MEDICAL TUESDAY

1. Featured Article: Insurance - by Gerry Smedinghoff

Gerry Smedinghoff, a health care Actuary, responded last week to a HealthBenefitReform question regarding an important insurance principle. “Rather than bother with the implications of the term ‘risk pool,’ I will simply note that anyone who purchases any form of insurance is, by definition, (assuming they aren’t fraudulently representing themselves to the insurer) paying more than their expected loss. If a health insurer calculates that the average person of your age, sex and health class will spend $2,000 in health care this year, it will charge you perhaps $2,500 for the insurance. The $500 excess amount above your expected loss ($2,500 - $2,000 = $500) represents what you’re willing to pay for the financial protection against a much larger loss. That’s why it’s called an insurance premium. The cost exceeds its nominal value.”

In responding to the question, Gerry Smedinghoff reminds us that a portion of the annual premium for the high deductible health plan is diverted (or pooled) each year to pay claims of others who have incurred large health care expenses.

"What follows is the introduction to a work-in-progress paper I am writing to explain the foibles and folly of Social Security, corporate pensions and other unfunded liabilities such as Medicare. Note that the premium in the example below is the fence (the extra cost to protect one's property) or the wheat, (the extra cost for possible future crops), but nevertheless it’s still a premium.

Insurance

The exponentially increasing wealth in Western society, created by industrialization, coupled with the advances medical science, allowed the working class - for the first time in human history - to outlive their useful productive life span. This opportunity also presented a problem to working classes for the first time in human history: the risk of outliving one’s savings, and dying prematurely from poverty as the result of a lack of proper planning and a market of robust financial products to protect their savings.

Of course, where there’s a risk, there’s a need for insurance. In modern society, we face four basic risks of everyday life: property, income, expenses and investments. And we purchase insurance to protect ourselves against these risks.

Property Risks are your auto and home. If your car gets stolen or your house is destroyed by fire, you can be financially ruined. These problems are easily solved in the short-term by property and casualty insurance, which take into account the value of the property you own and the probability it will be stolen or destroyed.

Income risks are dying too young and becoming disabled. If either of these tragedies strikes you, your family will suffer. If you die too young during your working life, life insurance replaces your lost income and takes care of your family. And if you become physically incapacitated, disability insurance replaces your lost salary.

Expense risk is living too long and running out of money before you die. If you live longer than normal, a guaranteed pension or annuity is designed to make sure that you don’t outlive your retirement savings.

Investment risk is that your financial assets that represent your savings will drop in value or become worthless.

Many people find the topic of insurance to be overly technical and far too complex for their understanding. However, the concept of insurance is very simple, and can even be illustrated without using money. Ultimately, insurance is an immediate small fixed reduction in wealth, in exchange for protection against a future large uncontrollable loss.

To see how simple the concept of insurance can work in practice, consider a farmer who grows wheat on a plot of land next to railroad tracks.The greatest threat to his wheat crop is during the dry hot summer months, from sparks that fly off the tracks when trains go by, which can easily set his wheat field on fire, thus destroying his entire crop. To insure his wheat crop against accidental destruction by fire, the farmer has two options which involve taking an immediate small fixed reduction in his wealth by:

1. Not planting any wheat within 50 feet of the railroad tracks, so the sparks that fly off will land harmlessly on the dirt. Here his immediate fixed loss amounts to the value of the extra crop he could grow by planting wheat all the way up to the base of the tracks.

2. Building a fireproof fence along the tracks, which would catch all the sparks flying off the tracks, thus allowing him to plant his wheat on the 50 feet of dirt next to the tracks. Here his immediate fixed loss amounts to the cost of building and maintaining the fireproof fence.

The farmer’s decision between the two insurance options will hinge on whether the cost of building and maintaining a fence along the railroad tracks is greater than the value of planting wheat on those 50 feet of dirt each year. Note that in both cases, the farmer accepted a small fixed reduction in salary (value of the wheat) or wealth (cost of the fence) immediately, in exchange for protection against a large uncontrollable loss in the future (destruction of his wheat crop by fire).

All varieties of insurance you typically purchase operate on the same basic principle of immediate wealth reduction. The only differences are: [1] instead of independently self insuring the risk, other policyholders purchase similar insurance to share or pool the risk, and [2] instead of dry dirt or a fence, money is the medium of exchange for the transaction. Thus, when 1,000 40 year old males each contribute $1,000 to an insurance pool, the 999 who survive forfeit their premium, and the one who dies gets the $1,000,000 benefit to make up for his lost income.

However, with pensions and Social Security, there are three other differences, which are the primary cause of corporate and government unfunded liabilities - our topic at hand.

First, short-term property and income risks slowly expire with the passage of time, but your long-term pension risk of outliving your savings slowly accumulate over time. If you want to protect your life and property during the year 2004, you can buy insurance that starts on January 1st and ends on December 31st. Once the year has passed, so has the risk. On January 1st, 2005 , you no longer have to worry about 2004. However, with expense risk of pensions, with every year that passes, the risk of outliving your savings continues to grow. It’s now even more likely that you’ll live to the ripe old age of 97, while your savings runs out when you’re only 82.

Second, most people don’t die young and collect on their life insurance; but most people do live long enough to retire and collect a pension. About 90% of people in the United States live to reach the age of 60.

Third, the risk of outliving your savings, in addition to involving the short-term pooling of funds, involves the long-term investment risk of managing your retirement savings. If you invest foolishly or are defrauded by unscrupulous money managers, you lose out.

Fourth, while the short-term property risks are relatively simple in practice, the long-term pension risks are unnecessarily complicated and perverted by the Internal Revenue Code (IRC), creating a moral hazard for everyone involved, which entices them to gamble with your savings and adopt fraudulent accounting standards and actuarial funding principles.”

Our thanks to Gerry Smedinghoff for making this preliminary draft available to MedicalTuesday members.

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2. In the News: Most Law-abiding Citizens Probably Commit Three Arguable Felonies Each Day Without Even Knowing It

Harvey A. Silverglate, a lawyer working on a book concerning abusive federal prosecutions, writes in the Wall Street Journal about "Dubious Convictions for Dubious Crimes."

"The Justice Department . . . has built a record in business fraud cases that has held up in court on Enron, WorldCom and Adelphia. In fact, the reasons the feds have more success in court than Mr. Spitzer, [the Attorney General in New York,] is because federal law has been so corrupted that most law-abiding citizens probably commit three arguable felonies each day without even knowing it. The reason for the Justice Department's success is that the federal courts have aided and abetted in contorting the law by affirming dubious convictions for dubious crimes. The Supreme Court's welcome reversal of the Arthur Andersen conviction, one hopes, signals a counter-revolution rather than a mere blip in the continuing degradation of the federal criminal code.” For more, see http://online.wsj.com/article/0,,SB111888108516061015,00.html?mod=todays_us_opinion.

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3. International News: How Bodies Can Be Given a Name

Jane Elliott, health reporter for BBC News, reports that as the UK comes to terms with the death of at least 50 victims in the London bombings of 7/7/05, scientists and medics continue the grim task of identifying the dead.

"Members of the Association of Forensic Radiographers say that Pathologists can determine a lot about an explosion through the pattern of injuries. But, to avoid any distressing errors, the work has to be painstaking and slow so police have asked for families' patience while they analyze the evidence. Many of the bodies are so badly injured they are impossible for relatives and friends to identify.”

“Evidence

And in some cases, experts only have body parts to work with. This is where experts like forensic radiographer Mark Viner and his colleague Kim Hutchings can be vital. They can use X-rays of the body to help create a positive identification of the dead person."

“Kim Hutchings, based at Homerton University Hospital, London, helped identify victims of the tsunami disaster. She said: ‘Radiographers are key part of the identification and autopsy process.’”

"‘It is possible to identify people by matching X-rays to the X-ray films they had done in life. The team would identify any previous distinguishing marks, pathology or injury, such as previous fractures, dental work or surgery, so that the pathologist could identify them.’

“This might not be as obvious as a broken bone - for instance, old X-rays can show up unusual patterns of growth. Medics can tell by looking at fractures whether they are new or old by the amount of healing that has gone on.

“Even the tiny amount of healing that has gone in a fracture that is one or two days old can be enough for experts to distinguish between an old injury, or one sustained at the point of death.

“The technique can even work to a degree for bodies that have no obvious distinguishing marks from their previous medical history.

“Scientists can inch towards a positive identification by measuring limbs to discover their height, sex and sometimes even their age. The fact that the bones do not fully fuse until the age of 25 can help pin down this last element....

“Mark Viner, based at Barts and the Royal London Hospitals, helped in the identification of victims of the IRA bombings in Victoria Station and Canary Wharf, and worked on atrocities in Sierra Leone, Bosnia and Croatia. He said that bodies can be scrutinized using a machine called a fluoroscope. This speeds up the identification process by providing a "real-time" video shot, allowing fragments to be removed from the body while the X-ray is being carried out, rather than waiting until it is over.

“In the case of the London bomb blasts, X-ray technology will not only help to identify victims - analysis of the pattern of injuries will provide vital clues about the nature of the explosions.

The work of identifying victims falls under the auspices of the Association of Forensic Radiographers.

“A spokesman said it was important to remember that, unlike the tsunami, the London bombings were a crime scene. As well as identifying the victims, medics also had an important role to play in preserving and identifying evidence that could be used in any subsequent prosecutions.”

To read the entire article, go to http://news.bbc.co.uk/2/hi/health/4586281.stm.

4. Government Medicare: New Crysta-lens Coverage Distorts Cost-Benefit Analysis

Dorsey Griffith, Sacramento Bee Medical Writer, reported on July 3, 2005 , about a new trend in lenses that is an eye-opener. “Like sagging skin, stiff joints and thinning hair, the blurring of everything close is an annoying but inevitable aspect of aging.

“For many baby boomers and their elders, the eye condition known as presbyopia can make deciphering drug labels, threading needles and even writing notes impossible without reading glasses.

“And as with every other symptom of growing older, presbyopia, the Greek term for ‘aging eye,’ is the target of new technologies to minimize the undesirable effects of the march of time.

"‘There are a lot of people who are aging, and one of the (five senses) is sight,’ said Kathy Kelly, a spokeswoman for the company that makes crysta-lens, one of two new types of lenses that replace cataracts but also correct presbyopia. ‘When you start losing your sight, you start feeling old.’

“Conventional cataract surgery involves replacing the clouded human lens with an artificial one that can be designed to improve long-distance vision. The new lenses go further, fixing not just the cataract, but sharpening vision at all distances, near and far.

“Analysts are predicting the market for these new lenses will increase fivefold following Medicare's decision in May to cover their cost, as long as patients pay the difference in price - about $1,200 an eye - between the conventional cataract lens and the presbyopia-correcting lens.

“While the federal Medicare program considers cataracts a debilitating condition and covers their removal, it views presbyopia as an easily corrected vision problem that does not merit a surgical fix. Similarly, the Food and Drug Administration has approved the new lenses for cataract surgery, but not solely as a means of correcting poor eyesight.

“Even so, the new technologies are proving a big draw for baby boomers - many of them too young to have cataracts but old enough to need glasses to make out a listing in the phone book. About 80 percent of crystalens patients don't have cataracts but are plunking down about $3,500 an eye to have their vision corrected, said Dr. Stephen Wilmarth, a Sacramento eye surgeon using the new procedure.

“The trend raises concern among some eye surgeons, who like the products for cataracts - a condition that ultimately blinds you - but say the invasive operations pose unnecessary risks for people whose problem could be easily fixed with a pair of dime store reading glasses.

“Even uncomplicated cataract surgeries can, in rare instances, result in devastating retinal problems, said Dr. Brent Reed, a Sacramento ophthalmologist who uses Restor, one of the new lenses for cataract surgery.

"‘I don't see intraocular surgery as a reasonable option at this point just to get rid of reading glasses,’ he said. ‘If your patient ends up with retinal detachment and you are trying to fix presbyopia, that is a high price to pay.’

“Renada Halliday was willing to take the risk. At 46, she has worn contact lenses for 30 years to see better at a distance and more recently started using reading glasses. ‘I am a nurse, so I have to have good eyesight,’ she said. ‘I do a lot of reading, giving medication, drawing meds in syringes for injections. I have to be accurate.’

“Although she could live with the hassles of poor eyesight, she said, ‘I was just not wanting to wear contacts and the glasses both for another 30, 40 or 50 years. Because surgery is available, I figured, why not?’ Not only will the new lenses improve Halliday's near and far vision, but the artificial lenses cannot form cataracts.

“More than 20 million Americans have cataracts, a condition that develops with age as dead cells collect on the lens, clouding vision. Presbyopia is considered the first sign of a cataract. With age, the lens stiffens, making it harder to focus, especially up close. Presbyopia typically sets in around age 45, and affects virtually everyone over age 51.

“Like other intraocular lenses, crystalens, made of silicone, replaces the body's natural lens. Unlike other cataract lenses, crysta-lens is designed to work naturally with the eye muscles, changing shape as the patient focuses near, far or anywhere in between.

“Seventy-seven-year-old Ed Latham of Antelope opted for crystalens for his cataract replacement surgery. A retired minister of the Church of Christ in Roseville , Latham still preaches from time to time, teaches Bible classes and leads his congregation in singing. ‘I have to pick up the book with one hand, and lead the congregation with the other,’ he said, ‘because I can't see the book from the lectern.’

“On a cool morning in June, Latham was wheeled into an operating room where his right eye was numbed, his vital signs monitored and an intravenous sedative dripped into his veins to keep him calm. After cutting a slit in Latham's eye, Wilmarth cleaved the lens away from the capsule surrounding the lens, then cut it up and sucked out the yellow-tinged tissue that was the cataract. Into the tiny opening he jiggled the crystalens, centered it, flushed with solution and removed the air bubbles. The procedure was over in about half an hour.

“Wilmarth said the crystalens operation requires special training, meticulous planning and surgical precision to achieve a good outcome. Even so, up to 20 percent of patients will require surgical adjustments to improve their distance vision. Halliday, for example, said her eyesight with crystalens isn't perfect yet, and plans to have a tune-up with a laser procedure soon.

"‘We are talking about the evolution of a technology,’ Wilmarth said. ‘We now have something which was almost unthinkable five years ago. As time progresses, we are going to improve in every aspect of our care.’

“Other surgeons prefer Restor, made by Alcon Laboratories Inc. Restor is the newest intraocular multifocal lens for cataracts. Like crystalens, the Restor lens improves both distance and near vision, but it uses a different technology that doesn't work in concert with the eye muscles.

“Reed said earlier efforts to make a multifocal lens resulted in patients seeing halos, glare and rings of light, and made night vision particularly difficult. These problems improved, but are not entirely resolved with Restor.

“Reed's first patient in Sacramento was John Thompson, a 68-year-old retired special agent with the state Department of Justice. Thompson started wearing glasses 22 years ago for an astigmatism. He said he had trouble focusing both near and far, then developed cataracts.

"‘All of a sudden, I started having to have my prescription changed every three months,’ he said. ‘It got worse and worse.’ Reed put Restor in Thompson's left eye first. ‘Within three days of surgery I read the newspaper without glasses,’ he said. ‘I looked at the computer without glasses.’

“Still, with the remaining cataract in the right eye, Thompson said he couldn't sit down and read a long Tom Clancy novel, as he yearns to do. Heading into surgery for the other eye last week, Thompson said, ‘If this second eye comes anywhere close to half the improvement that I got with the first eye, I am going to be excited.’

“The surgery began smoothly. Reed made the incision, preparing to remove the cloudy lens from Thompson's right eye. Reed inserted an instrument that uses ultrasonic energy to break the cataract into small pieces and sends a watery solution through the tip to turn the cataract to a slurry, which is then sucked up through the instrument and out of the eye.

“But there were complications. Reed said the phacoemulsification machine burped ‘and for whatever reason the fluid flow pulsed and stopped just for a second, but the suction continued.’

“That pulled the lens capsule forward, engaging the tip of the instrument. It punctured the back of the capsule. Vitreous, the gelatinous material in the back of the eye, leaked into the space where the new lens would have been placed.

"‘A capsule rupture probably happens in one in every 200 eyes,’ Reed said later. Thompson still got his Restor lens, but Reed was forced to put it in front of the capsule rather than inside it, a functional though not optimal option.

“Although rare, a punctured capsule can lead to serious problems down the road, including retinal detachment. "We're going to watch you like a hawk," Reed told Thompson after the surgery.

“Reed said lens implant surgeries are far riskier than Lasik, the popular laser procedure that changes the shape of the cornea to correct nearsightedness, because they can lead to serious infections or retinal problems.

“And he used Thompson's case to illustrate why patients without cataracts should think twice about the invasive operation.

"‘You are upping the ante tenfold when you go inside the eye,’ Reed said. ‘The real issue is nobody wants to get old or deal with the effects of aging. I think that's fine as long as they don't put themselves at significant risk to lose what they've still got.’

The Bee's Dorsey Griffith can be reached at (916) 321-1089 or dgriffith@sacbee.com. To read the full report, go to http://www.sacbee.com/content/news/v_print/story/13172123p_14015593c.html.

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5. Medical Gluttony: Only Possible with Third-Party Health Care With Fixed Copayment

The pharmacy made a mistake on a prescription fill for one of my patients, dispensing 20 mg tablets instead of 5 mg tablets. The patient came to the office and we cross-checked the copy of the prescription in my file, which was correctly written, but went ahead and wrote a new one. Both were completely legible as evaluated by a medical assistant. The patient thanked me and said she would toss the large dose into the toilet. When reminded that to do so was tossing valuable medications down the sewer, she replied that it was only worth $14. We informed her that the drug was really a $110 prescription with a fixed copay of $14, and since the seal was not yet broken on the bottle, it could still be used. She asked if I might have a poor patient who could use the medication. Since it was a commonly prescribed drug in our practice, I accepted it since I have a number of patients that would appreciate a free month’s supply.

Several patients, as well as responders to last week's article concerning expiration dates and when drugs do lose their potency, have told me that they had either read, or a doctor had told them, to always throw extra pills into the toilet and drain them down the sewer. How can this waste of valuable health care costs be stopped?

This type of behavior cannot be changed by altering the medical school curriculum concerning one fact out of hundreds of thousands of medical facts; nor can it be changed by a massive advertising campaign since no universal agreement could ever be reached. It can only be altered by patient responsibility which only becomes relevant when the patient pays a percentage of every medication or medical service–not a fixed copay as in this case. When patients share financial responsibility, they will find a way to conserve their income.

Patients will never conserve the expenses of the third party, whether insurance carrier, Medicare, Medicaid, National Health Service, the VA, etc., that paid the $96 that the insurance company paid for the prescription. But for example, with a 30 percent copayment of the $110, it is significant enough that patients will reduce their health care costs and save health resources.

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6. Medical Myths: Medicaid Pays Care for Poor People? But Are Old Folks Really Indigent When They Have Rich Kids? The Legal Responsibility of Adult Children to Care for Indigent Parents

Less than one third of older Americans are able to pay for two or three years of nursing home care, according to a recent study published by AARP. As baby boomers who have failed to adequately prepare for old age retire, there will be fewer seniors with the means to pay for such care, says legal researcher Matthew Pakula.

“Medicaid, the joint federal-state health care program for the poor, is the major funder of long-term care in the United States. For example, when seniors in nursing homes exhaust limited Medicare benefits, those who have not purchased long-term care insurance must pay for their care themselves. If they consume their financial assets and their incomes are low enough, they qualify for Medicaid coverage.

* Long-term care cost Medicaid $60 billion in 2002, according to Centers for Medicare and Medicaid Services data.

* Federal and state laws allow Medicaid to seek reimbursement from recipients’ estates, and under current laws the states now collect $350 million a year, according to the AARP.

“Unfortunately, most Medicaid recipients have no estate when they die, and an increasing proportion of those who receive assistance are sheltering their financial assets to meet the definition of poor under the Medicaid statutes. So while their children receive the benefit of these assets, taxpayers pick up the tab for their care,” says Pakula.

“More than 30 states have statutes that make adult children responsible for the care of indigent elderly parents, but the laws are seldom enforced. Enforcement of filial responsibility statutes could discourage much of this asset shifting,” says Pakula.

Source: Matthew Pakula, "The Legal Responsibility of Adult Children to Care for Indigent Parents," National Center for Policy Analysis, Brief Analysis Nor. 521, July 12, 2005 .

For text: http://www.ncpa.org/pub/ba/ba521/.

For more on Medicaid: Reform Proposals: http://www.ncpa.org/iss/hea/.

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7. Overheard in the Medical Staff Lounge: Patients Find Unorthodox Ways of Saving Medical Expenses

Dr Edwards was commenting on one of his patients who was heavily tattooed and used a Harley as his mode of transportation. The patient had an altercation and ended up with a knife wound and a bullet through his thigh. Since he was on the wrong side of the law in previous experiences, and didn't want medical documentation of his injury, he allegedly took a hot iron and seared the wound. The patient said that he had heard this would kill all the germs. His said it healed without medical attention and it didn't get infected. The tattoos had nicely covered the burn scars.

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8. Voices of Medicine: Overworked or Underpaid - How You Can Solve One of Those Two Problems

John Toton, MD, a Healdsburg orthopaedic surgeon reports in Sonoma Medicine about his experience when he worked at Kaiser Permanente.

"As an orthopaedic intern at Oakland's Highland Hospital in the 1960s, I met Dr. Jim Johnston, who had established himself at Kaiser Oakland as an orthopaedic pathologist with national credentials. He taught UC San Francisco residents pathology, and his teaching slides were exceptional; I brought his collection with me to residency in Philadelphia. After residency, I spent two years fulfilling my military duties in Okinawa, Japan. The setting was so remote that I lost most of my contacts with California orthopaedic groups, and going it alone seemed impossible. But then I remembered Jim, who became the local contact for my post-military job search. I figured if Kaiser employed doctors of such caliber, I should check it out.

“An interview followed at Kaiser San Francisco, where there was an 'opening.' It wasn’t exactly an interview; the physician-in-chief talked at me about Kaiser’s history and practice opportunities for more than an hour. I left with an application form and the experience of saying no more than 10 words. I doubt he even knew who I was.

"The next contact, four months later, was a phone call letting me know I had a full load of patients scheduled for next Monday! I didn’t even know I had been hired; that was how Kaiser took you on board 30 years ago."

"In those days, Kaiser was a gold mine of opportunity, but not of the financial kind. My general practitioner father was appalled at the starting salary for a surgeon. Raises, and partnership, did come with time; but my income never kept up with private practice in that “golden age” of medicine. . . .

"The practice of medicine at Kaiser has always been associative. Not too long ago, before Kaiser grew, before budgets were strictly enforced, every doctor knew every other doctor in his or her specialty in the other facilities and knew many other members of the larger Permanente group as well. It is a shame that today, very few doctors seem to have that regional perspective, except in their specific referral areas.

“By a wide margin, Kaiser met most, if not all, of my professional and personal goals. When you are off, at Kaiser, you are OFF. When you are at work, you are ‘fully busy at work,’ with no shortage of challenging and stimulating patients to see. You may be tired, but you are never bored.

"And then, quite unexpectedly, probably because the stock market was hot and medical dues were flat, Kaiser offered me an early-retirement package that was too good to turn down. I suspect they wanted the top salaries to move on and to hire younger and cheaper doctors. I was not insulted: although I always felt I was a valued member of the group, I recognized early on that Kaiser is a business and I was an employee.

"I was not compelled to take advantage of the retirement package, but I wanted to see what was on the 'other side,' so I went into private practice. It has been and continues to be a learning experience!”

“With savings and cash from unused sick leave and vacation pay, I opened a ‘second opinion’ office in a Santa Rosa business park. The idea was, ‘Bring yourself, your X-rays, your records. Pay me for the time we spend together, with the premise that I will not do the surgery, only offer advice.’ My charges were based on exactly what Triple A charged for an auto diagnostic ($65 per half-hour). A few people came from ads I placed in local and throwaway newspapers, but I got no referrals from local doctors. Most people wanted insurance to pay for their visit; they had no concept of paying out-of-pocket for a service. The practice covered the rent but nothing more.

“Then an old Kaiser associate, Tom Miles, invited me to join his private orthopaedic practice in Healdsburg. He asked only one question: ‘Are you bored with retirement yet?’

“Tom was leaving town (he’s since returned), so I could fill a need, with a promise that I would jump into a world of good people, good loyal referral doctors, a stable insurer (HPR), secure physician groups (SPA and HMG), and a thriving hospital and medical community. In June 1999, it was all true, but SPA, HMG, and HPR soon bit the dust. Healdsburg Hospital lost its ICU, OB, second operating room, and after-hours surgery. Some physicians left, and practice referral patterns changed. Yet, quite a few patients and doctors stuck out the turmoil, including me.

“How is private practice different from Kaiser? First a disclaimer: my Kaiser experience is now six years old and my private practice experience is six years new. Before 1999, the Kaiser slogan was ‘good people, good medicine,’ and our mindset was to offer ‘good medicine’ at an affordable cost. Kaiser dues were usually near the bottom of medical insurance premiums. We were part of a culture born in the pre- and post World War II unions; we were the working man's health plan, fulfilling a 1960s dream of a ‘better world.’ Our doctors were accused of being socialists, and acceptance in medical societies was hard to obtain.”

Dr Toton outlines these exciting years and how his life changed at Kaiser Permanente. To read his comparison of private practice experience to his Kaiser Permanente experience, go to www.scma.org/magazine/scp/sp05/toton.html.

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9. Book Review: From the PHYSICIAN / PATIENT BOOKSHELF - An Old Message with Modern Meaning

PATIENT POWER - The Free-Enterprise Alternative to Clinton’s Health Plan by John C Goodman, PhD and Gerald L Musgrave, PhD. Cato Institute, Washington, DC © 1994, ISBN: 1-882577-10-8, 134 pp, $1.00 (from Cato Institute).

In the Preface, the authors state that a thorough economic analysis of the health care system in the United States is complex, not because special theories are needed, but because health care is the most regulated and most politicized sector of our economy. It takes considerable understanding of economics, medical care, politics, ethics and emotions before anyone can obtain a unified view of health care. Patient Power is a synthesis of those aspects. The abridged volume is a further condensation of that synthesis.

The thesis of this book is simple: if we want to solve the nation's health care crisis, we must apply the same common sense principles to medical care that we apply to other goods and services. The irony is that health care costs are rising because, for individual patients, medical care is cheap, not expensive.

According to Patient Power, patients pay on the average only 5 cents out-of-pocket for every dollar they spend in hospitals. The remainder is paid by private and public health insurance. Patients pay less than 19 cents out-of-pocket for every dollar they spend on physicians' services, and they pay less than 24 cents for every dollar they spend on health care of all types. Patients therefore have an incentive to purchase hospital services until, at the margin, they're worth only 5 cents on the dollar and to purchase physicians' services until they are worth only 19 cents on the dollar. The wonder is that we don't spend even more than what we do.

Health care, like other necessities such as food, clothing, housing and transportation, is said to be a necessity. If we paid for any of those items the way we pay for health care, we would face a similar crisis. If we paid only 5 cents on the dollar for food, clothing or housing, for example, costs would explode in each of those markets.

If we are to control health care costs, we must be prepared to make tough decisions about how much to spend on medical care versus other goods and services. So far, we have avoided such choices, confident that health care spending can be determined by "needs," rather than by choices among competing alternatives. In that respect, the U.S. health care system is unique. The United States is the only country in the world where people can consume medical care almost without limit, unconstrained by market prices or by government rationing.

Consider the case of an 80-year-old man who suffered from the condition of "slowing down." Despite the physician's counsel that the condition was perfectly normal at age 80, the patient and his wife went on a literal shopping spree in the medical marketplace. As the physician explained to the New York Times:

A few days ago the couple came in for a follow-up visit. They were upset. At their daughter's insistence they had gone to an out-of-town neurologist. She had wanted the "best" for her father and would spare no (Medicare) expense to get it. The patient had undergone a CAT scan, a magnetic resonance imaging, a spinal tap, a brain-stem evoke potential and a carotid duplex ultrasound.

No remediable problems were discovered. The Medicare billing was more than $4,000 so far. . . . but they were emotionally exhausted by the experience and anxious over what portion of the expenses might not be covered by insurance.

I have seen this Medicare madness happen too often. It is caused by many factors, but contrary to public opinion, physician greed is not high on the list. I tried to stop the crime, but found I was just a pawn in a ruthless game, whose rules are excess and waste. Who will stop the madness?

The potential demand for health care is virtually unlimited. Even if there were a limit to what medical science can do (which, over time, there isn't), there is an almost endless list of ailments that can motivate our desire to spend. About 83 million people suffer from insomnia, 70 million have severe headaches, 32 million have arthritis, 23 million have allergies and 16 million have bad backs. Even when the illnesses are not real, our minds have incredible power to convince us that they are.

If the only way to control health care costs is to have someone choose between health care and money (that is, other goods and services), who should that someone be? There are only two fundamental alternatives: the choices must be made either by the patients themselves or by a health care bureaucracy that is ultimately answerable to government. This book makes the case for the patients.

Almost all arguments against empowering patients are variations on the notion that individuals are not smart enough or knowledgeable enough to make wise decisions. But if that argument is persuasive in health care, why isn't it equally persuasive in every other area of life?

The case for empowering patients rests on a different assumption. No one cares more about us than we do. Thus, while prudent people seek and get advice from specialists before making many decisions, it does not follow that we should turn control of our lives over to the experts. In the long run, more good than bad decisions are made when self-interested individuals are free to accept or reject advice from many quarters.

A corollary to the goal of empowering patients is the goal of creating competitive markets in the health care sector, including physicians' services, hospital services, other services and health insurance. Individuals pursuing their own interests in a market are best served by suppliers who compete vigorously to meet consumer needs with high-quality services produced at the lowest possible cost.

As the authors emphasize, this book represents a radical departure from the conventional wisdom in the field of health policy. Whereas the vast majority of health policy commentators take a bureaucratic approach to health care, the authors' approach is individualistic, focusing on the decisions that individuals make and the incentives they face when they make them. Whereas the vast majority of health policy proposals call for more regulation and more government spending, the authors find that government is the problem, not the solution–that solving America 's healthcare crisis requires undoing the harmful distortions introduced by government and that only a market-based system will work.

The dominant view of what's needed in health policy, as regularly reported in the national news media and parroted by syndicated columnists, editorial writers and politicians, is not competition but monopoly. Instead of empowering individuals, they assert, we should empower the bureaucracy. Rather than look to the private sector for solutions, we should look to government. When speaking to the general public, the socialism-works-in-health-care crowd points to national health insurance in other countries, arguing that the quality is high, the cost is low and the vast majority of people like it.

It is no surprise that most people who live under national health insurance like it. For minor aches and pains, they have no difficulty seeing general practitioners and they perceive such services to be "free." But that's not a useful test of a health care system. In any given year, only about 4 percent of the population require access to the remarkable advances made possible by modem medical science. The better test is when people need such services; can they get them? And if they do get them, how long do they have to wait? It is in answering those questions that we uncover the worst tragedies of socialized medicine.

The authors cite the case of Joel Bondy as illustrative of what we could be facing. Joel was a two-year-old child with a serious congenital heart defect that urgently needed surgery. It was a serious operation, but one that was performed many times in hospitals across the United States . Unfortunately, Joel did not live in this country. He lived in Canada , where the country's national health care system has resulted in a severe shortage of cardiac care facilities. In fact, Canada has only 11 open-heart surgery facilities to serve the entire country, compared to 793 in the United States .

Joel's operation was repeatedly postponed as more critical cases preempted the available facilities. Alarmed at their son's deteriorating condition, Joel's parents arranged for him to be operated on in Detroit . When word of this case reached the Canadian media, embarrassed authorities told the Bondys that if they would stay in Canada , Joel would be moved to the top of the waiting list and could have his surgery immediately. Joel was taken on a four-hour ambulance ride to the nearest hospital equipped for the procedure, but there was no bed available. The family had to spend the night in a hotel. Del Bondy died the next day without ever reaching surgery.

The authors state that such a tragedy could easily become commonplace in this country if we make the wrong decisions on how to reform our health care system. The examples given are somewhat dated, but they are as valid today as when this book was written a decade ago. Even a decade ago, 793 hospital communities in our country would be able to provide cardiac surgery–frequently the same day as do now. However, in Canada and other socialized countries, the delays are even longer than they were in 1994. We must not let the United States to become a third world country. With a price of only a dollar for the abridged edition, we should all order dozens to give to our friends, neighbors and especially our doctors and dentists before it’s too late.

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10. Hippocrates and His Kin: God, Doctor and Patient - an Unstoppable Combination

Kevin W. McCullough, reports in the Los Angeles Times: For many doctors, beliefs influence their practices. More than three-fourths believe in God and more than half believe in an afterlife, a survey finds. Results surprise the study's author.

Religion is the "unmovable foundation" on which Dr. James Keany bases his practice of medicine. He sometimes stops and prays with a patient coping with tragedy or life-changing illness, and he prays silently for many more.

"Patients are more than just an accumulation of lab tests and data. They are a living, breathing, feeling, spiritual entity," the Mission Viejo doctor said. Praying with his patients doesn't cure their illnesses, he added, but it helps comfort them in a difficult time.

As an emergency medicine doctor at Mission Hospital Regional Medical Center , Keany considers the spiritual health of his patients an important part of his job, like tending to their physical and emotional well-being. Keany, a nondenominational Christian, may be more like his fellow doctors than previously assumed.

A new study has found that more than three-fourths of physicians believe in God and more than half believe in an afterlife. The survey of 1,144 physicians, published in the July issue of the Journal of General Internal Medicine, came as a surprise to the study's main author.

"Doctors are not as irreligious as we might have expected," said Dr. Farr Curlin, an instructor in the department of medicine at the University of Chicago . More than half of the doctors said that their religious beliefs influenced their practice of medicine. Doctors are often able to better care for their patients when they draw upon their religious beliefs, Curlin said. But not all doctors agree.

"A physician's religion is utterly irrelevant to the patient," said Richard P. Sloan, a professor of behavioral science at Columbia University Medical Center , who has researched the topic of faith and medicine and advocates that they should not mix. "There are some elements of our lives that may be associated with health and illness that are nonetheless out of bounds for physicians."

Sloan noted that doctors hold considerable power in the clinical relationship. Because physicians know patients' private matters, see them naked and examine them in extremely personal ways, patients are in many ways vulnerable when visiting a doctor. That vulnerability, Sloan cautioned, means doctors should be extra vigilant about mixing religious beliefs with their practice. "There is a tremendous potential for abuse," he said.

Many previous studies have shown the importance of patients' faith to their health, well-being and medical decision-making. There has been comparatively little research on doctors' religious beliefs, however.

Although slightly less religious than the general public, doctors still were similar in their religious convictions, the survey found, with 76% of doctors saying they believe in God versus 83% of the general public (a figure established in a previous national survey). And 56% of doctors described themselves as religious, compared with 62% of the general public.

Doctors were significantly more diverse in their religious backgrounds than the U.S. population, however. They were more than 26 times as likely to be Hindu than the general population, more than seven times as likely to be Jewish, and more than five times as likely to be Muslim. Doctors were 20% less likely to be Christian.

Those from Christian backgrounds were more likely than any other religious group to say that their religion influenced their practice of medicine, except for Buddhists, who overwhelmingly said that it did.

It is not clear from the study if doctors become more religious because of their work, or if people with religious backgrounds are more likely to enter the field of medicine, but Curlin said: "It's more likely that people go into medicine because it is not only a scientific practice, it is also a moral practice." He added that doctors would "cripple" their medical practice if they only treated physical symptoms and refused to pay attention to the spiritual needs of their patients.

Sloan agreed that doctors have a responsibility to respect and understand their patients' spirituality, but disagreed that a doctor's faith is important to the interaction. "You should treat your patients humanely and respect their autonomy regardless if you are a fundamentalist Christian or a Jew or a Muslim or an atheist," he said.

Keany said he has come to believe that it would be "unconscionable" to separate religion and the practice of medicine. "The technical aspect of medicine is actually the easy part of medicine; the hard part is being emotionally and in some cases spiritually available for the needs that a patient has," he said.

But he added that doctors must be sensitive to patients' beliefs. "If you have an agenda," he says, "you will not be there for their needs."

The National Center for Policy Analysis, John C Goodman, PhD, President, who along with Devon Herrick wrote Twenty Myths about Single-Payer Health Insurance, which we reviewed in this newsletter the first twenty months, issues a weekly Health Policy Digest, a health summary of the full NCPA daily report. You may log on at www.ncpa.org and register to receive one or more of these reports. This week, read more about Medicare's new prescription drug benefit in the article Pennsylvania's Experience Warns Against Medicare Prescription Drug Program at http://www.ncpa.org/iss/hea/2002/pd071502d.html.
The Mercatus Center at George Mason University (www.mercatus.org) is a strong advocate for accountability in government. Maurice McTigue, QSO, a Distinguished Visiting Scholar, a former member of Parliament and cabinet minister in New Zealand, is now director of the Mercatus Center's Government Accountability Project. This week, read the article Spending on Regulation Keeps Growing at http://www.mercatus.org/article.php/1273.html.
The Galen Institute, Grace-Marie Turner President and Founder, has a weekly Health Policy Newsletter sent every Friday to which you may subscribe by logging on at www.galen.org. A new study of purchasers of Health Savings Accounts shows that the new health care financing arrangements are appealing to those who previously were shut out of the insurance market, to families, to older Americans, and to workers of all income levels. Read the current newsletter on Tax Reform as the Road to Health Reform at http://www.galen.org/redtape.asp?docID=808.
Greg Scandlen, Director of the “Center for Consumer-Driven Health Care” at the Galen Institute, has a Weekly Health News Letter: Consumer Choice Matters. You may subscribe to this newsletter that is distributed every Tuesday by logging on at http://www.galen.org/www.galen.org and clicking on Consumer Choice Matters. Archives are now located at www.galen.org/ccm_archives.asp. This is the flagship publication of Galen's new Center for Consumer-Driven Health Care and is written by its director, Greg Scandlen, an expert in Health Savings Accounts (HSAs). Read a letter of resignation from a National Health Service Surgeon, Mike Lavelle to chief executive Peter Coles at http://www.galen.org/healthabroad.asp?docID=813. What most physicians, who have a genuine concern and compassion for their patients, don't understand is that most bureaucrats and attorneys have none. Bureaucrats and attorneys actually welcome letters such as these from what they feel are non-compliant public servants who use up their budget resources. They may look in pity on a doctor who wishes to help patients and are greatly relieved when they leave.
The Heartland Institute, www.heartland.org, publishes the Health Care News, Conrad Meier, Managing Editor Emeritus. To understand how people who have an agenda set out to prove it nonscientifically, such as is the problem in health care, read about why the "Minnesota Team Abandons Effort to 'Prove' Global Warming" at http://www.heartland.org/Article.cfm?artId=17351.
The Foundation for Economic Education, www.fee.org, has been publishing The Freeman - Ideas On Liberty, Freedom’s Magazine, for over 50 years, with Richard M Ebeling, PhD, President, and Sheldon Richman as editor. Having bound copies of this running treatise on free-market economics for over 40 years, I still take pleasure in the relevant articles by Leonard Read and others who have devoted their lives to the cause of liberty. I have a patient who has read this journal since it was a mimeographed newsletter fifty years ago. To read another timeless classic on "The Growth of Government in the United States," go to http://www.fee.org/vnews.php?nid=2269.
The Council for Affordable Health Insurance, www.cahi.org/index.asp, founded by Greg Scandlen in 1991, where he served as CEO for five years, is an association of insurance companies, actuarial firms, legislative consultants, physicians and insurance agents. Their mission is to develop and promote free-market solutions to America's health-care challenges by enabling a robust and competitive health insurance market that will achieve and maintain access to affordable, high-quality health care for all Americans. "The belief that more medical care means better medical care is deeply entrenched . . . Our study suggests that perhaps a third of medical spending is now devoted to services that don’t appear to improve health or the quality of care–and may even make things worse." To read Merrill Matthews, PhD's testimony on "The Health Care Choice Act," go to http://www.cahi.org/cahi_contents/newsroom/article.asp?id=608.
The Health Policy Fact Checkers is a great resource to check the facts for accuracy in reporting and can be accessed from the preceding CAHI site or directly at www.factcheckers.org/. This week, read the Claim: The cost of increased utilization of services under the single-payer bill is offset by savings in administration at http://www.factcheckers.org/showArticle.php?id=530. Then read The Grand Illusion: The Perennial Quest for a Single-Payer Health Care System that Works at http://www.cahi.org/cahi_contents/resources/pdf/n127Singlepayer.pdf.
The Independence Institute, www.i2i.org, is a free-market think-tank in Golden, Colorado , that has a Health Care Policy Center, with Linda Gorman as Director. Be sure to sign up for the monthly Health Care Policy Center Newsletter at www.i2i.org/healthcarecenter.aspx. Read her latest newsletter at www.i2i.org/hcpcjune2004.aspx which includes a section on PC Medicine and Euthanasia. This week, read about how Colorado added 400 new laws to the 30,000 already on the books, creating new criminals since no one can even know all the laws. Thus, new law abiding citizens inadvertently become criminals. Log on at http://www.i2i.org/article.aspx?ID=1167.
The National Association of Health Underwriters, www.NAHU.org. The NAHU's Vision Statement: Every American will have access to private sector solutions for health, financial and retirement security and the services of insurance professionals. There are numerous important issues listed on the opening page. Join in the celebration of their accomplishments during their first 75 years and their discussion as to "What's Next?" at http://www.nahu.org/2005_Annual_Report.pdf.
Martin Masse launched the first libertarian webzine in Quebec , Le Québécois Libre, in February 1998, and has since been its publisher. Its name is a pun on the nationalist slogan "Québec libre": instead of promoting the sovereignty and freedom of an ever larger and tyrannical Quebec state, its goal was to promote the sovereignty and freedom of individual Quebecers. Its network of contributors and its readership quickly grew to include French-speakers in Europe , as well as English-speakers in North America and elsewhere. It remains the only real libertarian magazine produced anywhere in French, and its bilingual and multinational character allows it to reach readers all over the world. At the end of 2003, its archives contained over 2000 articles, which makes it one of the largest Websites in Quebec in terms of content available for free. QL’s mission is not a forum for debate, but to offer a wide range of analyses and commentaries so as to educate and inform its readers . . . and others interested in discovering new ideas and perspectives. In 2003, he translated into French Johan Norberg's international best-seller, In Defense of Global Capitalism. Please log on at www.quebecoislibre.org/apmasse.htm to review his free-market based articles, some of which will allow you to brush up on your French. You may also register to receive copies of their webzine on a regular basis. This month, read Musings by Maddocks, commenting on the fact that almost half of the arrests and prosecutions in the USA each year involve consensual crimes. Log on at http://www.quebecoislibre.org/020413_6.htm.
The Fraser Institute, an independent public policy organization, focuses on the role competitive markets play in providing for the economic and social well-being of all Canadians. Log on at www.fraserinstitute.ca for an overview of the extensive research articles that are available. You may want to go directly to their health research section at www.fraserinstitute.ca/health/index.asp?snav=he. To read the current report on comparing provinces and the states with the greatest economic freedom and those with the greatest wealth, go to http://www.fraserinstitute.ca/shared/readmore.asp?sNav=nr&id=673.
The Heritage Foundation, www.heritage.org/, founded in 1973, is a research and educational institute whose mission is to formulate and promote public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values and a strong national defense. The Center for Health Policy Studies supports and does extensive research on health care policy that is readily available at their site. This week, be sure to read what the long-term consequences are of "Adolescent Virginity Pledges, Condom Use, and Sexually Transmitted Diseases Among Young Adults" at http://www.heritage.org/Research/Welfare/whitepaper06142005_1.cfm.
The Ludwig von Mises Institute, Lew Rockwell, President, is a rich source of free-market materials, probably the best daily course in economics we’ve seen. If you read these essays on a daily basis, it would probably be equivalent to taking Economics 11 and 51 in college. Please log on at www.mises.org to obtain the foundation’s daily reports. Be sure to read the reality of economic theories of John Maynard Keynes, late economic adviser to the British Government "Stones into Bread: The Keynesian Miracle." You may also log on to Lew’s premier free-market site at www.lewrockwell.com to read some of his lectures to medical groups. To learn how state medicine subsidizes illness, see www.lewrockwell.com/rockwell/sickness.html; or to find out why anyone would want to be an MD today, see www.lewrockwell.com/klassen/klassen46.html.
CATO. The Cato Institute (www.cato.org) was founded in 1977 by Edward H. Crane with Charles Koch of Koch Industries. It is a nonprofit public policy research foundation headquartered in Washington, D.C. The Institute is named for Cato's Letters, a series of pamphlets that helped lay the philosophical foundation for the American Revolution. The Mission: The Cato Institute seeks to broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets and peace. Ed Crane reminds us that the framers of the Constitution designed to protect our liberty through a system of federalism and divided powers so that most of the governance would be at the state level where abuse of power would be limited by the citizens' ability to choose among 13 (and now 50) different systems of state government. Thus, we could all seek our favorite moral turpitude and live in our comfort zone recognizing our differences and still be proud of our unity as Americans. Michael F. Cannon is the Cato Institute's Director of Health Policy Studies. Read his bio at www.cato.org/people/cannon.html. Restriction to buy cold medicines may soon be a reality in Oregon. See http://www.cato.org/dispatch/07_22_05d.html#3.
The Ethan Allen Institute http://www.ethanallen.org/index2.html is one of some 41 similar but independent state organizations associated with the State Policy Network (SPN) http://www.spn.org/newsite/main/. The mission is to put into practice the fundamentals of a free society: individual liberty, private property, competitive free enterprise, limited and frugal government, strong local communities, personal responsibility, and expanded opportunity for human endeavor.
Hillsdale College, the premier small liberal arts college in southern Michigan with about 1,200 students, was founded in 1844 with the mission of "educating for liberty." It is proud of its principled refusal to accept any federal funds, even in the form of student grants and loans, and of its historic policy of nondiscrimination and equal opportunity. The price of freedom is never cheap. You may log on at www.hillsdale.edu to http://www.hillsdale.edu/newimprimis/default.htm.to receive Imprimis, their national speech digest that reaches more than one million readers each month. This month, read Bob Williams, President, Evergreen Freedom Foundation, discussing "Reforming Elections for the Preservation of Liberty" at http://www.hillsdale.edu/imprimis/. The last ten years of Imprimis are archived at www.hillsdale.edu/imprimis/archives.htm.

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Del Meyer

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Words of Wisdom

P. J. O'Rourke: When buying and selling are controlled by legislation, the first thing to be bought and sold are legislatures.

Mark Twain, (1866): There is no distinctly native American criminal class save Congress.

On This Date in History - July 12

On this date in history, Julius Caesar was born in 102 BC. Caesar built imperial Rome , created a new monarchy that lasted for hundreds of years and, in the end, fell prey to the same lust for power that let him to the top. He died in one of the most famous assassinations of all time.

On this date in history, Henry Thoreau was born in 1817 AD. Nearly two millennia later, Thoreau, who stood for all that was opposite to the ideas of Caesar, was born in Concord , Mass.