Posts
Wednesday, March 31, 2010
Tuesday, March 30, 2010
Opinion: Reform's Great, But We Need More Doctors
Opinion: Reform's Great, But We Need More Doctors
Kevin Pho, M.D.
Special to AOL News
(March 30) -- Health reform has passed, and the United States is poised to join the rest of the industrialized world in providing most of its citizens with affordable health coverage.
But having health insurance doesn't necessarily mean it will be easy to find a doctor. Even before reform, reports projected a shortfall of 40,000 primary care physicians over the next decade. Thirty-two million newly insured Americans, plus the millions of baby boomers entering Medicare age, will only make this shortfall worse.
As a primary care doctor in New Hampshire, I have had the opportunity to observe the effects of health reform in neighboring Massachusetts, which enacted a similar approach to universal coverage in 2006.
To its credit, Massachusetts covers 97 percent of its residents, the highest in the country. But its wholly unprepared primary care system was unable to handle the 500,000 newly insured patients looking for a regular doctor. According to the Massachusetts Medical Society, a primary care internist had an average wait time of 50 days for new patients, with almost half refusing to accept to new patients.
When Amherst, Mass., family physician Kate Atkinson decided to accept newly insured patients, she was forced to close her doors six weeks later. She told the Boston Globe that "there were so many people waiting to get in, it was like opening the floodgates," saying that her office is getting "10 calls a day from patients crying and begging."
And this is a state that already has the highest number of doctors per capita nationwide. It's frightening to imagine how other parts of the country, most of which have significantly fewer primary care doctors, can handle the influx of patients if Massachusetts can't.
Any hope to bolster the primary care work force, unfortunately, is not on the horizon.
With medical students graduating with an average educational debt exceeding $150,000, new doctors overwhelmingly choose to become specialists, which offer salaries several times more than those of primary care doctors. In the 2010 residency match, fewer than half of family practice residency slots were filled by American medical graduates, compared with more than 95 percent in fields like radiology, anesthesiology and orthopedic surgery.
Furthermore, nurse practitioners and physician assistants, who can help alleviate the shortage, are also enticed by the lucrative allure of specialty care. As Newsweek recently reported, "almost half of current nurse practitioners and physician assistants work in specialty practices, where the money is."
Health reform does try to help primary care, through modest improvements to Medicare and Medicaid primary care clinician payments, better funding of loan repayment programs and pilot programs for new primary care models. But these incremental solutions fail to appreciate the enormity of the problem.
Nor do they address the phenomenon of physician burnout currently plaguing the field. A survey published last year in the Annals of Internal Medicine found that nearly half of primary care doctors reported practicing in a work environment "strongly associated with low physician satisfaction, high stress ... and [an] intent to leave." Indeed, almost one-third said they were likely to leave their practice within two years.
At a time when primary care physicians are needed most, health reform does little to relieve these frustrated doctors of the unreasonable time pressures and onerous bureaucratic requirements that worsen their practice conditions and obstruct their patient relationships.
Providing affordable health care to an additional 32 million Americans is certainly worth celebrating. But whether our beleaguered primary care system can meet the challenges that lie ahead will be critical in determining health reform's success or failure.
Kevin Pho, M.D.
Special to AOL News
(March 30) -- Health reform has passed, and the United States is poised to join the rest of the industrialized world in providing most of its citizens with affordable health coverage.
But having health insurance doesn't necessarily mean it will be easy to find a doctor. Even before reform, reports projected a shortfall of 40,000 primary care physicians over the next decade. Thirty-two million newly insured Americans, plus the millions of baby boomers entering Medicare age, will only make this shortfall worse.
As a primary care doctor in New Hampshire, I have had the opportunity to observe the effects of health reform in neighboring Massachusetts, which enacted a similar approach to universal coverage in 2006.
To its credit, Massachusetts covers 97 percent of its residents, the highest in the country. But its wholly unprepared primary care system was unable to handle the 500,000 newly insured patients looking for a regular doctor. According to the Massachusetts Medical Society, a primary care internist had an average wait time of 50 days for new patients, with almost half refusing to accept to new patients.
When Amherst, Mass., family physician Kate Atkinson decided to accept newly insured patients, she was forced to close her doors six weeks later. She told the Boston Globe that "there were so many people waiting to get in, it was like opening the floodgates," saying that her office is getting "10 calls a day from patients crying and begging."
And this is a state that already has the highest number of doctors per capita nationwide. It's frightening to imagine how other parts of the country, most of which have significantly fewer primary care doctors, can handle the influx of patients if Massachusetts can't.
Any hope to bolster the primary care work force, unfortunately, is not on the horizon.
With medical students graduating with an average educational debt exceeding $150,000, new doctors overwhelmingly choose to become specialists, which offer salaries several times more than those of primary care doctors. In the 2010 residency match, fewer than half of family practice residency slots were filled by American medical graduates, compared with more than 95 percent in fields like radiology, anesthesiology and orthopedic surgery.
Furthermore, nurse practitioners and physician assistants, who can help alleviate the shortage, are also enticed by the lucrative allure of specialty care. As Newsweek recently reported, "almost half of current nurse practitioners and physician assistants work in specialty practices, where the money is."
Health reform does try to help primary care, through modest improvements to Medicare and Medicaid primary care clinician payments, better funding of loan repayment programs and pilot programs for new primary care models. But these incremental solutions fail to appreciate the enormity of the problem.
Nor do they address the phenomenon of physician burnout currently plaguing the field. A survey published last year in the Annals of Internal Medicine found that nearly half of primary care doctors reported practicing in a work environment "strongly associated with low physician satisfaction, high stress ... and [an] intent to leave." Indeed, almost one-third said they were likely to leave their practice within two years.
At a time when primary care physicians are needed most, health reform does little to relieve these frustrated doctors of the unreasonable time pressures and onerous bureaucratic requirements that worsen their practice conditions and obstruct their patient relationships.
Providing affordable health care to an additional 32 million Americans is certainly worth celebrating. But whether our beleaguered primary care system can meet the challenges that lie ahead will be critical in determining health reform's success or failure.
Obamanomics & Healthcare; 1st Installment
Here's a little democratic fuzzy math (Obamanomics) for you all:
Congress has appropriated $5,000,000,000 (5 billion) dollars to pay for direct medical care for a "temporary high-risk pool" of individuals that currently do not have insurance until the mandates for insurance take effect in 2014.
These individuals will purchase the insurance through the "government exchange program" adminsitered by each state.
The 5 billion dollars is above and beyond the premiums that will be collected for the new "affordable policies" that cannot be more than what the current market policies are.
Still with me--here's where the fuzzy math comes in?
In 2010 we will spend a little over $3,000,000,000,000 (3.05 trillion) in health care.
If 85% of the population have insurance and about 15% dont (about 30 million individuals), that means that those that don't have insurance will require 15% of the 3 trillion or about 450,000,000,000 (450 billion dollars) per year for health care expenditures.
However, congress has only appropriated 5 billion dollars or 0.16% of the total amount needed to pay for such care expecting to make up the rest or 98.14% needed from premiums collected with the stipulation that if the money runs out, then the Secretary of the Health and Human Services "will take such measures as to raise premiums, limit coverage, or create waiting lists".
Now let's say for the sake of argument that 98.14% of $450,000,000,000 is still pretty much $450,000,000,000--then that means they will need to collect 450,000,000,000 in premiums from 30 million people or about $15,000 dollars each ($1250.00/month).
But--since this is an "affordable plan" and the premiums cannot be more than what the market currently is, that means there are only two alternatives:
The first is that after they run out of the 5 billion plus whatever premiums they collect (which will take about a month), they simply limit care or deny coverage.
The second option is that the rest of us will be asked to pay for the shortcoming through increased premiums, taxes, or both.
What option do you think they will choose?
Furthermore, the above analysis makes the assumption that the "high-risk" pool will utilze the same amount of care as the "average"; however, since by definition, they are "high-risk" and presumably have pre-existing conditions, then that means they will actually utilize more care which, of course, will cost more!
John R. Vigil, MD (1988), MBA (2011)
Fellow, American College of Physician Executives
Congress has appropriated $5,000,000,000 (5 billion) dollars to pay for direct medical care for a "temporary high-risk pool" of individuals that currently do not have insurance until the mandates for insurance take effect in 2014.
These individuals will purchase the insurance through the "government exchange program" adminsitered by each state.
The 5 billion dollars is above and beyond the premiums that will be collected for the new "affordable policies" that cannot be more than what the current market policies are.
Still with me--here's where the fuzzy math comes in?
In 2010 we will spend a little over $3,000,000,000,000 (3.05 trillion) in health care.
If 85% of the population have insurance and about 15% dont (about 30 million individuals), that means that those that don't have insurance will require 15% of the 3 trillion or about 450,000,000,000 (450 billion dollars) per year for health care expenditures.
However, congress has only appropriated 5 billion dollars or 0.16% of the total amount needed to pay for such care expecting to make up the rest or 98.14% needed from premiums collected with the stipulation that if the money runs out, then the Secretary of the Health and Human Services "will take such measures as to raise premiums, limit coverage, or create waiting lists".
Now let's say for the sake of argument that 98.14% of $450,000,000,000 is still pretty much $450,000,000,000--then that means they will need to collect 450,000,000,000 in premiums from 30 million people or about $15,000 dollars each ($1250.00/month).
But--since this is an "affordable plan" and the premiums cannot be more than what the market currently is, that means there are only two alternatives:
The first is that after they run out of the 5 billion plus whatever premiums they collect (which will take about a month), they simply limit care or deny coverage.
The second option is that the rest of us will be asked to pay for the shortcoming through increased premiums, taxes, or both.
What option do you think they will choose?
Furthermore, the above analysis makes the assumption that the "high-risk" pool will utilze the same amount of care as the "average"; however, since by definition, they are "high-risk" and presumably have pre-existing conditions, then that means they will actually utilize more care which, of course, will cost more!
John R. Vigil, MD (1988), MBA (2011)
Fellow, American College of Physician Executives
Monday, March 29, 2010
Cost of Medical Care in 2007
Cost of Medical Care in 2007
From Medicine & Opera http://medicine-opera.com/2009/03/25/cost-of-medical-care-in-2007/
The aggregate cost of medical care in the US in 2007 was $2.26 trillion. That used to be a lot of money before the federal government started spending trillions like they were millions. The pie chart below shows how this cost was distributed. It also is rising faster than GDP and has been doing so for almost a half century.
It’s as interesting for what it leaves out as well as what it includes. Under what category were diagnostic tests placed? The cost of imaging and laboratory testing is enormous. The clinician doesn’t get paid for these studies, but he does determine which and how many of these tests are performed.
Also note that the cost of prescription drugs is only 10% of all costs. It’s been that for years. Villainizing drug companies for the high price of their drugs has been a popular pastime since the discovery of penicillin, but even if all drugs were free we’d still be left with a $2 trillion bill. Of course if all drugs were free we’d have no drugs.
The current administration wants to fix the US healthcare system. First it’s not a system and before you fix it you have to understand what doesn’t work. Medical care in the US is the best in the world if you’re inside the tent. Students of medicine at every level want to train in this country. Medical research here is also the best in the world. What’s wrong is that medicine costs too much. The reason it costs too much is that there are no incentives to reduce costs. Every incentive out there encourages extra spending.
No attempt to overhaul our “system” will work if it doesn’t successfully deal with cost. More coverage for more people at less cost is impossible without first understanding and then fixing the forces that drive costs up. After that you’d have to drastically lower the cost of every service without restricting its availability.
An MRI doesn’t have to cost $4000, but health insurance and Medicare encourage high prices at the same time they think they’re containing them. Only a system of competition and money incentives will drive prices down. Patients should be able to shop around for the cheapest MRI they can find. They’d have to have an incentive to do so; which means they’d have to bear up front some of the cost. Today the incentives all support paying the highest price to the nearest provider. If MRIs were priced competitively they’d cost about $100 – $200 at the most.
I don’t think either the public or the government is ready for price competition in medical care. Price competition necessarily means price rationing. What we’ll get instead is rationing by delay. The interesting question is how much degradation in the ease and facility of current medical care will the 85% of the public that has health insurance accept to provide care for the 15% that doesn’t. By the time the answer is in the debate may be over.
--------------------------------------------------------------------------------
Sunday, March 28, 2010
Fine Tooth Analysis of the Healthcare Bill
Dear Friends and Concerned Citizens,
I will be going through the recently enacted Healthcare Reform Bill with a fine toothed comb--unlike the majority of our elected officials that voted on it--and will apply over 20 years of healthcare experience in the trenches as a surgeon, emergency room physician, and a primary care/urgent care provider in interpreting it and posting all relevant aspects of the bill as they affect all of us, including providers and consumers.
In the first 26 pages of the bill under Division A (Affordable Healtcare Choices), Title I (Immediate Reforms)the bill discusses setting up high-risk pools of those that have been denied coverage for a variety of reasons--especially pre-existing conditions--so that they may obtain immediate and affordable coverage.
The problem is that Congress has appropriated 5 billion dollars--not including collected premiums)--to pay for direct medical care provided to those individuals. Now that may sound like a lot of money, but remember, that money must also go to pay administrative costs as well as direct medical care. Since this is a "high-risk" pool of patients, that, by definition means that their medical care is going to be much more costly--but, since they cannot be denied or charged more than anyone else (remember it is supposed to be affordable)that means the money will come from the 5 billion dollar pool which will be burned through very quickly.
Now the second problem--that was never told to the public--is that when the funds run out, then the Secretary of Health and Human Services may " reduce benefits, increase premiums, or establish waiting lists."
Don't believe me? See for yourself and pay attention to the last paragraph:
14 (1) IN GENERAL.—There is appropriated to the
15 Secretary, out of any moneys in the Treasury not
16 otherwise appropriated, $5,000,000,000 to pay
17 claims against (and administrative costs of) the
18 high-risk pool under this section in excess of the pre19
miums collected with respect to eligible individuals
20 enrolled in the high-risk pool. Such funds shall be
21 available without fiscal year limitation.
22 (2) INSUFFICIENT FUNDS.—If the Secretary es23
timates for any fiscal year that the aggregate
24 amounts available for payment of expenses of the
25 high-risk pool will be less than the amount of the ex-
VerDate Nov 24 2008 12:56 Oct 30, 2009 Jkt 089200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\H3962.IH H3962 rmajette on DSK29S0YB1PROD with BILLS
26
HR 3962 IH
1 penses, the Secretary shall make such adjustments
2 as are necessary to eliminate such deficit, including
3 reducing benefits, increasing premiums, or estab4
lishing waiting lists.
And that is just in the first 26 pages and 11 of those were introduction and table of contents!
John R. Vigil, MD
I will be going through the recently enacted Healthcare Reform Bill with a fine toothed comb--unlike the majority of our elected officials that voted on it--and will apply over 20 years of healthcare experience in the trenches as a surgeon, emergency room physician, and a primary care/urgent care provider in interpreting it and posting all relevant aspects of the bill as they affect all of us, including providers and consumers.
In the first 26 pages of the bill under Division A (Affordable Healtcare Choices), Title I (Immediate Reforms)the bill discusses setting up high-risk pools of those that have been denied coverage for a variety of reasons--especially pre-existing conditions--so that they may obtain immediate and affordable coverage.
The problem is that Congress has appropriated 5 billion dollars--not including collected premiums)--to pay for direct medical care provided to those individuals. Now that may sound like a lot of money, but remember, that money must also go to pay administrative costs as well as direct medical care. Since this is a "high-risk" pool of patients, that, by definition means that their medical care is going to be much more costly--but, since they cannot be denied or charged more than anyone else (remember it is supposed to be affordable)that means the money will come from the 5 billion dollar pool which will be burned through very quickly.
Now the second problem--that was never told to the public--is that when the funds run out, then the Secretary of Health and Human Services may " reduce benefits, increase premiums, or establish waiting lists."
Don't believe me? See for yourself and pay attention to the last paragraph:
14 (1) IN GENERAL.—There is appropriated to the
15 Secretary, out of any moneys in the Treasury not
16 otherwise appropriated, $5,000,000,000 to pay
17 claims against (and administrative costs of) the
18 high-risk pool under this section in excess of the pre19
miums collected with respect to eligible individuals
20 enrolled in the high-risk pool. Such funds shall be
21 available without fiscal year limitation.
22 (2) INSUFFICIENT FUNDS.—If the Secretary es23
timates for any fiscal year that the aggregate
24 amounts available for payment of expenses of the
25 high-risk pool will be less than the amount of the ex-
VerDate Nov 24 2008 12:56 Oct 30, 2009 Jkt 089200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\H3962.IH H3962 rmajette on DSK29S0YB1PROD with BILLS
26
HR 3962 IH
1 penses, the Secretary shall make such adjustments
2 as are necessary to eliminate such deficit, including
3 reducing benefits, increasing premiums, or estab4
lishing waiting lists.
And that is just in the first 26 pages and 11 of those were introduction and table of contents!
John R. Vigil, MD
Retirement Health Care: Average Couple Needs To Save $250,000
MARK JEWELL | 03/25/10 06:59 AM |
BOSTON — Relief to seniors facing high prescription drug costs is one of the first changes to come under the new health care overhaul. But ultimately that won't offset the relentless increase in retirees' medical expenses.
A couple retiring this year will need a quarter of a million dollars, on average, to cover medical expenses in retirement, according to a study to be released Thursday by Fidelity Investments.
The estimate is up 4.2 percent from Fidelity's projection last year. The Boston-based financial services company has updated its estimate annually since 2002 as part of its business helping employers design workplace benefits programs.
The study is based on projections for a couple of 65-year-olds retiring this year with Medicare coverage. The estimate factors in the federal program's premiums, co-payments and deductibles, as well as out-of-pocket prescription costs. The study assumes no employer provided insurance in retirement, and a life expectancy of 85 for women and 82 for men.
The estimate has risen 56 percent from Fidelity's initial $160,000 projection in 2002. The average annual increase has been 5.7 percent, so this year's 4.2 percent rise – from $240,000 last year to $250,000 – is modest.
But with broader inflation now near zero amid a recession, health care costs continue to rise faster than other expenses, said Sunit Patel, a senior vice president at Fidelity.
The findings illustrate the importance of factoring in health care alongside housing, food and other expenses in retirement planning.
"It turns out to be a surprise for many, and one of the largest expenses in retirement," Patel said.
The increase in this year's estimate was relatively small because a surge in patent expirations for brand-name drugs meant many cheaper generic versions reached the market, Patel said. That helped limit out-of-pocket prescription costs
BOSTON — Relief to seniors facing high prescription drug costs is one of the first changes to come under the new health care overhaul. But ultimately that won't offset the relentless increase in retirees' medical expenses.
A couple retiring this year will need a quarter of a million dollars, on average, to cover medical expenses in retirement, according to a study to be released Thursday by Fidelity Investments.
The estimate is up 4.2 percent from Fidelity's projection last year. The Boston-based financial services company has updated its estimate annually since 2002 as part of its business helping employers design workplace benefits programs.
The study is based on projections for a couple of 65-year-olds retiring this year with Medicare coverage. The estimate factors in the federal program's premiums, co-payments and deductibles, as well as out-of-pocket prescription costs. The study assumes no employer provided insurance in retirement, and a life expectancy of 85 for women and 82 for men.
The estimate has risen 56 percent from Fidelity's initial $160,000 projection in 2002. The average annual increase has been 5.7 percent, so this year's 4.2 percent rise – from $240,000 last year to $250,000 – is modest.
But with broader inflation now near zero amid a recession, health care costs continue to rise faster than other expenses, said Sunit Patel, a senior vice president at Fidelity.
The findings illustrate the importance of factoring in health care alongside housing, food and other expenses in retirement planning.
"It turns out to be a surprise for many, and one of the largest expenses in retirement," Patel said.
The increase in this year's estimate was relatively small because a surge in patent expirations for brand-name drugs meant many cheaper generic versions reached the market, Patel said. That helped limit out-of-pocket prescription costs
Wednesday, March 24, 2010
Now, Can We Have Health-Care Reform?
ObamaCare doubles down on a failing system.
By HOLMAN W. JENKINS, JR.
A certain kind of person—we get emails from them all the time—understands exactly nothing about the health-care debate, but thinks they know who the villain is: the insurance industry.
Barack Obama is not one of them. In the desperate hours he played to public ignorance. But from the beginning, the industry was his ally because he set out to solve its biggest problem—which is not the same as America's biggest problem.
We'll let Angela Braly, CEO of insurer WellPoint, take the story from here. She was recently hauled before Congress to justify her company's proposed 39% rate hike in California. She explained the source was two-fold: rising medical costs and healthier customers dropping their coverage, forcing the sick to pick up the tab.
Now this sounds like two problems, but for WellPoint and other insurers it's really only one problem. Once everyone is required by government mandate to buy insurance, the industry's survival is no longer threatened: It can just pass its skyrocketing costs along to customers. Once customers can no longer refuse to buy the industry's product, the problem of costs won't be fixed, but it no longer is the insurance industry's problem.
There, in that one sentence, we give you the failure of ObamaCare, the failure of the congressional health-care debate, the failure of health-care politics in this country.
Health insurers, and indeed Corporate America as a whole, are like monkeys who are caught by staking a glass jar to the ground with a shiny trinket inside. They won't let go so they can't get their hands out of the jar. That trinket is the ruinous and regressive $250 billion-a-year tax benefit for employer-provided insurance.
Corporate America isn't brave enough to argue against a direct subsidy to its employment costs, no matter how perverse its impact in insulating consumers from the true cost of their health care choices. Insurers are not brave enough to say: Give us a tax code that lets us go back to being insurers rather than a tax laundromat for the middle class's health-care spending.
Almost any bill would have been worth having that fundamentally fixed this tax distortion, regardless of its other elements.
We say this because any bill, including the one signed by the president yesterday, will be revisited many times in the future. Millions of pages of rules will be written by regulators before we see how it really works. Congress itself will return in predictable ways: It will reverse the proposed Medicare cuts that created ObamaCare's illusion of fiscal probity. It will tighten the mandate that requires insurers to cover the sick at favorable prices. It will not tighten the requirement that the young and healthy buy insurance at prices that subsidize the old and unhealthy.
More and more tax money will have to be found to keep the jalopy on the road. More and more administrative controls on medicine will attempt vainly to keep the jalopy from bankrupting the nation.
Under the law just signed, employers have even more incentive than they did yesterday to lavish excessive health insurance on their high-end employees. They have less incentive to cover low-end workers, or even hire them.
For the young, healthy or anyone not stumbling into a giant tax handout, buying insurance at the inflated prices available in the marketplace would be an even crazier financial decision today than it was yesterday—because now you can wait and buy it when you're sick.
For insurers, the check is in the mail: So watered down is the individual mandate that it must accelerate the industry's death spiral if not for the massive subsidies the government now has obliged itself to provide to keep the industry afloat and allow insurers to continue scalping their 15% off the top for serving as gatekeeper to a tax loophole.
When all is said and done, with unerring accuracy, ObamaCare has ended up doubling down on the system's existing perversities. The one thing it doesn't do (though it would be perfectly consistent with the Democratic goal of universal access) is incentivize a health-care marketplace based on competition in price and quality.
A world-class hospital in India does heart surgery the equal of any heart surgery in America, but does so at one-tenth the cost (and increasingly attracts a world-wide clientele). The reason is not what you think: low-paid doctors and nurses. The reason is that competition works in medicine as it does in everything else when the patient cares about getting value for money. This is the great low-hanging fruit of health-care reform. It continues to hang.
By HOLMAN W. JENKINS, JR.
A certain kind of person—we get emails from them all the time—understands exactly nothing about the health-care debate, but thinks they know who the villain is: the insurance industry.
Barack Obama is not one of them. In the desperate hours he played to public ignorance. But from the beginning, the industry was his ally because he set out to solve its biggest problem—which is not the same as America's biggest problem.
We'll let Angela Braly, CEO of insurer WellPoint, take the story from here. She was recently hauled before Congress to justify her company's proposed 39% rate hike in California. She explained the source was two-fold: rising medical costs and healthier customers dropping their coverage, forcing the sick to pick up the tab.
Now this sounds like two problems, but for WellPoint and other insurers it's really only one problem. Once everyone is required by government mandate to buy insurance, the industry's survival is no longer threatened: It can just pass its skyrocketing costs along to customers. Once customers can no longer refuse to buy the industry's product, the problem of costs won't be fixed, but it no longer is the insurance industry's problem.
There, in that one sentence, we give you the failure of ObamaCare, the failure of the congressional health-care debate, the failure of health-care politics in this country.
Health insurers, and indeed Corporate America as a whole, are like monkeys who are caught by staking a glass jar to the ground with a shiny trinket inside. They won't let go so they can't get their hands out of the jar. That trinket is the ruinous and regressive $250 billion-a-year tax benefit for employer-provided insurance.
Corporate America isn't brave enough to argue against a direct subsidy to its employment costs, no matter how perverse its impact in insulating consumers from the true cost of their health care choices. Insurers are not brave enough to say: Give us a tax code that lets us go back to being insurers rather than a tax laundromat for the middle class's health-care spending.
Almost any bill would have been worth having that fundamentally fixed this tax distortion, regardless of its other elements.
We say this because any bill, including the one signed by the president yesterday, will be revisited many times in the future. Millions of pages of rules will be written by regulators before we see how it really works. Congress itself will return in predictable ways: It will reverse the proposed Medicare cuts that created ObamaCare's illusion of fiscal probity. It will tighten the mandate that requires insurers to cover the sick at favorable prices. It will not tighten the requirement that the young and healthy buy insurance at prices that subsidize the old and unhealthy.
More and more tax money will have to be found to keep the jalopy on the road. More and more administrative controls on medicine will attempt vainly to keep the jalopy from bankrupting the nation.
Under the law just signed, employers have even more incentive than they did yesterday to lavish excessive health insurance on their high-end employees. They have less incentive to cover low-end workers, or even hire them.
For the young, healthy or anyone not stumbling into a giant tax handout, buying insurance at the inflated prices available in the marketplace would be an even crazier financial decision today than it was yesterday—because now you can wait and buy it when you're sick.
For insurers, the check is in the mail: So watered down is the individual mandate that it must accelerate the industry's death spiral if not for the massive subsidies the government now has obliged itself to provide to keep the industry afloat and allow insurers to continue scalping their 15% off the top for serving as gatekeeper to a tax loophole.
When all is said and done, with unerring accuracy, ObamaCare has ended up doubling down on the system's existing perversities. The one thing it doesn't do (though it would be perfectly consistent with the Democratic goal of universal access) is incentivize a health-care marketplace based on competition in price and quality.
A world-class hospital in India does heart surgery the equal of any heart surgery in America, but does so at one-tenth the cost (and increasingly attracts a world-wide clientele). The reason is not what you think: low-paid doctors and nurses. The reason is that competition works in medicine as it does in everything else when the patient cares about getting value for money. This is the great low-hanging fruit of health-care reform. It continues to hang.
Sunday, March 21, 2010
A Taste of Obamacare
For all you people that are celebrating this bill, let me give you just a little of what we can expect now:
1. Acute and severe shortage of doctors--especially primary care doctors.
Why: Because this bill does nothing to change the primary problem of incredible waste and inefficiency in the current system which is an overreliance on high cost/high tech care driven by too many specialists, demanding consumers, and medical liability. We already have a critical shortage of primary care doctors in this country and this bill will only make it worse as older doctors retire out of frustration and less and less people enter the specialties of primary care.
2. Number one will be exacerbated by an influx of 30-40 million more people into the system which will increase the volume of people that a diminishing number of primary care doctors will see which will result in shorter visits, longer waits in the office and to get in, and a greater potential for medical errors and mistreatment as the doctor has less time per visit.
3. In a measure to control costs, medical care will move from the time honored system of the patient-physician relationship with the physician using his or her training as well as experience to treat disease to a "best practices" system where treatment guidelines and protocols are based on statistical data and analysis, including cost-benefit analyses and developed by doctors that don't know you. What this means is that instead of treating the individual--we will be treating the patient within the context of populations. It might not sound different, but I can assure you there is a huge difference--let me try to explain:
Today, if you suffer from coronary artery disease or blocked arteries in the heart, you can be treated with medication and/or more invasively with stents or operation. However, statistics show that patients treated with stents and operations (which are very costly) do no better--as a group--than those treated with just medication and lifestyle changes (which is not so costly). The key phrase here, is AS A GROUP, there is no doubt that within that group of people that have more costly treatments, there are some individuals who do much better with respect to mortality and quality of life than those treated with the less costly methods.
So the end result will be that if you are lucky enough to fall within the arbitrary confidence levels set up by the committee that makes the treatment guidelines, then you're treated, if you fall out of the curve---too bad.
4. Since doctors will no longer have much discretion in how you are treated, they will find the challenge of being a mere technician reading a cook book unrewarding and unbecoming the years of training and sacrifice they have endured and will leave the profession or not enter it, further exacerbating number 1 above.
5. As a result of number 1 and 4, you will all be seeing more and more mid-level providers like physician assistants (PAs) and nurse practitioners (NPs) who do not have near the level of training or experience to recognize and treat obscure and rare diseases or complex and complicated cases.
6. The overall quality of specialists will fall and more people with serious or complicated medical problems will not be treated at all.
Why: The current bill aims to reward and punish hospitals and providers based on certain quality benchmarks, like mortality or rates of complications, or infections, and etc. Now on the surface this certainly sounds wonderful--but, if you look a little deeper, what will happen is that a phenomenon that goes on every day in this country called "cherry picking" will become the standard of care.
Let me explain: Cherry picking means that doctors and hospitals will pick and choose only those patients that are going to give them good results....that means that they will be treating patients that are deemed low-risk and that would probably do fine--or even better---without treatment!
Meanwhile, smaller community hospitals and inner city hospitals and doctors that do not have the luxury of picking and choosing only the good risk patients, will have worse scoring on their benchmarks which will mean less money for them (because remember, the "good doctors and hospital" got the money) to invest in research and technology. On the other hand, the "good hospitals" will invest their money on high tech gadgets and technology to treat patients that don't need it (remember, they are low risk anyway) and which will add significantly to the cost of care and which is the major cost driver for out-of-control costs (see number 2 above).
An analogy would be like rewarding a military unit that doesn't fight (therefore has low mortality) with high tech weaponry and protective gear, while punishing the units that have higher mortality (because they are in the trenches fighting)! Which unit do you think would have the higher quality?
7. Of course, there is not a single democrat that will admit it, but someone has to say it. That is, like it or not--there will be rationing!
Why: Look at 1, 2, and 3 above. regardless of what the CBO says or Obama says, healthcare costs will continue to rise exponentially as we rely more and more on costly high tech care (which is again, the biggest cost driver) and since 30 to 40 more million people will be added to a decreasing pool of doctors to take care of them and we obviously will not have unlimited money to pay for that care--that means rationing and very long waiting lists! If you're over 70 and have renal failure--too bad, no dialysis for you. If you're 60 and need a knee replacement--you'll have to wait until all the 50 years olds (and sports celebrities) get theirs because they are more "valuable" to society than you. Need a liver transplant--you better be Madonna or Mickey Mantle. Need a heart bypass--better get in line. Are you 70, 80, or 90 and have a broken hip---too bad, you're not going to get one! You will be given comfort measures and will most likely die of a pulmonary embolus or pneumonia.
8. Insurance premiums will continue to rise and in an attempt to offset that by the government, subsidies will be given which we all know means higher taxes.
Why: Again, this bill does nothing to address the two fundamental problems with American Healthcare: Out-of-control costs spent on high cost/high tech(and even some low cost care such as antibiotics) care and technology--that is often not needed and a third party system to pay for that care.
A third party system does nothing to put the responsibility of (the cost) of health care where it belongs—which is with the patient! As long as there is the perception that someone else is paying for any commodity--then we all by human nature are going to want and expect the best there is and with all the bells and whistles--whether we need it or not! Health insurance should be used only for unpredictable calamities--not routine health care! If we all had to pay for our screening mammograms and colonoscopies, and regular doctors visits, maybe we would shop around and educate ourselves as to whether we really need it and where we could get the best deal! Secondly, as I already mentioned, since the cost will continue to rise and the insurance companies will continue to pay, where do you think the money will come from to pay for it? The tooth fairy?
That is just a short list of what we can look forward to in the next few years--and that's just in health care!
Good luck!
John Vigil, MD (1988), MBA (2011)
Fellow, American College of Physician Executives
1. Acute and severe shortage of doctors--especially primary care doctors.
Why: Because this bill does nothing to change the primary problem of incredible waste and inefficiency in the current system which is an overreliance on high cost/high tech care driven by too many specialists, demanding consumers, and medical liability. We already have a critical shortage of primary care doctors in this country and this bill will only make it worse as older doctors retire out of frustration and less and less people enter the specialties of primary care.
2. Number one will be exacerbated by an influx of 30-40 million more people into the system which will increase the volume of people that a diminishing number of primary care doctors will see which will result in shorter visits, longer waits in the office and to get in, and a greater potential for medical errors and mistreatment as the doctor has less time per visit.
3. In a measure to control costs, medical care will move from the time honored system of the patient-physician relationship with the physician using his or her training as well as experience to treat disease to a "best practices" system where treatment guidelines and protocols are based on statistical data and analysis, including cost-benefit analyses and developed by doctors that don't know you. What this means is that instead of treating the individual--we will be treating the patient within the context of populations. It might not sound different, but I can assure you there is a huge difference--let me try to explain:
Today, if you suffer from coronary artery disease or blocked arteries in the heart, you can be treated with medication and/or more invasively with stents or operation. However, statistics show that patients treated with stents and operations (which are very costly) do no better--as a group--than those treated with just medication and lifestyle changes (which is not so costly). The key phrase here, is AS A GROUP, there is no doubt that within that group of people that have more costly treatments, there are some individuals who do much better with respect to mortality and quality of life than those treated with the less costly methods.
So the end result will be that if you are lucky enough to fall within the arbitrary confidence levels set up by the committee that makes the treatment guidelines, then you're treated, if you fall out of the curve---too bad.
4. Since doctors will no longer have much discretion in how you are treated, they will find the challenge of being a mere technician reading a cook book unrewarding and unbecoming the years of training and sacrifice they have endured and will leave the profession or not enter it, further exacerbating number 1 above.
5. As a result of number 1 and 4, you will all be seeing more and more mid-level providers like physician assistants (PAs) and nurse practitioners (NPs) who do not have near the level of training or experience to recognize and treat obscure and rare diseases or complex and complicated cases.
6. The overall quality of specialists will fall and more people with serious or complicated medical problems will not be treated at all.
Why: The current bill aims to reward and punish hospitals and providers based on certain quality benchmarks, like mortality or rates of complications, or infections, and etc. Now on the surface this certainly sounds wonderful--but, if you look a little deeper, what will happen is that a phenomenon that goes on every day in this country called "cherry picking" will become the standard of care.
Let me explain: Cherry picking means that doctors and hospitals will pick and choose only those patients that are going to give them good results....that means that they will be treating patients that are deemed low-risk and that would probably do fine--or even better---without treatment!
Meanwhile, smaller community hospitals and inner city hospitals and doctors that do not have the luxury of picking and choosing only the good risk patients, will have worse scoring on their benchmarks which will mean less money for them (because remember, the "good doctors and hospital" got the money) to invest in research and technology. On the other hand, the "good hospitals" will invest their money on high tech gadgets and technology to treat patients that don't need it (remember, they are low risk anyway) and which will add significantly to the cost of care and which is the major cost driver for out-of-control costs (see number 2 above).
An analogy would be like rewarding a military unit that doesn't fight (therefore has low mortality) with high tech weaponry and protective gear, while punishing the units that have higher mortality (because they are in the trenches fighting)! Which unit do you think would have the higher quality?
7. Of course, there is not a single democrat that will admit it, but someone has to say it. That is, like it or not--there will be rationing!
Why: Look at 1, 2, and 3 above. regardless of what the CBO says or Obama says, healthcare costs will continue to rise exponentially as we rely more and more on costly high tech care (which is again, the biggest cost driver) and since 30 to 40 more million people will be added to a decreasing pool of doctors to take care of them and we obviously will not have unlimited money to pay for that care--that means rationing and very long waiting lists! If you're over 70 and have renal failure--too bad, no dialysis for you. If you're 60 and need a knee replacement--you'll have to wait until all the 50 years olds (and sports celebrities) get theirs because they are more "valuable" to society than you. Need a liver transplant--you better be Madonna or Mickey Mantle. Need a heart bypass--better get in line. Are you 70, 80, or 90 and have a broken hip---too bad, you're not going to get one! You will be given comfort measures and will most likely die of a pulmonary embolus or pneumonia.
8. Insurance premiums will continue to rise and in an attempt to offset that by the government, subsidies will be given which we all know means higher taxes.
Why: Again, this bill does nothing to address the two fundamental problems with American Healthcare: Out-of-control costs spent on high cost/high tech(and even some low cost care such as antibiotics) care and technology--that is often not needed and a third party system to pay for that care.
A third party system does nothing to put the responsibility of (the cost) of health care where it belongs—which is with the patient! As long as there is the perception that someone else is paying for any commodity--then we all by human nature are going to want and expect the best there is and with all the bells and whistles--whether we need it or not! Health insurance should be used only for unpredictable calamities--not routine health care! If we all had to pay for our screening mammograms and colonoscopies, and regular doctors visits, maybe we would shop around and educate ourselves as to whether we really need it and where we could get the best deal! Secondly, as I already mentioned, since the cost will continue to rise and the insurance companies will continue to pay, where do you think the money will come from to pay for it? The tooth fairy?
That is just a short list of what we can look forward to in the next few years--and that's just in health care!
Good luck!
John Vigil, MD (1988), MBA (2011)
Fellow, American College of Physician Executives
Saturday, March 20, 2010
Tyranny Must be Resisted
My fellow Americans,
Please...make no mistake about this healthcare bill. This bill is not about healthcare and it is not about Obama, Pelosi, and Reid. No, this is much more vast and treacherous than that. It is nothing more than the "fundamental transformation of America"--translated as the transfer of power and redistribution of wealth to the socialist working class. This is about Marx, Lewinsky, Soros, Andy Stern, the unions, and other socialist elitists that manipulate the puppet strings attached to Obama, Reid, Pelosi, et al.
What we are witnessing is nothing less then the fruits of seeds that were planted over 60 years ago and only now are bearing fruit. The arrogant disrespect and disregard for the will of the people as they force this bill upon us only shows us that they truly believe that they have succeeded. Their blatant disregard for our constitution and our democratic principles is nothing short of tyranny and their actions are nothing short of treason!
We can wring our hands and express our fears and concerns and write letters and make phone calls and send e-mails that have only fallen on deaf ears. Paradoxically those efforts actually seem to have embolden them more as they trample on our God-given rights and liberty.
We can begrudgingly concede defeat and cry and hope for change in November of 2012; however, they don't care about November of 2012 or 2014--for they feel their time has come. They have shown that they are willing to 'martyr' their own to achieve the end; in this, they are no different than the Taliban or Al Quaida.
We can bow our heads and acquiesce and accept the "fundamental transformation"--Or--we can fight and resist!
But to fight tyranny...we must leave our comfort zones...that means being willing to sacrifice life, liberties, and more! We should take inspiration from those patriots in Iran and China that have risked all and have even died resisting tyranny and opression. If they can do that for even a modicum of freedom, what then can we do for our sacred liberty?
I, for one, stand willing, able, and ready!
And, lest you dismiss me as just another revolutionary, reactionary, fanatic, or red-neck militia member with crazy conspiracy theories, I am a Vietnam era and first Iraqi war vet. I have served both as an enlisted soldier and an officer in the US Army.
I am an upper middle-class surgeon/physician iin a very successful practice and am also completing my MBA. I have a wonderful family with children and live very comfortably in "middle America".
I am Hispanic-American and my family has been here in the US since 1692. I come from a very modest background where my family was very poor and I had about an even chance of going to school or ending up dead or in prison. I chose the military and am proud to be able to say I have served my country honorably. I have worked hard and sacrificed much to achieve what I have and to become who and what I am today.
I have seen and lived the best this country has to offer and now I see and am living the worst! In my 55 years, I never dreamed I would see this happen to my country. Like many of you here and unlike Mrs. Obama, for once in my life, I am truly ashamed of my country.
Slowly but surely, God has been taken out of our government and out of our schools. My children are being indoctrinated in school and not taught. They are introduced to concepts that I disagree with which is fine—as long as dissenting concepts and tenets are also introduced and taught!
But, introducing my children to homosexuality and gay rights in elementary school is NOT alright! Teaching them that we are responsible for global warming without counter evidence is NOT acceptable to me! Teaching them that eating meat is inhumane is not acceptable! Taking Jefferson out of history textbooks discussing ‘the enlightenment’ and replacing him with Voltaire is not OK!
It is MY job to indoctrinate my children in the beliefs, customs, culture, and moral judgments that I and my family hold dear! It is only the job of the school to teach my children how to read, write, communicate, and learn!
I try to teach my children that this is the best country in the world. But it is hard to reinforce that when they see the shameful things our government is doing today in the name of progressive liberalism.
The ACLU claims to defend our civil rights—please! They have done nothing but erode our rights for the benefit of small fringe groups and individuals!
Andy Stern and the unions claim to represent the rights of workers—yet any student of economy will tell you that unions drive up the cost of labor which drives down the demand for labor and which ultimately leads to higher unemployment for all. They also will not tell you that while unions drive up the wages and increase the standard of living for union workers--at the same time, wages for non-union workers and their standard of living is driven down.
This government will tell you that ‘big bad corporations’ are the only ones that will be taxed—what they don’t tell you is that corporations don’t pay taxes...people do...and taxes to corporations are like human waste...it flows downhill! They also do not tell you how taxes cause deadweight losses that decrease the overall wellfare of those that cary the burden of the tax.
The main-stream media and press which is supposed to be our ever vigilant first line of defense has lost all sense of objectivity and has aligned itself with the progressive doctrine and the "fundamental transformation of America".
Enough is enough! I’ve had enough and this latest show of political chicanery and complete disregard and disrespect for the collective will of the people and our constitution by this government has driven me to an anger and discontent that I have never experienced before!
I am not advocating violence and would very much love to just stay in my comfort zone and run my practice and build my businesses and sing "everything is beautiful". But in my heart and in my soul, I cannot just sit back and quiet as just another disaffected American while this great nation crumbles around me. I can’t do that for me, for my children and their children, and I can’t do it for you!
Tyranny is tyranny...whether here or abroad and we don’t need talking heads and politicians to define it for us—we see it, recognize it and it MUST be resisted by whatever means necessary!
Dismiss me as a ranting and raving conservative (I am a middle American!) if you will—but know this—I will fight with my life to defend the rights of even those I disagree with...I guarantee you they will not do the same for you!
John R. Vigil, MD
Please...make no mistake about this healthcare bill. This bill is not about healthcare and it is not about Obama, Pelosi, and Reid. No, this is much more vast and treacherous than that. It is nothing more than the "fundamental transformation of America"--translated as the transfer of power and redistribution of wealth to the socialist working class. This is about Marx, Lewinsky, Soros, Andy Stern, the unions, and other socialist elitists that manipulate the puppet strings attached to Obama, Reid, Pelosi, et al.
What we are witnessing is nothing less then the fruits of seeds that were planted over 60 years ago and only now are bearing fruit. The arrogant disrespect and disregard for the will of the people as they force this bill upon us only shows us that they truly believe that they have succeeded. Their blatant disregard for our constitution and our democratic principles is nothing short of tyranny and their actions are nothing short of treason!
We can wring our hands and express our fears and concerns and write letters and make phone calls and send e-mails that have only fallen on deaf ears. Paradoxically those efforts actually seem to have embolden them more as they trample on our God-given rights and liberty.
We can begrudgingly concede defeat and cry and hope for change in November of 2012; however, they don't care about November of 2012 or 2014--for they feel their time has come. They have shown that they are willing to 'martyr' their own to achieve the end; in this, they are no different than the Taliban or Al Quaida.
We can bow our heads and acquiesce and accept the "fundamental transformation"--Or--we can fight and resist!
But to fight tyranny...we must leave our comfort zones...that means being willing to sacrifice life, liberties, and more! We should take inspiration from those patriots in Iran and China that have risked all and have even died resisting tyranny and opression. If they can do that for even a modicum of freedom, what then can we do for our sacred liberty?
I, for one, stand willing, able, and ready!
And, lest you dismiss me as just another revolutionary, reactionary, fanatic, or red-neck militia member with crazy conspiracy theories, I am a Vietnam era and first Iraqi war vet. I have served both as an enlisted soldier and an officer in the US Army.
I am an upper middle-class surgeon/physician iin a very successful practice and am also completing my MBA. I have a wonderful family with children and live very comfortably in "middle America".
I am Hispanic-American and my family has been here in the US since 1692. I come from a very modest background where my family was very poor and I had about an even chance of going to school or ending up dead or in prison. I chose the military and am proud to be able to say I have served my country honorably. I have worked hard and sacrificed much to achieve what I have and to become who and what I am today.
I have seen and lived the best this country has to offer and now I see and am living the worst! In my 55 years, I never dreamed I would see this happen to my country. Like many of you here and unlike Mrs. Obama, for once in my life, I am truly ashamed of my country.
Slowly but surely, God has been taken out of our government and out of our schools. My children are being indoctrinated in school and not taught. They are introduced to concepts that I disagree with which is fine—as long as dissenting concepts and tenets are also introduced and taught!
But, introducing my children to homosexuality and gay rights in elementary school is NOT alright! Teaching them that we are responsible for global warming without counter evidence is NOT acceptable to me! Teaching them that eating meat is inhumane is not acceptable! Taking Jefferson out of history textbooks discussing ‘the enlightenment’ and replacing him with Voltaire is not OK!
It is MY job to indoctrinate my children in the beliefs, customs, culture, and moral judgments that I and my family hold dear! It is only the job of the school to teach my children how to read, write, communicate, and learn!
I try to teach my children that this is the best country in the world. But it is hard to reinforce that when they see the shameful things our government is doing today in the name of progressive liberalism.
The ACLU claims to defend our civil rights—please! They have done nothing but erode our rights for the benefit of small fringe groups and individuals!
Andy Stern and the unions claim to represent the rights of workers—yet any student of economy will tell you that unions drive up the cost of labor which drives down the demand for labor and which ultimately leads to higher unemployment for all. They also will not tell you that while unions drive up the wages and increase the standard of living for union workers--at the same time, wages for non-union workers and their standard of living is driven down.
This government will tell you that ‘big bad corporations’ are the only ones that will be taxed—what they don’t tell you is that corporations don’t pay taxes...people do...and taxes to corporations are like human waste...it flows downhill! They also do not tell you how taxes cause deadweight losses that decrease the overall wellfare of those that cary the burden of the tax.
The main-stream media and press which is supposed to be our ever vigilant first line of defense has lost all sense of objectivity and has aligned itself with the progressive doctrine and the "fundamental transformation of America".
Enough is enough! I’ve had enough and this latest show of political chicanery and complete disregard and disrespect for the collective will of the people and our constitution by this government has driven me to an anger and discontent that I have never experienced before!
I am not advocating violence and would very much love to just stay in my comfort zone and run my practice and build my businesses and sing "everything is beautiful". But in my heart and in my soul, I cannot just sit back and quiet as just another disaffected American while this great nation crumbles around me. I can’t do that for me, for my children and their children, and I can’t do it for you!
Tyranny is tyranny...whether here or abroad and we don’t need talking heads and politicians to define it for us—we see it, recognize it and it MUST be resisted by whatever means necessary!
Dismiss me as a ranting and raving conservative (I am a middle American!) if you will—but know this—I will fight with my life to defend the rights of even those I disagree with...I guarantee you they will not do the same for you!
John R. Vigil, MD
The ObamaCare Crossroads
The ObamaCare Crossroads
The vote is really about who commands the country's medical resources.
With the House's climactic vote on ObamaCare tomorrow, Democrats are on the cusp of a profound and historic mistake, comparable in our view to the Smoot-Hawley tariff and FDR's National Industrial Recovery Act. Everyone is preoccupied now with the politics, but ultimately at stake on Sunday is the kind of country America will be.
The consequences of this bill will not only be destructive for the health-care system and the country's fiscal condition, though those will be bad enough.
Inextricably bound up in a plan as far-reaching and ambitious as ObamaCare are also larger questions about the role of government, the dynamism of American enterprise and the nature of a free society. Above anything else, this explains why Democrats have had such trouble convincing the public, let alone their own Members.
***
Most acutely in the balance is the future of U.S. medicine. On the opposing page we reprint a 1996 essay by the great Milton Friedman that is more relevant than ever. Drawing from Alexander Solzhenitsyn's novel "The Cancer Ward," the late Nobel laureate traces the ways that national health care fundamentally alters "the consensual relation between the patient and the physician."
In our world of infinite wants but finite resources, there are only two ways to allocate any good or service: either through prices and the choices of millions of individuals, or through central government planning and political discretion. This choice is inexorable. Stripped of its romantic illusions, ObamaCare is really about who commands the country's medical resources. It vastly accelerates the march toward a totally state-driven system, in contrast to reforms that would fix today's distorted status quo by putting consumers in control.
Friedman lays out how the country arrived at our current pass, starting with the World War II-era decision to offer tax subsidies for employer-sponsored coverage only. Like the company store, this inefficient and inequitable preference encourages workers to be paid in kind rather than cash, and over the years the third-party payer system it entrenched has inhibited competition and desensitized patients to the costs of their own care. With the 1965 creation of Medicare for seniors and Medicaid for the poor, government has come to play the leading role in shaping the way care is paid for and provided.
Naturally, the result has been high and rising costs. Since 1962, the share of the economy devoted to health care has risen to about 17% from 6%. Today, health entitlements account for about 5% of GDP but on current trend will rise to 7% in 2025 and about 15% in 2062.
That is the problem President Obama inherited, as it were. Yet rather than fundamentally changing these incentives, he chose instead to create a new middle-class insurance entitlement that will transform the way U.S. health care is financed, and thus delivered. Such a "universal" system has been the core liberal aspiration since the age of Bismarck. But time and again this political ambition has been thwarted by American individualism, distrust of government power, the checks and balances of the political system, and, every so often, good judgment in Washington.
Once the health-care markets are put through Mr. Obama's de facto nationalization, costs will further explode. The Congressional Budget Office estimates ObamaCare will cost taxpayers $200 billion per year when fully implemented and grow annually at 8%, even under low-ball assumptions. Soon the public will reach its taxing limit, and then something will have to give on the care side. In short, medicine will be rationed by politics, no doubt with the same subtlety and wisdom as Congress's final madcap dash toward 216 votes.
As in the Western European and Canadian welfare states, doctors, hospitals and insurance companies will over time become public utilities. Government will set the cost-minded priorities and determine what kinds of treatment options patients are allowed to receive. Medicare's price controls will be exported to the remnants of the private sector.
All bureaucratized systems also restrict access to specialists and surgeries, leading to shortages and delays of months or years. This will be especially the case for the elderly and grievously ill, and for innovation in procedures, technologies and pharmaceuticals.
Eventually, quality and choice—the best attributes of American medicine in spite of its dysfunctions—will severely decline.
Democrats deny this reality, but government rationing will become inevitable given that overall federal spending is already at 25% of GDP and heading north, and Medicare's unfunded liabilities are roughly two and a half times larger than the entire U.S. economy in 2008. The ObamaCare bill already contains one of the largest tax increases outside the Great Depression or the world wars, including a major new tax on investment income—and no one seriously believes it will be enough.
So a vote for ObamaCare is also a vote against the vitality of American capitalism. Business elites have mostly held their tongues, or calculated that they can later dump their health-care liabilities on the government. Yet ObamaCare will lead to much higher levels of taxation across society. The tax wedge—the share of labor costs that never reaches workers but instead goes straight to government—will start flying towards the 50% that prevails today in most of Europe. In America, without the same welfare state obligations, it hovers near 30%.
***
A self-governing democracy can of course decide that it wants to become this kind of super-welfare state. But if the year-long debate over ObamaCare has proven anything, it is that Americans want no such thing. There is no polling majority or any bipartisan support, much less a rough national consensus, for this expansion of government power. The election of Scott Brown in Massachusetts for Ted Kennedy's seat, of all things, was as direct a referendum as you could have.
So if the health bill passes in the House, it will only do so the way it did in the Senate, with a narrow partisan majority, abetted by political bribery and intimidation, budget gimmicks and procedural deceptions. An entitlement the country can't afford and doesn't want may pass because of sheer ideological willfulness. The ugliness of the bill, and of its passage, means that some or all of it might be repealable, but far better not to make the tragic mistake in the first place.
The vote is really about who commands the country's medical resources.
With the House's climactic vote on ObamaCare tomorrow, Democrats are on the cusp of a profound and historic mistake, comparable in our view to the Smoot-Hawley tariff and FDR's National Industrial Recovery Act. Everyone is preoccupied now with the politics, but ultimately at stake on Sunday is the kind of country America will be.
The consequences of this bill will not only be destructive for the health-care system and the country's fiscal condition, though those will be bad enough.
Inextricably bound up in a plan as far-reaching and ambitious as ObamaCare are also larger questions about the role of government, the dynamism of American enterprise and the nature of a free society. Above anything else, this explains why Democrats have had such trouble convincing the public, let alone their own Members.
***
Most acutely in the balance is the future of U.S. medicine. On the opposing page we reprint a 1996 essay by the great Milton Friedman that is more relevant than ever. Drawing from Alexander Solzhenitsyn's novel "The Cancer Ward," the late Nobel laureate traces the ways that national health care fundamentally alters "the consensual relation between the patient and the physician."
In our world of infinite wants but finite resources, there are only two ways to allocate any good or service: either through prices and the choices of millions of individuals, or through central government planning and political discretion. This choice is inexorable. Stripped of its romantic illusions, ObamaCare is really about who commands the country's medical resources. It vastly accelerates the march toward a totally state-driven system, in contrast to reforms that would fix today's distorted status quo by putting consumers in control.
Friedman lays out how the country arrived at our current pass, starting with the World War II-era decision to offer tax subsidies for employer-sponsored coverage only. Like the company store, this inefficient and inequitable preference encourages workers to be paid in kind rather than cash, and over the years the third-party payer system it entrenched has inhibited competition and desensitized patients to the costs of their own care. With the 1965 creation of Medicare for seniors and Medicaid for the poor, government has come to play the leading role in shaping the way care is paid for and provided.
Naturally, the result has been high and rising costs. Since 1962, the share of the economy devoted to health care has risen to about 17% from 6%. Today, health entitlements account for about 5% of GDP but on current trend will rise to 7% in 2025 and about 15% in 2062.
That is the problem President Obama inherited, as it were. Yet rather than fundamentally changing these incentives, he chose instead to create a new middle-class insurance entitlement that will transform the way U.S. health care is financed, and thus delivered. Such a "universal" system has been the core liberal aspiration since the age of Bismarck. But time and again this political ambition has been thwarted by American individualism, distrust of government power, the checks and balances of the political system, and, every so often, good judgment in Washington.
Once the health-care markets are put through Mr. Obama's de facto nationalization, costs will further explode. The Congressional Budget Office estimates ObamaCare will cost taxpayers $200 billion per year when fully implemented and grow annually at 8%, even under low-ball assumptions. Soon the public will reach its taxing limit, and then something will have to give on the care side. In short, medicine will be rationed by politics, no doubt with the same subtlety and wisdom as Congress's final madcap dash toward 216 votes.
As in the Western European and Canadian welfare states, doctors, hospitals and insurance companies will over time become public utilities. Government will set the cost-minded priorities and determine what kinds of treatment options patients are allowed to receive. Medicare's price controls will be exported to the remnants of the private sector.
All bureaucratized systems also restrict access to specialists and surgeries, leading to shortages and delays of months or years. This will be especially the case for the elderly and grievously ill, and for innovation in procedures, technologies and pharmaceuticals.
Eventually, quality and choice—the best attributes of American medicine in spite of its dysfunctions—will severely decline.
Democrats deny this reality, but government rationing will become inevitable given that overall federal spending is already at 25% of GDP and heading north, and Medicare's unfunded liabilities are roughly two and a half times larger than the entire U.S. economy in 2008. The ObamaCare bill already contains one of the largest tax increases outside the Great Depression or the world wars, including a major new tax on investment income—and no one seriously believes it will be enough.
So a vote for ObamaCare is also a vote against the vitality of American capitalism. Business elites have mostly held their tongues, or calculated that they can later dump their health-care liabilities on the government. Yet ObamaCare will lead to much higher levels of taxation across society. The tax wedge—the share of labor costs that never reaches workers but instead goes straight to government—will start flying towards the 50% that prevails today in most of Europe. In America, without the same welfare state obligations, it hovers near 30%.
***
A self-governing democracy can of course decide that it wants to become this kind of super-welfare state. But if the year-long debate over ObamaCare has proven anything, it is that Americans want no such thing. There is no polling majority or any bipartisan support, much less a rough national consensus, for this expansion of government power. The election of Scott Brown in Massachusetts for Ted Kennedy's seat, of all things, was as direct a referendum as you could have.
So if the health bill passes in the House, it will only do so the way it did in the Senate, with a narrow partisan majority, abetted by political bribery and intimidation, budget gimmicks and procedural deceptions. An entitlement the country can't afford and doesn't want may pass because of sheer ideological willfulness. The ugliness of the bill, and of its passage, means that some or all of it might be repealable, but far better not to make the tragic mistake in the first place.
Tuesday, March 9, 2010
The Emotion of Reform
By DAVID BROOKS
Published: March 8, 2010
We all have our emotional hot and cold spots. If you asked me about the New York Mets, you’d see a glow in my eyes. If you asked me about banking reform, words might come out of my mouth, but you’d notice me nodding off midsentence.
For the Democrats, expanding health care coverage is an emotional hot spot. Over the past year, Democrats have fought passionately for universal coverage. They have fought for it even while the country is more concerned about the economy, and in the face of serial political defeats. They have fought for it even though it has crowded out other items on their agenda and may even cost them their majority in the House.
And they’ve done it for almost no votes. The 30 million who would be covered under the Democratic proposals are not big voters, while the millions who would pay for the coverage are strikingly unhappy.
There is something morally impressive in the Democrats’ passion on this issue. At the same time, it’s interesting to compare it to their behavior on other issues in which they have no emotional investment.
For example, Democrats say the right thing when it comes to helping small businesses create jobs, but there’s no passion there. For the past year, small business owners have been screaming that they can’t hire people because they don’t know what the rules will be on health care, finance or energy. Democrats hear them, but those concerns take a back seat to other priorities.
Small business owners have been screaming about the health care bill that forces them to offer coverage or pay a $2,000-per-employee fine but doesn’t substantially control rising costs. Democrats hear their concerns, but push ahead because getting a health care bill is more important.
Then there is the larger issue of exploding federal deficits. A few Democrats are genuinely passionate about this, President Obama among them. He has fought tenaciously to preserve a commission that might restrain Medicare spending. But 90 percent of the people in Congress have no emotional investment in this issue.
They’re going through the motions. They’ve stuffed the legislation with gimmicks and dodges designed to get a good score from the Congressional Budget Office but don’t genuinely control runaway spending.
There is the doc fix dodge. The legislation pretends that Congress is about to cut Medicare reimbursements by 21 percent. Everyone knows that will never happen, so over the next decade actual spending will be $300 billion higher than paper projections.
There is the long-term care dodge. The bill creates a $72 billion trust fund to pay for a new long-term care program. The sponsors count that money as cost-saving, even though it will eventually be paid back out when the program comes on line.
There is the subsidy dodge. Workers making $60,000 and in the health exchanges would receive $4,500 more in subsidies in 2016 than workers making $60,000 and not in the exchanges. There is no way future Congresses will allow that disparity to persist. Soon, everybody will get the subsidy.
There is the excise tax dodge. The primary cost-control mechanism and long-term revenue source for the program is the tax on high-cost plans. But Democrats aren’t willing to levy this tax for eight years. The fiscal sustainability of the whole bill rests on the naïve hope that a future Congress will have the guts to accept a trillion-dollar tax when the current Congress wouldn’t accept an increase of a few billion.
There is the 10-6 dodge. One of the reasons the bill appears deficit-neutral in the first decade is that it begins collecting revenue right away but doesn’t have to pay for most benefits until 2014. That’s 10 years of revenues to pay for 6 years of benefits, something unlikely to happen again unless the country agrees to go without health care for four years every decade.
There is the Social Security dodge. The bill uses $52 billion in higher Social Security taxes to pay for health care expansion. But if Social Security taxes pay for health care, what pays for Social Security?
There is the pilot program dodge. Admirably, the bill includes pilot programs designed to help find ways to control costs. But it’s not clear that the bill includes mechanisms to actually implement the results. This is exactly what happened to undermine previous pilot program efforts.
The Democrats have not been completely irresponsible. It’s just that as the health fight has gone on, their passion for coverage has swamped their less visceral commitment to reducing debt. The result is a bill that is fundamentally imbalanced.
This past year, we’ve seen how hard it is to even pass legislation that expands benefits. To actually reduce benefits and raise taxes, we’re going to need legislators who wake up in the morning passionate about fiscal sanity. The ones we have now are just making things worse.
Published: March 8, 2010
We all have our emotional hot and cold spots. If you asked me about the New York Mets, you’d see a glow in my eyes. If you asked me about banking reform, words might come out of my mouth, but you’d notice me nodding off midsentence.
For the Democrats, expanding health care coverage is an emotional hot spot. Over the past year, Democrats have fought passionately for universal coverage. They have fought for it even while the country is more concerned about the economy, and in the face of serial political defeats. They have fought for it even though it has crowded out other items on their agenda and may even cost them their majority in the House.
And they’ve done it for almost no votes. The 30 million who would be covered under the Democratic proposals are not big voters, while the millions who would pay for the coverage are strikingly unhappy.
There is something morally impressive in the Democrats’ passion on this issue. At the same time, it’s interesting to compare it to their behavior on other issues in which they have no emotional investment.
For example, Democrats say the right thing when it comes to helping small businesses create jobs, but there’s no passion there. For the past year, small business owners have been screaming that they can’t hire people because they don’t know what the rules will be on health care, finance or energy. Democrats hear them, but those concerns take a back seat to other priorities.
Small business owners have been screaming about the health care bill that forces them to offer coverage or pay a $2,000-per-employee fine but doesn’t substantially control rising costs. Democrats hear their concerns, but push ahead because getting a health care bill is more important.
Then there is the larger issue of exploding federal deficits. A few Democrats are genuinely passionate about this, President Obama among them. He has fought tenaciously to preserve a commission that might restrain Medicare spending. But 90 percent of the people in Congress have no emotional investment in this issue.
They’re going through the motions. They’ve stuffed the legislation with gimmicks and dodges designed to get a good score from the Congressional Budget Office but don’t genuinely control runaway spending.
There is the doc fix dodge. The legislation pretends that Congress is about to cut Medicare reimbursements by 21 percent. Everyone knows that will never happen, so over the next decade actual spending will be $300 billion higher than paper projections.
There is the long-term care dodge. The bill creates a $72 billion trust fund to pay for a new long-term care program. The sponsors count that money as cost-saving, even though it will eventually be paid back out when the program comes on line.
There is the subsidy dodge. Workers making $60,000 and in the health exchanges would receive $4,500 more in subsidies in 2016 than workers making $60,000 and not in the exchanges. There is no way future Congresses will allow that disparity to persist. Soon, everybody will get the subsidy.
There is the excise tax dodge. The primary cost-control mechanism and long-term revenue source for the program is the tax on high-cost plans. But Democrats aren’t willing to levy this tax for eight years. The fiscal sustainability of the whole bill rests on the naïve hope that a future Congress will have the guts to accept a trillion-dollar tax when the current Congress wouldn’t accept an increase of a few billion.
There is the 10-6 dodge. One of the reasons the bill appears deficit-neutral in the first decade is that it begins collecting revenue right away but doesn’t have to pay for most benefits until 2014. That’s 10 years of revenues to pay for 6 years of benefits, something unlikely to happen again unless the country agrees to go without health care for four years every decade.
There is the Social Security dodge. The bill uses $52 billion in higher Social Security taxes to pay for health care expansion. But if Social Security taxes pay for health care, what pays for Social Security?
There is the pilot program dodge. Admirably, the bill includes pilot programs designed to help find ways to control costs. But it’s not clear that the bill includes mechanisms to actually implement the results. This is exactly what happened to undermine previous pilot program efforts.
The Democrats have not been completely irresponsible. It’s just that as the health fight has gone on, their passion for coverage has swamped their less visceral commitment to reducing debt. The result is a bill that is fundamentally imbalanced.
This past year, we’ve seen how hard it is to even pass legislation that expands benefits. To actually reduce benefits and raise taxes, we’re going to need legislators who wake up in the morning passionate about fiscal sanity. The ones we have now are just making things worse.
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