Consumer Power Report #178

Published May 18, 2009

I’m not going to spend much time this week on the meeting President Barack Obama had with some industry groups. There has been plenty of gushing about it already–far more than the event deserved. I thought it was interesting who was and wasn’t in attendance. For instance, the SEIU was there but the AFL-CIO wasn’t, AHIP was there but BCBS wasn’t, the AHA was there but not FAHS. The AMA was there but no other physician group. There were no nurses, no nursing homes, no ambulatory surgery centers, no allied professions, no home health agencies, no insurance brokers. And certainly no patients, the only people who really count.

This was all about the Fat Cats divvying up the health care pie. And they are willing to roll over and get their bellies scratched if it means a big treat for them at the end of the day. It is Washington at its most sickening.

Meanwhile, on Friday, May 8 we had a great meeting in Milwaukee with more than 80 people in attendance. Peter Fotos, Heartland’s director of government relations, and I gave substantive presentations and State Rep Leah Vukmir gave the keynote address. About half the folks were from Americans for Prosperity, and I am looking forward to working with them in the future.



The newly created Health IT Policy Committee met for the first time on May 11 to figure out how to spend the $17 billion included in the stimulus bill. The whole project has already had a negative effect on the growth of health IT as the voluntary adoption of new systems has come to a screeching halt while people wait for the standards to come out from Washington. The Obama administration has decreed that it will issue these standards by December of this year, which is pretty unrealistic given that whatever this committee comes up with has to go through the Administrative Procedures Act process. That means being published in the Federal Register for public review and comment before being finally adopted. In effect, it has created a dead zone for health IT for 2009 and much of 2010 because no one wants to spend money on systems that may not comply with the yet-to-be-determined federal standards.

The head of the Patient Privacy Coalition, Dr. Deborah Peel, has been monitoring these developments and notes that without privacy assurances the whole enterprise will fail. She writes the following:

No surprise the new HIT Policy committee is gearing up to eliminate privacy, i.e. patient control over personal health information, using the excuse that the entire nation’s records are needed for biosurveillance and research without informed consent.

The committee is dominated by industry appointees who will make sure the policies they come up with grant unfettered government and industry access to Americans’ most sensitive personal data, from prescriptions to DNA.

What they don’t get is they will lose the public’s support and trust if they build a system where everyone’s health records can be data mined for any research purpose. A Westin/Harris IOM poll found only 1% of the public would allow researchers unfettered access to their electronic medical records. The government and the research community are completely at odds with the public’s rights to health privacy.

The reality is millions of Americans already refuse to participate in healthcare systems that harm them because they have no control over their medical records.

The Department of HHS noted in the Preamble to the HIPAA Privacy Rule that 600,000 Americans a year avoid early diagnosis and treatment for cancer because treatment records are not private. Two million people a year with mental illness avoid diagnosis and treatment for the same reason: their records are not private. The Rand Corporation found that 150,000 Iraqi vets refuse treatment for PTSD because their treatment is not private, resulting in the highest rate of suicide in active duty military personnel in 30 years.

Can this committee face reality when they have severe conflicts of interest and want the use of Americans’ health data?

The lack of privacy drives millions away from healthcare. And the lack of privacy causes suffering and death–bad outcomes.

We need to add that the research that would come out of such data will be flawed because the information will be distorted. As we predicted when the law was passed, this is $20 billion being flushed down the toilet right before our eyes.

SOURCE: Federal Computer Week


David Cutler is one of the people providing intellectual ammunition to the push for ObamaCare. Mr. Cutler is an economist at Harvard and an original thinker. He wrote a book a few years ago in which he argues that most of the medical interventions that have been developed over the past 20 years were well worth the cost in terms of the extension of life or the improvement in the quality of life.

While I appreciated that he was being original, I worried at the time that he was taking a bean counter’s approach to medicine and was too selective in his reading of the literature and too accepting of rhetorical arguments in his recommendations going forward.

Now Mr. Cutler has published a paper for the Center for American Progress Action Fund titled, “Health System Modernization Will Reduce the Deficit.” He argues that, “Health care modernization involves four broad steps: investing in infrastructure; measuring what is done and how well it is performed; rewarding high-value care, not just high-volume care; and realigning consumer incentives to encourage better health behavior.”

It is hard to argue with any of that. The problems come when he considers who should be doing all of this. His default position is–the government. For instance, he praises the growth of information technology in other sectors and notes how it has increased productivity and efficiency. True. But it is also true that in no other sector was it mandated or “standardized” by the federal government. It was allowed to grow organically. But he glosses over that and even buys in to the idea that passing a law is the same as actually making something happen.

For instance, he says, “Part of the necessary infrastructure was put in place with the information technology funding approved in the American Recovery and Reinvestment Act in January 2009.” Well, no. Nothing has been “put in place,” and it may never be put in place if the experience of Great Britain is any guide. There is a very big difference between appropriating money and actually putting something in place.

Mr. Cutler has blinders on for other issues as well. He includes a very interesting graph of the growth of medical spending from 1960 to 2006, and he seizes on a notable dip in health spending between 1993 and 1997, which may be attributed to managed care. But he completely ignores an even bigger dip that has taken place from 2002 to 2006, which has nothing to do with managed care, and may in fact be associated with the growth of consumer-driven care.

His essential argument is that health care “modernization” will save the government a ton of money, and he estimates the savings for Medicare, Medicaid and SCHIP, and private health insurance. But curiously, he provides the exact same estimate for all three sectors–0.5% per year in 2011 and 2012, and 1.5% per year from 2013 and beyond. But all three sectors are not the same. They are starting from different bases, have vastly different benefits structures and administrative systems, and even bigger differences in enrolled populations. It is simply not credible that all three should experience the exact same reductions of cost at the exact same times.

This is nothing more than wishful thinking on a grand scale. If this is the intellectual foundation of the Obama administration’s ambitions, we are in bigger trouble than I realized.

SOURCE: Center for American Progress


Tom LaGrelius, MD

Writing in The New York Times, Kevin Sack reports on the continuing growth of concierge medicine, even during the recession. He says people are cutting back on a lot of things–gym memberships, restaurants–but, “boutique practices have shown resiliency. Doctors said the recession seemed to have reaffirmed the importance of health care to their patients. With jobs scarce and stress at a peak, many may see a link between continued health and continued employment. And with savings depleted, they recognize that assiduous preventive care may help them avoid costly chronic conditions and hospitalizations.”

The article goes on to quote CHCC member Dr. Tom LaGrelius, current president of the Society for Innovative Medical Practice Design, as estimating there are 5,000 physicians now in such a practice. Why? Because “the concierge movement reflects deep exasperation with the two-hour waits and 10-minute appointments of conventional primary care. Given the burnout among physicians who must see more than two dozen patients a day, they say the concierge model may sustain doctors who would otherwise hang up their stethoscopes.”

SOURCE: New York Times

David McKalip, MD

CHCC Member David McKalip, MD testified before a committee of the Pennsylvania legislature on May 8 about “The Trouble With Single-Payer Healthcare.” He told the committee about the problems endemic to both public and private third-party payment and said, “Better than private or public third party payment is the results produced when patients spend their own money from a health savings account backed by a catastrophic health plan.”

In addressing single payer, Dr. McKalip testified that, “Many utopian dreamers are motivated by the best of intentions and envision that the best way to achieve high-quality health care is to create a system by which the government will control all health care spending and ensure that it is equitable, efficient, and proper.” But he proceeds to explain how that has worked in practice.

SOURCE: Dr. McKalip’s Testimony

Ross Schriftman

CHCC Member Ross Schriftman is quoted in an article in the Philadelphia Inquirer about what new college graduates should do to retain their coverage. The article says, “Young people can buy individual policies for $40 to $100 a month, but even a low-cost policy may be a stretch for someone who is working an entry-level job and has student loans. And some young people simply don’t see the need for health insurance.”

The article discusses slacker mandates (the story doesn’t use that term), which allow young people living at home to stay on their parents’ policies to age 25, 30, or in the case of New Jersey, age 31. But it quotes Mr. Schriftman as saying, “Some parents have never taught their children to be self-reliant” and adds, “He says it’s far better for young people to buy low-cost plans and learn how to manage health-savings accounts, allowing parents to save for their own health problems in old age.”

SOURCE: Philly.Com


New Republic

Several articles have come out recently suggesting that health reform may not be the slam dunk this year most people have been expecting. One was written by Henry Aaron and published in the New Republic. He starts right out saying, “Behind closed doors all over Washington, serious people are working hard to design a major overhaul of the U.S. health care system. We should wish them well, but their chances of success are slim.” He argues that people should be thinking ahead to salvage what they can, since “yet another complete failure would be catastrophic.”

His essential argument is that too many people have too much to lose with fundamental reform and will fight tooth and nail to keep it. He is willing to settle for health IT, comparative effectiveness research, and an insurance exchange. Oh, he just assumes that mandatory coverage is a given.

His argument for an insurance exchange is peculiar. He says, “In the late 1980s, Alain Enthoven pointed out that no mortal human being can rationally choose among the myriad available health insurance plans.” Well, yes, that was Enthoven’s assertion, but it is as wrong today as it was then. But he especially likes the insurance exchange because it was endorsed by The Heritage Foundation and is, therefore, “bipartisan.”

SOURCE: New Republic

The New York Times

Writing in The New York Times, Robert Pear says, “Obama Push to Cut Health Costs Faces Tough Odds.” His article suggests that while the session with industry executives at the White House was a feel-good event, the “proposals are vague–promising, for example, to reduce both overuse and underuse of health care. None of the proposals are enforceable, and none of the savings are guaranteed.”

He adds, “Still, the event was significant. For the health care and insurance executives, the savings initiative helps them secure a seat at the table where many decisions about their future will be made in the next year. They also ingratiated themselves with Democrats in the White House and Congress who are moving swiftly to reshape the nation’s health care system.”

Ah, yes. The old ingratiation trick. Somehow people keep trying that trick no matter how often it fails. Mr. Pear writes, “Industry groups sounded constructive and positive on Monday, but the real test will come in a few weeks when lawmakers unveil detailed legislative proposals. ‘Will they still be supportive?’ Kaiser Family Foundation’s Drew Altman asked, ‘or will they revert to form and protect their turf?'”

SOURCE: The New York Times

Boston Globe

Since Massachusetts is widely seen as a model and precursor for what Mr. Obama is trying, we might learn some lessons there. A recent article reports, “a state commission (is) poised to recommend this month that insurers radically change how they pay doctors and hospitals.” Apparently the state thinks doctors and hospitals cost too much so is going to adopt “a single, yearly fee … intended to discourage doctors and hospitals from providing unneeded tests and treatments, so patients could find it harder to get procedures of questionable benefit.”

Sound familiar? Well it should. This was precisely the premise behind managed care, and especially capitated HMOs that were so roundly rejected in the 1990s. I think Albert Einstein might have had something to say about doing the same thing and expecting different results.

I won’t go into details here. You can read the article. But the interest groups that met with Obama last week should take heed. This is what the future holds if they continue down the path of “ingratiation.”

SOURCE: Boston Globe


Can’t leave without mentioning AHIP’s latest census results. Its annual nose count of 96 insurance providers finds that enrollment in HSA programs has grown 31 percent in the past year, now totaling 8 million people, up from 6.1 million last year, 4.5 million in 2007, 3.1 million in 2006, and 1 million in 2005. The largest source of enrollment growth is in large groups. The new report includes a state-by-state breakdown of enrollment and average monthly premiums for individuals and families. It would be nice if AHIP had given this one-tenth of the fanfare it gave to its meaningless meeting with the president.