The Health Care Crisis

Wednesday, December 3, 2008

Jose H. Valladares, MD

There is a terrible weirdness to Washington these days. The keys to the Treasury have fallen into corrupt hands and key members of the political class seem intent on getting as much cash out to their friends before the game comes crashing down to a halt. We all know it is dishonest; we all know it is profoundly corrupt. No one can stop it. Fear is used to justify complete nonsense. The banks are failing, the insurance sector is failing, the investment banks are infected with a strange disease; clouds of invisible derivatives are festering in the polluted skies of New York. Run, panic, hide. The sky is falling.

Only it isn't. The remnants of our democracy are being looted. The bill for what has already been taken is so large the next generation will never be able to repay it. If Obama stands for the change we need then he needs to step up to the plate.

The public markets in this country, once the greatest free market concept put into practice, a system that has allowed though the years the greatest ideas and most motivated entrepreneurs access to capitol while allowing the average citizen the opportunity to participate in the process now seems to be completely broken. No longer are ideas that are good for the country and the world funded by responsible well-meaning citizens. Instead today the stock markets now largest casinos in the world overreact manipulate and act as the second largest taxing agency in the country. And now the largest taxing agency in our country the Federal Government is going to step in and help fund the party.

For the right to PLAY with the public’s money the management teams of public companies, which in my opinion have no resemblance to private sector, should be held as financially accountable for the decisions they make as their private sector counterparts. Too much of the compensation for the corner office is guaranteed and determined by an elite group of inbreeds a concept that should roil true free market capitalists. The variable portion of this compensation is also too often tied to short-term measures that are too easily manipulated to once again benefit the smallest group of elitists that play with other people’s money in the stock market, as opposed to long-term fundamentals that position our nation’s largest companies with the ability to compete in a global marketplace. These public entities have made years and years of irresponsible decisions for personal gain and backslapping because those decisions have not directly impacted their own pocketbooks’ as they would have if they were truly private companies.

At least in the current economic conditions. What are the costs to our economic system of liquidation? Would costs be lower if Congress provided funds for a restructuring to occur? These are the questions.

The Bush administration is opposed to a government role in restructuring. Period. Bush would prefer to accept the least optimal potential economic outcome for ideological reasons.

The Democrats want a restructuring process instead of sending a 'bridge loan to nowhere'.

Arguments are being made based on emotional reactions to unions, government intervention in markets and pressure from wealthy special interests to rescue themselves from their management failures

The criminal executives that run these companies need to be fired and imprisoned. Every single cent of their wealth and assets seized. Make no mistake they are criminals who have stolen from their employers, their employees, their investors and from Uncle Sam. Greed, arrogance, immorality, unethical closed door deals and shear stupidity have ruled Detroit for 20 years. Lawyers, HR managers, bean counters and ex-cons run manufacturing, particularly automotive and automotive suppliers. Honest, hard working, moral, intelligent men and women have been run out of the automotive sector. They do not like working with Jackals.

It is going to get real bad. And the people that actually wipe their own ass are going to be the people that suffer the most. The bums and permanent underclass will know no different (they'll just get some more free cheese) and the criminals in the banks and New York will just count their stacks of cash from their yachts.

What is happening with health care?

FIRST

Going back to October 2, 1942, a vote was placed on the so-called “stabilization act” of 1942. Big companies wanted to offer some attraction to a work force shrunk by war mobilization. This bill allowed employers to deduct from taxable income all payments for employee health premiums.

But it did not allow the same benefit if the employee paid. It was at this moment that the workers lost management of their families health care and the employer without a day of training became their doctor.

SECOND

April 10, 1965 LBJ signed into law a bill to provide healthcare benefits for anyone who had passed his or her 65^th birthday.

Medicare was created. On this day the federal government without schooling awarded itself an MD degree. As a result of these two issues, individual patients lost control over their medical care and all control over the costs.

Today healthcare is enormously expensive, more so than in any nation. In total $2.2 Trillion a year. The physician is overburdened with paperwork, has hired new employees to fill out forms and arrange referral trails, and with declining pay, has gradually surrendered autonomy and is even now in the process of signing on as an employee with a big clinic or medical center. Payers demand elaborate records, and some physicians say they feel as if they are having to diagram sentences. The practitioner is told that electronic medical records are the magic answer, so he is struggling to learn to type. But one fourth of regional electronic programs have gone out of business and the rest are floundering some hospitals have abandoned their computerized record systems; and only 20% of doctors actually use such programs.

Patients complain that the physician is treating not them but the computer, since eye contact has evaporated. Shrinking compensation has provoked either early retirement or doubling the daily patient load, necessarily resulting in a halving of doctor-patient interaction time. Return phone calls are an anachronism. Primary-care trainees are declining just as the demand is climbing, and the smaller number is more and more made up of international medical graduates. More pressing is the contraction of physician hours, as primary care doctors turn hospital duties over to hospitalists and as two doctors now do the work of one.

Indeed, as a result of key legislative errors, $2 Trillion dollars are being pumped into US healthcare every year without the supervision of the people who earned it, temporarily owned it, and should have controlled it. Our healthcare is getting more expensive and less accessible.

PPOs and HMOs and physician-insurance company contracts began the amateur rationing phase. There was no more balance billing. In fact, the doctor had to promise the payer that he would accept whatever they paid. In the case of Medicare, balance billing was illegal. In the case of insurance companies, it would violate the contract.

The payers managed the revenue and soon they controlled what they would pay for. They would say that the patient did not need a colonoscopy, a PSA or high-priced antibiotic. They were also controlling the diagnosis and the treatment. The clerical personnel had become the patient’s doctor. The health insurance cartel devised multiple rationing methods such as: precertification, denial of benefits, increase of uncovered procedures and other strict measures such as “inadequate documentation.” The health plans had taken a heart and ate the government.

Drug dealers and other illegal operators are always looking for ways to dignify their ill-gotten gains in many ways with what is called “money laundering.” $2.2 Trillion had to be laundered through the system each year. This had to be done before the patient or the doctor received any kind of compensation. It became clear that in order to remain and or enter this new world of reimbursement, 8 minutes visits live with documentation had to be performed. This could only be done by avoiding the really sick and time-demanding patients. The new name for these physicians became the provider or health supplier. The rules to survive were easy: twice the patients per day, ½ the time with each, ½ the value.

The politicians, such as Hillary Clinton, going back to the 1990s, made speeches stating that the patients should choose their own doctor, doctors should run health care, insurance companies should not be telling doctors what to do. They problem was that her 1400 page proposal was offering precisely the reverse. It was in essence the coming of universal healthcare.

The policy scholars assigned to observe and design the new changes have always been spectators from their seats in a stadium. They have never been on the floor of the arena where the gladiators are. Round tables on health care issues, for example, contained among its 20 members, one practicing physician, and no documented patients. Their final report described health care in America as panoply of misuse, overuse, and underuse and recommended a massive unspecified renovation. Another self-appointed arbiter of what should be done in medicine, “the commonwealth fund,” contains 19 members, of which some are MDs, some PhDs -but none of the MDs are treating physicians. The bipartisan committee of the future of healthcare assembled at request of the White House to report to Congress contained 17 people out of which only one was a physician and a non-practitioner. What has really happened is that politicians appoint people with impressive titles to help arrange policy forgetting that the activity to be governed is just as strange to the appointees as to the appointers. The average practicing physician with a skyrocketing overhead, plummeting reimbursement by third party payers, cannot afford to leave his post to sit on an all-day committee unless he is supported from other sources.

What about other systems in other countries? A report from the CATO institute tells us “the grass is not always greener.” Unified health systems of 12 developed countries were studied concluding that 1. They are all different 2. Not that universal and 3. Not that wonderful.

For example, Canada, the system that is most often touted by planners, has a health plan that has faded precipitously in the last decade. Tests such as PSA (a blood test to determine prostate cancer) are done half as often as in the USA. The same for PAP smears (cytology of female genitalia) and mammograms are done 1/3 as often as in the USA. Not surprisingly, deaths from prostate CA are 18% and breast CA 25% higher than in the USA. The average time to see an orthopedic surgeon and get on the operating schedule is around 40 weeks. People with angina are only 1/3 likely to get angioplasty, catheterized or bypassed. Canadian health costs will consume ½ of the gross domestic product by 2050.

The UK: If you need a hernia operation, you will join the 1 million Britons out of the 60 million in the population waiting for a hospital bed. 1/3 of them wait over 30 weeks. Once you get to be 64 years of age and over, you become a victim of HISM –the national health service has decried that no preventive screening tests for cancer should be done over 65 despite the fact that this when cancers become more frequent. Death rates from pneumonia in that age group a triple compared to the USA.

France: You pay 18.8% from your payroll taxes in addition to alcohol and tobacco taxes. It is interesting to know that 92% of the citizens pay for private insurance in addition to 30% co-pays. In Paris, 80% of the doctors bill additionally. In there you pay up front and later collect from the government or the insurance company.

Even though in the USA Medicaid patients receive terribly fragmented care and the Medicare patients, as well as the doctors, are bound by very elaborate rules that make it very difficult to practice medicine, we continue to say the free enterprise has not worked and thus we have to go to a single payer system. The reality is that patients assigned benefits to the insurance company or Medicare and the insurers pays the provider whether it is doctor or hospital, prices are now being set by the insurance company and government. We have accidentally done a controlled experiment in which ½ of our healthcare is government sponsored and in the private sector 2/3 of the people are covered by a third party i.e. insurance company. Therefore in reality we have never tested the free enterprise system.

DRUG PRICES

Annually, we spend $230 billion –more than any European nation. Antibiotics range from $10/day and some other drugs, like cancer drugs, may run to $10,000 per year. All other countries have their governments negotiate prices with the pharmaceutical companies. The VA does it. However, when Plan D was implemented (the plan allowing patients to obtain meds at markedly reduced prices) part of the law contained that government would NOT negotiate prices wit the drug companies. In essence, big pharm is making a killing.

It cost about $800 million to put a new drug in the marketplace in the USA. This includes, research, development, production, distribution and marketing. This money has to be recovered or the stock holders will go away. Thus these new drugs cost a lot during the early years while on patent.

We are about the only country that invents new drugs. Other countries use ours.

When drugs go off patent, they become generic and less expensive. They cost less in the USA than anywhere else the reason being that the government does not set the price and competition is allowed.

The major players in the drug business, which are essentially the same companies running managed care, have progressed into a basically unaffordable system by creating subterfuges such as approved drugs under formularies.

Basically what happens is that one of the plans covers all of the medications that a beneficiary may need leaving him on his own to pay whatever price is demanded in the outside market.

The approved medication formularies change a regular basis meaning they keep you guessing which is drug that is at present covered.

MEDICAL MALPRACTICE

· Medical diagnostic, procedural and treatment of patients are a complex biological and technical service where each individual is a different case, even if having the same condition as other. Of course, errors can occur.

· Victims of injuries can never be properly compensated for said errors.

· A pretense that they can be compensated has been created through litigation that becomes a horrifying experience trying to place value on human life, adding, multiplying, subtracting, dividing, and extrapolating hypothetical expectations, when in reality they are based on available money to be paid to the plaintiff and its lawyer.

· There are more than 125,000 frivolous, meritless cases in progress every day at a cost of a minimum of $30,000 each.

· The cost of tort has risen by a factor of 400 between 1940 and 1990. Typical payouts average: 24% for economic cost to the victim; 22% for pain and suffering; 24% for administration of the case, 16% for claimant's attorneys' fees; and 14% for other defense costs.

· The cost of medical defense is between $50 to $90 billion each year.

· The only result has been the closure of clinics, the driving away of physicians from their practices and the jeopardizing of patient proper care, while driving up costs. One third of the cost of a pacemaker or a third of the cost of a simple tonsillectomy goes to liability protection. In Nevada, women have to deliver babies in the Emergency Room or go to another State, because the OB/GYN liability policies have scared away specialists.

· A recent fanfare over medical practice is in essence a well thought plan to deviate attention from the real problems, stated above, and for all practical reasons, create a "medical malpractice hoax".

The insurance companies claim they must raise their premiums because of doctors' errors and juries ever increasing awards to victims. And they threaten with bankruptcy or leaving a State as a way to pressure States' legislatures to award higher rates, but as a group they are practically unsupervised and very lightly regulated.

Doctors, on the other hand, are the most regulated group of professionals in modem history. The following is an incomplete list of parties that watch over physicians:

· State Medical Boards

· Department of Health and Human Resources

· The Office of the Inspector General

· The Clinical Laboratory Improvement Act

· The American Disabilities Act

· Peer Review Boards

· Individual Hospital Boards

· Workplace laws

· Drug and Prescription laws

· HMOs

· Anti- Trust laws

· Stark II

· Third party payers

· And of course, predatory actions of Malpractice Lawyers

Nevertheless, the burden of increasing cost of premiums fall upon doctors who can not raise their prices to pass this cost to patients since the health plans will not allow it.

Medical advances and an increasing aging population have escalated costs. US medical care (if you can get to it) is the best in the world, and also the most expensive. Thus, "Health" has become a TRILLION dollar industry. This is a really big pie. And all big pies attract modem predators.

The government heralded managed care in the middle 80's as the solution to contain the ever increasing costs ... including more regulation for the doctors. Ten years later it was evident that the reverse was happening. Enrollment in the managed care companies dropped and merchants fled the market unable to obtaining juicy profits in spite of not having legal accountability for their rationing of medical care. Health costs had not been contained, stocks were tumbling, and patients and physicians were demanding that the "shackles" of managed care were removed.

Between 1995 and 1999, when most wages in the nation were rising an average of 3% rapidly, the average physician income, adjusted for inflation, decreased by 5%.

Today we have over 60 million people without health insurance, out of a 300 million population -and a real medical crisis.

The lack of insurance coverage, placing limits in hospital stays, emergency room usage, procedures options and specialists' care in order to maintain benefits and increase profits, the management care and insurance companies have created a climate of diminishing quality and quantity of the health care, which in turn encourages litigation.

It is clear that the "malpractice crisis" is the end result of the inability of the insurance companies to yield a profit using non-substantiated data, catalyzed by the legal system, while using the Government as a shield.

The interested parties wish to continue enjoying the "big pie", although the doctors are reluctant to continue being an involuntary part of the hoax. So the issue has been brought to many State legislatures, such as Florida, with the intention that legislators, as "sorcerers" can produce a miracle by finding "workable" solutions to allow the show to goon.

Items such as "pain and suffering", "bad faith", and "caps" attempting to create a ''No Fault Auto" look-alike have been brought into play, all with the intention of limiting the payments to be made by the insurance industry ... while no mention has been made to prices, premiums, and proper regulation of insurers. A mandatory mention every once in a while of a "Universal Health Coverage" is an integral part of this made-to-order crisis, being brewed while we are diverted with other topics.

The Universal Health Coverage option is based on the principle that in order for things to remain the same we must change everything. This disguised managed care alternative has been proven not to be able to contain costs even by withholding benefits or life saving care, while at the same time mortally wounding the scientific research which has kept the United States first in the world in the advancement of health care.

When you study the problem in its proper perspective, taking the four players in consideration, that is: patients, doctors, insurers and lawyers, it is evident that the root of the problem arises from an improper "health insurance system" (which historically and ironically was already mandated by Otto Von Bismarck in the 19^th Century).

How does malpractice fit in this? As already mentioned, in an inefficient health care system, which attempts to depend on managed care's ever reducing proper care in search of profits, the care deteriorates and litigation increases.

My conclusion is:

· There are 60 million people, in a 300 million population, without health insurance coverage.

· Article 25 of the Declaration of Human Rights reads that each person and his/her family has a right to health care, food and housing, but it is ignored.

· Doctors are bound by law to do the right thing for patients, to protect them and inform them of choices, alternatives and risks.

· Meanwhile, profit seeking managed care continues to make multimillionaires of venture investors, by compromising proper care, leaving doctors with moral, legal and financial residuals.

· Improper care is created by the displacement of drug coverage, non-coverage of medically necessary items, and delayed referral to overworked specialists, as the tools for "rationing" due care.

The House Judiciary Committee has met to discuss Medical Malpractice Reform and has reviewed physicians' income tax, credit, patient injury compensation funds, "professional discipline of physicians", physicians' homestead exemptions, non economic cap of $250,000, elimination of several liabilities, disclosure of collateral resources, periodic payments of awards, limits on trauma liabilities, etc, etc, etc ... practically everything ...except the only issue that would solve the problem. That of properly regulating care management and insurance companies -the birthplace of the so called crisis.

The malpractice issue must be addressed, but not with a search for a "miracle' by busy legislators or by political appointees ... or by disguised interested parties. Most 'miracles' produced by this type of solution seekers are of the kind we hear often ... a "roll back" in premiums ... a 20% reduction of premiums ... all about premiums that can not be afforded anyway.

No proper solution will be found unless those that are really in the battle front are taken in consideration. Malpractice exists because of inadequate health coverage. Place the responsibility where it belongs, in the health insurance and managed care concerns, and malpractice will no longer be a problem.

Note: Dollar figures quoted are from the beginning of the last decade and therefore have substantially increased.

BEST POSSIBLE SOLUTIONS

In 2004, the Bush Administration authorized health savings accounts (HSA).

Under this plan, the individual first obtains a high deductible insurance (Catastrophic policy) to cover major medical problems. Then he can set aside an annual fund –pre tax –for ongoing medical expenses. Major events such as heart attack or surgery will be covered after the very large deductible. At that point the catastrophic policy goes into effect and covers the expenses. Week to week medical expenses can be paid directly out of the fund.

There are approximately 6.2 million HSA accounts in the USA.

HSAs may come from the employer, employee, a combination or can originate from the individual. It is permanent, roles over from year to year, is tax deductible for both employer and employee and can become part of the retirement account.

In order for HSAs to work, a high deductible or catastrophic program has to be in effect. The average American citizen spent approximately $7000/year in 2008.

Patients under 65 spend an average of $4500 per year. The average Medicare patient spends approximately $15K per year. Medicare may be combined with an HSA account.

Medicaid

The Medicaid patient is given a voucher containing a major medical provision and a cost defined fund which can be presented to any approved health provider who can then withdraw payments on a predetermined price list.

There are approximately 60 million patients at a cost of approximately $5200 per year.

HSA for uninsured patients who pay no taxes.

The uninsured patient, whether indigent or not, usually presents to the ER, receives care and does not pay. The bill is usually not successfully pursued by the provider. The amount is unknown but thought to be enormous. In 2006 it was estimated at $31 billion.

Consumers with HSA funds or vouchers cannot use money to purchase health insurance.

Health insurance should be purchasable across state lines. The average premium in New Jersey is 5 times that of Nevada. This is because of mandates where various merchants have persuaded the legislature to include payments for massage, aroma therapy, yoga etc.

THE FUTURE

The lawmakers in Capitol Hill are afraid to touch or remove or change any benefits for they do not wish to anger their big corporate supporters who have a vested interest in the status quo (insurance, big pharm). They also dread to mention raising taxes. The usual pattern has been that nothing happens. The newly elected President opposes individual plans but favors massive government expenditures to provide coverage for everyone despite the facts that Medicare and Medicaid are both doing a poor job and face bankruptcy. We all need to be informed of what is actually happening in our nation which has progressed to indolence, apathy, acceptance and dependency. We now ignore our right to health care -a basic human right.

FURTHER READING

1. Medicaid Spending Surges in 2007.

www.heartland.org/policybot/results.html?articleid=21128

2. Karkaria, U. Study: State Medicaid reform pilot falls short. www.jacksonville.com/tu-online/stories/050907/bus_168514889.shtml. May 9, 2007

3. NY Times Editorial Medicare’s Bias. www.nytimes.com/2008/07/14/opinion/14mon1.html

4. Reed, Jack. A Plan to benefit HMOs, not seniors. The Miami Herald. Other Views, Saturday, December 6, 2003.

5. Moffit, R. The President’s Medicare Budget Proposal: A Step Forward on Entitlement Spending. www.heritage.org. February 6, 2007.

6. Pugh, T. Health funding worse off than Social Security. The Miami Herald, Monday, January 17, 2005.

7. Stecklow, Steve and Furhmans, Vanessa. UnitedHealth Executives Forfeit $390 Million in Options. The New York Times. Market Place, Thursday, November 9, 2006.

8. Dorschner, John. Government plans boost HMOs. The Miami Herald. Business, Friday, Januray 23, 2004.

9. Dorschner, John. Florida HMOs post large profits. The Miami Herald. Business, Thursday, May 25, 2006.

10. NY hospitals sue UnitedHealth, claim racketeering. www.fiercehealthcare.com February 7, 2007

11. Physicians’ suit against UnitedHealth dismissed. www.aapsonline.org. June 22, 2006.

12. UnitedHealth Group ex-CEO forfeits $620 million. www.aaps.com News of the Day, January 2, 2008.

13. Appleby, Julie. Tenet accused of $1 billion Medicare Fraud. www.usatody.com March 3, 2005.

14. Loyd, Linda. Tenet will pay $7M to settle Medicare overcharging lawsuit. The Philadelphia Inquirer. February 21, 2006.

15. Tenet Pays $900 Million to Settle Medicare Fraud Claims. White Collar Crime Prof Blog. www.lawprofessors.typepad.com. June 30, 2006.

16. Tenet wins $1B federal lawsuit over outlier payments. www.fiercehealthcare.com August 6, 2007.

17. Morse, D. and Terhune, C. HealthSouth’s Scrushy is Acquitted. The Wall Street Journal. Wednesday, June 29, 2005.

18. Trojan, N. Forum on Scrushy. www.gotroytrojans.com/forums

19. Dorschner, J. Blue Cross to pay Doctors. www.miamihearld.com. April, 19, 2008

20. Blue Cross and Blue Shield to pay $128million in settlement. www.miamiherald.com April 27, 2007

21. Dorschner, J. Insurer settles with $128M cash payment. www.miamiherald.com April 28, 2007.

22. Gov. Romney signs Massachusetts universal coverage bill; vetoes employer “fair share contribution” www.aaps.com News of the Day, April 15, 2006.

23. Moffit, R. Magical Thinking. www.aapsonline.org. Volume 62, No. 5, May 2006.

24. WellCare to pay $32.5M settlement. www.fiercehealthcare.com August 25, 2008

25. Waters III, W. Two Days that Ruined Your Health Care (And How you can Provide the Cure). Logikon Press, Newnan, Georgia, September 1, 2008.