The Sandwich Board: September 2008

I'm back on the bandwagon for "Healthcare for everyone that's privately delivered and publicly accountable ". Last night we had a panel discussion at F&M with a lot of the heavy hitters in the movement. Sen Jim Ferlo, Rep Kathy Manderino, Chuck Pennacchio, Dr. Walter Tsou, Dr. Tom Gates and Donna Smith. I learned:
1. The US spends 50% of the world's healthcare dollars, but on only 5% of the world's population. (And we have worse health outcomes - higher infant mortality, shorter lifespan, higher incidence of preventable disease, etc.)
2. Healthcare spending in PA is three times higher than the entire state budget.

Donna Smith wrote about the panel in her Blog, which you can read here.

However, this will be a tough fight. I took Dr. Flaherty to my Rotary Club on Tuesday to make the case for publicly funded, privately delivered healthcare for everyone, and we got savaged. Here is an email response from one club member:

"It would be my pleasure to explain what I meant [during the discussion at Rotary]! It is a sad commentary on the state of journalism and research today that most of this information is considered too complex to discuss on cable news or in most papers. In my 24 years of working in health care and managing the benefits of employees, I live it every day.

First, we have no tort reform of any kind in this country. Anybody can sue anybody for any reason. Our legal system (government promulgated) exists to enrich lawyers (who by the way populate all of the legislative bodies and the presidency in much higher numbers than is healthy for our democracy). Two words – “loser pays” the legal costs would go a long way to reducing a lot of needless litigation - especially in health care. [My Employer's] liability insurance runs hundreds of thousands of dollars a year due to frivolous law suits (and we have NEVER been sued in our history). The argument against this change to the “British system” is that poor folks would not have equal representation. If the case is sound and the lawyer can earn 30%, someone will take the case. In addition, we have all heard of the ACLU and the countless other organizations that take up the cause of the individual. Simply placing limits on damages would go along way toward reducing costs as well. Physicians order far too many procedures and expensive services in order to protect themselves from lawsuits, driving up the cost of health care further.

Second, the cost of health care is directly related to the lack of balance in the purchasing of health insurance. That imbalance is due to government regulations! Employers are prohibited by the government from purchasing health insurance in groups unless they set up complicated, legal consortiums . Since most employers are small business with less than 200 employees, the health insurance companies act as monopolies. They refuse to share utilization data (because the government allows them to refuse – do you see the pattern here?) unless the employer is of a certain size. Thus the employer has no idea what is driving up their health care costs nor does the employer have the benefit of reducing their risks by increasing their pool of employees. [My Employer] has seventy covered lives in our health insurance plan. The insurance companies lower their risk by upping our rates by double digit percentages every year. They could not do that if employers banded together in groups with thousands of covered employees. In fact employers could take on the risk themselves and insurance companies could be turned into administrators, fighting to provide the service at the most reasonable cost! The government forces the current, imbalanced system on us.

Why throw out the free market system for a government run system until we address the clear, government-caused hindrances to the free market working in our current system. It is akin to killing the patient to cure the disease. My next examples show why a government run system will be bad for everyone.

Third, the existing government health programs are Medicare and Medicaid. The government sets its payer rates significantly lower than the free market and any provider of Medicaid signs an agreement that the government will be the lowest payer. For Medicaid, the rate is often lower than cost of providing the service. That means the private pay rate MUST be higher to make up the difference. A person on Medicaid can’t even find a dentist willing to serve them if they have a toothache, unless they go to a non-profit clinic that subsidizes the rate! Imagine what will happen in a single payer system. We don’t have too. Go on the internet and read the stories from Europe and Canada.

Go to Medicare.gov and see how easy the government makes Medicare Part A coverage, Part B coverage, Part C coverage with it’s A, B, C, D, E, F, G, H, I, J, K plan varieties and best of all, the new Medicare Part D pharmacy coverage. Read for yourself what a modern government promulgated health care plan would feel like. Every one of 63 or so Part D Pharmacy plans has a different formulary and when you choose one, you are locked into it for one year, yet the pharmacy can change the formulary at any time during the year removing the medication that you need. The only exception is if you live in a nursing home you can change your plan as needed. The most important nugget of information that you need is whether or not your specific drugs are covered by the plan. See if you can find that information on the site. This is brand new government health policy! It is hideous and it foreshadows what you and I will be dealing with in a single payer system.

Fourth, do you know that the Commonwealth of PA, starting in 2005, actually taxes private pay nursing home residents to pay for the Medicaid program? Do you know that arbitrarily that tax rate could be $2.00 a day or $15.00 a day? It is a scheme to draw down $100s of millions of dollars of additional Federal matching Medicaid dollars. Here’s where it gets complicated, Alan. Do you know where that extra money goes? To the worst nursing homes in Pennsylvania. Do you know why? Because they have the highest Medicaid census so they get the extra money. They have the highest Medicaid census because they provide lousy care. They are almost always for-profit corporations. Guess what they do with the extra money? It goes to their stakeholders or their corporate leaders as bonuses. The residents still have bare minimum staffing levels, poor food and horrid conditions. The private paying residents who are paying the tax live in non-profit homes that already staff 50% higher. The government cannot buy quality. It is paralyzed by its endless regulations and its requirement to be “fair.” Fair does not equal quality. If the government regulated the car industry the way they regulate health care, they would add additional taxes to all car purchases but only subsidize Ford and GM purchases with the money. Where is the incentive for Ford and GM to build better, more competitive cars? This is no way to purchase health care and the government should be kept far away from yours and mine!

Imagine if Isaac’s customers were taxed 3% on everything they bought and the Commonwealth subsidized special value menu ($1.00 or less – think McDonalds, Burger King and Wendy’s) purchases with that money. Would that make sense? Is that good for the consumer? Might Isaac’s be tempted to pervert its menu offerings to get its piece of the government subsidy? Would that be good for Isaac’s brand, customers or employees? That is how the government enters markets and through direct regulations or government policy perverts the marketplace. That is what it has been doing in health care since 1965 when it first passed the Medicare and Medicaid amendments to the Older Americans Act. Overnight 70% of care homes became for-profit entities that only cared about government money. There are approximately 10,000 of these horrible for-profit nursing homes still in existence today simply because of easy government money. My chosen field was ruined by government implementation of single payer systems for older adults. It will do the same to the rest of the health care industry if the whole system becomes single payer.

The problem is that our government system always results in compromise. Compromise always results in poorer quality and less efficiency. The government has two parties that never agree and are more interested in power than good policy. The government is filled with lobbyists who pervert the system. The government is filled with hundreds of thousands of employees who want to justify their jobs. This is not a recipe for high quality health care in my humble opinion. My understanding of free markets (I have a degree in economics albeit only a B.S.) is that inefficiency is often caused by an outside force that upsets the balance. The government is that force in the United States – legally, regulatory, and policy wise.

These are only a few glaring examples of how the government directly raises the cost of health care needlessly. I can give you a half dozen additional examples easily and they are equally egregious.

Finally, I do not believe that the overhead of Private Insurance far exceeds that of Medicare and Medicaid (do you know that Medicare is actually administered by those health insurance companies because they know how to do it efficiently. They are called Medicare fiscal intermediaries and I believe that Highmark is the largest in the nation). I am sure that the Professor’s data was not comparing apples to apples. The extra profit that the health insurance companies earn would be cut if the government regulation of the health insurance industry were changed to allow true competitiveness AND balance of power in the marketplace."

Whew! Seems to me this email is making some of my points for me, but the fact that the government hasn't done a good job with healthcare up this point is certainly true!