yolland

^ And having said that, I shall now have the chutzpah to post an article from the Post on health care reform.

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yolland

Did Warren Burger Create the Health Care Mess?
The 1975 antitrust decision that gave you physician-owned hospitals.

By Timothy Noah
Slate, July 29, 2009


...Doctor-owned hospitals are the most conspicuous manifestation of a culture of entrepreneurship that's gone a long way toward creating today's health care crisis. Although traditional economic theory holds that competition drives prices down, in medicine competition had tended to drive prices up as doctors explored new avenues for profit, most typically through fee-for-service overuse of expensive technologies and procedures.

It's easy to shrug at such things and say, "That's capitalism." But, in fact, market-driven medicine didn't exist a generation ago, because the American Medical Association didn't allow it. "I saw it happen before my own eyes," says Dr. Arnold Relman, 86, emeritus professor at Harvard Medical School and former editor of the New England Journal of Medicine. Relman has written extensively (most recently in the New York Review of Books) about what he terms "the medical-industrial complex." Much of the blame for its creation, Relman believes, lies with the Supreme Court's 1975 decision in Goldfarb v. Virginia State Bar.

Goldfarb doesn't get a lot of attention from the health-reform crowd, partly because (as its name suggests) it was a case involving lawyers, not doctors, and partly because it extended the reach of antitrust law, something usually favored by the same sort of Democrats who want to make health insurance universal. Lewis H. Goldfarb was a homebuyer in Fairfax County, VA, who got mad when he couldn't find a title-search lawyer willing to charge less than 1% of the purchase price, the minimum recommended by the county's bar association and enforced by the state bar. Goldfarb maintained that the bar's imposition of a minimum fee constituted price fixing and violated the Sherman Antitrust Act. The Supreme Court agreed, and in a unanimous opinion (minus Justice Lewis Powell, who recused himself), Chief Justice Warren Burger concluded that law and other "learned professions" participated in "trade or commerce" as defined by the Sherman Act and therefore could not engage in "anticompetitive conduct."

Nowhere in the opinion did the words "medicine" or "doctor" appear, but the implications for health care were immediately obvious. Prior to Goldfarb, Relman explains, any notion that doctors or hospitals might seek to maximize profits was deemed a violation of professional ethics. AMA guidelines forbade doctors to advertise, to sell drugs, or to own a financial interest in any lab or machinery they used to perform tests. Medical doctors' sole source of income in the health arena was supposed to be the care of patients (or supervising the care of patients). "For the most part," Relman says, "those guidelines were followed." After Goldfarb, the AMA's lawyers warned that such prohibitions risked being struck down in court as anti-competitive. So the AMA altered its message. Doctors could now have other sources of health care-related income, provided these money-making activities weren't harmful to patients and that patients knew about them. In 1982, the Supreme Court followed up on Goldfarb by striking down not a minimum fee but a maximum fee imposed by Arizona's Maricopa County Medical Society. Federal regulations were imposed to ban a few particularly egregious types of physician self-dealing.

But in general, especially after Ronald Reagan became president, there was a paradigm shift. Where once government had sought to police the health care sector mainly to protect patients, now it sought to police it mainly to protect a competitive health care marketplace. A thriving health care bazaar, it was assumed, would serve patients' interests. This is the theory that bequeathed us doctor-owned hospitals, the endless churning of marginally valuable medical tests, and dermatologists' waiting rooms where patients are bombarded with video infomercials in which their very own doctors market skin creams and facelifts. "The same investors who started Kentucky Fried Chicken," Relman complains, "started the Hospital Corporation of America!" (The common link is Jack Massey.)

The failure of market-driven medicine was foretold by Nobel Prize-winning economist Kenneth Arrow in a 1963 paper, "Uncertainty and the Welfare Economics of Medical Care," that is widely credited with inventing the discipline of health care economics. (In 1963, the health care sector was so sleepy financially and so dominated by nonprofit do-gooders that economists saw little reason to study it.) There were several factors making it difficult to impose a market model on medicine, Arrow wrote. Demand for services was "irregular and unpredictable," and the buyer was physically vulnerable. Judging the value of the product (i.e., medical treatment) entailed a degree of uncertainty "perhaps more intense…than in any other important commodity," which was compounded by the presumption of an extreme asymmetry between the doctor's knowledge and the patient's. Complicating matters even further, the patient didn't pay; his insurance company did. The doctor "acts as a controlling agent on behalf of the insurance companies," making sure the patient didn't overuse his services, but only up to a point; "the physicians themselves are not under any control and it may be convenient for them or pleasing to their patients to prescribe more expensive medication, private nurses, more frequent treatments, and other marginal variations of care."

In an online interview last week with Conor Clarke of the Atlantic, Arrow, now 87, said that "the basic analysis hasn't changed," but "[s]ome specifics have changed." Arrow explained that in his 1963 paper he emphasized that market forces were supplemented by "professional commitments to provide a service, to engage in services that aren't self-serving. Standards of caring decided by non-economic actors. And one problem we have now is an erosion of professional standards. In a way there is more emphasis on markets and self-aggrandizement in the context of health care, and that has led to some of the problems we have today."

...Relman believes that the health reform bill, if it passes, won't do much to solve the problem, because it does almost nothing to inhibit medical entrepreneurship. "The idea that health care is a legitimate arena for investment is monstrous," Relman says. "Things are going to have to get a lot worse and the costs are going to have to become absolutely intolerable, and then people will finally begin to realize that the system we have doesn't work right." Part of that change, Relman says, should come from the Supreme Court. If Congress outlawed for-profit medicine, perhaps "the Supreme Court would be willing to take another look at this." The Supreme Court? Where the Chicago school is king? Relman's answer skirts thrillingly close to violating the Hippocratic oath. "Where there's death, my friend, there's always hope."

[Update, July 30: In today's New York Times, Kevin Sack and David Herszenhorn report on an energetic lobbying effort by the doctor-owned Doctors Hospital at Renaissance in Edinburg, Texas, that helps explain why existing doctor-owned hospitals (as opposed to future ones) would be permitted to continue participating in Medicare under the House and Senate bills. Suffice it to say that traditional market economics, while not easily applied to health care (a point explored further by Alec MacGillis in today's Washington Post), apply all too well to the legislative process. The Doctors Hospital at Renaissance is not a specialty hospital, but it was criticized for wasteful spending in Atul Gawande's much-cited New Yorker piece about excessive Medicare spending in McAllen, Texas, which is next door to Edinburg. ("It has a reputation," Gawande wrote, "for aggressively recruiting high-volume physicians to become investors and send patients there. Physicians who do so receive not only their fee for whatever service they provide but also a percentage of the hospital's profits from the tests, surgery, or other care patients are given.") Overall, the Washington Post (citing figures from the Center For Responsive Politics) reports that the health care sector is spending close to $1.5 million a day to influence health reform.]

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adrball

Just adopt the Singapore model.

Firstly...Provide health insurance free-of-charge to cover those once/non in a lifetime events such as road-traffic accidents, fires, personal attacks, terminable deseases. There's some strong economic theory that supports the fact that nobody will take out insurance against these events unless they know they are likely to claim for it (eg cancer runs in the family), and therefore the sky high premiums make it unattractive to the rest of us.

Secondly...Give money to the population (individually) and give them further tax breaks for investing this money into other medical plans (covering non-seriousl conditions, and preventative care such as annual check ups). Competition between hospitals for these funds creates an efficient industry where the individual gets the benefit of lower cost which in turns makes the proposition to the individual attractive. For the folks that don't take out the insurance - well they have to pay for the treatment but they did make a concious decision to opt out.

Something like this anyway

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AliEnvy

A Canadian doctor diagnoses U.S. healthcare - Los Angeles Times

The caricature of 'socialized medicine' is used by corporate interests to confuse Americans and maintain their bottom lines instead of patients' health.

By Michael M. Rachlis
August 3, 2009

Universal health insurance is on the American policy agenda for the fifth time since World War II. In the 1960s, the U.S. chose public coverage for only the elderly and the very poor, while Canada opted for a universal program for hospitals and physicians' services. As a policy analyst, I know there are lessons to be learned from studying the effect of different approaches in similar jurisdictions. But, as a Canadian with lots of American friends and relatives, I am saddened that Americans seem incapable of learning them.

Our countries are joined at the hip. We peacefully share a continent, a British heritage of representative government and now ownership of GM. And, until 50 years ago, we had similar health systems, healthcare costs and vital statistics.

The U.S.' and Canada's different health insurance decisions make up the world's largest health policy experiment. And the results?

On coverage, all Canadians have insurance for hospital and physician services. There are no deductibles or co-pays. Most provinces also provide coverage for programs for home care, long-term care, pharmaceuticals and durable medical equipment, although there are co-pays.

On the U.S. side, 46 million people have no insurance, millions are underinsured and healthcare bills bankrupt more than 1 million Americans every year.

Lesson No. 1: A single-payer system would eliminate most U.S. coverage problems.

On costs, Canada spends 10% of its economy on healthcare; the U.S. spends 16%. The extra 6% of GDP amounts to more than $800 billion per year. The spending gap between the two nations is almost entirely because of higher overhead. Canadians don't need thousands of actuaries to set premiums or thousands of lawyers to deny care. Even the U.S. Medicare program has 80% to 90% lower administrative costs than private Medicare Advantage policies. And providers and suppliers can't charge as much when they have to deal with a single payer.

Lessons No. 2 and 3: Single-payer systems reduce duplicative administrative costs and can negotiate lower prices.

Because most of the difference in spending is for non-patient care, Canadians actually get more of most services. We see the doctor more often and take more drugs. We even have more lung transplant surgery. We do get less heart surgery, but not so much less that we are any more likely to die of heart attacks. And we now live nearly three years longer, and our infant mortality is 20% lower.

Lesson No. 4: Single-payer plans can deliver the goods because their funding goes to services, not overhead.

The Canadian system does have its problems, and these also provide important lessons. Notwithstanding a few well-publicized and misleading cases, Canadians needing urgent care get immediate treatment. But we do wait too long for much elective care, including appointments with family doctors and specialists and selected surgical procedures. We also do a poor job managing chronic disease.

However, according to the New York-based Commonwealth Fund, both the American and the Canadian systems fare badly in these areas. In fact, an April U.S. Government Accountability Office report noted that U.S. emergency room wait times have increased, and patients who should be seen immediately are now waiting an average of 28 minutes. The GAO has also raised concerns about two- to four-month waiting times for mammograms.

On closer examination, most of these problems have little to do with public insurance or even overall resources. Despite the delays, the GAO said there is enough mammogram capacity.

These problems are largely caused by our shared politico-cultural barriers to quality of care. In 19th century North America, doctors waged a campaign against quacks and snake-oil salesmen and attained a legislative monopoly on medical practice. In return, they promised to set and enforce standards of practice. By and large, it didn't happen. And perverse incentives like fee-for-service make things even worse.

Using techniques like those championed by the Boston-based Institute for Healthcare Improvement, providers can eliminate most delays. In Hamilton, Ontario, 17 psychiatrists have linked up with 100 family doctors and 80 social workers to offer some of the world's best access to mental health services. And in Toronto, simple process improvements mean you can now get your hip assessed in one week and get a new one, if you need it, within a month.

Lesson No. 5: Canadian healthcare delivery problems have nothing to do with our single-payer system and can be fixed by re-engineering for quality.

U.S. health policy would be miles ahead if policymakers could learn these lessons. But they seem less interested in Canada's, or any other nation's, experience than ever. Why?

American democracy runs on money. Pharmaceutical and insurance companies have the fuel. Analysts see hundreds of billions of premiums wasted on overhead that could fund care for the uninsured. But industry executives and shareholders see bonuses and dividends.

Compounding the confusion is traditional American ignorance of what happens north of the border, which makes it easy to mislead people. Boilerplate anti-government rhetoric does the same. The U.S. media, legislators and even presidents have claimed that our "socialized" system doesn't let us choose our own doctors. In fact, Canadians have free choice of physicians. It's Americans these days who are restricted to "in-plan" doctors.

Unfortunately, many Americans won't get to hear the straight goods because vested interests are promoting a caricature of the Canadian experience.

yolland

Republicans Propagating Falsehoods in Attacks on Health-Care Reform

by Steven Pearlstein (business columnist)
Washington Post, August 7


As a columnist who regularly dishes out sharp criticism, I try not to question the motives of people with whom I don't agree. Today, I'm going to step over that line.

...There are lots of valid criticisms that can be made against the health reform plans moving through Congress--I've made a few myself. But there is no credible way to look at what has been proposed by the president or any congressional committee and conclude that these will result in a government takeover of the health-care system. That is a flat-out lie whose only purpose is to scare the public and stop political conversation. Under any plan likely to emerge from Congress, the vast majority of Americans who are not old or poor will continue to buy health insurance from private companies, continue to get their health care from doctors in private practice and continue to be treated at privately owned hospitals.

The centerpiece of all the plans is a new health insurance exchange set up by the government where individuals, small businesses and eventually larger businesses will be able to purchase insurance from private insurers at lower rates than are now generally available under rules that require insurers to offer coverage to anyone regardless of health condition. Low-income workers buying insurance through the exchange--along with their employers--would be eligible for government subsidies. While the government will take a more active role in regulating the insurance market and increase its spending for health care, that hardly amounts to the kind of government-run system that critics conjure up when they trot out that oh-so-clever line about the Department of Motor Vehicles being in charge of your colonoscopy.

There is still a vigorous debate as to whether one of the insurance options offered through those exchanges would be a government-run insurance company of some sort. There are now less-than-even odds that such a public option will survive in the Senate, while even House leaders have agreed that the public plan won't be able to piggy-back on Medicare. So the probability that a public-run insurance plan is about to drive every private insurer out of business--the Republican nightmare scenario--is approximately zero.

By now, you've probably also heard that health reform will cost taxpayers at least a trillion dollars. Another lie. First of all, that's not a trillion every year, as most people assume--it's a trillion over 10 years, which is the silly way that people in Washington talk about federal budgets. On an annual basis, that translates to about $140 billion, when things are up and running. Even that, however, grossly overstates the net cost to the government of providing universal coverage. Other parts of the reform plan would result in offsetting savings for Medicare: reductions in unnecessary subsidies to private insurers, in annual increases in payments rates for doctors and in payments to hospitals for providing free care to the uninsured. The net increase in government spending for health care would likely be about $100 billion a year, a one-time increase equal to less than 1% of a national income that grows at an average rate of 2.5% every year.

The Republican lies about the economics of health reform are also heavily laced with hypocrisy. While holding themselves out as paragons of fiscal rectitude, Republicans grandstand against just about every idea to reduce the amount of health care people consume or the prices paid to health-care providers--the only two ways I can think of to credibly bring health spending under control. When Democrats, for example, propose to fund research to give doctors, patients and health plans better information on what works and what doesn't, Republicans sense a sinister plot to have the government decide what treatments you will get. By the same wacko-logic, a proposal that Medicare pay for counseling on end-of-life care is transformed into a secret plan for mass euthanasia of the elderly. Government negotiation on drug prices? The end of medical innovation as we know it, according to the GOP's Dr. No. Reduce Medicare payments to overpriced specialists and inefficient hospitals? The first step on the slippery slope toward rationing. Can there be anyone more two-faced than the Republican leaders who in one breath rail against the evils of government-run health care and in another propose a government-subsidized high-risk pool for people with chronic illness, government-subsidized community health centers for the uninsured, and opening up Medicare to people at age 55?

Health reform is a test of whether this country can function once again as a civil society--whether we can trust ourselves to embrace the big, important changes that require everyone to give up something in order to make everyone better off. Republican leaders are eager to see us fail that test. We need to show them that no matter how many lies they tell or how many scare tactics they concoct, Americans will come together and get this done. If health reform is to be anyone's Waterloo, let it be theirs.

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torn vinyl

If anything, Americans should want a state run health care system because it is a lot cheaper. It probably won't happen because of the efforts by the insurance companies to scare people into keeping an expensive system that penalizes the middle and lower class.

If all people are equal under the eyes of god or whatever the constitution says, then everyone should have the same access to healthcare.

So: it's cheaper and will help the lower and middle classes maintain their health. What's the problem?

And no, the government will not euthanize anyones grandparents or abort fetuses.

AliEnvy

Bluer White

The president's public option would not cover abortion?

torn vinyl

I meant that they wouldn't force people to abort their parents or fetuses.

Irvine511

any serious person knows that the present system is fiscally unsustainable. we have to address that if we are to have any hope of climbing out of debt.

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HyperU2

Bummer.

maycocksean

Yes! Thank you for that! That article NEEDS to be the starting point for any reasonable opposition to the current efforts at health care reform.

Irvine511

i think what you said before is fascinating. you're obviously an educated person, you have a good job, you've lived abroad, you have a wife and a child ... and yet you told us that having to pay $5000 in medical care would absolutely break you. and that's what should shock us. you're hardly working at McDonalds or a day laborer without a steady source of income, you've "made it," so to speak, and even still, you could very easily be broken by health care costs.

this is what we need to address. i've paid well over $10,000 with my health issue, and i'm lucky because i have a generally well paid job job, no kids, and i co-habitate a relatively cheap apartment with Memphis. could i afford to suddenly cough up $5K, yes, it would hurt but it could be done, but i realize that this is actually a very rare thing.

and that's something that "market forces" can't do a damn thing about.

there has to be a public option. there simply has to be. and, yes, we are all going to pay for it, but it will save us in the long term.

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INDY500

I'm sorry for your misfortune. Unfortunately what you experienced is what is both right and what is wrong with our current system. First you enjoyed technology and therapies that may well have saved your life, but they are expensive. What is wrong with our systems is that cash customers are often the patsy that hospitals and providers recoup their third party and uncompensated care losses from. In other words, you were paying for more than just your care.

Not fair I know. But neither are expectations that healthcare should be paid for by someone else (the poor and catastrophic care aside). If healthcare is a right does one also have the right to force someone else to purchase it for them? I know it's hard to look at the economics of healthcare but we need to get away from our current system of third party payers and returned it to the domain of personal choice and responsibility like buying car insurance, food, clothes and our homes. If 75% of patients requiring your care were paying out of pocket I promise you prices would fall to an affordable price through a consumer-driven marketplace. If not the providers would have to close up shop. In addition, tax credits encouraging savings accounts would allow families to save for the day they had larger bills and paychecks would be larger if employers weren't purchasing health insurance.

But now you know how a public system will control costs. Lower fees paid for services will shift costs from taxpayers and patients to healthcare providers. With no way to recoup losses if the government set price is too low, providers will fall out of the system. In other words, De facto rationing.

Irvine511

no, i think it is fair. we live in a country where everyone will be treated if you show up at the ER. my bills probably in some small part helped cover them. i don't resent other people for that. i resent a system where these people cannot afford coverage or had coverage denied to them.

we do not want people with a GSW to go untreated. i don't care if Joe Crackhead doesn't have health insurance -- if he's gunned down and rushed to the ER, we shouldn't deny him care simply because, god forbid, someone else (like the government) is paying for it. i don't think that health care is a commodity like food or even car insurance -- it's much more akin to education, where we force everyone to go to school up until the age of 16. why not bring Joe Crackhead into the system, find a way to pay for him, and maybe we can not get hung up on our free-market-saves-all ideology. Joe Crackhead is a person, no matter what stupid decisions he has made, and i don't understand the ideology that would let him bleed to death in the streets simply because he's made a series of bad decisions.

if that comes out of my pocket book in part, so be it. i'd rather pay for Joe Crackhead to have his GSW stitched up than for G.I. Joe to go kill Tommy Al Quaeda in Baghdad.

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