Archive for the ‘insurance’ Category

Before Thanksgiving, the Senate voted to opening debate on President Obama’s health-care bill, and that debate has begun in earnest this week.

Well, if they want a debate, let’s let them have it. But let’s not get distracted by the sideshows Senate Majority Leader Harry Reid has planned for us.

Forget about abortion. Of course the left will accept restrictions on funding for abortion, because they want to keep moderate Democrats on board for the goal they know is really important: giving the government a dominant role in health care. Everything else is just details, and funding for abortions is an issue to which the left can return at leisure later on-once government is firmly in charge of everything.

And don’t bother debating the “public option,” either, because it’s already dead; enough Democratic senators have come out against it. But Harry Reid is all too happy to have a debate over the public option so he can make a show of “compromising” and giving it up. And while we’re having that fake debate, he’s hoping that we won’t be challenging everything else in the bill.

So let’s get straight what the real essentials of the bill are-and how disastrous they are.

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Initially, the insurance companies supported the proposed healthcare reform because they thought it would increase revenue by forcing more citizens to purchase health insurance or face a hefty fine. Now they have decided to oppose it because the fine is not large enough to provide the incentive for people to scare people into buying healthcare. What the insurance companies don’t understand is that once the government gets into the arena the whole game is lost. The insurance companies should be fighting to keep the government out of the private insurance market as much as possible.

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A response to T R Reid’s recent, interesting article in the Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2009/08/21/AR2009082101778.html).

I will discuss each of the myths not necessarily in an effort to refute the author’s point but rather to add some depth and counterpoints that are worth considering.  His commentary makes some excellent points but leaves out some important distinctions not all of which have I touched upon. 

Myth #1: It’s all socialized medicine out there. 

The author is correct to point out that there are varying degrees of ‘socialization’ of medicine world-wide.  It appears that his definition of ‘socialization’ is whether the facilities are government property and the care providers are government employees.  The real issue is the degree to which the government is involved in, and influences, the health care sector.  For example, he cites Japan as a country that provides care  entirely through private sector mechanisms but does not mention that the government sets the prices, control reimbursements, and citizens are required (by law) to pay into a mandatory employer-based system.  Sure the government doesn’t own the assets but it effectively controls them through reimbursements and pricing controls.  

The author cites the US Veterans Administration as one of the most ‘socialized’ systems in the world- this is true and it is also true that it is considered to be one of the poorest quality, least customer friendly systems in the world (along with the US Native American system). 

So one big question is: given the US tradition of individual liberty/responsibility just how much government intervention/control do we want in the healthcare sector?  Which begs a second, more thought provoking question- what is the appropriate relationship between the individual and the government? 

Myth #2: Overseas care is rationed through limited choices or long lines. 

This statement is true in the more ‘socialized’ systems of Canada (see the Frasier Institute’s report “Waiting Your Turn”) and the UK (over one-million people awaiting treatment at any one time; one in five colon cancers progresses to an untreatable state while waiting for treatment). Other nations (France, Japan, and others) use co-pays to manage demand for medical services.  Unlike in the US where the percentage of healthcare that is paid for by patients is dropping, in France and Japan the percentage of health care paid by patients is going up.  This is achieved through a combination of increased co-payments (from 10-40% in France) and increased taxes.  In such cases, the government has constructed barriers to utilization by effectively pricing consumers out of the market.  This is not a bad idea in that it helps avoid the Samaritan’s Dilemma that we face with Medicaid here in the US- unlimited demand for a ‘free’ product.  Recently, Investors Business Daily published an editorial discussing how increasing healthcare costs in France are forcing higher taxes and co-pays.  (http://www.ibdeditorials.com/IBDArticles.aspx?id=336178343967257

The author claims that “Germans can sign up for any of the nation’s 200 private health insurance plans — a broader choice than any American has.” While technically this is true as most Americans are limited in their choices to the plans offered by their employer, actually there are over 1,000 providers of health insurance in the US.  Americans who receive health insurance through their employers do have their choices artificially limited by their employer as usually the employer chooses one insurance company and offers only that insurer to its employees.  Employees have an incentive to use that insurer in order to take advantage of the tax benefit given to employer-based coverage.  A change in the tax treatment of health insurance expenditures would better open up the market for individuals so they could purchase what they wanted and it could even allow companies to cut their overhead by getting rid of the administrative functions that currently manage their benefits programs.

Myth #3. Foreign health-care systems are inefficient, bloated bureaucracies.  

There are two responses to this: First, regardless of which country you consider,  (France, Germany, Switzerland, the US, etc.) they all have a cost control problem- health expenditures are blowing out the budgets and causing nations to take steps to either raise revenue (more taxes/fees) or limit utilization (waiting lists or higher co-pays).  At a basic level, it does not really matter what the administrative costs are if the whole system is in the red.  Second, the profit motive of private insurers also reduces the amount of fraud as they have an incentive to control fraud.  The fraud and corruption in the Medicare/Medicaid programs run into the billions of dollars- the state of Florida recently investigated a group of HIV clinics and discovered that several of them were actually pizza parlors; one woman submitted thousands fraudulent Medicare/Medicaid claims through her laptop and was reimbursed tens of millions of dollars. 

It is noteworthy as well to consider that no nation with a highly centralized healthcare system is nearly as large as the United States- either geographically or demographically.  One finds it difficult to conceive of the scope of the bureaucracy necessary to manage a healthcare system this large- just consider how large and complex the Medicare/Medicaid/VA complex is and they don’t cover even half of the US population.  As recently as 2004, the National Health Service of the UK was the 3rd largest employer in the world behind the Chinese Army and the Indian rail service.  Consider the implications if the US system becomes more centralized than it already is.

Myth #4: Cost controls stifle innovation.  

In response to this I will quote directly from a 2008 Cato Institute Study on health care systems in other countries (http://www.cato.org/pubs/pas/pa-613.pdf ). 

“Moreover, the United States drives much of the innovation and research on health care worldwide. Eighteen of the last 25 winners of the Nobel Prize in Medicine are either U.S. citizens or individuals working here.32 U.S. companies have developed half of all new major medicines introduced worldwide over the past 20 years.33 In fact, Americans played a key role in 80 percent of the most important medical advances of the past 30 years.34 As shown in Figure 2, advanced medical technology is far more available in the United States than in nearly any other country.35 The same is true for prescription drugs. For example, 44 percent of Americans who could benefit from statins, lipid-lowering medication that reduces cholesterol and protects against heart disease, take the drug. That number seems low until compared with the 26 percent of Germans, 23 percent of Britons, and 17 percent of Italians who could both benefit from the drug and receive it.36 Similarly, 60 percent of Americans taking anti-psychotic medication for the treatment of schizophrenia or other mental illnesses are taking the most recent generation of drugs, which have fewer side effects. But just 20 percent of Spanish patients and 10 percent of Germans receive the most recent drugs.37 Of course, it is a matter of hot debate whether other countries have too little medical technology or the Unites States has too much.38 Some countries, such as Japan, have similar access to technology. Regardless, there is no dispute that more health care technology is invented and produced in the United States than anywhere else.39 Even when the original research is done in other countries, the work necessary to convert the idea into viable commercial products is most often done in the United States.40 By the same token, not only do thousands of foreign-born doctors come to the United States to practice medicine, but foreign pharmaceutical companies fleeing taxes, regulation, and price controls are increasingly relocating to the United States.41 In many ways, the rest of the world piggybacks on the U.S. system.”

It is also true that foreign consumers benefit from the presence of the US healthcare system because US consumers pay higher prices for drugs thus enabling pharmaceutical companies to recoup the R&D costs required to develop new drugs.  The ‘low’ costs negotiated by other countries are sufficient to cover the incremental (marginal) costs of a new drug but not the fixed costs thus the US consumer is subsidizing innovation for the rest of the world.  To put it another way, pharmaceutical costs to US consumers are kept artificially high because consumers in other countries are paying too little for the medicines.

Consider also, that when people the world over want the best healthcare they can get- they come to the US.

 Myth #5: Health insurance has to be cruel. 

No doubt insurance companies have some culpability in this area- there are plenty of accurate stories of heartless behavior.  There are three responses to this: first, the great thing about having a market with over 1,000 providers is that if you are not happy with the product you are receiving you can change to another provider (just as you would with housing, food, or transportation).  In places where there are few providers or where the providers have very little autonomy, the consumer has very little recourse in cases where they have been ill-served.  Second, the purpose of insurance is to protect against significant/catastrophic loss not to handle every little niggling, minor expenditure that comes down the pike.  To the extent that consumers/regulators/government have expected insurers to handle everything, the insurance companies have responded by creating systems to enable them to control costs, pay accurately, AND  try to serve customers (with varying degrees of success).  In addition, insurance companies have had to deal with an increasing regulatory burden: 30 years ago there were approximately 250 state mandates on health insurance companies, now there are almost 2,000.  In addition, laws require the insurance companies to maintain separate companies within each state in which they do business.  Consumers are not allowed to purchase health insurance from outside their state of residence.  (Health insurance in New Jersey is several times more expensive than health insurance in other states).  Such regulatory constructs automatically drive up the cost of insurance.  Third, neither insurance companies nor the government is responsible for an individual’s health.  Individuals take decisions every day that have more long term (and short term) influence over their health than almost anything an insurer or the government does.  The problem usually comes when the sum of poor decisions results in a health problem or crisis.  Individuals do not want to take responsibility (in the form of bearing the cost) for their decisions and seek instead to transfer the costs to others.  In an insurance setting this handled through the mechanisms of risk pooling and pricing adjustments while in a more government controlled system this is addressed by transferring the cost to other tax payers in the form of taxes and fees.

What are described as ‘insurance companies’ internationally are not really anything more than payment clearing houses as they do very little to pool and manage risk.   Thus, comparing them to US insurance companies is not accurate.  It would be more accurate to compare their activities to the payment/fulfillment functions of Medicare/Medicaid. 

The HIPA Act of 1996 provides for pre-existing conditions- if you have been insured for the previous twelve months you cannot be rejected for a pre-existing condition with the exception of a waiting period for coverage which is shortened by the amount of time within that preceding twelve month period you were insured. (http://www.dol.gov/ebsa/faqs/faq_consumer_hipaa.html

Finishing notes: Much has been made of the World Health Organization rankings that showed the US as having the 37th ranked health care system in the world.  I encourage you to read the CATO Institute’s analysis of that ranking and it’s study of other national health care plans @ http://www.cato.org/pubs/pas/pa-613.pdf .  The analysis shows that in a qualitative, non-politicized study the US would have ranked much higher.  I have also used the information in the study in this response. 

In addition, we hear commonly that 46-47 million people are uninsured in America.  Sally Pipes at the Pacific Research Institute, in an article in the Washington Examiner, breaks down the numbers and shows that the reality is much different.  Feel free to read about it at: http://www.washingtonexaminer.com/opinion/columns/More-OpEd-Contributors/The_truth_behind_the_Census_Bureaus_insurance_figure.html

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Source: www.ibdeditorials.com

By INVESTOR’S BUSINESS DAILY | Posted Wednesday, August 26, 2009 4:20 PM PT

Health Systems: Health care in France is often held up as a model the U.S. might follow. Yet the French have their own problems that show there’s no such thing as a free lunch — or a free doctor’s visit.

Call it the grass-is-greener syndrome. Advocates of national health care, acknowledging the flaws in ObamaCare yet despising the current U.S. system that has the best medicines, the best medical equipment and the shortest waiting lists, have turned their eyes lovingly to places like France.

As City Journal contributing editor Guy Sorman notes, the French would also love to have the low-cost, high-service system some Americans gush about. Unfortunately, they don’t. France’s system isn’t that cheap and is financed by high taxes on labor that have heavy economic consequences.

Sorman notes that a Frenchman making a monthly salary of 3,000 euros has 350 of them deducted for health insurance. Then the employer throws in an additional 1,200 euros. This raises the cost of labor to prohibitive levels and puts a brake on economic growth. This helps explain why French unemployment hovers around 10%.

France imposes an additional tax levy to cover the constant deficits that national health insurance runs.

The French Parliament raises this levy, which applies to all forms of income, every year. Altogether, Sorman writes, “25% of French national income goes toward what’s called Social Security, which includes health care and basic retirement pensions for all.”



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Source: AmericanThinker.com

By Zane F Pollard, MD

I have been sitting quietly on the sidelines watching all of this national debate on healthcare. It is time for me to bring some clarity to the table by explaining many of the problems from the perspective of a doctor.
First off, the government has involved very few of us physicians in the  healthcare debate. While the American Medical Associationhas come out in favor of the plan, it is vital to remember that the AMA only represents 17% of the American physician workforce.

I have taken care of Medicaid patients for 35 years while representing the only pediatric ophthalmology group left in Atlanta, Georgia that accepts Medicaid. For example, in the past 6 months I have cared for three young children on Medicaid who had corneal ulcers. This is a potentially blinding situation because if the cornea perforates from the infection, almost surely blindness will occur. In all three cases the antibiotic needed for the eradication of the infection was not on the approved Medicaid list. 


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This was mailed to our Senator today:

The healthcare reform bill under consideration in the Senate would would not solve the healthcare problems in America.  It would destroy the private insurance market, create a massive new government bureaucracy, and it would codify and expand the inefficiency/ineffectiveness that we currently see in the Medicaid, Medicare, and VA systems.
The headlong rush to ‘do something’ can only result in huge mistakes being made.  Many of the problems that we currently face in healthcare can be addressed by some simple reforms that would empower citizens and physicians to manage healthcare and bring more free market discipline to the healthcare sector.  Here are some examples: Allow everyone to get the same health insurance tax benefit that only employers receive today, open up the health insurance market so that individuals can purchase from a provider in any state, expand/enhance the use of HSAs, and tort reform.
Please do not fall for the notion that government programs solve problems.  America became great and is great not because the American government is great but because the American people are free and good.  The role of the government is to protect that freedom and allow every American to succeed or fail according to their own abilities and efforts.  Please do not forget that the government exists to serve the citizens not the other way around.
We are praying for you and your colleagues.


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Source: Bloomberg.com

Commentary by Caroline Baum

President Barack Obama has been exhorting lawmakers to use the August recess to read health- care-reform bills currently before Congress.

In other words, if the president had gotten his way, members would have voted first and read second legislation to revamp one-sixth of the U.S. economy. No wonder public support for both Obama and his health-care plan is eroding, according to recent polls.

Yes, people are resistant to change, as the president noted, especially when it comes to something as important as their doctor. But maybe something else is at play: the growing realization that the numbers don’t add up.

I listened to Obama’s July 29 town hall meeting in Raleigh, North Carolina, hoping to understand how the government plans to deliver more for less, to cover most of the 46 million uninsured Americans while lowering premiums, limiting out-of-pocket expenses and requiring insurance companies to cover preventive care.

I heard Obama say a lot of people will get a lot more without anyone getting less.

I heard him say two-thirds of the cost of covering everyone in America can be paid for “by money that is already in the health-care system.”

I heard him say he favors a public option to increase competition and keep costs down.

I heard him say he “will not sign a health-care bill that is not deficit neutral” and that doesn’t lower health-care inflation over the long term.

Let’s see how some of these claims stack up:

1. Mind Your P’s and Q’s

Obama wants to insure more people and lower the total cost of care. In economic terms, he wants to control price (P) and quantity (Q). What makes Obama think he can repeal the law of supply and demand?

To achieve higher Q and lower P, the supply curve has to shift outward, to the right. How does the government plan to increase the supply of health care? By making it less attractive to young men and women with a passion for medicine and a desire for independence?

Obama says he wants to encourage medical students to become primary-care physicians via financial incentives, reversing the trend toward specialization, which is where the money is.

Easier said than done, says Paul Feldstein, professor of health-care management at the Paul Merage School of Business, University of California, Irvine. “It takes a long time to produce more doctors.”


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