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.

The Lack of Market Forces in U.S. Healthcare. MRI Cost and Utilization as an Example.

The fundamental problem with the economics of medical care in our country is that, in accordance with government policies over many decades, we've relegated payment to third parties. The result has been high prices, reduced quality of services and stifling of service innovation. I'd like to provide some concrete examples in the next few posts. I'll start by inserting a section from an essay I wrote 3 years ago:

In Japan medical services are completely private but prices and fees are strictly controlled by the government and are set very low. The average price for an MRI of the head in 2009 was set by the Japanese government at $105 as opposed to over $1000 in the U.S. At such prices one might have expected producers to have limited interest in these tests but in fact Japanese manufacturers responded to the market by producing compact machines at a much lower price[1] and are producing these machines for export.  As a result consumer demand increased markedly and Japan now has far more MRI machines and does far more MRI tests per capita than any other advanced country[2] resulting in both decreased cost and increased diagnostic capacity. Contrast this situation with that of Canada where funds for medical services are centrally controlled and availability of MRI machines is limited by budgetary constraints. One finds there long waiting periods for all but the most urgent MRI tests[3] and therefore marked decrease in diagnostic capacity.

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[1] Reid, T. R. (2010-08-31). The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care (pp. 92-93). Penguin Group. Kindle Edition.

[2] MRI scanners per capita http://www.oecd-ilibrary.org/sites/health_glance-2011-en/04/02/g4-02-01.html?contentType=/ns/StatisticalPublication,/ns/Chapter&containerItemId=/content/serial/19991312&itemId=/content/chapter/health_glance-2011-30-en&mimeType=text/html

[3] Waiting list for MRI in Canada http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2653696/#__sec7title

I quote this section not to endorse the Japanese system or to suggest the correct utilization of MRI scans but simply to show the large elasticity that exists in the use of medical  technology and how such technology is dependent on economic stimuli.

Many people have the idea that medical practice is cut and dried, that there is only one right way to treat each case, and that therefore the market forces of substitution or alternative choices cannot operate such as for example when buying a refrigerator or a television. This is far from true. If a patient comes with shoulder pain there are multiple diagnostic and treatment options. MRI gives the most definitive anatomical diagnosis but is not needed. After all there was a time when there was no MRI. A cost of $100 vs $1000 makes a great deal of difference as to whether it is selected.

In Japan almost all have insurance. There is a fee for service system and the patient pays a portion of the cost, usually 30%. All medical facilities must be operated by doctors. The government carries on negotiations with doctor representatives to set prices. I believe that it would be better to have a market based system in which the patient makes cost decisions which would result in lower prices and more innovation. However the point is that the price was forced down. Hitachi and Toshiba innovated by producing a new line of compact, inexpensive MRI machines costing around $150,000 - a fraction of the price of the bigger machines then used in the United States resulting in a much larger MRI market.

In our system the orthopedist demands an MRI which leaves no diagnostic ambivalence. The cost to the patient is either zero or some small co-pay. The third party payer has little justification to refuse. All it can do is put up roadblocks, demanding a lengthy frustrating procedure to obtain permission. Canada with it's government run system faced the high cost MRI problem by limiting the availability of MRI machines. MRI facilities in Canada have a substantial wait list problem, with some centers reporting wait times of up to one month for urgent scans and up to several years for non-urgent scans.

The U.S. has 4 times as many MRI scanners as Canada and Japan has many more than both countries. Japanese patients have many more MRI scans than in the U.S. and far more than in Canada. In the U.S. because of third party payment there is little market pressure on cost and technical innovation tends toward higher cost refinements rather than lower cost advances. Technology is the lifeblood of medical advances. However, for third party payers technology that increases cost is a liability and is resisted. The Canadian government payment system follows suit and therefore a system intended to assure medical care for all by putting the government in charge ends up by restricting its availability.

MRI is an essentially harmless way to investigate the body's anatomy. Originally it was developed with brain and spinal cord diagnosis in mind. However it has now revolutionized orthopedic diagnosis. I read recently that prostate MRI is equal to needle biopsy in localizing cancer. Who knows what other uses might be found  in a mass market, but it's use is restricted by payers. MRI price is obviously far higher than it needs to be, even for insurers. The real price would be discoverable only in the free market in which consumers rather than third parties paid. Direct payment would put market pressure on price, would not restrict the market but would expand it and would lead to innovation based on cost and efficiency just as it did in the computer market.

Policy differences in the Trump cabinet. How to speak about Muslim terrorists.

http://www.foxnews.com/politics/2017/02/25/trumps-national-security-adviser-reportedly-says-label-radical-islamic-terrorism-not-helpful.html

Multiple members of Trump's cabinet have expressed opinions which differ substantially from Trump's. For example Mattis on enhanced interrogation, and Tillerson (and others) on climate change. I could site many other examples. The news media generally has been reporting these conflicts as evidence of disarray bordering on incompetence. Most of us who support Trump see this tolerance of differing points of view as a highly positive quality. It indicates that Trump is choosing advisers based on what he feels are their capabilities and not based on their slavish alignment with his thinking.  (Of course no one thinks alike on all issues so that someone who appears to be doing so would be hiding his true opinions). I suspect that this has been his management style in his business as well, presumably a key to his success. It is also a good thing that differing points of view are allowed to be expressed openly, and not just in private. This stimulates open public discussion which is one of the strong keys to success in a democracy.

It seems to me that this was not a strong suit of the Obama administration, that is that one rarely heard any reports of internal disagreement. This was not to their advantage. For example there were these quiet reports that Hillary (and others) disagreed with the total Iraq pullout, which turned out to be disastrous. Her inability to stray from the party line and make this point during the campaign I think was to her great disadvantage.

My second comment is on the Islamist issue. I can see McMaster's point but I disagree with it. Of course the great majority of American Muslims who accept American values are fine people who are just interested in a good life for themselves and their families. On the other hand, although I have never read the Koran (English spelling) there is this thing they call Sharia law which seems to be fundamentally opposed to western ideas of individual freedom and equality. That these concepts are not just antique symbolism not to be taken literally, as in the Hebrew bible, is indicated by the strict adherence in some Muslim countries such as Saudi Arabia where women are subservient, there is no religious toleration and social deviancy is subject to severe punishment. Apparently this extreme interpretation of the Koran includes capital punishment for those who express derision for Mohammed or for apostates from their religion. There are a great many Muslims in the world and it is my understanding that there is a sizable portion, perhaps even the majority who favor these ideas, even if they do not themselves carry out radical behavior. So with these people there is a clash of civilizations. If they were to simply stay in their own territory and run their civilization as they wish that would be one thing, but some very small, but lethal, proportion are not content with that.

President Obama (and President Bush as well) adopted the policy of minimizing this conflict so as not to offend those Muslims who are content to accept western values and hopefully to recruit them to help in the battle. As it turns out I don't think this has been an effective strategy. In fact the reluctance to forthrightly name our enemy seems to many to have inhibited our response and led to more calamity. Trump's idea, and I and many others agree with it, is to point out that there are 2 kinds of Islam, the modern kind that adheres to the good aspects of Islamic teachings, that correspond to the principles of peace and toleration advocated by other religions, and the abhorrent, fundamentalist kind that teaches a violent intolerance of those who do not accept Mohammed's word as expressed in at least some parts of the Koran.

I think this debate, stimulated by the differing opinions in Trump's cabinet, might hopefully lead to something of a compromise in Trump's polemics. He should state loudly and clearly that our country is freely open to the adherents of all religions as long as they accept western values of freedom, tolerance and equality. (We went through this same debate on a smaller scale 55 years ago with Catholicism when Kennedy was elected.) But at the same time we will adamantly reject those who wish to come here who do not accept our values and wish to change us to their system, sometimes by violence. And he should call on the "good" Muslims to help us in this fight, more openly than they have up to this point, by strongly condemning the radicals and by helping us to identify and remove from our midst, or possibly even to reform, those who do not accept our values.

Where am I going wrong??

The Russians, our election and federal control of health care

The Democrats, and some Republicans who favor the status quo, have been in shock since the election. As a manifestation of this the amount of vitriol directed toward the new President and his many supporters is unprecedented. Also the losers have been intensively pushing the narrative that Russian interference with the election, in collusion with the new administration, is responsible. Of course the Russian government, as well as many others, have been spying and playing dirty tricks on us for years as we have in exchange. This is all public knowledge. Nevertheless until the election the Obama administration for the most part was accommodating to Russia and Putin. They tried the Russian reset. Early on they aborted the planned missile defenses in eastern Europe. Very little was done to prevent the takeover of the Crimea or the overture in the Ukraine. And famously President Obama assured Vladimir that he would be more flexible after the election. But it was the 2016 election result that irked President Obama into expelling Russian diplomats and imposing economic sanctions on some of its citizens.

But if the Russians truly favored Donald Trump and exposed the emails of John Podesta and the DNC to help him, it did not turn the election. The emails verified things that were already assumed to be true, namely that political parties and politicians tell their constituents what they want to hear but say and do the opposite in private. They confirmed the obvious fact that the major news media heavily favor the Democrats and do what they can to help their cause. But it was not the emails of John Podesta or the knowledge that their newspapers favored Mrs. Clinton that induced the good people of northeast Pennsylvania, who have a 3:1 Democrat registration preponderance, to vote to elect Mr. Trump. The election surprise was the culmination of the growing dissatisfaction in much of the citizenry with the direction in which our country has been heading and the blame was placed squarely on the progressively intrusive dysfunctional activities of the federal government.

The federal interference has been involving many areas of our lives, and about these I have my opinions as much as anyone else, but no real expertise. In the medical area I can speak with some authority since I have done a number of types of medical practice in my career and have watched the federal involvement almost since its beginning. Our government has for decades been collecting tax money to finance the medical care of a large mass of citizens who are well able to manage their own affairs and would be much better off doing so. At the same time it has often ignored or given short shrift to many needy persons who have suffered medical misfortune. The limited access, very high deductible solution of Obamacare has proved to be unworkable.

The Medicare program, the ultimate free lunch, incentivizes waste and abuse, spends far more per beneficiary than it takes in, and so despite steadily increasing tax levies over the years has been progressively adding to our national debt. In its desperate attempt to control this situation without major rationing of care, the government has imposed burdensome regulations. The federal government is at this point mandating for private medical practitioners what electronic equipment and software they must buy, what types of personnel they must hire, what specifically they must note in their records, what way they must prescribe their medications, and increasingly what types of tests they must perform and what medical guidelines they must follow in their treatments. Incident to this regulatory activity they are taking from patients what they value most, the time and undivided attention of their doctors.

Other federal programs are equally troublesome. Reimbursements for Medicaid patients are often only a fraction of the cost of their care, but at the same time the program is plagued by even more waste and abuse than Medicare. Recipients are routinely provided with excessively expensive treatments that cannot be afforded by those who are footing the tax bill to pay for them. Also the Veterans Administration program is a well-known bureaucratic nightmare and I have personally experienced it when I practiced for a while as a full time VA doctor.

Those who call for a federal government takeover to correct these problems are seriously misguided. Some quote the experience with such plans in other countries. I have studied these things but have no personal experience to report. However I can say with confidence from my experience that there could not be a worse solution for the political entity that is the United States of America.

Those responsible for federal policy on medical care in the Trump administration understand these problems and have good ideas on what to do about them. Nevertheless we have all gradually adjusted our lives to what we have and therefore it is going to be a very, very touchy task to move things to something more rational without causing at least temporary harm. I'll be watching closely and will continue to comment as things unfold.