The President of the United States gave a speech on June 15th 2009 before the AMA in Chicago. This was to be a speech which was an attempt to gain their support as well as provide some substance to the proposals which would be supported by the current Administration. We look at what was said and attempt to come to a better understanding of what he meant and to what direction he is taking the people of this country.
The Speech
He opened his speech as follows:
"So let me begin by saying this: I know that there are millions of Americans who are content with their health care coverage – they like their plan and they value their relationship with their doctor. And that means that no matter how we reform health care, we will keep this promise: If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what. My view is that health care reform should be guided by a simple principle: fix what's broken and build on what works…"
This is a strong promise and one that will be broken immediately with Medicare. This statement is there solely to assuage the public and in no way reflects the reality of what follows.
He continues:
"First, we need to upgrade our medical records by switching from a paper to an electronic system of record keeping. And we have already begun to do this with an investment we made as part of our Recovery Act."
Yes, again we all agree with this and this is a time consuming process which will take time just to define what is meant. It is stuck at the front as a technological solution whereas it is a solution which requires integration into the fabric of the very practice of medicine. It will happen, slowly and inevitably, but again slowly.
Again he continues:
"The second step that we can all agree on is to invest more in preventive care so that we can avoid illness and disease in the first place. That starts with each of us taking more responsibility for our health and the health of our children. It means quitting smoking, going in for that mammogram or colon cancer screening. It means going for a run or hitting the gym, and raising our children to step away from the video games and spend more time playing outside….It also means cutting down on all the junk food that is fueling an epidemic of obesity, putting far too many Americans, young and old, at greater risk of costly, chronic conditions…"
Prevention is the key, and we have shown that by dealing with Type 2 Diabetes, smoking related illnesses and a few major cancers, prostate, breast and colon, we can cut over 30% from the costs of health care. However the way to accomplish this is a carrot and stick approach, taxing and educating.
He then uses the Dartmouth studies; again we have discussed them in detail before, and lay out two proposals:
"One Dartmouth study showed that you're no less likely to die from a heart attack and other ailments in a higher spending area than in a lower spending one. There are two main reasons for this. …The first is a system of incentives where the more tests and services are provided, the more money we pay….We need to bundle payments so you aren't paid for every single treatment you offer a patient with a chronic condition like diabetes, but instead are paid for how you treat the overall disease. We need to create incentives for physicians to team up – because we know that when that happens, it results in a healthier patient. We need to give doctors bonuses for good health outcomes – so that we are not promoting just more treatment, but better care…."
Here he is taking a strong stand on bundling. We have shown how this will have a massive negative impact on health care. It places the hospitals in charge and reduces the physicians to mere clerks in a massive Government controlled health system. Why the AMA let this pass is incomprehensible. Bundling is a step to complete Government control via a concentration of power through a concentration of payment.
He uses the example of Diabetes. To any physician who has ever treated a Type 2 Diabetes patient you know that 90% of your battle is with the patient. They are too heavy and get too little exercise. They want to live their old lifestyle and just want more drugs to do so. So the metformin leads to insulin and leads to nephoropathy. So what role does the patient play. The physician is being penalized. Frankly he could not have chosen a better case to use as an example of why bundling makes no sense.
He continues with his second statement:
"The second structural reform we need to make is to improve the quality of medical information making its way to doctors and patients. We have the best medical schools, the most sophisticated labs, and the most advanced training of any nation on the globe. Yet we are not doing a very good job harnessing our collective knowledge and experience on behalf of better medicine. Less than one percent of our health care spending goes to examining what treatments are most effective. And even when that information finds its way into journals, it can take up to 17 years to find its way to an exam room or operating table."
This second statement is the CCE issue. The comment that it takes 17 years to enter practice is frankly an insult. Physicians are always being trained and retrained, a mandate of almost all State Medical Boards, requiring dozens of CME hours per year per physician and tested and retested. With the advent of the Internet we find patients confronting physicians with information before it is even approved by the FDA.
Thus this 17 year comment is frankly out of place. Yet what this means is the under his plan the Government will organize the information and tell physicians the best practices. In no other profession is this done, not even the law. This means again as I have stated that we can expect the Government to create the future volumes of Harrison's and Brunwald! We should just reintroduce witch doctors now!
He continues on the Medicare improvement track with three recommendations:
"So, we need to do a few things to provide affordable health insurance to every single American. ..The first thing we need to do is protect what's working in our health care system….Second, we need to use Medicare reimbursements to reduce preventable hospital readmissions…Third, we need to introduce generic biologic drugs into the marketplace…."
These are not too controversial but the issue is who decides what is working now, we have to understand why readmission occur, many times we have truly sick patients, and generics work in 90% of the cases but in those few in which they do not it may be because they do not exist.
Tort Reform
In the talk he also stated as regards to Tort Reform the following:
"Now, I recognize that it will be hard to make some of these changes if doctors feel like they are constantly looking over their shoulder for fear of lawsuits. Some doctors may feel the need to order more tests and treatments to avoid being legally vulnerable. That's a real issue. And while I'm not advocating caps on malpractice awards which I believe can be unfair to people who've been wrongfully harmed, I do think we need to explore a range of ideas about how to put patient safety first, let doctors focus on practicing medicine, and encourage broader use of evidence-based guidelines. That's how we can scale back the excessive defensive medicine reinforcing our current system of more treatment rather than better care."
The above is recognition of the problem but provides no pathway to its resolution. Admittedly many physicians perform tests over and over and even tests that in a less litigious environment would not be performed just to make certain that they have "belts and suspenders" regarding a diagnosis. One must understand that almost 90% of the diagnoses are based on the clinical presentation by the patient.
But to be certain that the educated analysis of the physician is not called into question at a later time there are multiple tests and even multiple referrals made. This clearly adds to the costs. The answer is not to reduce the payment but to reduce the law suits and the liability in a fair and equitable manner. The speech did not address this issue. It is a key issue.
In a recent NEJM paper by Mello and Brennan this same week, the authors provide an excellent overview of the Tort options. They state:
"There are at least three reasons why government champions of health care reform might consider bundling medical liability reform in the same package. First, one piece of conventional wisdom that is shared by those on both sides of the political aisle is that “defensive medicine” spurred by concern about malpractice liability is a substantial driver of the escalation of health care costs….Second, health care reformers understand that they will have to garner physician support for an omnibus bill that will no doubt create a more stringent financial environment for health care providers…Third, bundling tort and health care reform may help to attract support from congressional Republicans for a health care reform package."
The authors then go onto to discuss approaches which may gain acceptance.
They state:
"Two potential approaches are…. The first approach calls for state experimentation with innovative programs adopted by liability insurers, sometimes called disclosure- and-offer programs, in which health care providers disclose unanticipated outcomes of care to patients and make prompt offers of compensation in appropriate cases. Patients do not waive their right to sue by accepting the offer, but reportedly, few go on to file lawsuits… The second approach is to shift the adjudication of medical malpractice claims to a new kind of tribunal — either an administrative panel that would award damages on the basis of judgments by neutral experts about the avoidability of the injury or specialized judicial courts presided over by judges with medical expertise. .."
Clearly as the authors state the tort problem has a ready ability to be resolved. It is stuck however due to the influence of the Tort Attorneys who have always had a strong and costly influence in Washington. If we want a resolution in health care we demand a resolution in Tort Reform!
Coase
It is worth a brief review of what Coase has said regarding this issue. I have found Coase is one of my favorite economists, one of very few. He avoids the plethora of useless equations and deals with simple examples and logic. Coase is in many ways the Aristotle of economics.
Coase's famous observation is stated in the Library of Economics and Liberty is:
"Firms are like centrally planned economies, he wrote, but unlike the latter they are formed because of people’s voluntary choices. But why do people make these choices? The answer, wrote Coase, is “marketing costs.”… But because markets are costly to use, the most efficient production process often takes place in a firm. His explanation of why firms exist is now the accepted one and has given rise to a whole literature on the issue."
The article continues:
"Economists before Coase of virtually all political persuasions had accepted British economist Arthur Pigou's idea that if, say, a cattle rancher’s cows destroy his neighboring farmer’s crops, the government should stop the rancher from letting his cattle roam free or should at least tax him for doing so. Otherwise, believed economists, the cattle would continue to destroy crops because the rancher would have no incentive to stop them..."
As I have argued before the Pigou school is one of central Government control via taxation. A favorite approach by Mankiw and the Harvard economists. If you don't like it tax it. In contrast Coase recognizes the efficiency of the market, if left to its own merits and that is saying something for a man who was an ardent Socialist when he began his analysis.
The article concludes:
"This insight was stunning. It meant that the case for government intervention was weaker than economists had thought…"
Now on point as regards to health care Coase talks of the light house and how they functioned without Government control. Specifically:
"Coase also upset the apple cart in the realm of public goods. Economists often give the lighthouse as an example of a public good that only government can provide. They choose this example not based on any information they have about lighthouses, but rather on their a priori view that lighthouses could not be privately owned and operated at a profit. Coase showed, with a detailed look at history, that lighthouses in nineteenth-century Britain were privately provided and that ships were charged for their use when they came into port. "
Thus health care, using the lighthouse metaphor, and in a Coasian sense, should follow a similar path, and such a path is in many ways divergent from that as presented by the current President.
The Speech
He opened his speech as follows:
"So let me begin by saying this: I know that there are millions of Americans who are content with their health care coverage – they like their plan and they value their relationship with their doctor. And that means that no matter how we reform health care, we will keep this promise: If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what. My view is that health care reform should be guided by a simple principle: fix what's broken and build on what works…"
This is a strong promise and one that will be broken immediately with Medicare. This statement is there solely to assuage the public and in no way reflects the reality of what follows.
He continues:
"First, we need to upgrade our medical records by switching from a paper to an electronic system of record keeping. And we have already begun to do this with an investment we made as part of our Recovery Act."
Yes, again we all agree with this and this is a time consuming process which will take time just to define what is meant. It is stuck at the front as a technological solution whereas it is a solution which requires integration into the fabric of the very practice of medicine. It will happen, slowly and inevitably, but again slowly.
Again he continues:
"The second step that we can all agree on is to invest more in preventive care so that we can avoid illness and disease in the first place. That starts with each of us taking more responsibility for our health and the health of our children. It means quitting smoking, going in for that mammogram or colon cancer screening. It means going for a run or hitting the gym, and raising our children to step away from the video games and spend more time playing outside….It also means cutting down on all the junk food that is fueling an epidemic of obesity, putting far too many Americans, young and old, at greater risk of costly, chronic conditions…"
Prevention is the key, and we have shown that by dealing with Type 2 Diabetes, smoking related illnesses and a few major cancers, prostate, breast and colon, we can cut over 30% from the costs of health care. However the way to accomplish this is a carrot and stick approach, taxing and educating.
He then uses the Dartmouth studies; again we have discussed them in detail before, and lay out two proposals:
"One Dartmouth study showed that you're no less likely to die from a heart attack and other ailments in a higher spending area than in a lower spending one. There are two main reasons for this. …The first is a system of incentives where the more tests and services are provided, the more money we pay….We need to bundle payments so you aren't paid for every single treatment you offer a patient with a chronic condition like diabetes, but instead are paid for how you treat the overall disease. We need to create incentives for physicians to team up – because we know that when that happens, it results in a healthier patient. We need to give doctors bonuses for good health outcomes – so that we are not promoting just more treatment, but better care…."
Here he is taking a strong stand on bundling. We have shown how this will have a massive negative impact on health care. It places the hospitals in charge and reduces the physicians to mere clerks in a massive Government controlled health system. Why the AMA let this pass is incomprehensible. Bundling is a step to complete Government control via a concentration of power through a concentration of payment.
He uses the example of Diabetes. To any physician who has ever treated a Type 2 Diabetes patient you know that 90% of your battle is with the patient. They are too heavy and get too little exercise. They want to live their old lifestyle and just want more drugs to do so. So the metformin leads to insulin and leads to nephoropathy. So what role does the patient play. The physician is being penalized. Frankly he could not have chosen a better case to use as an example of why bundling makes no sense.
He continues with his second statement:
"The second structural reform we need to make is to improve the quality of medical information making its way to doctors and patients. We have the best medical schools, the most sophisticated labs, and the most advanced training of any nation on the globe. Yet we are not doing a very good job harnessing our collective knowledge and experience on behalf of better medicine. Less than one percent of our health care spending goes to examining what treatments are most effective. And even when that information finds its way into journals, it can take up to 17 years to find its way to an exam room or operating table."
This second statement is the CCE issue. The comment that it takes 17 years to enter practice is frankly an insult. Physicians are always being trained and retrained, a mandate of almost all State Medical Boards, requiring dozens of CME hours per year per physician and tested and retested. With the advent of the Internet we find patients confronting physicians with information before it is even approved by the FDA.
Thus this 17 year comment is frankly out of place. Yet what this means is the under his plan the Government will organize the information and tell physicians the best practices. In no other profession is this done, not even the law. This means again as I have stated that we can expect the Government to create the future volumes of Harrison's and Brunwald! We should just reintroduce witch doctors now!
He continues on the Medicare improvement track with three recommendations:
"So, we need to do a few things to provide affordable health insurance to every single American. ..The first thing we need to do is protect what's working in our health care system….Second, we need to use Medicare reimbursements to reduce preventable hospital readmissions…Third, we need to introduce generic biologic drugs into the marketplace…."
These are not too controversial but the issue is who decides what is working now, we have to understand why readmission occur, many times we have truly sick patients, and generics work in 90% of the cases but in those few in which they do not it may be because they do not exist.
Tort Reform
In the talk he also stated as regards to Tort Reform the following:
"Now, I recognize that it will be hard to make some of these changes if doctors feel like they are constantly looking over their shoulder for fear of lawsuits. Some doctors may feel the need to order more tests and treatments to avoid being legally vulnerable. That's a real issue. And while I'm not advocating caps on malpractice awards which I believe can be unfair to people who've been wrongfully harmed, I do think we need to explore a range of ideas about how to put patient safety first, let doctors focus on practicing medicine, and encourage broader use of evidence-based guidelines. That's how we can scale back the excessive defensive medicine reinforcing our current system of more treatment rather than better care."
The above is recognition of the problem but provides no pathway to its resolution. Admittedly many physicians perform tests over and over and even tests that in a less litigious environment would not be performed just to make certain that they have "belts and suspenders" regarding a diagnosis. One must understand that almost 90% of the diagnoses are based on the clinical presentation by the patient.
But to be certain that the educated analysis of the physician is not called into question at a later time there are multiple tests and even multiple referrals made. This clearly adds to the costs. The answer is not to reduce the payment but to reduce the law suits and the liability in a fair and equitable manner. The speech did not address this issue. It is a key issue.
In a recent NEJM paper by Mello and Brennan this same week, the authors provide an excellent overview of the Tort options. They state:
"There are at least three reasons why government champions of health care reform might consider bundling medical liability reform in the same package. First, one piece of conventional wisdom that is shared by those on both sides of the political aisle is that “defensive medicine” spurred by concern about malpractice liability is a substantial driver of the escalation of health care costs….Second, health care reformers understand that they will have to garner physician support for an omnibus bill that will no doubt create a more stringent financial environment for health care providers…Third, bundling tort and health care reform may help to attract support from congressional Republicans for a health care reform package."
The authors then go onto to discuss approaches which may gain acceptance.
They state:
"Two potential approaches are…. The first approach calls for state experimentation with innovative programs adopted by liability insurers, sometimes called disclosure- and-offer programs, in which health care providers disclose unanticipated outcomes of care to patients and make prompt offers of compensation in appropriate cases. Patients do not waive their right to sue by accepting the offer, but reportedly, few go on to file lawsuits… The second approach is to shift the adjudication of medical malpractice claims to a new kind of tribunal — either an administrative panel that would award damages on the basis of judgments by neutral experts about the avoidability of the injury or specialized judicial courts presided over by judges with medical expertise. .."
Clearly as the authors state the tort problem has a ready ability to be resolved. It is stuck however due to the influence of the Tort Attorneys who have always had a strong and costly influence in Washington. If we want a resolution in health care we demand a resolution in Tort Reform!
Coase
It is worth a brief review of what Coase has said regarding this issue. I have found Coase is one of my favorite economists, one of very few. He avoids the plethora of useless equations and deals with simple examples and logic. Coase is in many ways the Aristotle of economics.
Coase's famous observation is stated in the Library of Economics and Liberty is:
"Firms are like centrally planned economies, he wrote, but unlike the latter they are formed because of people’s voluntary choices. But why do people make these choices? The answer, wrote Coase, is “marketing costs.”… But because markets are costly to use, the most efficient production process often takes place in a firm. His explanation of why firms exist is now the accepted one and has given rise to a whole literature on the issue."
The article continues:
"Economists before Coase of virtually all political persuasions had accepted British economist Arthur Pigou's idea that if, say, a cattle rancher’s cows destroy his neighboring farmer’s crops, the government should stop the rancher from letting his cattle roam free or should at least tax him for doing so. Otherwise, believed economists, the cattle would continue to destroy crops because the rancher would have no incentive to stop them..."
As I have argued before the Pigou school is one of central Government control via taxation. A favorite approach by Mankiw and the Harvard economists. If you don't like it tax it. In contrast Coase recognizes the efficiency of the market, if left to its own merits and that is saying something for a man who was an ardent Socialist when he began his analysis.
The article concludes:
"This insight was stunning. It meant that the case for government intervention was weaker than economists had thought…"
Now on point as regards to health care Coase talks of the light house and how they functioned without Government control. Specifically:
"Coase also upset the apple cart in the realm of public goods. Economists often give the lighthouse as an example of a public good that only government can provide. They choose this example not based on any information they have about lighthouses, but rather on their a priori view that lighthouses could not be privately owned and operated at a profit. Coase showed, with a detailed look at history, that lighthouses in nineteenth-century Britain were privately provided and that ships were charged for their use when they came into port. "
Thus health care, using the lighthouse metaphor, and in a Coasian sense, should follow a similar path, and such a path is in many ways divergent from that as presented by the current President.
Posts
