Health Savings Accounts

We shouldn't be paying for ordinary expected medical items by insurance. It costs more and restricts our choice. We should prefer compensation for our work to be in higher wages rather than in medical insurance and we should ideally have our own insurance that fits our needs and that we don't lose if we change jobs.Trump's administration plans to lower insurance costs by increasing competition across state lines and allowing insurance pools outside of employers. And high deductible insurance that kicks in only when we run into serious problems is much cheaper. But medical prices are high and what do we do when we need that MRI or colonoscopy.

Enter Health Savings Accounts. Basically it's a bank account that you fund periodically and then draw on for medical expenses. One place you get the money is from what is saved from the lower high deductible insurance premiums. What's the point of that, you say. Aren't I coming out the same in the end? Not at all. Because what's in the HSA is your money, that stays in your account if you don't spend it and that builds up over time. So if you decide on getting only what you really think is necessary and shop around for the things you do want and follow good health practices, then the money you save goes to you and not the insurance company.

In addition it's not just a savings account, but it's more like an IRA since the money in the account is tax exempt. And as you accumulate more than you need to pay your medical expenses you can put the rest into something interest bearing like a mutual fund which is also tax exempt. So it's really a better way to save for the future than an IRA because you can take the money out for medical expenses without penalty. And when you do retire you can actually use the money for any purpose without penalty.

The other good thing is that you don't need to worry about restrictions from the insurance company as to how you use the money other than that it has to be used for health related items. There are some government restrictions like you can't use it to pay for the gym or buy toothpaste but generally they're pretty liberal so that for example dental and vision and taxi rides to the doctor visits are fine.

So the smart thing to do is to get your company to set up an HSA, give you a really high deductible medical policy and put the money saved from the lower premiums into the HSA. When you change jobs the HSA, and the money in it, goes with you because it's yours. And if you have to buy your own medical insurance, do the same thing. The banks that offer them usually don't charge you, they keep track of the fund and you get a debit card and a checkbook to make payments from the account. Generally even if you pay a bill with the HSA it's best to pass it through the insurance since you get the discounted price.

Generally the Democrats have been against HSA's and have tried to slow them down because they tend to move us away from a government controlled medical care system. However even though most people are not familiar with HSA's the numbers of people who have them are rapidly growing because it's such a good idea. You'll be hearing much more about them when Trump and his health care team take over.

Is Medical Care a Right. The Negative Side of the Debate

Let me make the crucial point to begin with which is that I believe that we have the moral obligation to provide basic medical care to everybody who needs it and who cannot or will not provide it for himself.

Beyond the moral obligation I believe there is also a practical basis for this from the social standpoint as well. As Mr. Trump says -- we can't have people dying in the street.

Furthermore I believe that the overwhelming majority or our citizens, including the overwhelming majority of my conservative fellow citizens would agree with this statement especially in the practical setting of someone who required help.

I would hope that this would help at least to some extent to dispel the argument that conservatives,  many of whom are highly intelligent and steeped in Judeo-Christian traditions, do not consider medical care a right because of ignorance, greed or lack of compassion.

I will skip over the philosophical argument  that human rights such as those traditionally envisioned by our founders and the philosophers of the Enlightenment were simply freedoms from oppression by the majority and in particular the force of government. These rights are essentially unrestricted except where they impose on similar rights of others. I also understand the argument raised by the socialists of the 30's as encapsulated by FDR's discussion of the four freedoms that an individual cannot be truly free without being free from basic human needs.

The real arguments against calling medical care a basic human right are practical ones, to wit:

The concept has the inherent contradiction that fulfillment of such a right would oblige someone else to provide it, thus imposing on that person's freedom. In addition this right must be fulfilled by material goods and services which are in limited supply and therefore the question arises as to the whether and in what manner this right is to be restricted. But by far the most important practical consideration is how exactly we are to arrange for the enjoyment of this right.

The usual solution for the method of providing this right is for a collective arrangement supervised and regulated by the government. I would say that the main reason that we have not adopted this approach in the U.S. is our deep-rooted skepticism of government activity, not by all, but by a very substantial portion of our citizenry. Time and time again the government in its activities has proved itself to be venal, wasteful and hypocritical. Politicians claiming to be interested in public service are often more interested in self-service. Many government bureaucrats are sincere and hard-working but at the same time inefficient government bureaucracies are notoriously the subject of common humor.

However I think the more important criticism of collective action supervised and regulated by the government is that in society there is no such thing as common purpose and the common good but only individual desires and needs frequently in conflict with each other. Without going into detailed examples or appealing to the great number of authorities who have discussed this subject, the salient point is that it is simply not possible for government to arrange to provide suitably for the individual needs and desires of the individual citizens in the same manner that they would provide for themselves.

I will gloss over the comparative virtues of the market economy vis a vis the centrally planned economy in providing efficiently and appropriately goods and services at the lowest cost except to say that if there ever was a settled argument this is it. One might argue that it is reasonable to accept the waste, inefficiency and progressive regulation of government central control for the sake of equality of outcome. In response to this I will not bother you with the many examples that government control simply shifts the spectrum of those who receive favored treatment. Instead I would argue that the correct approach for the U.S. (which is a substantially different culture from Europe or Australia or Japan, etc) would be to not interfere with the majority who can provide for themselves and limit government involvement to those who cannot or will not make those provisions. In addition government should continue to act as a facilitator of the market to be sure there is no fraudulent activity or inappropriate hindrance of competition.

I understand the argument that some make about the fairness and the undesirability of a two tiered medical system. It is my personal opinion and those of many others that the major adverse tradeoffs inherent in a full centrally controlled system are simply too severe to warrant this purported benefit. I will leave aside any discussion of the fact that no system, especially a government controlled one, exists which does not favor the wealthy and politically connected. More importantly many argue that the efficiencies and substantially lower cost inherent in a market based system would significantly reduce the number of those who would require assistance. Nevertheless I strongly believe that government care limited to those who cannot or will not provide for themselves could easily match the care presently being provided by the advanced countries with centrally controlled systems, especially absent the government's involvement with other segments of our population.

Much of what is wrong in our present  system is due to undue government intervention. Time would be needed to reverse the effects of the unfair government subsidies dispensed to those working for large employers or who have high cost cadillac medical insurance. Other problems to address over time would be the large government benefits to the non-needy elderly, costly restrictions on the availability and type of coverage of medical insurance, restrictions on type of practitioners, extensive price controls, hyperregulation and many other similar problems which add high cost or inefficiency.

In this regard if one wishes to propose medical care as a right, we should address those economic rights which government is presently restricting. Should we not have to right to decide in what manner to purchase medical goods and services, what price to pay, what records are to be kept of interactions, what type of practitioner I can contract with, whether or not to purchase medical insurance and what type it should be. All of these regulations and restrictions have been judged to be legal but many citizens consider them to be abhorrent and oppressive.

I lay all this out not to convince you to my opinion but simply to convince you that there are reasoned alternative arguments. You speak of the right to medical care as if it were a geometric axiom, not to be denied by any rational being, so obviously true as to incite frustration at the obtuseness of your adversary.

The Economic Problems of Medical Care in the U.S.

What should be done to resolve the economic woes of medical care in our country. Unfortunately just repealing Obamacare will not do it. This misguided experiment added insult to injury but the problem is far more fundamental.

Obamacare sought to provide universal medical insurance coverage which completely misses the point of our problem. The development of the concept of insurance as a way of controlling potential risk of economic catastrophe was a great invention (of Genoese merchants in the 14th century) but it is a terrible way of paying for everyday expenses or even untoward events of manageable cost. What sense does it possibly make to purchase an item or service by giving your money to an intermediary who then deducts an administrative cost and profit and then pays your bill at the same time restricting your choice. 

But that's not the worst of it. When you're looking to purchase something you look at the price and if it's more than you can afford you let it go or look for some cheaper acceptable substitute. If you think it's something you need or really want you at least shop around. Sellers on the other hand want the best price they can get, but so do their competitors. So the best way for them to prosper is to figure out a way to offer you what you want at a price you want to pay at least as well as does their competition. . 

Paying by insurance messes that whole system up. Since the insurance company is paying the bill the sky is the limit. Maybe you're not trying to game the system but if something is sitting there on the shelf and you think you might be able to use it, what the heck, it's not costing you anything. If you think about it that deal also works pretty well for the sellers. So in that arrangement the insurance company has to be the bad guy and do the restricting. Of course the company can always raise its premiums but that can get ridiculous and of course they have competitors too. 

But, you tell me, you're not seeing the full picture. You point out that what I haven't considered is that it's your boss's problem since he's paying for the insurance. No,no,no. When you climb the ladder and look at things from his point of view you'll see that you're slaving away every day just as much for your benefits as for your salary. You're the one who's really paying for your medical insurance!

There's way more to this story but let's stop here for now. The bottom line is that we've developed a system of third party payment for medical goods and services that's tremendously inefficient and producing prices that are way too high. It's my educated guess that, depending on the item or service, medical prices are probably anywhere from 50% to 10 times what they would be in a market system in which people pay for things directly. And the high prices make things very difficult for anyone who really does have to pay out of pocket. Our problem is not too little insurance but too much. 

So yes Obamacare has made things worse by insurance coverage mandates but it's not the fundamental problem. Future installments will cover how we got into this insurance mess and the sad ongoing destruction of our country's medical care by the biggest and baddest insurance company of all, Medicare. Here's what I think is the fundamental problem. Progressive efforts to correct the bad results have made it worse.

Trump's Speech in Cincinnati

Trump's speech the other night in Cincinnati was remarkable. Anyone who didn't see it should bring it up on YouTube and give it a look.

He was preceded by Mike Pence who is an appealing guy with normal political oratorical ability and who gave Trump a rousing introduction to a packed very enthusiastic crowd. The contrast when Trump appeared was immediate. His relaxed style of direct communication with his audience is remarkable to watch.  Instead of the expected ceremonial pomp he started right off with joking comments about the problems the attendees had to go through with the security and he maintained that personal tone throughout.

The speech was about 70% teleprompted and the rest extemporaneous and he has an amazing ability to move seamlessly between the two modes. One can really only tell the difference from the content. This is a communicator to the ordinary man and woman who we haven't seen since Reagan. Obama is admittedly a master of prompted delivery but he's not nearly this good all around.

Alec Baldwin had great fun with his Trump imitation on SNL but Trump outdid him by a mile in his long takeoff of the news media predicting his loss and their pained astonishment when he pulled off the win. The speech is worth watching for that part alone. But the real treat was his message of unity and optimism about overcoming the decline which our country has been experiencing for the past few decades in almost any area you can name. It was a spirit that people felt somewhat with Obama's initial oratory, based on which he was given a Nobel prize, but which he totally failed to deliver.

Diehard liberals will of course be repulsed by Trump's display. But those of us, even those on the political fence, who are disappointed by the steadily ongoing American deterioration toward a dim future take some hope from this remarkable guy. He didn't have to take on this task. In fact it's hard to imagine a motivation for a 70 year old, who I can assure you is starting to see his life as a very finite quantity, other than a sincere vision that this country needs to be turned around and the self confidence that he can do it.

Strict conservatives have opposed the Trump phenomenon as well. They want a minimalist constitutional government with a President who understands his limited role and not a larger than life personality. We will have our checks and balances but especially in bad times our country has always prospered best when great leaders have emerged, starting right from George Washington. Trump may prove to be such a person. He's been a big winner so far.

Things May Be Looking Up for Healthcare

I like to distinguish between "health care" and "medical care". Health care is often a personal behavior matter and from that standpoint much of it is free. Following a sensible diet, staying physically active, getting adequate rest, good hygiene, avoiding tobacco, excessive alcohol and other intoxicants cost nothing and these practices go a long way toward maintaining health and extending life. Medical care, on the other hand, is not free. Doctors, nurses, hospitals, drugs and medical tests and devices must be paid for. How is it that we've been led to buy into the concept that when it comes to getting medical care we needn't bother our heads about the cost. Someone else will pay the bill.

It isn't true! It's us who pay the bill. Who else is there really? And the system we use for payment makes the costs go way up so we pay way more than we should and besides that it restricts our choices, reduces the quality of services and stifles innovation.

Here are some interesting facts. A study done in 2013 revealed that in that year government (that is, U.S. taxpayers) funded 64.3% of medical care expenses and rising. In Canada by comparison the figure was 71%. In 2015 medical expenses took up 17.5% of GDP and this is forecasted to rise to 20% by 2025. That's a fifth of what we earn going just to medical payments. Medical costs continue to rise faster than the GDP. Medicare is 20% of the overall costs and is rising the fastest, even though Medicare controls the prices of every medical service and product that it funds.

Obamacare tried to address the disparities in our system by mandating that everyone have medical insurance and mandating what it must cover. This approach did not lower prices, it increased them. Prices for medical goods and services in our third party payment system are way higher than they would be in a market based system. Moreover usually neither patients nor providers know the prices. This situation is threatening to everybody's financial welfare but is especially problematical for those who are out of the system and must pay the grossly inflated prices out of pocket.

All of these data and economic concepts are well known to medical economic experts but have been discounted by healthcare planners in the Obama administration who have favored increasing government control for solutions.

In my 50 years in medicine I had never seen the morale among my colleagues lower nor the future for medical care looking bleaker. The changes since the recent election have brought me a sense of cautious optimism. Trump has appointed Dr. Tom Price, physician and U.S. Representative from Georgia, as head of HHS (Department of Health and Human Services) and Seema Verma, a medical economic expert formerly serving under Indiana Governor Pence, who will run CMS (Center for Medicare and Medicaid Services). Both of these individuals fully understand the principles described above and are determined to carry out changes accordingly. This will be no easy task and must be done carefully so as not to cause disruption to those who have been accommodated to our present system despite its serious flaws.

The problems of medical care in the United States

As the question of what to do about Obamacare heats up we're going to hear a lot about medical care in our country. I'm going to do a few posts on the subject. As usual I have some controversial opinions but I can't be accused of being uninformed since I know the system well from the inside and from many aspects. Early in my career I spent almost 10 years working in a county clinic in California, seeing indigent patients. Then there were 36 years in solo private practice. Along the way there were stints as a doctor in the army and in the VA system. I even was Scranton's city doctor for a year or two. At present I'm spending some time in the free clinic at the U of S seeing "undocumented" patients. 

I received my training in the pre-Medicare days and observed the transition to the program between my internship and first year of residency. So I've witnessed the full extent of the slow and steady impact of government invasion of our medical care.

The critics of our system say that we're spending twice as much on medical care as the other advanced countries but not getting as much in return. I disagree with the assessment of what we're getting but you'll get no argument from me about the present state of medical care in our country. Medical prices are way too high generally and the way they impact different segments of the population is totally irrational. Medical care delivery has become ridiculously complex and is restrained by our system from serving the public efficiently. 

Some say that the solution is to let the government take over. That is a bizarre idea. To paraphrase the sainted Ronald Reagan, the government is not the solution to the problem, it is the problem. Most people don't realize that government at one level or another already pays for 65% of medical care in our country as opposed to 75% in Canada. Government control is not a way to save money or improve efficiency. 

In the last few years we have been watching the dismantling of small independent medical practice at an accelerating rate. It is now down in the 35% range. Solo medical practitioners are almost a thing of the past. One recent commentary by a health care planner points to the natural trend toward consolidation in other areas of our economy. But what's going on in medicine is not a natural phenomenon. It is rather the result of a grand experiment by the federal agency that controls medical care in our country, the CMS. And it is a tragedy, not so much for doctors, who will get along, but for patient care. I read an article recently encouraging doctors to face their computer screen toward the patient and glance over the top occasionally to maintain eye contact. How pathetic!

Public/private partnership. How the government works.

By almost any measure our economy continues to stagnate, eight years after the bursting of the housing bubble. GDP is 1-2%, labor participation rate is at an all time low, average income is declining and the Federal Reserve has been laboring mightily to keep things afloat by zero interest rates and flooding the money supply.

The keystone of Mrs Clinton's plan to address our troubled economy is to build a "public/private partnership which will make the biggest investment in good-paying jobs since World War II". Public/private partnership -  fine sounding words but what exactly do they mean? I think the idea here is that the really smart people in government know what the public needs and the big business guys know how to make and do things so getting the two together would make everything hunky-dory. However, it sounds to me like something we already have a lot of, what many critics are calling crony capitalism.

What exactly is this government thing that we speak of in the abstract. Leaving aside the judiciary, it's pretty much just a collection of politicians and bureaucrats, and just like you and I each of them are trying to make out as best they can and live as pleasantly as possible. And if you follow the money they're doing pretty well considering that 5 of the 10 richest counties in the U.S. are collected in the Washington, DC area.

These government people refer to themselves as public servants, but just what do these servants of ours do for us and how have they gotten so much wealthier than their masters. Well they do have meetings, give speeches and run agencies so they must have salaries and benefits for that like everybody else but that would hardly make you so much richer than the rest of us. Of course their company is pretty generous seeing that it prints and borrows money without a lot of fuss and has a very efficient collection agency. But the real key to their success is the other thing they do, passing a lot of laws and regulations, most of them having to do with collecting money and doling it out again. And that's where the "public/private partnership" comes in. Controlling tax laws, mandatory regulations and handing out government contracts makes you really popular with the big boys and is the key to figuring out why it costs a hundred million dollars to run for a job that pays a couple of hundred thousand.

Perhaps my cynical view of the federal government comes from watching its steady destruction through the years, now accelerating, of medical practice.  On the other hand what with the pervasive video cameras and hackers it's getting to be difficult to keep secrets in this modern era so that my attitude seems more justified every day.  Perhaps I shouldn't just accuse Mrs. Clinton since both parties are up to their necks in this muck. But she and Mr. Clinton seem to be world class experts at this game and will do everything they can to keep it going. Mr. Trump is a bit of an unknown quantity but he's got some good friends advising him, doesn't have a lot of political obligations and seems like the best chance we've had for a shakeup in a long time.