July 13th, 2009 by DrRich in Better Health Network, Health Policy
No Comments »
Even with the soaring popularity of our new President, and the general feelings of goodwill projected toward him by Americans and non-Americans alike, and despite the fact that the party he leads holds large majorities in both houses of Congress, and despite the general agreement by both political parties and by all the major stakeholders in the healthcare universe that the time has finally arrived for substantial reform, one gets the sense that Mr. Obama is losing some of the initiative on his healthcare reform plan.
Some of the leaders in the Democratic party (who, really, are the only ones who count) have balked at the price tag that has been attached to the Obama proposals (estimated currently at $1.5 trillion over 10 years, and most admit this projection uses the rosiest of assumptions), and now they’re balking as well at the much-desired (by the Obama administration, at least) “public option,” the Medicare-like insurance plan for all.
Worse, new schemes for healthcare reform – schemes which differ in fundamental ways from the Obama proposals – seem to be springing up all the time, and furthermore, many of these new proposals seem to be taken seriously by the press and by members of Congress. Even if none of these new plans ever ends up going anywhere, the mere fact that people in positions of authority are calling for them to receive honest consideration is a strong indication that the Obama plan might not come to a vote any time soon.
It is also a sign that Congress might be balking a bit, preparing to break sacred protocol, and actually preparing to subject any healthcare reform bill to careful consideration and debate prior to voting on it. Such action would be in stark contrast to the now-standard practice – honed with the TARP bill, the first (and one prays, only) stimulus package, and (in the House) the Cap and Trade bill – of voting on major legislation without a single congressperson taking the time to read it.
It seems clear (to DrRich at least) that the administration’s overarching strategy is (while invoking a sense of ultimate urgency), to ram through all of its incredibly high-cost policy initiatives, before the general sense of crisis and panic among the populace dissipates, and before sober reflection reveals to us that we’re already hamstringing our posterity with crippling debt. (Our motto: What’s our posterity ever done for us, anyway?) So any delay can only spell trouble for the Obama health plan.
Fortunately, DrRich is here to reassure the Obama administration that the thing is still well in hand. While the road may be a bit bumpier than you might have hoped, it still leads where you want to go.
To see why, one simply needs to consider for a few minutes those alternate reform proposals now circulating amongst policy wonks. DrRich will briefly describe three of these alternative proposals, ones that seem to have gained at least some traction, and which may on the surface seem to be quite good (and thus the most threatening to the Obama plan). Then he will demonstrate why these plans simply cannot work.
The Healthy Americans Act, sponsored by Sen. Ron Wyden (D-Oregon), requires that individuals buy private health insurance that at a minimum would offer “Blue Cross standard” care. Individuals would be able to afford this insurance (which will be available to all regardless of age or medical history) because everybody would get a big raise (by statute) when their employers no longer have to buy it for them. People earning less than 400% of the poverty level would receive government subsidies to purchase their own insurance. The Wyden plan has the great advantage of having been “certified” as being budget-neutral by 2014 – so “officially” it would be a trillion or two cheaper than the Obama plan over the next decade.
The Patients’ Choice Act, sponsored by four Republican Congressmen (Coburn, Burr, Ryan and Nunes), also places ownership of health insurance in the hands of individuals, instead of the employers. Individuals will buy their own insurance, which will be available to all, and which will be available through one-stop shopping via state-run “regional insurance exchanges.” Families will recieve a tax credit of $5700 ($2300 for individuals) to purchase this insurance, and those with low-income would receive further subsidies. Those who do not make an active insurance choice will be automatically enrolled in a private plan paid for by the tax credit.
And finally (finally for this blog post, at least), there is Bob Laszewski’s proposal, the Health Care Affordability model. Laszewski is a noted healthcare blogger and well-respected policy expert, and accordingly, his proposal is being taken quite seriously by some members of Congress. Laszewski is so smart and his proposal is so detailed that one with DrRich’s limited capacity has difficulty getting through the whole thing. But essentially he proposes to have the feds set formal cost-cutting targets which every private health plan must meet. Those who fail to meet these targets will lose their tax advantages (i.e., companies that continue to provide their products will no longer get tax deductions). Clearly, this will provide a strong incentive for insurance companies to meet those cost targets, and healthcare costs will, accordingly, eventually come under control. Lazsewski emphasizes that his proposal is not really a stand-alone plan, but can be attached to any other plan that’s out there. It will simply give insurance companies the added incentives they need to actually cut costs.
Now, DrRich is not opposed to any of these plans. In fact, he rather likes the Wyden plan and the Republican plan, because they both place the consumer in charge of choosing his/her own health insurance, and they provide for better competition among insurance products within the marketplace.
But alas, all of these alternate plans (and any plan that relies on private insurance) are doomed. The reason is simple. As DrRich has pointed out several times in the past, health insurance companies are no longer interested in providing health insurance. You can’t institute a healthcare reform plan that relies on private insurance – no matter how logical and wonderful that plan might otherwise be – when the insurance companies are all desperately seeking an exit strategy.
People, listen up. The health insurance companies just don’t want to play any more.
Private insurance companies have had 15 years of more-or-less unfettered free-reign to institute any efficiencies they want to. They entered the fray in 1994 (after vanquishing with extreme prejudice the Clinton’s attempt at healthcare reform) with great confidence and enthusiasm, cheered on (initially, at least) by the public and by public officials alike. In the ensuing years they’ve tried all kinds of legitimate ideas for reducing healthcare costs, such as managed care, gatekeepers, clinical pathways, disease management programs, pay for performance, wellness programs, medical homes, and even a ruthless consolidation of the industry to achieve “efficiencies of scale.” They’ve also tried sneaky and underhanded ideas for reducing cost, like cherrypicking patients, making specialty care as inconvenient as possible, browbeating PCPs into zombie-like compliance with care directives, refusing to cover expensive-but-effective services, and cancelling the policies of tens of thousands of patients after they get sick, based on trumped-up technicalities. They’ve tried everything short of dispatching teams of Ninjas in the dark of night to slaughter their most expensive subscribers in their beds.
Yet the cost of healthcare continues to skyrocket, entirely unabated. And despite annually increasing their premiums by more than 10%, insurance companies can see that they have no prospect of long-term profitability.
The insurance companies have shot their wad. They are in despair, entirely bereft of ideas. They want out, and they are now working their exit strategies as hard as they can.
The last thing they want is for Congress to adopt the Wyden plan, or the Republican plan, or the Laszewski plan, or any plan that relies on THEM to figure out how to get healthcare costs under control. They regard such a prospect with the same enthusiasm you’d get if you told a battered, shell-shocked WWI doughboy to leap from the trenches one more time, and trudge through bullet and shell, across 200 yards of mud, blood, barbed wire and bodies, to attack that same machine gun nest once again. Somehow they just don’t believe that, this time, the results will be any better.
This is why the insurance companies are “complicit” with the Obama plan. The Obama plan offers them, at worst, a graceful exit strategy that they can break gently to their shareholders, over time. With luck, they may end up with a long-term business as claims processors for a government plan. They may even get one last windfall in profits, from government-supplied insurance premiums for some of those 47 million uninsured. At the very least, the Obama plan won’t expect them to control the cost of American healthcare. Indeed, the Obama plan expects them to be completely incapable of competing with its public insurance option.
The Obama plan will allow the health insurance companies to stay in the relative safety in their trenches, hunker down, and await the armistice. Any alternate reform plan that hopes to be successful will need to offer the insurance industry a deal at least as sweet.
So as the move toward healthcare reform begins to bog down, President Obama still has an ace in the hole: the insurance industry has nowhere else to go. The support Mr. Obama enjoys from that industry is offered not out of mere political expediency, but out of utter necessity. The undying support of the insurance industry will likely make the administration’s healthcare reform plan unstoppable.
DrRich is glad to have been able to ease the administration’s concerns as their hour of darkness approaches.
*This blog post was originally published at The Covert Rationing Blog*
June 22nd, 2009 by DrRich in Better Health Network
No Comments »
Thanks to Dr. Wes for pointing us to a remarkable video of a 20-year old Belgian soccer player having his life saved by an implantable cardiac defibrillator (ICD). DrRich hopes you will view it.
As it happens, DrRich will be traveling to Europe imminently at the invitation of Dr. Pedro Brugada, whom some call Belgium’s King of Electrophysiology, and for whom the Brugada Syndrome is namesake. (DrRich is deeply honored to be one of the “masters” at Dr. Brugada’s “Meet the Masters” event, which gives him the opportunity to spend two days with a hand-picked group of top European and American electrophysiology fellows. DrRich will undoubtedly learn a lot from them, and will try very hard not to ruin these fine young physicians before they’ve even started out.) In any case, one must suspect that Dr. Brugada (being, after all, Belgium’s King of EP) must have been somehow responsible for placing the ICD in this young soccer player.
DrRich will be sure to ask him how that young man managed to receive an ICD. Because most high-risk patients, in the U.S. and elsewhere, have to do without.
Despite the fact that ICDs are dramatically effective and dramatically life-saving in people who have dangerous cardiac arrhythmias (please do watch the video to see the drama for yourself), they are still used in only a tiny fraction of the identifiable patients who are at risk for sudden cardiac death. Consequently, in the United States alone, almost 1,000 patients each day die suddenly from cardiac arrhythmias who could have been saved by an ICD.
DrRich has written before about the covert rationing of ICDs, which is done so openly that one is tempted to drop the modifier “covert,” and has even written about how a former government official has admitted that he had no choice but to juggle the statistics of a randomized clinical trial (i.e., to bastardize the science) in order to avoid having to pay for ICD therapy in broader categories of patients. That’s old news, and there’s no reason to beat it to death again here.
Instead, DrRich would like to explore another question – Why are ICDs still so damned expensive?
Having worked closely with ICD manufacturers since the early 1980s (which, DrRich knows, makes him a very bad person), he perhaps more than most appreciates the engineering magic that has gone into making and improving these devices over the years. It is a truly remarkable thing that one can build a tiny implantable device that a) houses a computer that runs an extraordinarily sophisticated heart rhythm analyzer that, from beat to beat, accurately diagnoses the heart rhythm in real time; b) can deliver a tiny electrical pacing impulse to the proper cardiac chamber at the proper time, from beat to beat, to coordinate and optimize cardiac function; c) then, if a fatal arrhythmia develops, to deliver a very big shock to the heart within 10 – 15 seconds, to restore the rhythm to normal (please do see the video); d) wirelessly communicate via the Internet to tell the doctor (and anyone else who needs to know) its own condition and the condition of the patient; e) all the while surviving in a hostile, high-temperature, salt-water environment (i.e., the human body), for 5- 7 years, without (for the most part) corroding, leaking, rusting, blowing up, or otherwise malfunctioning.
Try to get your iphone to do that.
At this point, most of DrRich’s regular readers are likely expecting him to say: No wonder these beasts cost $15,000 to $25,000 apiece. Just look at the sophisticated technology that is built into them!
And it is indeed true that over the past 27 years, hundreds of millions of dollars have been invested in making ICDs smaller, more reliable, longer lasting and safer. It is also true that the companies that make these devices ought to be fairly rewarded for their efforts in this regard. And for many years (DrRich estimates that the “right” number of years was about 18) the high cost of ICDs was easily justifiable, given the steady, remarkable, important and meaningful improvements in technology that took place during that time, improvements that were being funded by the cost of the devices.
But DrRich argues that by the turn of the millenium, ICD technology had become largely mature, and that since that time improvements (while still happening) have been merely incremental. “Gingerbread” might be too strong a term, but nonetheless that’s the term that pops into DrRich’s mind. The fact is that by the year 2000, all ICD manufacturers were building reliable, safe devices that were really good at preventing sudden death, and improvements since then have not altered (or materially improved on) that fact.
Here’s a truth that ICD manufacturers would not like us to know: It only costs them a couple of thousand dollars to build an ICD. DrRich does not know the precise dollar amount (very few people even in ICD companies know these precise amounts) but based on his experience he cannot see how it could be much more than about $3000 per unit. Now, lest you think that the roughly $22,000 difference between the cost to manufacture and selling price is pure profit, it’s not. ICD companies continue incurring expenses as long as an ICD remains in service. These “lifetime” expenditures include monitoring of device function; maintaining expensive, rigorous quality and reliability processes; and backing up every implanted device with a large force of highly-trained and expensive field clinical engineers who are available to electrophysiologists 24/7, anywhere and everywhere, for “troubleshooting” and even for routine follow-up. All this “extra” stuff must be fully accounted for in the initial price of the device.
Still, ICD manufacturers make a very, very nice margin on every device they sell. Few businesses in the world enjoy this kind of price margin.
With all that “room” to play with, one might think market forces would by now have brought the price down for a mature technology like this, especially since over the past few years the growth of the ICD market has flattened, and ICD companies now must compete with each other for more market share if they want to grow their businesses.
But classic market forces usually do not work in healthcare, and that is especially true when it comes to ICDs.
It all begins with Medicare reimbursement, which sets the price for ICDs, and consequently the cost of ICDs is likely to remain at $15,000 – $25,000 forever.
Now, to be sure, the government does not directly determine what companies get paid for ICDs. Rather, they indirectly determine the price by deciding what hospitals and physicians will be reimbursed for implanting ICDs. Those reimbursement rates apparently vary substantially from region to region and hospital to hospital (who knows how the government determines these things?), and the rates are not publicly available to DrRich’s knowledge. But ICD manufacturers, at worst, can impute the reimbursement rates by figuring out the top price specific hospitals are willing to pay for ICDs (hence the range in prices).
Having determined the top price they can possibly get paid for ICDs, the only logical strategy for manufacturers is to figure out how they can always get paid that top price for every device they sell. They do this by making ICDs specifically aimed at keeping the decision makers happy. And the decision makers, by and large, are the electrophysiologists.
Electrophysiologists decide who gets ICDs, and they decide which ICDs to implant. So, to keep prices at the highest possible level, ICD companies must cater to the wants and needs of electrophysiologists (their true customers), and so must produce a steady stream of new, improved ICDs whose novel features are requested by these very high-end, high-maintenance physicians.
Electrophysiologists have a clear agenda in this regard. Their “demands” on ICD companies, expressed in rigorously conducted marketing surveys and focus groups, inexorably lead to ever more complex devices. This complexity helps electrophysiologists (a small community whose growth is tightly controlled) to maintain a professional stranglehold over the implantation and management of ICDs.
It’s a matter of turf protection.
Since ICDs are already exceedingly complex devices, and grow more complex with each succeeding generation, then “obviously” one must be a high-end specialist like an electrophysiologist to understand and manage all their nuances. (In real life, ICDs have become so complex that not even a majority of electrophysiologists can keep up with them any more, thus necessitating armies of “clinical engineers” in the employ of ICD companies who can do troubleshooting in the field.)
All the ICD manufacturer needs (and wants) to know is: what gingerbread do I need to add to my next generation of ICDs to make them even more stupefyingly complex, so as to maintain the loyalty of my electrophysiologist customers? If they can answer this question manufacturers will continue to be paid top dollar for their product (again, as determined by regional reimbursement rates set by the government).
And this is why, despite the fact that ICD technology has been fully mature (says DrRich) for most of a decade now, which in a functional market would cause the price to plummet, the cost of ICDs remains so high. Whatever has developed in the complex interplay between ICD manufacturers, electrophysiologists, hospitals and the government, it’s not a functional market.
Among other things, this dysfunctional economic model (if that’s what it is) utterly precludes ICDs ever becoming available to a large proportion of individuals whose lives could be saved by them. They’re simply too expensive and complex for widespread usage.
Covert rationing, of course, thrives on opacity, obfuscation, confusion, inefficiency and complexity, and the convoluted ICD “business model” provides many, many avenues for covert rationing. So while the price remains high, relatively few ICDs actually end up being implanted (compared to the number of patients who have clear, FDA-approved indications for ICDs). In fact, the growth curve for ICD implantation has been successfully flattened for almost five years now (despite projections earlier this decade for 20% annual growth for years and years) – and it is likely to stay flat.
If we were to have a system of fully transparent, open rationing, then the ICD business model would rapidly be seen as the travesty of confusion that it is. Furthermore, a system of open rationing would quickly goad ICD manufacturers away from catering to the turf-based requests for more complexity by electrophysiologists. They would quickly develop ICDs that are simple, reliable, effective, easy to implant, long-lasting and cheap, and which could be safely implanted and managed by non-electrophysiologists.
The technology to do that exists today.
This is an example, DrRich believes, where open rationing would ultimately lead to more usage of a life-saving technology, by driving industry to put their development efforts into reducing the cost and increasing the simplicity and reliability of their products, and thus making them more cost effective, rather than striving to make them more attractive to high-end-physician decision makers. If they did this, then videos like the one Dr. Wes has shown us would no longer merit mention on blogs or on any other form of media, as ICD rescues would become very common.
DrRich has been telling all this to ICD companies for many years to no measurable effect. Of course, it has been well documented that DrRich is more than willing to tell his clients stuff they may not particularly want to hear. (It’s truly amazing that he can still make a living as a consultant.)
In any case, here’s DrRich’s investment advice for this week: The growth of the ICD market is destined to remain flat as long as high-priced, gingerbread-laden ICDs that only an electrophysiologist can love remain the norm. Avoid companies whose growth depends on these devices. On the other hand, the ICD market is ripe for a major disruption, if one of these outfits ever figures it out.
DrRich will now fade into quietude here for a week or so, as he entertains those nice people in Europe with his crazy ideas about healthcare.
*This blog post was originally published at The Covert Rationing Blog*
May 30th, 2009 by DrRich in Better Health Network, Opinion
No Comments »
Earlier this year, DrRich offered several potential strategies for doctors and patients to consider, should healthcare reformers ultimately decree it illegal for Americans to seek medical care outside the new universal system. This eventuality (i.e., making it a crime to spend your own money on your own healthcare) may not be as far fetched as one might think at first glance, since in societies where social justice is the ultimate goal, such individual prerogatives must be criminalized.
At that time, DrRich offered several creative solutions to this problem, including offshore, state-of-the-art medical centers on old aircraft carriers, and combination Casino/Hospitals on the sovereign soil of Native American reservations. A reader subsequently offered the possibility of simply establishing institutions something like the “Cleveland Clinic Tijuana,” i.e., cutting-edge medical centers just south of the border. (This solution would have the added advantage of encouraging the government to finally close the borders once and for all, employing whatever means it might take, including military patrols, minefields, and missle-armed drone aircraft.)
As entertaining as it might be to imagine such solutions, a readily available, though much more mundane, solution exists today – medical tourism.
Medical tourism, where one travels outside one’s country in order to obtain medical care elsewhere, is a booming business. A number of superb state-of-the-art medical centers expressly aimed at attracting medical tourists have been established in the Middle East, Singapore, India, China and elsewhere in Asia. These institutions cater to citizens of the world whose own healthcare systems cannot (or will not) provide in a timely fashion (or at all) the level of care patients may desire. They offer modern hospitals, numerous amenities, luxurious accommodations, attentive nursing care, top-notch doctors – and they do it all for a tiny fraction of what the same care might cost (if you can even find it) in the U.S. and other “first world” nations.
Obviously medical tourism is not particularly feasible for medical emergencies such as heart attack or stroke, or for chronic illnesses such as diabetes, congestive heart failure, or Parkinson’s disease, which require frequent visits and long-term management. What is feasible is to become a medical tourist for those one-time medical services that can be scheduled and planned, for which there is a long waiting period at home, or which is simply too expensive in one’s own country. Such medical services often include coronary artery bypass surgery, hip replacements, knee replacements, and numerous minimally-invasive and not-so-minimally-invasive surgical procedures. In other words, medical tourism to a large extent is something one does for elective (i.e., non-emergency) surgery.
It ought not be a surprise, therefore, that the first organization of American physicians to issue a formal policy statement regarding medical tourism is the American College of Surgeons.
The reaction of American surgeons to medical tourism ought to be obvious. They hate it. Elective surgical procedures – the very procedures for which Americans become tourists – are the bread and butter of most surgical specialties. And here go their prospective patients, off to Singapore for their lucrative bypass surgeries. American cardiac surgeons, for instance (already underemployed, thanks to American cardiologists throwing stents at every tiny coronary artery indentation they they can justify as a “blockage”), are nearly apoplectic at the idea.
It’s always fun to read formal policy statements which attempt to deliver an entirely self-serving message whose essence is, “We hate this and if you do it we’ll hate you,” but in which it is necessary to deliver the message in a polite, politically correct, non-judgmental, helpful and even friendly manner.
The surgeons in general have made a good effort, as you can see if you’d like to read the policy statement for yourself. It’s pretty much what you would expect – “Go ahead and have your knee replaced in Timbuktu if you want to. It’s your right, so go ahead and devil take the hindmost. Just don’t come crying to me when things go south a month later.” Only, of course, the surgeons employ the obligatory very polite and professional tone.
DrRich is struck by two aspects of the surgeon’s policy statement on medical tourism.
First, the surgeons begin with a litany of dire warnings regarding all the medical considerations one must take into account before trusting one’s health to foreign medical hands:
“Some of the intangible risks include variability in the training of medical and allied health professionals; differences in the standards to which medical institutions are held; potential difficulties associated with treatment far from family and friends; differences in transparency surrounding patient discussions; the approach to interpretation of test results; the accuracy and completeness of medical records; the lack of support networks, should longer-term care be needed; the lack of opportunity for follow-up care by treating physicians and surgeons; and the exposure to endemic diseases prevalent in certain countries. Language and cultural barriers may impair communication with physicians and other caregivers.”
These are all very important considerations. DrRich notes, however, that these very same considerations (even the warning about endemic diseases, once one allows for the MRSA infections which are secretly “endemic” in some American hospitals) must also be taken into account before agreeing to receive care even in an American institution. It may be that these considerations are more an issue in top-notch foreign hospitals than in your average American hospital, but DrRich is not convinced this is the case, and the surgeons do not provide any evidence that it is. That is, DrRich sees this very good advice as being equally applicable whether one is considering becoming a medical tourist, or just a typical American patient.
Second, and most astoundingly, DrRich notes – not so much with interest, but more with awe – that the surgeons are beseeching their patients to consider just how difficult it might be to launch a malpractice suit against foreign doctors. (DrRich himself does not know how difficult this would be. Given that we are being so strongly urged these days to merge the American legal system with international law, it might not be much of a problem for long.) Indeed, the potential difficulty in suing foreign doctors appears to be the chief differentiator, and the primary argument in favor of good-old-American-surgery. The surgeons, in essence, are saying, “Let us do your surgery, because we’re easier to sue if we screw up.”
This, from the very body of American physicians who are most at risk for malpractice suits, and who traditionally have been most vociferous in favor of malpractice reform.
DrRich can only shake his head in wonderment. If medical tourism is viewed by surgeons as such a dire threat that they are formally embracing medical malpractice suits as their chief weapon against it, then medical tourism must have already caught on far more than most of us realize.
Which means, of course, that when healthcare reform takes place, medical tourism will likely enter a phase of truly explosive growth.
And so, Dear Reader, thanks to this critical clue provided by our friends in the American College of Surgeons, DrRich can confidently offer yet another nugget of investment advice. He formally recommends the medical tourism industry – now in its infancy – as an area ripe for growth.
*This blog post was originally published at The Covert Rationing Blog*
May 19th, 2009 by DrRich in Better Health Network, Health Policy
No Comments »
DrRich has been around long enough to remember the sequence of events that accompanied the collapse of healthcare reform under the Clintons in 1993 – 1994. (Heck, he has been around long enough to remember Nixon’s plans for healthcare reform, which drowned in Watergate.) When President Clinton was inaugurated, everyone agreed that the American healthcare system was in a state of crisis (e.g., spending levels could not be sustained, there were too many uninsured, there was too much waste and inefficiency, etc., etc.), and that the time for fundamental reform had finally arrived. We had a fresh, dynamic, young President with new ideas and with a solid majority in both houses of Congress, and he was armed with polls showing that the people were in favor of fundamental reform.
Accordingly, when Mrs. Clinton put together her working groups to devise a reform plan, she initially had the enthusiastic participation of numerous interest groups within the healthcare industry – notably including the insurance companies, physician groups, and drug and medical device companies.
But when she finally produced her plan – a disturbingly heavy tome filled with frightening details – everybody was horrified with at least some of the stuff they found there. Most of the big interest groups turned on her – most notably, the insurance industry, which then launched the famous Harry and Louise commercials to scare the people about government healthcare. The people, now duly scared, called their congresspersons, who (despite the Democrat majority) ended up sending Mrs. Clinton’s healthcare reform to a crushing and humiliating defeat. And the Republicans were able to capitalize on the “near miss” of the Clinton’s brazen attempt at socialism, and in 1994 ushered in 12 years of a Republican majority in both houses of Congress.
Obviously, for those Republicans and other observers who abhor Mr. Obama’s plans for healthcare reform, it is relatively easy to see parallels between what happened in the early 1990s, and what appears to be shaping up now. Those parallels, and the subsequent ignominious defeat of the Clinton plan, are the only things keeping these sorry individuals from donning sackcloth, heaping ashes upon their heads, and engaging in public self-flagellation.
So, perhaps, for such outsiders the spectacle of the major private healthcare interests this week throwing in with the Obama administration will be seen as one more sign from the gods that the parallels of 1994 are falling into place.
But they are wrong.
There are at least three important differences between the enthusiastic participation of private interests in Mrs. Clinton’s working groups on healthcare reform, and the action taken this week by representatives of insurers, doctors, drug companies, hospitals, and medical device manufacturers to pledge their undying support for President Obama’s efforts at healthcare reform.
First, in 1993 the private interests were powerful and confident. They participated in the process because they felt they could control it. It turned out they were wrong, of course – the only one who has been able to out-maneuver the Clintons is Mr. Obama – and the plan Mrs. Clinton finally produced (despite all the “input” from diverse private interests) really was a blueprint for a full government takeover of healthcare, all spelled out and wrapped with a bow. But because the private interests were powerful and confident in those days, once they figured out what the Clintons actually had in mind they were able to scuttle healthcare reform entirely.
In contrast, today the private interests have come to the table not out of strength, but out of weakness. They come not as partners in negotiation, but as vanquished foes. They come to Obama as the Carthaginians came to the Romans after the second Punic war, suing for peace, begging for terms, offering massive tribute (in this case, $2 trillion) in exchange for being permitted to eke out a meager survival, at the edge of the desert. (DrRich wonders whether the insurance companies and their friends remember the third Punic war. Surely they must know that somewhere in Congress is another Cato the Elder, ending every speech with the words, “The insurance industry must be destroyed,” and that at some point their remaining, puny base of operation will be completely sacked, and their mission statements sown with salt.)
Second, whereas Mrs. Clinton was a major policy wonk who reveled in providing a fully-fleshed-out and exquisitely detailed set of plans for healthcare reform – thus giving her foes sufficient ammunition not only to defeat her reform plan, but also to banish the Democratic Party to the wilderness for three election cycles – Mr. Obama is not. His reform plan will be bare-bones – merely an outline, more-or-less a statement of principles. There will be nothing to attack, since there will be no details, and little will be spelled out. (Implementing the plan will be left to unelected bureaucrats and regulators, who are always happy to produce prodigious amounts of undecipherable and self-contradictory detail.) This time, at least prior to its actual implementation, critics of the reform plan will be left trying to attack a phantom.
And third, this time there is no Plan B.
In 1994, once the private interests had scuttled the Clinton healthcare plan, they immediately offered an alternative. They came to us and they said: “Citizens! We have just now dodged a bullet! Thanks to us insurance companies, doctors, drug companies and other patriots, the frightening socialist machinations of the Clintons have been defeated, and the Evil Ones have been reduced to embracing our agenda of tax reform and welfare reform as if it were their own. But where does this leave our healthcare system? We stand now between Scylla and Charybdis, between the spectre of socialized healthcare on one hand, and the continued profligacy of traditional fee-for-service on the other, and we cannot survive either.
“But here,” they continued, “is a third way. A painless way, an American way, based on the principles of managed care, open markets, and free enterprise. Let healthcare become a business, like any other business, and let the natural efficiencies of the marketplace find ways to cut costs and improve quality, and with minimal government intervention.”
And thus we were launched into an era of managed care run by HMOs and other similar creatures of the insurance industry. And over the past 15 years, while managed care has utterly failed to produce any of the things it promised, it has not been for a lack of trying. They indeed have tried numerous things to control spending, from the reasonable-sounding to the absurd to the frankly murderous, and despite all their strenuous efforts the healthcare system remains a morass of confusion, waste, and inefficiency, and its costs are many times what they were in 1994.
To say it another way, the private concerns, this time, have shot their wad. They are entirely bereft of ideas. They know not what to do.
And that’s why they have now fully abandoned their old allies, the Republicans (who are off somewhere – one knows not where – muttering to each other about the efficiencies of the marketplace, and wondering why nobody is listening to them). The last thing the insurance industry wants to hear today is that the burden of figuring out how to control healthcare costs belongs to them. They’ve tried everything they know and have failed, and they are desperately seeking terms for surrender.
So there is no Plan B this time. As of this week, the private interests have formally and publicly admitted they don’t have a clue. They’re throwing in with President Obama, despite the fact that they have no leverage with him whatsoever, not because they believe in his reform plans (which have not even been described in their most skeletal form), but because there is no place else for them to go.
And so, the last obstruction to healthcare reform has been removed. The path – the only path – is clear. If we fail to get comprehensive healthcare reform now, it can only be for one reason. It can only be because Mr. Obama and the Democrats, looking down that wide open road, will be unable to avoid seeing where it leads, and will decide that they do not want to be the administration or the party that finally has to begin saying the “R” word in public.
To turn away from healthcare reform now, when the way seems so clear, would be a crushing blow to them, and would likely not be politically survivable. But to go on will likely force them to begin speaking a truth – that rationing is unavoidable – whose name is more taboo than ever was the name of Yahweh. And every high priest of the ruling class knows that even hinting about healthcare rationing is political suicide.
But still, there it is. There is no Plan B.
Talk about Sylla and Charybdis.
*This blog post was originally published at The Covert Rationing Blog*
May 15th, 2009 by DrRich in Health Policy
No Comments »
DrRich’s valued colleague R. W. Donnell, who writes Notes From Dr. RW, has responded to a recent post in which DrRich bravely came out in favor of Comparative Effectiveness Research, even at the cost (DrRich asserted) of alienating the majority of the more conservative-leaning components of his readership.
Dr. RW, noting DrRich’s claim that conservatives have laid out a formal policy of opposition to CER, says:
“OK, stop. Where are these people, conservatives or those of any ilk, who have taken a position against CER? Dr. Rich cites groups who are skeptical and very concerned about the new political agenda for CER, not CER itself.”
Dr. RW is, of course, correct. Research that compares the relative effectiveness of medical procedures or treatments is not only inherently a very good thing, but also is a form of research that has a long and proud history. Healthcare would be an even more dire activity than it is today without the large body of research that guides physicians in making recommendations to their patients when more than one option is available. So yes, comparative effectiveness research is obviously a valuable and time-honored endeavor, and for anyone (conservatives or anyone else) to come out against it would be akin to coming out against babies, or bunnies. (Though, as one whose effort to grow vegetables has been severely challenged each year by a pride of aggressive rabbits, DrRich, as it happens, is indeed against bunnies.)
So, to reiterate, neither conservatives nor anyone else are really against comparative effectiveness research, just as Dr. RW asserts.
What they are against is Comparative Effectiveness Research. They are against a new government bureaucracy that sets the CER agenda, whose stated goal is to create a more efficient and less expensive healthcare system, and that will have the authority to determine what gets reimbursed and what doesn’t.
Dr. RW has made it plain that he is not confused about the following point, but many are: There is a difference between comparative effectiveness research (whose unambiguous goal is to compare the clinical effectiveness among different treatment options, so as to offer physicians objective guidance in making clinical decisions, and which is as unassailable as babies and bunnies), and Comparative Effectiveness Research (which is to be operated by a new government bureaucracy, whose agenda regarding what kind of effectiveness is actually to be compared is intentionally ambiguous).
The ambiguity of CER (as compared to cer) was made clear recently when Peter Orszag testified on behalf of the administration before the Senate Finance Committee. When queried by skeptical Republicans on the ultimate goal of the proposed CER board, Mr. Orszag was evasive. Specifically, when asked by Senator Kyle (R-Arizona) whether the CER board would be empowered to make decisions on which medical services will be reimbursed, Mr. Orszag finally replied, “Not at this point,” a reply which did not alleviate the suspicions of the minority party.
To state the ambiguity more plainly, it is clear that while the CER board will mainly be concerned about comparing “cost effectiveness” (which is the only way they can potentially achieve their main goal of reducing healthcare costs), the only kind of effectiveness they are willing to discuss publicly is “clinical effectiveness.”
This studied ambiguity allows proponents of the new government plan to paint opponents of the CER board as being against the “babies and bunnies” form of comparative effectiveness research, and thus reveal those nay-sayers as being beneath contempt, unworthy of anyone’s attention. Meanwhile they will be free to advance their real “cost effectiveness” agenda.
DrRich agrees with conservatives that this kind of deceptive ambiguity is indeed contemptible. But really, it is no more contemptible than the thousands of other forms of covert healthcare rationing we see all around us. (Covert rationing inherently relies on ambiguity – saying we’re doing one thing while all the time we’re doing another.)
Having tried to clarify this distinction between cer and CER, DrRich will now repeat that his prior post was not merely to express support for the “babies and bunnies” variety. As Dr. RW points out, everybody is in favor of that kind of comparative effectiveness research.
Rather – and this is where he further jeopardizes his continued tolerance by his conservative readers – DrRich is offering his support to the other kind of CER, the kind described in the stimulus bill, which (though the administration will not say it publicly) will undoubtedly use comparative effectiveness research to perform cost effectiveness calculations, then coerce physicians, through one form of federal subterfuge and intimidation or another, to employ the least expensive therapies. The government bureaucrats, just as they are doing today but with less muscle, will shout “quality” while enforcing “cost.”
DrRich supports this kind of CER not because it is a good thing – it decidedly is not. He supports it because here is a form of covert rationing that will at last effect everyone, and will be so blatant that after a time even us Americans will no longer be able to ignore it, try as we might. DrRich believes that relatively soon, we would notice that here is a cadre of unelected bureaucrats rationing our healthcare – determining which of us lives and dies – through some opaque process, and lying to us about it the whole time. He believes this to be the pathway most likely to get the American people to finally face the fact of healthcare rationing, and to goad them into an open debate on the best and least harmful way to accomplish it.
Go ahead. Call him a cock-eyed optimist.
*This blog post was originally published at The Covert Rationing Blog*
