The problem with a summit is that it's generally all downhill from there.

Like at least tens of other Americans, I spent virtually the entire day today listening carefully to what might be billed as The Great Bi-Partisan Healthcare Summit of 2010. Calling this leadership discussion a “summit” is particularly apt; there seems little doubt that the tone and nature of political discourse will now head straight downhill. My own suspicion is that it’ll reach the bottom faster than any skier at the Winter Olympics in Vancouver.

CNN, Fox and The Daily Show will rehash the main talking points of the two parties ad nauseum over the next day or two, so I will restrict my own comments to a few things that seemed particularly interesting or noteworthy.(see Note 1) Most of these will are bound to be glossed over in the regular media.

1. In a summit that was supposed to be all about bi-partisanship, commonality, and/or suggested “compromise by starting over”, the President (and everyone else in the room) completely ignored the fact that one person there had already drafted a bi-partisan bill: Senator Ron Wyden (D-Oregon). Co-drafted with Senator Robert Bennett (R-Utah), the Wyden-Bennett “Healthy Americans Act”, was scored by the Congressional Budget Office and Joint Committee on Taxation as being “roughly budget neutral in 2014”. Along the way it would provide private health insurance coverage for 99% of Americans, eliminate the headache and inefficiency of having health insurance coverage tied to employment, establish basic levels of coverage based upon benchmarks already present in the private sector, and allow complete portability of healthcare coverage. But apparently it wasn’t worth talking about.

While Senator Wyden was in the room for the entire time, you wouldn’t have known it unless you stayed for the last few minutes of actual discussion. He was allowed to speak for roughly five minutes, and merely suggested that he had some bipartisan ”ideas” that he’d be talking with attendees about in private after the meeting.

In a meeting where the Democrats are calling for “immediate action” and the Republicans are asking for a new approach based upon private-sector insurance, it ranks somewhere between shameful and criminal that no one breathed a word regarding the very existence of this alternative legislation. Despite its impressively bi-partisan origins, in July of 2009 President Obama refused to support the proposal, calling it too “radical” for the country. That alone should make the Republicans want to bring it up, if only to criticize the President’s lack of leadership. The least that everyone could have done is talked about whether anyone thought that it might be a viable alternative to the overstuffed legilsation already on the table.

2. In roughly the middle of the discussion, Senator Kent Conrad brought up an interesting statistic about the utilization of Medicare services. He noted that about 5% of Medicare beneficiaries account for nearly half of all Medicare expenditures – a percentage demonstrated by the figure below. Most of these individuals have one or more chronic diseases, are on multiple medications and are probably seeing a variety of primary and specialty care providers. Senator Conrad’s point was that this high incidence of cost and “polypharmacy” illustrated the need for “providers to better coordinate their care”.

This graph is taken from this CBO publication.

When government legislators and regulators talk about “coordinated care” in the United States, it’s generally a code phrase for second-guessing providers, cooking up more “guidelines of care”, and then punishing doctors when those bureaucratic guidelines are not followed. But with this much money at stake, I have a simple suggestion that I do not think has yet been proposed or systematically implemented nationwide. (To tell the truth, I can’t vouch for the fact that it’s never been discussed before. But if it has not already been tried, I hereby humbly offer the idea to the Federal government of the United States of America in exchange for only one-tenth of one percent of any savings that might be derived from its use.)

With only 10% of the beneficiary population generating a full 61.5% of all Medicare costs, it should be a relatively simple to identify the vast majority of these patients by statistical analysis. They will for example, probably fall into a certain age range, have one or more chronic conditions, be prescribed multiple medications and so on. The care of such patients typically takes an enormous amount of time and effort to manage successfully. Because the Federal government’s complex, expensive and poorly conceived method of payment does not tend to reward doctors for taking their time, nor for thinking about how a given patient might be better managed, most doctors cannot afford to see many of these patients.(see Note 2) If they do, they must either give them short shrift, go broke, or work like animals seeing hundreds of other patients in order to make up the financial deficit. It shouldn’t the slightest bit surprising that many, if not most, primary care providers and specialists have a difficult time coordinating care and caring for these folks.

Since this is the case, instead of turning the entire healthcare system upside down with elaborate Federal programs, why not implement a far simpler solution that does not appear in the President’s health plan? Carve out this population and have them assigned to the care of a relatively small number of “complex Medicare patient” specialists. Since most people are already familiar with the idea of intensive care specialists in hospitals, I’ll call them “outpatient intensive care doctors”. These would be ordinary physicians trained in internal medicine (since virtually all of the patients will be elderly), but whose entire practice would consist of complex Medicare patients. Regular medical practices would be required to refer all patients meeting the “Medicare complex patient criteria” to an outpatient intensive care practice.

Virtually all of patient visits with outpatient intensivists would be longer than average and billable with a high level of complexity. This will allow these doctors to survive financially. This is in marked contrast to their high volume colleagues who have to take on complex cases in addition to twenty other patients each day. The outpatient intensivist’s primary mission is to minimize the number of complications for patients under their care, and ensure that their care is highly monitored and coordinated. They are free to refer to any specialist and obtain any tests and consultations that their judgment may deem necessary.

If the use of outpatient intensivists can’t reduce the cost associated with the top 10% of costly Medicare patients, it’s a good bet that nothing can without of overt rationing. In that case we should quit kidding ourselves about the utility of “guidelines”, “pay-for-performance” and similar gimmicks, and simply get out our wallets and resource rationing coupons.

3. Perhaps the most amusing moment of the meeting took place when physician and Senator Tom Coburn (R-OK) brought up the topic of finding and punishing truly fraudulent Medicare providers. This is something you’d think that this topic would be old hat to the Democratic summiteers. The President’s initiative proposes no less than fourteen new government programs and initiatives to “crack down on waste, fraud and abuse”. The Senate original reform bill itself refers to “fraud” some 85 times as reported here. In contrast, Mr. Coburn suggested a supremely simple intervention: using undercover Medicare agents as “undercover patients”. These “patients” would be in an ideal position to know if suspected fraudulent providers are mis-using their Medicare coverage, offering kick-backs, selling defective equipment or otherwise engaging in truly criminal activity.

The immediate response of the President and other Democrats to this simple proposal was that of utter surprise. It was obvious that no one had ever suggested such a thing to them before – despite the fact that they had just spent over a year acquiring expertise on fixing healthcare and “carefully listening to Republican proposals”. It’s not often that one gets to see the most powerful leader in the free world flummoxed by such a simple and (probably) inexpensive, highly effective concept.

4. There is one final topic of interest I’ll comment upon, given that this nationally broadcast session was supposed to give Americans “the story” as presented by each side. It was supposed to allow them to decide which, if either, side was more compelling.

These were the incidents in which the supposed “facts” presented by each side were in dispute. The first time was between the President and Senator Lamar Alexander (R-TN). These two gentlemen spent some time arguing about whether the Congressional Budget Office (CBO) had said that the Democratic plan would raise private insurance premiums, or lower them. The second time was when Representative Paul Ryan (R-WI) quoted a truly impressive array of CBOish figures which (he said) demonstrated that the Democratic healthcare proposals utilized so much accounting sleight-of-hand that it amounted to a Ponzi scheme. This was immediately contradicted by one of the Democratic representatives present, who was also supposedly referring to the CBO “gold standard”.

I will readily admit that I am not an expert on the CBO’s reports and government accounting. I doubt that most people are. However if our Leaders are going to get together for a seven hour nationally televised meeting and claim to use CBO reports to call each other liars, can’t they bring a referee? How much trouble could it possibly be to whip out a cell phone, call the CBO and ask them to send someone over to tell the American public who’s right? Do our nation’s highest elected officials wish to remain ignorant and uninformed about the financial realities of American healthcare and their own “reform” proposals forever?

Hmmm. I was afraid of that. This is why we’re on the road to Hellth.

There are lots of other ways in which the cost of American healthcare can easily be reduced by hundreds of billions of dollars each year. I have discussed many of them in my book, “Overhauling the Healthcare Machine”, and will touch on more of them in future posts.

I think that it goes without saying that none of our Leaders mentioned any of them. I seriously doubt that they either know of them, or have given them any thought whatesoever.

Note 1: As pointed out in my last post, this summit will be the major healthcare headline only until this coming Monday. At that point I predict that virtually all of the media’s attention will be devoted to the “Crisis in Medicare”, as the 21% reduction in gross Medicare compensation to physicians takes effect. A rational economic entities, doctors and clinics will be forced to turn away or delay scheduling Medicare patients because it costs more to see than healthcare providers will receive in compensation. The resulting chaos and media circus will result in many calls for “immediate action” on the Presidents’ healthcare reform proposal to resolve this healthcare emergency.

Note 2: The method of calculating what healthcare providers in the United States are paid for their services is called the “resource-based relative value system”, or “RBRVS” for short. Have no fear – this monstrosity will be the subject of future posts, as it figures prominently in wasting huge amounts of time and money for patients, taxpayers and healthcare providers alike.

This week, President Obama will sit down with Congressional Republicans and Democrats in a televised appearance to discuss his revised healthcare reform proposal.  It seems highly unlikely that this public bit of theater will accomplish much in the way of good new ideas, bipartisan cooperation or compromise.  But of course that’s not the point.  The real point of the show is to help the President get what he wants.  It has to be.  Heck, he’s the one calling the meeting.  No one seriously thinks that he would do so with any intention of helping the Republicans get whatever it is that they might want…and certainly not in an election year.

The bad part is that the President and his allies in Congress need to see chaos unleashed on patient and providers in the healthcare system as part of the plan.  Of course sacrifices must be made.  It’s just that they’ll be made by you and I rather than the actual politicians involved.

Of course, if you can't limit your exposure you'll just have to suffer...

What the President appears to want is passage of a modified version of Senate’s healthcare bill.  The bill’s primary modifications seem to focus on papering over some of the backroom deals that attracted the most vocal public outrage.  These include the special “Cornhusker Kickback” Medicaid deal for Nebraska (but not a repeal of the $300 million given to Louisiana’s Senator Landrieu for her vote), altering the special deal given to labor union members with high-cost health plans to make it less conspicuous, and substituting a first-of-its-kind Medicare tax on investment income to make up for the resulting revenue shortfall.  However if the President’s proposals are to truly humiliate the Republicans and overcome his opposition in a public forum, more political firepower is clearly needed.  These “big guns” take two forms: healthcare handouts and the subtle threat of chaos.

The handouts in the President’s proposal are obvious enough.  They include closing the doughnut hole in Medicare’s drug benefits (even though the Bush Administration’s creation of Medicare Part D without any way to pay for it has contributed greatly to budget deficits, and this new benefit can only make things worse), making the Federal government the primary (although indirect) purchaser of private health insurance for millions of Americans through massive tax credits, and forcing insurance companies to provide essentially unlimited benefits to people at high risk for running up huge medical bills.  But more subtle and more interesting are the threats of chaos.  These are meant to insure that voters cannot afford to leave the President’s proposal un-passed at the risk of even greater hardships to come.

The first of these threats to be unleashed came from Anthem Blue Cross of California, when it announced an increase in insurance premiums of up to 39% for one of the vulnerable group of policyholders – those purchasing individual insurance coverage.  DrRich at The Covert Rationing Blog has provided an excellent, and I believe very accurate, analysis of the seemingly astonishing timing and size of these premium increases.  He argues that the huge increases so blatantly devised by Anthem and other insurers designed to assist the President and his Democratic colleagues in Congress with passage of their healthcare proposals.  Increases this big are bound to get lots of attention and scare the pants off voters.  They can’t be left unaddressed; to do so invites chaos in the market for private individual health insurance.  The only alternative is immediate government action.

Right on time and on cue, the President’s healthcare proposal appeared within a two weeks and offered to address the problem.  It features an immediate fix in the form of what amount to national price controls on private healthcare insurance.  The President would create a new “Health Insurance Rate Authority” that will help review all insurance rate increases and force insurers to reduce or eliminate them in they are “unreasonable or unjustified”.  While this measure does nothing to increase competition in the insurance businesses, reduce actual healthcare costs or mitigate rapidly increasing healthcare overhead expense, it does solve the immediate problem of insurance rate increases in the individual insurance market.  Ergo, anyone who does not support the President’s plan could be labeled as willing to unleash medical and economic chaos among many of those voters who are least able to bear these burdens.

As handy as this threat might be for the President’s healthcare agenda, it is mere chickenfeed in the face of what America potentially faces next week: complete chaos for literally millions of seniors and the doctors who take care of them.  You see, it just so happens that Congress has not yet bothered to pass a stay of execution for the 21% “sustainable growth rate” (SGR) cut in provider compensation that is currently scheduled to take place on March 1^st.  This is the Monday right after the President’s meeting with Congressional Republicans.  If the SGR cuts are allowed to go through either millions of seniors will have no physician willing to take care of them at Medicare rates, hundreds of thousands of doctors will be faced with the prospect of economic devastation, or both.

For those of you who may not be familiar with it, the SGR is a bizarre cost control mechanism invented by Congress in 1998.  The principle behind the SGR basically says that, if outpatient Medicare costs are increasing faster than desired, it must all be the fault of doctors.  Other factors such as increasing numbers of old and sick patients, skyrocketing administrative and overhead costs, more expensive treatments or other similar cannot possibly be responsible, or if they are the government does not care.  Therefore doctors will, by law, be the ones punished if the total cost of outpatient goods and services covered by Medicare increases faster than an arbitrary “sustainable growth target”.

The net result is that while virtually all other costs are simply indexed by Medicare for inflation, the amount that Medicare pays physicians will be reduced every time the spending target is exceeded.  The only possible reprieve for doctors is if Congress specifically passed legislation that prevents these cuts from taking place.  However every time these cuts are postponed they accumulate, and can eventually reach very big numbers.

This happens to be the situation that we find ourselves in at the moment.  Since members of Congress generally like to see that seniors are taken care of, over the past 12 years they have generally reversed the SGR cuts on a year-by-year basis, (although in real terms Medicare payments still decline annually due to inflation).  The cumulative Medicare payment cut that physicians are now facing is a whopping 21% of their gross Medicare income.  To put that in perspective it’s useful to know that the average outpatient doctor has an overhead expense rate of about 50%.  To earn a $150,000 annual salary, she has to bring in $300,000 in gross income.  If she’s 100% dependent on Medicare income, her gross income after the SGR reduction would drop to $237,000, but her overhead expenses will remain the same at $150,000.  This means that her actual salary will plummet to $87,000 – a net reduction of 42%.  With educational debt, training-induced delays in entering the workforce and continuously rising overhead expenses, very few younger physicians are in a position to weather a financial storm of this magnitude.  They can respond in only one of two ways: (1) refuse to accept Medicare patients; or (2) go broke.  Either one would play havoc with the U.S. healthcare system.

Congress was took up the SGR penalty last November, when the House passed legislation to wipe out the accumulated SGR debt, but the measure failed to pass the Senate.  A temporary patch to delay the 21% decrease until March 1^st was then tacked onto the annual defense appropriations bill.  Another temporary delay until October 1, 2010 was then included in the jobs bill drafted by the Senate, but this particular provision was intentionally stripped out by Senate Majority Leader Harry Reid when he personally dismantled the bipartisan bill just a little over one week ago.  The net result is that SGR cut is scheduled to go into effect just as President Obama’s televised “bipartisan” talks with Republicans collapse.

If physicians close their doors to Medicare patients it is virtually certain that voters will demand immediate action.  Democrats will readily interpret this demand as support for their healthcare agenda, and pass whatever healthcare reform legislation they desire in the name of bowing to the will of the people.

Voila!  Mission accomplished.  All it takes is considerable cost, chaos and inconvenience to those of us who are ill, or devote our lives to managing illness.  To the winning politicians, their advisors and supporters whoever they may be, that will have been a small price to pay.

Who'd have believed it? These car dealers are now as or more trusted than politicians.

When it comes to healthcare, public trust in government has hit rock-bottom and is continuing to dig. An October 19^th Gallup poll showed that solid majorities of Americans distrust both Republicans and Democrats to do the right thing with respect to messing around with the healthcare system. Twice as many people think that healthcare reforms passed by Congress will make things worse rather than better in terms of quality, cost, coverage and barriers to receiving treatment.

Of course, this particular poll was taken before: (1) dozens of members of Congress gave speeches that were literally written by a drug company; (2) a federally funded commission decided that women in their 40s would feel better without routine mammograms; and (3) the House and Senate passed 2,000+ page reform bills that few, if any, lawmakers actually read prior to the vote. It’s inherently hard to trust a process in which most legislators don’t even read major bills before voting on them. As James Madison once wrote: “It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood…”

Voter confidence certainly hasn’t improved since October. A December Gallup public opinion poll asked 1,017 Americans to rate the ethical standards and honesty of people in a wide variety of different fields. Members of Congress were given the lowest rating for ethics and honesty of all 22 professions included: 55% of people gave them a “low” or “very low” rating, compared with only 51% for car salesmen, 40% for lawyers and 38% for bankers. Health professionals were given the public’s greatest trust. Eighty-three percent of those polled rated nurses as having “high” or “very high” ethics and honesty, compared with 65% for physicians, 63% for policemen, and 9% for Members of Congress. Only HMO Managers and car salesmen ranked worse, at 8% and 6% respectively.

And here are two telling graphics from an even more recent CBS/New York Times public opinion poll:

One doesn’t have to be a genius to understand that this distrust makes it terribly difficult for the public to support a government-led overhaul of the healthcare system. The stakes are simply too high. In practical terms there are no limits to what the government can or cannot do with respect to healthcare. It can regulate anything. It can ban or insist upon the use of specific treatments and technologies. It can mandate mountains of paperwork, and/or insert itself directly into the physician-patient relationship – all with equal ease. All of the reform bills that the Democrats have proposed would expand the role of government in defining what constitutes “quality” care, control physician behavior by manipulating payments, and significantly increase healthcare spending on committees, regulation and administrative overhead. Many of these provisions are vague; there is no way to know what the ultimate impact on patients and providers is likely to be. With over 7,000 healthcare lobbyists spending $1.4 million per day to influence Congress and the Obama administration, voters have good reason to expect the worst. The only way wholesale reform is going to work is if firm patient and provider responsibilities and safeguards are put into place along with a re-structured system.

To put it another way, American healthcare has become so massive, important and screwed up that it desperately needs its own dedicated healthcare constitution.

What exactly is a healthcare constitution? It’s really pretty simple. A healthcare constitution is a document that defines what we want our healthcare system to achieve, and how. Along the way, it also delineates the rights, responsibilities, obligations and limitations of the interested parties: patients, providers, insurers and government.

The Founding Fathers would certainly approve; they had a basic mistrust of the political process. The U.S. Constitution mandates divided government, checks and balances, and specific individual rights. Had they anticipated the ability of government and corporations to directly control physicians and healthcare services, they probably would have dealt with it themselves.

It’s sad to say, but given the current environment, creating a document like this for healthcare is something that cannot and should not be done by politicians and lobbyists in Washington. The Founding Fathers had already proven that they would not abuse the public trust when they went into a room with George Washington and came out with a blueprint for governance. That can’t be said for our Leaders in either political party today, or for their special interest allies.

So who should create this thing? Since healthcare providers both know healthcare and are highly trusted, they ought to take the lead.* Citizens groups and businesses need to contribute as well.

The Internet makes it possible to perform the most important functions of a “constitutional convention” on-line. These include the presentation of proposals, debate regarding their advantages and disadvantages, suggestions for change and compromise, and even the assessment of support for specific measures. The contributions of experts, patients, business and political leaders and even lobbyists can be considered on their merits alone. In contrast, “merit” seems to have little to do with the current healthcare “debate” going on in the media, on Capitol Hill and coming from the White House.

Would a healthcare constitution created in this way be legally binding on our representatives? No, but that doesn’t mean that the result can be ignored. In the words of Henry James, “Ideas are, in truth, force.” If we can collectively agree that a new structure for healthcare is called for and accurately define what that structure should be, our political Leaders will eventually have little choice but to follow along.

I strongly encourage you to comment on this topic. It deserves considerable discussion.

The Road to Hellth we’re traveling makes lots of people miserable and angry. If you know how the system works it’s completely understandable. Virtually all of American healthcare is now based on the subtle dishonesty of cost- and labor-shifting. Everyone is constantly dumping on everyone else. People get tired of it after a while.

Thank goodness you won’t see a sign like this in your nearest clinic, hospital, health insurance broker, business or neighbor’s home anytime soon! Unless, of course, Congress doesn’t bother to fix its currently scheduled 21% reduction in Medicare reimbursement rates…

As is usually the case in life, the dumping on others starts at the top; just take a look at the figure below.

The federal government generally pays far less for the healthcare goods and services it purchases through Medicare and Medicaid than the actual cost of producing those services. This beggar-thy-neighbor approach is really a hidden tax on businesses and individuals who buy private health insurance or pay for healthcare out-of-pocket. It’s “cost-shifting” because it the less the government pays, the more private insurers have to pony up to keep the healthcare system financially solvent. This makes private insurance premiums increase faster than they normally would, and makes the businesses and individuals who pay them angry with the private insurance system. (I think you’ll agree that this is an especially cunning approach to healthcare financing by Our Political Leaders. Congress can claim to be “protecting” taxpayers by reducing payments to providers on one hand, and then argue that only a government-run insurance system can control costs on the other. Of course if the private insurance ever went away the government would have to either cut benefits or raise provider compensation drastically, but hopefully no one with think that far ahead…)

As the manure rolls downhill, private insurers shift their costs too. One way insurers do this by forcing doctors and patients to take on massive amounts of paperwork. This reduces the insurers’ own administrative expenses and (coincidentally) helps them to subtly ration care. Of course this situation is a complete win-win for insurance company executives and shareholders. “Need to see a specialist? Sorry, you’ll need to obtain a referral. Have your doctor fill out these papers, and then give then to the specialist you want to see.” “Hello doctor, want to be paid for your services? Tut, tut, not until you’ve submitted all of your paperwork and sent us copies of the patient’s medical records. (Of course, we’ll never look at them, but rules are rules.)” “Want to prescribe a medication that actually works for your patient? We’ll be happy to consider it! All you have to do is to write a little essay for our benefits nurse who has never seen your patient as to why you think this drug is necessary…”

And this is just the beginning. As we’ve seen before, mail-order pharmacies dump on patients and physicians by shorting-changing medications and forcing write duplicate prescriptions. States dump on insurers with unfunded mandates requiring coverage for specific diseases, treatments, tests or procedures. Hospitals dump on each other by cherry-picking patients with good insurance and referring the rest to their competitors. Insurers dump on patients by having formularies filled with cheap-but-obsolescent drugs.

Doctors dump on each other in dozens of subtle and not-so-subtle ways. Why just today, a specialist collegue of mine was referred a patient from a primary care doctor who NEVER refers patients. It was an event so rare that everyone was wondering if the Mayan calendar had somehow run out early and the world had come to an end. What precipitated this Lenten Miracle? It seems that the patient’s only symptom was that he was suffering from “spells”. The primary care had done no tests, a minimal physical exam, and only the barest bones history. Oh, did I mention that he was also demented, did not speak English and had Medicaid for insurance? The patient, that is…

Patients dump on providers by pretending that they are their mothers rather than beleaguered professionals. Frankly it’s no wonder patients and providers are practically homicidal out there in the medical trenches.

Whenever you hear about some plan to “reform” healthcare, you should always ask yourself four questions:

1. Does it reduce the amount of complexity within the healthcare system for everyone involved?
2. Is it economically sustainable?
3. Does it allow different people to freely purchase different amounts of healthcare goods and services based upon their resources and personal preferences?
4. Does it reduce the prevalence of dumping in the healthcare system from top to bottom?

If the answer to any of these questions is “no”, it’s not really healthcare reform – it’s just a putting a different face on the same old dysfunction. And if the answer to question #4 in particular is “no”, you might want to start working on your own “no dumping” sign. It’ll come in handy the next time you’re in a clinic or the hospital.