Posts Tagged ‘Healthcare’

And higher costs equal lower participation.  It’s just plain common sense.

Here is a nice article that I hope gets some political attention.  I find the proposals elegant.  Meaning, they may look simple but the underlying actions that they create are very complex.

Here’s a little lesson in engineering.  Start with an above ground pool, perfectly still with the surface of the water completely flat.   Let’s say that the pool had a window on the side so that you could see the water level and you place a mark where it currently stands.  Now, let’s place a small boat into the pool.  When you do, the boat sits in the water, not on top of it.  The water that the boat displaces is spread to the other parts of the pool.  The water that makes contact with the bottom of the boat is lower, right?  What about the remaining water in the pool?  When you go back to the window, you will see that the level of water within the pool has risen, maybe not a lot but it is higher.  What you have done is spread the displaced water (that which was where the boat now sits) to the other areas of the pool.

Let’s take this farther.  You want the boat to be larger and to sit lower in the pool so you build a bigger boat and make it heavier.  You will have succeeded at making the boat sit lower and for the water that touches the bottom of the boat to be lower.  Go back to the window and you will see that the water level of the remaining free water (meaning no boat sitting on top of it) has risen even higher.

There.  you have finished lesson one of CIRCLE’s unaccredited marine sciences course.  What, you don’t see this as practical knowledge since you have no above ground pool or a desire to put a boat into the one you have?  Well, this is something that can be applied to other systems.

Take healthcare.  Replace the pool with our healthcare economy.  Think of the surface of the water as the prices paid for all healthcare services.  Think of the boat as Medicare and Medicaid.  The water level under the boat is the price levels set by the government for healthcare goods and services (remember, their prime goal is to lower the price of those services that are currently available in the market but because they are big, they can use their size to demand lower prices, similar to taking on more weight within a boat).  So, when the government pressures healthcare facilities and providers to take less, what happens to the those that reside outside of the government program?  Or in the case of the pool analogy, the people that reside outside of the boat?  Remember, the heavier the boat, the higher the surface water moves.  Your answer should be (if I have done my job) is that we, those reside outside of the government system, pay higher and higher prices.  Do you think there is a direct link between the more people on government healthcare and overall healthcare inflation?  I do.

So, some may say that we should all reside under the boat so we, too, can get lower healthcare rates.  Well, if only that were true…

Let’s go back to the pool (metaphorically).  Let’s take a large object that covers the entire inside of the pool and start placing lots of weight on it.  Does the water go down?  If you have a tight seal on that, no, but the object doesn’t go down either.  Ok, let’s make it so some of the water can leak out, making it easier to have the object drop within the pool.  Where does the water go?  Over the side and out of the pool, forever.

Go back and apply this to healthcare.  The water in the system represents our healthcare economy.  Water leaving the pool is analogous to money leaving the healthcare economy.  Where does it go?  Some of it may go to other investment opportunities but much will just cease to exist.   The money that resided within the healthcare economy, prior to us pushing it out of the pool, was used to pay doctors so they could pay off student loans.  It went to pay the nurse or technician so they could sustain their living standard.  It was used to invest in research and development projects to bring to market better value added goods and services.  In essence, it went to make more money that would reside within the pool.  But we kicked it out by forcing the water level down.

That is how I think of the debate on Universal Healthcare.  If you force an unnatural monopoly ( the large object that covers the pool) onto people they will avoid it at all cost.  You may be comforted in paying lower fees now (sitting lower in the boat), but you have dramatically taken away the funds needed (the water within the pool) to make advances and to support those that provide the services.

Over the past 3 or so months, I have been hit by many healthcare reform proponents using a very consistent message that makes me think MoveOn.org penned a script to use when confronted with rational opposition.  They all use the highway system as an example of a central government success story and want to apply it to the healthcare reform debate.

I see two issues with this.  First, what similarities are there between building and maintaining highways and imposing a centralized approach to healthcare services?  It’s not size relative to the economy.  Highway infrastructure accounts for less than 1% of GDP while healthcare is upwards of 16%.  It’s not employment, only 600,000 work in the government highway system versus the 14 million plus that work in the healthcare industry.  Maybe it’s in the rate of innovation of the two sectors?  No.  Actually, there is no rational reason for using the highway system as an example.

Second, how could anyone look to the US highway system as a great example of success in centralized government manipulation?  I’m not even sure where to start.  How many of you have been driving home during rush hour to see the highway crew block off one or two lanes for a mile or so and have no one out there working?  How much over budget was the Big Dig of Massachusetts?  Well, they did finish it on time… NOT!  How many stories are there of payoffs and corruption within the highway construction industry?  Answer:  Too many.

What about the fact that most roads are locally managed and most commercial traffic flow over local roads, not highways.  Let’s not forget that government highways may be a monopoly within long distance transportation by automobile, it is not a monopoly of all transportation (private rails constitute the majority of goods transported, air freight is a large business that circumvents the highway system, barges also are a reasonably good transporter outside the highway system for the central part of the US).  I’m also very impressed with the myopic view these people have when they use the highway system as an example.  Do they not read about the crumbling infrastructure of our national bridges and tunnels?  Is that what they want our healthcare system to turn into?

What seems lost on some are the vast differences between these two systems.  Our highway infrastructure is long lasting (20-60 years between replacement cycles), static in the area of innovation (possibly due to government regulations), and not a monopoly of all transportation.  Our healthcare system and the proposed reform policies are completely different.  Innovation within the current healthcare system is enormous and funded by private enterprises on the order of 10 to 1 over government funds.  All medical services have a variable cost component that is significantly above zero unlike our highway system where an extra truck or two are hard to notice on the wear and tear of the infrastructure.   Oh, and let’s not forget that the proposed reform policies are attempting to turn the entire healthcare industry into a monopoly, not just a very small fraction of the medical care infrastructure.

I think it says a lot about their position when the best example of centralized government manipulation is the US highway system.  Remember this note the next time you hit a pothole.

What is happening to our congress?  It has come to a point where governing is no longer even an element of their day-to-day job.  The Healthcare bill in the senate is the most recent example and hopefully, the last.  Christmas, Christmas, Christmas!!!  We must pass this by Christmas!!!  Why?

This entire process is being driven by emotion rather than reason.  “What item do we need to include to get you to accept this other item?” is all they ask.  No matter the true cost, no matter who it impacts and how.  These people are making a mockery of our system.  All so that they can stroke their ego on how important they are and how they can make “big” decisions.

That is all crap.  They want the headline, no matter if it helps or hurts the bottom line.  Deadly Sins: 2 (Pride, Extravagance), American People: 0.

It’s interesting to me the way some justify the immediate need to change our healthcare system.  I understand it’s not the best it can be but that doesn’t mean its not the best that exists in the world today.  Many rant that we rank 41 globally in some UN report on quality of life or rank way up there on heart disease, and then conclude that our healthcare system is broken.

Well, by looking at only the outcomes of people’s lives, one is not necessarily looking critically and rationally at the actual healthcare system.  They are neglecting how we, as a country, are much, much fatter than other countries.  We smoke more and exert physical energy less.  In essence, we are fat, lazy slobs (this comment excludes Mrs. H as she is stunningly beautiful and in great physical shape.  grrr).  So, maybe, just maybe, our system kicks ass because it allows us to continue to live to an average age equal to the rest of the world, yet we are much more destructive on our bodies versus other countries.

That is exactly the conclusion I come to after reading a paper by Professors Preston and Ho from the University of Pennsylvania.  This report can be kinda dry but if you have time, you may want to skim read it.  It suggests that when the researchers actually looked at items that would be best to characterize the true quality of care in the US versus other countries, we rank 1 amongst all.  The items that they deemed important to look at were 1) the amount of testing we do, 2) the quality of outcomes once disease is diagnosed, and 3) the speed innovation is adopted within the healthcare profession.  To summarize, they looked at items that the healthcare system has direct control over.

In all categories, the US ranks 1 in 1) testing and accurately diagnosing diseases, 2) having the best outcomes once a disease has been detected, and 3) fastest at adopting new procedures to help those that are sick.

What I found very interesting was the part where they discuss that the other countries may rank better than us because they actually test less than us, and then, either ignore illnesses or mis-diagnose them.  It’s easy to have less heart disease when you don’t look for it in the first place!

So, when one actually looks critically and rationally at the healthcare system, they can conclude that the system is actually far better than any other out there today.  Definitely not the best it could be, but following those systems that are inferior to ours will not lead us to a better outcome.

I just read this article in the Wall Street Journal that I thought I should share.  The author approaches the conversation on healthcare from a different perspective that I find worth a discussion or two.

Last week, I asked South Carolina Congressman James Clyburn, the third-ranking Democrat in the House of Representatives, where in the Constitution it authorizes the federal government to regulate the delivery of health care. He replied: “There’s nothing in the Constitution that says that the federal government has anything to do with most of the stuff we do.” Then he shot back: “How about [you] show me where in the Constitution it prohibits the federal government from doing this?”

(I, personally, find the Congressman’s comment very unnerving).  Have a good day.

Competition, Competition, Competition!!!  That’s what our leaders want out of the healthcare reform act.  They use a 1-pager from the Center for American Progress to show that most states are dominated by 1 or 2 greedy insurance companies, therefore, drawing the conclusion that we need government competition to make them honest.  Well, I’m all for competition and a level playing field upon which competition can drive better value for consumers.  Actually, I have grown up thinking that was best implemented through free market principles.

However, my note today is not about how best to offer competition to the market.  Instead, I wanted to look closer at the data that is being used to show the lack of competition.  Actually, my interest is in the jump to concluding that high market concentration of a few large insurance companies leads to higher healthcare insurance costs.  It makes sense if that were the case, but is it shown within the data?

No.  It’s not.  At least with the data that I have.  I took the data provided by CAP and data from the Kaiser Family Foundation website on healthcare costs by state as a percent of personal income.  The scatter graph below shows that there appears to be no direct correlation between the healthcare cost in the state and the amount of market concentration in insurance providers.

So, from this simple look at things, I don’t think one can draw the conclusion that having market concentration impacts the cost of healthcare.  Interesting, no?  I was shocked.

But, it occurred to me that maybe the impact from the lack of competition is drowned out by something else, some other factor that “weighs” on the cost of healthcare.  So I looked at the obesity rates by state and compared it to the cost of healthcare by state.

Hmm.  Seems to be correlated, huh?

And it kind of makes sense.  We know that being overweight causes diabetes, heart attacks, etc.  So why should it be shocking that as our nation’s individuals eat more, it costs more to care for them?  I don’t know about you, but to spend upwards of $1 trillion over the next decade to implement a reform package that doesn’t address the real cause of ever higher healthcare costs seems a little unnecessary.

The healthcare reform bill being presented by our current administration follows the same thought process as the European and Canadian socialized programs; they are pessimistic with respect to advancements to healthcare and human nature.  In both cases, the focal point is on lowering costs through mandating lower pricing from healthcare providers.  Don’t believe me?  See this quote from Chris Jennings, a health policy expert from the Clinton administration when they were pushing HillaryCare (he is currently assisting the new administration).

“…the power of the public option would come from government’s ability to present doctors and hospitals with a stark choice: accept lower reimbursements or lose access to large numbers of patients.”

So let’s take a step back and think about this.  By wanting to attack the problem of rising costs and lack of complete coverage, our government believes that the best way is to force providers to take less for their goods and services.  In doing so, you will start a cycle of less people going into the field of medicine (since it’s harder to make a dollar doing doctor stuff versus being an electrician) and reduce the future advancements (as capital will go to those areas that offer more promise).

So, I would like us to think optimistically and produce solutions that allow for, and leverage, advancements.  Here are some of my wishes for a reformed healthcare industry.  These ideas are not original to me but those that I have seen presented by others that I find valuable for us to pursue.

1.  Mandate coverage (similar to auto liability as mentioned by a friend) with the intent to offset costs that may be taxing to the healthcare system when costs are pushed to the hospitals and doctors through bad debt (this would be, in my mind, meant to cover the big, expensive stuff like cancer, emergencies, etc), and that it would be delivered through private insurance companies.  This would not be preventative care coverage as I see that as a choice of the individual.  It is an individual’s responsibility to maintain ones health.

2.  Privatize Medicaid by slowly adjusting income qualification levels to be location based (a $44,000 AGI in rural Indiana is completely acceptable to live on, whereas $44,000 in NYC, Boston would not). One way to do this would be for the federal and state governments to go through a bidding process with nationwide insurers, keeping some control.  [The reason I find this important is the amount of expense and inflexibility placed into the system that produces no productive end.  This comes from speaking with hospital administrators and medical professionals that spend upwards of 20% of revenue trying to conform to outdated govt regulations]

3.  Offer a government sponsored (though privately administered) major disability plan (similar to the re-insurance industry) that would act as a supplemental to a regular plan for those with pre-existing conditions.  The way I see it working, it would allow a private insurance contract to be more accurately priced for the chronically ill (as the maximum distribution would be known as the government plan would kick in above some level) for the more preventative care side of healthcare as well as the risks of new ailments.  This would only be offered to those with pre-existing conditions. Also administered through private insurance companies that would have to compete every few years for the business.

4.  Stimulate competition amongst the 1,500 insurers by allowing them to cross state lines, setting the federally mandated standard level of care at the lowest coverage currently offered by the states.  See this study for some good detail.

5.  Reform malpractice laws and payouts.  Having a penalty of $50,000,000 with half of it going to the lawyers is not an effective way of ‘teaching the doctor/hospital a lesson’.  With malpractice insurance composing 15%+ of a procedure’s cost, one needs to rethink how we penalize them for making mistakes or true malpractice.

6.  Don’t allow unlimited tax deductions for health insurance expense, and make the tax code fair (eliminate the favor of deductions given to big businesses).

7.  Revert the FDA back to its original mission: test the safety of new products.  It has turned into an averaging mechanism, where we are getting to more tailored drugs as we refine the technology yet the FDA will not approve based on averages over large samples.  If they were to go back and approve based only on safety, it would allow doctors more flexibility to tailor treatment to the needs of the individual, removing the limited accessibility of potentially helpful drugs.  (from conversations with pharmas, given the genome project, we can invent drugs to target specific DNA types but have problems getting through FDA as they are incapable of setting up useful (and economical) clinical trials (all due to their archaic definition of drug effectiveness)).  With FDA clinical trials representing more than 50% of the drug development costs, this would positively impact the development cycle, both in speed to drug and volume of treatments.

I’m not an athlete but I do know that the best way to slow down during a race is to turn your head and look at your competitor.  I hear many say that, in the end, it is a race against yourself so push hard and focus on the finish line.  I wish someone would give that advice to our current government.  From our Supreme Court Justices referencing international laws to our current administration looking to Europe for healthcare reform, I see so much time being spent looking at those behind us.

Did I offend anyone?  Sorry, but for those readers outside the US, I hate to be the one to tell you that your nation’s progress toward individual freedom lags the US (there may be argument from Singapore, Australia, NZ, and a few others, but I feel comfortable in defending my statement).  I can’t take credit for it, it’s just a fact that the US fought for independence from tyranny in the late 1700′s and has led the movement against oppression since.  This is the part of the world where those desiring freedom of expression, freedom to succeed or fail, freedom to think as an individual, freedom to pursue unlimited success, etc have come for centuries.  The US has grown to be the largest economy very quickly due to the relatively low barriers placed in our way by the whimsical acts of authoritarians.

So, why is our current administration looking to those that lag for ideas on how to advance our society?  Does Tiger Woods look to the golfer in 30th place and try to copy his swing?  Does Bill Gates try to copy the strategy of the executives of Kodak, Digital Equipment, NCR, or Unisys (for those that aren’t into technology history, those are all failed tech companies)?  No, they are the laggards, the losers.

Whomever was the one to propose the single-payer healthcare plan (aka the government-option, aka co-op plan, aka socialized medicine) should have been laughed out of the room immediately for suggesting something that those that are losing talent (brain drain of UK in the 80′s), that grow much slower than us (Europe GDP has been anemic compared to ours), and that offer little in advancement of personal freedom (class segmentation in UK, France, India) have adopted.  The response should have been “Are you nuts?  Why do we want to go backwards?  We (the nation) have fought long and hard to obtain and maintain our individual rights and you want to suggest we take a step back?  Oppression is oppression no matter what name you give it.  Get Out!”

So, my recommendation to our government, look forward, not backward.  Advance freedom, don’t rescind it.  Leverage the skill and knowledge base that collectively makes up our healthcare society rather than alienating it and risk losing it.

No doubt this will be taken as a scare tactic by those that favor government run healthcare, but examples of this behavior already exist within our country (think of our financial system and how a few people in Washington got to choose which ones survived and which failed, or the automobile companies and which managers were given new powers and which were pushed out by the auto czar).

The article is Klavan’s way of expressing the end that could come about from the government’s desire to control healthcare.  This quote sums up, for me, the attitude that appears pervasive in D.C.

“Free people can treat each other justly, but they can’t make life fair. To get rid of the unfairness among individuals, you have to exercise power over them. The more fairness you want, the more power you need. Thus, all dreams of fairness become dreams of tyranny in the end.”

Are you sick of hearing about the Healthcare reform bill?  I am.  Unfortunately, endurance is called for as this is a very important topic for all of us.  Since we have heard so much from all the politicians in DC, it might be time to hear from someone that will be impacted (severely) by their actions.  A few great quotes are:

I took a different path, seeking a cancer vaccine. One had been developed at Stanford University 12 years earlier that had given 90% of patients very long remissions and cured some entirely. Unlike chemotherapy, there were no severe side effects.

But I couldn’t get the vaccine because the Food and Drug Administration required another trial that would take nine more years. Over-regulation has kept this treatment from patients for 21 years, as some 24,000 lymphoma patients died each year.

and,

I am still here because my care was managed by doctors—not a government agency. My doctors do what the bureaucracy can’t: They see me as a human being.

and,

Patient-as-person will be a lost concept under the new health-care plan, where treatments will be based not upon individual patient needs, but upon what’s best for everyone. So cancer drugs for seniors might take second place to jungle gyms and farmers’ markets—so-called preventive care—which are covered under both the House and Senate versions of the health bill.

A British physician’s take on our government’s move to socialized medicine.  Here are a few of my more favorite quotes.

Where does the right to health care come from? Did it exist in, say, 250 B.C., or in A.D. 1750? If it did, how was it that our ancestors, who were no less intelligent than we, failed completely to notice it?

and,

Moreover, the right to grant is also the right to deny. And in times of economic stringency, when the first call on public expenditure is the payment of the salaries and pensions of health-care staff, we can rely with absolute confidence on the capacity of government sophists to find good reasons for doing bad things.

and,

Universality is closely allied as an ideal, ideologically, to that of equality. But equality is not desirable in itself. To provide everyone with the same bad quality of care would satisfy the demand for equality. (Not coincidentally, British survival rates for cancer and heart disease are much below those of other European countries, where patients need to make at least some payment for their care.)

The graph to the right was presented in the Wall Street Journal this morning and is based on government data for healthcare cost inflation.  Does anyone else find this a little disturbing?

It shows that the government agency that our leaders want to depend more on for managing the healthcare of millions and millions more individuals is actually estimating that they will experience a higher inflation rate than the private sector over the next 9-10 years.  It also shows that the government system has experienced a faster growth in costs than out-of-pocket or private insurance since 1990 (every year).

And our wise leaders think it makes sense to use them to increase coverage and lower healthcare costs?  I don’t get it.