Being Critical of Daschle’s “Critical”

Like legions of other health care policy wonks when I discovered that former U.S. Sen. Tom Daschle was going to be Obama’s point guy on health care, I sent off for a copy of his book Critical. It’s a fast and easy read, but in its examination of the problem it doesn’t add much to superior books on what’s wrong with health care.

First, the former Senate Majority Leader promotes himself as a scholar of failed attempts at health reform past, and of course a witness to the most recent attempt. He’s been here, and seen this done wrong.

Critical

But the actual coverage solution Daschle proposes is to essentially expand the insurance program that covers federal government workers (something called the Federal Employee Health Benefits Program) with some improvements made by states like Massachusetts and to impose a pay (the government) or play (by providing insurance) option on employers. Daschle would also expand Medicaid and the current insurance for poor children – and then add an individual mandate with subsidies to those who can’t afford to buy-in to FEBHP.

This package is tied together, sort of, by a Federal Health Board.

Daschle lucky that he didn’t call this board Fannie Med, but he’s a victim of poor timing as he links his health board’s success to the accomplishments of the Federal Reserve at a time when that “success” is looking, shall we say, shaky.

The main role of the Federal Health Board would be as a cost-effectiveness review organization with teeth since that Medicare, Medicaid and the (newly expanded) federal employees benefit plan would all be bound to follow its guidelines. So essentially he’s advocating the creation of a national health insurance benefits package with federal supervision on rates and practices.

Critics on the loony right (old reliable Sally Pipes there in the Wall Street Journal) will call this rationing. More thinking critics will call it the slow emanation of a messy single payer system. That’s essentially what it’ll turn out to be as the private plans toss the worse (and most expensive) health risks into the federally supported pool and employers steadily get priced out of providing health benefits. Daschle, would be happiest with a U.K.-style single payer with a trade up option, but dismisses that course as unrealistic for the U.S. He also dismisses as unrealistic moderate attempts by Sen. Ron Wyden attempts to decouple health care insurance from employment and create a truer “market” based on social insurance (which is closer to the Dutch model).

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Review: Free Lunch

Few of the books I’ve read lately have been quite as staggering as Free Lunch, from former New York Times investigative reporter David Cay Johnston who, heroically, made his career writing about – brace yourselves – the U.S. tax code. Free Lunch is a fabulous book by a veteran investigative reporter giving you his life’s work–a look at how corporations and wealthy Americans have profited, again and again, at the expense of you and me.

Johnston’s best known for his exhaustive investigations at the Times into how corporations and very very rich individuals subvert U.S. tax law so that they pay less to the government, while the rest of us pay more. But in this book – written after he’s free of the “responsibility” of being a Times reporter – he gets almost biblical in calling out the cheats, crooks and murderers.


“Free Lunch”

And when I say murderers, I’m not fooling. In that case, Johnston is talking about John Snow, President George W. Bush’s former Treasury Department secretary – the one who did such a great job regulating the sub-prime mortgage market back around the turn of the century that the potential for a credit and housing collapse in the latter part of this decade was avoided…Oh, wait. Nevermind.

Snow was CEO of CSX Corp. the railroad which, Johnston shows, sucked entirely off the public teat, and systematically and knowingly reduced the amount it spent on train and passenger safety – and also subverted the safety inspectors who were supposed to enforce the law – to the point that train crashes and railraod passenger deaths dramatically increased. Even worse, when CSX was successfully sued by the wife of a Miami cop who died in a crash, somehow the company managed to get Amtrak – the government-supported train service – to pay the penalities demanded by the court, not the CSX’s CEO or the shareholders. Yup, you and me paid for it. That of course didn’t stop Snow from raking tens of millions off CSX over his tenure, even as the stock price fell.

My usual bailiwick, health care is not spared Johnston’s wrathful scrutiny. I was amused last year when Bob Gumbiner who made tens of millions converting FHP International Corp., from a non-profit HMO to a for-profit sent me his book proclaiming that a single-payer socialized system was the answer for America. Johnston reminds us how Gumbiner essentially defrauded the state of California out of about $200 million (in 1986 dollars!) when he bought FHP on the cheap. Same with Wellpoint CEO Len Schaeffer, who’s initial attempts to pay nothing when Wellpoint/Blue Cross converted from non-profit to profit-making insurance company were eventually at least partially blocked.

It’s good to know that in the course of Schaeffer, Gumbiner and others like United HealthGroup CEO and options cheat Bill McGuire becoming gazillionaires, the health care system became cheaper and all the problems with access got fixed….Oh wait. Nevermind.

But it’s not just large corporations that feel Johnston’s wrath. He goes after the welfare queens who run sports teams (George Steinbrenner, George W. Bush) and the politicians who tax the poor and middle class to pay them huge subsidies. In fact organized sports in the U.S. makes a profit for their owners that is less than the amount of public subsidies they receives for stadium construction and other “incentive” tax breaks. That’s right – we’re all paying for the billions those owners make, often in the name of urban renewal or economic redevelopment.

Johnston presents a long line of industries and individuals who have lobbied to change the rules that benefit the rich at the expense of everyone else. You think Warren Buffet is some cuddly grandfather who gets a free pass cause he’s a Democrat who’s giving it all away to charity? Not in Johnston’s world. Johnston shows how lobbyists for electric utilities Buffet owned systematically went after municipalities in Iowa and prevented them from competing with him in the power business. Buffett didn’t stop the municipally-owned power utilities in the free market; he stopped them by paying off politicians.

This is part of Johnston’s look at de-regulated electricity “markets” – the kind brought to you by Enron and its “kept” politicians which were systematically rigged against consumers. It was news to me but he shows that there’s theoretical and actual proof that municipally-owned plants are cheaper (and more reliable) sources of electricity. Something, by the way, that the residents of Sacramento, Palo Alto and Los Angeles know and that those in San Francisco would like to find out … which is why PG&E’s ads against the public power initiative on the ballot in my home town have started two full months before the election.

That pattern is repeated over and over again in the book. Under the cover of obfuscation and with the co-operation of an emasculated corporate-dominated media, politicians at the state and federal level take campaign contributions to do the bidding of wealthy men and corporations who, in return, do anything they can to suck more from the public teat and to avoid paying their fair share. The final tally: The richest 400 families in America, making over $100 million annually, pay a lower proportion of their income in tax than the rest of us.

Johnston ends the book laying out the income data. And although we know it, it’s staggering. All of the gains in the last thirty years have gone to the top 10% income bracket. Everyone else has seen their incomes go down in real terms and of course their share of the nation’s wealth plummet. But wait there’s more (a catch phrase Johnston likes!). The bottom half of the top 10% are standing still and it’s only the top 5% who have gained, and most of that gain is in the top 1% and most of that gain is in the top 0.1%.

After 35 years of “free marketeers” running their own version of corporate welfare, we are a nation that has an income distribution that looks like Mexico, Russia or Brazil. Or like France before 1789.

Revolution anyone?

The Primary Care Conundrum

Ask any health care wonk and they’ll tell you that within the larger health care crisis is a primary care crisis. There is more and more demand for primary care physicians – the person you probably call your “family doctor” – but America’s medical schools are producing fewer of them.

Why? Well in a word, money.

It’s not actually medical school that’s the problem. It’s what happens next. A newly graduated physician, carrying a big chunk of debt used to pay for medical school tuition, gets to chose their residency and, as such, decides what type of doctor to become.

In the U.S. we let medical students choose what to do. Not being dummies, most of them notice that diagnostic radiologists and orthopedic surgeons make three times what primary care doctors make, and choose their career path accordingly. Why the vast difference in compensation? Doing something to a patient – fixing a broken hip, reading an x-ray – has always been better rewarded more than talking to them about their high blood pressure or their son’s excema.

And while the taxpayer has subsidised teaching hospital residency slots to the tune of a more than $100 billion over the last two decades, the government doesn’t limit the number of those slots by specialty type. Most sensible countries do because they know that the more specialists there are the more specialty care gets done. And specialty care is very expensive. Which is the main reason we spend so much more on health care here than in other countries. In 1965, primary care doctors made up 50 percent of physcians; the other half were specialists. Today, about 70 per cent of America’s doctors have become specialists. Most other countries have the reverse ratio.

There were two major attempts to redress the imbalance in the 1990s. First, managed care plans like HMOs started paying primary care physicians a global fee to provide all care to their patients. In some cases this meant that primary care groups started acting as general contractors and ended up reducing the specialty and hospital care their patients received — and keeping more money into the bargain. In some markets, notably southern California, specialists saw their incomes drop dramatically. Politically this resulted in the ‘managed care backlash’. Patients and specialists complained, politicians and judges threatened, and insurers and employers who were paying for the HMOs backed off. Worse the insurers started cutting payments to the primary care groups and many doctors ended up bankrupt — having taken on insurance-type risks that they couldn’t manage: getting paid to treat a group with a range of illnesses and problems and incomes rather than one or two not-so-sick people with fat wallets.

The other attempt to improve the lot of the primary care doctor was the introduction of a physician payment scheme by Medicare called the Resource-based Relative Value Scale (RBRVS). The name underlined the intention. Payments to doctors were meant to be based on the relative value of resources used. So a unit of time spent managing patients and talking to them about exercise for high blood pressure, for instance, would be close in value to a unit of time cutting them open.

Unfortunately, America’s specialty societies hijacked the process and they now control the somewhat secretive RBRVS Update Committee, which advises Medicare on those payments. So specialty care and procedures remain much much better rewarded than primary care. In the nearly three decades after this problem was first recognized, it’s becoming harder and harder to find primary care doctors. It’s going to get worse; last year the number of medical students opting for primary care fell to an all time low.

So what’s the likely outcome? Medicare clearly will take a hack at redressing the imbalance in payments as part of whatever reform happens in 2009. But unless the specialists and the hospitals that live in symbiosis with them are ready to significantly and voluntarily cut their incomes and reallocate that money to primary care, there will not be enough money for primary care to solve the current shortfall. And the U.S. is not seriously going to tackle – let along address – this problem as a matter of public policy until the whole system breaks so severely that more people demand massive reform. Such a time is still at least a decade or so away.

In the meantime, the market will have a go at addressing the primary care shortage. but it won’t do it in ways that primary care doctors will like. You’ll continue to see an expansion in nurse practitioners in retail clinics in supermarkets and drugstores. And more and more people will become frustrated by the lack of availability of primary care docs in their neighborhood and will go online where they’ll find plenty of entrepreneurial companies offering Internet consults. Of course if an online consult is good enough – and it probably is in many if not most cases – why does that doctor need to be in the same town, or even the same country? Or if it’s a diagnosis that requires extensive medical knowledge, why can’t a computer do it as well? Why not indeed? You’ll see all this happening in the next few years as well.

In fact, the result of the primary care crisis may not be inspired reform. it may instead just end up causing globalization and technology outsourcing to come into physicians’ lives. Just like it has to auto workers, steel workers and call center clerks.

An Expert Dilemma

I want to ask your help. I have to make a financial decision regarding my health insurance and given the confusion of the system – one I’m supposedly expert in – I need advice.

Now realistically you’re not likely to be much good to me. Why do I say this? Well, the data says you’re dummies.

Last week Trizetto, a private tech company, put out a survey that said as much. While 80% of consumers surveyed were concerned about health care costs, less than a third knew how much their family spent.

It gets worse. Around 60% of Americans, including the vast majority of those under 65, get their insurance from their employer. How much are employers paying each year? Well according to Joe Public, not that much. Most don’t know or think it’s less than $5,000 per family. In reality it’s around $9,000.

But I’m not one of the blissfully ignorant who gets his insurance at the company trough. Well, not quite. And hence my cry for help.

As a solo consultant I buy my insurance in the gong-show that is the individual insurance market. It’s an convoluted process in which you attempt to persuade an insurance company that you are healthy and worthy of their lowest premium rate. About four years ago I succeeded in this endeavor and Healthnet issued me a high deductible policy at the low price of $99 a month. I’m paying nearly $200 a month now because of premium increases, but that’s still way less than I would have paid if HealthNet had decided that I wasn’t a good risk.

Now California, where I live, doesn’t do much to protect individuals entering the insurance market but once you’ve bought an individual policy, the insurer can only increase the rates with everyone in your age group. But if you let the policy lapse and then try to buy another — usually because you went back into the corporate world and then left again — they’ll re-examine your medical history. If anything has gone wrong – surgery, illness, funny blood work – you might see your rates increase by a factor of 4 or 5. More likely, you won’t get insurance at all.

That’s not currently my problem. This is: I got married.

My wife has a job and health care benefits. She put me on her company plan for an extra $50 a month.

This year my individual premium is heading to $250 a month. Now most of you are saying, why is he continuing to pay $250 a month when his wife is paying $50 to cover him on her plan? The obvious thing is to cancel my HealthNet plan.

But what happens if my wife comes to her senses and stops being my wife? If that happens I’d be better off keeping my plan at $3,000 a year because if I have to buy insurance again in a year or two, and they decide I’m not a good risk, it might cost me $12,000 a year!

It gets more complicated. If my wife stops working, we could buy into her company’s plan under something called COBRA for another three years. But if we decide not to do that we might have to re-apply in in the individual market as a family which means being underwritten again – and running the risk of being a bad risk. So, perhaps we wouldn’t be able to buy insurance, and we’d both be in deep trouble!

And like the rest of the dummies in the survey I don’t know how much my wife’s employer plan actually costs. When you pay for COBRA you pay the whole fee: the employer does not chip in. So I need to find out, and work out the possible future costs. And if you figure into that the relative chance of my not being married and therefore not being able to buy into my wife’s plan my $3,000 in “extra” insurance starts to make a kind of odd sense.

But this all begs a question: Why? The current health insurance system has so many complex wrinkles that an alleged expert (me!) is not sure what to do. There aren’t any good choices, and the decision analysis requires PhD-level economic forecasting. Which makes Republican nominee John McCain’s plan to force these decisions on more people, by giving tax incentives for people to drop their employer’s plan, a mite puzzling.

If this keeps going long enough, the political revolt may create a stable universal insurance plan that will cover me. OK now I’m really kidding.

So can someone tell this dummy what to do?

Health Plans Behaving Badly

Several of the same health plans have been busted by the agency that oversees them, the Center for Medicare and Medicaid Services (CMS) fraudulently marketing these Medicare plans to seniors by doing things like telling them that there were no premiums when there were, telling them that they didn’t need to change doctors when they did, and saying that various procedures which Medicare covered were also covered under these plans when they weren’t

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It’s A Sicko World

There’s so much wrong with Michael Moore’s Sicko that it’s embarrassing, especially for a health care pundit, to reveal the emotional punch it gives you. You know that your head is being bowled over by your heart, and you also know that it’s very, very cleverly done.

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Her Majesty’s Healthy Service

I was born a Brit but I moved to America in my mid-20s, fell in love with the sun and the fun in California, and never plan on going back. This apparently is bad for my health. On the other hand, perhaps I should move to Canada. Yup, both the Brits and the Canadians apparently are healthier than Americans.

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