HEALTHPLANUSA . NET
Community For Affordable Health Care
Vol V, No 1, April, 2006
Utilizing the $1.4 Trillion Information Technology Industry
To Transform the $1.7 Trillion HealthCare Industry into Affordable HealthCare
In This Issue:
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Article: First Principles: Poison
Pill, by Clive Crook
Big, politically ugly changes to
In every rich country, it seems, people expect too much of their health-care systems. That is why, in their different ways, they are disappointed—and why they always will be. Citizens everywhere desire unrestricted access to state-of-the-art technologies. Increasingly, they insist on choice and control, too. Yet they are unwilling to pay what those things cost. People demand as a right the best health care money can buy, delivered in the way that best suits them, expense be damned. All that, and the price must be affordable.
Nowhere can this self-contradictory demand be
satisfied. Everywhere, therefore, health care presents itself to governments as
their most difficult nonsecurity challenge. In the
Consider this: the government increases its spending on Medicare by tens of billions of dollars a year (as the administration did with its recent prescription-drug reform) and the beneficiaries are up in arms about it. Yes, the execution of the scheme was botched. Still, where else could generosity on such a scale actually arouse hostility, to say nothing of its apparent failure to buy votes? When Americans are asked what they think about health care, most say they like the quality of service (the government must do nothing to compromise those high standards); they also complain that health care is far too costly (the government must act).
you look, you find no plainly superior system. Countless variants—from the
mainly government-run, single-provider, single-payer model at one extreme to
course, the world's national health systems have more in common than you might
think. Almost all of them are hybrids, mixing public and private. In statist
is a basic principle: if costs are to be better controlled, some medical
services must be either forgone or denied. The key question: Who decides?
Top-down rationing—as in
enormous extra cost doubtless saves or significantly improves many lives. It
supports a remarkable pace of innovation. And nothing is wrong in principle
with a country spending proportionally more of its income on health care as it
gets richer. But the system includes plenty of waste. It delivers services that
cost more to provide than they would be worth to the patient if the patient
were paying. And millions of Americans with low-paying jobs have no insurance:
their employer does not provide it, they cannot afford to buy their own, and
they are not poor enough to qualify for Medicaid. So
The administration and the economists it listens to want to control costs by mobilizing consumers. If the tax advantage for employer-provided insurance were removed or offset, and if more people bought their own policies, Americans would lean more toward plans with low premiums and plenty of cost-sharing (high deductibles and high co-payments). In this way, health insurance would be more like real insurance—a protection against serious financial risk—and less akin to a utility payment plan. Patient-consumers would have the incentive they lack at present to force costs down. The administration has proposed some reforms with this notion in mind.
This kind of approach draws two objections—one largely false (though widely advanced), the other valid. The false objection is that patients are too ignorant to be intelligent consumers of medical services. It is all too complicated, this argument goes. Necessary health expenditures would be cut as well as unnecessary ones. Some even question whether there is any such thing as an unnecessary health expenditure. It is not as though people go to the doctor for fun, they point out; people do it only when they have to. If you restrict access by directly confronting people with the costs, their health will suffer.
such evidence as there is says that when patients have to pay a direct share of
health-care costs, they do buy fewer medical
services—but also that the effect of this on health outcomes is small. This was
the principal finding of the RAND Health Insurance Experiment of the 1970s and
early 1980s, still the largest health-policy study ever conducted in the
given a reason, buy wisely. Is that so surprising? The truth is, buyers are at
an informational disadvantage to sellers almost every time a deal—any deal—is struck.
But they understand this, do their homework (if the transaction justifies the
effort), and find ways of mitigating the problem, whether they are buying a
car, a home, a college education, or an operation to remove a mole. Health-care
professionals have a vested interest (15 percent of the gross domestic
product) in insisting that health is special. In this respect it is not, or at
any rate not as different as the argument implies. In all likelihood, making
The whole thing is political poison, of course, but as costs keep rising, something will eventually have to give. The present system is on course to be unaffordable and to let too many people down, and the closer you get to the single-payer socialized alternative, the less appealing it looks. Consumer-driven health care, supplemented with generous subsidies for those with low incomes, is at least worth a try.
To read the article, (subscription required) go to www.theatlantic.com/doc/prem/200604/crook.
Any Entitlement Is Permanent Because It Is A Poison Pill That Congress Won’t Swallow
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2. In the News: You Can Be Too Careful by Brian Doherty
How the government’s new corporate accounting rules impede efficiency and stifle innovation – Reason
Adelphia founder John Rigas got 15 years (a life sentence for the 80-year-old executive), and former WorldCom CEO Bernard Ebbers got 25—two victories in the government’s post-Enron wave of corporate fraud prosecutions. Meanwhile, the Enron case itself has crawled along, with few significant victories and a handful of defeats for federal prosecutors. The trials of former Enron chairman Kenneth Lay, president Jeffrey Skilling, and chief accounting officer Richard Causey are set to begin in January.
New laws were not necessary to prosecute those
executives. Still, Congress responded to the scandals that destroyed or hobbled
their companies by passing the Sarbanes-Oxley Act. Signed into law by President
George W. Bush on
Sarbanes-Oxley, a.k.a. SarbOx, is a complicated law that has the business world abuzz with annoyance and anxiety. Among other things, it requires that CEOs and chief financial officers certify, under penalty of 20 years in prison and $5 million in fines, that their internal financial controls are in order and that they lead to accurate reports. It says executives must provide “reasonable assurance” that everything is kosher, a provision that is likely to invite litigation as well as prosecution. The law created the Public Company Accounting Oversight Board, adding yet another level of oversight to a profession already monitored by the Securities and Exchange Commission, the Fair Accounting Standards Board, and the Justice Department. The board is ostensibly private, but has the power to force accounting firms to pay both fees for its operations, and fines for disobeying its edicts. SarbOx also requires that auditors (though not necessarily auditing firms) switch out every five years, and it prohibits auditors from jumping ship to executive positions at companies they have just audited.
Critics in academia and business journalism—and many from the corporate world itself, most of whom are reluctant to talk on the record and thereby show “bad faith” regarding the law—have many complaints about SarbOx, from its picayune requirements to its overall cost. While all such guesstimates should be taken with a grain of salt, one financial consulting firm, the Johnsson Group, has put the 2004 costs of SarbOx compliance at $15 billion. The critics also argue that the law’s benefits are apt to be small. . . .
SarbOx probably won’t cripple the American economy, any more than the Clean Air Act or the Americans with Disabilities Act did. But it’s bound to create bad incentives and unintended consequences. Far from increasing the efficiency of capital markets, it will discourage some businesses from going public, since most of its provisions do not apply to privately held companies; will encourage some now-public companies to go private; and will keep some foreign companies out of the U.S. stock market.
According to a survey of companies with under $1
billion in annual revenue done by national law firm Foley and Lardner, SarbOx has more than tripled the average annual regulatory
costs of being a public company in the
The costs of SarbOx compliance, while not driving anyone out of business, will siphon revenues toward legal and accounting work. That drain may, in the words of Forbes’ Rich Karlgaard, “succeed in stopping the next Enron, but…crib-kill the next Cisco, Microsoft and Starbucks” by leaving them less capital with which to expand.
To get a better sense of how Sarbanes-Oxley is affecting American businesses, Reason Senior Editor Brian Doherty asked four people familiar with the law’s consequences to explain what the new rules mean in practice. . . .
As a Sarbanes-Oxley compliance consultant, Stephen Stanton is a man whose self-interest should encourage him to praise the law. But he sees little good coming from it, aside from added income for consultants and auditors.
Charles Wilson is chairman of the board of Trio-Tech
International, a California-based semiconductor testing company with about 500
employees and a market capitalization of $12 million.
To read the other responses and the entire original article, please go www.reason.com/0601/fe.bd.you.shtml.
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3. International Medicine: In The NHS The Maximum Waiting Period Of Six Months Becomes The “Minimum Waiting Period” To Save Money.
the doctors' fault the NHS is in financial trouble, says Hewitt
By Melissa Kite and Beezy Marsh (Filed:
Patricia Hewitt blamed doctors for holding up National Health Service improvement yesterday as she announced that hospitals are to be rated on their financial performance.
The Health Secretary said part of the problem facing the health service was "clinical resistance" to change.
Tomorrow a Government watchdog the Healthcare Commission will announce a two-tier rating system that will see hospitals given separate scores for clinical care and management of resources.
The Sunday Telegraph can also reveal that NHS staff may have their pay rises delayed by the Government to help to ease the financial crisis in the NHS. Sources said the Treasury and Department of Health were considering a "staged" pay award, which would allow them to put off payment until later in the year.
An announcement on the pay deal for 2006-7 was postponed last week following the departure of the NHS chief executive Sir Nigel Crisp after it emerged that debt is likely to top £800 million this year.
More evidence of the worsening situation came yesterday when Eastbourne Downs primary care trust ordered the town's hospital not to operate on any patient who had not been waiting six months, the maximum allowed, making it the latest to introduce in effect a "minimum waiting time" to save money.
Ms Hewitt said the best hospitals were those where "you have got the clinicians and the managers working well together". She said: "Behind every good clinical team is a good manager. Patient care goes hand in hand with good finance." . . .
Ms Hewitt appeared to acknowledge there was a problem with pay. She said: "It's been clear for a while that 'Agenda For Change' and the new GP contracts are all costing us rather more than we anticipated." . . .
The Chancellor, Gordon Brown, has already told the Pay Review Body - the independent body that makes recommendations on NHS pay - that he wants awards to be capped at two per cent this year, just above inflation.
The British Medical Association is seeking a minimum pay rise of 4.5 per cent for doctors this year.
To read the entire article, please go to www.news.telegraph.co.uk/news/main.jhtml?xml=/news/2006/03/12/nhs12.xml
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By Ross Clark, Melissa Kite and Beezy Marsh, (Filed:
Hewitt was confined to barracks as news of the parlous state of NHS finances
A meticulously composed minister, Ms Hewitt was making the most of an unenviable task: how to explain to journalists why health service deficits were running at a record £800 million and why Sir Nigel Crisp, the chief executive, had just taken "early retirement".
miles away in
The trust's other main hospital, the Royal Cornwall Hospital in Truro, had just written to 200 patients to warn that their operations were to be postponed as part of an attempt to solve a cash shortage of £8.1 million this financial year.
For Cornwall's sick and infirm, more delays and cancellations in treatment inevitably lie ahead and it is the same story across the country, where dozens of small hospitals have either been closed or earmarked for closure, wards have been mothballed and training slashed.
Had this been happening against a background of Government cuts it might be easier to understand. Yet, money has been lavished on the NHS in recent years. Since Gordon Brown announced in his 2002 Budget that he was putting a penny on National Insurance to fund health spending, the NHS budget has risen from £65 billion to £87 billion, an increase in real terms of 7.5 per cent a year. British health spending - NHS and private health - has grown rapidly from 7 per cent of GDP in 1997/98, and is on course to reach the 9.8 per cent of GDP spent by the French by 2008.
So where has all the extra money gone? Much of it, according to the King's Fund, the independent think-tank, has gone into the pockets of doctors and nurses. In 2004/05, the fund claims, an extra £5.086 billion was spent on hospital and community health services (ie most NHS expenditure excluding GPs' surgeries), a 12.4 per cent rise on the year before. Yet, of this hefty increase, a mere 2.4 per cent found its way into new beds and extra operations. A massive 27 per cent went on pay rises and 29 per cent was spent on "rebasing" the pensions of NHS staff, effectively shifting the liability from the Treasury to the NHS.
to Laura Mason, of the Royal Cornwall Hospitals' Trust, new consultants'
contracts have added £1 million to the wage bill this year, and Agenda for
Change, which established national pay scales for nursing and other staff, has
added a further £2.5 million. The trust's funding from
Ms Hewitt went on to blame "clinical resistance" to change among some doctors, echoing Tony Blair's remark in a speech in 1999 that he had "scars on my back" from attempting to reform health.
cited the case of John Petri, an Italian orthopaedic
surgeon who has spent most of his career in
While he operated in one theatre, another patient was prepared in a second. He moved on to the second patient, leaving a junior to finish the first. By the time the second operation was nearing completion, a third patient was waiting for him in the original theatre. The system enabled him to perform up to five hip and knee replacements in a shift, compared with one or two carried out by surgeons who use one theatre. Yet it faltered, said Ms Hewitt, because "other surgeons in that hospital were not particularly keen to adopt the same practice".
Hewitt's complaint certainly won't wash with surgeons down at the
the very introduction of PCTs, has played a part in the financial debacle. Inspired by
World Health Organisation dogma that health care is best
administered through public bodies that cover about 100,000 people, PCTs were supposed to provide a missing element of localism
into the bloated monolith that is the NHS. Instead, they have managed to upset
more local people than a
Suffolk PCT, for example, has proposed the closure of two hospitals in
thing is sure: the Public Finance Initiative (PFI) deals which have been used
to construct many new hospitals are not going to save money. The
When, in 2008, spending matches that of the French health service, you can be sure that Ms Hewitt, if she is still in office, will herald it as a great success. Nurses and doctors will be happily spending their extra wages. Whether we will really be healthier for it all, or whether the rapid increase in NHS spending is based on a false premise that more money equals better health, is another matter.
To read the entire article, please go to www.news.telegraph.co.uk/news/main.jhtml?xml=/news/2006/03/12/nhs112.xml.
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Christopher Booker's notebook (Filed:
Hospitals must go, to pay for the managers to close them
Two weeks ago today, when I went for a cataract operation at a small community hospital in Westbury, Wiltshire, I little realised I was walking into the centre of a major national scandal. Originally referred to a large general hospital, I had been told the operation might not be possible for a year. On questioning this, I was told that if I went to the special eye unit at Westbury, I could be fitted in just two weeks later.
Arriving at the hospital's clean modern buildings on a Sunday afternoon, I was so struck by the friendly atmosphere and the speed and efficiency with which the operation was completed that I observed that Westbury seemed an absolute model of everything the NHS should be. I was then told that, thanks to a shock decision by West Wiltshire Primary Care Trust (PCT), the hospital was being closed down - starting the following week with the removal of its 12 elderly in-patients. The rest of its wide range of services would soon follow.
What made this decision incomprehensible, as Westbury's MP Dr Andrew Murrison pointed out when he raised it in Parliament, was that it flies right in the face of Patricia Hewitt's recent White Paper on community care. Not only had Mrs Hewitt stated that "community hospitals should be retained if needed and wanted by the communities they serve", she urged "Primary Care Trusts to rethink their closure plans, particularly when they were being put forward as a cost-saving measure. Community facilities should not be lost in response to short-term budgetary pressures".
Westbury is far from alone. Such is the spate of closures and cutbacks taking
place all over the country, in a bid to reduce the NHS's
current £800 million deficit, that some 90 of our 350 community hospitals are
threatened, according to Chant (Community Hospitals Acting Nationally
Together), a body formed to fight the closures. In
What makes this truly scandalous are the reasons for the closures. Since 1999 the Government has almost doubled its NHS spending, from £40 billion to £76 billion. But 80 per cent of this additional money has gone, not on expanding health care, but on a massive inflation in salaries (with many GPs now said to be earning £125,000 a year); on the increased cost of drugs and compensation claims; and on the soaring cost of interest on PFI building schemes.
One of the biggest increases has been the 66 per cent rise in the number of health service "managers", in what is now said to be the third-largest state-run organisation in the world, after the Chinese army and the Indian railways. Yet it is these bureaucrats who are deciding to close down nearly a quarter of our community hospitals, to meet a deficit which has resulted not least from their own recruitment: precisely the "short-term budgetary pressures" which Mrs Hewitt insists must not be made an excuse for closing community hospitals.
[In] Westbury where, last Sunday, in what was described as a "dawn raid", the remaining in-patients, elderly and confused, were summarily removed from their beds, without breakfast, to be sent to other hospitals. Only one remained - Mena Rising, terminally ill with cancer and too weak to be moved. She died on Thursday.
Such inhumanity should prompt Mrs Hewitt to intervene now, to halt a disaster which makes such a mockery of her fine but, it seems, empty words.
To read the original article, go to www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/03/12/nbook12.xml.
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6. Medical Myths: HealthCare is Free in
More doctors, but care isn't free for the
French and Germans (Filed:
Public health is financed from taxes and compulsory social-health insurance contributions from employers and employees. Tax is "ring-fenced" from pay packets and paid into the national health service budget.
Compulsory sickness insurance funds cover 99 per cent of the population. People are affiliated to a health-insurance scheme on the basis of their professional status and place of residence. The insurers are non-government, non-profit agencies and employers pay a premium for them.
Seventy per cent of a person's health-care costs are covered by social security. To cover the remaining 30 per cent, they pay their "mutuelle", an annual premium equivalent to £1,500 per year that guarantees them a single room in hospital. Employers bear a heavy part of the cost.
Patient contributions are taken for visits to the GP, which costs about £13 up front but with 70 per cent of the cost refunded. Prescriptions are also paid for but up to 65 per cent of the cost is refunded by the state.
Dental care is not covered by the public health scheme.
There are about 450 so-called sickness funds, or
public-health insurance companies, which the employee and employer must pay
into to fund
Contributions are shared equally between the insured and their employers. The average contribution rate is 13.5 per cent, so the employee will contribute 6.75 per cent out of their pre-tax income and the employer will pay the same amount in addition to wages.
Everyone has the right to choose which fund they want to join. . .
To read the entire article, please go to www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/03/12/nhs412.xml.
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Rick Santorum’s Republican crusade for big government. By Jonathan Rauch for Reason – Free Minds and Free Markets
In 1960 a
Republican senator from
Rick Santorum, a
second-term Republican senator from
Above all, it is worth noticing because, like Goldwater’s Conscience, it lays down a marker. As Goldwater repudiated Dwight Eisenhower and Richard Nixon, so Santorum repudiates Goldwater and Ronald Reagan. It’s now official: Philosophically, the conservative movement has split. Post-Santorum, tax cutting and court bashing cannot hold the Republican coalition together much longer.
As a policy book, It Takes a Family is temperate. It offers a healthy reminder that society needs not just good government but strong civil and social institutions, and that the traditional family serves essential social functions. Government policies, therefore, should respect and support family and civil society instead of undermining or supplanting them. Parents should make quality time at home a high priority. Popular culture should comport itself with some sense of responsibility and taste . .
Goldwater and Reagan, and Madison and Jefferson, were saying that if you restrain government, you will strengthen society and foster virtue. Santorum is saying something more like the reverse: If you shore up the family, you will strengthen the social fabric and ultimately reduce dependence on government . . .
To read the entire article, please go to www.reason.com/0512/cr.jr.goodbye.shtml.
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8. What's in Store for
What can be done to aid the recovery of
the [NHS] system? (Filed:
The chief economist for the think-tank, the King's Fund, a charity that works to improve health care through research and policy analysis
"The NHS needs to look at how long patients actually mind waiting for their operations. It has achieved a target of maximum waits of six months, but now has a new target of 18 weeks' waiting by 2008. That could be very difficult to achieve.
"With the current financial situation, we may have to see patients waiting up to the maximum six-month limit in order to save money for the NHS. The Department of Health is going to have to start thinking about relaxing some of the targets it has set the NHS."
The head of employment relations at the Royal
"The Government needs to look at what has happened to the NHS and put the pieces of the jigsaw together to solve the current financial problems.
"The NHS has been stretched to the limit by a range of Government initiatives without the capacity to fulfil them. It's an issue of not getting to grips with finance before launching new schemes.
"There is a hugely expensive new computer system, which has been fraught with difficulties, spiralling drug costs and private finance initiatives to build new hospitals, which have locked the NHS into debts for years to come.
"Restructuring the NHS needs to be thought out carefully so that we don't face another round of upheaval in another year or two. How much is it costing the taxpayer to recruit all these new boards and chairmen?"
Dr Jonathan Fielden
The deputy chairman of the British Medical Association consultants' committee
"There has to be an appreciation that there is a limited amount of money in the NHS, so it can't all be delivered 'now'.
"When politicians impose a significant number of targets to be delivered in unreasonable time scales, things start to fall down. We are already stumbling into a situation where the only way to sort out the NHS is the blunt tool of finance.
"There are no easy answers on how to 'fix' the NHS. That means the time is right now for a proper public debate, led by the profession, about what we actually want from the NHS for the next 15 to 20 years."
To read what others are saying and the rest of the article, please go to www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/03/12/nhs212.xml.
The entire NHS debate seems to be about finance, bean counting, even from the physicians and the BMA. Isn’t anyone even thinking about the suffering and dying patients and their needs? Why do we allow government to hurt our patients and destroy healthcare?
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9. Health Plan
article this quarter, by Clive Crook in The Atlantic Monthly, gives an
excellent overview of health care in this country and the world. Things are really
in a shambles, essentially throughout the world. Many hold up the National
Health Service or the Canadian Medicare as a goal for the
The father of government social
insurance, German Chancellor Otto von Bismarck,
observed how Napoleon III used state pensions to buy support for his regime
when he was Ambassador to
When social insurance began to include our health care, we essentially became slaves to the state. Slavery was a difficult problem in our country in the past, but we finally prevailed. Will we prevail in freeing humankind from the medical slavery imposed by the state?
That is our purpose in life. We welcome you to the mission of freedom in medicine.
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Words of Wisdom
Charles de Gaulle (1890-1970): I have come to the conclusion that politics are too serious a matter to be left to the politicians.
Plato (427 – 347 BC): One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors.
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This Month in History
April begins with the day that all Jokesters love, April Fools Day – the day when practical jokesters go to town. Aquariums receive a lot of phone calls for Mr Fish, salt and sugar gets switched, quarters are glued to the sidewalk, and improbable tales are told with a straight face.
It was no joke that on this day in 1789, the
And it was not a laughing matter, that on this date in 1863, the First Wartime Conscription Law went into effect in our nation, which was built by volunteer enlistees.