First, let me state that I am not a fan of Universal Health Care. All socialized medical systems ration health care regardless of what Michael Moore wishes to portray. He simply chooses anecdotes that support his political view. I do share his distaste for the insurance industry. Mortality rates both infant and adult have nothing to do with the quality of a healthcare system. They are connected more with demographics and crime. Here in the USA we have much better survival rates for prostate, colon, and breast cancer than any socialized country. There are, however, many doctors that make solid arguments for a single payer system.  Just recently I attended a lecture given by an extraordinarily intelligent woman physician who made a very convincing case for Universal Health Care.

Our current medical system is failing economically on all fronts.  Medical providers are becoming buried in insurance bureaucracy at huge expense in both dollars and quality of care.  Doctors practice mindless defensive medicine for fear of the legal system, and in many instances provide unnecessary services to bolster their eroding profits. It is estimated that some 30 to 50 % of the medical care provided in this country is entirely unnecessary and in some cases actually harmful. The net cost of medical insurance is increasing at a rate up to 10 times that of inflation.  The Drug manufacturers have been isolated from the pressures of competition by the insurers who are paying for these drugs with everyone else’s money.  The insurance industry’s response to higher drug prices is simply to raise premiums and, in all fairness, they are punished by the public at large if they try not to cover the newest most expensive drugs even if they are no more effective than older, cheaper ones. Our economy is being attacked by these ever increasing insurance premiums to the detriment of us all. Our medical system is now hovering at about 20% of the gross domestic product and climbing. We are becoming increasingly less competitive with the rest of the world as a result. Just ask GM and Motorola.

A single payer system could have significant gains in bureaucratic efficiency. Medicare spends about 2% of its income on non-medical overhead. The commercial insurers spend between 15 to 20% on non-medical overhead. Medicare generates significantly less paperwork for doctors than the commercial insurers, it is not-for-profit, it essentially does not market, and it does not have any seven figure executives.  Assuming that a single payer could operate at the same efficiency as Medicare, this might add up to a 13 to 18% percent reduction in the net cost of insurance. The problem with this data is that it does not include the cost of collecting taxes which is substantial and the cost of the worthless “Medicare and You” publication that Medicare releases yearly to all Medicare beneficiaries.

There is more savings to be had on the medical care side of the equation. Having to deal with one efficient payer rather than 10 paper crazy ones would allow dramatic simplification of the individual bureaucracies of all medical providers.

As an example, when I terminated all of my insurance contracts and began practicing Independent Personal Medicine my overhead dropped from $340,000 to just over $60,000. But my patient load dropped also and the practice still has considerable room to grow. A better way to look at it would be overhead dollars per patient care hour. That would be $165 per patient care hour to $60 dollars per patient care hour, a 64% reduction.  Adding one insurer would increase it to about $80 per patient care hour. I doubt large complex providers like hospitals could achieve that kind of reduction and frankly, I have no way of knowing what can be had. But, I know it is significant, at least on the order of

30%. So, system wide we are looking at a conservative 50% increase in bureaucratic efficiency. What that adds up to in actual dollars or percentage of the total cost of medical care I do not know.  In my office that added up to a 50% reduction in overall operating cost which includes my salary.

In a single payer system premiums would be collected in the form of taxes probably on the basis of income. One of the major problems with our current system is that many of the people that use it do not contribute a nickel to it or no where near their fair share. The cost is shifted to the rest of us in the form of taxes, higher fees and inferior care. A single payer system might not only reduce the cost of management but theoretically would spread the remaining cost over a much larger percentage of the population. Everyone would be covered. Cost per individual would drop. How much is anybody’s guess. There are too many variables. Remember, most of the uninsured in this country are people with money, jobs and income. The truly poor have Medicaid.

Then there is the philosophical aspect. I personally do not believe medical care is an absolute “right.” As an example, does an individual have a right to have a face lift?  Does an individual have a right to lung cancer treatment when they gave it to themselves by smoking, knowing, in no uncertain way, the risk, and what about those people who don’t wear motorcycle helmets or their seatbelts?  If you assume the moral premise that one individual does not have the right to damage another individual either physically, psychologically or financially then as long as people smoke, do not wear their seatbelts or helmets, drink alcohol to excess and not carry insurance their self inflicted illnesses wind up costing the rest of us a bunch of money- financial damage. Medical care is certainly an essential service. If you get appendicitis you are headed to the operating room. There is not much room for choice and nobody goes out of their way to give themselves appendicitis. What about the child with leukemia? I do believe that as a society we have the obligation to provide our citizens with essential medical services at as reasonable a cost as we can attain at the highest attainable quality. The 500 billion dollar question: Is Universal Health Care the way to do it in this country?

Now, let us look at the problem from the other side. If you think universal healthcare works well in the countries that have it check out this link; http://www.cato.org/pub_display.php?pubid_id=3627 . It seems as if most of them are scrambling to develop private systems.

Medicare might be 18 percent more efficient on the management side but that is only 2 percent of its total expenditure at best.  Medicare is a FINANCIAL DISASTER! It is unsustainable in the face of the evolving demographic. The problem is going to require some really creative and perhaps politically unpopular thinking on the part of our politicians. Are they up to it? Recent history would suggest not.

The most expensive part of the medical system is by far the medical care. Some where between 30 to 50 percent of the medical care provided by our system is totally unnecessary and certainly results in additional risk and morbidity. NOTHING that the government and the insurers have done so far has controlled the single most significant problem we have, over-utilization. They have just made the over-utilization worse by making it more expensive. Any savings achieved by contracting and diagnosis related groups (The Medicare method of paying hospital bills) has been more than cancelled out

by increased bureaucracy and increased cost in certain sectors. The pharmaceutical industry is a great example. Hospitals now have departments whose sole purpose is to peruse charts in search of “modifiers,” to jack the amount Medicare pays for the admission, perfectly legal. All Medicare has done is induce an expensive “creative billing” system. The single most important fact is that the cost of our medical system is accelerating at about twice the rate of the gross domestic product.

The forces that induce over-utilization are numerous and varied. Examples are: Patient demand, lack of significant direct personal financial responsibility, unnecessary care provided by a minority of doctors to increase profits, mindless protocol medicine, defensive medicine, smoking, not wearing seat belts or helmets, the obesity epidemic, deteriorating doctor-patient relationships because good doctors are being forced by the system into volume care, unnecessary use of higher cost emergency rooms, the misuse of certain tests for screening such as PSA’s, the treatment of untreatable cancers and the surrealistic expectations given to patients in these cases, a totally out of control legal system.

Have I made enough enemies yet? Some of these problems are always going to exist to some degree because that is the nature of the business but many of them have solutions. One thing is for certain. The more entities you have working on a problem the more likely you are to come up with the right solution particularly in a competitive market with consumers that are engaged.

Limiting the field to one may well doom us to failure. You think our government always knows what it is doing?  How about Vietnam, the luxury tax which knocked off the domestic boat manufacturing industry, Iraq, hurricane Katrina, 9/11, Medicare, Social Security, raising taxes, lowering taxes, prohibition, the Great Society, need I go on? But the government has to set the playing field and there may be a little light at the end of the tunnel. The creative solution to over-utilization starts at the very beginning of the chain by making the individual responsible for a small but significant portion of their care in a way that is politically palatable. 

The Government created in 2004 as part of the Medicare drug act the Health Savings Account, an IRA, by any other name, that just happens to cover essentially any medical or dental care you need in pre-tax dollars up to the deductible of the insurance where the insurance kicks in. Why spend $200 at an ER for an ear ache when you can get the same or better care from your own doctor for $50. Illnesses that blow through the deductible will be the big ticket items like heart attacks and cancer which are exactly the kinds of illnesses we need insurance for. Not a $50 visit with your family doctor.

But there is more. HSA’s have a graded catch up plan for people 55 and over. That means people like me, a baby boomer, will be able to invest an additional $50,000 before getting to Medicare age. Why do you think our boys and girls in the Capitol Building would do that? I am hoping against hope that the plan is to evolve Medicare into a single plan, not A and B, which is a high deductible plan based on HSA’s. People without HSA’s should be able to transfer some of their IRA or 401K to create an HSA. People with lower incomes will have graded deductibles according to their means and perhaps purchase insurance to cover a portion of the deductible. The HSA’s of those who pass on should be

directly transferable to their children’s HSAs without taxation and parents should be allowed to seed their own child’s HSA at the age of 18 with an initial contribution.

Next, quality medical care starts at the bottom with comprehensively trained primary care specialists practicing at a pace where they can maintain the confidence and loyalty of their patients and be available for them 24/7. This is the ONLY way to control over-utilization by having lower cost, but effective providers engaged, providing care in urgent situations, and lowering demand for unnecessary care through direct patient education. I can stop any “million dollar funeral” if I have the family on my side. But we have to make the effort and have the time to get to know the families of our elder patients and get everyone on the same page. The government and the insurers had the right idea of using primary care to control secondary care. They just went about it wrong and actually destroyed the practice models that might have lead to significant gains in over utilization by forcing them into high volume, paperwork riddled inefficient practice.

People are going to have to pay for their drugs directly. Via HSA’s they are a tax write off.  Doctors are now very conscious of the price and utilization of drugs.  The end result is within a few years we could all be paying much less for our drugs. The Feds should reward Pharmaceutical companies for NOT MARKETING by listing those who abstain on a web site and occasionally on TV. Doctors would turn to these companies in droves. Let the competitive market work.

There are many creative solutions that might just create a better medical system that a single payer simply won’t think of.

We are at a turning point right now in the life of our medical system. The screws have been turned about as far as they can go. The fact that the system is so inefficient will allow new lean, mean insurers, the Jet Blue of insurers, to enter the fray and out compete the old guard forcing them into the garbage heap of history where they belong.

Can I envision a federal system that might actually work? You bet. Continue to foster and subsidize HSA’s and create one single high deductible insurance plan for the entire population. Tax EVERYONE based on income or maybe even a VAT tax. Reduce deductibles at the lower end of the income scale, an efficient one provider system with first dollar control by the individual. In the end we might all save a lot of money in the form of lower taxes/premiums. But the elderly will have to pick up more of their fair share, a big political road block. I am not hopeful. I think for the time being I would like to put my money on Jet Blue. In the mean while I refuse to deal with any of them, they are ALL corrupt and I will not have them interfere with the manner in which I care for my patients.

7/10/07

Dr. Mike

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