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 Networking to Restore Accountability in HealthCare & Medical Practice

 Tuesday, May 13, 2003

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In This Issue:
1. This Experiment We Call the United States–How Laissez Faire Evolved
2. HealthCare Prices Aren't Rising When Patients Pay the Bill
3. Our Monthly Review of the Twenty Myths of National Health Insurance
4. Physicians Should Not Be at the Public Trough
5. Medical Gluttony or Excessive HealthCare Costs
6. The MedicalTuesday.Network for Restoring Accountability in HealthCare & Government
7. The MedicalTuesday.Network for Restoring Patient Based Private Practice

The History of Private Versus Public Enterprise in the United States
Clifford F. Thies, Professor of Economics and Finance at Shenandoah University writes in the Cato Journal that at the founding, the United States were a bunch of experiments in self-government (note the use of the plural). Each state was very much free to determine its own destiny. Many directed economic development through state enterprises, loan guarantees, and direct subsidies, mostly in banks, canals and other transportation projects. Almost all of these interventions proved to be failures. These failures forced state governments to raise taxes and sell their money- losing ventures. In some cases, states were forced into default. Many then amended their constitutions to prohibit state enterprises and loan guarantees, and to restrict government borrowing. Thus, the railroad network of the country was developed almost entirely as private enterprise.

The history revisionists argued that the country was not founded, ideologically, on laissez- faire. Thies contends that revisionists misleadingly argue that the development of the economic potential of the United States was due to, or even helped by, state intervention. The fact is that the state interventions were disasters, out of which arose a principled commitment, embodied in amendments to state constitutions, to laissez-faire. Using state-level data, he finds that the states that overspent did not advance the development of their railroad networks; however, those that adopted amendments to their state constitutions restricting borrowing, investment, loan guarantees, and the like did.

Almost all of the states of the North became committed to laissez-faire. They opposed state-owned banks and supported balanced budgets and private enterprise. As a result, the North attracted labor and capital and grew in population and industry. Almost all the Southern states, however, remained committed to mixed economies, part slave and part socialistic, with many states having state-owned banks, weak currencies and liberal debtor-relief laws. In contrast to the grandiose projects undertaken by government, the railroad network was mostly developed by “the piecemeal system” whereby many small projects, each justified on its own prospects with a subsequent phase of consolidation in any direction, guides its extension beyond the limits first proposed, thus creating a nationwide network.

The entire article can be found at http://www.catoinstitute.org/pubs/journal/cj22n2/cj22n2-4.pdf. It would appear we have modern parallels with state intervention in HealthCare, Schools, Business and Amtrak. We may be headed towards the same disasters that occurred one and a half centuries ago, unless we allow the creativity and accountability of private HealthCare to flourish rather than be usurped by unaccountable state interventionists. Those that don’t understand history are doomed to repeat it.

HealthCare Prices Aren't Rising When Patients Pay the Bill
Although prices for health care services over the past decade have risen almost twice as fast as consumer prices, cosmetic surgery costs are actually lower in real terms. According to the National Center for Policy Analysis (NCPA), the key difference is in who pays the bill. Third parties (insurers, employers and government) pay most of the health care costs. But cosmetic surgery is almost always paid by the patient. Among the factors that keep cosmetic surgery prices low are the following:

* Cosmetic surgeons search for ways to be efficient; for example, they perform operations in their offices, rather in a hospital.
* Cosmetic surgeons often quote patients a package price, and Web sites offer competitive bids for surgical procedures.
* When procedures become pricey, substitute products quickly emerge; for example, laser resurfacing, Retin-A treatments, Botox or collagen injections, chemical peels and dermabrasion can replace the need for a costly facelift.

Devon Herrick reports that an explosion of medical bills being paid through third parties such as Medicaid (for the poor), Medicare (for the elderly) and private insurers is chiefly responsible for medical inflation in the modern era. Prior to the advent of Medicare and Medicaid, health care spending never exceeded 6 percent of gross national product; now it's at 14 percent.

National HealthCare Systems in the English-speaking World (No 14)
In his recent update of the “Twenty Myths about National Health Insurance,” John C Goodman, PhD, president of the National Center for Policy Analysis (www.ncpa.org), states that ordinary citizens lack an understanding of the defects of national health insurance and all too often have an idealized view of socialized medicine. For that reason, Goodman and his associates have chosen to present their information in the form of rebuttal to commonly held myths. See previous issues or the archives at www.MedicalTuesday.net for the summary of the first thirteen myths or www.ncpa.org for the original 21 chapters of the book.

Myth Fourteen:  A Single-Payer System of Health Insurance Would Improve the United States’ Ability to Compete in International Markets and Benefit American Labor.

Some critics have argued that high U.S. health care costs make U.S. products less competitive in the international marketplace and ultimately harm American labor. They assert that health care costs add to the price of American products and that a single-payer health insurance system would make American manufacturers more competitive by removing the cost in providing health insurance for their employees. Goodman contends that both assertions are wrong.

There is no evidence that the cost of private health insurance adds anything to the price of  goods. Health insurance is simply one element in a workers’ total compensation package. For many American workers, health insurance is a (non-taxable) fringe benefit provided in lieu of money wages. Fringe benefits for most American workers have grown from less than 19 percent of payroll in 1951 to nearly 42 percent today. This reflects the fact that workers, faced with taxes on wage income, have increasingly preferred to receive a larger portion of their compensation in the form of non-taxed benefits.

The fact that Americans spend a greater proportion of their income on health care and a smaller proportion on other goods and services does not put us at a competitive disadvantage relative to other countries. These international differences merely reflect consumer preferences and consumer product prices.

However, a single-payer health insurance system would affect our ability to compete in international markets. That is because such insurance involves not only the purchase of health care, but also a redistribution of income among producers in different industries. On the whole:

• A single-payer health insurance system would impose extra taxes on U.S. exporting industries and use the proceeds of those taxes to subsidize other industries.
• The industries that would receive subsidies contribute mostly to domestic rather than international markets.
• The industries that would be penalized are the manufacturers that provide most of our exports.

Consider, for example, the impact national health insurance programs have had on international competitiveness among European countries. In these countries, national health insurance has not improved the ability to compete in international markets. Instead, it has reduced that ability in some countries and contributed to high unemployment by increasing the cost of labor. For example, in addition to all taxes levied to finance non-health care expenditures:

• Germany’s sickness insurance funds are financed by compulsory contributions of 13.5 percent of payroll, shared equally by employers and employees.
• In France, in addition to a payroll tax on wages of 12.8 percent for employers and 0.75 percent for employees for health insurance, employees pay an additional 7.5 percent of all income, including interest, dividends and other earnings, as a general social contribution, most of which goes to health insurance.

If a single-payer system were introduced in the United States, we can assume that it would impose similar tax burdens on U.S. industries. Far from making U.S. producers more competitive, a single-payer health insurance system would likely raise production costs relative to foreign rivals. It would make industries less competitive by increasing our tax burden to levels found in European countries such as Britain and Germany. The U.S. prosperity and competitiveness in international markets is in large measure attributable to this country’s comparatively lower tax rates–on both employees and employers. In those countries that rely on single-payer national health insurance schemes, high taxation can be directly linked to the financial burdens of public-financed health care. If the United States were to adopt a single-payer health insurance system, our tax burden would approach that of these countries. That additional burden would have a major impact on our ability to compete.

Physicians at the Public Trough–But Should They Be
Headlines indicate that the state Senate and Assembly last week passed a package of bills that will cut $3.6 billion from the state’s record budget deficit, which has been estimated to be as much as $34 billion over the next 18 months. Though $316 million of the legislature’s proposed cuts will come from health care, the CMA (California Medical Association) has thus far been successful at keeping Medi-Cal physician reimbursement, optional Medi-Cal benefits and Medi-Cal eligibility off the chopping block.

The CMA along with a coalition of more than 70 consumer, patient, and provider advocacy groups will continue to fight to stop the governor's proposed $2.7 billion in Medi-Cal cuts. Governor Davis will revise his budget proposal on May 15, after the Department of Finance has seen the state’s updated income report. The proposal is expected to contain almost $2 billion in  additional cuts or tax increases.

When physicians join consumers and the indigent at the public trough funded by taxpayers, can we still have a civil society?

Medical Gluttony or Excessive HealthCare Costs
Excessive medical costs come in all forms. Last month I had a patient who I thought had, among other things, early diabetes. She was upset that I had the temerity to suggest that she had such a disease. I determined this after learning that both of her parents had diabetes and therefore, at the very least, she had genetic diabetes. Since all of her siblings also had diabetes, I felt a glycohemoglobin determination would perhaps make the diagnosis. When the test proved elevated, it suggested that her average blood sugar over a 24-hour period was about 140, even though her fasting blood sugars were normal . Because she was asymptomatic, I suggested diabetic counseling, dietary management and monitoring. She was unhappy with the diagnosis and demanded to see an endocrinologist, which I authorized. When his report confirmed my diagnosis and suggested therapy, she demanded a second opinion. I explained the endocrinologist was just that. After several more visits, I realized this lady would never be happy no matter how many opinions were obtained, and since she’d already tripled her health care costs, I decided to make the tough decision: I asked her to call her HMO and get reassigned to another physician. After a few months, she wanted to return stating she’d not since received as thorough an examination. As a matter of policy, I do not let former patients return. Human beings do not change all that much. She stated that she’d seen three doctors in the past year. In addition to the two examinations by the endocrinologist and myself, her health care costs increased by 500 percent.  No health care system including single-payer medicine will ever be able to control such patient costs. Control will only occur when she obtains her health care in the Medical MarketPlace where she will pay, e.g. a 30 percent co-payment, for her excessive outpatient medical demands. Only then will she put these demands in perspective. After one unnecessary consultation, she will begin to connect the dots between costs and benefits.

The MedicalTuesday Network Recommends the Following for Their Efforts in Restoring Accountability in HealthCare, Government and Society:

• 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 review in this newsletter monthly, issues a weekly Health Policy Digest, a health summary of the full NCPA daily report. You may log onto www.ncpa.org and register to receive one or more of these reports.

• The Mercatus Center at George Mason University is a strong advocate for accountability in government. Nobel Laureate Vernon L Smith, PhD, has joined its Economics faculty. Please log on at www.mercatus.org to read the government accountability reports–their fourth annual Performance Report Scorecard just became available last week. The Mercatus Center at George Mason University ranked 24 federal agencies’ mandated Results Act (GPRA) disclosures, based on clarity and usefulness for policymakers and the public. Topping the chart were the perennial leaders, the Departments of Labor, Transportation and Veterans Affairs, joined by the Small Business Administration (SBA) that tied with Veterans for third place by jumping up 13 places since last year’s rankings. The Federal Emergency Management Agency (FEMA) and Department of State also won mention among the most improved agencies, but they did not rise to the top tier.  Disappointingly, most in need of improvement were the Departments of Defense, Health & Human Services and Energy, along with the U.S. Agency for International Development (USAID), which fell from top ranking four years ago to dwell near the bottom of the list for two successive years.
 The analysis arrives at a crucial moment for the U.S. Government, with revenues down and budgets crunched, recent war and reconstruction on the horizon, and domestic programs squeezed by homeland and national security efforts.  The quality of information contained in agency documents will be pivotal as Congress and the Administration make funding decisions based on outcomes, says report author Maurice McTigue, QSO, a Distinguished Visiting Scholar, a former government minister in New Zealand, and now director of the Mercatus Center’s Government Accountability Project. “The opportunity costs at a time like this are tremendous. If one government agency can deliver results at lower unit cost than another program attempting the same public benefit, policymakers should have that information.” He feels he’s having success with our MBA President who understands efficiency issues. Mercatus scholars identify which agencies are making progress and which have reached plateau or regressed in these three key areas: transparency, documenting tangible public benefits, and demonstrating forward-looking leadership.

• The Galen Institute, Grace-Marie Turner President and Founder, has a weekly Health Policy Newsletter to which you may subscribe by sending an email to gracemarie@galen.org. In her current issue she cites Michael Greve of the American Enterprise Institute who argues that the fiscal crisis facing many states is not a revenue crisis, as the National Governors Association asserts. Instead, he says it is a systemic problem in "cooperative" federalism where states cannot turn down federal matching funds and thus increase spending in times of economic prosperity. In Medicaid, this means states expanded optional benefits and eligibility in the 1990s beyond what would be sustainable in slower economic times. Instead of giving states more money, Greve suggests separating federal and state functions by having the federal government take over long-term care and prescription drugs in exchange for allowing all other federal payments to states for Medicaid to be capped.  The full article can be found at  www.aei.org/publications/pubID.17053/pub_detail.asp.

• Greg Scandlen, whose research at the NCPA found in his Health Policy Comments we used frequently over the past year, has been named the Director of the new “Center for Consumer Driven Health Care” at the Galen Institute. He has a Weekly Health News Letter: Consumer Choice Matters. You may subscribe to this very informative and well-outlined health care newsletter by logging onto www.galen.org or reading his current newsletter by clicking on Consumer Choice Matters on this website. Writing in the May/June issue of Contingencies, Definity's  head actuary David Tuomala makes "The Case for Consumer-Driven  Health Care." He says all this activity is "an attempt to build a more rational model in health care." He disagrees with those who "suggest that health care is fundamentally different from other parts of the economy, and that the usual supply and demand considerations don't apply." Instead, the key transaction occurs between a provider of care and a patient. This is where supply and demand plays out, and this is where attempts at third-party control break down. He argues that consumer-driven models such as "personal care accounts" that require a financial transaction at the point of care will be more effective than defined contribution approaches that require consumer judgment only at the time of enrollment. He uses the vision care system as an illustration of a point of care payment system. He says this system tends to be highly competitive, price transparent and convenient for consumers. "Even when expensive new technology (such as Lasik surgery) becomes available, a different pattern emerges… than elsewhere in health care," with prices dropping over time. He adds, "Many of the problems we face in health care today can be traced to the prevalence of the third-party payment system itself." http://www.contingencies.org/mayjun03/commentary.pdf.

• Martin Masse, director of the Montreal Economic Institute, is the publisher of the webzine: Le Québécois Libre. Please log on at www.quebecoislibre.org/apmasse.htm to review his free market-based articles, some will allow you to brush up on your French. You may also register to receive copies of his webzine on a regular basis. This week Ralph Maddocks writes about “The Rights and Freedoms in the USA: a Descent into the Abyss.” Few of us read government regulations, their prose being hardly enchanting in the best of times. (Did you know that the U.S. Federal Government regulations on the sale of cabbage contains 26,911 words.) It is this ignorance which prevents most of its citizens from being fully aware of the steadily growing loss of liberty in the USA. You may read the entire article at http://www.quebecoislibre.org/030510-6.htm.

• 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 with considerably less bias. Please log on at www.mises.org to obtain the foundation’s daily reports. You may also log onto 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 http://www.lewrockwell.com/rockwell/sickness.html.

• Hillsdale College, the premier institution for producing graduates that understand Free Market accountability, receiving no federal subsidies placing them at a monetary disadvantage to all other colleges and universities, recognizes that the price of freedom is never cheap. Plan to attend one of the annual week-long von Mises Seminars which are now held every February. You may log onto www.hillsdale.edu to register for one of their famous Shavano Institutes or register to receive Imprimis, their national speech digest, that reaches more than one million readers each month. This week Sky Dayton, Founder & Chairman of EarthLink, discusses the Internet and how it affects Education (Ideas have consequences and now can travel thousands of miles reaching millions of people in a second.), the Media Business that drops dozens of his industry and news stories in his inbox each day (The old media is out of touch with the rest of the world and has difficulty dictating ideas and culture, while the internet is less expensive, increases competition, provides a two-way exchange of ideas and reaches billions of people connected.) and Civilization, which advances when it becomes easier to communicate (Every advance in civilization was preceded by an advance in communications technology–from the earliest invention of language to Johannes Gutenberg’s development of the printing press in the mid-1400s with huge changes in Western culture, to the ease of communication on the Internet which he believes will decrease prejudice, increase religious freedom, and allow nations to interact with each other billions of times a day and learn of each other’s cultures, customs, religions, dreams and daily life.). He feels Saddam Hussain, who was so adamantly opposed to the Internet, used it but wanted to keep his people in the dark and feared their communicating with the world. To read the abridged speech, see http://www.hillsdale.edu/newimprimis/default.htm. The last ten years of Imprimis are archived at http://www.hillsdale.edu/newimprimis/archives.htm.

• Robert J Cihak, MD, & Michael Arnold Glueck, M.D, write an informative Medicine Men column that has recently moved to NewsMax.  Please log on at http://www.newsmax.com/pundits/Medicine_Men.shtml or subscribe by sending Bob an email at rcihak@techline.com. The current issue on the Painful DEA, the Drug Enforcement Administration (DEA) inflicting pain on both patients and doctors–and what this symptom might mean. Way back during the so-called Progressive Era a century ago, a de facto alliance of physicians and bureaucrats undertook to regulate the possession and distribution of drugs, especially those that affected the sensation of pain. Asa Hutchinson, former DEA director, speaking to a meeting of the American Pain Society on March 14, 2002, told doctors: "... we trust your judgment. You know your patients. The DEA does not intend to play the role of doctor. Only a physician has the information and knowledge necessary to decide what is appropriate for the management of pain in a particular situation. The DEA is not here to dictate that to you. .... We never want to deny deserving patients access to drugs that relieve suffering and improve the quality of life."  But Cihak and Glueck then ask us to consider what the drug enforcers actually do: 1. Dr. Deborah Bordeaux of South Carolina was convicted under a "drug kingpin" statute carrying a mandatory minimum sentence of 20 years, even though she'd worked only two months in a temporary position treating chronic pain and other ailments. 2. The late Dr. Benjamin Moore, working briefly in the same clinic, pleaded guilty although convinced of his own innocence, and then committed suicide rather than testify against others. 3. Dr. Jeri Hassman of Arizona, who had the largest pain practice in Tucson, is being threatened with a 28-year prison term, apparently because a small fraction of her patients used prescriptions in unauthorized ways. For the full story about the further criminalizing of medical practices, see http://newsmax.com/archives/articles/2003/5/6/115807.shtml.

MedicalTuesday Supports These Efforts in Restoring Accountability in Medical Practice by Restoring the Doctor & Patient Relationship Unencumbered by Bureaucracy:

• PATMOS EmergiClinic - www.emergiclinic.com where Robert Berry, MD, an emergency physician and internist, provides prompt care for many of the injuries and illnesses treated in Emergency Rooms at a fraction of their cost as well as an internal medicine practice. Congratulation are in order for his Op-Ed piece in The Johnson City Press wherein he rebuts Jack Anderson who wrote, “The logical answer to the nation’s medical woes is a national system that would be publicly financed like Medicare.” Mr. Anderson wrongly concludes that health coverage equals health care. If anything, Dr Berry contends, it makes health care less available and less accessible. To read the entire article, go to http://www.johnsoncitypress.com/LettersToEditor.asp#2003.

• Dennis Gabos, MD, President of the Society for the Education of Physicians and Patients (SEPP) www.sepp.net, for making efforts in Protecting, Preserving, and Promoting, the Rights, Freedoms and Responsibilities of Patients and Health Care Professionals, with a special page for our colleagues in nursing;

• Dr Vern Cherewatenko for success in restoring private-based medical practice which has grown internationally through the SimpleCare model network, www.simplecare.com. He now reports that more than 1500 medical professionals and 15,000 patients are engaging in PIFATOS (Payment In Full At Time Of Service). The time is now to return medicine to patients and doctors by charging fair prices, getting paid directly, and teaching patients to secure an affordable major medical policy to cover catastrophic expenses.

• Dr David MacDonald has partnered with Ron Kirkpatrick to start the Liberty Health Group (www.LibertyHealthGroup.com) to assist physicians by helping them to control their medical benefit costs for their staff and patients. He is available to speak to your group on a consultative basis. You may contact him at DrDave@LibertyHealthGroup.com.

• Christopher Jones, MD, President of HealIndiana, a supporter of market-based medicine, www.HealIndiana.org, whose mission is to educate people about health care and have open discussions about any health care alternative.

• The Association of American Physicians & Surgeons, (www.AAPSonline.org) The Voice for Private Physicians Since 1943,  representing physicians in their struggles against bureaucratic medicine and loss of medical privacy. They have renamed their official organ the Journal of Physicians and Surgeons, and named Larry Huntoon, MD, PhD, a neurologist in New York, as the Editor-in-Chief. The AAPS is holding it’s quarterly  meeting in Seattle on Saturday, May 31, 2003: Thrive–Not JUST Survive III: "Shark Proof Your Practice." This is a Practice Management & Asset Protection Workshop with eight CME credits. Because of HIPAA criminalizing so much of what we do, there has been renewed interest in these meeting that resulted in all recent meetings been sold out. You may register on the website above.

Stay Tuned to the MedicalTuesday.Network and Have Your Friends Do the Same
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Del Meyer

Del Meyer, MD, CEO & Founder
DelMeyer@MedicalTuesday.net
www.MedicalTuesday.net

In USSR every Soviet citizen had the right to Health Care. In 1971, it became a “Right to Health.” During that time, medicine deteriorated. Then the people’s health deteriorated. Then the right to health care became a total political euphemism. Then the political system collapsed. The health care infrastructure had disappeared. . . . We hope our children and grandchildren won’t have to repeat this statement–only substituting US for USSR!