HEALTHPLANUSA . NET
Community For Affordable Health Care
Vol V, No 2, July, 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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[My successor as editor of
Sacramento Medicine was extolling the virtues of the socialized welfare state.
This was in the period where Russian communism was failing, and
[It is hard to believe
that we have citizens in this country that believe that Stalin, Hitler,
Mussolini and Mao allowed so much freedom that the
[This lengthy editorial in
the WSJ recently points out the struggles of people when autocracy rules. They
get so used to being controlled that they are unable to fathom a free society.
Even in the
Is Russian Civilization? By
EDVARD RADZINSKY, The Wall Street Journal,
The era of Muscovite czars and the following 300 years
of Romanov reign was one of ruthless autocrats. The
opportunity to destroy the autocracy appeared rarely, but it did appear. For
example, in the early 1540s, the boyars (or nobility) ruled the country as
regents of an infant czar. They could have established an aristocratic republic.
Instead, they squabbled furiously, without forgetting the main occupation of
Asiatic bureaucracy -- stealing. The military governor in
The Time of Troubles
The suppression of the dynasty of
The reign of Alexander II was another of those rare
times when autocracy could have been transformed. This Russian Lincoln not only
emancipated the serfs in 1861; he became the father of perestroika, reforming
all parts of Russian life. But he was a typical Russian reformer, a Janus with
one head facing forward, the other looking back. The reforms stopped in the
first half of his reign. A contemporary wrote what could serve as the epigraph
to all Russian perestroikas: "For some reason
everything good in
The czar was hated by liberals for stopping reforms,
and by conservatives for starting them.
"Balancing on the edge of the abyss" was
Dostoyevsky's description of
His son, Czar Nicholas II, became the victim of the explosion. That is how the first Atlantis, the autocracy of the Romanovs, perished.
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Astonishingly, it was members of the ruling class, the
intellectual nobility who would not accept autocracy, who fomented the
revolution. A poet wrote in the 19th century: "In
The fantastical came to pass as a result of the
Russian Revolution. In pious
This civilization was astounding. It had a Nocturnal
Life and a Daytime Life. In the Daytime, the population awoke to the unsilenceable radio, zealously rushed to work,
enthusiastically attended daily rallies where they condemned the enemies of the
On Bolshevik holidays, they went with their families
The Daytime Life was like the one William Shirer described in Nazi Germany: "The observer would be surprised to see that the Germans did not consider themselves victims of threats or pressure from a heartless and cruel dictatorship. On the contrary, they supported that dictatorship with unfeigned enthusiasm." Stalin worked at creating a sense of conquest in the people. The radio blared cheerful marches, as it should in the land of conquerors. They had conquered czarism and the monarchists. Now they were conquerors in their Daytime Life: In the course of two or three Five-Year Plans they were going to surpass the rest of the world. At every trial, they conquered enemies and spies. And they had conquered religion: All that was left of Holy Russia were beheaded churches.
But Stalin had studied in a seminary, and said that
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Carnivals for Labor
The collective, the masses, were everywhere, as befits
a barracks: The collective at work and at home (since most apartments were
communal). The collective at rest: All the professions had their own holiday
(Day of the Miner, Day of the Construction Worker, Day of the Metallurgist,
etc.), so that the collectives could have a day to drink and be merry
(together, of course). At the height of the terror, in 1938, there were
carnivals for labor collectives in
Stalin gave the country a new religion and he gave it
czar and god in one person. Lavrenty Beria, chief of his security apparatus, explained the task
of the film, "The Vow," to its director during production: "'The
Vow' must be an exalted film, where Lenin is the biblical John the Baptist and
Stalin is the Messiah Himself." Stalin's name was repeated all day on the
radio. "Stalin this and Stalin that. You can't go to the kitchen or sit
down on the toilet, or eat lunch without Stalin pursuing you: He got into your
guts, your brain, he filled in all the holes, he ran nipping at your heels,
called into your soul, got under the covers with you, and shadowed memory and
sleep," wrote a woman in her diary. At the end of his life, Stalin signed
a resolution to create a statue which could be compared only with the
This was the symbol of the Bolshevik civilization built by Stalin, the second Atlantis, which drowned in 1991.
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Now is the time of the third civilization.
Gorbachev began the path toward freedom, Moses moving
eternally through the desert. It was a difficult journey. The republics spoke
up. Stalin had built the
The peaceful dissolution of the
A major reason for Gorbachev's fall was that he did not understand this. He tried to become an ordinary politician, a political dancer -- step to the left, skip to the right. But the public, after a millennium of autocracy, needed yet another czar, albeit in democratic garb. A czar does not dance, a czar commands. Yeltsin was like that. If an American president commanded the dollar to stop falling, he would certainly be deemed mad. But during the default of 1998, outraged by the ruble's capricious behavior, Yeltsin commanded it to stop falling. And, for a period, the ruble froze in fright.
Yeltsin's tragedy was that he was an autocrat who sincerely tried to be a democrat. He forced himself to put up with what is most odious for a czar -- freedom of speech, that is, public insults from Communists and other opposition parties. He knew how to shut them up, of course. He knew, but did not do it, for he was a democrat, and what would his best friends -- Friend Clinton and Friend Kohl -- say! This constant tension, of knowing what to do but not being able to do it, made him seek solace in the bottle and destroyed his colossal health. The end of his reign was marked by chaos and wild corruption.
An Unknown Person
So once again, the people, as in the days of Ivan the Terrible, wanted a strict father. Yeltsin's majesty lay in doing the impossible for a Russian czar: voluntarily giving up power. Surprising the country, he turned the reins over to an unknown person. His fantastic sixth sense did not let him down. He selected a man the country wanted to see. After a president who made people wonder whether he would be able to get up from a chair, came a normal, modern and young man. He skied, and spoke breezily, without notes. He was probably the first Russian leader that teenage girls got crushes on.
Vladimir Putin has ended the
era of Kremlin ancients who elicited sarcasm in the West. He decisively
executes what the majority wants from him: Authority has been strengthened,
stability established, and the concept of "super power," without
which Russians cannot live, is being returned to
Gogol gave the only truthful answer to the question he
To read the entire Op-Ed article (subscription required), please go to http://online.wsj.com/article_print/SB115248692737401858.html.
Mr. Radzinsky is the author of "Alexander II: The Last Great Tsar" (Free Press, 2005). (This essay was translated from the original Russian by Antonina W. Bouis.)
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Our leaders are like a physician who makes a wrong diagnosis and prescribes the wrong medicine, but because of his ego can’t tell the patient he made a mistake. Instead he hopes the patient will get better on his own. But instead of improving, the patient gets worse from the medication wrongly prescribed."
I have been involved in politics for over 30 years and have never seen the American people so angry. It’s not unusual to sense a modest amount of outrage, but it seems the anger today is unusually intense and quite possibly worse than ever. It’s not easily explained, but I have some thoughts on this matter. Generally, anger and frustration among people are related to economic conditions; bread and butter issues. Yet today, according to government statistics, things are going well. We have low unemployment, low inflation, more homeowners than ever before, and abundant leisure with abundant luxuries. Even the poor have cell phones, televisions, and computers. Public school is free, and anyone can get free medical care at any emergency room in the country. Almost all taxes are paid by the top 50% of income earners. The lower 50% pay essentially no income taxes, yet general dissatisfaction and anger are commonplace. The old slogan “It’s the economy, stupid,” just doesn’t seem to explain things
Some say it’s the war, yet we’ve lived with war throughout the 20th century. The bigger they were the more we pulled together. And the current war, by comparison, has fewer American casualties than the rest. So it can’t just be the war itself.
People complain about corruption, but what’s new about
government corruption? In the 19th
century we had railroad scandals; in the 20th century we endured the
Could it be that war, vague yet persistent economic
uncertainty, corruption, and the immigration problem all contribute to the
anger we feel in
We all know that ideas do have consequences. Bad ideas, even when supported naively by the people, will have bad results. Could it be the people sense, in a profound way, that the policies of recent decades are unworkable-- and thus they have instinctively lost confidence in their government leaders? This certainly happened in the final years of the Soviet system. Though not fully understood, this sense of frustration may well be the source of anger we hear expressed on a daily basis by so many.
No matter how noble the motivations of political leaders are, when they achieve positions of power the power itself inevitably becomes their driving force. Government officials too often yield to the temptations and corrupting influences of power.
But there are many others who are not bashful about using government power to do “good.” They truly believe they can make the economy fair through a redistributive tax and spending system; make the people moral by regulating personal behavior and choices; and remake the world in our image using armies. They argue that the use of force to achieve good is legitimate and proper for government-- always speaking of the noble goals while ignoring the inevitable failures and evils caused by coercion.
Not only do they justify government force, they believe they have a moral obligation to do so.
Once we concede government has this “legitimate” function and can be manipulated by a majority vote, the various special interests move in quickly. They gain control to direct government largesse for their own benefit. Too often it is corporate interests who learn how to manipulate every contract, regulation and tax policy. Likewise, promoters of the “progressive” agenda, always hostile to property rights, compete for government power through safety, health, and environmental initiatives. Both groups resort to using government power-- and abuse this power-- in an effort to serve their narrow interests. In the meantime, constitutional limits on power and its mandate to protect liberty are totally forgotten.
Since the use of power to achieve political ends is accepted, pervasive, and ever expanding, popular support for various programs is achieved by creating fear. Sometimes the fear is concocted out of thin air, but usually it’s created by wildly exaggerating a problem or incident that does not warrant the proposed government “solution.” Often government caused the problem in the first place. The irony, of course, is that government action rarely solves any problem, but rather worsens existing problems or creates altogether new ones.
Fear is generated to garner popular support for the proposed government action, even when some liberty has to be sacrificed. This leads to a society that is systemically driven toward fear-- fear that gives the monstrous government more and more authority and control over our lives and property.
Fear is constantly generated by politicians to rally the support of the people.
Environmentalists go back and forth, from warning
about a coming ice age to arguing the grave dangers of global warming.
It is said that without an economic safety net-- for everyone, from cradle to grave-- people would starve and many would become homeless.
It is said that without government health care, the
poor would not receive treatment.
Medical care would be available only to the rich.
Without government insuring pensions, all private pensions would be threatened.
Without federal assistance, there would be no funds for public education, and the quality of our public schools would diminish-- ignoring recent history to the contrary.
It is argued that without government surveillance of every American, even without search warrants, security cannot be achieved. The sacrifice of some liberty is required for security of our citizens, they claim.
We are constantly told that the next terrorist attack could come at any moment. Rather than questioning why we might be attacked, this atmosphere of fear instead prompts giving up liberty and privacy. 9/11 has been conveniently used to generate the fear necessary to expand both our foreign intervention and domestic surveillance.
Fear of nuclear power is used to assure shortages and highly expensive energy.
In all instances where fear is generated and used to expand government control, it’s safe to say the problems behind the fears were not caused by the free market economy, or too much privacy, or excessive liberty.
It’s easy to generate fear, fear that too often becomes excessive, unrealistic, and difficult to curb. This is important: It leads to even more demands for government action than the perpetrators of the fear actually anticipated.
Once people look to government to alleviate their fears and make them safe, expectations exceed reality. FEMA originally had a small role, but its current mission is to centrally manage every natural disaster that befalls us. This mission was exposed as a fraud during last year’s hurricanes; incompetence and corruption are now FEMA’s legacy. This generates anger among those who have to pay the bills, and among those who didn’t receive the handouts promised to them quickly enough.
Generating exaggerated fear to justify and promote attacks on private property is commonplace. It serves to inflame resentment between the producers in society and the so-called victims, whose demands grow exponentially.
The economic impossibility of this system guarantees that the harder government tries to satisfy the unlimited demands, the worse the problems become. We won’t be able to pay the bills forever, and eventually our ability to borrow and print new money must end. This dependency on government will guarantee anger when the money runs out. Today we’re still able to borrow and inflate, but budgets are getting tighter and people sense serious problems lurking in the future. This fear is legitimate. No easy solution to our fiscal problems is readily apparent, and this ignites anger and apprehension.
Disenchantment is directed at the politicians and their false promises, made in order to secure reelection and exert power that so many of them enjoy. . .
Remember, the original American patriots challenged the abuses of King George, and wrote and carried out the Declaration of Independence.
Yes Mr. Speaker, there is a lot of anger in this country. Much of it is justified; some of it is totally unnecessary and misdirected. The only thing that can lessen this anger is an informed public, a better understanding of economic principles, a rejection of foreign intervention, and a strict adherence to the constitutional rule of law. This will be difficult to achieve, but it’s not impossible and well worth the effort.
To read a reprint of Dr Paul’s speech, please go to www.quebecoislibre.org/06/060806-4.htm.
To read the official transcript from the U.S. House of Representatives, please go to www.house.gov/paul/congrec/congrec2006/cr062906.htm.
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Medicine: Poppycock, By DR THEODORE DALRYMPLE, The Wall Street Journal,
In 1822, Thomas De Quincey published a short book, "The Confessions of an English Opium Eater." The nature of addiction to opiates has been misunderstood ever since.
De Quincey took opiates in the form of laudanum, which was tincture of opium in alcohol. He claimed that special philosophical insights and emotional states were available to opium-eaters, as they were then called, that were not available to abstainers; but he also claimed that the effort to stop taking opium involved a titanic struggle of almost superhuman misery. Thus, those who wanted to know the heights had also to plumb the depths.
This romantic nonsense has been accepted wholesale by doctors and litterateurs for nearly two centuries. It has given rise to an orthodoxy about opiate addiction, including heroin addiction, that the general public likewise takes for granted: To wit, a person takes a little of a drug, and is hooked; the drug renders him incapable of work, but since withdrawal from the drug is such a terrible experience, and since the drug is expensive, the addict is virtually forced into criminal activity to fund his habit. He cannot abandon the habit except under medical supervision, often by means of a substitute drug.
In each and every particular, this picture is not only mistaken, but obviously mistaken. It actually takes some considerable effort to addict oneself to opiates: The average heroin addict has been taking it for a year before he develops an addiction. Like many people who are able to take opiates intermittently, De Quincey took opium every week for several years before becoming habituated to it. William Burroughs, who lied about many things, admitted truthfully that you may take heroin many times, and for quite a long period, before becoming addicted.
Heroin doesn't hook people; rather, people hook heroin. . . . I have witnessed thousands of addicts withdraw; and, notwithstanding the histrionic displays of suffering, provoked by the presence of someone in a position to prescribe substitute opiates, and which cease when that person is no longer present, I have never had any reason to fear for their safety from the effects of withdrawal. It is well known that addicts present themselves differently according to whether they are speaking to doctors or fellow addicts. In front of doctors, they will emphasize their suffering; but among themselves, they will talk about where to get the best and cheapest heroin.
When, unbeknown to them, I have observed addicts before they entered my office, they were cheerful; in my office, they doubled up in pain and claimed never to have experienced suffering like it, threatening suicide unless I gave them what they wanted. When refused, they often turned abusive, but a few laughed and confessed that it had been worth a try. Somehow, doctors -- most of whom have had similar experiences -- never draw the appropriate conclusion from all of this. Insofar as there is a causative relation between criminality and opiate addiction, it is more likely that a criminal tendency causes addiction than that addiction causes criminality.
Furthermore, I discovered in the prison in which I worked that 67% of heroin addicts had been imprisoned before they ever took heroin. Since only one in 20 crimes in Britain leads to a conviction, and since most first-time prisoners have been convicted 10 times before they are ever imprisoned, it is safe to assume that most heroin addicts were confirmed and habitual criminals before they ever took heroin. In other words, whatever caused them to commit crimes in all probability caused them also to take heroin: perhaps an adversarial stance to the world caused by the emotional, spiritual, cultural and intellectual vacuity of their lives.
It is not true either that addicts cannot give up
without the help of an apparatus of medical and paramedical care. Thousands of
American servicemen returning from
Substitution of one drug for another is at best equivocal as a means of treating drug addicts. No doubt if you gave every burglar $10 million, each would burgle far less in the future; but this treatment of the disease of burglary would scarcely discourage burglary as a social, or rather antisocial, phenomenon. And the fact that there would be a dose-response relationship between the amount of money given to burglars and the number of burglaries they subsequently committed does not establish burglary as a real disease or money as a real treatment for it.
Why has the orthodox view swept all before it? First, the literary tradition sustains it: Works that deal with the subject continue to disregard pharmacological reality, from De Quincey and Coleridge through Baudelaire, Aleister Crowley, Bulgakov, Cocteau, Nelson Algren, Burroughs and others. Second, addicts and therapists have a vested interest in the orthodox view. Addicts want to place the responsibility for their plight elsewhere, and the orthodox view is the very raison d'être of the therapists. Finally, as a society, we are always on the lookout for a category of victims upon whom to expend our virtuous, which is to say conspicuous, compassion. Contrary to the orthodoxy, drug addiction is a matter of morals, which is why threats such as Mao's, and experiences such as religious conversion, are so often effective in "curing" addicts.
Mr. Dalrymple is the author of "Romancing Opiates" (Encounter, 2006).
To read Dr Dalrymple’s entire Op-Ed article (subscription required), please go to http://online.wsj.com/article_print/SB114852365443262675.html.
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4. Medicare: Medicare’s
Hidden Administrative Costs: A Comparison of Medicare and the Private Sector
By Merrill Matthews, Ph.D. (Based in Part on a
Technical Paper by Mark Litow of Milliman,
One of the most common, and
least challenged, assertions in the debate over
It is very difficult to do a real apples-to-apples comparison of Medicare’s true costs with those of the insurance industry. The primary problem is that private sector insurers must track and divulge their administrative costs, while most of Medicare’s administrative costs are hidden or completely ignored by the complex and bureaucratic reporting and tracking systems used by the government. This study, based in part on a technical paper by Mark Litow of Milliman, Inc., finds that Medicare’s actual administrative costs are 5.2 percent, when the hidden costs are included.
In addition, the technical paper shows that average private sector administrative costs, about 8.9 percent – and 16.7 percent when commission, premium tax, and profit are included – are significantly lower than the numbers frequently cited. But even though the private sector’s administrative costs are higher than Medicare’s, that isn’t “wasted money” that could go to insuring the uninsured. In fact, consumers receive significant value for those additional dollars.
We also raise an important, although heretofore unrecognized, issue that gives Medicare an inherent advantage on administrative costs. Because of the higher cost per beneficiary, Medicare administrative costs appear lower than they really are. If the numbers were adequately “handicapped” for comparison with the private sector, they would be in the 6 to 8 percent range.
Finally, like the private sector, Medicare also has to obtain funds to pay claims. But the cost of raising that money, or borrowing it if the government doesn’t collect it from taxpayers, is excluded from Medicare administrative cost calculations. While we don’t in this paper draw any conclusions about what we shall call the “cost of capital” and its impact on Medicare’s administrative costs, we do want to highlight that those costs exist and that taxpayers, both today and in the future, must bear those costs.
To read the entire report, please go to www.cahi.org/cahi_contents/resources/pdf/CAHI_Medicare_Admin_Final_Publication.pdf.
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[Jim Womack, CEO of Lean Enterprise Institute,
recently sent the following email; Administrative Physicians, Nurses and
Healthcare Leaders should take note. Do we want to be
I recently met with the chief executive of a very large American corporation organized by business units, each self-contained with its own product development, production, purchasing and sales functions. I asked what a CEO does in this situation and got a simple answer: “I search for heroic leaders to galvanize my business units. I give them metrics to meet quickly. When they meet them, they are richly rewarded. When they don't, I find new leaders.”
I noted that his firm, like many others I've examined, has a high level of turnover in its business unit heads. So I asked a simple question: “Why does your company need so many heroes? Why don't your businesses consistently perform at a high level so that no new leaders are needed? And why do even your apparently successful leaders keep moving on?"
The answer was that business is tough, leadership is the critical scarce resource, and that a lot of turnover indicates a dynamic management culture. But I couldn't agree. As I look at this and many other businesses I encounter on my walks, I usually see three problems apparently unnoticed by the heroic leader at the top rolling out the latest revitalization program.
These are confusion about the business purpose of the organization's core processes, poorly performing product development, production, supplier management and sales processes that tend to get worse instead of better, and dispirited people operating these broken processes at every level of the enterprise. Needless to say, there are also mini-heroes at every level devising workarounds for the defective processes.
What's needed instead? More farmers!
Let me explain by means of a second example. Recently I received a copy of the leading motor industry magazine with its annual listing of the fifty most influential (read “heroic”) leaders in the global motor industry. Bill Ford at Ford. Carlos Ghosn at Renault/Nissan. Rick Wagoner at GM. Etc.
What I found striking was that the list
contained no “leaders” from
The job of the hero is to tackle a situation
in which everything is out of control and quickly impose some semblance of
order. And sometimes heroes are necessary. Taiichi
But heroes shouldn't be necessary once an organization is transformed. Instead every important process should be steadily tended by a “farmer” (who we often call a value-stream manager) who continually asks three simple questions: Is the business purpose of the process correctly defined? Is action being steadily taken to create value, flow, and pull in every step of the process while taking out waste? Are all of the people touching the process actively engaged in making it better? This is the gemba mentality of the farmer who year after year plows a straight furrow, mends the fence, and obsesses about the weather, even as the heroic pioneer or hunter who originally cleared the land moves on.
Why do we have so many heroes, so few farmers, and such poor results in most of our businesses? Because we're blind to the simple fact that business heroes usually fail to transform businesses. They create short-term improvement, at least on the official metrics, but it either isn't real or it can't be sustained because no farmers are put in place to tend the fields. Wisely, they move on before this becomes apparent. Meanwhile, we are equally blind to the critical contribution of the farmers who should be our heroes. These are the folks who provide the steady-paced continuity at the core of every lean enterprise.
I hope that as you think about your job you will become a lean farmer who takes responsibility for the processes you touch and that you will work every day to plow the straight furrow, mend the fence, and obsess about the weather. These are the real value-creating aspects of management. When present they insure that no heroes will be needed in the future.
Best regards, Jim Womack, Chairman and CEO, Lean Enterprise Institute (LEI), www.lean.org/.
[Shall we call these farmers physicians?
Kaiser Permanente has become the worlds most
successful integrative health care system. That’s because Kaiser Health Plan
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6. Medical Myths: To Test or Not to Test? From The Placebo Journal by Doug Farrago, MD
In our current health care system, doctors ordered $200 million unnecessary laboratory tests or procedures from 1997 to 2002. The June issue of the American Journal of Preventive Health did a study showing that doctors ordered such things as useless urine and blood tests, EKGs and x-rays all of which weren’t evidence-based. They used the U.S. Preventive Services Task Force as the gold standard. A lot of these tests led to false positive results which led to more tests and on and on. Some of the reasons doctors do this is:
All this sounds bad for the doctor. In defense of them is the fact that every organization has their own recommendations that may or may not jive with the USPSTF guidelines. Also, there are lots of patients who are cyberchondriacs who come in with a pile of paperwork making their case for a test. Personally, I have been in that position a ton of times. It is tough to say no especially if they are forceful or convincing. The article quoted one physician who said, “I have not heard of a lawsuit because of overtesting”. That line says a lot.
Read the Placebo Journal to Keep your Finger on the Prostate of Medicine. www.placebojournal.com/shopexd.asp?id=165
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probably missed it in the rush of news last week, but there was actually a
report that someone in
"An American is English, or French, or Italian, Irish, German, Spanish, Polish, Russian or Greek. An American may also be Canadian, Mexican, African, Indian, Chinese, Japanese, Korean, Australian, Iranian, Asian, or Arab, or Pakistani or Afghan.
An American may also be a Comanche, Cherokee, Osage, Blackfoot, Navaho, Apache, Seminole or one of the many other tribes known as native Americans.
An American is Christian, or he could be Jewish, or Buddhist, or Muslim.
In fact, there are more Muslims in
An American is also free to believe in no religion. For that he will answer only to God, not to the government, or to armed thugs claiming to speak for the government and for God.
An American lives in the most prosperous land in the history of the world.
The root of that prosperity can be found in the Declaration of
An American is generous. Americans have helped out just about every other nation in the world in their time of need, never asking a thing in return.
As of the morning of September 11, Americans had given more than any other nation to the poor in
The national symbol of
Some of them were working in the
So you can try to kill an American if you must. Hitler did. So did General Tojo, and Stalin, and Mao Tse-Tung, and other blood-thirsty tyrants in the world. But, in doing so you would just be killing yourself. Because Americans are not a particular people from a particular place. They are the embodiment of the human spirit of freedom. Everyone who holds to that spirit, everywhere, is an American.
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8. What's New in US Health Care: End of Care, From The Placebo Journal
A very interesting case was discussed in the June 12th issue of American Medical News. Here is the reason that we are unable to ration care in this country. A Dr. Brian Drozdwoski wanted to take a patient off the ventilator, remove her feeding tube and allow her to die in peace. Before you get horrified, let me give you some details. Hazel Wagner was 97 years old. She had dementia. She had kidney failure. She had a recent heart attack. She was never married. She had no immediate relatives. She had a legal guardian. She had never told the legal guardian or anyone else her wishes whether she would have wanted to be kept alive. So a judge was the only one who could make a decision. He refused to grant the doctor’s request. He also felt the doctor was overstepping his bounds. The doctor, according to the judge, should just advise the family or guardian and step away. You have got to be freaking kidding me! Doctors need to advocate for the patients quality of life and their quality of death. We can’t just step away. And how does anyone believe we can pay for everyone’s healthcare in this country when we can’t even take a patient like Hazel off the vent. I can just imagine how much her care must have cost. Sorry, Hazel, nothing personal.
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9. Health Plan USA: Milton Friedman’s Prescription for Curing the Health Care System
In March 2001, Nobel
Prize-winning economist Milton Friedman published an article entitled “How to Cure
Health Care,” analyzing the problems facing the
Most payments for health
care are made by third parties: employers, the government or insurers. In 1999,
seven out of 10 working individuals received their health insurance coverage
through their job, according to the Employee Benefit Research Institute.
Friedman points out that by 2001, the government was the single largest
third-party payer, with its various programs paying for more than half of all
While third-party payers finance much of the nation’s health care, they also distort the system, according to Friedman. When third parties pay, they insulate consumers from the true cost of their health care. And this level of insulation renders consumers far less concerned with the cost of their care than they would be if they were paying the bills themselves. As a result, costs begin to soar. As the figure shows, health care premiums have been growing at very high rates, except for a period in the 1990s when managed care succeeded in slowing cost increases, in part by reducing utilization. But consumers have made it clear they no longer want those types of restrictions.
The same principle applies to virtually any array of goods or services.
If an individual is looking for a meal of a hamburger, fries and coffee, he has many choices. He can choose a fast food place for about $4 or go to a nicer restaurant where the same order costs $7. He bases his choice on either price or quality or some combination of the two. However, if someone else — a third party — is paying part of the cost, and the individual pays the same $2 at either restaurant, he will most likely choose the nicer restaurant.
Now, if the owner of the more expensive restaurant learns that the consumer is paying a reduced or fixed amount, she may not be as concerned about maintaining a competitive price structure. If the restaurateur also learns that the consumer pays no more, or only a little more, for an appetizer and dessert, what happens? Why, the restaurateur encourages all her customers to enjoy these additional items. But while the customers pay little or nothing for the extra food, the restaurateur serves more food, her overall costs go up, and someone has to pay — in this case, the third party.
Now, let’s say the third party determines that the increased food purchased has pushed its costs too high. To constrain those costs, it tells all restaurants that it will no longer pay the amount that the restaurant bills it. Instead, it will pay only a calculated average rate that should be enough to cover the cost of these meals. Let’s say that, based on its cost analysis, it decides the appropriate amount to reimburse all restaurants for a hamburger meal is $4. Each restaurant also will get the consumer’s $2, for a total of $6. Obviously, this is less than the original $7 at the more expensive restaurant, but greater than the original $4 at the fast food restaurant. So, what should we expect to see happen next?
Well, recall that due to the earlier billing arrangement the more expensive restaurant was able to attract most of the customers. However, at the $6 reimbursement rate, not only can the restaurateur no longer provide an appetizer and dessert but she will have to cut back on the food quality or portion size of her basic hamburger meal. What happens at the fast food restaurant? It receives $2 more than it was originally charging for the hamburger meal. If it can attract customers, its profit margins will soar. How will it appeal to those customers it had lost to the more upscale restaurant? One way to do so, and still have money to spare, is to offer a small salad or dessert. The extras may prove effective lures, even though they are not what the customers were originally looking for.
Now let’s further complicate the scenario. What if the third party decides that in one part of the area it services it will reimburse only $2 for any hamburger meal. This gives each restaurant a total of $4. The more expensive restaurant may stop serving a burger with fries and coffee, as the owner finds she cannot provide it for $4. The fast food restaurant will continue to serve it at the original $4 rate, but without the salad and dessert to which customers have recently become accustomed. Right away, customers will begin to complain that they are not being treated fairly.
In the above example, as Friedman observes, the insertion of a third-party payer breaks down the financial controls naturally existing in an economic system, and the increased demand or utilization causes an overall increase in cost for the entire system. Breaking this cycle
of increased usage followed by increased cost, Friedman believes, requires that we put consumers back in control of their health care expenditures.
To return control to consumers, Friedman supports the minimization or elimination of third-party payers. This would make the economic dynamics of health care similar to that of other insurance options such as homeowners and auto. For example, you purchase auto insurance to repair your fender in case of an accident, not to cover your oil and gas. To make this change all at once would mean the entire revamping of the current employer- and government-based health care financing system, which would be difficult to accomplish. What he proposes is a method of giving consumers more control by providing them with catastrophic insurance coverage and with funds to cover more routine conditions. As a mechanism for the latter, he supports the expansion of Medical Savings Accounts (MSAs). These accounts put funds in consumers’ hands so they can make payments for routine care just as they now make copayments.
Yet the dynamic is different, since the MSA money they spend is their own. His premise is that since the funds in the MSA are owned by the consumer, the consumer will make spending decisions differently than he or she would do when the funds belong to someone else. This change in decision making ultimately will enable the consumer to regain control over health care spending, which in turn will lead to reduced utilization of services and more fiscally responsible behavior by providers.
Our legislative leaders should seize upon Milton Friedman’s suggestions and immediately pass legislation that extends the MSA option to every American. Then, without further delay, they should reduce the role the government plays as a third-party payer. Putting the decisions for health care expenditures back in the hands of consumers is not only possible, it is essential.
To read the entire article, please go to www.cahi.org/cahi_contents/resources/pdf/friedman.pdf.
[There is a percentage ratio at each level of health care or type of health care that makes insurance work to keep costs at the lowest competitive level.]
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10. Restoring Accountability in Medical Practice by Non Participation in Government Programs and Understanding the Devastating Force of Government.
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Articles that appear in MedicalTuesday and HPUSA may not reflect the opinion of the editorial staff. All sections of this issue are entirely attributable quotes in the interest of the health care debate.
Editorial comments are in brackets.
ALSO NOTE: MedicalTuesday/HPUSA receives no government, foundation or private funds. The entire cost of the website URLs, website posting, distribution, managing editor, email editor, and the research and writing is solely paid for and donated by the Founding Editor, while continuing his Pulmonary Practice, as a service to his patients, his profession, and in the public interest for his country.
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Del Meyer, MD, CEO & Founder
Words of Wisdom
Winston Churchill on democracy: It's the worst form of government except for all the others.
John Adams: A constitution of government, once changed from freedom, can never be restored; liberty once lost is lost forever.
Some Recent Postings
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This Month in History
During the month
of July, we celebrate Independence Day on July 4. We should also pause
to remember three Presidents who died and one President that was born on this
date. Two presidents that signed the Declaration of Independence, Thomas
Jefferson and John Adams, whose careers were intertwined and whose friendship
was itself a classic story, died on the fourth of July in 1826 fifty years to
the day after they put their signatures on the Declaration of Independence.
James Monroe, another President, died on
The Fourth of
July looms so large in American history that sometimes we forget that it is a
day of some significance elsewhere in the world. July 4, 1807, was the birthday of Giuseppe
Garibaldi, the father of Italian independence and unity. He was born in
Nice, and later in his life tried, in vain, to incorporate that territory into
The last full week of July is observed for many years as National Farm Safety Week. We think back so fondly to the bucolic, rustic charms of the old country farm that we forget the risks. Farming is a risky business and it uses a lot of powerful machinery. But even when farming used horsepower and donkey power, it was a physically taxing and dangerous endeavor. There is always an idea among city folk that the city is where the risks are. But cities have no monopoly in this regard. Perhaps it would be helpful to the national interest if we would all remember, at least during National Farm Safety Week, that where the grass is greener it is also apt to be slipperier as well.
Speaker’s Lifetime Library, © 1979, Leonard and Thelma Spinard