Mortgage Bailouts and Health Reform

What does the mortgage crisis have to do with the future of health care reform? Plenty.
Stan J. Liebowitz, economics professor at the University of Texas at Dallas, tracked the intervention of the federal government into mortgage lending during the past 20 years. Boiling it down: In the name of home ownership, economic laws were suspended so that people without assets could buy houses. Should we be surprised when they cannot pay for them, and when they are foreclosed upon?

Now economists insist that free markets cannot adequately serve the lending industry, and that is why the federal government must step in to rescue it.

The commonality with health care reform is twofold:

1. The federal government, since at least 1965, has continuously ratcheted up its involvement in the payment and delivery of health care. States have either stayed a step ahead of the feds, or followed closely behind. Government has nearly destroyed the health care market economy.

2. The same logic used to justify a federal bailout of mortgage lenders and the banking industry will be used to reform health care. We have been told for decades that health care cannot operate in a free market environment. When it fails to meet governments’ goals for it, our vaunted U.S. health system, so the politicos will claim, need to be rescued by the government.

The big difference is that we have time to do something about health reform. An army of health insurance agents can dispatch itself to work overtime to convert the insurance market to consumer-directed health plans.

Only by bringing consumer (aka voter) pressure on Washington, D.C. and state capitals will the United States be able to avoid a national health plan. I am convinced that without such a movement, the march to socialized medicine will reach the tipping point by 2012-2014.

Please, don’t let this happen.

The uninsured in America

We're not doing so bad after all.

The U.S. Census Bureau has lit the fuse for the next battle in health care reform. The uninsured rate and numbers have dwindled, and that is good news. Why they dwindled might seem not so good.

Allegedly, now only 45.7 million of us are without insurance (or as our detractors say, "are without health care); about 15.3 percent of the current population. The drop is attributed to more people enrolling onto government health plans (more than 300,000 in Massachusetts along, thanks to the Connector).

On the other hand, this means that more than 255 million Americans are covered under a health plan.

Stick with me on this: At 255 million (the number of Americans with a health plan) it would make a country the third largest in the world, next to China and India. That we have the resources and systems in place to insure so many people (more than eight times the population of Canada) is a great accomplishment.

202 million Americans get their insurance through an employer, a number that held steady. The rate (just under 60 percent) is lower, but that is not so dismal news. After all, we have been fighting a difficult economy. I think it is a strong indicator of the important people place on group insurance.

Of the remaining folks without insurance, no more than 15 million, or five percent, are chronically uninsured. Those aged 18-34 comprised 54 percent of the uninsured, and that produces an interesting and vitally important issue.

The drive toward "universal health care" is a misnomer. The honest term is "mandatory universal health care," meaning forcing everyone by law to purchase health insurance. Now think about this.

If more than half of the uninsured are aged younger than 35, and we use the law to force them to buy health insurance, what does this mean? It means that we want young, healthy people to underwrite the cost of older people - of us Baby Boomers. Once again, the Baby Boomers want to be bailed out by someone else.

The other fascinating uninsured statistic is that of the new immigrants, who still make up 33 percent of the uninsured. Well over half of the uninsured, and many in this category, qualify for government health care, but refuse to sign up.

There are many reasons to reform U.S. health care, but the uninsured rate is not one of them. Don't let anyone get away with that myth any longer.

Harry and Louise have mellowed

Harry and Louise are back.

Remember them? They were trotted out during the height of HillaryCare in the 1990s. People who believed that Mrs. Clinton’s purpose was to move us to government-run health care used the ads to stop her in her tracks.

Harry and Louise appear to have mellowed.

You can see it for yourself at http://www.harryandlouisereturn.com/. This is the newest ad, and it is meant to throw resolution of health care into the lap of the next president.

From where I sit, asking the politicians to solve the health care dilemma is a prescription for problems. Every time they step in to help, it gets more complicated and expensive.

The ad, however, takes no explicit sides. But since it prominently mentions access to care and affordability of health insurance, it tries to set the debate.

These are real problems, and they need real solutions. The political arena is the worst place to get this done, although it obviously cannot be ignored.

Political leaders use health care reform to gain votes. Those who are serious, like Mrs. Clinton, are the ones who will advance their government solutions based on the appearance of a groundswell of support.

The answer to what ails U.S. health care lies primarily in two areas: We must become healthier. We must become involved in paying for, and therefore knowing about, the cost of care.

Politicians are building the case to tell us how to live, what to eat, where to go, and what to do. That runs contrary to traditional U.S. culture. Maybe Americans have become passive enough to accept top down directives. What do you think?

Clearly, most top down health reform points toward mandatory coverage, forcing more people to pay more to do more and will end up costing more. For certain, politicians cannot solve the spending problem by managing spending.

Why health care costs so much

Greg Dattilo and I are writing a new book. Our working title is “Why health care costs so much.”

I had a practical example on July 31.

Early that afternoon I suffered chest pains. (Since them, I have been calling them chest “aches.”) At the time, all I knew is that they did not stop. Feeling pains in the chest and the accompanying pressure is disconcerting, to say the least.

I called my doctor, planning to go to the clinic. They gave me to a triage nurse.
The triage nurse demanded I call the paramedics. She told my wife absolutely not to drive me to the ER. I felt stupid, because the pains (ache) were higher up in the chest. I had no other symptoms of a heart attack. But she insisted.

At the ER, two EKGs, blood work, and a chest X-ray indicated that whatever I had, it was not my heart. Yet, the ER doctor suggested I say overnight in the hospital and get a stress test.

I went home. Five days later, I had the stress test, but my insurance agent told me I had already spent all my deductible. I had the nuclear stress test, by the way.

The great news: My heart is 100 percent. The not so great news: I still have the achy chest, but it is far less of a problem. Tomorrow, the endoscopy. I told my doctors to look up helicobacter pylori (check it out at www.helico.com). We may be on to something here.

Why do we spend so much on health care? To date, I am guessing we’ve spent $5,000-$6,000 on this incident, although I have only seen the $1,600 charge for the paramedics. And there is more to come.

On July 31, there is no question I needed to see a doctor. Maybe even in the ER. Maybe.

My story, however, does indicate in a small way why health care costs so much.
Defensive medicine played a role. If the triage nurse had agreed with me, and I had suffered a heart attack on the way to the clinic, she fears getting sued. If the ER doctor had not offered the chance for me to be admitted, and I suffered a heart attack at home, he fears being sued (he admitted to me that the number one reason ER doctors get sued are chest pain issues).

Okay. They were all doing their job, and did it professionally. I get it. But I also realize that I spent at least $4,500 that accomplished only two things; it gave me peace of mind about my heart and it ate up my deductible.

So, of course, that means I am now considering other medical irritations that just might need treatment this year, instead of next. I admit it. I am just as human as the other 304 million Americans. The deductible has been met. What is your next question?

Oh, did I mention, I have a high deductible health plan and an HSA. And am I ever glad I have the HSA! And a good heart.

Obesity weighs down emergency costs

There is near unanimous agreement that obesity drives health spending higher. We understand this regarding diabetes, heart disease, blood pressure and other diseases.

I was struck by this additional cost that certainly never before crossed my mind. It is an indicator of how interrelated are the hidden costs of health care, and why it is so hard to get the health system under control.

The paragraphs below are lifted from “How To Purchase A Power Cot,” a sales brochure from MonsterMedic, a manufactuer of equipment used by Emergency Medical Technicians on ambulances.

Consider the additional cost for workers’ compensation insurance, heavier duty equipment, lost days to injury, short and long term disability insurance, not to mention pain and suffering of the medic.

“It is widely known that patients in the U.S. on average are getting heavier. Some experts estimate that about two-thirds of American adults are overweight or obese; 3.8 million people are over 300 pounds, over 400,000 carry 400 pounds or more.

“Obesity creates more medical risk factors and consequently, more emergency calls. A heavier patient creates a hardship for the EMT as the amount of weight to lift is more, the risk of cot tipping is higher, and the loss of control of the cot is more prevalent. Of course, this affects the safe transfer of the patient.

“It also presents a risk to the EMT. More weight to lift creates more physical strain on the EMT, especially to their back, shoulders, and knees. The highest percentage of the EMT back injuries occur when they need to bend down over the patient to raise them from the ground. Another common accident is when the EMT has to react unexpectedly to a cot that has become out of control.

“It’s not difficult to connect the dots.

“As patients become bigger, the EMTs face more physical challenges when transporting them. A look at current statistics point out that ambulance cart tipping is increasing and EMT back injuries are on the rise.

“As the general population changes, we must adjust the way we serve them.”

Now that is an understatement.

"EMR, call home"

Can electronic medical records (EMR) save us?

Technology has done marvelous things to better human life. It seems only normal, then, that we would turn to electronic medical records (technology) to help solve our health care spending problems.

Eventually, we might even get there. I sure hope so, but it will take a while – maybe a decade, or two.

Dr. Richard Reece has been reporting on the business of health care for more than 40 years. He informs me that today, about 10 percent of hospitals and a like number of doctors are using electronic medical records. That is a good start.

But there is a huge pushback by doctors, because it is expensive, time-consuming, and is viewed as adding very little to their ability to practice medicine. Before doctors commit thousands of dollars to convert their office and patient records to such a system, they will have to see its medical benefits, or a great deal of savings in streamlined record-keeping.

A second issue, seldom addressed, is that the emerging EMR systems speak but one language – the language of their own kind. That is, they do not speak to other EMR systems operated by other doctors and hospitals. Over time, this should be able to be resolved, but to find the common language and/or the translator that acts as a go-between will be costly, and in itself, create errors and misinformation.

Dr. Reece points out, too, that doctors in one specialty often need to know different information than doctors in another specialty. What is vitally important to the podiatrist, and about which he or she would take pains to record, is of very little interest to the pediatrician (who has his or her own specific needs for patient history).

I don’t write this as a doom-and-gloom commentary, but a realistic one. Reece said, “Someday, I suppose someone will come up with an algorithm to tie all this together,” but it may take 20 years to get there.

In the meantime, the most pressing need is to change patient behavior, in the way they take care of themselves, and how they spend their own health dollars. We cannot hope that technology will offset bad personal decisions.

Health care spending to decline?

Congressional hand-wringers warn us that unless we accede to more government control over health care, spending will go through the roof. They warn that the United States cannot afford to spend 16 percent of GDP on health care, and that this will spiral to 25 percent, unless we let them mange our health care economy.

Never mind that no one really knows how much health care we can afford, nor how the market will react when we hit that magic, but unknown ratio. What we all can agree upon is that a good deal of health care dollars are spent unwisely: Maybe that is changing.

One reason Americans spend so much on health care is that we can. Our total health spending eclipses the GDP of most every other nation. We are a wealthy people; and as our net spendable income increases, so does our spending on health care, only geometrically. The more net income we have, the more we spend on our own health.

Suppose, then, that certain economic developments decreased net spendable income. What if, for instance, gasoline, along with all other petroleum-based products, doubled in price? What if the cost of food increased 25 or 50 percent? Would we have more or less disposable income?

Given the increases in the everyday cost of living, it follows that most of us will have fewer discretionary dollars for plastic surgery, elective dentistry, health spas, chiropractic services, alternative (and often pricey) medicines or even name brand pharmaceuticals. When I say “most of us” I mean, of course, those of us who have some kind of connection with the first-dollar cost of health care.

On the other hand, those who receive health care from the government, and those with rich health plans, may just keep on spending like gluttons at an all-you-can-eat buffet. What better reason do we free market people need than to convince people that now is the time to go on a health insurance diet – that less is more, and HSAs along with high deductible health plans are the best option.

To have more discretionary income means spending less on those products and services that have lower cost options; another key selling point for high deductible health plans.

Overall, though, I think we might be in for a slowdown in national health spending. Politicians will ignore this, however, and continue to force increasing management burdens on providers, while strapping the public systems with an ever-increasing number of subsidized insured residents.

What do you think?

The Minnesota 17% uninsured crisis

You are reading this because the headline got your attention. You think you know that Minnesota does not have a 17% uninsured rate. In fact, you know that Minnesotans without health insurance, according to a 2007 Minnesota Department of Health, amounts to about 7.2 percent of the population.

So what’s with this 17% thing?

Minnesota law mandates that everyone who drives a car must have auto insurance. We have an auto insurance crisis in Minnesota, with somewhere near 17% driving without insurance. This far exceeds the state’s health uninsurance rate.

Car insurance is mandated by law. Health insurance is voluntary (for now). And yet, the health uninsurance rate is far below the auto uninsurance rate.

While pointing these facts out during a presentation several weeks ago, I think I found the real answer. Please, no one tell the politicians what I am about to suggest.

Employer-based insurance

A disclaimer is required. What I am about to say is written with my tongue planted firmly in my cheek, but I am saying it for a profound purpose:

What if governments allowed employers to provide auto insurance for their employees, and then gave employers the right to deduct that insurance expense? If auto insurance was a regular employer benefit, would the rate of uninsurance still be at 17%? Or would it be more like, say, 7.2%?

While I am not suggesting that auto insurance be made an employee benefit, I am saying this, and I hope, saying it clearly: One of the key reasons that our uninsurance rate in Minnesota is only at 7.2% is because employers provide health insurance.

Let me say it another way: If employers did not provide health insurance, our health insurance uninsured rate would probably be at 17%, or more, even if the state mandated it.

Let’s be clear about this idea that individual health insurance is the best way to go: It may be, but it carries with it the very real potential of driving up the uninsurance rate. With or without a legislative mandate requiring the purchase of health insurance, there is no doubt whatsoever that uninsurance rates would climb.

I share this because of my political crystal ball. Those who prefer a government-managed, single-payer system seize on the uninsurance rate to justify it. Why would any sane, market-oriented person want to give them more ammunition for their argument?

The best answer is to maintain choice. Let employers decide, as they do now, whether to provide group insurance and in what form they will or will not provide it. That is a free market.

"Unaffordable co-pays"

Recently, I ate lunch with a group of Michigan health insurance agents. Earlier that morning, they had endured my talk, “Arming Agents for Health Care Reform.”

Table talk turned to the plausibility of employees choosing high deductible health plans (HDHPs) over traditional HMO or PPO (networked) health plans.

Then the talk turned to unions, and their contracted health plan designs.

“So the UAW fought the automakers over a $5.00 co-pay,” I said, “saying they feared it would grow to $20.00.” I shook my head in disbelief.

“I’ve got groups with $2.00 co-pays!” one agent said, referring to a public school teachers’ group she serviced. “Try talking to them about HDHPs, HSAs and anything that costs them out of pocket.” Actually, I would like to, but that’s another story.

Going to a Tigers’ game

The teacher and her electrician husband drive two hours to Detroit for a Tigers’ ball game. They hand the parking attendant $15, and walk to the park, handing the ticket-taker a pair of $35 seats.

They have a great time. The Tigers even win.

He drinks three beers at $7.00 each; she sticks with diet Cokes at $5.50 each. They eat three hot dogs each, at $5.00, and share an order of nachos with cheese - $7.00.
After the game, they walk down the street, and pop into a restaurant for a leisurely dinner, spending $49.50, plus a tip.

On the way home, the wife begins feeling faint, turns pale, and throws up (thankfully, she had saved the plastic souvenir Coke cup). Her stomach starts cramping up, and she feels rotten. Since it came on fast, they pull off at the first sign saying “hospital” and head to an emergency room.

“Okay,” the admission’s clerk says to the husband, while his wife lay in an ER bed, “all I need is your $50 co-pay, and we’re set.”

“I thought it was $25,” he protests.

“It is, but only in a hospital in your insurance plans’ network,” she explains.

“Hey, this is about my wife’s health!” he exclaims. “I don’t get it. Why should we have to pay anything?” He launches into a rant about greedy insurance companies and selfish employers as he reaches for his credit card.

“This is just unfair, and who can afford it anyway?”

Indeed.

Health care and police forces

Recently, a socialist argued that great countries have learned they must assign certain duties to governments, and among these is the responsibility to administer and pay for health care. The socialist argued that after all, governments already use national schemes to provide many basic services, and named armies and police forces as examples: Why not also administer health care?

He could have mentioned that governments also build and manage the interstate highway system, waterways, forests, water purification, and any number of other such entities. (Of course, there is that inconvenient fact of a bridge falling down last August 1 in Minneapolis.) Whether it is best for us to have assigned these duties to governments is an argument for another time. I prefer to unpack the idea of police forces for our socialist friends to ponder.

Policing, at the beginning of our nation, was not a government duty; it was a private duty. That notion fell victim to dense population centers and a sense of desire for more security. Few but the most extreme libertarians would argue against government-provided police forces, sheriffs, U.S. marshals, the FBI, and such.
Our socialist friend asserted that police forces provide a level of proof that a national, single payer health system makes plenty of sense. Since governments run this essential service that serves a common good, all services that serve a common good could or might be nationalized (or governmentized).

What do police officers do, where do they do it, and who pays their bills? Moreover, do they do it alone?

Where’s that peacekeeper while someone is burgling your home?

Police offers have sometimes been labeled peace officers; nothing could be further from the truth. While the presence of a police officer, or a squad car, might have the effect of reducing crime while there is a police presence, there are far too few police officers to actually keep the peace.

The primary duty of police officers is to come along after a crime has been committed, to search out and find the criminals, and remove them from the population. Seldom can one call a police officer before a crime is committed in order to get that officer’s protection from the crime. There are two plain reasons for this: First, one has no sure knowledge that a crime will be committed, and therefore, cannot call for a police officer in advance. And two, there are not nearly enough police officers to assign each one a peacekeeping role.

Police officers are to public order what emergency rooms and specialist physicians are to health care. They are on call and ready to help, as long as not too many crimes are committed at the same time in nearby jurisdictions. When there is an outbreak of crime, its victims must wait for hours before the squad car shows, and by then, the criminal has long since left the scene and the victim’s bloody wounds have become the concern of a local medical emergency room.

Of greater importance is the simple fact that government police forces only provide a small fraction of the peacekeeping required to maintain social order. The primary role of peacekeeper is borne by hundreds of thousands of private security workers. They guard buildings, act as bodyguards, ferry millions of dollars in armored cars, secure routes for superstars and politicians, patrol shopping malls, and keep an eye on communities. These peacekeeping guards are more like our system of private physicians that provide health care services to almost all Americans. They are outside the government system, except for the likely requirement for a license, and by such, a certain form of proof of competence.

Government-paid police forces are augmented by a vast army of private sector “police officers” who serve as the nation’s peacekeepers. To suggest that police forces are an example of a common good being met in any comprehensive fashion by governments is facetious and shortsighted; and it is untrue.

(The same argument could be extended to our justice system, relying as it does on hundreds of thousands of private legal practitioners (lawyers) to carry the primary burden of ensuring justice for their clients. Americans agreed that the government should provide a justice system, but lays very little of its duties on government agencies; rather, relying on a contract system most often the result of negotiations between armies of lawyers in private practice.)

There is one other significant characteristic of police forces to consider: They are almost all locally controlled, by small town boards, city councils, county boards, or state legislators. They are not national “single policing” organizations. Policing is a local issue.

Neither is the administration of health care a national issue; it is a local issue, and serves the needs of communities and populations that hardly resemble each other in lifestyles, ethnicities, racial compensation, traditions, wealth (or lack of it), and in untold other nuanced differences. People are different in different places, and it would be a sorry place to live that tried to force them to all live and look alike.

Thanks to the U.S.

The United States, much to the chagrin of liberals and socialists, has the world’s most powerful military force. One might argue that it is too large and too strong given the relative lack of attacks on the United States, but such an argument is extremely shortsighted and naïve. The fact that we have sustained so few attacks is testimony to our military strength; but I add this for a more important reason.

Were it not for the strength of the U.S. military, most foreign nations would be forced to spend billions more on defense, and on building their own military forces. If the United States pulled out of Iraq, Afghanistan, Germany, Japan, and all other foreign military bases, does the liberal and socialist assume that those nations would be comfortable with the void such a withdrawal would create? Such naïve thoughts seem even beyond their pale.

Suppose, however, that the U.S. drew down its military force to the handful that liberals and socialists seem to desire, thereby saving our country $300-400 billion or more each year (and spend it on health care and education). If such a thing were to happen, would Canada and Mexico feel as secure as they do today, or would they be forced to spend tens of billions to build their own military forces for the sake of security? I think the former is most likely, and if Canada built a national military force powerful enough to provide such protection, the money would have to come from its citizens, and would further strap their health system with shortages heretofore unthinkable. It is arguable, in fact, that the strength of the United States’ military helps Canada in its attempts to provide a government-run health system.

If the United States was not the home to 80 percent of the world’s pharmaceutical research, medical device research, and medical entrepreneurism, the health care systems of most foreign nations would be hard strapped to create medical innovations, much less provide necessary daily health services through their government-run plans.

For the United States is the world’s medicine cabinet, and its police force.