What COULD Be Done to Fix Health Care?

(This follows from the previous blog.)

So what COULD be done in a reasonable way to solve the health care problem?

Without benefit of Larry Summers’ team or the leftover staff of the Clinton Health care folks, here is my alternative plan:

First, I would have the NIH or some new agency collect the various coverage mandates from all 50 states and come up with a Recommended Homologated Minimum Coverage Plan. The Plan would not be Cadillac coverage, but would have a heavy emphasis on prevention and some limits on coverage for chronic conditions. It would be intended as a safety net under the system, not as a choice plan for those who have more money to spend. This is within the constitutional power of the Federal government. States will be free to adopt or not adopt this standard plan. Most will adopt it, because it will be politically expedient. Small employers and those without insurance will demand it.

Second, I would ask the top ten health insurance providers to offer an All States Plan as per this standard. This Standard Plan would then be portable across all states. Today you have to sign up for a different plan in every state, losing your coverage and your deductible each time you cross a state line.

Third, I would have each of the insurers who offer such an All States Standard Plan to give up their underwriting on these plans in favor of a guarantee from the Federal government to the insurance company to cover any losses for existing conditions on the actuarial costs involved. This guarantee would be in the form of a contract between the relevant Federal agency and the insurance company. No one could be refused for pre-existing conditions.

I would require all employers over ten people to have a plan, even if it only the Standard plan. I would encourage, if it needed encouragement, every qualified insurer to offer extension plans, as they do now for Medicare part B. There is no reason why people who desire a premium plan and can afford it to be denied such a plan. That is Capitalism. I would maintain the deductibility of the Standard plan to all employers, and consider the excess benefits of premium plans as taxable income to the employee. Furthermore, the self-employed or those employed in small companies would also have the benefits of the tax deduction for the Standard Plan through their own individual tax return if it was not provided by their employer.

Moving to the broken parts of the system:

An estimated 30% of current health care costs are liability insurance for hospitals and practitioners, tort awards and the precautions drug and device manufacturers must take against tort awards. A surgeon pays as much as $120,000 per year for malpractice insurance. Hospitals order excessive tests and have extensive liability reviews to avoid being sued.

On drugs, the Courts have ruled that even though a drug is extensively tested for efficacy and safety, the manufacturer can still be sued for things they did not even suspect, in spite of the preponderance of good the drug may do. This has a chilling effect on new drugs and has caused drug testing to escalate to the billion dollar range. I would propose a transparency vs claims standard for drug law suits. I suggest the FDA can require a pharmaceutical company to publicly file its entire testing protocol and and all the results, and then to put the entire list of results and side effects on the label, or on a site accessible to the public, in plain language. This makes an implied contract between the manufacturer and the patient. If the patient suffers symptoms that were revealed and known as a possible side effect, there can be no liability to the manufacturer. It is up to the patient and his/her doctor to make the decision on the risk and the rewards of the treatment with all the data at hand. If, on the other hand, a court can show that a side effect was discovered, or should have been discovered, in the testing process, but was not disclosed, the pharmaceutical company is liable. That keeps the drug companies honest and the nuisance suits out of the courts.

Since medicine is beyond the competence of the average consumer, I would encourage a new profession - the medical counselor, and provide fees for that service in the Standard Plan. This person is an educator and advisor who will counsel patients on their alternatives and risks using information provided by their doctors and the drug companies. This will serve as a double check on hasty and erroneous procedures and further empower the consumer to budget and negotiate costs. The competence and independence of these counselors must be protected and audited. This function is the missing link between the consumer and the provider in today's health care setup. There can be no informed market response without informed consumers.

The efficient exchange of medical information between the doctors, nurses, hospitals, pharmacists, counselors and specialists should certainly be expedited by a good system that encompasses digital graphics standards for X-rays and tomography as well as prescriptions, insurance coverages and laboratory reports. Such systems exist now in the best hospitals, but there are no standards to interchange data among them. Right now the emphasis is on billing, billing and billing, and it is a nightmare. If doctors could solve the billing problem there would be a 25% increase in the time they could spend with patients and a significant reduction in their admin staff. I suggest a billing outsource service powerful enough to force insurers to cut through their egregious billing practices in favor of a rational approach that they all could use.

Te White House report had an economic goal to reduce the growth of health expense in the US by 1.5% per year. I believe the above plan meets that modest goal without a Constitutional amendment, without creating a new Juggernaut public entitlement and without the oversight of Big Brother and his evil companion, the Tax Collector.

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.