Consumer Power Report #158

Published December 22, 2008

We’re going to skip an issue later this week to enjoy Christmas with family and friends. We’ll be back before New Year’s Day to wrap up one of the most miserable years in memory.

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Pete Stark–“Slow Down”

The chairman of the Health Subcommittee of the House Ways and Means Committee, Pete Stark (D-CA), has always been a curmudgeon and now he is throwing cold water on the idea of rapid health reform in the new Congress.

He was featured on a conference call for reporters set up by the Institute for America’s Future. (By the way, the influence of liberal think tanks on the new administration and Congress is just extraordinary, far exceeding any sway free-market think tanks have ever had on Republican Congresses or administrations.) He predicts Congress won’t get around to it until late in 2009 or early 2010. He argues there are too many “maintenance of effort” bills to deal with first, including SCHIP expansion, fixing the 20 percent physician pay cut looming in Medicare, and enacting a health information technology law.

This is particularly interesting because Mr. Stark is probably the most important majority member of the House on health care issues and his influence is only enhanced by the ethical problems of committee chairman Charles Rangel (D-NY).

SOURCE: The Hill

CBO on Options

Mr. Stark’s perspective was reinforced by a massive report released by the Congressional Budget Office (CBO) this week. There were actually two reports, “Budget Options” at 235 pages, and “Key Issues in Analyzing Major Health Insurance Proposals” at 196 pages.

These reports are the contribution of CBO Director Peter Orszag, who is now headed to direct the Office of Management and Budget (OMB) in the incoming Obama administration. It is quite an act–the head of CBO hands off a budget analysis to the head of OMB–who is the same person. I can hear the conversation now, “Thank you, Peter for this outstanding report.” “You’re welcome, Peter, and I know you will do extraordinary things with it.”

The reports are incredibly detailed, so it is all the more amazing that they are so blind. For instance, the report says, “the high and rising costs for health care in this country impose an increasing burden on individuals, businesses, states, and the federal government, and a substantial number of people may have trouble paying for that care because they do not have health insurance.” This is precisely what economists and academics have been saying for at least 35 years. In my talks I like to quote Brandeis University professor Stuart Altman who said in 2001, “When I was 32 years old, I became the chief regulator in this country for health care. At that point, we were spending about 7.5 percent of our GDP on health care. The prevailing wisdom was that we were spending too much, and that if we hit 8 percent, our system would collapse.”

The report also quotes the old shibboleth, “the United States lags behind lower-spending countries on several metrics, including life expectancy and infant mortality.” But anyone who has been paying attention knows very well that these two particular “metrics” have very little to do with a nation’s health care system, and everything to do with the rate of poverty, the rate of violent crime, the rate of drug abuse, the nutritional status, the nation’s educational achievement, and the homogeneity of the population.

In any case, the report goes into so much detail and such a variety of approaches that it is hard to imagine how Congress will sort through all of the options. So, either it stalls out completely or it simply hands off the specifics to the administration. Certainly that is what incoming Secretary of HHS and White House Health Czar Tom Daschle wants. He was interviewed recently as saying “details kill,” and recommended that Congress simply pass broad enabling legislation. Will Stark go along with that? Stay tuned.

SOURCE: Investor’s Business Daily

Meanwhile, Kent Hoover writes for the local Business Journals that an “insurance mandate [is a] hard sell in a recession.” He writes, “The last thing struggling businesses need in this weak economy is a mandate from the federal government requiring them to provide health insurance to their employees.”

He quotes a Chamber of Commerce representative as saying, “This would probably be a very difficult time to create a new tax on business,” and Neil Trautwein of the National Retail Federation as saying, “If you increase the cost of labor, certainly in our industry, you run the danger of running us out of business.”

Even AHIP weighs in–“AHIP, however, decided against requiring employers to offer health insurance. Given the shaky state of the economy, ‘we didn’t think now was the time to recommend an employer mandate,’ said AHIP President and CEO Karen Ignani.”

Ah, yes, but a mandate on individuals during a recession? No problemo. They don’t have a bunch of Washington lobbyists speaking up for them.

SOURCE: Atlanta Business Chronicle


There is a whole lot on docs this week. Let’s start with an interesting paper by Twila Brase, RN, PHN, president of the Minnesota-based Citizens Council on Health Care, and published by ALEC. It is an in-depth exploration of “evidence based medicine (EBM).”

The paper explains the dangers of relying solely on EBM to determine appropriate treatment for an individual patient. The problems are too long to list in this newsletter, but they include:

  • Researcher bias when the researcher conducting the study has a preference for one form of treatment over another. Sometimes this may involve financial incentives, but that is not the only or even the major source of bias.
  • Conflicting results. This happens all the time in research. One study contradicts another, and neither may be completely accurate.
  • The expense, and therefore the rarity, of conducting randomized clinical trials. Very little medicine would be conducted if these trials controlled what could be done.
  • Co-morbidities. Clinical trials focus on only one condition at a time, but few patients present with just one issue. There is a little information available about how multiple conditions and multiple treatments interact.
  • Special-interest pleading. Well-organized interest groups are able to influence what topics are researched and how the research is conducted.
  • Lack of real-world testing. What works in the lab may break down on the battlefield of real life.

These are just a few of the research problems Ms. Brase examines. These issues are compounded by the profusion of clinical guidelines that are based on this error-filled research. Ms. Brase points out that the National Guideline Clearinghouse currently contains 5,899 sets of guidelines, with nearly 500 more being added every year. Some of these sets contain hundreds of pages, and often there are several different guidelines for the same condition. She writes, “the Clearinghouse contains nine guidelines totaling 165 pages written by seven different organizations for the treatment of middle ear infections.”

All of that is just the beginning of the problems with EBM. The far bigger issue is how it is to be applied and enforced. The obvious goal is to control physicians behavior. Academics and bureaucrats have decided that any variation in medical practice is a bad thing, so all physicians should do the exact same thing at all times.

The dean of the Boston University School of Public Health is quoted as saying, “Variations from these best practices should be defined as medical errors.” Ways to enforce standardization include protection from malpractice for compliance and “pay for performance.” But it is questionable whether such compliance will actually protect a physician from a lawsuit. Courts don’t care about population-wide statistics. They care about how one doctor treated one patient. Ultimately juries will decide whether the patient was harmed, and hiding behind a practice protocol will provide little protection.

Ms. Brase concludes with, “The danger to patients is real. If EBM becomes the legal standard of care, physicians and doctors will no longer have medical decision-making authority or professional autonomy. Patients in every corner of the nation will be left vulnerable to the personal preferences, financial agendas, value-laden opinions, and political biases of people who do not even know their name.”



The Los Angeles Times ran an article by Lisa Girion about the difficulties of primary care physicians. The story focuses on Dr. Tanyech Walford’s struggle to stay in business given the lousy pay and high overhead. The article says, “Small general practices afford doctors autonomy to practice medicine as they see fit and can produce strong doctor-patient bonds. But these physicians have little or no clout to leverage better payments with insurers; they have no economy of scale, which makes overhead more burdensome.”

The article cites another example, “Dr. Jerry Connell kept his family practice going in Santa Rosa for 29 years. But he closed it in October because his income had slipped to $50,000 a year, even though he had 2,600 patients.” When he sold off his equipment, he could not find another doctor to buy it so it was sold to a veterinarian and a tattoo parlor.

But Dr. Walford tried valiantly to stay in business, “In September, she sent invoices to Medicare, Medi-Cal, private insurers, and patients for $70,000. With negotiated discounts and government fee schedules, Walford, as a rule of thumb, expected to collect two-thirds of her billings, or about $45,000, that month. Instead, she got $14,000–less than her overhead.”

Now she has moved to Maryland where she will join a 200-physician group affiliated with Johns Hopkins. The article doesn’t say where her patients went.


The New York Times published an op-ed by Dr. Pauline Chen who asks, “Where Have All the Doctors Gone?” She writes, “In the last several months there have been reports in medical journals about an impending shortage of primary care physicians. But a recent survey indicates that the primary care crisis may not be looming on the horizon; it may already be at our back door.”

She cites the physician survey we reported on recently as indicating primary care physicians are already packing it up. She adds a caution to Mr. Obama, “Any attempt to make health care more accessible will be doomed to failure without an adequate number of primary care physicians and a strong primary care system. Mr. Obama and his team may find ways to give more Americans access to the waiting room, but what if there’s no doctor on the other side of the door?”

SOURCE: New York Times

A story from the Sacramento Bee sheds some light on these issues. A young woman caused a horrific traffic accident that nearly killed her. Heroic intervention saved her life and patched her up, at a cost of $130,000, of which she was expected to pay $16,000. So what is the thrust of the story? Not what a miracle it was that the lady was saved, but about how unfair it is that she should be expected to pay for part of the treatment!

The article explains that a court case found that California regulators have the power to “deem balance billing an unfair trade practice.” And that nine states have already prohibited balance billing. One activist is quoted as saying that it is “abhorrent” that a doctor should bill a patient for care not covered by a health plan. Welcome to the “gimmee, gimmee” society where it is “abhorrent” to pay anything for the medical care that saved your life from an accident you caused.

SOURCE: Sacramento Bee


Here’s a little Christmas present for you. In Connecticut, individual insurance premiums for Anthem’s Lumenos HSA product are dropping by 4 percent in 2009. Meanwhile, the company’s HMO is up 14.7 percent from last year and PPO premiums are up 13.4 percent.

SOURCE: Anthem News Flash