Consumer Power Report #162

Published January 26, 2009

There is way too much going on these days. It’s a full-time job just trying to stay up with it all. I’m beginning to wonder if these weekly missives are up to the task.

I hope you were able to catch President Barack Obama’s inauguration. An impressive affair, though I’m glad I wasn’t there in person. I was down in DC on Friday and I’ve never seen so much security–FBI vans marked “Bomb Squad” and “Crime Scene Investigation” parked along the streets, police barricades seemingly at random, helicopters in the air, ranks of PortaPotties on the sidewalks, grey skies and cold winds.

Ceremonial Washington certainly showed its stuff. Not just on Inauguration Day, but the next day at the National Cathedral as well. It was a bit too evocative of Empire for my taste, but that was offset by the parade itself. The parade was cute, with equestrians from Colorado, bag-pipe playing firemen from Cleveland, Indians in full regalia, boogey-down high school bands from inner cities, well-scrubbed kids from rural Iowa. Even the military contingents were pretty laid back. Nothing like the goose-stepping masses of troops in Iran and North Korea or the old Soviet missile displays in Red Square. When you get down to it, this is a pretty funky country, notwithstanding the pretentions of royalty from the Washington Elite.

I’m afraid that is something Mr. Obama didn’t get in his mediocre Inaugural Address. There is a huge divide between the elite and the folks in this country. He said, “We remain a young nation, but in the words of Scripture, the time has come to set aside childish things.” And, “These are the indicators of crisis, subject to data and statistics. Less measurable but no less profound is a sapping of confidence across our land–a nagging fear that America’s decline is inevitable, and that the next generation must lower its sights.”

That’s a lot of hooey. Americans are not despondent and Americans are not childish. This crisis was not caused by irresponsible citizens. This crisis was caused by lousy leadership and arrogant elites, the Barney Franks and Bernie Madoffs, and yes, the well-educated but not-so-bright academics who think it is their job to tell us how to live. Americans are rightfully furious that they have been betrayed by those who think they are better than the rest of us.

Mr. Obama can help us take control of our own resources and our own futures or he can give even more power to those bubbleheads who want to tell everyone else what to do. So far, the prospects are not promising.



What took me to DC on Friday was a hearing in Federal court about the pending “Medicare Opt-Out” lawsuit. This hearing was seeking a temporary restraining order against the government that it not withhold Social Security payments against Brian Hall who has just turned 65 and wants not to participate in Medicare.

Mr. Hall retired from the Federal government when he turned 62. He has been happily enrolled in an HSA program sponsored by the Mail Handler’s Union under the FEHBP and he has been receiving Social Security benefits for the past three years.

Kent Masterson Brown argued the case on behalf of Mr. Hall, saying Mr. Hall is likely to prevail in the ultimate suit and would be irreparably damaged if required to enter the Medicare program. The argument was compelling, and the government’s argument was weak. It argued that it doesn’t have any procedures in place to continue paying Social Security benefits while not enrolling Mr. Hall in Medicare. Yet it has been doing precisely that for three years now.

I don’t believe this hearing was written up in any media outlets, but if you would like to stay in touch with this important case, please contact Sonia Blumstein at [email protected].


Another big issue right now is the inclusion of $20 to $23 billion for health information technology in the stimulus package. The House marked it up last week and the Senate is expected to tackle it this week. The Patient Privacy Coalition has worked hard to get tough privacy provisions included in the legislation and so far has been very successful in the House, though less so in the Senate.

The New York Times‘ Robert Pear had the best overview of the issue I have seen. He writes that the dispute over privacy is “bitter and seemingly intractable,” and that, “Lawmakers, caught in a crossfire of lobbying by the health care industry and consumer groups, have been unable to agree on privacy safeguards that would allow patients to control the use of their medical records.”

The article notes that although the provision is supposed to create jobs, “So far, the only jobs created have been for a small army of lobbyists trying to secure money for health information technology.” But, “Consumer groups and some members of Congress insist that the new spending must be accompanied by stronger privacy protections in an era when digital data can be sent around the world or posted on the Web with the click of a mouse.” He adds, “In the last few years, personal health information on hundreds of thousands of people has been compromised because of security lapses at hospitals, insurance companies, and government agencies. These breaches occurred despite federal privacy rules issued under a 1996 law.”

Mr. Pear notes, “Rahm Emanuel, who will be the White House chief of staff for Mr. Obama, advocated such safeguards when he was a House member from Illinois. ‘As we move forward on health information technology,’ Mr. Emanuel said, ‘it is absolutely essential that an individual’s most personal and vulnerable information is protected.'” But Mr. Obama doesn’t want anything that will “slow down the bill.”

SOURCE: Privacy Rights Coalition; New York Times article


Meanwhile, a survey by the Kaiser Family Foundation and the Harvard School of Public Health finds very little support for spending more money on health information technology, with only 20 percent of the public supporting the idea, 60 percent saying spending should stay the same, and 17 percent saying it should drop.

The survey of 1,600 adults found quite a few nuanced views of public opinion around health reform. For instance, when asked, “Would you favor or oppose requiring employers to either offer health insurance or pay money into a government pool?” 71 percent of respondents said they were in favor and only 26 percent were opposed. But when they were asked, “What if you heard that paying for this may cause some employers to lay off some workers?” only 29 percent continued to favor it while 64 percent opposed.

Similarly, when asked, “Would you favor or oppose requiring all Americans to have health insurance with help for those who cannot afford it?” 67 percent were in favor and 31 percent were opposed. But when also asked, “What if you heard that this could mean that some people would be required to buy health insurance that they find too expensive or did not want?” support dropped to 19 percent and opposition rose to 78 percent.

These caveats are critically important. The survey found support eroding under a wide range of conditions:

  • 66 percent were less likely to support a proposal if it “would get the government too involved in your personal health care decisions.”
  • 61 percent were less likely to support a proposal if it “was going to increase people’s insurance premiums or other out-of-pocket costs.”
  • 56 percent were less likely to support a proposal if it “limited your own choice of doctor.”
  • 46 percent were less likely to support a proposal if it “was going to increase taxes.”
  • 43 percent were less likely to support a proposal if it “meant that you would have to switch health insurance plans.”
  • 37 percent were less likely to support a proposal if it “meant that there were waiting lists for some non-emergency treatments.”

People’s opinions are split when it comes to willingness to pay more for health reform. Since 1991 this survey has been asking, “Would you be willing to pay more–either in higher health insurance premiums or higher taxes–in order to increase the number of Americans who have health insurance, or not?” This year, 49 percent answered “no,” and 47 percent said “yes.” In 2007, 58 percent said no and 39 percent said yes. In fact, 2003 was the only year in which a majority–53 percent–said they would be willing to pay more.

But people are perfectly happy to have someone else pay for all this. Seventy-two percent favored a cigarette tax, 70 percent favored higher taxes on people making more than $250,000, and 61 percent favored repealing the tax cut on families making more than $250,000. Eighty-one percent of those getting employer-based coverage oppose taxing the value of those benefits.

People are also happy to stick it to the insurance and pharmaceutical industries, with 65 percent favoring “government imposing limits on the administrative expenses on health insurance companies,” and 64 percent in favor of limiting their profits. And 90 percent believe the federal government should “negotiate” prices of drugs under Medicare Part D.

By the way, 79 percent of the population favors “spending more federal money” to eliminate the donut hole in Medicare Part D. There was no follow-up question about what they would think if they knew that “federal money” is in fact their money and such a move would raise their taxes. So, maybe Mr. Obama’s complaint about childish Americans has some merit, after all.

SOURCE: Kaiser Family Foundation


Along with health information technology (HIT), many policy wonks think disease management (DM), especially of chronic conditions, will solve all our problems.

An article in Health Leaders magazine notes DM proponents have promised “huge cost savings in DM, some going so far as stating 15:1 and 20:1 return on investment.” But now, “High-profile studies (have) questioned whether DM is worth the investment.” It says, for instance, that “the Centers for Medicare and Medicaid Services ended its DM-inspired demonstration pilot called Medicare Health Support.”

But not to worry. Once there is a big infrastructure in place and a lot of money at stake, the folks invested will find a way to salvage their investment. Ariel Linden, a consultant in Oregon, is quoted as saying, “What they are trying to do is get away from the narrowly defined DM concept, which has now been demonstrated not to be financially effective, and move it into areas in which they think there is more opportunity as well as retain their current clients.” Ah!

Now they are switching from the chronically ill to “population health.” The article says, “population health’s popularity is on the rise because DM vendors see growth opportunity and employers like the idea of an integrated model that reaches out to all employees–from the healthy to the chronically ill.”

So, being a proven failure in the original area of focus, the DM industry wants to expand itself into an even larger population. Golly, sounds like a government program to me.

SOURCE: Health Leaders


Boy, I hate it when this happens.

Two gentlemen I admire have published one of the most offensive papers I’ve ever read. Arnold Kling and Michael Cannon just released a paper, “Does the Doctor Need a Boss?” in which they conclude that independent physicians may be okay for treating simple things, but when it comes to anything complicated they ought to be working for a corporation. YIKES!

In coming to this conclusion, they cite a host of discredited work such as Alain Enthoven and the Institute of Medicine’s “To Err is Human.” But they seem driven by the personal experience of Mr. Kling, whose 88-year-old father was poorly treated in a hospital. One might think the lesson here would be less corporatization, not more, since a hospital is nothing but a corporate entity.

The paper says, “During his father’s illness, Arnold observed firsthand the lack of continuity and coordination of care, which squandered the sincere efforts of many individual doctors and nurses.” I don’t doubt that is true, and repeated thousands of times a day. But is the answer adding another corporate bureaucrat … or turning to someone like a concierge physician who knows the patient, knows the family, and is able to advocate for the patient at every level of care?

The gentlemen also fall into the old trap of blaming the problem on fee-for-service medicine when it should be well-established by now that the problem is not FFS but third-party payment (speaking of corporate medicine). Obviously this level of expense required insurance coverage, but it did not require third-party payment. Providers will always respond to their paymaster. They get into the habit of tailoring what they do to please whoever is paying the bill. Third-party payers have rules and procedures that must be followed and providers learn to perform in ways that maximize their pay.

What failed here was not the doctors and nurses, but the fact that Mr. Kling was crushed between corporate entities (the hospitals and the health plan) that were more interested in their bottom lines than in the well being of the patient.

I won’t belabor this. It underscores the emotional side of health care and how personal experience can color our thinking. I don’t blame Mr. Kling for being unhappy with the system. But to conclude that competent physicians created this system and are to blame for it boggles my mind. Read the paper and draw your own conclusions.

SOURCE: Cato Institute