Pearl Harbor Day. World War 2 and the American Spirit

Yesterday was Pearl Harbor Day. Mostly forgotten now, although we remembered it pretty well for many years. More than we remembered 9/11, really. I remember telling Emily after 9/11 how soon the horrible memory would fade from the American interest. It's how we are today, every hot event fading into the next news cycle.

I was only age 3 at the time so I don't remember the event, but the war went on for 4 more years so I do have memories of the times. In fact probably one of my earliest vague memories was of an air raid drill where my mother had to turn off the lights and pull the shades at our house in Pittston. I couldn't have been much more than 4 then.

That war was definitely different from those of today in that it wasn't fought by the military alone. Since then we've had "guns and butter", but not then. The whole population was intensely involved. Things back home were rationed since they were needed for the war effort. I can remember the gas ration stamps which entitled you to only so much unless you were needed for a critical job. Many other things were rationed, rubber, butter, nylon stockings and on and on. Auto plants were converted to manufacturing tanks and planes, so forget new cars. Sports were suspended since all the players went to war. The culture changed. Women went to work instead of staying home to replace the drafted men.

The whole country pulled together. There had been plenty of anti-war sentiment before Pearl Harbor, probably the majority. After the experience of WW1 nobody wanted to get involved in the crazy internecine feuds of the Europeans. But a deadly sneak attack in those days didn't sit well with the Americans. They didn't weep and wail and put up memorials. They got mad!  And FDR, regardless of what you may think of his social programs, was a superb wartime leader. As was his friend Churchill.

After Pearl Harbor, men didn't try to escape the draft, they enlisted. Even if you were afraid you would never admit it because it was  your duty. And for some there was even a certain feeling of excitement to get away from home, which for most at that time wouldn't have happened otherwise. It happened to my 2 uncles, who with both parents dead, enlisted as teenagers to see the world. One, my uncle Ross, came home with a Purple Heart and that meant something then. People proudly displayed their service. A blue star on your window meant you had a son in the military and a gold star was for a son who wasn't coming back. Such families grieved but with pride. The media and the entertainers didn't undermine the war, they promoted the effort. The movies mocked Hitler and Tojo, and esteemed military heros like Audie Murphy. They made movies like the Flying Tigers. And the entertainers volunteered like Jimmie Stewart; some never to come back like Glenn Miller. The government urged us to grow victory gardens and save tin cans.

We knew who was our enemy and put it right out there. I can remember in first grade making stick drawings of "Jap" planes being shot down by the red, white and blue. The war was fought with ferocity, all out and everybody contributed. And the industrial output of everybody working together overwhelmed 2 mighty enemies on 2 continents. It was fought to the finish in 4 years. It's a long time ago and I was little but I can remember the elation of VJ Day.

Today we're at each other's throats. War is some distant event, not even raising the interest of the TV cameras. 9/11 15 years later stirs up little fuss except for 1 day a year. It's pathetic really when you think about it as we should today.

Blood Glucose Testing, CGM and FreeStyle Libre

At our support group sessions we've talked about home blood glucose
testing. I encouraged almost all of my patients to do it, even those
with minimal problems. For the most part blood glucose cannot be
perceived and testing is necessary to know your levels and get
important feedback as to the influence of various factors. A1c is
useful as a guide to blood glucose control over the long term but does
not give information about daily fluctuations.

The timing of testing is important. Blood glucose fluctuates
throughout the day depending on food intake, activity level,
medication effects, and many other factors such as psychological
stress and the many hormones that the body manufactures and emits
intermittently. Key times to test are before and after meals. Diabetic
patients with type 1 and those with type 2 on complicated insulin
regimens should test several times daily.

The majority of type 2 patients taking less complicated treatment, and
particularly those with consistent meal and activity schedules, tend
to have a stable blood glucose pattern, rising and falling  in a
similar manner on a daily basis. For such patients I recommended a
less intense amount of testing, still testing at key times mentioned
above but limiting the number of days of testing to between 1 and 3
days weekly. The point with this approach is less to adjust things on
a daily basis and more to try to pick out a pattern, particularly of
high or low times during the day, which might be used for longer term
treatment changes. Doing this is much more useful than the common
practice of testing daily before breakfast which measures glucose at
one point in the day but misses all the rest of the fluctuation.

A more recent approach to blood glucose testing is with CGM
(continuous glucose monitoring), using a tiny glucose sensor which is
inserted under the skin and which measures and transmits blood glucose
information every few minutes to a remote monitoring device, such as
an insulin pump screen, a cell phone or even a wrist watch device.
Tremendous strides have been made in the development of these devices
in recent years, especially in accuracy and duration. In fact the most
recently available sensors work out of the box without calibration and
can be used as a substitute for finger sticks and give accurate
results for up to 7 days.

Continuous glucose monitoring is fast becoming the standard of care
for treatment of type 1 diabetes, primarily because one receives not
just a real time blood glucose reading, but more importantly because
trends are identified. It is more important when using insulin to
understand in which direction the blood glucose is heading and how
fast. Also because of this ability to show trends, CGM devices can
give out alarms that warn when the blood glucose is heading too low or
too high.

CGM devices hold great promise in the quest for automating insulin
treatment since their data can be linked wirelessly to insulin pumps,
thus advancing toward the promise of an "artificial pancreas". Many
innovators are working diligently toward this goal. However, as CGM
devices have become easier and simpler to use it seems to me that they
should be useful for monitoring of blood glucose in type 2 patients as
well, not constantly, but periodically, as a better way to do the
intermittant analysis which I mentioned above. For this purpose a less
expensive easier to use device with less high tech features would be
most desirable.

Today's newsletter was actually prompted by my happening upon news
about the soon to be marketed FreeStyle Libre. This is a somewhat
lower tech and lower cost CGM device that looks to me like it would be
good for most type 2 patients and would even make sense for those type
1 patients who wish to continue with insulin shots rather than a pump
and could reasonably take the place of most of their fingerstick
testing. The sensors are unobtrusive, about the size of 2 stacked
quarters and look like a cinch to apply. They can be kept on in the
shower and even be used under water for a short time. Instead of a
continuous display on a monitor as with most sensor systems,
information is transmitted to a small, low cost monitor when it is
passed over the sensor, like items at a checkout counter. Whenever
this is done, on the monitor screen appears your present glucose
reading, a graph depicting what's been happening over the last 8 hours
and an arrow indicating which direction and how rapidly your glucose
is changing. In addition various graphs useful to analyze the last 90
day's data can be called up on the screen or downloaded to a computer.
The rechargable monitor device is supposed to sell for $60 and the
sensors which last 10 days I'm told will sell for $40, far lower than
the other available CGM systems. These prices might be particularly
appealing for Medicare type 2 diabetic patients for whom CGM is not
covered and who might use the devices only periodically to analyze
their blood glucose responses. If I were still in practice I would
certainly be interested in using this system to analyze my patients.

More information can be found at https://www.freestylelibre.us/

The AMA Does Not Represent Most Doctors. Vote For the Graham Cassidy Bill.

I received a "wire alert" email from the AMA asking me to contact my senator to advise him to vote against the Graham-Cassidy Amendment. The AMA has always had a political function but primarily one devoted to the advancement of private medicine. It's leadership is now fully invested in government controlled medical care with their organization being a major player. I stopped paying my dues 10 years ago after it revealed all its cards and came out in support of Obamacare.

What I am going to do in response is to advise my senators to vote in favor of the Graham-Cassidy Amendment. Of course that will be mostly a waste of time since both Pennsylvania senators will be voting along party lines.

But I also am going to recommend to you readers of these posts to support it. Government and other third party involvement in our health care over the past 5 decades has resulted in high prices, ridiculous regulation, stifling of service innovation and shifting control of health care decisions away from patients. This new bill is far from a solution to these problems but passage in the senate would at least get the matter into a conference committee with the house where a reasonable new law could be worked out. As incompetent as the present congress seems to be, many of the members as well as HHS Secretary Price understand the principles which would devolve medical care back to the control of patients and medical providers. We must get our health care out from under the control of the government and their third party allies.

And by all means do not be fooled into thinking that the AMA represents the thinking of the majority of American doctors. It does not.

What is the point of the NFL "kneelers"??

Overall I think the NFL controversy is pretty dumb. But one thing does mystify me. What exactly is kneeling during the national anthem supposed to signify. I guess it means that you don't like the country. But what about it don't you like? The laws, the people, the climate? What is it?

Is it the fact that we have the disgrace of a minority ghetto in almost every big city, plagued by crime, violence, dangerous schools, unemployment, welfare dependency, fatherless families? But what's the cause of that, and how does condemning your country help to solve it?

What exactly is the outcome that is going to satisfy the incessant race consciousness in our country? It was supposed to go away when we got our first mixed race president, but it seems to me that it has just gotten worse. Where are we going with it? Nowhere good.

Is Paying for Medical Care Out Of Pocket Really a Crazy Idea?

We're so used to paying for medical things by insurance or through government programs that it seems crazy to suggest that we should pay directly out of pocket like we do everything else. How can we afford those high prices? What does the ordinary person know about what tests or treatments he should have? One of my liberal friends laughs at me and asks me if I'm having a heart attack how I bargain with my doctor or hospital over the price.

OK, well what about the high prices. How can we afford them? Think about it. Who does pay them. Well we all do. If we pay our medical bills through insurance that we get from our job that premium is part of the compensation for our work. We get it instead of wages. And Medicare is paid by our taxes and premiums and add-ons to the national debt. It's not some rich guy being forced to pay, it's us.

OK, in reality we pay the bills. But really, what about the high prices! Well technology is expensive, that's true. But we buy lots of expensive things by ourselves, like houses and cars and vacations. And a lot of medical stuff isn't all that expensive. The monthly Comcast bill is as much as the average doctor bill. The statistics say that most of us actually pay more for entertainment than for health care.

Actually if we paid for most of our medical care directly out of pocket it would be much cheaper. What?? How could that be? Well here's how the economists tell us the free market works. Consumers actually run the show, not by bargaining as my uninformed liberal friend thinks, but by choosing what most satisfies them at the best price. If something costs way too much they go without it if it's not that important. Or if it is important they substitute something else that works for them. Like I might look in the Mercedes showroom but I buy a Chevy which basically does the job I want. But why do economists say that consumers run the show? Aren't they at the mercy of the big boys. Well actually the producers have to figure out what the consumers want and then compete against their rivals to make something worthwhile at a price they'll pay. If they do that they prosper. If they don't they go out of business and go to work for somebody else. So the free market works to give people what they want at the best possible price and if you do that really well you get really rich. Take good old Henry Ford for example. In 1908 when he started he sold about 6000 Model T's for $850 apiece. By 1916 he had got the price down to $360, he sold 577,036 and he became the world's richest man.

Despite all this, in our country we have this idea that when we're buying medical care we shouldn't have to bother our heads about the price. I can actually see where that idea comes from. Medical care is pretty important and some of us really might be in that position of having to go without unless we get a little help from our friends. On the other hand we pay directly for lots of things that are just as important, like food and shelter. For these things if someone's on hard times we help them out but we don't revamp the whole darn system. Any guesses what would happen if the government took over paying for all our food or houses?

The other argument I've heard is that the common folks just don't have enough technical knowledge to make the right choices. How arrogant is that! We're just going to do this little operation on you, and don't you worry, it's free. When I'm picking out a car do you think I inspect the engine and decide based on all those technical specifications they have in the brochure? Yet somehow I come out with something in my price range that fills the bill. On the other hand in the area of medical care I do know what I'm looking at when I peek under the hood and I can tell you a couple of things: 1. you pesky patients have an awful lot of opinions on what you want and how things are done to you, and 2. there's a tremendous amount of flexibility in how we can do most things you want done. So if you're paying the bill we can work with the price. For that matter, if I ask you to get some lab work done, how much technical knowledge does it really take to go to the place with the lowest prices. But has any of you ever seen a lab that advertises its prices?

Here's the main point. Our medical care isn't free; we're all paying the bill. And not only isn't it free, it's very, very expensive, largely because we've got this arrangement that makes us act like it's free. And added to that there are tremendous wasted administrative costs both for the payers and for the providers just to make the system operate like its free. AND added to that we get the hell regulated out of us so we have to ask permission just to get what we're paying for. So which system is really the crazy one?

I'm going to keep going. I've got lots of good examples to prove the point.

Fixing Obamacare Will Not Fix Our Health Care System

Chuck Schumer says he knows that Obamacare is flawed but that we should fix it and not repeal it. What exactly is the problem with Obamacare and how is it to be fixed? In the eyes of the politicians, specifically all of the Democrats and many of the Republicans, the illness of our health care system is that some of us are "uninsured" and that the government should arrange to "insure" those who are lacking. If we work that out they will have done their job and everyone will be happy.

That fact is that the problem with medical care economics in our country is much more fundamental. Our peculiar system of indirect payment and insurance company and government intervention where none is needed is responsible for price inflation, wasted medical goods and services and gross bureaucratic interference that produces no health benefit at all. Obamacare is the wrong treatment for the wrong diagnosis and "fixing" it will not cure our illness. It simply adds more people to a bad system and does a lot of counterproductive things at the same time.

I recently visited a doctor for my own problem. At the registration desk I waited 10 or 15 minutes for the lady in front of me to get all her insurance information recorded, get her picture taken, put her signature on several items and on and on. We're all so used to this nonsense that we think of it as normal. In my practice there were personnel whose whole function was to attend to billing. Others oversaw adherence to Medicare and Medicaid regulations. My nurse spent hours daily seeking pre-authorization rather than interacting with patients. I was obliged to buy expensive computer systems and pay regular high IT fees just to comply with billing activities and documentation to justify my claims to the payers. The bill payers on their end required personnel and computers to handle similar administrative work. All of this activity depends on a system of extensive coding of each of thousands of medical items and services. Millions of dollars are spent paying organizations to devise these coding systems. Millions more are spent on bureaucrats and consultants to meet, categorize and devise value to each code.

To make claims to the payers for my service I used these codes and I documented what was necessary to justify each code. Such documentation requirements were far in excess of what I would need for actual medical communication and took large amounts of time from patient interaction. Many doctors because of this have added a new employee called a "scribe" whose function is to attend to the documenting, another layer of personnel cost. One study recently estimated that 50% of physician time is spent on administrative work.

Space limitations preclude a full description of the regulatory cost and time loss of our present system just in this one area of the doctor visit, none of which has any patient care value. It is a tremendous waste of resources, the cost of which is ultimately borne by medical consumers.

The alternative to this system would be simply for the patient to pay at the desk by cash, check or credit card. With direct payment major personnel and equipment reductions as well as the office space to house them would occur. In addition major diversions of doctor and nursing time would return to patient care. My best estimate is that direct payment would translate to at least a 25% reduction in my office fees and at the same time an increase of about 20% in time spent with patients. I cannot estimate the savings derived from decreased involvement of insurance companies and government bureaucracies but they would clearly be substantial.

I often hear people say that they had such and such a procedure and didn't pay a cent. It's an illusion friends, a scam really. Not only is your treatment not free, it is very, very expensive. All these billers, coders, clerks, scribes, bureaucrats and consultants must be paid and none of them are doing a blessed thing to attend to your medical problems. And all these goings on are just the tip of the iceberg that is the wasteful, inefficient, paternalistic, bureaucratic system that we've become adjusted to over the past 50 years or so. Stay tuned.

American Universal Health Care

America leads the world in medical science and technology. At the same time our system is plagued by inflated cost, grossly excessive third party interference, lack of incentive for efficiency and innovation of services as well as considerable variation between individuals in accessing the system. It is time for us to address these problems and become the leader in medical care delivery as well as technology with a uniquely American system. The basic principles for doing this were laid out in the last post. They involve the following: 1. There should be direct payment for ordinary medical expenses rather than through third parties, 2. Incentives should be given to individuals to devote a portion of their income to savings while they are young and healthy for inevitable future medical costs, 3. Low cost, personally owned, medical insurance should be widely available to pay for unanticipated catastrophic medical events, and 4. A government safety net, supplemented by charitable organizations, should be in place to provide basic, good quality medical care limited to those who need it rather than the general public. This safety net system should be individualized and as free as possible from waste and abuse.

There are good practical steps which health care economic experts have been proposing for many years that would make the transformation. Some of these ideas actually coincide with substantial parts of the long term goals of the recently proposed Republican health care plans. Unfortunately they were released to the public in a hasty and obscure way, without much debate or explanation, leaving many uncertain and reluctant. Some of the reason for that is that from the political standpoint achievement of these principles would need to be done stepwise over time so as not to disrupt those who have planned and adjusted their lives to the present system.

Since the 1940's the federal government has excluded the value of employer based health insurance from both income and payroll taxes. This is an unfair government subsidy which favors those who receive this employee benefit over those who do not and which favors those with higher incomes who pay more taxes. Healthcare tax incentives are a reasonable policy of government but if they are to be given they should go equally to every individual. Moreover our reliance on employer provided health insurance has a number of disadvantages. These include an overdependence on using insurance to pay for medical services, severely limited choice of policies, and a constraining linkage of medical care access to one's employment. The system obscures the actual value of wages and it involves the employer in an area in which he has little expertise. (For a fuller discussion see http://tinyurl.com/yayxdrpj). This tax exemption policy should be converted to one which applies to all and which incentivizes savings for medical care and promotes medical insurance policies which are personally owned and which are not linked to one's employment.

The best way to do this is through the idea of Health Savings Accounts (or HSA's) which are individually owned funds used to pay healthcare expenses. Although at present HSA's form only a small portion of the health insurance market they are its fastest growing segment. The owner of the HSA pays ordinary medical expenses directly from the account instead of through insurance, usually using a credit card or check. HSA's are administered by banks in a manner similar to a personal checking account. but, like an IRA the savings are tax deferred. Money in these accounts can be used for a much wider range of health related expenses than standard insurance and any savings by prudent shopping remains the property of the owner rather than the insurance company. Over time substantial amounts can accumulate and in essence the owner is self insured. Funds can be used only for health related expenses but under present law they may be withdrawn for any use after age 65. (For a fuller discussion see http://tinyurl.com/y7srksxh).

Despite their growth, the market for HSA's has been significantly restrained by government imposed funding limits and utilization regulations. In general those who favor government controlled medical care have opposed the concept. Under present law they are required to be tied to a high deductible insurance plan and cannot be used for health insurance premiums. Such restrictions should be eliminated and any amount of funding should be allowed. HSA ownership should be widespread and strongly encouraged to be the primary mode of payment for medical goods and services. Ownership of an HSA at an early age, similar to the social security account, should be the standard in our country and would become the "universal coverage" that so many desire.

Funding of personal HSA's can be done by individuals themselves and this is encouraged by the tax benefits and their eventual possible use for retirement savings. However others, such as employers, can contribute to them and ideally this could be the primary source of funding for many. Money that today goes to insurance companies would go directly to the private tax deferred accounts of employees to use as they see fit. Those with chronic disabilities, severe illness and low income would also be HSA owners which would be funded from government or charitable sources, thereby replacing the patchwork of present day government programs with their wasteful policies and oppressive costly regulations.

For the HSA owner, insurance assumes its rightful place as a protection against very high cost unexpected events and not as a payer of ordinary expenses. HSA funds would be used for premiums and thus policies would be personally owned, independent of one's employment and suited to one's medical needs. Such high deductible insurance is cheaper but changes in federal insurance laws would help to lower insurance prices further. These would include allowing health insurance to be sold nationally, elimination of coverage mandates, and authorizing associations other than employers to sponsor policies so as to take advantage of group coverage. Most importantly if direct payment for medical expenses became the dominant mode, market forces would cause substantial price reduction generally which would strongly affect insurance prices.

Over the decades multiple interventions into our health care system has left it in a highly complex disordered state. Many people find the discussion of how to correct the system confusing. The idea of complete government takeover is tempting to many because of its apparent simplicity. But impersonal government programs bring with them waste, inefficiency, stifling of innovation and oppressive bureaucratic regulation. The next post will detail how the plan outlined above promises to dramatically lower medical prices, make services far more efficient and personal and open the floodgates for innovation in medical care delivery.

Should The U.S. Have Government Controlled Medical Care?

We're always being told that America should get with it. Let the government be in charge like in all the other advanced countries. But I don't know about that. First of all America isn't like other countries. It's a lot bigger, a lot more diversified and has a culture with a strong element of personal independence and skepticism about government functioning. Besides that, if you really look into it there is no such thing as generic "single payer". The systems in all these other countries differ greatly from one another and most have a considerable amount of private pay. The majority are having financial problems of their own and many are encouraging more private involvement to relieve the pressure.

Moreover, the fact is that the American health care system has a great deal of government involvement and control. Between Medicare, Medicaid and various other government run programs such as the VA, the military, and the whole host of State sponsored programs, and also funding of insurance for government employees, as well as the tax exclusions for employer insurance, somewhere in the range of 65% of our health care is government financed as compared to about 71% in Canada. http://tinyurl.com/y7cw3kxl

Some complain that the problem with the American system is it's fragmentation. I would say that that's a blessing in disguise. Our poster child single payer system, Medicare, must compete with our private insurance system in the benefits it offers so that Medicare finds it difficult to economize by rationing services to cut costs as is done in other countries and so it continues to rush headlong into bankruptcy. It's the same situation with Medicaid and the VA which both get poor grades when held up to comparison to the private system.

Not that the American system is so good; it isn't. Technologically speaking American medicine is the best in the world despite the idiotic ranking of the World Health Organization statistics that put us just below Costa Rica and just above Slovenia. But regarding economics and efficiency we're nowhere near where we should be. And I'm not just talking about Obamacare. I'll give the Democrats credit for good intentions but their attempt to fix a flawed system has made things worse. Somehow these bright people don't seem to understand basic economic principles, natural human behavior or the inner workings of medical interactions. The reason I think is that they're in love with central government control, and just like many lovers, are blind to their loved one's many flaws.

So what should a real American health care system look like. One that emphasizes personal choice and individualization. One that incentivizes efficiency and low cost and innovation of services. One that encourages involvement in one's own health behaviors. And, yes, one that is generous in helping those who have disabilities, or who suffer medical misfortune, or even those who bring their medical troubles on themselves. The basics of such a system are well understood by many of the thought leaders in medical economics. The politics of getting there are difficult considering that all of us have individually adjusted our lives and efforts to the present system so that any policy changes for the better will have to be gradual and carefully done. In the interests of time and space that discussion will be left to a companion post.

The Health Care Solution - Basic Principles

The health care debacle we are presently witnessing is a great example of why we should get politics and government out of our medical care. What is government other than a collection of politicians and bureaucrats whose primary interest is in maintaining their positions by satisfying their particular constituents. So they fight interminably about who gets what. Their plans and policies help some and hurt others. What is the point of that? You and I are interested in our own specific situation and the decision-making should be left to us.

Although good medical care can be found throughout the world, technologically speaking America clearly remains the leader. Government had nothing to do with that except at the NIH. But for the last 50 years or so the politicians and bureaucrats have told us that they know how to manage the delivery of our health care and we've gone along with them. What we've gotten is a hyper inflated, highly bureaucratized, complex system that is distorting medical practice, stifling service innovation and generally pushing us toward impersonal, paternalistic medical care.

The best thing the politicians can do for us is get out of our way. Give some assistance to those who need it and for the most part leave the rest of us alone. I think to some extent that this was the intention of the Republican plan but they crafted and explained it so ineptly as to leave the public in confusion. They committed the Obamacare sin, asking us to pass it to find out what was in it. There are in fact some basic principles about health care economics that could be followed to lead us back to sanity and some specific readily available ways the principles can be applied.

Lets first clarify that what we're talking about is purchasing goods and services provided by others. Medical services are not free and they never will be. They must be paid for or they will not be provided and even in a socialist or communist arrangement this would be the case. There are many necessary things in life, food, clothing, shelter, and so forth. In our economy most of us pay for all these things directly and for those who are disadvantaged our society arranges help. For reasons mostly having to do with government policies over the previous decades we have come to treat medical care differently in that most of us pay for it indirectly through third parties, mostly insurance purchased by others in our name or government entitlement programs.

Indirect payment has proved to be a dysfunctional arrangement. The reasons why gets into some economic theory but it's not hard to understand. We give our money to a third party which then pays our bills but adds an administrative expense. But this is a minor cost compared to the much larger one of loss of market forces and regulation. With indirect third party payment there is no limitation by prices on consumer demand. Moreover patients have no interest in price shopping or seeking substitutions. They accept any service offered which does not entail danger, discomfort or great inconvenience. Medical providers, for their part, are not required to compete on price and are guaranteed payment as long as they comply with documentation requirements. In our free market economic system prices regulate the market but appropriate pricing by a central bureaucracy for millions of transactions is simply not possible since they cannot have knowledge of individual circumstances. Producers are incentivized toward providing overpriced and away from underpriced items. Items not included in the pricing and payment schedule will not be provided. The system produces price inflation, waste of some items and services, scarcity of others, uneven distribution of services and stymying of service innovation. Moreover the need to control overutilization requires the payers to introduce ever increasing costly regulation and ultimately rationing. Considering all of this, what instead should be the makeup of an American health care system?

For the majority of us, for ordinary medical expenses like the other necessities mentioned above, the ideal system should involve getting back to direct out of pocket payment which would work to drive prices down, would provide us what we really wanted and needed and not otherwise, and would largely eliminate the complicated and extremely costly administrative and regulatory system.

Medical care is a little different from some of our other needs in that the requirement for it generally increases with age. The obvious way to address that issue is by saving. This is not a unique situation. We save for many future needs. For example most of us as we age want to slow down from work and eventually retire. So those who are sensible make arrangements for this time by saving when they are younger and this should include eventual medical needs. The great deal of funds being wasted on extremely high cost insurance premiums and taxes for government entitlement programs, much of which are not even used directly for medical care, would be better put to use for this purpose. The government has a legitimate interest in promoting such savings in order to minimize the number of those who eventually might call on it for help. There is a good way to do it which will be discussed in a further post.

Some small number of us suffer major costly medical crises before our time or before savings can be accumulated. But costly untoward events are not limited to illness. Houses burn down, weather catastrophes occur, accidents cause major injuries. Risk management for such events is the highly beneficial reason for insurance, but using insurance for payment of ordinary expenses is an absurdity that none of us would do ordinarily. Like other types of insurance we would hope never to have to use it thereby leaving funds for generous coverage for those who have misfortune. Such insurance for very expensive untoward events would cost much less than the prices we pay presently. Ideally its premium prices would reward and incentivize good health behavior. In addition government policy changes can affect the insurance market to make it more efficient and competitive and reduce the price even further. Ideally medical insurance should be owned by individuals, kept long term and not be dependent on changes in life events such as employment or family or marital status.

And then there is the case of need. There are always those at the lower end of the income scale or whose costs outstrip their ability to pay and who need the help of society. Charity can help but here is an appropriate role for government. However, the malfunctioning Medicaid system must be replaced with something more rational. The cost of this system is rapidly outpacing the inflation rate. It is filled with waste and subject to fraud but at the same time it grossly underpays providers, often less than their expenses, so that many will not accept the patients. It does not discriminate between those who make no effort to help themselves and those who are truly disabled and needy and treats both the same. It has a sharp income cutoff line, giving full benefits to those below and nothing to those just above. The Obamacare strategy of pushing people into this program is a truly bad idea.

It is important that everyone in our country have access to basic good quality medical services but, regarding the Obamacare solution, it is extremely important to point out that a direct payment system in which the costs of medical services are dramatically deflated is far better for the uninsured than providing them with insurance with a very high deductible expense or allowing them into a program which many providers will not accept.

These are the basic principles of what is needed. The next post will describe some good ways to fulfill these criteria.

Donald Trump, Jr Was Right To Meet With The Russian Lawyer.

Donald Trump, Jr was not interested in colluding with Putin, he was interested in information on illegal activity by Hillary, whatever the source. He didn't seek the source out, the source contacted him. He was interested in the information and not where it came from. Suppose it came from England, or Brazil, or Tanzania, who cares. It's nonsense to think he should have just informed the FBI and not first found out the nature of the material, and no political operative in this day and age would have done any differently, certainly not any of the Democrats. Of course he would have been happy to receive it and use it.

And what is the point about who exactly came to purportedly give information. It wasn't Donald Trump who was giving out information, it was someone supposedly coming to give it to him. He didn't know any of them to begin with. There isn't the slightest suggestion in his email chain that he was willing to enter into some sort of shady deal to get the information, as the Democrats and the media, who actually did make such deals, are I suppose trying to imply.

And what would he have done with such information? Would he have kept it a secret? If it was truly illegal activity he certainly would have informed the authorities, and in the meantime made sure it was leaked to friendly press people so it wouldn't be kept under cover by the Obama FBI and Justice Department. Can anyone imagine him doing otherwise than making the information known to the authorities who could then start a further investigation on Hillary?

The only ones colluding here are the media and the Democrats. Their hysteria makes no logical sense. It's frustrating how few on the Trump side are putting out a forceful and logical response.

Price Fixing by Medicare. The Premiere Medical Monopoly.

United States antitrust law, starting in 1890, has regulated the conduct of business corporations to promote fair competition for the benefit of consumers. Government prosecutors bring cases against monopolies and major corporate mergers which appear to be stifling business competition so as to interfere with the functioning of the free market. Sometimes such cases are controversial and are litigated in court. However, some practices are deemed by the courts to be so obviously detrimental that they are categorized as being automatically unlawful, or illegal. The simplest case of this is price fixing, in which a group of businesses, known generally as a cartel, collude to set the price of a good or service so as to avoid competition. In a competitive market producers try to reduce their costs through efficiencies and innovations so as to reduce their prices and gain market share. Those who do so the best will prosper the most and consumers are the beneficiaries. Those who do not measure up will fail. The cartel is set up to protect its members from such competitive forces at the expense of the consumers.

In 1975 the U.S. Supreme Court ruled in the case of "Goldfarb v. Virginia State Bar" that the antitrust statutes applied to the professions as well as other businesses. The ruling was primarily to prevent State law bars from setting minimum legal fees, but the ruling applied to the medical profession as well. The fact is that before Medicare it was customary that doctors entering practice in a community were obliged to adhere to a minimum fee schedule imposed by their local medical society. Doctors were concerned about preventing price competition and maintaining the financial security of their membership. The Supreme Court decision affirmed that such an anticompetitive arrangement was harmful to consumers of professional services. But the reality for doctors was that the introduction of Medicare in 1965 made this a moot point by securing their fees which, in the absence of any consumer restraint, then entered a period of rapid inflation.

The Medicare bureaucracy, after failing to control this period of fee inflation by other means, in 1983 introduced a fee schedule for hospital care, and in 1992 fixed fees for medical services. Thus was introduced the very monopolistic anticompetitive system for which the government prosecutes business entities and which the Supreme Court has ruled against. The price fixing extends beyond the Medicare beneficiaries since almost all private insurance reimbursements other than for pharmaceuticals are based upon the Medicare fee schedules.

Medicare price fixing has the good intention of controlling price increases but has the unintended consequence of precluding price competition thus inhibiting market forces which lower prices. Medical providers set fees based on insurance reimbursements rather than on costs, consumer restraints and competition. Efforts to maintain and enhance income are directed toward providing procedures which are tied to fees that offer the highest profit margins, complying with fee enhancing regulations and simply increasing the number of procedures which are paid for and decreasing those which are not. Doctors of course are in the business of treating patients and are motivated by a number of forces to do the best job they can. However this situation produces a number of perverse incentives that inhibit efficiencies and innovations, produce waste and cause considerable distortions of provider supply some of which I will detail in the next post.

Possibly the worst aspect of this fee control system is the necessity to tie it to ever increasing complex regulation designed to define the procedure which the medical provider must perform to justify the fee which is claimed. In an attempt to preclude gaming of the system documentation is required which has become absurdly complicated, time consuming and expensive. Items such as the number and type of questions asked about the illness, the number of parts of the body inspected, whether aspects of the patient family or social history are included must be counted and have substantial impact on the fee received. In 2009 as part of the federal government stimulus package electronic record keeping was set as a "critical national goal" and various financial stimuli and penalties were put in place for doctors to adopt computerized records. Unfortunately government mandated computerized documentation has added dramatically to the cost of medical practice, has substantially interfered with patient doctor interaction and has virtually destroyed medical records, converting them from a means of medical communication to one of payment guideline documentation. In fact none of this has any positive impact on actual patient care or outcome. Although most physicians have adapted to the system, the way a frog in a heating pot of water adapts and remains in place, it is madness, the stuff of Franz Kafka and Alice in Wonderland. Does any patient with a medical concern care about such things?

What's Happening to Independent Medical Practice?

"Single payer" is another way for saying somebody else pays. Of course the single payer is using our money, but it is convenient to let somebody else worry about the cost. Nevertheless we've forgotten about the old adage, "He who pays the fiddler names the tune".

 

Medicare has been our single payer for everyone over age 65 for the past 50 years. We've given the job to the CMS bureaucrats to worry about the cost, but what can they do? They're not in the doctor's office with you to decide whether you really need this or that test or how often you should come back for a visit and so on. How are they supposed to figure out what the right fee should be for any of the millions of medical transactions that go on every day. So they do the only thing they can under the circumstances, they issue regulations. They put out fee schedules and tell medical providers what they have to do to qualify to get the fees. And this is how they name the tune and run the show.

What's going on in the present bureaucratic highly regulated system reminds me of when I was in the Army and I found out that the way to prosper in that environment was to learn the regulations and use them to get what you wanted. The master sergeants were the ones who played the regs like a Stradivarius. Not that they were bad guys - just the opposite. They just did what any smart person would do considering the incentives. Later when I worked in the VA for a couple of years it was pretty much the same thing.

Well bureaucratic regulations seem like a necessity in the military, but in medical practice? Unfortunately that's where our Medicare single payer has lead us. Complying with regulations is a large part of what your doctor does every day. And to a considerable extent it's taking away from his thinking about you, sometimes even more than he realizes. For the young guys it's the environment they're used to. (For you gals I'm sorry but it's just too cumbersome not to keep using the default English male gender).

In all the medical economic blogs we keep reading that independent medical practice is rapidly declining, now under 50% and even around 35% of doctors in one source I read. Doctors are fleeing to salaried jobs with hospitals and big medical organizations. It's the regulations folks! They're just too complicated and expensive for the little guy. Well you say, what else is new. Isn't consolidation what's happening all over the economy? Well I think it depends on the type of business and how personal you want it to be, and it's hard to think of anything you want more personal than your medical care. I clearly understand the lure for doctors to work for a medical conglomerate as opposed to having an independent practice. I've been in both situations. Especially in the present difficult environment the temptation is great to abandon your independence and leave the complex legalistic and economic headaches to others. But there is a subtle difference in your allegiance. As long as the dominant mode has been independent practice, looking out primarily for his patient's interest was the norm that all doctors adhered to but I fear for how things will go when all doctors become employees of big entities, the point toward which our system seems to be rapidly heading. Then will doctors become just the highly skilled technicians following disease protocols that the medical leaders and bureaucrats envision? Then not just doctors but more importantly patients will be part of the medical brave new world where it is more society's and less individual interest that determines the nature of your medical care.

Medicare, the American Version of Central Payer

Medicare is the American version of "central payer" for everyone over
65, a segment of our population which consumes a disproportionate
amount of medical services. Medicare is popular because it seems like
a good deal, so much so that politicians like Bernie Sanders want to
extend it to the whole population. Unfortunately Medicare has a fiscal
problem in that every day it is substantially adding to our
dangerously high national debt and is rapidly heading toward
bankruptcy.

CMS, the agency that runs Medicare, has been trying hard to get out
from under this financial difficulty by imposing increasing amounts of
new regulations which thus far have added to costs rather than
reducing them. The reality is that if the program is to continue in
its present form the solution must reside in some combination of
either major increase in taxes and fees, serious rationing of
services, or substantial reduction of payments to providers, the same
devices that are used in other advanced countries with government
controlled medical care. Understandably politicians are reluctant to
do any of these things, which would be highly unpopular and in many
ways counterproductive. Americans have been enjoying life on their
credit card but eventually we're going to reach our limit.

Medicare's fiscal problems are well known even though they are too
unpleasant to be talked about much. Less obvious is that Medicare
through its regulations has been adversely affecting the nature of
medical practice for decades but in recent years there has been a
regulatory firestorm which is having major bad consequences for
patient care. I would contend also that Medicare, through its dominant
influence, and government intrusion generally in our healthcare
system, has been a major factor in causing inflated medical prices,
which mostly hurt the poor, as well as disruptions of services
including distortions in distribution and impedance of innovation.
Thus we have a system which was designed to make medical care less
costly and more accessible causing the exact opposite effect.

But first let's examine the fiscal problems. CMS sets the price paid
for every single medical item, large and small, and allows payment
only for those which it deems to be necessary. Why then its economic
troubles? The answer is the same one that has always caused centrally
controlled economies to be consistently outperformed by the free
market. It's the conceit that somehow a central committee of experts
can make economic decisions for individuals better than they can make
for themselves.

The free market works to distribute goods to their best uses and keep
prices as low as possible. Consumers seek around for what satisfies
them for the best value. They behave differently depending on how the
bill is being paid. If you send your teenager out to buy himself a
pair of jeans you can give him your credit card or you can give him a
$100 bill and ask him to bring back the change or you can give him the
same bill and let him keep the change. In either case the result will
probably be serviceable clothing but a world of difference otherwise.
From the producer's standpoint the competitive market makes them work
to produce things that people want at a price they are willing to pay.
Whoever succeeds best will gain market share and prosper. Whoever does
not will fail.

Some contend that medical care is different, that it's too highly
technical for individuals to make their own decisions. But we purchase
high tech things like cars and computers all the time without knowing
the details of their inner workings. And in fact patients also make
medical decisions all the time, including those that are critically
important. Except sometimes in emergencies they decide when and in
what way to interface with medical care providers, and whether or not
and in what way to follow their recommendations. If I recommend a test
or procedure is the patient obliged to accept? Of course not. The
patient, like the consumer in every other area, is the final
decision-maker. And in fact it is the patient who makes the economic
decisions as well, but in the context of a distorted system bad
results follow. When offered items at no or little cost there is no
incentive to decline except where there is risk or pain involved.

Those who jump to the "central payer" idea will accuse me of being
hard-hearted, of having no sympathy for the poor and unfortunate. On
the contrary! It is they who are unwittingly favoring high prices and
restrictions, not just for the poor, but for everyone. Medical goods
and services are not free. Doctors and nurses and technicians will not
work without being paid. Likewise hospitals and nursing homes and
medical equipment must be paid for. The question is how to pay. In the
central payer scheme I give my money to government bureaucrats to take
their share, then parcel it back out, while regulating the providers
and restricting my choice. When I pay directly and control the funds I
select what service suits me the most and the market works to lower
prices. I buy insurance, not for ordinary costs but for unlikely and
unforeseen circumstances because in such cases I want the money I
spend on insurance to provide generous coverage. Yes there are those
who through misfortune or lack of foresight or indolence are unable to
afford basic care and for whom society should provide. Other than that
the intervention of society does more harm than good.

But if the truth be told it is not the unfortunates who are the chief
interest of central payer proponents. In such a highly commercial
society as ours is we should be immune from ads that claim to give us
items that are "absolutely free". But the idea that someone else is
paying is a siren song that is too sweet to be resisted. The
government will arrange things so that "the rich" will pay more and I
will pay less, the rich being anyone with an income larger than mine.
The link between this arrangement, high taxes and restricted services
is papered over as much as possible. But what is completely lost sight
of is the tremendously destructive effect of eliminating market forces
which bring down prices and reward efficiency and innovation. I've
tried to give some examples from my personal observations in previous
posts and I'm going to continue doing that.

How efficient is Medicare?

One of my critics offered the following response to my last post: "The most efficient payment system we have now is Medicare. If everyone were enrolled, payment for all services would be the same and automatic. Insurance companies would no longer be involved in the risk, which is where all the fraud and abuse occurs." His input is appreciated since it focuses the argument. Medicare for all is a commonly heard opinion, essentially the idea put forth by Bernie Sanders during the recent primaries.

Medicare is widely popular. Efforts to change it are "touching the third rail" for politicians. Who doesn't like walking into almost any medial provider, presenting a card, and getting full service. No charge if you've bought a Medicare supplement. Why not just let everyone in on this great deal?

There is one problem that most people are aware of but don't like to think about too much. The system is going bankrupt. Just to give you an idea, the present unfunded liability, which is the amount that is promised in the future for all present eligible citizens but not covered by taxes, is in the range of $50 trillion. Where's our country going to get that kind of money? Well I guess we could raise taxes.

The problem is that's already been done. Part A, which pays for hospitals and home health, is financed through the Medicare payroll tax which everybody pays. That started out way back at 0.3% of your paycheck but now it's up to 2.9% unless you make over $125K in which case it's 3.8% and, unlike Social Security, as of 1994  that applies to 100% of your paycheck. Despite these increases the Part A trust fund has been spending more than it takes in for several years and is predicted by the Medicare trustees to run out completely in 2026. That's 9 years from now folks.

For Part B, which covers doctors, lab tests and medical devices, seniors are charged a premium which is adjusted higher according to their income, and which has been increasing rapidly for everyone in recent years. Originally those premiums were supposed to cover half the bill with the general taxpayers covering the rest. For the last 10 years or so what the seniors pay has dropped to 25% with 3/4 of the cost being added to the national debt.

So for Part A we could raise the payroll tax and take more out of everybody's paychecks. That's not going to be popular considering our stagnant wages. For Part B 3/4 of the costs from the general funds seems like something of an outer limit. We could ask seniors to take a big bump in their premiums, also not likely to be too popular. In fact the amounts involved in each case are a big deal, increases probably not politically feasible.

What else could we do? Here's another idea that some are pushing. Raise the eligibility age, say to 67. Surveys show that present day Medicare recipients are OK with that. No surprise there. Younger folks not so much, although surveys also show that a lot of the youngsters don't expect Medicare to be around for them anyway. But wait a minute!! I thought we were talking about including everyone, not cutting people out. Back to the drawing board.

One other solution that no one likes to talk about is the ace in the hole. Medicare could do some serious rationing. CMS does some of that now, but not enough to be really noticeable. Nevertheless It's a big way that central payers in other countries control their costs, and we're told we should learn from them. The problem we have in our country is that we've got this private system to compete with and how would it look if the feds couldn't manage to provide the same services as the greedy insurance companies. What's worse is that those pesky companies have to do it all with just premiums. No taxpayers to back them up and definitely going into debt is not an option. No profits and they're kaput! Get rid of that troublesome competition and things would go a lot more smoothly.

I think it's fair to ask how all this fiscal problem can possibly be. After all CMS, the agency that runs Medicare,  rigidly regulates the whole blessed thing. Each service, from heart transplant right down to drawing a tube of blood, has a fixed price and its payment is authorized only by absolute necessity. Somehow looked at this way the system doesn't seem all that efficient. I think I know the answer. Stay tuned to this station.

The real cost of free medical care. Concrete examples.

Our system of indirect payment for medical services by insurance or government programs is supposed to be shielding us from high cost and improving access. In fact it is doing exactly the opposite. This arrangement is in fact greatly inflating medical costs, restricting their availability and retarding innovation. I'm going to post a series of concrete examples - things I observed in my own practice.

As a diabetes specialist most of my patients did home blood sugar testing. A tiny drop of blood from a fingerstick is placed on at test strip which is read in a meter. There are a large number of meter companies, each with their own brand, and importantly the test strips are proprietary, each meter requiring its own type of strip. Until the last 2 or 3 years these meters were priced in the range of $100 in most pharmacies although more recently prices have come down drastically. The reason for this is that the meter is a one time sale and the profit for the producers resides in the test strips which require ongoing use. Companies do not rely on meter sales and in fact give meters away in doctors offices to be given to patients who then are tied to those specific strips.

All insurance companies and government programs cover the strips so that to the insured patient they are either "free" or require only a small copay. As time has gone on all the major brand name companies have refined their strips, improving their speed and accuracy and raising the prices accordingly. At the pharmacy the price of the major brand name test strips runs around $1.50 per strip and can run up over $2.00. To be sure pharmacy benefit management companies, insurances, Medicare and Medicaid reach agreements with the producers to lower those prices and I am not privy to that information but they are expensive nevertheless.

In the case of most medical items it is not possible to know the true market price, that is the actual price at which a producer can sell his product to a cash paying consumer and make a profit. Normally prices are set with insurance payments in mind and are grossly inflated but adjusted by discounts to insurance companies and by price setting arrangements with government agencies. The case of blood glucose strips is unusual in that Walmart sells a series of meters and strips for cash payment to the public at roughly $10-20 for the meters and roughly 15-20 cents a test strip, that is 1/10 the published price of the major brand name strips, which in fact, unlike the Walmart strips, are sold almost exclusively through insurance. I have assessed these Walmart strips and found them to be equal in speed and accuracy to the high cost brand name strips which I used regularly in my office.

In my office extremely few of my patients used these low cost strips, maybe 2 or 3%, despite the fact that I made an effort to inform the patients of their availability and welcomed their use. Why would anyone pay even a small amount for test strips when they can be obtained for free with one's insurance. In fact the free strips became a problem with wastage, prompting Medicare to regulate their use, limiting the amount authorized to 1 strip/day for diabetics not using insulin and 3 strips/day for those using insulin. Such arbitrary regulations are nonsensical since many factors other than insulin use, including importantly patient preference, determine how many strips are used. In fact such regulations do not stop wastage since many patients obtain but do not use their allotted amount and at the same time many others require more than they are allowed.

Who does buy the low cost strips? Well for one the uninsured who attend the free clinic where I work once a week. These low income people find the strips that are sold at Walmart at the market price to be, as they say, "affordable". Even if they test as often as 4 times daily the cost is well under $1 a day instead of the $6-8 dollar cost of the strips that are "free" to those with insurance.

Of course as we all know the "free" strips are not really free. We pay for them through the insurance premiums that our employers pay for us as part of our compensation and in the taxes we pay and the debts accumulated by government entities. But the "free" strips cost more than you might think. In addition to their inflated price caused by elimination of market forces we pay for the wasted strips that are acquired but not used. And in the process of obtaining them we also pay for the time of the people in doctor's offices and pharmacies filling out forms, the computer systems required for billing and coding, the legions of clerks in the insurance companies and government agencies as well as the bureaucrats and consultants in the meeting rooms working out the regulations needed to keep the system going.

Our medical payment system is shot through with this type of thing and it is crying for reform.

What to do about Pre-existing Conditions.

So what about "pre-existing conditions"? A complicated problem!

To begin with it's pretty clear that the overwhelming majority of our citizens, regardless of political persuasion, accepts that everyone in our country who has serious illness, even when it's caused by bad health habits or personal neglect, should have access to at least reasonable medical care appropriate to that illness without causing major financial hardship. Let's put aside the "medical care is a right" argument and submit instead that in a country with such abundance it is not humane or socially prudent to ignore people who are ill or injured who could be readily treated.

In fact in my 50+ years of medical practice that's always been the prevailing attitude. When I was a kid doctors commonly saw poor people for free and there was no charge at the Scranton State Hospital. In the days before federal government intrusion when I was a student and intern in Phillie we had the ward services at Temple and Penn and of course there was Philadelphia General, all free to all comers. I did my residency at San Francisco General where there was no charge and all California counties had something similar. To be sure this was second tier care by doctors in training but in those days of low tech there wasn't really a heck of a lot of difference between how we treated patients on the ward and private services.

Nowadays this system has been replaced by Medicaid and obligatory Emergency Room and hospital care. We treat people who are seriously ill or injured first and worry about payment later and oftentimes such patients are then enrolled in Medicaid, at least temporarily. Medicaid is a terrible system, at the same time both excessively wasteful and underfunded, but it limps along in a crazy way, often providing its beneficiaries high cost items that the taxpayers who fund it can't afford.

The problem, of course, is the small percent not poor enough to be on Medicaid but for one reason or another left out of the insurance game. Particularly this is problematic for those with some form of stable chronic illness who have no one who will sell them insurance even if they could afford it. These people are stuck facing the grossly inflated prices for medical services caused by the fact that everyone else has some third party paying their way.

The knee jerk response has been to mandate that insurance companies sell policies to such individuals, and to do so for premiums that are too low to cover their costs which of course increase dramatically as soon as insurance takes care of the bill. If this is our answer then there is little point in complaining about the high cost of medical insurance for everyone else. It's all well and good to provide such persons with what they need and want, but it's the most wasteful and inefficient way to do it. When you take that approach you've got a new group of people with the highest medical demands really ramping up medical prices which are already inflated by third party payment and lack of market forces. This mandatory insurability device was one of the major causes for the Obamacare financial woes, namely dramatically rising premiums and insurance company losses and withdrawals.

So what IS to be done about the problem. The new Republican offering is complicated and disjointed, cobbling together a bunch of somewhat contradictory approaches to accommodate all sides. Nevertheless it contains several good ideas. I like especially the major escalation of health savings accounts, and the potential devolution to the states of control over Medicaid and provision of help for high cost individuals. It seems like a good idea to get multiple different centers working on solutions to these difficult problems.

Fundamentally though the solution to our medical economic problems rests in dramatically lowering the prices of medical goods and services by finally exposing them to market forces. We need the 350 million of us out there looking for the best value and all the hundreds of thousands of providers competing with each other for their business. How much better for all of us, but most especially the poor, if our medical goods and services were many times cheaper and more efficiently rendered.

Employer based health insurance is the wrong way to go.

Employer based insurance for medical expenses came about in the U.S. largely during WWll when wage controls were imposed to assure that there would be no labor problems during the tremendous effort to produce munitions. In lieu of increased wages Kaiser shipyards offered medical care to attract employees and that started the trend, one that the federal government solidified by making this employee benefit tax exempt. Whatever its merits originally, employer based health insurance today is a net negative.

Despite the illusion that the employer is paying the bill, the health insurance benefit is in reality part of the overall worker's compensation. However, perversely, since someone else appears to be paying, employees want the most generous benefit possible and often fight tooth and nail to obtain what they would consider grossly wasteful if they were paying the cost - which in reality they are. Who would, for example, wish to purchase homeowners insurance that paid for a handyman to come to fix chipped paint or auto insurance that covered oil changes. And who does not seek to obtain lower premiums for these types of insurance by increasing deductibles. Although we might use the handyman or Jiffy-Lube, we all understand that buying insurance for such ordinary maintenance expenses would be an absurdity. But this is the very situation we find ourselves in with our employer based health insurance.

Accepting health insurance from our employers in place of monetary compensation for our labor has many disadvantages. First there is the cost. Although it is easy and pleasant to simply plunk down the insurance card for any medical service, the luxury of not having to shop around comes at a high price. Not only is the oil change at the dealer instead of at Jiffy-Lube expensive but much more than that would be the back end cost of paying by oil change insurance.

In addition letting our employer do the shopping greatly limits our options to the one or two plans he negotiates. Although he for the most part wants to do right by you his eye is on his bottom line and his overall employment pool rather than your individual needs. Worse than that is "job lock". Changing jobs is a big health insurance hassle and how many are stuck in a job they don't like simply because of health insurance coverage.

To be sure the employer based system has some advantages. First there is the tax exemption for the premiums previously mentioned. Secondly group health insurance has big administrative advantages over individually purchased policies and especially if you have some chronic medical problem that can be a big deal. Thirdly is the phenomenon that the employer, at least temporarily, has to absorb the cost of increasing premiums. That advantage however is illusory, since a moment's thought leads to the understanding that such increases replace wages, and of course lead to policies with increasing copayments and deductibles.

These advantages are not worth the defects and are reportedly being addressed in the new health care deliberations. Firstly if we are to have federal tax exemption for health insurance it should go to everybody regardless of employment status. Secondly, any authorized association, such as churches, social organizations or disease advocacy organizations should be allowed to offer group health insurance, and not just employers. Thirdly the market for health insurance offerings should be expanded nationwide. If there was ever a case where interstate commerce laws should apply, this is it.

We should buy our own health insurance that will stay with us regardless of who we work for. And there should be a wide market with various associations allowed to compete with group policies. Purchased this way we would seek policies which covered only large items with substantial deductibles, and with riders that guaranteed coverage of any new unexpected illnesses. We would see much more stable, appropriate coverage with much lower premiums. And we would get wages for our labor instead of high cost, excessive health insurance. This arrangement would go a long way to addressing the "pre-existing illness" problem. But that is a matter for another time.

Obamacare requires every employer with more than 50 employees to provide health insurance. Needless to say I think this is the wrong way to go by 180 degrees.

Post Mortem on the Health Care Bill

Well that was a big waste of time and effort. Your tax dollars at work. For the last eight years the House conservative ideologues huffed and puffed but could not blow down President Obama's house. But they sure did a job on their own place.

It's a strange situation. The conservatives got their way, which turns out to be the status quo as the Democrats left it, something they profess to dislike intensely.  Mrs. Pelosi claimed a great victory for the Democrats who were powerless to do anything without their conservative allies. She actually sounded pretty silly.

The President is a practical dealmaker and is most definitely not a conservative ideologue. In fact conservatives didn't particularly like him and some worked against his election. He was voted in based on his common sense perceptions of what was going wrong in our country, perceptions shared by a great many others who are also not conservative ideologues, in fact many Democrats. In his world of real estate deal making everyone gave in a little to get things done. Not so for conservative ideologues who, like petulant children, kick and scream to get their way, but find out in the end that mother was right after all.

To be sure Speaker Ryan's plan was complicated, and therefore there was no groundswell of support. It was carefully crafted so as not to hurt the Obamacare winners, to help those who need it, to move things toward a market based system, and to actually be enacted. For most people who are not political junkies this kind of complicated law, like Obamacare itself, was going to have to be passed to find out what was in it. The conservative ideologues would have none of this intricacy. Even the astute Dr Krauthammer favored passing a law that the Senate Democrats were sure to vote down and who would then take on the blame for its failure. But figuring out who to blame is hardly the point of fixing our health care system.

The President's focus is on getting his promises accomplished and he is going to move on. The conservative ideologues are saying that now we can begin again and do it right, but I think they're going to find that for now the rest of us are ready to move on as well. They have had their day. It strikes me that this fight might have been an opportunity for Democrats to exercise some influence. After all there is general admission that Obamacare is headed for major fiscal problems and needed major revision. Speaker Ryan's plan actually left Obamacare in place, albeit with considerable alterations. But unfortunately these days the liberal ideologues are just as much in the ascendency among Democrats as their counterpart conservatives among the Republicans.

The first hand has been played and Mr. Trump now knows where the cards lie. He's a quick learner, non-ideological and results oriented and it will be interesting where he goes from here.

The problem with Free essential benefits

There's a lot going on with the health care bill. Right after President Trump took office people were criticizing Speaker Ryan like crazy for not repealing Obamacare right away as promised. Now they're criticizing him for not taking enough time. He's probably kicking himself for acceding to the pressure to take this job.

However, I think the conservatives who are resisting the present bill have a point about the essential health benefits idea. It is short sighted to have the concept that there are some medical care items that are so important that they should be exempted from any financial restrictions like deductibles.

Take colonoscopies for example. The socialist-thinker says that we want to encourage people to get colonoscopies so we should make them "free". So there's no misunderstanding I also strongly recommended to all my patients that they have screening colonoscopies. But colonoscopies are not free and making them "free" actually raises the price which we eventually pay indirectly. If colonoscopies are subject to the same deductible as every other procedure people will prefer to have theirs at the out-patient center instead of at the hospital where the price is much higher. And soon some enterprising person will set up a colonoscopy center where this screening procedure, which has become very routine, is done in large numbers very efficiently, perhaps even by trained PA's, and thereby really cut the price.

When colonoscopies are "free" such forces do not operate. When they are "free" they are a liability to third party payers who then regulate them so that we are told who can have them and how often.

I will not even mention the added cost of paying for the regulators, the administrators, the billers, the coders, the IT personnel, all the hangers on who are needed to make this procedure "free".

The same reasoning applies to all the other "essential benefits" that some wish to exempt from deductibles, things like pregnancy care, drug rehab, etc. Surely it is appropriate to help those who truly cannot pay, but why continue to push medical prices higher and higher by making things "free".

The Health Care debate

I made the pretty obvious prediction that fixing our healthcare economics isn't going to be easy. Changing 50 years of accumulated bad government policy is problematical, not so much because we don't know what the problems are, but more because the public has gradually accommodated itself to the present system. Abrupt changes are disconcerting and can do some real harm, at least temporarily .

President Trump has made the statement that making the change was harder than he thought. You can't fault him for that because to really know the problems you not only have to be immersed in the system in some way but also to have really given it a lot of thought for a long time. And beyond that you have to understand the politics involved in turning the battleship around without sinking the rest of the flotilla.

President Obama likewise had extremely limited understanding of healthcare economics. He wouldn't be expected to know much given his lack of background in the subject. During the Obamacare debate, for example, he made some very foolish statements about how doctors behave. Whether he understood his lack of knowledge is hard to say. He never admitted his surprise as Trump has. Speaker Pelosi and Senate Leader Reid were in the same boat. The ACA was mostly devised by policy wonks who had no particular complaint with the old system and just wanted to bring everybody into it. The politics was much easier because of the overwhelming congressional Democrat majority, including 60 Senate members, but even so it was a hard sell.

President Trump has some advantages. HHS Secretary Price has a deep personal understanding of both the medical and the legislative issues. Speaker Ryan has an overwhelmingly better grasp of the issues than did Speaker Pelosi, although she is said to be good at head counting when it comes to passing legislation.

Senator Schumer and the Dems, as expected, have turned their faces against the new American Health Care Act for the time being. Whether they can hold fast against items, which will be presented later, that promise to substantially lower the cost of health insurance and health care generally remains to be seen. Meanwhile we are now seeing a battle royal among the Republicans. As one political commentator said this is an old time legislative fight, something we haven't seen in decades.

I think Ryan and Price's basic goals, designed first and foremost to lower the cost of health care and then to make sure that everyone has access to at least basic standard medical treatment, are widely accepted among the Republicans. The argument is about the politics of how to get there. It's really pretty interesting. The opening gambit of the AHCA was laid down and now there's a pretty public debate. It reminds me a little bit of what I've read about how things went when our constitution was being devised. The points of reference are pretty disparate at this stage and we'll see what compromises can be reached. If there was ever a time for President Trump's deal making skills this is it. He is said to be working very hard at it.

I've heard the argument put forth that Obamacare is collapsing financially, that we should just let that happen and then people would clamor for a solution. That road would lead to disaster. The Republicans were elected in part to fix this problem and they'd better do it.  

Observations on the AHCP Republican healthcare plan

Here are some initial observations about the American Health Care Plan.

Obamacare diagnosed the problem of our health care system as an underinsurance problem and focused on getting everyone insured. Although it's true that something like 15% of our citizens were locked out of the system, Obamacare addressed only one of the symptoms of our sick system rather than the disease. Furthermore its treatment was faulty and was falling apart.

The Obamacare plan for the uninsured was to have the younger healthy people fund the care for the older sicker people but they weren't buying into the deal. There were certainly winners but a lot of losers too as many were forced off insurance they liked and had to pay much higher premiums. Many of the winners, actually most, were simply being pushed into the Medicaid program. Medicaid is not the subject of this post except to say that it is a truly terrible program. It is flawed from many aspects but from the economic standpoint it is at the same time grossly wasteful and grossly underfunded and pushing more people into it is definitely not a rational solution for what ails our system.

Most reasonable Democrats agree that Obamacare as it stands is flawed but wish simply to fix it. However not only is the basic concept wrong but it does nothing to correct or even aggravates the more fundamental problems of our health care system such as severely excessive medical prices, stifling of innovation in medical services and grossly excessive outside interference in medical practice. The plan that the President and Congressional leaders have now proposed will attempt to address all these problems.

The Repubs have some major problems that the Dems didn't have in 2009. The Dems had a filibuster-proof 60 member majority. Also, despite its problems, 8 years have now allowed a bunch of Obamacare beneficiaries to settle in. The Repubs must honor Trump's pledge that the new plan would take care of these people. Parading them around would be red meat for the Dems attacks. More than that it's the right thing to do.

What the Repubs must absolutely clarify is that the AHCP is only the first installment of a comprehensive three part plan to rationalize American health care economics and it is the least important part to boot. It's the Obamacare replacement to help the uninsured. It gives them money through the tax system to use to buy their own insurance. No more mandates. It keeps in force the Obamacare insurance regulations on pre-existing illness and children up to age 26.

The next 2 parts to follow are more critically important. Part 2 is Tom Price, the HHS director, eliminating many of the Obama era regulations on health care. Part 3 is the good part intended to lower health care costs, encourage service innovation and give health care back to patients and doctors. This includes things like buying insurance across state lines, malpractice reforms, broadening the use of health savings accounts, and allowing various organizations other than employers and unions to develop specific insurance products. For example ARC, an organization advocating for the disabled, could develop an insurance plan tailored for its members like my disabled grandson.

The reason for splitting things up like this have to do with Senate rules which will allow Part 1 to be passed by a simple majority, but Part 3 will need to get some Democrat buy-in to overcome a filibuster. However the whole thing ties together. Giving the uninsured money to buy their own insurance is important, but bringing the cost down and allowing for service innovation is critical, not just for the uninsured, but for everybody.

The Dems are shooting at the plan, which is to be expected. The Repubs did it with Obamacare. However the Dems have allies of convenience in Rand Paul and his conservative friends who look at the refundable tax credits as another government entitlement. There's a problem with their argument. Tax subsidies, mostly from the federal government, amounting to more than $300 billion, go to people who get insurance through their employer. No matter how you slice it that ain't fair to those who don't. Dr. Senator Paul can't have things both ways. Either you give the subsidies to everybody or not to anyone, but taking them away from those who get employer based insurance at this point would be political suicide.

Part 1 might have some alterations before coming to a vote. But the most important point is that passing Part 1 is necessary both to replace the Obamacare arrangement to help the uninsured, but also to get to the good stuff in Parts 2 and 3.

One last point. Almost immediately the AMA leadership came out against the new plan. That alone would make me support it. The AMA presumes to speak for all physicians, but have less than 20% membership, and that counts student and resident members. Practicing doctors didn't drop their memberships because they just forgot to send in their dues. The AMA doesn't speak for them so don't be fooled by that one.