This piece was written at the request of Bill Katz for his blog Urgent Agenda
I write in response to your request for my observations with respect to the healthcare issue. This is something I have thought about in depth and have written about previously. My response will be thorough and I think rather long.
The issue of health care in the United States does not stand on its own. A real discussion of the situation and the means by which positive change can occur impacts virtually every aspect of our economy, culture and politics. It is because of the complexity that no meaningful change has ever occurred and no politicians have had the fortitude to discuss or address these matters. Various "special interests," many quite powerful, have to be confronted. But rather than do this politicians, the liberal mainstream media and the special interest groups attack physicians and organized medicine as some sort of evil cabal milking the system.
In actuality physicians are the smallest part of the problem. Physicians are dedicated hard-working people. In any other profession, industry or job in this country they would have gone on a permanent strike a long time ago and completely shut down the system. They haven't. They have taken abuse and harassment for decades. They are underpaid. They are under constant assault from the press, the politicians, and the trial lawyers. They get out of bed every night in the middle of the night to go to the emergency room to help someone with no assurance of compensation and with the ever present risk of a malpractice suit. And they do this for fee schedules that are less on an hourly basis than many plumbers, hairdressers, and automobile mechanics are paid.
Former Surgeon General C. Everett Koop made a very important statement several years ago that has been avoided assiduously in all discussions of our health care situation. To paraphrase him he said that the American people want three things from their health care system: immediate access, the highest quality and latest technology, and low-cost. Quite sagely he observed that society can only have two of the three. Let's move on to the various aspects of the morass.
The insurance industry: there are two industries in America that retain antitrust exemptions. Major league baseball and insurance. Insurance companies have owned Congress virtually forever. When President Theodore Roosevelt busted the trusts around the turn of the 20th century the government went after the new money. Oil, railroads, steel, shipping and the like. Banking and insurance were not touched. Banking was regulated after the crash of 1929 and many bank failures but was subsequently deregulated. Insurance has never been touched. As a result the companies never really have to show their books to anybody. The big money is in reinsurance, not the policies you buy, and this money disappears offshore faster than drug money. Insurance companies are able to cherry pick and use artificial risk pools. Employer-sponsored insurance is a deadly farce. This is compounded by the absurdity and travesty of union trust funds which are exempt from ERISA and other federal regulations and are for the most part slush funds for corrupt union officials and the politicians they own.
What must be done? The insurance industry's antitrust exemption must be abolished. The artificial barriers of limiting insurance by state lines must be abolished. Employer sponsored insurance must be abolished. Artificial risk pools must be abolished (For example, this is why, when you seek an individual policy, it is so expensive - because you are considered a potential high risk if you are older or have been ill.)
Every family or individual needs to purchase their own insurance, possibly with an offset from their salary or a tax credit, but they must purchase it individually. it would be rather simple to identify risk pools of a minimum of 100,000 people or 250,000 people based upon date of birth, Social Security number or other random assortment but not by zip code or income or other selective variables that would facilitate special selection and treatment for some.
Every insurance company that sells any kind of insurance in the United States would have to be required to sell competitive health insurance or be prohibited from selling any insurance. Keep in mind, insurance companies don't take losses well. If there wasn't a profit in health insurance they would have left that market a long time ago. Union trusts funds, minimally with respect to health, disability and life insurance must be turned back to private industry. The union leadership would scream bloody murder because this would put most of them out of extremely lucrative jobs above the table plus the fortunes in illicit income they make annually. It would also cost politicians one heckuva lot in terms of contributions and other gratuities.
Insurance companies must be held to rigid enforced guidelines with respect to their behavior. No more than 8% for administrative costs. Get rid of all of the managers and intermediaries. Prompt payment. Most of the insurance commissions in the 50 states are supported by the fines they levy against insurance companies for violation of prompt payment laws and other things. It is far cheaper for the insurance company to pay these monthly fines than to pay their bills on time. It allows them to keep their float longer. If reality set in and the fines were truly meaningful, i.e. painful and punitive, it would be cheaper for them to pay their bills. It would also mean that the insurance commissions in each state would cease to be profit centers for the governments. I could go on much longer but I will move to the next topic now. But before I do ask yourself if you have ever heard much of the above from the mainstream media, your politicians, or the left wing activists who want socialized medicine.
The pharmaceutical industry: I have no sympathy for them but they are in some ways victims of this systemic problem. Regardless of final ownership or location of patents most of the meaningful drug research and development is done in the United States. It costs a fortune to get drugs to market. Is that why it costs us so much? No. It's because the rest of the world does not pay or play fair. Canada, France, Italy, the UK, you name it, any place where there is a national health system, government run, tells the pharmaceutical companies how much they will pay for which medications (and keep in mind that in many places the latest and best treatments are simply not available unless you have private insurance or a great deal of money).
So, for example, Canada buys so many doses of an antidepressant or an anticancer drug way below market value. If they run out after eight months it's tough luck for the patients there. But the cost burden is shifted to us. We make up the difference out of our pockets in the same way we do the cost shifting of uninsured and underinsured patients, which includes Medicaid and managed care. How do they get away with this? They say that if they don't get the product at the price they want to pay they will violate our patents and make it themselves. Of course you have never heard of this from the mainstream media, the politicians or the left-wing activists who want socialized medicine.
Solutions? Pretty simple really. Our government needs to say play fair or don't play. We are supposed to have free trade agreements with most of Europe and Canada, etc. Our government has to have the wherewithal to say to the rest of the world that they will pay a fair market rate for our pharmaceutical products or we will violate their patents (I'm not sure this is terribly meaningful with respect to Canada and much of the world) or we will block imports from their countries or impose huge tariffs. You know, that nine- dollar bottle of Chianti in the cute basket now costs $99; the $99 hockey skates now costs $900; the $300 bottle of French wine now costs $3000 and the $90,000 Mercedes-Benz now costs $900,000. Gosh, this would be a trade war. Sure would. We would win. We might have to go without Brie, flat-screen TVs and spare parts for some cars for about three months before they caved in. have you heard of any of this from the mainstream media, your politicians or the left-wing activists who want socialized medicine?
Illegal aliens: Boy oh boy we got a hot one here. We, all of us, pay in the high billions of dollars per year, probably over $1 trillion a year to provide free care to illegal aliens. Not the putative uninsured American citizens but illegal aliens. Let me state up front that I have a great deal of respect and admiration for any human being who wants to better their lives and the future of their families. And I am amazed at how hard-working, diligent and tireless are the Mexican men and women I see working here in Southern California. Most of them are illegals. They are doing the jobs that "Americans don't want to do!" You know, the ones who get welfare checks every week or two.
Let me say also that most of my family was exterminated during the Holocaust. Many were denied immigration visas to the United States. No, it's not a matter of jealousy but a matter of fairness and reality. La Raza and Justice Sotomayor notwithstanding, we'll never get the health care system under control unless and until we cease to provide free care for these people. Sure it's difficult. What do we do? Provide emergency care and deport them immediately. Okay. Do they not go for care until they are seriously ill? That's a matter of personal choice. But you see this is another one of the big-ticket items that the politicians do not want to address when they talk about reforming health care.
The government has no money. The government has our money. And they use it carelessly. But God forbid they actually were serious about closing the borders, sending illegals back home and requiring them to make proper application for immigration and residence. It might not be pleasant but it would be legal and moral and totally consistent with our history and tradition. And by the by, Mexico is a large country with vast natural resources and great wealth. But it has been ruled by a small rapacious oligarchy for more than a century. We have never put meaningful pressure on them to reform their systems and their government and to provide services and education and health care to their own people and to deal in a truly meaningful if necessarily violent and vicious manner with the drug cartels. But you see all of the above is tough stuff. It's easier to say that doctors make too much money and we need to socialize medicine. Balderdash.
The trial lawyers: this is the most perverse part of the problem. The trial lawyers seem to run major elements of the Democratic Party as well as to influence too much of the Republican Party. They make an awful lot of money because they sue people. They make a fortune in Worker's Compensation and personal injury and class-action products liability, but I think they make the most money in malpractice. Most of it frankly comes from shakedowns, the nuisance suits that cost more to defend than to settle for $30,000-$50,000. Multiply that by hundreds of thousands of shakedowns per year. Then mix in the truly ludicrous multi-million-dollar settlements that made slimy creatures like John Edwards rich by "channeling" the thoughts and feelings of babies with cerebral palsy, an unfortunate condition that occurs in utero, not as a result of birth trauma.
Let me be very clear. Good doctors don't want bad doctors practicing and they don't tend to cover for them very much anymore. There is way too much at stake. But even good doctors do make a mistake once in a while. But more often than that reality occurs. There are bad outcomes that are no one's fault-- unless you believe in God and want to blame him. There are complications and unanticipated things found that couldn't be seen even on the MRI. There is human frailty and the fact that we are mortal and ultimately all will die. It would not be very difficult to mandate a system of review boards. Review boards not run by politicians or special interests but very rigidly structured to have reputable practicing physicians, judges, lawyers, and citizens serve for one to two weeks per year, with proper reimbursement provided by the insurance industry and the AMA and the government, to weed out the vast majority of the claims. Viable claims could go forward but only in the face of capped punitive damages, structured settlements, and very stringent and niggardly fees for the lawyers. No, this would not deny legal recourse to the poor. You see, only the viable cases would get through and would yield reasonable rewards so good lawyers -- not the bottom feeding case flipping shakedown artists -- would have little to worry about. Keep in mind as well that this involves the insurance industry, too. Remember they're the ones who sell malpractice insurance. They don't sell if they don't make a profit and they make one enormous profit on the huge premiums doctors and hospitals must pay.
Hospitals: for all their caterwauling most hospitals do very well. They made a deal with the devil a long time ago and generally are quite well reimbursed by insurance companies. They do less well with Medicare and Medicaid but in the private sector where an insurance company may pay a doctor $.10 on the dollar they tend to pay hospitals $.93 on the dollar and the hospitals do famously.
Changes are in order. For-profit hospitals aren't a bad idea with proper oversight. Nonprofit hospitals with need more scrutiny. Hospitals must be barred from owning practices or employing physicians. There is an inherent conflict of interest and doctors need to be on their own or in groups. Otherwise the doctor cannot place the best interests of the patient first. Regulations must be dramatically diminished. The various supposed regulatory agencies and supervisory boards and quality assurance reviews and such are self propelled self-justifying entities.
In the same way that at least 25% of health-care dollars on the insurance side can be saved by decreased administrative costs the same thing applies in the hospitals. These agencies are a pox on the health care system. Over the past two decades I have observed hospitals cutting back on staff, understaffing wards and floors, closing satellite pharmacies and blood gas labs as administrative staff and executives increase exponentially. Remember, doctors and nurses and ancillary staff provide healthcare and generate revenue. 40 hour per week salaried and benefited administrators do exactly the opposite. It is unacceptable for a 150-bed hospital to have a CEO who pays himself a half a million a year and has a senior executive staff of over 20. There are an enormous number of such places.
There still remain some very good for-profit privately held hospitals that do a very good job quite efficiently with an administrator, three assistant administrators, the director of nurses and appropriate support staff but this is no longer the rule but the exception. Oh, by the way, there has to be uniformity of care, liability and regulation. This means that community hospitals, teaching institutions, state facilities, County hospitals, the Veterans Administration, HMOs (which need to be phased out of service as soon as possible) need to have the same standards, regulations and guidelines. They need to have the same liability exposure, contribute to the same malpractice insurance pools, the physicians and staff as well as the executives and administrators must be held to the same standards or the system will remain out of balance. It is not acceptable for physicians or nurses or administrators to hide in county hospitals or state hospitals or the VA because they couldn't make it or don't want to try to make it in the private sector...and they can't be fired because they're a member of a union.
Physicians: before I proceed did you know that physicians are prohibited from organizing, talking to one another about their fees or many other things because any such communication is considered a violation of the RICO statutes? The government has used this threat and action against doctors who have tried to get together to foster meaningful reforms. Keep that in mind as the discussions ensue. Physicians do need to get together. They need to tell administrators to take a hike. They need to spend the necessary amount of time with their patients and they need to insist that they get reimbursed properly. They need to engage their patients and the patient's family's as their partners in this endeavor. Patients need education not just about the disease and treatment and prognosis but they need education about that which I write today.
If the doctors and patients got together it would be hard for the government to accuse the doctors and patients of racketeering. Given that most of the population are patients of doctors it's one massive special interest group that puts AARP, the NRA, the NEA and NASCAR to shame. Obviously doctors need to police themselves, and they are doing a pretty good job of it, but you don't hear about it very often. Medical boards really only get the truly bad actors. Most interventions are done at the community level with great efficiency by other doctors. Again, the medical boards get a lot of angry nonsense complaints that take up a lot of time and money. Most come to naught. People have a right to complain and to recourse but doctors need to be less intimidated by manipulative and threatening patients. Yes, I'm a doctor. I'm biased. I have written-off more money than most people earn in a lifetime. I have provided free care that equals more than more people earn in a lifetime. Funny thing. Last month my wife went to the market to shop for a family party. She forgot her wallet--no cash, check or credit cards. Funny thing. They didn't let her leave with the food. I had to run over and pay. Funny thing. I'm in the only business where people get served, often have their life saved, and I have to wait 3-4 months to see if I'll get paid anything. I'm withdrawing from all insurance plans. Patients are shocked: "You mean you expect me to pay you when I come in?" Uhm, yes, in fact I do.
Patients: Patients need to be reeducated about some fundamental facts pertinent to healthcare. First of all they are responsible for themselves. They are responsible for how they take care of themselves, whether they drink, smoke, overeat, exercise, engage in dangerous and stupid behaviors and so forth. They also need to be held responsible for obtaining their own insurance. When the individual has to apply for insurance -- as part of a reasonably assembled risk pool -- rather than simply having it handed to them by an employer or the state, they have to look at the numbers and see how much things cost. In the same way that they have to look at their automobile insurance and see that it goes up when they get tickets and have accidents, and that expensive cars cost more than inexpensive cars, it has an impact on many people. Similarly if they saw that various risk factors raise their premiums, copayments, deductibles and so forth the impression made upon the pocketbook is always far more potent than public service announcements, healthcare conventions and everything else.
Furthermore the patient needs to deal directly with the doctor about treatment decisions and payment. The patient needs to pay the doctor. The patient needs to deal with the insurance company with respect to reimbursement issues. Ask any patient who has had to deal with trying to get reimbursement from their insurance company under the present system and magnify that by millions when you deal with doctors offices trying to deal with insurance company nonsense. The very force of the mass of individuals coming together would force major changes in the behavior of the insurance industry. Absent defensive medicine and avaricious venal attorneys all costs will drop dramatically. There is much more to say about this but I have to try to be a little bit brief.
Managed care: Managed care is a failure. It does not work. It does not work in the UK where they have an upside down pyramid with two administrators for each doctor and two more administrators for each administrator and so forth and so on. It does not work here. It may work in terms of keeping down costs but it does not improve health care, it worsens it. It makes for delays. It costs a fortune for doctors and hospitals to have full-time individuals and departments spending their days obtaining authorizations and doing reviews and appeals. The only managed approach that shows any utility is the concept of managed outcomes. This has been done on a small scale and is remarkably effective. Managed outcomes means that there is no management on the front end. Patients go to doctors. Doctors decide what tests they should do and what treatment to offer. Insurance companies or other monitors look at the outcome over a period of 12 to 24 months. A really good physician may spend a lot of money on the front-end in the evaluation of the patient; blood tests and scans and what have you. But that same physician may achieve a diagnosis rapidly rather than slowly and tediously over a period of many months with incremental evaluative procedures and tedious referral to specialist consultants. The results that are monitored are quality-of-life outcomes, recidivism, re-hospitalization, and patient satisfaction. And satisfaction is measured primarily in terms of the patients satisfaction with the efficacy of their treatment, the speed, and their quality of life, not whether the doctor wears a happy face button and acts like Mr. Roberts.
Managed outcomes always leads to the lowest overall cost. After the monitoring, doctors and hospitals and clinics are graded. What happens then is the best doctors and facilities are permitted to do whatever they choose with very little scrutiny and full reimbursement. Doctors and facilities at a second level, on a third level, on a fourth level have lower levels of reimbursement and higher levels of patient copayment and deductible. So patients are incentivized to seek care from the providers that give the best outcomes. Overall it costs the insurance company far less, the patient far less, and outcomes are much better. Of course this means that a lot of reviewers and benefit managers would have to look for work in another field.
The government: the government needs to facilitate the changes noted above with respect to insurance regulation and scrutiny, tort reform, managed outcome, the pharmaceutical abuse by the rest of the world. The government should get out of healthcare completely. Medicare and Medicaid should be privatized. If the elderly, disabled, poor and so forth become members of reasonably sized mixed risk pools then costs will be averaged out and contained. Certainly when you have a risk pool of elderly and disabled people you are guaranteed high costs. Medicare came about because elderly people could not obtain insurance. The insurance industry identified them as a risk pool of one and would not insure them or charged ridiculous premiums. If the scheme noted above is implemented there is no need for any government program whatsoever, just prudent honest government oversight.
Responsibility: every American must be required to have health insurance. It's not okay to opt out because you're young and healthy and want to spend your money on a Kawasaki ninja and drive without a helmet, intoxicated, have an accident, and end up brain-damaged paraplegic and with one arm and then expect the highest quality of medical care acutely, and for the rest of your life. It's also not okay for the jerk who bought the bike instead of the insurance to find a slimy lawyer to sue Kawasaki, the doctors who tried valiantly all night to save them and the unfortunate driver who "sideswiped" the motorcycle as the motorcycle zipped between lanes of traffic. The traffic was moving at 40 miles an hour and the motorcycle at 85.
Certainly it's impossible to get everyone covered. There need to be punitive measures, high-risk pools, and various other accommodations in the system. When our culture permits the chronically mentally ill to wander the streets and live in bushes until they are so sick that they are picked up near death by paramedics and brought to a fine medical Center what can you do? Society has to look at these issues, contemplate them and make some decisions.
Equality: the brilliant and important concept of all people having equal opportunity is a core of American life. But it's equal opportunity, not equal outcomes. If you work harder you get bigger rewards. If you buy insurance with a high premium and free choice of facilities and providers that's fine. If you choose to spend less money and have less access and more restrictions than that's the way it goes. Do you want a Chevrolet, a Cadillac or a Ferrari? The costs differ, the options differ. They all get you to your destination. Even patients with Medicare and Medicaid in a private system can choose to spend a little more and have a little less cash every month, or not. It isn't as difficult as the politicians want it to be.
Life and death: physicians have helped patients live and die for centuries. That's the way it should be with no government interference. However the public has to be brought to the table and begin to understand some fiscal realities as well as some human realities. It is true that approximately 70% to 80% of Medicare dollars are spent in the last six months of the patient's life. Most competent doctors have had end-of-life discussions with most of their patients at appropriate times. The two biggest problems that we face right now are selfishness and lawyers. When your 82-year-old grandmother has a massive heart attack, with resultant strokes, renal failure and multi-system disease, she should be afforded every measure of comfort. However it really isn't realistic to insist that her cataracts be fixed or her hip replaced or that she be considered a candidate for a heart transplant.
This might seem like a ridiculous example but it is one that we confront on a daily basis. And usually it is driven by a minority threat. What do I mean by a minority threat? I mean that 9 of 10 of grandma's children and grandchildren do not want any heroic measure, do not want her disturbed and cut up and in misery, and want her to have a comfortable and peaceful passing. But some lunatic daughter flies in from 2000 miles away yelling and screaming that you better do everything for my mama or I'm going to sue you for malpractice, report you to Medicare and get the attorney general of the city to prosecute you for manslaughter.
This all happens several times a day and hospitals and doctors override the majority vote and the durable power of attorney and the advanced directive and spend a veritable fortune keeping Granny alive and in increasing misery as Granny's lunatic daughter wails screams and shrieks and threatens nonstop. No, the government should have nothing to do with this. It should remain between doctors and patients. Dollars shouldn't be involved. Ethics committees and hospital chaplains should be involved but we can't be stuck with a system where one party wants nothing done so that they can get their hands on the estate as fast as possible and the other party wants everything done because they want their progenitor "to live" as long as possible regardless of their mental capacity, physical capacity, and suffering.
I know that this has been a long essay. I also did not pay a great deal of attention to paragraphs and stylistic issues. I just wanted to get it out. I also want to make a comparison. Obama put forth a healthcare reform bill of more than 1000 pages that neither he, his aides, or virtually anyone in Congress read. It included a vast and expensive government bureaucracy. It did not include tort reform, insurance industry reform, antitrust exemptions and the things alluded to above. It did not address the issue of pharmaceutical costs being covered by Americans. It intruded improperly in the doctor patient relationship. And so forth and so on. I expect that I may have offended some people. That's fine.
Again, I have practiced medicine for more than 30 years. I'm a third-generation physician and have grown up surrounded by medicine and have observed the changes in it since I was able to understand anything. My mentor, my late grandfather, practiced medicine for 60 years. During the Depression he made house calls in the middle of the night to people who could not pay him. Sometimes a cake or a kugel was brought to his office. Frequently he left money with the family to pay for the medicine they needed. He was never sued for malpractice. I'm definitely biased, but he was the best physician I ever met and that includes a bunch of egotistical honchos at Harvard, Cedars-Sinai, UCLA, USC and many other places. Very few physicians went to medical school to get rich. The ones who did often got very rich and frequently got in a lot of trouble. In terms of educational investment, sweat equity, dedication and devotion, doctors are the second most underpaid profession in this country. The first is the military who make sure that this country exists.
