Consumer Power Report #161

Published January 19, 2009

And so it begins. The new administration hasn’t even taken office and Congress is already going wild in health care. Last week the House passed its version of SCHIP expansion without allowing amendments and without hearings or “due deliberation.”

Molly Sandvig of Physician Hospitals of America found the bill included an effort to kill off physician-owned specialty hospitals. She writes:

“HR 2, Section 263 contains language limiting the ownership of physician hospitals and, if passed as is, would have the following effects:

“1. Existing hospitals would not be forced to ‘buy-down’ physician ownership but would rather be able to remain at the percentage of physician ownership that they had as of date of enactment.

“2. The majority of existing hospitals would not be allowed to grow or expand in any way. Provisions allowing expansion based upon very stringent and limiting requirements are included in the bill, but according to our calculations, would only allow approximately nine physician hospitals in the country to apply to HHS for the right to grow.

“3. All under-development hospitals that do not have a Medicare Certification number by January 1, 2009, would not be grandfathered. In other words, they would not be allowed to continue to take Medicare and Medicaid patients if the physicians who own the hospital continue to refer to that hospital.

“4. The whole hospital exemption to the Stark laws would not apply for any hospitals not in existence as of January 1, 2009, allowing no future growth of physician-owned hospitals under that provision.”

Somehow the House believes that killing specialty hospitals will save money. Never mind that every service performed in such a hospital will still be performed, but in a more expensive and riskier facility.

For more information about SCHIP, see Heartland’s recent Research & Commentary at

At the same time, Congress is looking to add up to $100 billion in the “stimulus package” to pay for health information technology. Ashley Katz of the Patient Privacy Coalition reports there is virtually no support in the Senate for including privacy protections. Many people believe Congress won’t take privacy seriously until one of them finds his medical records splashed all over the Internet. And then they will rush to retrofit privacy into the law. I’m equally concerned that we are going to spend $100 billion on ideas that will likely never work and will add a whole new level of bureaucracy and regulations onto a system that is already collapsing under the weight of too much of both. $100 billion on bureaucracy and not one single penny on patient care.

Please visit Patient Privacy Rights to find out more.



New Insurance Company in Virginia

CHCC member and former CEO of the Virginia Medical Society, Paul Kitchen, has done what many of us wish we could do–started an innovative new insurance company. The Richmond-based carrier, nHealth, offers hospitalization-only coverage like the old Blue Cross model and accompanies it with an HSA to help pay for professional fees. An article in the Richmond Times Dispatch cites several clients that are saving significant sums on premiums. The company’s first year of operation was 2008 and it confined its market to groups of under 100 lives in Virginia. It is starting small and local and expects to grow as it gets its sea legs under it.

SOURCE: Richmond Times Dispatch

California Supremes Ban Balance Billing

The California Supreme Court has ruled it is illegal for hospital emergency departments and physicians to collect unpaid balances from patients when the patient’s HMO payment is inadequate–even when the hospital has no contractual relationship with the HMO. It isn’t clear from press reports whether the ruling applies to non-HMOs or to non-emergency services. And it raises more questions than it answers–who determines what a reasonable payment is from the HMO? What is to prevent the HMO from paying pennies on the dollar? What recourse does the provider have? Why does the patient have no responsibility for the bills he incurs? Plus, this comes at a time when hospitals in California are already hard-pressed just to keep their doors open. The state has made it uniquely difficult for facilities to stay in business, with the burden of serving illegal immigrants and complying with regulations on nurse-staffing ratios and earthquake retrofitting.

SOURCE: Los Angeles Times

Domestic Medical Tourism

The Washington Post reports Americans may be as well-served by domestic “medical tourism” as by going overseas. It writes, “In 2007, Thomas Van Buskirk, 64, a chiropractor in Oakland, Calif., had a blocked carotid artery and no insurance. He’d have paid $70,000 to have surgery at a Bay Area hospital, and $12,000 plus travel expenses to do it in India. Then he found Oklahoma Heart Hospital, which did the surgery for just $15,000.” It also says, “Galichia Heart Hospital, in Wichita, recently lowered its price for a coronary bypass to a flat $10,000. The hospital discounts a number of procedures for patients willing to pay cash upfront, including a hip replacement for $12,000–about one-third of the going U.S. rate.” Note these are the same facilities the House is trying to kill in its SCHIP legislation.

SOURCE: Washington Post

Remember the Fundamentals

CHCC member Dave Racer reminds us of the fundamentals in an op-ed in the Minneapolis Star Tribune. He points out that the United States is huge–equal to the populations of Canada, the United Kingdom, Germany, France, Spain and Japan combined. We are diverse–67 percent white, 12 percent Hispanic, 12 percent black, 4 percent Asian, with an enormous number of people born in other countries who bring their health histories with them. We are rich and can afford to spend a lot on health care, as we can afford to spend more than other countries on a lot of less-important stuff. Obviously we could be more efficient, but that is true throughout American society, and it unlikely to be improved by having government manage the system.

SOURCE: Minneapolis Star Tribune


CIGNA reports that its consumer-driven plans (“Choice Fund”) “reduced medical cost trend by 13 percent relative to HMO and PPO plans, even as individuals enrolled in CDHPs use more preventive services and comply with their medical treatments.” The company’s chief medical officer, Jeffrey Kang, MD, is quoted as saying, “In our latest study of medical claims for 440,000 people covered by CIGNA plans, we reviewed claims for 22,000 individuals who have either hypertension or diabetes and found that medical cost trend was substantially less for those with CDHPs, while their treatment regimens were the same or better than those in traditional HMOs and PPOs.”

Cost trend was reduced by 20 percent for people with diabetes and 18 percent for people with hypertension, compared to people with the same conditions in non-CDHP plans. Pharmacy costs were 10 percent lower, and overall medical trend was down by 3.3 percent compared to an increase of 10.6 percent for HMO and PPO enrollees. Yet preventive care visits were 8 percent higher for CDHP enrollees and 15 percent higher for renewing CDHP enrollees.

Dr. Kang concludes, “CIGNA’s mission is to improve people’s health, sense of well-being, and security; as our latest CDHP study shows, these plans are part of the solution for creating a more affordable, accessible, sustainable, and high quality health care system.”

SOURCE: CIGNA Press Release


Jane Orient, MD, head of the Association of American Physicians and Surgeons (AAPS), wrote an excellent analysis of current “reform” efforts for The New American. She argues the current push for “universal coverage” is less about paying for medical services and more about controlling the way patients are treated.

She looks, for example, at the push for “health information technology” and concludes, “This ‘modernization’ of the system is supposed to save tens of billions of dollars, at some point, after a hefty initial investment. But its main purpose is to monitor and enforce standards for quality, ‘medical necessity,’ reduction of ‘disparities,’ and proper billing and coding.”

Dr. Orient writes, “The new blueprint will fail for the same reason that the system is already failing: It is really the same old blueprint that violates the basic laws of economics.” When something is subsidized, its use goes up. But there are not enough physicians to meet the increased demand and that will be aggravated as the politicians cut physician fees further and add additional administrative burdens. The result is obvious–we will all be well “covered” but unable to access “care.”

It is worse than that, however. The available evidence shows the reformers are simply wrong on virtually every point. Dr. Orient notes, “The reformers imply that the sickness-care system will simply wither away when we are all healthy.” But in fact, “preventive health measures, though valuable, usually do not save more than they cost.” People will still get sick and will need to be treated.

She says the reformers promise costs will go down once everyone is covered because they won’t have to go to expensive emergency rooms. However, in Massachusetts, the newly insured can’t get in to see a doctor so they end up in the ER for every medical need. Further, the idea that the uninsured are clogging up ERs is simply factually wrong. In fact, studies have shown “the uninsured were actually under-represented among patients using the ER for primary care.”

Reformers say covering everyone will reduce cost-shifting to the privately insured. But, in fact, the cost shift from the uninsured adds only 2.7 percent to medical bills. The far greater problem is underpayment by public programs. To the extent “universal coverage” adds people to the rolls of public programs, it will worsen cost-shifting to the privately insured.

Adding information technology is every bit as likely to increase medical errors and costs as reduce them–IF it is ever successfully implemented at all. Dr. Orient writes, “We have much more experience with computer disasters than successes in medicine. Rollout of the £12 billion flagship centralized Cerner IT system of the British National Health Service was halted because it was ‘hugely expensive,’ ‘desperately behind schedule,’ and a ‘shambles from the start.'”

Similarly with the push to adopt “evidence-based medicine,” because research and experience bring about constant change, “by following government guidelines, we can be sure that patients will be given outdated care regimens.”

Dr. Orient offers a number of recommendations to improve the system, but, she says, “the one-sentence answer is to put patients back in control of their medical dollars and their medical decisions. In a free-market system, prices would be much lower, and patients would have much broader choices. If they had more money in their own pockets–having given less to their insurer–more people would opt for less expensive, less toxic, possibly more effective treatments that insurers have historically refused to cover.”

SOURCE: Orient

NCPA’s John Goodman reinforces Dr. Orient’s perspective. Mr. Goodman writes, “During the election, Obama’s health advisors said they could save the average American household $2,500 a year through such reforms as coordinated care, preventive care, evidenced-based care, pay-for-performance care, electronic medical records and a slew of similar ideas. The CBO response? These reforms will save about 1 percent of what the Obama team projects, and maybe nothing at all. They may even increase costs!”

He also points out that such visions of easy answers aren’t confined to Mr. Obama and friends. Senator John McCain was promulgating similar fantasies, as are policy wonks from every corner of the spectrum. Why? Because they need to find a villain, and “To them, doctors are the problem. The solution is to induce, incentivize, cajole, bully, intimidate, coerce, command, etc. doctors into practicing medicine in predetermined ways.”

SOURCE: John Goodman’s Blog


Samaritan Ministries

We used to have major medical insurance, which cost us about $3,300 a year with an annual deductible of $5,000. Six years ago I had my emergency surgery, the ER of the hospital that is covered by our insurance was closed so my doctor sent us to a different hospital. That hospital didn’t like what our insurance paid for “fair and reasonable” so we were left with the remainder of the bill on top of our $5,000 deductible. Ouch! That almost did us in AND the hospital wasn’t all warm and cozy about working out payments.

It was then that we started looking elsewhere because we felt the insurance was messed up and we couldn’t even make decent medical decisions. Not to mention that when we came up for renewal I was now high risk with a higher premium because of my ectopic pregnancy.

We decided to join Samaritan Ministries ( It is an organization where Christians share each other’s medical bills and the bills are paid in cash. It isn’t insurance.

So here is how my leg injury played out. My total bills were $30,616. I called each of the providers and asked for a discount if I paid cash. Doing that alone lowered my bills to $18,814. I then submitted my bills to Samaritan (they are very thorough on checking that the needs/bills are legitimate) and they assigned our “need” to enough people to cover the bills completely. Our need was sent out the first of December and as of now 53 families have sent us money and we have received all but $3,000. I expect the rest will come in by the end of the month.

As a family we pay $285 each month to a family that has a medical need. Samaritan sends us a notice at the first of each month who we should send our money to. Singles and couples with no children pay less than $285 each month. Each need that you have will be covered in full (should everyone send their money) up to $100,000 per incident. You can join a program called “Save To Share” if you want needs covered above and beyond $100,000.

We have participated and sent out money to a different family each month for four years now. This is the first time that we have had to submit a need and it has been incredible to see it work. You can submit your medical need that is over $300 (they do have guidelines about preexisting conditions and non-covered needs). We now spend $3,420 on medical each year and can submit any need that is over $300. We have the freedom to go where we want, when we want and select the services we want.

I won’t get too political here but this is what Obama wants to take away–especially for the children–and that saddens me greatly.

I have nothing against insurance but I think it has gotten out of hand in the medical arena. It is such a great feeling to know that you are helping someone pay their medical bills in cash (and it is a great feeling to have your medical bills paid in cash without the red tape of insurance).

Some employers pay the employee’s Samaritan share each month because they have chosen not to take the group health coverage offered by the employer. However even this wouldn’t work under Obama’s plan.

(Editor’s note: For more information about these programs, go to The Alliance for Health Care Sharing Ministries–