Consumer Power Report #156

Published December 8, 2008

It is time to get serious. I don’t think freedom in health care has ever faced such enormous challenges–which is ironic because at this point in history the evidence could not be clearer that consumer empowerment works while centralized planning fails–every single time.

If we followed the evidence, all of the momentum would be on the side of free markets in health care. But “universal health care” has become a mantra that is mindlessly repeated by people too lazy to look at the evidence. Either too lazy or too cynical.

There is a growing segment of the health care community that knows full well the Kennedy/Baucus/Massachusetts approach to health reform will be a disaster, but they figure that is where the momentum is, so they will go along with it and try to enrich themselves in the process.

It’s enough to make you sick. This time around we cannot count on industry allies. Our only hope is to educate and mobilize the American people. It is the people’s money and the people’s health at stake in this fight.

If you care about the kind of health care your children and grandchildren will get, I hope you will help support our efforts. Please go to our new web site to see how you can help. By the way, while you are there you will also be able to find the more recent back issues of this newsletter.



The Maryland Insurance Commissioner is “investigating” concierge medicine to see if these physicians are acting as unauthorized insurers. Commissioner Ralph Tyler will be holding a hearing on December 19 in the Fraud Conference Room at his offices in Baltimore. A spokeswoman for the commissioner notes his office has not received any complaints about these practices, so this is a real fishing expedition. It must be nice that the department has so much time on its hands that it can look for problems where there are none.

SOURCE: Insurance and Financial Advisor


Well, this is unsurprising. America’s Health Insurance Plans (AHIP) has come out in favor of a law requiring everyone to buy what they sell. A friend points out this is like the Big Three automakers supporting a law requiring everyone to buy a new (American-branded) car.

In fact, this may be the wave of the future–Levi Strauss could work on a law requiring everyone to buy blue jeans, Jif and Skippy could require everyone to buy peanut butter, Steve Jobs and Bill Gates could require the purchase of a new computer once a year! Yippee! A whole new way to market your products! If people don’t want to buy what you sell, get a law passed making them do it anyway.

Imagine the money we could save on R&D and new marketing. After all, consumers are stupid and don’t know what’s good for them (according to Senate Majority Leader Harry Reid, they smell bad, too), so let us in Washington decide for them–for their own good, of course.

SOURCE: LA Times; Wall Street Journal; Business Insurance

The bubbleheads in the editorial departments of major news organizations think this is just all swell. The Philadelphia Inquirer ran an editorial headlined, “Insure Everyone.” Why? Well it isn’t really sure, other than that, “insurance works best when everyone is in the pool.” Does it, now? In fact, there are many people who cannot manage insurance, even when it is free. They may be too illiterate to read and understand an insurance contract, they may be mentally or emotionally disadvantaged, they may be illegal residents or criminals who do not want to identify themselves to authorities, they may be addicted and incapable of impulse control or functional behavior.

These are a not-small segment of the American population. They do not need and will not be able to handle an insurance card. They need direct access to care through neighborhood clinics and charitable hospitals.

SOURCE: Philadelphia Inquirer


Meanwhile, back in Massachusetts, things ain’t goin’ all that well, according to an excellent article by Paul Hseih in the Objective Standard. Indeed, if demands for “evidence-based medicine” were applied equally to public policy, all these policymakers would run away from the idea of mandatory coverage as fast as they could.

Mr. Hseih writes, “Republican governor (and former presidential candidate) Mitt Romney proclaimed that “every uninsured citizen in Massachusetts will soon have affordable health insurance,” that costs would be reduced through “market reforms” encouraging “personal responsibility,” and that the plan would require “no new taxes … and no government takeover.” But, “two years after its inception, the Massachusetts plan has failed to achieve either of its goals. Instead,” writes Mr. Hseih, “the plan has increased costs for individuals and the state, reduced revenues for doctors and hospitals, and left Massachusetts officials in the awkward position of having to admit that their ‘universal’ coverage is not likely to be universal any time soon.”

He says the plan has failed to restrain costs because, like any mandate, the government must define what is being mandated, and that opens the door to special-interest pleading … which politicians find irresistible. That in turn has raised (not lowered) costs for both consumers and the state government to the point that, “overall costs to the state have risen by more than $400 million, 85 percent more than originally projected.”

Because state costs have gone up so much, it has decided to cut payments to physicians and hospitals, which has reduced (not improved) access to medical services for people. Hence, providers have imposed long waits on their patients. The article quotes Dr. Carroll Eastman as saying, “‘we don’t have more doctors, but we have lots more patients’–and the new patients have to wait two to three months for an appointment.” So, people may have health insurance “coverage” but they don’t have health care.

Even the poor are being hurt. The article cites the Cambridge Health Alliance, which has long provided care to the indigent. Because of rising costs and reduced payment it is cutting staff, reducing services, and limiting referrals to specialists to stay solvent.

Costs are going up even further, according to the article. The state is raising premiums by 10 to 12 percent next year (twice the national average) and cutting payments to physicians and hospitals by 3 to 5 percent, thereby reducing access to care even more.

In concluding, the article says, “Mandatory insurance violates the rights of insurers and individuals to act on their own judgment.” It adds, “A right is a legitimate freedom of action–a freedom of action necessary for the maintenance and furtherance of human life. The right to act on one’s judgment–which means, the right to act on one’s basic means of survival–is one’s basic right. Mandatory insurance violates this right by forcing insurers to sell and customers to purchase insurance on terms and prices dictated not by their own judgment, but by government decree, thus destroying the very conditions that make insurance a value.”

SOURCE: The Objective Stanard


Some of the effects of mandatory insurance are being felt in the Medicare program, which is mandated on the elderly. We are seeing the same phenomenon–provider cuts, expenses far exceeding revenues, and clumsy efforts to control how much care is delivered.

In Washington state, physicians are defecting from Medicare in growing numbers, according to Peter Neurath in the Puget Sound Business Journal. Dr. Smiley Thakur, who specializes in kidney transplants, recently “joined the ranks of Washington doctors abandoning the federal insurance program,” according to the article. Dr. Thakur is quoted as saying, “This is not a small thing, to jump off the Medicare ship. This is very sad for me. It’s sad to lose patients you’ve taken care of for years. It really hurts.”

The article explains that “nearly one-third of the state’s doctors have shut the door to new or existing Medicare patients.” It gives a number of examples of clinics and physicians who have decided they can no longer serve Medicare beneficiaries as much as they would like to. The Everett Clinic has 26,000 patients on Medicare but has stopped accepting new ones because, “we are losing $7.6 million per year treating Medicare patients,” said clinic spokeswoman April Zepeda.

The article says Dr. Thakur’s practice charges $180 for a routine visit, but “Medicare paid him $94.49. After expenses related to that visit, Thakur said he was left with after-tax net income of only $29.”

SOURCE: Business Journal

Jason Shafrin writes a blog called the Healthcare Economist. In a recent entry he explains the “latest rage among health wonks” is pay for performance (P4P) to solve the problems of escalating cost in Medicare and private health insurance, but it may not improve quality or lower costs at all. He reviews recent work by Mullen, Frank and Rosenthal that looked at the experience of PacificCare over the past 15 years.

And the results? “Of the six measures initially rewarded, only cervical cancer screening showed consistently positive returns. On the other hand, appropriate asthma medication rates actually decreased when P4P was introduced in California. Preferred antibiotic usage also declined.”

He concludes, “P4P is a very blunt instrument. In some cases it works fairly well but in other cases it does not.” In fact, it may be simply rewarding physicians who do a better job of documenting what they do, rather than actually improving the care delivered.

SOURCE: Healthcare Economist

But, again, none of these problems deter the bubbleheads. The Des Moines Register thinks, “What’s needed is a government-administered health-insurance program–similar to Medicare, which covers seniors and disabled people–available to all Americans.”

Right. Medicare is already facing $34 trillion in uncovered liabilities and it covers only one-half of the elderly’s health care expenses with no limit on out-of-pocket costs whatsoever. So by all means let’s compound those problems by extending the wonderfulness to all Americans.

The paper acknowledges that “Covering everyone in a national system will require higher taxes.” But that’s okay because, “Getting help from taxpayers to pay for health care is hardly a foreign concept in America,” i.e., taxpayers already pay for Medicare, Medicaid, and public employees, so they might as well pay for everybody else as well. Just who does the Register think “they” is?

SOURCE: Des Moines Register


Just in case there is anyone out there who is interested in pursuing “evidence-based public policy,” they may want to look at the growing body of evidence that the most successful innovation in health care in consumer-driven health.

The latest entry is from Aon Consulting and the International Society of Certified Employee Benefit Specialists (ISCEBS). The study surveyed 336 employers and found that 45 percent currently offer a CDHP program, with 39 percent of the rest planning on offering one in the near future. The reasons they offer these plans are to:

  • introduce consumerism for long-term change (36 percent)
  • control health plan costs (35 percent), and
  • encourage better use of health care services (12 percent)

Overall, employers are even more optimistic about the effectiveness of CDH plans this year than they were last year. Sixty-one percent believe the plans make employees better, more efficient consumers of health care services, with only 4 percent believing they have no effect.