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The Only Way To Decrease Healthcare Costs Is To Ration Care

Those on the left will pretty much sacrifice everything to attain their goal of universal coverage.

But, in this well-reasoned piece by conservative economist Tyler Cowen, expanding coverage won’t necessarily control costs, which is a more imperative issue. The bandied about means of cost control, such as electronic medical records, cutting provider payments, and preventive care, all will have little nor no impact in controlling costs.

Take physician reimbursements, for instance, a favorite target of health reforms. According Princeton economist Uwe Reinhardt, a favorite son among policy wonks, cutting physician pay by 20% would only reduce spending by 2%.

Furthermore, under the current payment system, simply cutting provider reimbursements will only give more of an incentive to do more procedures to make up for lost revenue.

The hard truth is that care will be rationed, and that’s something the Obama administration is unwilling to admit. Indeed, as Mr. Cohen writes, “if we aren’t willing to take even limited steps to conserve resources, we shouldn’t be spending any more money elsewhere.”

Cost control first before universal coverage, and therein lies the central contention of the debate.

And the worst case scenario, as progressive blogger Ezra Klein correctly surmises is, “that the final bill will include a pricey expansion of coverage paired with a speculative and uncertain set of cost controls.”

*This blog post was originally published at*

No Easy Way Forward For Healthcare Reform

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*

Counter Point: A Nurse Who Wants A Single-Payer System

My apologies to James Carville. I plagiarized his tagline because the insurance industry has forgotten about sick people during our national healthcare debate.
I remember when nurses and insurance companies use to get along with each other. Back in the 1960s, these nurses even took time out of their busy schedules to pose for one of their ads. We took care of patients at the bedside, and the insurance companies paid the hospital bill. It was as simple as that, but then things started to change. It began with three little letters—HMO.

Insurance companies are spending a lot of time and money trying to scare people into opposing President Barack Obama’s ideas on health care reform. They are especially working hard to torpedo the public option plan. That plan would allow you to keep your own private health insurance policy or buy affordable health insurance through a public plan. Insurers are going all out to make you hate this idea by making claims that aren’t true. They are saying that the government is going to ration health care by dictating which doctor you can see, and by making you wait weeks to see a specialist. Ironic isn’t it? The insurance industry is already doing these things to patients everyday via their HMOs. We wouldn’t even be having this debate if they were playing fair in the first place.

Insurance companies make their money a couple of different ways. They rack in the bucks by not insuring people who are sick, a practice known as cherry picking, and by not paying out claims. They also make money by cutting out competition. This is the real reason why insurers are trying to muscle Uncle Sam out of the insurance business. Medicare administrative costs are equal to about 2 percent of what it pays out to providers. For private insurers the ratio over expenses to payments is typically over 15 percent. Why the big difference? Insurance companies have high overhead. Their CEOs take home mega-million dollar paychecks, they have to take care of their shareholders, and they have to pay for fancy ads that convince consumers that they will have health coverage when they really need it. They need those fancy ads. Insurance companies are always looking for ways to deny our claims, but I digress. Competition between private companies and a public plan would hit insurance companies right where it hurts—in their wallets. Fewer customers in private plans means less profits, and less profits, up to 20 to 30 percent by some estimates, means fewer martini lunches for those at the top of the corporate food chain. To make matters worse, those greedy folks who make money by NOT paying for care would have to lower their profit margin on the customers they do keep in order to compete with the government.

I’ll never forget the day that I learned about HMOs. I came into work and found red dots on the side of a few patient charts. My head nurse told me that the dots were put there to prompt doctors to discharge patients as soon as possible so that the hospital and the insurance company could make more money. That was twenty-five years ago and the system has been in freefall ever since. Year after year, nurses are voted as the most trusted profession in America in Gallup’s annual survey of professions for their honesty and ethical standards. We are patient advocates, and we never put anything above what’s best for our patients. That’s why I’m putting my seal of approval on President Obama’s public health insurance plan, and so are the American Nurses Association (ANA) and the SEIU. The insurance companies want your money. Nurses want to take care of their patients. We want all Americans to have affordable, high-quality healthcare.

*This blog post was originally published at Nurse Ratched's Place*

A Nurse’s Perspective On Healthcare Reform

AnacinWell, apparently they call a nurse!

Either that or Nurse Nellie caused the headache.

But we know that nurses never cause doctors to have headaches, so that can’t be what’s happening.


Trust me, there have been a few doctors over the years that have given me major headaches and I have no doubt that I have been the impetus behind a few MD migraines myself!


The guy in the Anacin ad must be doing what I’ve been doing for the last two days.

Trying to get a grip on healthcare reform.

That alone is enough to give you a migraine.

There is so much information and conjecture and opinion and debate, it is difficult to know where to start.

Who gets covered? What gets covered? Who pays? Who decides the charges? Who decides the fees? Who has an agenda: political, financial or otherwise? Private or public plan?

And the most important question of all: Who is fighting for what is best for the patient?

Because, when all is said and done, WE are “the patient”.


Okay, so I’ve come up with some foundations; these are things that I feel must be at the heart of any health care reform debate:

1.   Every citizen must have health care coverage.

2.  Every citizen needs to own their health care coverage.

3.  There should be a choice between private and public plans.

4.  Every citizen must be able to choose between a private or a public plan and switch between as necessary.

5.  Each plan must cover basic health care: physicals, screening, immunizations, well care.

6.  Each plan must cover chronic or catastrophic illnesses. (Diabetes, asthma, MS, cancer – just a few examples)

7. After basic health care and chronic/catastrophic illness, each citizen should be able to choose how they want to be covered. I have heard this called the “cafeteria plan”.


Gee, I don’t ask for much, do I?

We don’t have to invent the wheel here. Other countries have gone before us; there are models of universal coverage we can study.

The operative word here is “study”. Take what is good, understand what does not work and use that knowledge to form a unique form of universal health care that meets the needs of the citizens of the United States.


Probably the easiest way to tackle health care is from a personal angle.

I just found out what my COBRA payment would be if I left my job tomorrow.

I’m hoping my jaw heals before I go to work on Thursday.

But that’s a topic for the next post.

*This blog post was originally published at Emergiblog*

Top Medical Bloggers Discuss Healthcare Reform – A Podcast

Have you been following these bloggers?

Well you’re in for a treat. I had the good fortune of coralling them for a healthcare reform discussion, lead by Dr. Bob Goldberg of CMPI-Advance. Bob’s recent Op-Ed at ABC can be viewed here. I was going to provide a synopsis of what they said, but then – that would spoil the show!

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