NEOAVATARA

I am going to try to focus on particular issues within the health care debate, largely because many platitudes are used, but no one gets to the heart of the matter.

Today, President Barack Obama went to talk to the American Medical Association, and talked about how to reduce costs.  And to promote it, he used scare tactics:

“If we do not fix our health care system, America may go the way of GM — paying more, getting less and going broke,” Obama told the AMA’s 158th annual meeting.

He is at least open to some of the more conservative proposals, but his allies in Congress are a different story all together.  Additionally, the President said he may consider tort reform, but without any caps.  That defeats the purpose, frankly, and doctors are unlikely to support that.

How far the President will go to push against the liberal left is still to be seen.  Obama however did make a complete misstatement:  that the public option won’t hasten the downfall of private medical insurance in this country.  That is a fact, no matter how much Obama denies it.  Obama can call me a liar to the day I die…but he is still wrong.  Heck, his own HHS Secretary Kathleen Sibelius said virtually the exact thing in 2007…maybe he should call her a liar as well:

Ultimately, cost, of course, is the biggest problem.  So much so that Democrats are somehow trying to avoid using the CBO numbers…which would be unprecedented.  But the CBO is saying that Obama’s plan as-is would cost $1 trillion…and still not cover 30 million people.  If you wanted to cover everyone, the cost shoots up to $4 trillon.  Yikes.  Additionally, they are using statistics that are outdated, or are totally wrong, thus making the argument even harder.  This is making it very difficult for Democrats to find the votes they need to pass the bill, even in the liberal Congress.

Therefore, cost is the main issue.  You solve this, everything else falls into place.  But let us face some realities right up front.

1. Costs, overall, will increase.

I went into depth on this in my health care review, which can be read here.  But basically, you are going to universally cover health care; so about 40 million uninsured, plus the additional 50 million underinsured. That is 90 million people who are largely not getting full health care coverage today.

Then, you will provide them with full health benefits, preventative care, etc.  Those things are costly, regardless of their longterm benefits.  Thus, upfront there will be an immense increase in health care spending, all things being equal.

2.  The myth of Medicare’s ‘efficiency’

This is a complete fairy tale.  From the Wall Street Journal:  Medicare was created in 1965, U.S. health spending has risen about 2.7% faster than the economy and on current trend would hit 20% of GDP within a decade. Every public or private attempt to arrest this climb has failed: wage and price controls in the 1970s, the insurance industry’s “voluntary effort” in the ’80s, managed care in the ’90s.  Here is how the Wall Street Journal editorializes it, and they are absolutely right:

Medicare is an ocean of money surrounded by people who want some. It is not only an entitlement to beneficiaries, but a de facto revenue entitlement to hospitals, physicians, nursing homes, durable medical equipment suppliers and the rest. Even a tweak to the Medicare fee schedule is the small-scale equivalent of closing a military base or trimming farm subsidies. The system will never be as rational as Mr. Orszag desires unless it is severed from politics.

And one other thing…let us remember that medicare itself does not pay taxes…like private insurers.

3. Information Technology is NOT NECESSARILY going to save money.

This is a farce.  As someone with IT background, IT will cost the American Health Care system billions.  Will it make the lives of doctors easier, and hopefully reduced mistakes?  Sure. I am all for IT for those reasons.  But there is proof that IT advances will increase cost, not decrease them; no proof, other than Obama’s word, has shown otherwise.

4. And above all, you want to control costs, you must ration care.

This is the pink elephant in the room.  Every other socialized health care system openly rations.  Obama is a smart man; he knows he has to, but is not willing to be honest with Americans about it.

This is the real reason our costs are skyrocketing.  We are the greatest innovators in medicine, by far.  About 90% of the medical patents in the world come from here.  Why?  Because we are a Petri dish of innovation.  We try technologies long before they are proven as cost beneficial.  Technology moves at such a fast rate, it would be impossible to test all the devices before implementing them; it would stop medical innovation to a stand still.

And most of the Medicare savings Democrats talk about?  They come directly from rationing of care.

Obama is now facing more pressure to reduce costs, but he is doing it in all the wrong ways.  First, he proposes to slow the rate of increase of hospital reimbursements, which will threaten the already shaky hospital system.  He plans to reduce Medicare payments; for doctors, medicare already pays less than 30% of costs…how many doctors do you think will start to opt out of the system?  Eventually, they will have to, because the reimbursements will be less than their own costs.

In addition, the president is proposing to reduce subsidies for hospitals that care for the uninsured as the number of uninsured falls. That would generate $106 billion over a decade, the White House said. Payments would be slowed beginning in 2013. By 2019, payments would be 25% of what hospitals had received in 2013, updated for inflation.  That may be reasonable, if a full system is implemented.

Obama is keeping his major cost savings hidden…likely because he has no really proposition for the hard decisions necessary to really reduce costs.  Moving dollars from one category to another is not cost savings; it is playing a shell game.  His weekly address on June 12 is an example of how nonspecific he is trying to be:

The New York Times had a fairly good editorial about the failure of doctors to reduce costs as well.  They are right in many ways, but they miss some vital points.   First, most doctors do not benefit from over treating patients; this is a small minority of doctors that have interests in their own testing agencies, commonly called self-referral.  For example, if a orthopedic surgeon owns his own MRI center, he is more likely to sent patients for an MRI; there are multiple studies that show this.  However, a family practioner who has no interest in the MRI center is more likely to order tests that are needed.  Obama and the Democrats are avoiding this issue, because of powerful medical lobbies.  Second and maybe more important, the most common reason for doctors to order too many studies is a simple one:  lawsuits.  Tort reform would potentially help in alleviating that.

All right.  So that is where we are.  So how do we move forward?

1. Make insurance personal, and not employer based.

It is frankly illogical and stupid to have your employer be responsible for your health care.  Few things are more personal than your health care choices; do you really want your boss making those decisions?  Additionally, health care should be readily portable.  You should have to think twice about switching jobs because of health care.

There are two reasons why people are still demanding employers pay for health care.  One, historical; it has always been that way.  Second, inertia; people don’t want to take responsibility themselves.  Neither argument carries much weight.

Instead of giving employers a tax benefit for giving out insurance, we should make employers choose; either give that money in salary to employees, or continue to cover their employees.  Most will choose the former, because handling health care is a headache.  So ultimately, it becomes a personal responsibility.

That is a good thing.  Why?  Right now, patients have no idea how much health care costs.  Heck, most doctors don’t know what health care costs.   It is essential to get patients to realize that these things are costly, and certainly not free.  People make choices daily about everything else cost wise; why not health care?  Sure, we need guarantees for disasters and such, but short of that, a system framed on personal choice is much, much more likely to limit costs than one governed by the feds.

2. Give patients more choice AND more repsonsibility.

I am all for more freedom and choice.  That is ultimately what America is about.  Thus, the more rights we give to the individual, the more likely we will have success.  But rights in this society does not come without personal responsibility.

What do I mean by that?  What I mean is that costly procedures that have questionable benefit should not be regularly covered by insurance.  The prime example is life sustaining tools in the final months of life.  We need to change societal expectations about life and death.  Spending approximately $700 billion a year on the final three months of dying patient’s lives is just not smart.  We need to cover hospice care, palliative medicine, etc.  Now, if a family wants to keep grandpa on life support, that is fine…but that should come out of their own pocket.

Examples such as these can be found through out health care.  Why?  Because people don’t ‘pay’ for services in health care.  Thus, they feel entitled to everything.  By making patients make rational choices, we can reduce the waste of hundreds of billions of dollars quite easily.

3. Tort reform.

Obama at the AMA speech came out against caps for malpractice lawsuits, which in my humble opinion signficantly reduces his credibility on the issue of cost reduction.

This is contentious, and clearly as a physician I am not impartial.  But it is more than  just lawsuits.  There is a vicious cycle in medicine of practicing ‘defensive medicine’.  This is basically doctors order often unnecessary tests only because they feel legal retribution if they don’t.  This has to stop.  This has created a terrible culture of misspending in medicine in America.  We need a complete culture change, where we order tests that are unnecessary, and don’t blame doctors or the system when things still go awry.  Medicine is not a perfect science, even if our legal system wants it to be that way.  There should still be legal recourse for negligence, real mistakes, etc.  But this needs to be limited.

4. Decrease bureauocracy and red tape.

I don’t think there is any industry that has as much paperwork as medicine.  It is out of control.  From documentation, to billing, to legal issues, medicine is mired in paperwork.  It is estimated that private care physicians (family medicine, internal medicine, pediatrics) spend at least one quarter of their time on paperwork, and spend at least 1/3 of their overhead on those costs.  And it doesn’t stop there.  The federal government and state governments have overlapping regulations that make things even more complicated for physicians, hospitals, and insurers.  This whole system needs to be cleaned up.  We could reduced paper work by half, and increase physician productivity by one eighth in one single step.  The cost savings could be enormous.

Frankly, the Obamacare and Democratic plan fails in all four of these steps. They are looking at costs savings from a very high level; how can we save dollars on Medicare and Medicaid, shift it to Obamacare; how can we increase taxes, etc.  Medicine ultimaately is about individuals, and if you want real cost savings across the board, you need to clean up the mess and minutia that is limiting the actual process of health care, instead of staring at accounting tables and tax receipts.

Please see the complete Neoavatara Health Care Plan Here.