The Covert Rationing Blog

Healthcare Economics, Explained At Last

March 17th, 2008 by DrRich

Dr. Gaulte of Retired Doc’s Thoughts recently suggested that DrRich might want to weigh in on the Fuchs-Emanuel “Universal Health Care Voucher” proposal for financing American healthcare. Specifically, Dr.Gaulte allowed that he has trouble implementing his normally reliable “follow-the-money” rule to figure out whether this voucher system makes sense, or why neither the Republicans (who like vouchers) nor the Democrats (who like universal healthcare) have ever addressed - much less supported - the Fuchs-Emanuel proposal.

DrRich is humbled that anyone (much less the perceptive Dr. Gaulte) would seek out his opinion on a matter of such a complex fiscal nature. However, having had the audacity to entitle his recent book “Fixing American Healthcare,” and the even greater audacity to advance a Grand Unification Theory of Healthcare, DrRich (try as he might) cannot reasonably shrink from Dr. Gault’s comparatively “simple” request.

So.

Distilled to its essence, the Fuchs-Emanuel proposal postulates a certain unfortunate truth about healthcare economics, and then offers a new way of financing healthcare aimed at rectifying that underlying problem. Accordingly, DrRich will offer his commentary on the Fuchs-Emanuel voucher proposal in two separate posts. In the present post we will consider their analysis of present healthcare economics. In a later post we will consider the voucher proposal itself.

The Fuchs-Emanuel view of healthcare economics

Fuchs and Emanuel argue that the widely discussed ideal of “shared responsibility” - wherein individuals, the government, and employers all will contribute their fair share in bearing the financial burden for healthcare - is inherently a “myth.” To support their contention that shared responsibility does not and cannot exist, they focus their analysis mainly on American businesses. (Their argument extends to government-funded healthcare, but their focus on business is reasonable since at least until recently, most Americans got their health insurance through employee benefits.)

Fuchs and Emanuel make a convincing case, supported by plenty of data, that there is a direct trade-off between wages and healthcare costs. Simply put, businesses treat employee health insurance premiums as a straightforward employee expense, that is, they put those expenses into the same bucket as wages. Since limiting the size of the overall employee expenses “bucket” is critical to any business, changes in wages tend to become the inverse of changes in health insurance premiums. Their data show that that, for decades, wage changes have moved in the opposite direction of changes in insurance premiums. The result is that companies aren’t really paying their employees’ insurance premiums; the employees themselves are paying, directly out of their own pockets, in the form of lost wages. Indeed, because of the soaring cost of healthcare, inflation-adjusted wages have actually fallen over the past 30 years.

But employees believe they are getting healthcare for (nearly) nothing - so why should they tax themselves, or agree to any other changes in healthcare policy, to get what they’re already receiving for free? The “myth” of shared responsibility distorts the public’s view of how healthcare is paid for, and places a roadblock in the way of any meaningful reform. Somehow, Fuchs and Emanuel say, we must make the public understand that the entire cost of healthcare is already being taken from their own pockets. Otherwise we are all stymied.

DrRich comments:

The Fuchs/Emanuel synthesis of healthcare economics is unquestionably accurate. In fact, DrRich believes that their synthesis, to a large degree, is essentially trivial. It ought to be completely obvious (and would be if not for our dysfunctional educational system and for the lies that political leaders of both parties pass off as truth) that neither businesses nor the government have access to funds that don’t ultimately come out of the pocket of individuals. The government gets its money from taxes. Companies get their money from selling stuff. Any expenses incurred (healthcare or otherwise) must be provided by individuals, either through an increase in taxes or the price of goods (or, in the case of the employees themselves, in reduced wages). That’s just basic economics.

Certainly, the failure of individuals to realize they’re actually the ones paying for their (and everyone’s) healthcare is a major root of the problem. The notion that healthcare expenses are “shared” with business and the government makes healthcare feel “free,”and any time something feels free it’s nearly impossible to set limits. It is our now-institutionalized inability to set limits on healthcare spending that promises ruination. (Our “no limits” paradigm is fundamentally what requires us to engage in covert rationing, rather than open rationing, of healthcare.)

As DrRich sees it, however, the actual reasons we are unable to set limits on healthcare spending go deeper than the synthesis described by Fuchs and Emanuel. If we’re going to consider their proposed voucher solution to healthcare financing, we ought to first take a closer look on why such limits have become impossible.

On limits, and why we can’t have them
A fundamental principle in economics is that when we are buying consumable products that we are consuming ourselves - like Caribbean cruises, sports cars, ice cream, or healthcare - we should spend no more on those products than we are able to pay ourselves.

Now, before you click away in anger, be assured that DrRich is not trying to make a political statement here, just an economic one. It is certainly true that some societies have decided to purchase some of these consumable products (healthcare, for instance) collectively. And the collective purchase of consumables constitutes a somewhat different situation that we will address in a moment.

But for consumable products that everyone agrees ought to be paid for by the individual (let’s just take Caribbean cruises as a relatively non-controversial example), the individual must arrange to cover the cost. The reason for this principle is obvious. If individuals could arbitrarily decide to go on a cruise, but leave the cost to others who have no say in whether the cruise happens, the economic system would soon collapse.

Three quick asides on this basic principle:

1) The fact that our economic system is in severe turmoil at the moment - and, according to some, is indeed at risk of total collapse - is precisely because we encouraged too many people to borrow too much money that they have no means of repaying.

2) This principle permits occasional exceptions among small groups. Certain privileged factions, such as politicians, have awarded themselves the ability to take Caribbean cruises on somebody else’s tab whenever they choose. Such a practice will not cause a widespread economic catastrophe as long as the size of the privileged group is carefully circumscribed.

3) However, when those same politicians “forget” that the rules under which they are personally privileged to operate cannot be generalized, and then, say, pass laws that encourage lending institutions to extend those same privileges to the masses, economic turmoil is inevitable. See item 1.

But what about those societies which have decided to collectively purchase certain products and services (like healthcare) that are consumed by individuals? It turns out that these societies must operate under a very similar economic principle: A society should spend no more on such consumable products than it can pay without incurring long-term, multi-generational debt.

In the U.S., we have decided to pay for healthcare collectively. A large chunk of healthcare is provided directly through big government programs like Medicare and Medicaid. But even the “private” healthcare that Americans get through their employers is collectively supported through the tax deductible insurance premiums enjoyed by businesses. So whether your healthcare is provided directly through government payments or through tax-deductible insurance premiums, to a great extent society is collectively footing the bill.

This would not be a problem, economically, if we were doing it on a pay-as-you-go basis. But we’re not. We’re running a huge national debt today, and largely because of healthcare obligations that debt will reach stupendous proportions in the foreseeable future.

Reasonable people can argue over whether having a large national debt is good or bad, but the answer lies at least partially in what it is that the debt has been incurred to pay for.

The ability to borrow money, and carry debt, is important to a vibrant economy. Individuals can borrow even large amounts of money as long as they promise to pay it back and their credit rating is high enough. But if a person fails to pay back what they owe according to a predetermined schedule, society takes steps to stop further borrowing and to force them to repay. If they get in too deep, society ushers them into bankruptcy, and allows them to slowly make themselves whole again. But society does NOT allow them to simply keep borrowing indefinitely.

This is because individuals die. If we were to allow individuals to simply accumulate as much debt as they want until they die, leaving it to somebody else to pay it back, the economic system would soon disintegrate. So before people can borrow money, they need to demonstrate their ability to repay it, or to have their estates repay it upon their death. In this way there is a natural limit to how much individuals can spend on consumable products in their lifetime.

Societies, like individuals, must borrow no more than they can eventually pay back. The difference is that, unlike individuals, society lives “forever.” That is, the accumulation of debt that cannot be paid off in a single generation is not necessarily alarming, because society will “always” be there to pay it off.

As it turns out, the ability to accumulate even huge amounts of debt is vital for complex societies like ours, as it permits us to maintain a buffer for economic stability, to smooth out boom-bust cycles, and to maintain reasonable predictability, stability, and steady growth. The ability to carry multi-generational debt enables the government to borrow the money it needs to make multi-generational investments, things like building up the nation’s infrastructure, providing for national defense, advancing medical research, and engaging in other forms of non-commodity spending that will allow society to progress, to grow stronger, and to steadily improve the lives of successive generations of its citizens.

The “right” kind of long-term national debt, then, is a chief enabler of economic growth and prosperity, an investment in the nation’s future. It is appropriate to ask future generations of Americans to share the financial burden of that debt, since they will reap the benefits of the investment.

Things go very wrong, however, when we burden society with the “wrong” kind of debt, the kind that represents an open-ended promise to purchase products and services that are consumed by individuals, such as healthcare. There are two problems with this kind of debt.

First, this kind of debt is not an investment in the future, whose fruits will be realized by our children and grandchildren, and whose returns will more than cover the overall debt obligation. Instead, it benefits only the individuals currently alive who are the direct recipients of the consumable services, leaving no direct benefits but only an ever-increasing debt burden to those who will be left paying the bills decades later.

Second, while there is a natural limit on how much an individual can spend for products and services they consume during their lifetime, once the responsibility for paying for those consumables shifts to society, there is no longer such a natural limit (since societies live forever). The debt can now be borne by multiple generations. Because there is no longer an inherent limit to what an individual can consume, and because it is to the advantage of present and would-be officeholders to eliminate any remaining arbitrary limits, individuals are eventually encouraged to consume as much as humanly possible. And without these limits (whether natural or imposed by rules) the provision of such services to individuals rapidly becomes an entitlement, whereupon the natural checks and balances that apply to other parts of the federal budget are no longer available.

When society faces an accelerating debt burden that is completely open-ended and is not subject to normal checks and balances, that society is dealing with a disproportionate economic variable (DEV) - that is, an economic obligation that grows without limit and completely out of proportion to the growth of the overall economy. Healthcare spending, which unrelentingly consumes an ever-increasing proportion of the GDP, already has become a DEV.

DEV’s are inherently destructive to a society, and for that reason are rare. Indeed, in viable societies the only commonly encountered DEV is wartime spending, a form of spending that is temporarily required for survival. Indeed, the disproportionate spending in wartime is tolerable only because war is temporary. It should be noted, however, that one reason war is temporary is that in a prolonged war, a runaway DEV can cause a country to spend itself into oblivion. (See: the multi-decade Cold War and the demise of the Soviet Union.)

Our government has made apparently irrevocable but unsustainable promises to its citizens regarding future spending for their healthcare. As DrRich pointed out in an earlier post, the GAO now tells us that Medicare alone has created an unfunded obligation that, over the next several decades, will reach an unimaginable 34 TRILLION dollars. The reason this massive debt burden exists is the same reason similar debt burdens exist for companies such as General Motors, i.e., because of open-ended promises for whatever healthcare their future retirees may need, without limits. The threatened result - oblivion - is also the same.

Americans need to admit that there’s a limit to what we can spend on healthcare, even if that limit is liberally defined as “something less than would eventually cause the disintegration of our society.” Our current political discourse disallows us from setting even that modest limitation.

Fuchs and Emanuel accurately describe the mechanism by which Americans have become enabled to ignore the truth, i.e., the myth that our present and future healthcare obligations can be “shared” into feasibility. But the truth is actually far more troubling than merely that Americans are already paying for their own healthcare without acknowledging it. The real truth is that, while individuals are already paying far more than they realize, they’re not paying nearly enough; and that indeed, they can’t pay enough to cover the multi-generational societal obligations we have have already signed up for (even excluding the new healthcare obligations our politicians are promising us, and which many of us seem quite anxious to add).

In this way, shared responsibility is not really a myth. In fact, we all - individuals, businesses and the government - do share responsibility for what we have wrought; and unless we figure out how to reestablish limits (either the natural ones or the kind established by rules), when the bill comes due we will all pay in a very similar manner.

In later posts we will consider how far the universal healthcare voucher system proposed by Fuchs and Emanuel might take us toward resolving our looming fiscal crisis in healthcare.

Note: This is the first in a series of posts that discuss healthcare economics, and the three basic questions we will have to answer before we can devise a way to fix American healthcare. The second post in this series, “Can a Voucher System Fix American Healthcare?” can be found here.

Posted in Fixing American Healthcare, Healthcare economics | 2 Comments »

How to Invest in the New Medicare Audits

March 11th, 2008 by DrRich

Several bloggers (including DB and Catron) have commented on the recent unleashing of Medicare’s “Recovery Audit Contractors.”

The RACs are a fun tidbit brought to us by the Medicare Prescription Drug Act of 2003. Under the RAC initiative, private contractors will soon be dispatched across the land to perform audits of billing already done by insurers, health plans and physicians. The objective is to find “overbillings,” which the providers will have to repay along with penalties. Further,the act explicitly allows for prosecutions to be brought for “fraud and abuse,” even if the providers have repaid any overbillings.

The purpose of the Recovery Audit Contractors will be, well, recovery. During the 3-year pilot of the RAC initiative, which took place in only 3 states, over $300 million were recovered. This wonderful success is the reason RACs are being turned loose everywhere.

The RACs are paid by commission. Essentially they are bounty hunters, and they get to keep 20% of whatever they collect. According to the Associated Press, hospitals and providers are just a tad worried that these contractors, being so generously incented, will prove a little overzealous in their enthusiasm to find fraud. But worried auditees should not look for sympathy from the public. “A little zealotry is what we’re looking for on the part of the taxpayers,” said Leslie Paige, spokeswoman for Citizens Against Government Waste. “We think it’s about time.” Indeed - everybody can get behind fighting fraud, which is what makes the fraud gambit such a powerful tool for covert rationing.

It is good to be an RAC, and, DrRich suggests, it would also be good to own stock in whichever companies are contracted to perform the audits. These outfits are about to harvest the vast bounty of obfuscation that Medicare has been carefully cultivating for 40 years, and has been carefully fashioning as fraud-traps for a somewhat shorter period of time.

DrRich has discussed on this site several of these fraud-traps. Boiling it down, NOBODY can interpret as a coherent document the 110,000 pages of turgid, incomprehensible, self-contradictory language that constitutes the Medicare regulations. And now, “nobody” officially includes Medicare itself.

This becomes apparent from a recent GAO report entitled “Improvements Needed in Provider Communications and Contracting Procedures.” The GAO report notes that the bulletins which Medicare carriers are required to send doctors periodically (to make sure they understand the regulations) are filled with dense, lengthy and poorly organized prose sufficient to make them unreadable. Even if they were readable, the GAO continues, these bulletins would do doctors little good since they routinely announce new regulatory policies well after the implementation date, when doctors will already have been guilty of violating such policies (and thus committing fraud). Finally, the GAO finds that when confused doctors contact the Medicare call centers for clarification on the regulations, they get the correct answer only 15% of the time. (Heck, even the IRS does substantially better than that.) And the Medicare websites, required under the regulations to clarify everything for the providers, universally lack “logical organization and navigational tools,” and as a consequence are nearly unusable.

So even when a doctor prospectively asks for instruction on how to comply with Medicare regulations (so as to avoid committing healthcare fraud and incurring huge fines and jail time) nobody is able to give him/her a straight answer. For, while it’s easy to look at a provider’s actions retrospectively (as the RACs are doing), and find something in the dense regulations that makes those actions imperfect, it’s not so easy to tell providers ahead of time how to navigate those regulations in pristine fashion. As the GAO report reveals, nobody knows how to do that.

This state of affairs is simply part of the covert rationing paradigm, of course. When your goal is to scare doctors into avoiding sticking their necks out for their patients, why would you want to give them a safe harbor for their actions?

So whoever you are, here’s a hot tip. Stop what you’re doing, find out which companies are doing these RAC audits, and buy their stock. These companies have a license to print money.

But DrRich is not here just to tell you what you already know. There’s a twist to this story you ought to take into account as you make your investments. Every time there’s an ostensibly cooperative effort between Gekkonians (in this case, the contractors doing the RAC audits) and Wonkonians (Medicare), there’s a back story that reflects the actual battle to the death in which these groups are engaged.

The RACs see the vast herds of providers (violators one and all) placidly grazing all across the fruited plains, just waiting to be harvested. Indeed, their chief problem will not be finding as much fraud and abuse as they want, but instead will be pacing themselves. If they harvest the herd with the enthusiasm of the Gekkonian buffalo hunters of the 1870s, then like those buffalo hunters, within a few years they’ll be out of business. On the other hand, killing off all the buffalo is just what the Wonkonians want them to do. Like their Wonkonian forebears of the 1870s, their real motive is to place the groups who depend on the buffalo for their survival in a state of penury, to break their independent spirit, to make them entirely dependent on the government, and at last bring them slouching onto the reservation. Once Wonkonians drive enough providers from the field, the beleaguered American patient and their remaining doctors will have no choice but to turn to the government for their healthcare. (A winning strategy here will obviously require the Wonkonians to vanquish all the private insurers before they cause all the doctors to leave medical practice, a strategy not without substantial risk. They will need to find ways of making it “inadvisable” for doctors to leave medical practice altogether; DrRich is confident they’ll be able to manage this aspect of the problem.)

In any case, if you do buy stock in the RAC companies, be sure to sell before the inevitable collapse.

Posted in Wonkonian Rationing, General Rationing Issues | 1 Comment »

Wonkonians Should Read Their Own Work Product

March 6th, 2008 by DrRich

According to Fortune Magazine senior editor Geoff Colvin, if you ask Alan Greenspan what the biggest threat is to the U.S. economy, he answers with one word: Medicare.

Greenspan is relatively sanguine about the sub-prime troubles, the housing crash, the falling dollar, and the trade deficit, all of which are relatively routine economic challenges which will “sort themselves out.” The real problem, he maintains, the one that dwarfs all the others and that all but guarantees some sort of societal upheaval over the next few decades, is the money we’ve all signed up to spend on Medicare, Medicaid and Social Security - but in particular, on Medicare.

Greenspan’s opinion merely reflects the bland prose of the 2007 Financial Report of the U.S. Government (FRUSG), recently published by the GAO. Not too far into the future, according to the FRUSG, the “required Medicare, Medicaid and Social Security spending and the related deficit financing costs will far exceed the Government’s ability to pay.” (Which is another way of saying it will far exceed its ability to tax, at least under the representative form of government which, so far, most of us seem to prefer.) According to the FRUSG, within many or our lifetimes these three entitlement obligations alone will consume more than the total revenue of the US government.

But not to worry; we’ll have either a revolution or societal collapse well before that happens.

Of these three massive entitlement programs, the FRUSG makes it clear that the Mother of All Fiscal Problems is Medicare. Even before we adopt “Medicare for everybody,” or one of the similar programs now being discussed by presidential candidates, Medicare already has unfunded obligations that reach the unimaginable sum of 34 TRILLION DOLLARS. (For those who have trouble with big numbers like this, $34 trillion is considerably more than the unfunded pension liability of, say, General Motors. Or of all the companies that exist in the universe put together. It’s more than half of the total GDP of the world. Really, it’s a whole lot of money.)

While the financial projections made by the FRUSG are truly dire, they are still too optimistic. They assume that certain absurd cost-cutting measures currently required by law (such as cutting Medicare payments to doctors by 41% over the next nine years), will actually occur. (The only way this will occur is if we have 41% fewer doctors than we have today - which, if the doctors I’m talking to are to be believed, is actually a possibility.)

With a healthcare-induced financial catastrophe like this staring us in the face, with healthcare reform being (intermittently, at least) the number one domestic issue; with the dire fiscal projections in the FRUSG being advanced not by agenda-driven right-or-left-wing nut-jobs, but by plodding government accountants who are just adding up the numbers; and especially with with Medicare officially projected to go in the red during the very next presidential administration; one might think that at least one of the candidates from one of the parties might want to start talking to us about it.

The fact that they’re all looking the other way, talking as if providing health insurance to those who are uninsured is the chief (and only) issue, ought to disqualify the lot of them. (To be fair, Senator McCain does talk more about controlling costs than his counterparts, but only to the extent that Columbus is closer to Antarctica than Cleveland.)

In any case, it is obvious that if we’re to address this problem effectively, then rationing healthcare (i.e. withholding by design at least some useful healthcare from at least some people who would benefit from it) is going to have to be part of the solution.

It is also obvious, since the government employees who produced the FRUSG took our present activity into account in making their projections, and since our present activity includes extravagant, wholehearted, flagrant covert rationing, that covert rationing does not work. This, of course, goes without saying since covert rationing requires complexity, opacity, tangled incentives, waste and inefficiency, as per Corollary 4 of the Grand Unification Theory. (We should note the irony inherent in the notion that the lack of “universal coverage” is the chief problem, when in fact, having tens of millions of uninsured Americans is an integral part of the covert rationing solution.)

Since rationing is unavoidable we need to try rationing the other way, the open way, to figure out how to ration healthcare so as to optimize the balance of fairness, outcomes, and efficiency. But, of course, we can’t, since we’re Americans and Americans don’t ration. Until we give them leave to tell us the truth, a truth nicely documented by the eyeshaded branch of the Wonkonians’ own family, our Wonkonian presidential hopefuls have no choice but to ignore the fact that the government healthcare obligations we’ve already adopted are hurtling us toward the abyss.

Posted in Wonkonian Rationing, Healthcare economics | 1 Comment »

Why the Colette Mills Dilemma Won’t Happen Here

February 20th, 2008 by DrRich

The January 27 issue of the Sunday Times of London tells the tragic story of Colette Mills, a 58 year-old British woman who lost her battle with the National Health Service (NHS), and as a consequence appears doomed to lose her battle with breast cancer.

After her initial treatment for breast cancer, Ms. Mills was placed on the drug Taxol to reduce the odds of cancer recurrence. The NHS paid for both the surgery and the Taxol. However, Ms. Mills also wanted to take the drug Avastin, which, clinical trials have shown, can reduce the chance of recurrent cancer by about 50% when it is taken in addition to Taxol. Ms. Mills, aware that the NHS will not pay for Avastin, wanted to pay for the drug herself, and asked the NHS for permission to do so. The NHS said no. Ms. Mills appealed. Unfortunately, four months into the appeal process her cancer returned and has spread to other parts of her body, making her appeal for permission to pay for Avastin moot. Her prognosis now appears grim.

According to Sarah-Kate Templeton, Health Editor of the Times, Ms. Mills is “the victim of a ruling which states that any patient who wants to pay for additional drugs not prescribed by the NHS should lose their entitlement to their basic NHS cancer care and pay for all their treatment.”

The British Department of Health holds firm to the idea that individuals paying for supplemental treatment “would ‘undermine’ the ‘fundamental principle of the NHS, now supported by all the main political parties, that treatment should be free at the point of need.” That is, you get the healthcare the government says you get, and no more, even if you’re willing to pay for it yourself.

Since the British system is often held up as an example of one we in the U.S. should emulate, we ought to ask, “Will a universal American healthcare system also prohibit individuals from purchasing their own supplemental healthcare?”

This is a question that proponents of universal healthcare, at least those proponents running for political office, assiduously avoid. But the answer to this question is almost certainly, yes. Judging from the original Clinton healthcare plan in the early 1990s, from the actions of the federal government since that time to restrict the ability of individual Medicare patients to pay for “extra” care themselves, and from more recent actions aimed at outlawing retainer practices, it is pretty clearly the (unstated) aim of the Wonkonians to ultimately prevent individuals from supplementing their government-provided universal healthcare with their own resources. One size will have to fit all.

Indeed, this very issue (whether people are to be permitted to spend their own money protecting their own health) is likely to shape up as the central battle in American healthcare reform. By DrRich’s estimate, the very reason none of today’s prominent Wonkonians are talking about a straightforward government takeover of healthcare (favoring instead a more meandering course to that end), is that they don’t think they can win the “individual autonomy” battle right now. Americans, they judge, still need 5 or 10 years of softening up. But we’re getting there. After a few more enervating years dealing with our current healthcare mess, both the Gekkonian health insurance industry and the average American will be ready to throw in the towel, and accept whatever terms the Wonkonians care to offer.

Even then, lingering notions of individual autonomy might still threaten to make things occasionally uncomfortable for government officials. But not to worry. DrRich is here to reassure nervous Wonkonian bureaucrats. After their constituents have finally drunk the government-healthcare KoolAid, American Wonkonians won’t face kind of nasty dilemma now confronting honest British bureaucrats because of disruptive patients like Ms. Mills.

The reason is straightforward.

Fundamentally, the problem imposed on the NHS by Ms. Mills was one of medical progress. As reported in the London Daily Mail, medical “specialists fear that the NHS will be ‘crippled’ by the increasing range of breakthrough treatments.” (When the chief concern of the healthcare system is controlling costs rather than optimizing healthcare, breakthrough treatments are revealed as the true threats they are.)

The good news is that once American healthcare goes to a British (or Canadian) model, the world’s great engine of medical progress (i.e., the profit-driven American healthcare system) will grind to a screeching halt. With the American profit motive out of the way there won’t be any more new therapies which the Ms. Mills of the world can selfishly demand the right to purchase. Happily, American officials will be spared the kind of regrettable discomfitures now plaguing their British counterparts. The entire problem (whose extent is sadly illustrated by some of the headlines - e.g., “Sentenced to Death By Idiocy” - to which well-meaning British bureaucrats are now being subjected), will simply disappear.

So, not to worry. It won’t happen here.

Posted in Wonkonian Rationing | No Comments »

Physician Report Cards and the Designated Driver

January 28th, 2008 by DrRich

A new study in the February 2008 issue of the American Heart Journal shows that cardiologists in New York State are less willing to aggressively treat patients with severe heart attacks than cardiologists in other states, and that the mortality of these patients is significantly higher in New York. The authors of the report attribute this reticence to treat to the existence of public report cards in New York, which publish doctors’ names alongside their procedure-related mortality figures.

The study compared the treatments and the outcomes in 220 New York patients with 325 patients from states without public reporting systems, who had shock (severe circulatory instability) caused by myocardial infarctions (heart attacks). They found that patients in New York were significantly less likely to receive either diagnostic cardiac catheterizations or stents. Both groups of patients were equally likely to receive coronary artery bypass surgery, but the surgery was significantly delayed in patients from New York. Among all patients, the risk of death in the hospital was 50% higher in New York than in other states. But among patients who actually received either stents or bypass surgery, there was no significant difference in mortality.

DrRich has pointed out earlier the advantages of physician report cards to a system based on covert rationing. Let us review the many benefits that accrue to the payers:

1) Fewer expensive procedures are being done
2) Fewer emergency procedures are being done (procedures like the ones being avoided in this study are often performed in the middle of the night and on weekends, entailing overtime payments and other excess overhead.)
3) More high-risk patients (destined to be chronically expensive) die expeditiously.
4) The docs who do persist in doing these high-risk procedures stand out even more in the public report cards.
5) Eventually, NOT doing these high risk procedures will become the new de facto standard of care, and outliers then can be dealt with directly (instead of relying on bad report cards to weed them out).
6) All the while, payers can stand upon the altar of altruism, proclaiming transparency and the patient’s right to know.

The inappropriately negative fallout experienced by physicians conducting potentially life-saving procedures on high risk patients, of course, could be easily overcome by appropriate risk-adjustment methodologies (to account, for instance, for the very high mortality predicted for any patient presenting with shock due to myocardial infarction). But doing so would wreck the whole notion of using public report cards to further the cause of covert rationing. (See items 1 - 6, above.)

But, as usual, DrRich has a solution.

It’s called the Designated Driver.

Imagine the distinguished Chief of Cardiology approaching a promising 31-year-old cardiology fellow, who is finally at the end of his long course of training and at last is ready to enter practice, and saying, “Son, you are going to have a brief but spectacular career. You are going to be our Designated Driver.”

For an extraordinary annual salary and immediate vesting in a generous pension plan, this young man is going to have the honor of being the one who gets all the high-risk cases for the group. He will agree to do this as long as it is feasible, that is, as long as he’s not run out of town because his report card is so abysmally bad. Given the inefficiencies of collecting and processing data for report cards (a process controlled by tangled bureaucracies of one flavor or another, and often, by several tangled bureaucracies that have to devise even more tangled processes for some semblance of cooperation), this is likely to take at least 5 years, and in many cases may take 10. With a sufficient number of more “routine” cardiac cases tossed his way by his sympathetic colleagues (to help him buffer his report card statistics), he may be able to survive 12 or even 15 years. But in any case, by the time he is in, say, his late 30s, he’ll be able to retire quite comfortably.

The Designated Driver scheme is a win-win for everybody (almost). Very sick patients can get the procedures they need (i.e., the ethics of medicine can be shored up for a bit). Your typical cardiologist can enjoy his/her long, relatively risk-free career. And your young, aggressive cardiologist will be presented with a glorious challenge not unlike those of the gladiators of antiquity (save that when it’s finally time to face the old “thumbs down,” they will be spirited to a much more agreeable retirement.)

This solution, as brilliant as it is, will attract critics. And those critics will eventually demand (Gekkonians) or pass (Wonkonians) laws, regulations, and guidelines to turn the Designated Driver into merely one more manifestation of the federal crime of healthcare fraud, punishable by the usual massive fines and jail time.

So when that time comes we’ll have to think of something else. But for now, given the alternatives, DrRich recommends the Designated Driver to cardiologists in the great State of New York.

Posted in General Rationing Issues | 8 Comments »

Why Canadians and Other More Advanced Civilizations Should Root Against U.S. Healthcare Reform

January 22nd, 2008 by DrRich

Michael Moore, Hillary Clinton, and other Wonkonians find it relatively easy to find both Canadian officials and regular Canadian folks (invariably healthy-looking ones, likely innocent of ever having needed serious medical care) who are willing to publicly extol to us Americans the innate superiority of their government-controlled, universal healthcare system, and to urge us to adopt a similar plan.

DrRich would be inclined to take the opinions of these helpful Canadians more seriously save for two things: a) their sense of smug superiority, by which they clearly hold for us loutish Americans the same level of disdain that your average aristocratic British colonel held for Bedouin chieftains during World War I; and b) the utterly self-destructive nature of their advice. For, by their urging us to go and do likewise with our healthcare system, these Canadians are not behaving logically. And so, quite simply, they cannot be trusted. And if they cannot be trusted, DrRich reluctantly concludes that those who trot them out to lecture us on healthcare reform should also be regarded with great caution.

Let us state the problem simply and precisely. Whatever success may be enjoyed by the rational and humanitarian Canadian healthcare system - as tenuous as that success may be - is largely dependent on the continued existence of the irrational, unfair, wasteful American healthcare system.

The fact that the irrational American healthcare system exists just across the border serves to decompress rising public discontent among our northern neighbors. It provides rich Canadians a place to come for “elective” hip replacements and coronary artery bypass surgeries they cannot easily or conveniently or timely get at home, and so keeps these potential troublemakers mollified.

It allows a strapped Canadian healthcare system to avoid making capital investments it finds inconvenient. For instance, Catron points us to an article in the Globe and Mail (Toronto) entitled “Critically Ill Patients Rushed to U.S. For Care,” which relates that more than 150 Canadians recently have had to come to the U.S. for intensive medical and surgical care. The reason for these transfers, it seems, is a multi-faceted Canadian system failure which includes a lack of sufficient technology, limited operating room time, too few intensive-care beds, and a short supply of adequately trained intensive-care nurses and physicians. Stories like this, which are being told more frequently these days, demonstrate not only that the American healthcare system is increasingly vital to the health of Canadians, but also that this American escape valve is increasingly vital in keeping what might otherwise become troublesome dissatisfaction among the Canadian public in check.

To the brutish enemies of Canadian-style healthcare, who argue that advances in modern medicine arise almost exclusively in America and that radical healthcare reform in the U.S. will kill innovation, proponents of radical reform reply that in Western countries like Canada which have adopted universal healthcare, plenty of medical progress continues. Canadian technology might not always be completely at the levels seen in the U.S., but Canadian medical care is clearly progressing quite nicely despite single-payer healthcare. Furthermore, this continued progress is more considered and less haphazard (i.e., more civilized) than in the U.S. Finally, proponents say, very successful and very innovative biomedical companies indeed do exist in countries that have adopted something like universal healthcare. The kind of innovation that continues in such countries therefore would most certainly also continue in the progress-obsessed U.S. under a Canadian-style system.

But a closer look shows that most of the continued medical progress seen in these other countries in fact arises and percolates there from the U.S. - often (most famously with drugs) at discounted prices to boot. So indeed, medical progress continues in the rest of the world, but it’s progress that’s paid for by the dollars and sweat of American citizens. Similarly, non-American companies that continue to innovate in healthcare can do so almost exclusively because they know a ready market exists for their new products - it exists in here.

In large part, it is the existence of the irrational American healthcare system that makes the more “civilized” healthcare systems around the world acceptable to their populations. If radical healthcare reform of anything like the Canadian variety were to occur here, thus stifling both the innovation and the consumption generated by the great roaring engine of American healthcare, then healthcare will change radically not only here, but all around the world.

This is why we shouldn’t pay attention to the smug Canadians (or French, or Cubans) who, at the behest of Wonkonians, urge us to follow them. These people don’t even understand what’s in their own best interests. How could they possibly understand what’s in ours?

Posted in Wonkonian Rationing | 2 Comments »

John Edwards and the Distribution of Livers

January 10th, 2008 by DrRich

DrRich has not yet decided who he will support in this year’s presidential election. Whoever he ends up supporting, though, it will not be because he admires their policy on healthcare. No candidate from either party even begins to approach the fundamental problem facing our healthcare system, which is (of course), rationing, and how best to do it. An honest candidate would be saying something like this:

Healthcare rationing, my fellow Americans, is an economic imperative. We can’t avoid it, and indeed we’re not avoiding it. And the manner in which we’re currently not avoiding it - by doing it covertly - is producing most of the disasters we’re seeing today within our healthcare system. So here’s how I propose that we organize that unavoidable rationing in order to make it as equitable, as effective, and as efficient as possible (thus to limit the necessary rationing to the minimum possible amount), and in such a way as to support (rather than undermine) the autonomy of individual Americans.

DrRich does not expect to live long enough to hear any major politician say anything like this.

By avoiding the rationing question, obviously, each of our presidential candidates (by simple default) continues to endorse covert rationing. Their disagreements on healthcare policy, then, necessarily devolve mainly to arguing about which group of special interests will get to control that covert rationing. The Wonkonians hope to move toward more governmental control, either through ever stricter laws and regulations to force doctors and insurance companies to do their bidding, or by simply taking over the entire healthcare system. The Gekkonians, on the other hand, wish to rely on “market forces” (such as the gentle ministrations of truly avaricious, cold-hearted insurance executives) to manage the covert rationing. Either way, the rationing (being covert) will be conducted not according to what is most fair, effective and efficient, but rather, according to what they (the Wonkonians and Gekkonians) can most easily get away with.

And as readers of this blog will understand, DrRich does not have a clear preference as to which of these two species of covert rationing will finally be used to dispatch him and his loved ones and friends. We’ll all end up just as dead, either way. Fire and ice, as the poet says.

So, given this synthesis of the issue, it may be a bit unfair of DrRich to single out any single presidential candidate for criticism on an issue related to healthcare in general, or rationing in particular. But in Mr. Edwards’ case, DrRich cannot refrain.

It was John Edwards’ quasi-victory speech after the New Hampshire primary this week that finally did it. Finally, DrRich has had quite enough of hearing Mr. Edwards suggest he is the one who knows best how to distribute livers.

The now infamous case of Nataline Sarkisyan, the 17-year-old girl who died a few hours after her health insurer finally approved her for liver transplantation, has become the rallying flag for the Edwards healthcare platform. If not for the corporate greed of the CIGNA company, Edwards suggests, this wonderful young person would still be alive. It is completely obvious that she ought to have received a liver, and the fact that she did not is a signal travesty, a clear marker for everything that is wrong with our healthcare system today. CIGNA wanted to save some money; a young person is dead. A compassionate Edwards healthcare system (fully 100% Wonkonian) would have prevented this tragedy.

DrRich does not pretend to know whether Ms. Sarkisyan should have received a liver transplant. Her youth and her fighting spirit mitigated for it. Her odds of survival after a liver transplant (being a patient with leukemia who, according to CNN, had been in a vegetative state for weeks prior to her death) may have mitigated against it. DrRich cannot adjudicate this question.

What DrRich does know is this. Livers, as well as all other transplanted organs, are truly and openly rationed. Demand far outstrips supply; there simply aren’t enough donor livers to go around. So most people who need liver transplants in order to survive will die without ever receiving one. As of this morning (according to the Organ Procurement and Transplantation Network) there are 17,143 Americans officially on the waiting list for livers. In the year 2007, only 5398 patients from this list received liver transplants, while 9286 were “removed” from the transplant list without being transplanted.

So each time a person from the transplant list is selected to receive a liver, there’s necessarily another person on that same list who will, as a result, not get a liver and will die. This means that we should be pretty careful about distributing donor livers. They ought to go to patients who have at least a reasonable chance of surviving after they’re transplanted, so that in making the selection we have a fighting chance of dooming only one person, and not two. It seems clear that such decisions should be made, to the fullest extent possible, based on objective medical criteria, and not subjective political criteria.

Edwards asserts that CIGNA executives were acting solely out of corporate greed (i.e., were behaving like Gekkonians) when they initially denied Ms. Sarkisyan a transplant. CIGNA (all evidence to the contrary aside, they being an insurance company) denies it, and claims they were using objective medical criteria to make their decision. (While lying comes as easily to insurance executives as swatting mosquitoes does to sharecroppers, in this case there’s at least some evidence to suggest they have a point.)

Edwards also declares that under his healthcare system, in which the Gekkonian insurance companies would either cease to exist or would behave according to the humanitarian rules of the Wonkonians, Ms. Sarkisyan would certainly have gotten her liver. However, since no matter how you cut it livers need to be rationed - some patients will get them, some will not - then the blithe willingness of a politician to declare from a remote distance, for his own political gain, that this or that particular person is deserving of a liver fully reveals the conceit of the Wonkonians. Wonkonian rationing only seems more humanitarian; in truth, it’s not. (Edwards, of course, has no words of comfort for the unnamed individual, one of the 17,143 now on the waiting list, who would have died as a result of his awarding a liver to this particular patient.)

Rationing healthcare is bad. It means that at least occasionally, at least some healthcare will be withheld from at least some patients who need it. We should not leave such rationing decisions to the Gekkonians, who will always be inclined to make those decisions arbitrarily, from the position of corporate greed. We also should not leave those rationing decisions to the Wonkonians, who will be inclined to make them arbitrarily, from the position of political greed. Rationing healthcare equitably is too important to leave to either variety of greed.

Thanks to Mr. Edwards for reminding us of the second, less-talked-about variety.

Posted in General Rationing Issues | 4 Comments »

Covert Rationing Even Wrecks Socialism

December 11th, 2007 by DrRich

Last week, John Goodman wrote a provocative piece about what he’s termed the “nonprice rationing” of healthcare. By nonprice (or nonmarket) rationing, Goodman means the kind of rationing you get when the government, rather than market forces, control the healthcare system - specifically, he’s addressing a system of socialism. He offers five principles of such nonmarket rationing, which I paraphrase here:

1) Any excellence that may exist is not systematic, but instead occurs spontaneously and randomly.
2) Access to this random excellence is not random; the rich and connected are the ones who get it.
3) The skills that allow people to succeed in a market system are the same skills that allow them to succeed in a nonmarket system (i.e., one’s wits will determine one’s access to excellence).
4) Doctors rationing at the bedside will make value judgments about their patients; youthful and highly productive (and presumably influential - DrRich) patients will get an unequal share.
5) People at the bottom of the income ladder will almost always do better in a market system.

To sumarize: Despite the inevitable efforts of the government to homogenize healthcare under socialism, pockets of excellence will still randomly appear. The rich, the connected, and the quick-witted will find those pockets of excellence. So: the same people who are getting decent healthcare today will continue to get better than average healthcare under a government system, and the peons will suffer even more than they do today under a more market-based system (where they at least have a shot).

Goodman also says:

I am probably one of the few people you interact with who has a real interest in understanding nonprice rationing of health care. In fact, I may be the only such person. . . .In fact, I don’t believe anyone has developed a real theory about it.

Readers, please do not think too badly of Dr.Goodman just because he has not yet heard of DrRich or his Grand Unification Theory of Healthcare (GUTH), the theory that explains everything. Dr. Goodman’s a busy man, and DrRich is, well, obscure.

Does the GUTH account for Goodman’s “nonmarket rationing?” Indeed it does. Does it reach the same conclusions as Goodman? Well almost, but not quite.

The difference? Goodman’s formulation could be applied to almost any aspect of a classic socialist system, where virtually all goods and services are controlled (i.e., rationed) centrally. The same five principles (with the possible exception of principle 4, which seems to refer specifically to physicians) would hold under a socialist economy whether you’re talking about healthcare, cigarettes, plumbers, or wheat.

Under a socialist system, there will always be shortages of everything; but on the other hand there also will always be special caches of the rationed item, which somehow will be made more-or-less available to the rich, the connected, or the quick-witted. (The Cuba segment of Michael Moore’s Sicko, for instance, nicely displays the special cache of healthcare excellence that Cuba makes available to the fortunate few, such as American filmmakers bent on embarrassing the Bush administration). This inherent aspect of socialism is merely a concession to reality. Perfect socialism, requiring as it does a fundamental change in human nature, cannot exist. So special caches (whether of gasoline or of medical excellence) will always be permitted to spring up and to persist, at least tacitly. Trading in these special caches, after all, is how the central authorities a) maintain their power, and b) get to have some of the special stuff themselves.

Goodman’s formulation derives directly from the classic behavior of socialist systems, and thus must be correct. And being correct, it must also be compatible with the GUTH; and so it is.

But the GUTH adds a twist. The twist is: We’re Americans, and Americans don’t ration. So the central authorities who control the American healthcare system have got to do the rationing covertly. (In contrast, rationing under classic socialism is quite open.) Covert rationing corrupts everything it touches (Corollary 4 of the GUTH). Ironically, it even disrupts the inherently corrupt style of rationing classically seen under socialist systems.

Goodman points out that under classic socialism,

Since there is no financial reward for excellence and no financial penalty for mediocrity, excellence tends to be the result of the enthusiasm, energy, and leadership of a few people scattered here and there.

That is, socialism creates no incentive for excellence. Whatever pockets of excellence you get will have to be created by a few special individuals who are unusually self-motivated.

What this formulation does not account for is that under the American healthcare system, dedicated as it is to covert rationing, the Wonkonians are aggressively putting into place several powerful reverse incentives. These reverse incentives, we’ve seen (we being readers of this site), are aimed at actively stamping out, eradicating, and punishing any self-motivated physician who tries, despite all obstacles, to deliver excellent healthcare. Among these are the mandate that primary care doctors spend only 7.5 minutes per patient encounter; invoking the magic of P4P to determine exactly what must and must not take place during that 7.5 minutes; grabbing the right to interpret clinical science in order to formulate the “guidelines” that inform P4P; coercing doctors to agree to egregious adhesion contracts that any sane person would find unconscionable; forcing doctors to practice under a set of coding “guidelines” that prevent good patient care and serve as traps for “fraud;” and in general, making every patient encounter subject to a web of regulatory speed traps that force doctors to concentrate on keeping the OIG at bay rather than on what the patient needs. In short, in their efforts to gain control of physicians’ behavior in order to covertly ration healthcare, American Wonkonians are creating insurmountable and systematic disincentives for excellence, and severe penalties for non-mediocrity. They have placed doctors in the untenable position of being utterly unable to fulfill their professional, traditional, legal, and ethical obligations.

The only way doctors will retain a realistic opportunity to achieve excellence under such a system (so as to service at least the rich, the connected and the quick-witted), will be to abandon the system altogether.

Perhaps somebody can purchase an obsolete Soviet aircraft carrier, convert it into a state-of-the art hospital ship, staff it with renegade American physicians, park it in international waters off the east coast, and ferry Congresspersons back and forth by helicopter to receive their well-deserved excellent healthcare. Under a covert rationing paradigm, that might be the only way to fulfill Goodman’s five principles, even if we end up with a fully socialized healthcare system.

Posted in Wonkonian Rationing | 8 Comments »

Another Way to Run Afoul of E&M Coding

December 5th, 2007 by DrRich

Last week, DrRich ranted on the E&M coding guidelines, and attempted to demonstrate how this oppressive and uninterpretable set of rules has harmed patient care, and has exposed many if not most doctors to the constant threat of an unpleasant visit from the Office of the Inspector General.

DB took up the call here, and the Happy Hospitalist (who was the one that rekindled DrRich’s indignation on coding issues in the first place) took up (here) the mind-numbing question of how the resultant codes get converted into physician payments. DrRich doesn’t really expect any of his readers to sort through HH’s explanation of the arcane details of coding. Just realize: Real doctors can’t actually follow these procedures to anyone’s satisfaction.

DrRich does not mean to offend his medical colleagues by claiming they can’t code correctly. He is just stating a fact. There is, in fact, no “correct” way to code, because correct coding is impossible. This verity was proven a few years ago when a group of specialized government-sanctioned coders took a sample of typical doctor-patient visits, coded them according to their own E&M guidelines - and they all got different answers. DB describes this interesting result in an old post, here.

Obviously, any doctor toward whom the fickle finger of fate points the OIG is very likely to be found guilty of abuse, if not fraud. Here’s what happens to doctors who are found to commit coding abuse (that is, who are visited by the OIG):

1) A small sample of their patients’ charts is audited.
2) The error rate is calculated for that sample, then that rate is applied by extrapolation to all Medicare billing the doctor has done for the past 6 years (the statute of limitations).
3) For each violation in coding the doctor is calculated to have committed during those six years, the doctor must pay a) triple the amount of restitution, and b) $11,000.00 (per coding violation).

It is not unusual for audited doctors to be hit with hundreds if not thousands of coding violations over a 6-year period, and the fines will almost always amount to well over 7 figures, if not 8. Even rich doctors usually can’t afford that kind of damage. However - if it’s just abuse the doctor has committed and and not fraud - often the OIG may offer a settlement deal in the low 7 figures.

And here’s what happens if the coding violations are judged to be fraudulent (which, unfortunately, often appears a somewhat arbitrary designation):

1-3) All the above, minus any settlement offer.
4) Jail

So really, at the end of the day we see that the E&M coding guidelines amount to just another iteration of the Wonkonians’ favorite gambit, the Regulatory Speed Trap. Nothing particularly new here.

Except there’s a little twist that makes the E&M guidelines just a bit more interesting than the average RST.

Realizing they’re in a no-win situation, not wanting to attract the attention of the Feds, and wishing to immunize themselves against being judged fraudulently avaricious if they do, many doctors have taken up the practice of routinely “downcoding.” Downcoding is the opposite of upcoding (upcoding being the sin against which the E&M coding guidelines were invented). By routinely billing for Level 2 E&M services (with Level 5 being the highest), these doctors believe they are making a reasonable trade. They’ll accept less money than they deserve, in exchange for less odious documentation requirements, and (they believe) avoiding the deadly scrutiny of the feds. Government agents should consider this capitulation a victory, these doctors reason, since they will be paying out less money than is actually owed.

Such doctors badly misread the purpose of the E&M guidelines. The purpose of these guidelines is not to save money (either by guaranteeing that the documentation matches the coding level, or by scaring doctors into routinely downcoding). The purpose, like any Regulatory Speed Trap, is to create new opportunities for fraud.

This being the case, doctors who downcode - who attempt to remove themselves from the jeopardy of incomprehensible, no-win coding rules - just make the Feds mad.

Accordingly, the OIG has determined that the practice of downcoding, of billing the preponderance of patient encounters as Level 2, constitutes the fraud of “clustering.” Clustering, which is readily identifiable by means of software that looks for more Level 2 codes than average, indicates that the doctor is guilty - of upcoding! The theory here is that if the doctor is billing every patient encounter as Level 2, there are bound to be a few that ought to have been Level 1. Hence, clustering itself constitutes sufficient proof of abuse, if not fraud. Accordingly, clustering is punishable. (In reality, of course, Level 1 clinical services are so trivial that they are almost never seen in clinical practice. “Clustering” at Level 2 is downcoding, not upcoding.)

Doctors whose billing patterns show an insufficient diversity in coding levels, as determined by the Feds’ Secret Software, are therefore guilty. (Nobody should be surprised that the uber-virtue of “diversity” - from which, apparently, the subservient Seven Holy Virtues must spring - even applies to physician billing practices.) Only such diversity, after all, can demonstrate that a doctor is treating the E&M guidelines with the respect they deserve.

So: You can’t win; you can’t break even; you can’t even get out of the game.

Unless, that is, you really get out.

Posted in Wonkonian Rationing, Primary Care in America | 3 Comments »

Wonkonians Send Gekkonians a Message

October 12th, 2007 by DrRich

Joseph Paduda of Managed Care Matters comments (here) on the recent New York Times report (here) that private health insurers are, to be technical, screwing thousands of Medicare patients. According to federal auditors, the insurers accomplish this crime by employing devious sales tactics, misrepresenting their products, improperly terminating coverage for people with expensive diseases, and creating enervating inconveniences designed to discourage consumption of healthcare services.

The bottom line of this unsavory episode is nicely summarized by Mr. Paduda:

If you’re a single payer advocate, you get to sit back and watch the private sector prove your case.

DrRich agrees with this assessment, but when examined more closely there’s more to this story than first meets the eye.

One aspect that comes out in the New York Times article, for instance, is that the health plans may feel they are being treated unfairly here. As absurd as this proposition might seem, let’s play with it for a moment.

All the abuses duly tabulated by the federal auditors, of course, amount to standard operating procedure for Gekkonian health plans. It’s their business model. Covertly rationing healthcare is not easy - indeed, it’s a thankless job. But somebody’s got to do it. And we, through our elected representatives, have deputized the health plans to do it for us. If we’re going to send the for-profits off to accomplish the covert rationing for us, then we’ve got to give them the means to make a profit doing it, don’t we? After all, it’s only fair.

The unfairness of criticizing the health plans for doing what we asked them to do is reflected in the plaintive words of John H. Wells, compliance officer at Bravo Health, who said (as quoted by the New York Times),

“The appeals and grievance process is very complex. It is very difficult for any plan to be fully compliant. In many cases, the government’s guidance is unclear, so it’s impossible for a business to know what to do.”

Now, DrRich will not sympathize with the Gekkoninan health plans. They show no mercy or empathy for the sick people in their charge who are harmed by their unfair policies and Byzantine procedures. Why should they expect any quarter when they themselves are skewered by similar policies and procedures promulgated by the feds?

But nonetheless, Mr. Wells has a point. Even if the health plans wanted to be good citizens, and wanted to be fully compliant with each of the laws, rules, regulations, and guidelines spewed forth with great regularity by myriads of federal agencies, they couldn’t. The health plans are inherently caught up in the great Regulatory Speed Trap. If you’re working in the healthcare arena today, then each and every day, no matter how careful and meticulous you may be, as you navigate the monstrous and seething regulatory tangle in one way or another you’re committing healthcare fraud.

The great Wonkonian regulatory hammer can be brought down any time the feds want, on anybody they want. Indeed, on closer examination it becomes immediately apparent that the Wonkonians aren’t even all that serious about it this time. Consider: Given the list of abuses reported by the federal auditors, heads could have rolled, executives imprisoned, companies shut down. After all, real people were done real harm here; some might have died. Instead, the feds merely fined 11 companies a total of $770,000 - a pittance, a trifle, not even a substantial part of the profits they’ve made by doing these evil things, an amount they can make up by foregoing one or two TV ads (aimed at convincing us of how caring they are).

But the Wonkonians aren’t yet ready to deliver the fatal blow. The people aren’t quite ready for what that would mean. (It would mean what Mr. Paduda says it would mean.) This time the Wonkonians are simply sending the Gekkonians a message, and they’re doing it publicly enough to render the people (i.e., us) just a bit more resigned to their inevitable endgame.

Mr. Wells has heard the message. “We’ve got you where we want you, Gekkonians. Behave yourselves and we’ll let you play a little longer. But don’t kid yourselves. When the time is right, it’s all over for you.” Wise Gekkonians will be carefully packing their Golden Parachutes.

Posted in Gekkonian Rationing, Wonkonian Rationing | No Comments »