Victory means exit strategy, and it's important for the President to explain to us what the exit strategy is.    The Honorable Governor of Texas, George W. Bush

I hate quotations. Tell me what you know.    Ralph Waldo Emerson

Saturday, January 08, 2005

Re tort

W was in Southern Illinois recently—cranked’ up the old ’47 and flew his entourage of reporters, staff, automobiles, SS troopers and what have you to falsely remind some doctors just who was responsible for all the ills in the health care system; those darn trial lawyers. This is the administration line on the health care crisis despite a wealth of statistics and tragic stories that emphasize so many more immediate problems. Such diversion is tantamount to ignoring the issue, which is clearly an expression of the desires of lobbyists for the many concerned parties.

Funny thing is that when it comes to suing HMO’s the AMA and AATL are on the same side—doctors support raising liabilities for the HMO’s because the latter’s rules expose them to liability arising from non-delivery of non-covered care. We’re trying to survive out here and what do we see from our governmental process? Turf wars! There are about 13 health care lobbyists in Washington for every legislator, the jobs of each consisting of procuring the biggest slice of the health care pie they can wheelbarrow out of town.

What happened to all that “ownership society” talk and how the government was going to assist the uninsured to buy in? The simple truth is, despite however many stretchers the neocons have back in the storerooms of their “think harder” tanks, the free market concept is as poor a fit for the health industry as it is for tort structure.

It has to do with who is uninsured. Of the approx. 44 million uninsured the majority is unsurprisingly poor—as in a subsidy by the government to buy health insurance will still leave premium bills under a stack of late housing, utility and food bills. Many of the less poor are uninsured because they’re unemployed or self employed. Studies of states that have tried public subsidies of premiums have shown increases in the total percentage of insured of, at most, 3%. Any such plan will leave a great number uninsured (as will privatizing Social Security leave many elderly on the street). Consider also that such government assistance that might be provided by this regime will, of political necessity, likely not be limited to strictly the needy.

So heck, let’s just insure all the uninsured. This is similar to what we do now. Much of the information that follows is from a highly regarded report of the Kaiser Family Foundation Commission on Medicaid and the Uninsured.

Last year uninsured people racked up $125 billion in costs, of which about $40 billion was unpaid. Governments subsidized hospitals (but not doctors or generally clinics!) for about 85% of the unpaid bills. Hospitals are generally fine with this arrangement, though budget tightening and the disparity of programs across the states have caused friction points leading to the unavailability of critical care. Are hospitals leading the pack to get the uninsured insured? Not on your life!

An obvious limitation to this system is that doctors and drug companies lose patients and patients, having to postpone care to the point of required hospitalization, lose lives—an estimated 18,000 of them unnecessarily last year. Drug companies are making a lot of money now and are more concerned with the efforts of many to allow re-importation of prescription drugs. Are they in a hurry to fix the uninsured crisis? Not on your life! They’ll take the odd subsidy (and I do mean odd) the government can cough up and lay as low as possible.

And the doctors? They are clearly the most likely to promote reform, both from an ethical standpoint and as a matter of business. Perhaps this leads to the “urgency” with which tort reform is addressed rather than actually accomplished. First things tantalizingly first!

So what would it cost to insure the outs and bring their care up to standards? The study reports a figure of about $48 billion. This may seem like a lot of money, but consider that the value of “foregone” care (should’ve been taken care of sooner) among those 40 million uninsured has been estimated conservatively to reach twice that amount. Regular readers may know how I feel about statistics, but is seems here that we could insure everyone and have a net gain.

Of course, who is going to pay for private insurance when public insurance offers the same care? And if you’re as bone tired as I am of hearing entitlements being referred to as “coddling” by the “Nanny State”, you can guess how this scenario would play! Imagine the abhorrence of free market types to the specter of the government negotiating health care prices with the proxies of 41 million customers!

No, the only equitable way for all to be insured is as a universal condition of employment. More luxurious plans can be available but the basic plan must not sacrifice level of care. We do this now with unemployment insurance. We do this now with social security (though the ins seem hell-bent on turning that into another this!)

Those who are unemployed will remain insured at the government’s expense until they find employment.

Insurance companies could still compete. Hospitals could still compete. Businesses could still compete by offering recruits higher levels of comfort. Where is it written that competition can’t be about service! Drug companies could still compete although clearly it is they who will be shaken most deeply, and in my opinion rightfully so.

I used to drive livery out of O’Hare airport and shuttle high level employees, executives and other adjuncts of pharmaceutical and hospital products companies to the finest Chicago restaurants, Magnificent Mile destinations like the Ritz Carlton and the Four Seasons hotels, the fanciest under-the-radar North Shore country clubs and so on. Northern Chicagoland is not a one horse town, so to speak. The corporate population of this corridor includes headquarters or otherwise large presences of heavyweights such as Allstate Insurance, Walgreens, Hewitt Associates, American Express, HFC, Motorola, FMC, United Air Lines, Sears, Illinois Tool Works, Kraft Foods, and many more. Yet by far our biggest client was Abbott Labs, followed by Baxter Labs, followed by G.D. Searle. Abbott Labs has hundreds of people in the air every day. Most of those who don’t rate transport on the stable of private jets out of Waukegan Airport are picked up by limo services and shuttled to O’Hare. The cost of these and countless other perks are among those “research and development” costs that contribute to the overpricing on patented products such as Abbott’s leading PSA screen (my health insurance company won’t pay for it) or Prevacid, a gas relieving drug Abbott hired John Elway to tell you to tell your doctor you need while the uninsured or underinsured can’t get the Norvir AIDS cocktail ingredient.

Not surprisingly the drug czars are, to a man, “free market capitalists”— in this instance including the concept, however, that during the patent run pricing will be done on a whatever-we-can-manage-to-spend plus margin basis. Those who can’t afford their share of the R&D boondoggle will simply have to do without. If the CEO of Abbott can’t fly his buddies out to Jackson Hole for the weekend on his Dassault, research on drugs will end as we know it, human progress will cease to exist.

Are the drug peddlers willing to endure the inevitable exposure of their pricing structure a united plan will demand? Not on your life!

The grand irony in all this is that the two principals in this exchange—doctors and patients— are least satisfied with the system while everyone else involved is busy trying to jam this square peg into the round hole of what the market will bear. I suggest an alliance.

Reining in the health industry won’t be pretty; some will suffer. On the other hand, some thousands of lives will be saved; many millions of lives will be healthier; millions of doctors will be able to sleep at night knowing they have done what can be done; millions who have been caught in between jobs will no longer be faced with harassment and financial ruin; and, perhaps most important to the grand scheme, tens of millions of insured people will be able to more freely consider adjusting their employment situation to one more suited to their needs.

With this giant monkey off our back we cannot fail to be more productive.


At 8:50 AM, Blogger JD said...

you must have been working on this one for a while!

Blue Cross Blue Shield of NC made over $300,000,000 in profit last year alone. So I'm not to concerned about the fate of insurance companies should health care reform be enacted. Of course, it never will as long as the republicans control congress.

At 11:53 AM, Blogger sequoit said...

about 16 hours is all.


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