Berwick avoided senate scrutiny
President Obama used the recess appointment process to appoint Dr. Donald Berwick to head up our government health care systems – Medicare and Medicaid. Presidents in the past have used this constitutional provision. Usually, it is used when the president wants to get his first choice appointed and knows he faces a hostile senate, a senate that would reject the appointment.
The constitution allows recess appointments when Congress is not available to consider giving its consent. In this case, however, it is apparent that President Obama did not want Berwick to face public scrutiny.
Berwick, a pediatrician had a short clinical resume. As a kids’ doc, he has probably never had to deal with the Medicare mess that he now leads. Chances are that he has had at least limited experience with the low reimbursements Medicaid pays to doctors.
Berwick is outspoken and controversial. His more infamous quotes have flown across the newswires and the Internet. Berwick’s praise of England’s National Health Service is particularly troublesome. While he does not favor the NHS’ long wait lines for critical health services and elective surgeries, he like the NHS and “value-based” medicine.
Imagine a hostile U.S. Senator asking, “So Dr. Berwick, are you saying that perhaps here in the United States we should withhold care from a senior citizen if Medicare thinks it is too expensive? If the person would probably die within a short time anyway?”
Pres. Obama knew better not to lay Berwick, the controversial quote-maker, open to that kind of questioning.
My favorite Berwickian quote:
For the past several weeks, I have been using one particular Berwick quote, because I think it sums up the Obama administration’s view of health care management. “I cannot believe that the individual health care consumer can enforce through choice the proper configurations of a system as massive and complex as health care. That is for leaders to do.” [Emphasis Added]
Berwick here lays bare his bias: Mortals cannot manage their own health care. Only leaders have enough savvy to tell we commoners how to care for ourselves. Government, he implies, is the proper authority to control medical caregivers. The quote speaks volumes about Berwick’s attitude toward Health Savings Accounts (HSA) and consumer-directed health care. It appears that in his view, mere mortals could not possibly make health care consumerism work. Yet, consumerism is the one shining star in pre-Obama health care reform that has both reduced spending trends, and helped individuals maintain good health.
Berwick prefers that health “experts” along with academics, researchers, and government leaders lay out what is medically preferable. President Obama appointed him, ergo, Obama believes government is the best arbitrator of individual health care.
At the same time, however, there is a remnant of truth in this Berwick quote. Health care is complicated and difficult for individuals to manage. The complexity of health insurance and the provision of medical care is why Americans seeking advice consult with non-government, private experts rather than government bureaucrats.
Doctors, nurses, pharmacists, therapists, patient advocates, professional insurance agents, insurance company claims specialists, social workers, and a host of other highly trained individuals help health care consumers navigate through medical complexity – with bureaucrats on the sideline.
Berwick implies that the army of private professionals already assisting individuals is not capable of doing what government “leaders” do. Government, Berwick implies, is providing the leadership that we demand, and without which we would certainly waste our health and money. We “need” government as our shepherd as we ponder the health care we think we need. Do not be dismayed, however, because our new health care leaders will make we get the care when they believe we need it, and in the manner they prescribe. “That’s what leaders do.”
Imagine Dr. Berwick trying to explain this to a U.S. Senate panel.
Tuesday, August 24, 2010
Saturday, July 24, 2010
Individual insurance across state lines. Some thoughts to ponder.
In a truly free market for health insurance, crossing state lines to purchase the best possible insurance product makes a lot of sense. That’s why so many smart, well-studied conservatives support it.
Competition is the key to holding down prices.
But I caution you on this, and not because I oppose it, but because there are serious downsides that must be addressed. Let me mention three:
First. The issue of individual state mandates, and how that translates into better pricing. Minnesota ranks second in the country with insurance mandates – 67 of them (RI is first at 70).
If you purchase an Iowa insurance product that might only have 55 mandates (I do not have the real number in front of me), which state’s mandates will prevail? If Minnesota’s, then a good deal of the competitive nature of the plan is gone. If Iowa, it begs the question of how will Minnesotans get their fertility treatments paid (for instance).
Or, a regional pact can be negotiated that allows at least limited competition within the region, with identical mandates (whose will prevail, and would Linda Berglin or Tom Huntley allow this?).
Second. The issue of networks. As you doctors painfully know, the insurance companies can play hardball on network negotiations in part because there are so few competing in Minnesota. On the other hand, doctors are loathe to sign contracts with more networks. How will non-Minnesota insurance companies overcome the inability to create workable networks?
Networks can be rented, of course, but what advantage would one company have over another? If all have the same mandates, and all, but a few have the same networks and contracts, I fail to see the advantage.
Third. Many who favor cross state lines sales do so because they do not support employer-based health insurance. The assumption is that individuals will be better able to shop for their own plan if freed up to do so, in a market of many plan choices.
Setting aside the issue of the individual mandate, and if we can overcome the issue of state mandates and networks to design competitive products, there are still serious considerations in unraveling the employer-based insurance system.
Today, depending on whose numbers one uses, some 140-150 million Americans receive private health insurance through employers (more than the entire Russian population, by the way). If our goal is to achieve near universal coverage, this gets us halfway there.
Let us assume that Congress eliminates the tax deduction for employers to provide health insurance. And let us assume that in so doing, Congress transfers that deductibility to individuals. Would 150 million Americans continue to receive their insurance from private markets?
The presumption is that employers would simply pay their workers the difference. That is, instead of spending $12,000 on insurance, they would spend $12,000 on payroll. The tax implications for the employer are nearly neutral, save for the extra payroll taxes generated by increased wages and salaries. An option would be paying an additional $10,000 and consider the payroll taxes part of the total compensation, but again, these are business expenses that will be allowable as deductions, and not subject to taxation.
Will the outcome, then, be increased pressure on tax revenues from the neutrality of the employer tax deductibility, and the increased deductibility of insurance premiums? If so, what will Congress tax to replace this lost revenue?
More of a concern than transferring insurance cost to wage cost is the most simple of questions: Without an employer mandate, why do we believe employers would pay the insurance savings in increased wages? This is a dangerous assumption that could leave individuals with reduced net income, and leave more on the bottom line for employers. Unfortunately, those now-liberated employees might also forgo health insurance because of the negative impact of employers not transferring those costs – unless Congress forces them to do it (and that raises numerous other issues). Hence the uninsured rate could spike higher, driving us closer to single payer or some other such scheme.
I would suggest there are other considerations, but will not dwell on them here. They do, however, include the right of employers to control their own businesses, the need for employers to retain and attract good employees, and other such issues.
Lastly, let me repeat. I am not for or against the idea of purchasing individual health insurance across state lines, but I believe these serious issues need to be fully vetted before this idea can win wide spread support.
Competition is the key to holding down prices.
But I caution you on this, and not because I oppose it, but because there are serious downsides that must be addressed. Let me mention three:
First. The issue of individual state mandates, and how that translates into better pricing. Minnesota ranks second in the country with insurance mandates – 67 of them (RI is first at 70).
If you purchase an Iowa insurance product that might only have 55 mandates (I do not have the real number in front of me), which state’s mandates will prevail? If Minnesota’s, then a good deal of the competitive nature of the plan is gone. If Iowa, it begs the question of how will Minnesotans get their fertility treatments paid (for instance).
Or, a regional pact can be negotiated that allows at least limited competition within the region, with identical mandates (whose will prevail, and would Linda Berglin or Tom Huntley allow this?).
Second. The issue of networks. As you doctors painfully know, the insurance companies can play hardball on network negotiations in part because there are so few competing in Minnesota. On the other hand, doctors are loathe to sign contracts with more networks. How will non-Minnesota insurance companies overcome the inability to create workable networks?
Networks can be rented, of course, but what advantage would one company have over another? If all have the same mandates, and all, but a few have the same networks and contracts, I fail to see the advantage.
Third. Many who favor cross state lines sales do so because they do not support employer-based health insurance. The assumption is that individuals will be better able to shop for their own plan if freed up to do so, in a market of many plan choices.
Setting aside the issue of the individual mandate, and if we can overcome the issue of state mandates and networks to design competitive products, there are still serious considerations in unraveling the employer-based insurance system.
Today, depending on whose numbers one uses, some 140-150 million Americans receive private health insurance through employers (more than the entire Russian population, by the way). If our goal is to achieve near universal coverage, this gets us halfway there.
Let us assume that Congress eliminates the tax deduction for employers to provide health insurance. And let us assume that in so doing, Congress transfers that deductibility to individuals. Would 150 million Americans continue to receive their insurance from private markets?
The presumption is that employers would simply pay their workers the difference. That is, instead of spending $12,000 on insurance, they would spend $12,000 on payroll. The tax implications for the employer are nearly neutral, save for the extra payroll taxes generated by increased wages and salaries. An option would be paying an additional $10,000 and consider the payroll taxes part of the total compensation, but again, these are business expenses that will be allowable as deductions, and not subject to taxation.
Will the outcome, then, be increased pressure on tax revenues from the neutrality of the employer tax deductibility, and the increased deductibility of insurance premiums? If so, what will Congress tax to replace this lost revenue?
More of a concern than transferring insurance cost to wage cost is the most simple of questions: Without an employer mandate, why do we believe employers would pay the insurance savings in increased wages? This is a dangerous assumption that could leave individuals with reduced net income, and leave more on the bottom line for employers. Unfortunately, those now-liberated employees might also forgo health insurance because of the negative impact of employers not transferring those costs – unless Congress forces them to do it (and that raises numerous other issues). Hence the uninsured rate could spike higher, driving us closer to single payer or some other such scheme.
I would suggest there are other considerations, but will not dwell on them here. They do, however, include the right of employers to control their own businesses, the need for employers to retain and attract good employees, and other such issues.
Lastly, let me repeat. I am not for or against the idea of purchasing individual health insurance across state lines, but I believe these serious issues need to be fully vetted before this idea can win wide spread support.
Friday, April 9, 2010
CNN interviews whiners about health care reform
Today, someone sent me to a CNN webpage that reported on four individuals -- Karen Scheuerman, Mary Pitman, Douglas Wolk, and Lita Epstein -- that are pleased as pink about Obamacare. Go and look for yourself and then come back to this blog, because I am going ask the questions below that CNN, apparently, failed to ask.
Go here: http://money.cnn.com/galleries/2010/news/1004/gallery.health_care_real_people/index.html
For Karen Scheuerman – How much money have you saved because you pay premium for a $10,000 plan, versus first dollar coverage? It certainly should be enough to pay for necessary preventive services. What preventive services are you unable to afford, given how much you are saving?
Do you sincerely believe that a health insurance plan offered through a Health Insurance Exchange will save you money? Based on what data? And those subsidies you expect to receive, are they free? I mean, does someone else have to pay them so you can pay less? I note that you are in some kind of financial advisory business. Will you be advising your clients that getting on the dole is a wise strategy?
Mary Pitman – I see that you are willing to pay for preventive care, but not for catastrophic coverage. What part of “insurance” do you fail to understand? Insurance is all about getting help for unexpected occurances, not preventive care (well, in a normal insurance market, anyways).
And you suggest the ER is the only choice for uninsured people? Are you sure, or does your town lack Community Health Centers?
Apparently you believe picking pockets is okay, as long as it is someone else’s pocket you pick. Do I have that right?
Why do you care, by the way, that people (prior to Obamacare) with health insurance have to pay more, since you are not presently insured?
You suggest that everybody will get cheaper health care. That is an interesting theory, but I expect you will be very disappointed as health care cost continues to rise faster than CPI.
Lastly, I see that you are a healthy person, and you understand that getting healthy people into the pool is important. Why, then, haven't you jumped into the pool yet? Or are you just waiting until someone else helps to pay your premium?
Douglas Wolk – Let’s see. You are young and healthy, and apparently, you only need flu shots (I would ask you who told you that, but it would take me off course). If you only need flu shots and help for an occasional snotty nose, that might even work in one of those foreign countries (as long as you can find a family doctor willing to take your case).
Imagine, you have to pay a whopping $500 a month to insure three people. How much do you think is fair? Then I see that you prefer not to abide by the insurance contract you willingly signed that tells you up front not everything you want is covered. Let me ask you this: When you go to a restaurant and pay the menu price of a hamburger, do you get angry if the owner denies you prime rib?
About that single payer thing: As a writer you need to do more research. And are you really anxious to live in a country where the government could employ “mechanisms” to keep costs down? I wonder how that would work?
Lita Epstein – You are 57 and self-employed. Your $700 a month insurance increased to $1,200 at age 56. I am 62, self-employed, and the insurance my wife and I own just increased to $689 a month. What gives? Aha. You probably have richer coverage than I do, instead of the common sense insurance that I own.
I see you have a health plan of sorts. Looks to me like a plan that costs you more than you will ever actually spend on health care, since it is virtually useless for any catastrophic procedures.
You Four: Listen up now. Aren’t you glad that in the United States there are filthy rich people, people that make more than $200,000 year – really filthy rich – who are willing to give you some of their money? What a country.
Go here: http://money.cnn.com/galleries/2010/news/1004/gallery.health_care_real_people/index.html
For Karen Scheuerman – How much money have you saved because you pay premium for a $10,000 plan, versus first dollar coverage? It certainly should be enough to pay for necessary preventive services. What preventive services are you unable to afford, given how much you are saving?
Do you sincerely believe that a health insurance plan offered through a Health Insurance Exchange will save you money? Based on what data? And those subsidies you expect to receive, are they free? I mean, does someone else have to pay them so you can pay less? I note that you are in some kind of financial advisory business. Will you be advising your clients that getting on the dole is a wise strategy?
Mary Pitman – I see that you are willing to pay for preventive care, but not for catastrophic coverage. What part of “insurance” do you fail to understand? Insurance is all about getting help for unexpected occurances, not preventive care (well, in a normal insurance market, anyways).
And you suggest the ER is the only choice for uninsured people? Are you sure, or does your town lack Community Health Centers?
Apparently you believe picking pockets is okay, as long as it is someone else’s pocket you pick. Do I have that right?
Why do you care, by the way, that people (prior to Obamacare) with health insurance have to pay more, since you are not presently insured?
You suggest that everybody will get cheaper health care. That is an interesting theory, but I expect you will be very disappointed as health care cost continues to rise faster than CPI.
Lastly, I see that you are a healthy person, and you understand that getting healthy people into the pool is important. Why, then, haven't you jumped into the pool yet? Or are you just waiting until someone else helps to pay your premium?
Douglas Wolk – Let’s see. You are young and healthy, and apparently, you only need flu shots (I would ask you who told you that, but it would take me off course). If you only need flu shots and help for an occasional snotty nose, that might even work in one of those foreign countries (as long as you can find a family doctor willing to take your case).
Imagine, you have to pay a whopping $500 a month to insure three people. How much do you think is fair? Then I see that you prefer not to abide by the insurance contract you willingly signed that tells you up front not everything you want is covered. Let me ask you this: When you go to a restaurant and pay the menu price of a hamburger, do you get angry if the owner denies you prime rib?
About that single payer thing: As a writer you need to do more research. And are you really anxious to live in a country where the government could employ “mechanisms” to keep costs down? I wonder how that would work?
Lita Epstein – You are 57 and self-employed. Your $700 a month insurance increased to $1,200 at age 56. I am 62, self-employed, and the insurance my wife and I own just increased to $689 a month. What gives? Aha. You probably have richer coverage than I do, instead of the common sense insurance that I own.
I see you have a health plan of sorts. Looks to me like a plan that costs you more than you will ever actually spend on health care, since it is virtually useless for any catastrophic procedures.
You Four: Listen up now. Aren’t you glad that in the United States there are filthy rich people, people that make more than $200,000 year – really filthy rich – who are willing to give you some of their money? What a country.
Saturday, March 27, 2010
Cars are not people - Welcome to finite value
Auto Insurance Mandate is a False Argument
Humans are not autos
You’ve likely heard it. “If the government can mandate auto insurance, then why do you say it cannot mandate health insurance?”
There are at least four major differences (and be sure to read number 4, because it is the most critical):
First: The FEDERAL government does not mandate auto insurance. States mandate it. And three states have chosen not to do so. Auto insurance, like health insurance, is a state issue.
Second: The mandate for ownership of auto insurance only covers what the driver might do to someone else. It is liability insurance, not collision, comprehensive, glass, or preventive maintenance. To be like the new FEDERAL health insurance law, auto insurance would have to cover routine maintenance, parts replacements, and just about everything else.
Third: Even though 47 states mandate auto insurance coverage, the average uninsured rate, according to the Congressional Budget Office, is 14.6 percent. (Actually, I believe that estimate is very low, considering that in California and Texas, it exceeds 25 percent.) The uninsured rate in our mostly voluntary health insurance system has held steady at about 15.5 percent or so for a decade.
Four: Auto collision insurance is somewhat like catastrophic health insurance in that it will pay to fix damage from an accident. But it never pays more than the value of the car (there is no limitless benefit).
If an 85-year old man wraps his $3,500 car around a tree, and the car suffers $4,000 in damages, the insurance company pays the old guy $3,500. The auto has a finite value.
If that 85-year old man breaks his bones, and if health insurance worked like auto insurance, the insurance company would give the man three choices: 1) the fair market value of his life in cash, 2) enough money to pay for hospice care until he dies, or 3) pay for assisted suicide.
In the United Kingdom, the value of human life is determined by a formula. For the most ill patients and the elderly, health care regulators decide the value of human life in Quality Adjusted Life Years. If there is not enough economic value in the “repair” of a human life, plans are made to help them adjust to death. In the United States, Oregon demonstrated this principle with 64-year old Barbara Wagner.
Wagner contracted cancer. She wanted to continue to live, and indeed, if she lived in any state other than Oregon, the health system would have given her that chance. Wagner’s doctor prescribed Tarceva, a new chemotherapy drug regimen. Wagner, however, received her health coverage from the Oregon Health Plan – a government health plan. Because of its global budget, Oregon officials notified Wagner that they would not pay for her chemotherapy, but they would pay for either hospice care or an assisted suicide.
Dr. Walter Shaffer, a spokesman for Oregon’s Division of Medical Assistance Programs, explained the realities of the Oregon Health Plan. “We can’t cover everything for everyone. Taxpayer dollars are limited for publicly funded programs. We try to come up with policies that provide the most good for the most people.” Oregon’s health care managers decide, in the end, who will gain relief from pain and suffering, and who will die.
Despite strong bipartisan opposition, President Obama signed the “Patient Protection and Affordability Act” on March 23, 2010. The bill authorizes federal government approved health plans, and will help 68 percent of Americans to receive some form of federal tax subsidy to purchase overly expensive health insurance. Accepting a government subsidy means they will be governed by federal health plan guidelines. Barbara Wagner, were she alive, would tell you what this means.
Health insurance is not auto insurance: So you get the picture. Auto insurance deals with predictable, finite cost. It is a state issue, not a federal issue. And when the cost of the insured item exceeds its finite value, it is cashed out. Why would auto insurance companies cap payments at the value of the auto, and not offer limitless coverage, preventive care, reimbursements for worn out engines and transmissions? Because no one could afford it.
With the stroke of his pen, President Obama has invited you into the world of finite human value.
Humans are not autos
You’ve likely heard it. “If the government can mandate auto insurance, then why do you say it cannot mandate health insurance?”
There are at least four major differences (and be sure to read number 4, because it is the most critical):
First: The FEDERAL government does not mandate auto insurance. States mandate it. And three states have chosen not to do so. Auto insurance, like health insurance, is a state issue.
Second: The mandate for ownership of auto insurance only covers what the driver might do to someone else. It is liability insurance, not collision, comprehensive, glass, or preventive maintenance. To be like the new FEDERAL health insurance law, auto insurance would have to cover routine maintenance, parts replacements, and just about everything else.
Third: Even though 47 states mandate auto insurance coverage, the average uninsured rate, according to the Congressional Budget Office, is 14.6 percent. (Actually, I believe that estimate is very low, considering that in California and Texas, it exceeds 25 percent.) The uninsured rate in our mostly voluntary health insurance system has held steady at about 15.5 percent or so for a decade.
Four: Auto collision insurance is somewhat like catastrophic health insurance in that it will pay to fix damage from an accident. But it never pays more than the value of the car (there is no limitless benefit).
If an 85-year old man wraps his $3,500 car around a tree, and the car suffers $4,000 in damages, the insurance company pays the old guy $3,500. The auto has a finite value.
If that 85-year old man breaks his bones, and if health insurance worked like auto insurance, the insurance company would give the man three choices: 1) the fair market value of his life in cash, 2) enough money to pay for hospice care until he dies, or 3) pay for assisted suicide.
In the United Kingdom, the value of human life is determined by a formula. For the most ill patients and the elderly, health care regulators decide the value of human life in Quality Adjusted Life Years. If there is not enough economic value in the “repair” of a human life, plans are made to help them adjust to death. In the United States, Oregon demonstrated this principle with 64-year old Barbara Wagner.
Wagner contracted cancer. She wanted to continue to live, and indeed, if she lived in any state other than Oregon, the health system would have given her that chance. Wagner’s doctor prescribed Tarceva, a new chemotherapy drug regimen. Wagner, however, received her health coverage from the Oregon Health Plan – a government health plan. Because of its global budget, Oregon officials notified Wagner that they would not pay for her chemotherapy, but they would pay for either hospice care or an assisted suicide.
Dr. Walter Shaffer, a spokesman for Oregon’s Division of Medical Assistance Programs, explained the realities of the Oregon Health Plan. “We can’t cover everything for everyone. Taxpayer dollars are limited for publicly funded programs. We try to come up with policies that provide the most good for the most people.” Oregon’s health care managers decide, in the end, who will gain relief from pain and suffering, and who will die.
Despite strong bipartisan opposition, President Obama signed the “Patient Protection and Affordability Act” on March 23, 2010. The bill authorizes federal government approved health plans, and will help 68 percent of Americans to receive some form of federal tax subsidy to purchase overly expensive health insurance. Accepting a government subsidy means they will be governed by federal health plan guidelines. Barbara Wagner, were she alive, would tell you what this means.
Health insurance is not auto insurance: So you get the picture. Auto insurance deals with predictable, finite cost. It is a state issue, not a federal issue. And when the cost of the insured item exceeds its finite value, it is cashed out. Why would auto insurance companies cap payments at the value of the auto, and not offer limitless coverage, preventive care, reimbursements for worn out engines and transmissions? Because no one could afford it.
With the stroke of his pen, President Obama has invited you into the world of finite human value.
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