

Related items:

• Anchor Rising on in-store health clinics here.
• Anchor Rising trying to understand the emergency room crisis here.
• Anchor Rising on universal healthcare here and here.
• RI Future's disdain for all things Wal-Mart here and here.

Wal-Mart to Open In-Store Health Clinics Nationwide

Blogger Mickey Kaus calls a news item directly impacting multiple blog-topics a "harmonic convergence" of issues. I think it’s fair to consider this news from Wal-Mart a harmonic convergence within the Rhode Island blogosphere…

Wal-Mart Stores, Inc., intends to contract with local hospitals and other organizations to open as many as 400 in-store health clinics over the next two to three years, and if current market forces continue, up to 2,000 clinics could be in Wal-Mart stores over the next five to seven years, Wal-Mart president and CEO Lee Scott will say in a speech later today at the World Health Care Congress in Washington, D.C. The clinic program's expansion is just the latest in a series of moves by Wal-Mart to help implement customer solutions to America's health care crisis, including the $4 generic drug prescription program, health information technology and participation in a major coalition supporting comprehensive healthcare reform by 2012.

Wal-Mart puts appeals to all kinds of health policy wonks into their press release…

Scott notes that surveys in existing clinics revealed more than half of those who visited a clinic said they were uninsured. Nearly 15 percent of customers said they would have gone to a hospital emergency room for their care -- thus increasing the burden on already strained community health care institutions -- if they could not have gone to the clinic inside a Wal-Mart.

The providers running the clinics will determine what services to offer, which will generally include preventive and routine care for conditions such as allergies and sinus infections, as well as basic services such as cholesterol screenings and school physicals at affordable prices. They will be staffed by either certified nurse practitioners or physicians.

(Note that this part of the Wal-Mart proposal is different from CVS's description of its in-store clinic plan, which mentions only nurse practitioners.)

"We also think there is tremendous potential with local hospitals as partners for some or all of these clinics. Patients trust the role hospitals play in providing quality medical care. They have the medical experience and expertise -- and the larger network if more serious treatment is needed," Scott says.

The clinics will post clear prices for services and procedures, helping to bring much-needed price transparency to the American health care system.

Scott highlights Wal-Mart's work on health information technology, pointing to Wal-Mart's partnership with other corporations to start Dossia, an independent, non-profit group that will provide safe and secure electronic medical records to their employees and retirees. Wal-Mart recently joined with the University of Arkansas and Blue Cross Blue Shield to create the Center for Innovation in Health Care Logistics, a new research center focused on improving health care delivery through information technology.

Wal-Mart is also working with leaders in business, government, labor and public policy on the "Better Health Care Together" coalition. The goal of the coalition is to assure that affordable, quality health care is accessible to all Americans by 2012

Related items:

• Anchor Rising on in-store health clinics here.
• Anchor Rising trying to understand the emergency room crisis here.
• Anchor Rising on universal healthcare here and here.
• RI Future's disdain for all things Wal-Mart here and here.

United Healthcare Versus St. Joseph's and Our Lady of Fatima

I’m not commenting on the veracity of either side’s claims, as reported by Karen Lee Ziner in today’s Projo. I’m just pointing out that if United Healthcare decides to drop St. Joseph’s and Our Lady of Fatima hospitals from its provider network, the average United customer has no recourse, because of the way that health insurance is tied to employment. In a more rational system, people who didn’t like United's decision could walk away from United and buy their insurance elsewhere. However, since employment-based health insurance places consumers in the position of taking the one choice that's offered or taking nothing at all, United is free to make this decision without considering what its customers want.

OK, I will comment on one claim mentioned in the news item. This ratio does seem a bit out of whack…

At a news conference at Our Lady of Fatima, [St. Joseph Health Services president and CEO John Keimig] , “[United Healthcare] is the same company that earned over $5 billion in profits nationally last year. It is the same company that paid its CEO the staggering total of $124 million in compensation last year — an amount that is approximately 150 percent of the total annual payroll for all of the 2,000 employees here at St. Joseph Health Services …”

If one insurance CEO getting paid the same amount as 2,000 hospital employees is a problem, the solution is to allow every individual Rhode Islander to seek insurance from companies that can provide the same coverage with less corporate overhead. Under the existing system, insurance companies can increase the price of their services far above their costs because consumers are not free to take their healthcare dollars to insurers who run their businesses more efficiently, i.e. to insurers able to charge lower rates for the same or better service and still make a profit. Break the link between insurance and employment, and you'll see insurers suddenly become a lot more accomodating towards individual consumers.

It should be noted, however, that if hospitals want to be less subject to the whims of insurers, they too need to become more friendly towards the individual consumer.

United Healthcare Versus St. Joseph's and Our Lady of Fatima

I’m not commenting on the veracity of either side’s claims, as reported by Karen Lee Ziner in today’s Projo. I’m just pointing out that if United Healthcare decides to drop St. Joseph’s and Our Lady of Fatima hospitals from its provider network, the average United customer has no recourse, because of the way that health insurance is tied to employment. In a more rational system, people who didn’t like United's decision could walk away from United and buy their insurance elsewhere. However, since employment-based health insurance places consumers in the position of taking the one choice that's offered or taking nothing at all, United is free to make this decision without considering what its customers want.

OK, I will comment on one claim mentioned in the news item. This ratio does seem a bit out of whack…

At a news conference at Our Lady of Fatima, [St. Joseph Health Services president and CEO John Keimig] , “[United Healthcare] is the same company that earned over $5 billion in profits nationally last year. It is the same company that paid its CEO the staggering total of $124 million in compensation last year — an amount that is approximately 150 percent of the total annual payroll for all of the 2,000 employees here at St. Joseph Health Services …”

If one insurance CEO getting paid the same amount as 2,000 hospital employees is a problem, the solution is to allow every individual Rhode Islander to seek insurance from companies that can provide the same coverage with less corporate overhead. Under the existing system, insurance companies can increase the price of their services far above their costs because consumers are not free to take their healthcare dollars to insurers who run their businesses more efficiently, i.e. to insurers able to charge lower rates for the same or better service and still make a profit. Break the link between insurance and employment, and you'll see insurers suddenly become a lot more accomodating towards individual consumers.

It should be noted, however, that if hospitals want to be less subject to the whims of insurers, they too need to become more friendly towards the individual consumer.

"Anchor Babies" and RIte Care

Froma Harrop calls attention to the problem that "Anchor Babies" (some consider the term to be a perjorative, incidentally) pose for immigration reform and enforcement.

Pregnant women routinely arrive in the United States in time to give birth and thereby obtain Social Security numbers for their babies — and with them, permanent entrée into American society and the socio-economic benefits it offers. Once the American-born child turns 21, he or she can sponsor his or her parents and other relatives for citizenship.

Many illegal aliens already in this country make a point of having “anchor babies” that they hope will secure them a permanent status in the United States. During the recent immigration raid at the Michael Bianco factory, in New Bedford, a number of the arrested women who had American-born children were allowed to return to the community, while the childless workers were kept in detention centers.

Changing the law will not be easy. The guarantee of citizenship to any child born on U.S. soil is in a 1952 immigration act and the 14th Amendment to the Constitution, ratified in 1868. When Rep. Brian Bilbray (R.-Calif.) first introduced legislation to change the law, in 1995, stopping the anchor-baby phenomenon was considered radical.

Since then, however, our broken immigration system has made the concept more mainstream. Very few countries offer this automatic citizenship. Even France has been tightening up.

Ending the citizenship birthright need not affect any future measures to grant amnesty to illegal immigrants. What it would do is end another lure to come here illegally.

Meanwhile, RIte Care is now in the process of implementing more stringent, federal guidelines that seek to prevent illegal aliens from using the system. And although even legal citizens are having a hard time proving their citizenship so that they may participate in RIteCare, the program does cover all children, whether their parents are illegal or not, so long as the kids are U.S. citizens. This is exactly the sort of thing Harrop is talking about. Finally, while the President is currently beginning a new push for "comprehensive immigration reform," there is no discussion about fundamentally changing the citizenship equation as outlined by Harrop.

All is Not Fine with the Emergency Room Fine

I have to examine the numbers more carefully before commenting on the overall plan, but this part of Rhode Island’s new small business healthcare plan, as described by Felice J. Freyer in yesterday’s Projo, seems troubling…

You pay through the nose — $200 per visit — if you go to a hospital emergency room with a problem that does not lead to being admitted.

Obviously the state is trying to discourage people from using emergency rooms for non-emergency care -- which may or may not be contributing to rising healthcare costs.

Yet at the same time, the state is also blocking alternative treatment facilities designed specifically for dealing with immediate but non-emergency care from opening in Rhode Island. Taken together, the policies seem to be designed to discourage people from seeking non-emergency care at all. I know that’s not the intent, but it’s the kind of stupid dysfunction you get when you try to manage individual human decision making through government planning.

And would anyone like to take a stab at explaining how charging people what is in essence a fine for using the emergency room helps to reduce costs? At first glance, the $200 surcharge seems more like a backdoor way to subsidize indigent care (those without insurance get still get emergency room treatment for free, right?) by grabbing money from families teetering on the edge of the middle class than it does a plan for real cost control.

All is Not Fine with the Emergency Room Fine

I have to examine the numbers more carefully before commenting on the overall plan, but this part of Rhode Island’s new small business healthcare plan, as described by Felice J. Freyer in yesterday’s Projo, seems troubling…

You pay through the nose — $200 per visit — if you go to a hospital emergency room with a problem that does not lead to being admitted.

Obviously the state is trying to discourage people from using emergency rooms for non-emergency care -- which may or may not be contributing to rising healthcare costs.

Yet at the same time, the state is also blocking alternative treatment facilities designed specifically for dealing with immediate but non-emergency care from opening in Rhode Island. Taken together, the policies seem to be designed to discourage people from seeking non-emergency care at all. I know that’s not the intent, but it’s the kind of stupid dysfunction you get when you try to manage individual human decision making through government planning.

And would anyone like to take a stab at explaining how charging people what is in essence a fine for using the emergency room helps to reduce costs? At first glance, the $200 surcharge seems more like a backdoor way to subsidize indigent care (those without insurance get still get emergency room treatment for free, right?) by grabbing money from families teetering on the edge of the middle class than it does a plan for real cost control.

Maybe the Worst Healthcare Op-ed Ever

Lawrence Purtill’s education aid op-ed isn’t the only recent Projo op-ed guilty of trying to convince people that a contradictory set of recommendations can be combined into sound public policy. In last Thursday’s Projo, Dr. Joseph Chazan presented this dud of a suggestion for containing healthcare costs in Rhode Island…

Government controls and regulators should recruit new insurance companies to enter and compete in the marketplace and mandate that everyone receives needed care regardless of ability to pay as part of the cost of doing business.

I really don’t think that “Use your gains in other states to subsidize big operating losses in Rhode Island” can become the basis of a successful recruiting campaign. How exactly can you recruit companies to come to Rhode Island while demanding that they give their product away for free or below cost? What precisely are the “recruiters” supposed to pitch as the advantage of doing business here?

Dr. Chazan’s attitude towards individuals is even more frightening than his attitude towards business…

Recognize that individuals demand all the advances that have occurred in medical technology and prescription medications without concern for their costs. It is unlikely that health-care costs can be contained without some limitation or rationing of services. However, this will require a frank debate and the acceptance that to contain costs, not every patient can receive every available service.

Translation: "People have a survival instinct and want to live, so government must teach them to manage and suppress that instinct". That's not a business that government should be getting into.

Before we start talking about giving government regulators, who have have a difficult time controlling costs without killing whatever economic sector they are trying to regulate, absolute power to decide who gets treatment and who doesn’t, shouldn’t we at least give an expansion of consumer-driven health plans a chance? After all, as another of Dr. Chazan's recommendations explains (quite inadvertently), consumer driven plans are the best fit for a pluralistic, democratic society like the US…

Finally, permit a robust, honest, forthright, uncensored debate to occur among parties: government, regulators, providers, insurers and consumers included.

Dr. Chazan has the right principle in mind here, but what he and other advocates of a government takeover of healthcare never seem to grasp is that people need real choices if a robust, honest, forthright, uncensored debate is to matter. When individuals have a choice of healthcare options, they will talk to potential insurers and talk to their healthcare providers. That talk will have real ramifications, in terms of compromises on costs and on coverages and treatments offered. How can debate get any more robust than this?

Unfortunately, because of our employer-based system of health insurance, that debate is too restricted now because (save for a few forward-thinking companies like this one) employers have a big voice in the healthcare debate, but employees have almost none. And in strong-government schemes, the problem will become even worse, as government regulators, big-insurance companies, and well-organized special interests will become the only voices that matter, freezing ordinary people completely out of the debate.

Finally, Dr. Chazan reminds us that just because you think you're debating doesn't mean that you're making sense…

About 20 years ago, Rhode Island had one of the most regulated and controlled health-care systems in America. State laws required the Health Services Council and the head of the state Department of Health to approve the opening of virtually any new health-care facility (“certificate of need”). That sustained the status quo by delaying or preventing competitive facilities from operating but failed to control increasing costs.

Er, why should anyone be surprised that heavy regulation in order to reduce supply led to increased costs?

Maybe the Worst Healthcare Op-ed Ever

Lawrence Purtill’s education aid op-ed isn’t the only recent Projo op-ed guilty of trying to convince people that a contradictory set of recommendations can be combined into sound public policy. In last Thursday’s Projo, Dr. Joseph Chazan presented this dud of a suggestion for containing healthcare costs in Rhode Island…

Government controls and regulators should recruit new insurance companies to enter and compete in the marketplace and mandate that everyone receives needed care regardless of ability to pay as part of the cost of doing business.

I really don’t think that “Use your gains in other states to subsidize big operating losses in Rhode Island” can become the basis of a successful recruiting campaign. How exactly can you recruit companies to come to Rhode Island while demanding that they give their product away for free or below cost? What precisely are the “recruiters” supposed to pitch as the advantage of doing business here?

Dr. Chazan’s attitude towards individuals is even more frightening than his attitude towards business…

Recognize that individuals demand all the advances that have occurred in medical technology and prescription medications without concern for their costs. It is unlikely that health-care costs can be contained without some limitation or rationing of services. However, this will require a frank debate and the acceptance that to contain costs, not every patient can receive every available service.

Translation: "People have a survival instinct and want to live, so government must teach them to manage and suppress that instinct". That's not a business that government should be getting into.

Before we start talking about giving government regulators, who have have a difficult time controlling costs without killing whatever economic sector they are trying to regulate, absolute power to decide who gets treatment and who doesn’t, shouldn’t we at least give an expansion of consumer-driven health plans a chance? After all, as another of Dr. Chazan's recommendations explains (quite inadvertently), consumer driven plans are the best fit for a pluralistic, democratic society like the US…

Finally, permit a robust, honest, forthright, uncensored debate to occur among parties: government, regulators, providers, insurers and consumers included.

Dr. Chazan has the right principle in mind here, but what he and other advocates of a government takeover of healthcare never seem to grasp is that people need real choices if a robust, honest, forthright, uncensored debate is to matter. When individuals have a choice of healthcare options, they will talk to potential insurers and talk to their healthcare providers. That talk will have real ramifications, in terms of compromises on costs and on coverages and treatments offered. How can debate get any more robust than this?

Unfortunately, because of our employer-based system of health insurance, that debate is too restricted now because (save for a few forward-thinking companies like this one) employers have a big voice in the healthcare debate, but employees have almost none. And in strong-government schemes, the problem will become even worse, as government regulators, big-insurance companies, and well-organized special interests will become the only voices that matter, freezing ordinary people completely out of the debate.

Finally, Dr. Chazan reminds us that just because you think you're debating doesn't mean that you're making sense…

About 20 years ago, Rhode Island had one of the most regulated and controlled health-care systems in America. State laws required the Health Services Council and the head of the state Department of Health to approve the opening of virtually any new health-care facility (“certificate of need”). That sustained the status quo by delaying or preventing competitive facilities from operating but failed to control increasing costs.

Er, why should anyone be surprised that heavy regulation in order to reduce supply led to increased costs?

Re: Senator Tom Coburn’s Healthcare Reform Plan

The inclusion of this item in Senator Tom Coburn’s national healthcare proposal…

Keeping Medicaid on mission: The bill liberates the poor from substandard government care and offers states the option to provide their Medicaid beneficiaries the kind of health care coverage that wealthier Americans enjoy. The bill creates incentives for states to achieve private universal coverage for their population. The bill offers states the freedom to design the programs that serve their beneficiaries with the best care instead of the current, one-size-fits-all straitjacket.

…led commenter “mrh” to ask what “liberat[ing] the poor from substandard government care” meant.

John O’Shea of the Heritage Foundation provides the beginning of an answer…

In spite of Medicaid's hefty price tag, Medicaid patients find it difficult to access the health care system. Medicaid payment rates are considerably lower than physician payment rates under private insurance or even Medicare, in which physician payment is a recurrent problem. This has deterred physician participation in Medicaid. According to a 2003 Medicare Payment Advisory Commission (MEDPAC) study, only 69.5 percent of physicians surveyed were willing to accept new Medicaid patients, substantially fewer than the number willing to accept new privately insured patients (99.3 percent), Medicare patients (95.9 percent), and even the uninsured (92.8 percent)....

Once Medicaid beneficiaries gain access to the health care system, they receive inferior quality of care compared to patients with private insurance.

For example, patients with non-ST segment elevation acute coronary syndromes (NSTSE ACS), a form of heart attack, benefit significantly from innovative therapeutic approaches, including early invasive management strategies. These measures have now been incorporated into the guidelines of the American College of Cardiology and the American Heart Association. According to a study in the Annals of Internal Medicine, however, Medicaid patients with NSTSE ACS were less likely to receive evidence-based therapies and had worse outcomes (including increased mortality rates) than patients who had private insurance as the primary payer. This study found that these differences in care and outcomes persisted after adjusting for clinical characteristics (associated illness), socioeconomic factors (education and income), and the type of center where patients received treatment. In other words, the most important predictor of treatment and outcome in the study was whether the patient had Medicaid or private insurance.

Plenty of references available in the original memo.

Senator Tom Coburn’s Healthcare Reform Plan

Senator Tom Coburn of Oklahoma has introduced major healthcare reform legislation into the U.S. Senate. Kimberley Strassel had a short summary of the proposal in last week’s OpinionJournal…

[Senator Coburn's proposal] would remove the subsidy corporations get for health care, and instead give the money to individuals--putting them in charge of their health expenditures. It would expand HSAs, and allow consumers to buy insurance from any state, thereby avoiding costly regulations. It would modernize Medicare, allowing workers to invest their payroll taxes into a savings account and control their care in their retirement years. It would free up the states to inject Medicaid with new flexibility and competition.

Senator Coburn’s website has a more detailed summary…

Promoting prevention: The legislation will reform our rudderless and wasteful federal prevention programs and demand results and accountability. Five preventable chronic diseases – heart disease, cancer, stroke, chronic obstructive pulmonary disease, and diabetes – cause two-thirds of American deaths. Seventy five percent of total health expenditures are spent to treat these largely preventable chronic diseases. A sound prevention strategy will save countless lives and billions of dollars.

MediChoice tax rebates that will shift tax breaks away from businesses to individuals: Giving Americans a rebate check ($2,000 for individuals and $5,000 for families) to buy their own insurance will foster competition, improve quality and drive down prices. This provision will help put individuals back in charge of the health care, and help restore the doctor-patient relationship that has been severed by third-party government and health insurance bureaucrats.

Creation of a national market for health insurance: The bill would give Americans the right to shop for health insurance anywhere in America. Patients should not be forced to be pay for outrageously expensive health plans in states like New Jersey when they can save thousands by buying plans from companies in other states.

Creating transparency of health care costs and services: This Act requires hospitals and providers receiving reimbursements from Medicare to disclose their estimated and actual charges for all patients as well as the rates they are reimbursed through Medicare and Medicaid. This provision could allow patients to “Google” their doctor and comparison-shop for health care the way that they do for cars, computers, or other products and services.

Securing Medicare’s future by increasing choice and encouraging savings: The bill retains existing benefits but encourages true competition among private plans to hold down costs, a model already is working in Medicare’s prescription drug benefit. The plan would give Medicare recipients similar health care options available to Members of Congress and employees of Fortune 500 companies.

Keeping Medicaid on mission: The bill liberates the poor from substandard government care and offers states the option to provide their Medicaid beneficiaries the kind of health care coverage that wealthier Americans enjoy. The bill creates incentives for states to achieve private universal coverage for their population. The bill offers states the freedom to design the programs that serve their beneficiaries with the best care instead of the current, one-size-fits-all straitjacket.

If Emergency Room Overuse is Really a Problem, Why Aren't MinuteClinics Being Allowed?

For a while now, I have been hearing that the inefficient delivery of routine healthcare, especially through the over-use of emergency rooms, is a primary source of America's runaway healthcare costs. If this is true, CVS’ proposal to place “MinuteClinics”, staffed by a nurse practitioner, in a number of their stores, should at least an incrementally improve the existing healthcare system. Felice J. Freyer of the Projo described “MinuteClinics” in a Projo article from last year…

Say you've got a sore throat and you've heard that strep is going around. You're really busy at the office and want a quick answer on your health.

Then imagine you could just stop at the drugstore, where within minutes a nurse practitioner could give you a strep test -- and, if it's positive, a prescription for antibiotics. Which you could then buy at the selfsame drugstore.

Such convenience has obvious appeal for consumers.

Of course with this being Rhode Island and “MinuteClinics” being different from the established way of doing business in the state, there is an organized movement afoot to stop them from ever beginning operation here.

Allen Dennison, chairman of the Urgent Access Committee of Rhode Island Primary Care, had an op-ed in Sunday’s Projo arguing that Rhode Islanders already have access to all the urgent healthcare services they need. If they want improved access and convenience, well, they’re wrong to…

As to the issue of consumer convenience, the concept of the Urgent Care Center first arose in Rhode Island in 1975. According to the Web site of the Urgent Care Association of Rhode Island (urgentcareri.com) there are 20 Urgent Care Centers in Rhode Island, at most a 15-minute drive from anywhere in the state. Also, around the state, there are five Walk In Clinics that offer similar if simpler facilities with extended hours for the working sick who can’t get an appointment with their primary-care practice.

Five clinics with “extended hours” for a state with a million people. How dare Rhode Islanders think they might need anything more!

The immediate question that arises from this is why anyone in any business should be allowed to shut down a competing practice because it might attract people through increased convenience and better access. The fact that CVS thinks there's a market for MinuteClinics in Rhode Island implies that people will choose a facility other than an emergency room for simple medical needs, when another choice is readily available. Maybe there are problems with opening a clinic inside of a drugstore (what's the plan, for instance, for dealing with someone who thinks they can get a prescription for OxyContin right away, and is disappointed to find out that they can't?), but if Dr. Dennison really wants to help doctors and patients, shouldn't he be looking for ways to improve access to existing non-ER facilities, rather than shutting down any new alternative facilities before they open?

Having said all this, in a precise economic sense, I'm still not sold on the idea that emergency room overuse is a true driver of rising healthcare costs. Dr. Dennison bolsters my skepticism, when he admits that Doctors over-charge for simple procedures in order to subsidize other parts of their practice...

To put it frankly, simple visits make us money. The work required by the time-consuming complex patient, on the other hand, is poorly reimbursed by Blue Cross, United Health Care and Medicare.

I suspect, as Megan McArdle has suggested, that hospitals do the same thing: over-charge patients with simple problems and lots of insurance in order to subsidize uninsured patients and more complex cases. If so, then emergency room usage isn't really raising the cost of healthcare, it's only raising its price -- for those who are actually paying for it. A more rational insurance system than exists now, one that allows more people to participate by offering a range health savings accounts plus high deductible plans, is the needed beginning to more fairly allocating the costs of healthcare to patients who seek treatment.

Anyway, if Rhode Island politics plays out as usual, expect the lobbyists on Dr. Dennison's side to win, MinuteClinics to be stopped from entering RI, prices to continue to be inflated, urgent care access outside of emergency rooms to continue to be limited, and maybe the MinuteClinic system to eventually open branches in Attleboro and Seekonk.

Teaching Moment of the Week #1: United Healthcare’s Profit Transfer

According to Felice J. Freyer in today’s Projo, just about everyone in Rhode Island not on the United Healthcare payroll, including most of the state’s healthcare providers, Attorney General Patrick Lynch, and Governor Donald Carcieri, opposes United’s attempt to transfer $36.8 million from RI to their parent company in Minnesota...

United is seeking state permission to take out $36.8 million in “extraordinary dividends” — profits beyond the “ordinary” profits already taken. Although such permission has long been required, this year United’s request is being considered by the Office of the Health Insurance Commissioner and the Health Insurance Advisory Council, both created by a 2004 law....

An extraordinary dividend is defined as profits that exceed either 10 percent of the insurer’s surplus or the net income from the insurer’s operations in the previous year. Long-standing law requires insurers to win state permission for such dividends, but never before has the state sought public input on such a request.

Consider this story carefully, because it is a perfect illustration of how the healthcare mess faced by our country is NOT the result of impersonal and unstoppable macroeconomic forces, but of a strange system of government regulation maintained in this country out of inertia and not because it serves any public good.

Here’s what I mean. Current insurance laws, obviously, allow health insurers to conduct their business across state lines. Yet for individuals, similar activity is forbidden; individuals are restricted to their home states when spending money on health insurance. The restriction is not the result of any iron laws economic of necessity, but of political decisions made by the government.

If corporations have been given the freedom to pick and choose which states provide the best environment for the use of their resources, then why shouldn’t regular people be given the same freedom and be allowed to “transfer” a few thousand dollars to another state in order to buy a health insurance policy, if they can find a company in another state that better meets their needs? What legitimate purpose does the existing regulatory asymmetry between corporations and individuals serve?

Promoting New Healthcare Ideas in South Kingstown

Liz Boardman has a report in this week's South County Independent on a presentation given to the South Kingstown Republican Town Committee by Sean O’Donnell and Roland Benjamin on “Consumer Driven Health Plans”, i.e. health savings accounts combined with high-deductible insurance. Ms. Boardman provides a straightforward example of how CDHPs work…

Under CDHPs, employees put pre-tax dollars into a special savings account. Their employers match at least a portion of that amount. The employee uses the money to pay a relatively higher deductible, but any costs above that are fully covered by the plan.

For example, an employee with a $2,000 deductible would contribute $1,000, and his employer would add the other $1,000. If the employee has a chronic illness, such as asthma, he would likely spend his $2,000 on maintenance drugs and doctor’s visits, but he would cap out after $2,000 and not pay any additional costs…

Using a CDHP system, Benjamin told the group, LFI was able to hold the cost of health insurance steady after several years of near double-digit increases with traditional plans.

Among other benefits, South Kingstown Republican Town Chairman Dave Cote sees CHDPs as a possible way of relieving the fiscal crunch on Rhode Island’s cities and towns…

Coté said the GOP would be holding workshops about CDHPs around South Kingstown and statewide. “The end result, we hope, would be the students benefiting by infusing the savings back into school programs and extracurricular activities, like languages, sports and gifted programs,” he said.

Motivations for Employer Based Healthcare

I’ll admit to being surprised by the spirited defense of employment-based healthcare offered by commenters on this blog and in a few face-to-face discussions I’ve had. Mark Schmitt, writing just yesterday on the American Prospect’s weblog, adds an angle to this discussion not yet mentioned here, suggesting that many people prefer employer-based health insurance for the simple reason that they don't want the responsibility of choosing a health plan on their own…

On the other hand, an immediate transition to an individualized system seems unrealistic, and also politically dangerous. Not only do you have to give up the dollars that employers are putting in, but you also lose their role in helping to navigate the choices in the system (as Bruce Vladek, former head of HCFA, once pointed out, people may say they want choices but they really want somebody in HR to tell them what to do)…

There is also a more extreme view, expressed by Lord Douglas Jay, a member of the British Parliament in the 1940s. Lord Jay’s sentiment is rarely expressed in direct fashion today, but almost certainly exists in the minds of some healthcare reformers…

Housewives on the whole cannot be trusted to buy all the right things where nutrition and health care are concerned. This is really no more an extension of the principle according to which the housewife herself would not trust a child of 4 to select the week’s purchases. For in the case of nutrition and health, just as in the case of education, the gentleman in Whitehall really does know better what is good for the people than the people know themselves.

{Note from the blogger: Americanizing the end of the last sentence would translate to something like “the Department of Health and Human Services really does know better what is good for the people than the people know themselves.”}

(Original quote taken from David Gratzer’s The Cure: How Capitalism Can Save American Health Care).

Whether it’s Mr. Schmitt’s soft view (people want someone else to make their insurance decisions for them), or Lord Jay’s harder one (people need someone else to make their insurance decisions for them), the implication is the same -- the debate about employer-based healthcare is more than a debate about economic factors, it is also a debate about government co-opting corporate bureaucracies in an attempt to engineer better lives for individuals.

Is Mark Schmitt right? Do people support the employer-based system because, at some level, they want someone to help them choose their coverage, and not just because they are afraid that the employer-based healthcare system is the only non-directly government run system that can provide them with affordable coverage?

People who believe there’s a better way to provide insurance than through the existing system need to know the answer to this question, so they will know if they need to make the case for a more open insurance market in terms broader than just fiscal and economic viability.

The Stop & Shop Strike: Important, Yet Just a Distraction

The issues in the looming Stop & Shop strike are all too familiar, centering on health benefits and retirement benefits. From Gregory Smith and Talia Buford in today’s Projo…

[Stop & Shop], based in Quincy, Mass., wants union workers to contribute to their health-care premiums and allow it to switch from an employer-paid pension fund to a 401(k) plan for new employees. [Union Official Jim Riley] said the employees would be willing to help pay the premiums if their health-care plan is improved.

The big insurance companies must either sit back and laugh, or maybe just breathe a sigh of relief when they read a story like this, thankful that America’s employment based system of health insurance allows them to raise rates without improving the quality of their product, while deflecting all of the blame on to employers.

Stop & Shop is not responsible for rising healthcare costs. Insurer decisions beyond Stop & Shop (or any employer's) control, motivated by over-regulation state mandates, are responsible for that. Neither are Stop & Shop employees unreasonable in objecting to being charged more for the same coverage. When insurance companies want to charge higher prices for the same product, consumers should have the right to do what they would do with any other type of product -- to look for a better deal from a different supplier and to take their business there when they find one. Stop & Shop employees don’t have that option. Because of the way that insurance law is structured, most employees of Rhode Island businesses don’t. We’re all locked into a single, employer-provided option for health insurance and told “take it or get nothing at all”.

Stop & Shop’s management didn’t create the system that binds health insurance to employment, they are just trying to get along within it. That system, and not Stop & Shop's little corner of it, is what needs changing. State mandates should be relaxed, so that cheaper insurance policies are available. People should be given the option of high-deductible insurance plans and tax-free HSAs to cover their routine, recurring expenses. And individuals should be given the option of purchasing their health insurance from states where coverage is cheaper. These reforms could be combined in a way that would allow people to address their personal, medical needs without consulting with their employers.

If these options were available, many Stop & Shop employees would be able to find an affordable health plan that suited them. Some might even see an increase in their take-home pay. And, as an additional benefit, we would skip over a whole lot of labor strife that does very little to resolve the heart of the healthcare issue, by taking employers out of a role they don't want anyway as middlemen between individuals and insurers.

Will we ever see any interest from the left in the kinds of health insurance reforms that empower indivdual employees? Or are the forces in government and politics who should be labor’s allies more interested in managing the lives of employees, maybe even in just using them as a pathway to political power, than they are in giving those employees the tools they need to make their lives better?

A Prankster in the RI Senate?

I truly want to know the motivation behind proposed legislation such as this:

Sen. John C. Revens Jr. (D-Dist. 31, Warwick) has introduced legislation that would extend private health insurance coverage to dependents up to the age of 25.

The legislation, (2007 - S0327), targets individuals between the ages of 19 and 25 who are financially dependent but who are not in school full time. Under current law, insurers are only required to continue coverage for this age group if they are enrolled full time in school or have chronic disabling conditions.

“Allowing insurers to stop providing coverage for individuals in this age group can be potentially devastating, medically and financially, for these people and their supporting parents,” said Senator Revens. “We all know the enormous price of supplemental health insurance coverage, which makes it impractical for most, and the other temporary catastrophic programs don’t pay for doctor visits or pharmaceuticals these 19- to 25-year-olds might need.”

Is it naive dogooderism? Is it cynical vote buying? Is it backroom backrubbing? Is it self-interest? Or is it merely a practical joke? Because it seems to me that Rhode Islanders' representatives should be personally embarrassed and politically frightened to offer such bills.

As is a recurring theme in Rhode Island government, there appears to be an assumption that the targeted parties — in this case, insurance companies — will simply eat the additional costs resulting from legislation. They won't. They'll pass the cost on to payers — whether that means the taxpayers who fund RI's lavish public sector benefits or the businesses that supply health insurance to their employees — probably by increasing family plans across the board.

Although this might be news to those who've lived on the public dime their whole lives, in the private sector, businesses often pass additional family-plan costs directly on to their employees. Those companies that do cover employees' family plans will either cease to do so or find other areas of payroll/benefits in which to make up for the increased expenses. Whatever the case — and as is, again, a recurring theme in Rhode Island government — the upshot is that families struggling to get by in the leech-filled Ocean State, without public-union-bullied benefits or In Crowd largesse — will be the ones who bear the burden of ensuring that indolent young adults needn't worry about paying full price for prescription fungicides.

In fact, the only rational basis that I can see for such a policy in Rhode Island is to create financial incentive for those young adults who are not indolent, but motivated and unable to support themselves in this state, from seeking opportunities elsewhere. But they'll leave eventually, Sen. Revens. Why don't we just pass legislation to encourage a healthier state economy?

ADDENDUM:
Here's a project for folks with more time to indulge in hypotheticals than I possess: What would be the cost to RI taxpayers if a married family with three 19–25 year old children all had public-sector jobs and piled their health insurance onto one plan, taking buyouts for the other four?

Ron Wyden Likes George W. Bush's Healthcare Proposal

Senator Ron Wyden (Democrat from Oregon), a Senator with a creative healthcare plan of his own, wants to compromise and combine his proposal with President Bush's healthcare proposal. Michael Barone of U.S. News and World Report has the details…

Bush's proposal in a nutshell is to end the preferential tax treatment for employer-provided health insurance....This decision has saddled us with a system in which health insurance has been tied to employment, with many perverse results. Healthcare is perceived as a free good, and consumers have no incentive to take costs into account....

The biggest beneficiaries of the current system are high earners with employer-provided insurance. The biggest losers in the current system are low earners without employer-provided insurance. Health insurance experts on the left, right, and center have long called for ending the tax code's preference for employer-provided health insurance. But employers haven't wanted to lose the deduction, and politicians have flinched at the prospect of taxing voters on something they have been getting tax free. Bush has found a way out, by equalizing the tax treatment of health insurance wherever it comes from....

[Senator Wyden] notes that we don't have employer-provided auto insurance; we buy that out of after-tax earnings. He argues that people should be able to buy health insurance as members of Congress and federal employees do, from an array of choices offered by private insurers. He's looking to make something of a political deal [with President Bush]. Republicans would get Bush's standard deduction and a private insurance market in which consumers would have incentives to hold down costs. In return, Democrats would get universal coverage, with subsidies for low earners to pay for coverage. As John Goodman of the free market National Center for Policy Analysis points out, additional revenues from those with policies worth more than $15,000 could be used to subsidize low earners.

For conservatives and libertarians who may be turned off by the “universal coverage” part of the compromise, keep in mind that reasonable universal coverage schemes can be devised, if the goal is truly to provide insurance against major illnesses. It’s attempts by liberals, technocrats, and all-around demagogues to engineer a massive redistribution of wealth through the insurance system that creates problems, like big middle class tax increases that do nothing to improve the quality of care that taxpayers receive.

It’s not clear from Barone’s article exactly what universal coverage scheme that Senator Wyden envisions as part of a compromise, but if its based on his original plan, it will lean more towards a mandate that individuals buy some kinds of insurance from the existing system than it will towards a single payer, total government takeover of healthcare.

One other note: John Edwards, who is especially relevant to this debate for reasons I won’t expound upon, has positioned himself as the leading advocate for preserving the employer-based healthcare system.

Details on the Bush plan available here.

Details on the Wyden plan available here.

How would you mix and match?

President Bush’s Healthcare Plan

President Bush outlined a serious healthcare reform plan in last night’s State of the Union. The President’s plan is to replace the existing tax-exemption that applies only to money spent on employer-sponsored health insurance with a standard deduction that can be taken by any individual who purchases health insurance, regardless of employer or employment status.

1. Assuming the size of the deductions is reasonable, opposing this plan tantamount to saying “I oppose tax-breaks for individuals; tax-breaks should only be given to big corporations”. And yet we will surely see this reaction from the usually anti-business left. In fact, we already do.

If libs can get past their knee-jerk “if Bush is for it, I’m against it” response to the enitre universe, they will see that this plan addresses many of their complaints about Wal-Mart not providing insurance to enough of its employees. Under the Bush plan, for example, companies lose financial incentive to hire lots of part-time workers to avoid paying health benefits.

Arnold Kling of the Cato Institute systematically sums up and counters liberal reactions he has observed to the President's plan (h/t Instapundit)…

Since the President's plan was leaked, I have seen three complaints from the left.

1. The tax break benefits the rich more than the poor.
2. The tax break encourages people to leave employer-provided health plans and instead get health insurance on their own.
3. The proposals encourage catastrophic health insurance rather than insulation.

In my view (2) and (3) are positive developments….As for (1), I fail to see the cause for alarm. Consider the status quo. An economist on the faculty at Princeton who receives generous health benefits from the University is able to enjoy them tax-free. So can the professor's secretary. But, as with all tax breaks, there is a vertical inequity–the professor derives more benefit from the tax break than does the secretary. But today there is a horizontal inequity as well. A self-employed economist and a self-employed secretary get no tax break for obtaining comprehensive health insurance.

Now, if the President's proposal is enacted, the self-employed economist and the self-employed secretary will get a tax break....

My sense is that the hard left is going to dig in against the President's proposals. Too bad for the millions of people for whom health insurance is more expensive simply because where they work falls outside the corporate umbrella.

2. However, the biggest challenge to the President's proposal may not come from organized liberal shrieking, but from misunderstanding at America's apolitical center. Under the current system, employers do little more than choose the health plans that their employees will be allowed to spend their own salaries on. In spite of this, many individuals enrolled in employer-sponsored health plans are convinced that their employers are “giving” them something for nothing. When they hear about tax-code changes that will end the special status of employer based coverage, they will feel that the government is trying to take something away from them -- even though most will be able to to purchase same amount coverage with the same amount of money via an individual plan. Overcoming this perception will be one of the toughest challenges faced by Bush plan supporters.

3. To really make the Bush plan work, people must be allowed to buy insurance across state lines. Today’s OpinionJournal article on the President’s plan mentions that “the average employer-sponsored family plan runs about $11,500 annually”. Even for someone in the top tax-bracket, a $15,000 deduction would pay for less than half of a $11,500 plan. But the $11,500 figure averages together nsurance costs in high-regulation, high-cost states (like Rhode Island) with insurance costs in low-regulation, low-cost states (like Idaho).

I poked around the "ehealthinsurance" website (as suggested by Anchor Rising commenter Emily Harding) and found that in some states, high-deductible insurance plans are available for a family of four in the range of $2,500 - $4,000. If people are given the freedom to escape from legislative mandates that drive the cost of insurance up, they should be able to find affordable coverage with the numbers the President is using.

4. Barack Obama was wrong in his post-SOTU interview with Charlie Gibson of ABC when he said there are no cost-controls in the President's plan (no link available). The cost-controls come from introducing transparency and choice into medical care, both of which are currently lacking in a system where an employer hands you a very complex health plan and tells you to “take it or leave it”. Could Obama be confusing ”cost controls” with "price controls"?

5. 'Tis not all praise I have for Preisdent Bush for proposing this plan. Here's my criticism: Why didn’t he propose something like this when his party controlled both houses of Congress?

The Reform of the Veterans Administration Hospital System is Not the Great Example of Government-Controlled Healthcare That Liberals Think It Is

I've seen a few blogospheric comments touting the reform of the Veteran’s Administration hospital system as an example of how strong government involvement in healthcare, maybe as strong as single payer, works well. The example doesn’t work for a very simple reason, illustrated below.

An article from the July 17 issue of Business Week does provide several metrics proving pretty conclusively that (high) quality patient care is available from the VA hospital system…

According to a Rand Corp. study, the VA system provides two-thirds of the care recommended by such standards bodies as the Agency for Healthcare Research & Quality. Far from perfect, granted -- but the nation's private-sector hospitals provide only 50%. And while studies show that 3% to 8% of the nation's prescriptions are filled erroneously, the VA's prescription accuracy rate is greater than 99.997%, a level most hospitals only dream about. That's largely because the VA has by far the most advanced computerized medical-records system in the U.S. And for the past six years the VA has outranked private-sector hospitals on patient satisfaction in an annual consumer survey conducted by the National Quality Research Center at the University of Michigan. This keeps happening despite the fact that the VA spends an average of $5,000 per patient, vs. the national average of $6,300.

Of course it wasn’t always this way. As Business Week reminds us…

To much of the public… the VA's image is hobbled by its inglorious past. For decades the VA was the health-care system of last resort. The movies Coming Home (1978), Born on the Fourth of July (1989), and Article 99 (1992) immortalized VA hospitals as festering sinkholes of substandard care. The filmmakers didn't exaggerate. In an infamous incident in 1992, the bodies of two patients were found on the grounds of a VA hospital in Virginia months after they had gone missing. The huge system had deteriorated so badly by the early '90s that Congress considered disbanding it.

So how was the system turned around? In the mid-1990s, a VA administrator by the name of Kenneth Kizer (a Clinton appointee, for those keeping score) implemented a broad-based series of reforms...

The VA was reinvented in every way possible. In the mid-1990s, Dr. Kenneth W. Kizer, then the VA's Health Under Secretary, installed the most extensive electronic medical-records system in the U.S. Kizer also decentralized decision-making, closed underused hospitals, reallocated resources, and most critically, instituted a culture of accountability and quality measurements. "Our whole motivation was to make the system work for the patient," says Kizer, now director of the National Quality Forum, a nonprofit dedicated to improving health care. "We did a top-to-bottom makeover with that goal always in mind."

And what is Dr. Kizer doing now, to continue make the system even better and build on his successes? The answer is nothing. After fixing the VA system, Dr. Kenneth Kizer was fired by Congress for not doling out enough pork projects to key legislators…

Kizer, the turnaround's architect, was forced out in 1999 when Congress refused to reconfirm him after he closed hospitals in key districts.

Government Executive Online has more detail on Dr. Kizer's firing (technically, the Senate's decision not to renew his appointment; those who want to blame Republican Senators for opposing a Clinton nominee, get ready for a big disappointment)…

VHA also reflected another change in veteran demographics: the shift in population from North and East to South and West. Kizer's response was a resource redistribution plan called the Veteran's Equitable Resource Allocation (VERA) system. The system distributes operating funds among the agency's networks based on the number of veterans served. In its first year, VERA caused nine VISNs to lose some 1998 funding, while 13 gained. For example, VISN 3, in New York, lost $124 million, while VISN 18, in Phoenix, gained nearly $60 million.

VHA's shifts in focus and resources brought results. Staffing fell 11 percent between December 1994 and September 1998, while the number of patients treated per year rose 18 percent. Surgeries performed on an outpatient basis - increasing productivity and reducing deaths - rose from 35 percent of all surgeries to 75 percent from September 1995 to March 1998....

So Kizer is a hero, and VHA has been rewarded, right? Not in Washington.

In fact, after failing to win renomination in September 1998, at the end of his four-year term, and again in June 1999, at the end of a nine-month extension granted by Congress, Kizer withdrew from contention. By June, Kizer's VHA reforms had so angered legislators that they were lining up to threaten to place holds on his nomination if it ever escaped from committee.

Many legislators apparently couldn't stomach the process Kizer used to transform VHA into a patient-centered, effective and efficient health care system. Sen. Ben Nighthorse Campbell, R-Colo., repeatedly took Kizer to task for considering closure of the nursing home and outpatient clinic at Fort Lyon, Colo., a location so remote that the VA facilities there must run their own sewer system and fire department....

Meanwhile, Sen. John Kerry, D-Mass., threatened to hold up Kizer's nomination because of hospital cutbacks in his state, which has seen reductions in veterans, and consequently in VA hospital beds and funding.

There wasn’t anything magical about “single-payer” that made the VA system work. Dr Kizer's reforms could be implemented in the existing hospital/insurance system (with an important exception or two, one of which is noted below), if there was a will to do so. The magic was that, for a little while, the top-priority -- the only priority -- in allocating resources in the VA system was quality of care. Unfortunately, as the VA is a government system, a systemic focus on regular people couldn't last. In fact, a focus on reform of patient care, instead of on the politically motivated redistribution of resources, could cost a successful administrator his job.

To be successful, hospitals need to be run by people who want to build successful hospitals, not by politicians who view the world as a giant jobs program and whose concern for the quality of care is secondary to their concern that some fat budget numbers exist that can be pointed to on election day, whether or not the money is being spent on quality healthcare. Healthcare in America will only become economical, rational, and just when people are free to choose the best doctors and hospitals available to them, free from undue interference from either the government, or from private insurance industry bureaucrats who have figured out how to manipulate the government.

One other note. The Business Week article also notes that one factor in the VA turnaround an immunity from some lawsuits tied to the VA's status as a government agency…

[VA] doctors don't have to worry as much about malpractice lawsuits, since government agencies are somewhat protected. That made it easier for the VA to go out on a limb in 2005 and institute a systemwide policy of apologizing to patients for medical errors -- an act of contrition rarely done in the private sector.

Are those who look towards the VA as model of healthcare reform willing to explore extending the tort immunity enjoyed by the VA to non-government hospitals?

Healthcare: Appeals Court Agrees That “Fair Share” Plans are Not Legal Under Existing Law

It’s been a few months since I've written about it…
Yet it’s back in the news…
And it’s important, with impact on a major policy debate…
So humor me, and pretend that it’s an exciting topic…

With this introduction…
Loyal Anchor Rising readers will know…
That it can only be…

[Dramatic pause]…
[Unorthodoxly long dramatic pause now bordering on campy]….

ERISA -- The Employee Retirement Income Security Act of 1974!!!!

The Fourth Circuit Court of Appeals has upheld a July lower court ruling striking down Maryland’s “fair share” health coverage law as illegal under the aforementioned Federal ERISA law. Fair share laws are state mandates requiring large companies either to provide health insurance to their employees or pay an additional payroll tax used to fund a state-managed healthcare plan. The courts agreed (as they always have) that the ERISA statute prevents states from regulating employer-provided benefits – any benefits, healthcare included -- any more stringently than the Federal government does.

The strikedown of the Maryland law may have immediate consequences beyond Maryland, potentially ripping the heart out of Governor Arnold Schwarzenegger’s universal healthcare proposal for California. Without the tax on employers, the additional tax-increases on doctors and hospitals proposed in the California plan probably won’t be enough to pay for it. (By the way, I haven’t yet seen a satisfactory explanation of why ERISA doesn’t also doom Mitt Romney’s universal coverage plan for Massachusetts.)

In its coverage of the ruling, the New York Times mentions an interesting alternative to “fair share” laws that may have some cross-ideological appeal, because (at least in theory) it helps separate health care choices from employment…

Maryland lawmakers may also choose to rewrite the law, using an approach upheld in several other states that requires companies with uninsured workers to pay them higher wages that can be used for health care premiums, said Paul Sonn, deputy director of the Brennan Center for Justice at New York University School of Law and an expert on fair share health care legislation.

I’d be interested to know if the law in these other states requires employers to pay their employees only what would have been spent on health insurance, of if it requires the pay increase to be enough to pay for an individual health insurance policy, which would be substantially larger. If the second case is true, then this is less a reform proposal than it is a backdoor attempt to force everyone into (and thus continue) America’s strange system of employment based health coverage. That would be a bad thing, as it would retard the building momentum for decoupling health insurance from the workplace.

Some Questions (Answered) About the Wyden Healthcare Plan

Kari Chisholm of “Stand Tall for America”, a web-based effort founded to promote Oregon Senator Ron Wyden’s universal healthcare plan, answers a few questions about the Wyden plan put forth by me in the comments section of the Virginia Progressive blog. (The Wyden Plan is a federal proposal different from the Rhode Island small business health insurance plan, a state-level proposal also introduced last month). My original questions are in bold. Mr. Chisholm's answers are in italics.

The Wyden Plan begins from the radically simple notion of decoupling health insurance from employment. For the first two years, Senator Wyden is proposing that employers increase the wages and salaries of their employees using monies originally allocated for the purchase of group health plans. Employees would use their pay increases to purchase individual health insurance policies. Changes in the tax code and insurance regulation would be enacted to make individual insurance purchases feasible. That's all good. However, after year two, Senator Wyden wants to begin paying for his system through a payroll-style tax. That's not so good. The post-year two payroll tax was the subject of my first question…

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1. The plan, as I understand it from the Los Angeles Times summary, has people directly buying their own insurance in years 1 and 2. Why not keep with this system after year 2 and let people spend their own healthcare dollars (perhaps through a HSA) into the future? After taking employers mostly out of the mix for two years, what’s the motivation for shoehorning them back in?

People will buy their own insurance long after years 1 and 2. That’s the crux of the plan. Employers will be out - forever. After year 2, employers will pay a per-person contribution to the health care system - that roughly approximates to 25% of the cost of health care. This cuts the cost of health care for those responsible folks who have been paying for it until now; while getting a contribution from the cheapskates (Wal-Mart and friends.)

(Me again: But employers aren’t out if they are required to pay a new tax. This new tax means that after year two, most individuals will experience a sudden drop in the amount of healthcare they can afford per-hour of work. In years one and two, people will spend a certain percentage of their incomes on healthcare. After year two, across-the-board pay-cuts will be needed to pay for the new tax, even though healthcare costs will likely remain about the same. Workers won’t get as much healthcare per dollar collected by the government as they were getting per dollar paid to them directly because much of the new tax-stream will be going to subsidize healthcare for the poor. For most folks, a better solution than a payroll tax would be to allow tax-breaks for individuals and employers for monies paid into HSAs, and to allow individuals to take tax-breaks for purchasing high-deductible insurance.

Now, if you want to argue that we need a better subsidized healthcare system for the poor in this country, that is a perfectly legitimate argument, but it is a separate argument from how to provide health insurance to people that could afford it already, if not for the strange system of health insurance regulation that currently exists in America.

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2. How much of the supposed cost savings comes from price controls enforced by “keying” rates to Blue Cross? Price controls tend to have adverse consequences. Is this covered in the Lewin report somewhere?

There aren’t price controls in the system. There are some administrative cost controls, and otherwise the savings come from the increased fluidity in the market. As individuals are able to shop, we’ll see the end of double-digit inflation.

(Me again: There may not be overt price controls in the system, but given recent local history, some of us hardy Rhode Islanders have to be skeptical about a government program that includes granting a particular insurance company special status. The government has a tendency to make some very heavy-handed regulation -- including backdoor price controls -- a condition of continuing that special staus. And some early supporters of Senator Wyden's plan (like Ezra Klein of the American Prospect) openly admit they like the plan because they see it as a good first step towards ever-increasing regulation of healthcare into the future...

That said, any sort of coherent, national structure opens the door to serious cost containment mechanisms down the road.

If Mr. Klein doesn't mean price controls and rationing when he talks about "serious cost containment mechanisms", then what does he mean?)

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3. Is a modification of the community rating system, where people who take advantage of preventative care and routine check-ups get lower rates (if there is really merit to these programs, individuals utilizing these programs should incur lower cost in the future, right?) something that should be considered?

I’m not fully versed on it yet, but there will be some sort of premium reductions for people who participate in wellness and prevention programs. Certainly, if you don’t smoke, you’ll get a premium reduction.

(Me again: I would urge designers of the plan are considering a health-savings account component to pay for the wellness/prevention programs. If a large number of people are utilizing wellness and preventative care, then both doctors and patients benefit by dealing with one another directly, instead of through an insurance company.)

The Rhode Island Small Business Healthcare Plan

In today’s Projo, Felice J. Freyer describes a new small business/individual health insurance blueprint unveiled yesterday by the Rhode Island Office of the Health Insurance Commissioner…

Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare of New England are required, starting in May, to offer a “wellness health benefit plan” to individuals and businesses with 50 or fewer employees. The plan has to meet the state’s criteria and the average premium can’t exceed 10 percent of the average Rhode Island wage....

The new plan’s deductible will be about $500, with out-of-pocket costs capped at $3,000 — provided the enrollee signs a pledge promising to choose a primary-care physician, undergo a health-risk appraisal, either maintain a healthy weight or participate in weight-management programs, either remain smoke-free or participate in smoking cessation programs, and participate in disease-management programs if applicable. In the first year, subscribers will be asked just to promise these things; in the second year, they will have to prove participation.

Someone who didn’t want to sign such a pledge could still buy the plan but he or she would face a $3,000 deductible and out-of-pocket costs up to $6,000 a year.

The program's concepts are stunningly unoriginal, consisting of nothing more than…

1. Price controls on the amount insurance companies can charge employees of small businesses, and
2. Government regulation of individual behavior that will hopefully lead to individuals consuming less insurance.

Why didn’t someone think of this before; we can prevent healthcare costs from rising just by having the state order them to stop rising!

Seriously, there are at least 3 problems with the plan…

1. A fixed-price formula divorced from actual costs of providing healthcare could eventually drive health insurers out of the state. There is recent precedent for this. An irrational regulatory structure forced most workers’ compensation insurers to pull out of Rhode Island in the early 1990s because they were required to pay out more money than pricing regulations allowed them to collect. There is no reason that the same thing couldn't eventually happen to health insurance.
2. The partcular mechanism for implementing the “wellness” program sets a dangerous precedent. It is wrong for government to use its power to demand that interaction between individuals occur only on the government's terms. It is not hard to imagine a future where, for example, attendance at the sex-education program of the government's choice, chosen with as much political input as medical input, is made a pre-requisite of getting lower insurance rates on a family plan. (I chose the sex-education example because liberals, conservatives and everyone in-between should be able to envision a potential problem here.)
3. Finally, it will never make sense to pay for “wellness” programs through an insurance-type system. Insurance assumes that many people pay into a pool of money, while only a few take monies out to pay for unexpected emergencies. But usage of "wellness" care will not be occurring on an infrequent, emergency basis. Ideally, the wellness program will be utilized by many people at regular intervals. This means that paying for wellness care through an insurance program will be always be less cost-effective than paying doctors for wellness care directly, sans any middleman. (Of course, if people start paying their doctors directly, they will never develop a sense that their visits to a doctor are a government-provided entitlement, making the government seem a little less powerful, creating an impression that strong-government advocates would prefer to avoid.)

This plan is an example of the government’s ability to take separate ideas which have individual merit and ruin them by putting them together in a way that focuses on increasing bureaucratic power rather than creating effective public policy. A better implementation of the "wellness" concept in the Rhode Island plan would be...

1. Implementing some sort of community rating system, ala the Wyden plan, so people can buy insurance independent of their employer,
2. Modifying the community rating system so that insurers can modify their rates based on certain types of behavior (participating in a wellness program, not smoking, etc.), and
3. Creating health-savings accounts that people can use to pay for their routine and “wellness” care.

Through this set of proposals, you can provide wellness incentives and get individuals thinking about their own care, without invoking a government threat to deny medical access to those who do not behave "correctly".

Senator Ron Wyden's Universal Health Coverage Plan

Senator Ron Wyden of Oregon has announced a universal health coverage plan that he intends to introduce in Congress next year. Here’s how the Los Angeles Times describes it…

Wyden's plan would require employers to continue contributing toward the cost of health coverage, but it would get them out the business of directly providing insurance and limit their exposure to double-digit annual inflation in healthcare costs.

In the first two years of the plan, employers who now provide coverage would be required to directly pay workers what they were spending on insurance.

It sounds like free marketers and libertarians might actually be able to rally around the Wyden plan in years one and two. However, for some reason, after year two, Senator Wyden wants to stick employers back in between individuals and their health insurance…

Thereafter, most companies would pay the government a healthcare contribution that resembles a payroll tax.

If you can successfully decouple insurance from the workplace for two years, then why does it need to be recoupled at a later date? The payroll-tax provision sounds more like something intended to make the government’s tax collection job easier, or to increase government influence over the healthcare choices that individuals make or, if you really want to be cynical, to make people believe that government is giving them something for free, when they are really buying it with their own hard-earned money, more than it does something intended to improve the delivery of healthcare.

Regardless of that concern, the idea of giving people the resources they need to choose their own health insurance, rather than having employers choose their insurance for them, is a solid starting point. Here's the rest of the outline of Senator Wyden's plan, according to the Times…

Using the money from their employers, individuals would be required to purchase private insurance policies through state purchasing pools. Benefits would be keyed to the Blue Cross Blue Shield Standard Plan available to federal workers. Workers would not have to pay higher income taxes because of the employer contribution.

The uninsured would also have to buy coverage, but premiums for the poor would be fully subsidized by the government, and middle-class families with incomes up to $80,000 for a family of four would be eligible for help on a sliding scale.

Premiums from individuals and contributions from employers would be collected by the government through the tax system and distributed to insurers. Once enrolled, individuals would be covered until retirement. Seniors in the Medicare program would not have to make any changes.

A fuller description of the plan is available from Senator Wyden’s official website.

In short, the concept of the Wyden plan is really quite simple (as are most health insurance plans, contrary to what you may have been told. As Ronald Reagan once said, "There are no easy answers, but there are simple answers.")…

1. Change the insurance system so that people within a state are pooled together and can buy health insurance, regardless of who their employer is,
2. Require individuals to purchase a mandatory minimum level of health insurance, while allowing insurance companies to sell more coverage to people who are willing to spend more, and
3. Create a new healthcare entitlement for people below a certain income level.

The messy part of analyzing a bill like this one will be untangling the mess of regulations and tax arcana whose effects need to be considered, as well as sorting through (and trying to remove) provisions intended to regulate individual behavior and directly control prices not relevant to facilitating an effective market for health insurance.

Oh, and where is the money for that new entitlement going to come from?

If Medicare Part "D" Ain't Broke, Will Sen. Whitehouse Still Try to Fix it?

I remember during the recent RI Senate race that Senator-elect Whitehouse made much of Healthcare, and, in particular, the "broken" Medicare Part "D" program (prescription drugs). In fact, it was number one on his Health Care reform To-Do list. While he was holding "the hands of seniors who are desperately afraid that they’ll wake up one day to find that the medicines they need the most are beyond their reach,” Whitehouse proposed that the Medicare Part "D" plan be "scrapped" and cited the Washington Post, which reported "only 1.4 million people – a fraction of the 8 million eligible – have signed up for the new benefit, despite a $400 million campaign by the Bush administration."

Well, now the Washington Post (via Barone) has reported this:

It sounded simple enough on the campaign trail: Free the government to negotiate lower drug prices and use the savings to plug a big gap in Medicare's new prescription-drug benefit. But as Democrats prepare to take control of Congress, they are struggling to keep that promise without wrecking a program that has proven cheaper and more popular than anyone imagined...

Polls indicate that more than 80 percent of enrollees are satisfied, even though nearly half chose plans with no coverage in the doughnut hole, a gap that opens when a senior's drug costs reach $2,250 and closes when out-of-pocket expenses reach $3,600. By the latest estimates, 3 million to 4 million seniors will hit the doughnut hole this year and pay full price for drugs while also paying drug-plan premiums.

The cost of the program has been lower than expected, about $26 billion in 2006, according to the nonpartisan Congressional Budget Office. The cost was projected to rise to $45 billion next year, but Medicare has received new bids indicating that its average per-person subsidy could drop by 15 percent in 2007, to $79.90 a month.

Urban Institute President Robert D. Reischauer, a former director of the Congressional Budget Office, called that a remarkable record for a new federal program.

Initially, he said, people were worried no private plans would participate. "Then too many plans came forward," Reischauer said. "Then people said it's going to cost a fortune. And the price came in lower than anybody thought. Then people like me said they're low-balling the prices the firs