Friday, June 12, 2009

The Perilous Journey From Health Care to Cap and Trade

Having just read the White House Report released by the Council of Economic Advisors on Health Care Reform, I am impressed by the the fact that a group of economists have been first to weigh in on an issue so complex, with little visible reference to the to the medical or scientific issues involved in health care and the emerging fields of biologics, stem cell treatments, advanced medical imaging and diagnostics.

I am not at all opposed to health care reform. The avowed goals of reducing health care costs, covering the uninsured, and repairing the several broken parts of the system are shared among all rational observers. As Larry Summers’ team points out, the rising costs of health care will be 40% of US GNP by 2040. The White House team apparently arrived at this by trending out the historic cost curve using compound interest growth rate (CGR). Their Report presents convincing arguments that the accelerating costs of health care will present a serious drag on employment and on the economy in general. Medicare will be bust by 2040 and the drag on the economy will amount to 8%, a rut we would never get out of.

So much for trend projections. According to the trend projections of the Club of Rome we should be standing shoulder to shoulder all over the planet by now, or starving by the billions. According to trend projections we will be living in a hot scrubland with New York underwater by 2040. Trend projections never take in to account the tendency of all trends to fade due to limiting factors. In this case the limiting factors are the progress of scientific advance and the pocketbooks of people who ultimately pay for health care. We will never get to the dire straights predicted for 2040. People will simply find another way to protect their health.

Going back to the Report, it states that the current health system wastes as much as 30% of the money poured into it. One large source of that waste is that practitioners (doctors) are paid on the services they render. The Report wants them to be paid on outcomes, so the most efficient doctors get paid and the least efficient get paid less, or get paid nothing. That will weed out the least efficient practitioners and methods, leading to reduced costs. That is Economics 101.

In order to determine the most efficient methods, “outcome studies” will be arranged, presumably by a Federal agency at taxpayer expense, that will compare different treatments and determine which are the most effective. I have read two of these studies. One is a study for Type 2 diabetics taking an expensive medicine vs a cheaper medicine. The other is for the use of stents to prop up collapsing arteries and enhance blood flow to the heart, brain, etc. Besides that fact that the cheaper method always wins, I notice that these studies measure efficacy by survival statistics over large study populations. There are two problems with that. Patients measure efficacy by how they feel, by what they can do after an operation. They would not consider a long life of pain and restriction any sort of an improvement in their health care. The other problem is that medicine is not a “one size fits all” thing. The very essence of medical practice is to treat the individual, his or her particular complications, and his or her circumstances. Individual requirements are completely masked by such studies. The newest and best technologies look to the genetic and biochemical individuality of the patient and treat each case with those drugs most suited to that individual, or to that specific cancer tumor, for example. It is not possible to perform mortatlity outcome studies on a drug that completely cures 100% of all pancreatic cancers, but only in people with a certain gene which occurs in less than 10% of the population. No such treatment will ever pass outcome studies. On the other hand, it is not ethically reasonable to deny such a cure to that 10%.

But they will be denied. Doctors who persist in using “low outcome” treatments will not get paid. Who will decide? The Federal agency who decides such things will decide. You will not find doctors willing to risk their livelihood and their licenses, and perhaps their freedom from law suites, by performing unapproved procedures.

Obama wants to set up a public insurer, a Government run, taxpayer subsidized health plan “as an alternative to group and private plans”. The Report takes that as an unchallenged goal. That public plan will, of course, follow all the outcome-optimized procedures. For the 45.7 million people, most of whom are healthy 20 to 35 year olds, who do not have coverage now, this will be their mandated option. There is little question that it will absorb Medicare, because otherwise Medicare will be bankrupt. In fact, THE MAIN REASON OBAMA WANTS PUBLIC INSURANCE IS THAT MEDICARE CAN NOT BE SAVED WITHOUT HEAVY POLITICAL COSTS! Medicare, the program started by President Johnson that his adviser estimated would cost $100 million, is now running a cost of $200 billion per year. As every HMO and co-op plan has discovered, there is a virtually unlimited depth of medical need. Put up a plan, and they will come - in numbers that you will not anticipate, with problems that will drain your resources. The ONLY POLITICALLY ACCEPTABLE way to fix Medicare is to absorb it into another much bigger plan THAT WILL BE THE EXCUSE FOR RAISING HEAVY TAXES!

And the tax that will do the trick is....hold your breath... I mean do not exhale.... CAP AND TRADE ON CO2.

In summary, folks, Medicare is broken, so we will have to have Cap & Trade. Devious, simple and you can find it all on the White House web site, but not all in one place. Health Care will be MANDATED - pay for it or be subject to an onerous special tax. That is needed to drive HEALTHY people to the public health care plan.

There is a constitutional problem as well. Under our constitution, those powers not specifically enumerated to the Federal government are left to the States. A public health care plan, or even a set of mandated Federal outcome standards, are not among the enumerated power of the Federal government. Therefore, an amendment to the Constitution will be required to give this power to the Federal government. There is a possibility that it could be squeezed in under the Interstate Commerce clause, but I think it is too big a deal to pass without a constitutional challenge.

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