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 Some Powers of the Immutables [12:27m]: Play Now | Play in Popup | Download (32)

As DrRich helpfully pointed out in his last post, our new healthcare law (Section 3403) creates a new and apparently immutable entity called the “Independent Medicare Advisory Board,” whose job is “to reduce the per capita rate of growth in Medicare spending.” This, in fact, is the right goal. For it is the rate of growth in healthcare spending (and not the absolute amount being spent) that threatens us with societal disintegration within the next couple of decades.

But it is mathematically impossible to attribute this explosive growth rate in healthcare spending to waste and inefficiency. Most of that growth must necessarily be caused by healthcare expenditures that are actually producing some benefit (though, to be sure, some of that benefit is marginal). And this means that in order to reduce the rate of growth, we have to ration healthcare (i.e., to withhold at least some beneficial healthcare from at least some of the people who would benefit from it).

We can only conclude that, in order for the new IMAB to do its designated job, it must ration healthcare. But since the same law that creates the IMAB also stipulates that it must not ration care, the IMAB must necessarily perform that unavoidable rationing covertly. This is a very difficult job, as demonstrated by the fact that the private health insurers (even with the wonderful incentive of profits, and with the full support of Congress) have utterly failed to develop a sustainable business model based on the covert rationing of healthcare.

But still, this is the job that our leaders have now assigned to the IMAB. And so, DrRich has attempted to tease out some of the options which remain available to the Immutables as they embark on their difficult but necessary assignment of covertly rationing our healthcare. (As DrRich will shortly explain, the legal nomenclature for the IMAB is actually a bit confusing and misleading. So for clarity’s sake, DrRich will hereafter refer to this Board as the Immutables.)

DrRich has found, so far, at least three powers which our new healthcare law grants to the Immutables, that will give them at least a fighting chance at success.

1. The most fruitful pathway to covert rationing remains open to them.

The new healthcare law specifically does not allow the Immutables “to ration health care, raise revenues or Medicare beneficiary premiums. . ., increase Medicare beneficiary cost-sharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria.” While these prohibitions might appear on the surface to greatly limit the options available to the Immutables, in fact all this language does is to formalize their directive to ration covertly instead of openly. Since covert rationing has long been our society’s policy regarding healthcare, these prohibitions actually change nothing.

What is left to the Immutables, of course, is the most time-honored pathway to covert rationing – coercing the healthcare providers to place the needs of the payers ahead of the needs of their patients. DrRich has posted innumerable examples over the years showing how payers do this. He is confident that the Immutables will employ all the methodologies which have been devised to date for coercing providers, and (with the awful power of the sovereign authority behind them) they will invent some really useful new ones.

2. The Immutables have been granted near-dictatorial authority.

On the surface, one might think of the Immutables as a sort of Mr. Rogers of healthcare – a mild-mannered, friendly, always-helpful, but ultimately undemanding agent for good. One might get this impression by reading the first few paragraphs of Section 3403, which paint the new entity as an “advisory” board, whose main task is to develop “proposals” and “advisory reports,” and these “proposals” and “advisory reports” would solely consist of various “recommendations,” that ought to be “considered” for the purpose of cost reduction.

Indeed, one might get the impression that the main difference between the Immutables and this blog is that the former is appointed by the President, and has a travel budget.

Nothing could be further from the truth. Once the Chief Actuary of CMS determines that the projected per capita growth rate for Medicare exceeds the target growth rate, the Immutables are required to submit a “proposal” which will cut costs sufficiently to bring the growth rate back in line. Then, the Secretary of HHS is required to implement that “proposal” in its entirety, unless Congress acts to block implementation. However, Congress is forbidden from taking any action “that would repeal or otherwise change the recommendations of the Board,” unless it replaces those “recommendations” with its own legislation that would cut Medicare spending to the same target level.

For all practical purposes, then, the cost-cutting “recommendations” which the Immutables would “propose” for “consideration” will be implemented nearly automatically, with the full authority of the Federal government.

And, for all practical purposes, the Immutables will become a new agency of the executive branch, with near-dictatorial authority to cut Medicare spending as it sees fit.

3. The Immutables have been granted the authority to limit private health-care expenditures.

Those who paid attention to the process that brought us our new and transformational healthcare system might recall that the Senate bill, which ultimately became law of the land, was never designed to be actually implemented. It was designed solely to assure 60 votes in the Senate, after which the Joint Conference with the House was to meld the House Bill and the Senate Bill into a workable law.

As part of the negotiations to gain those original 60 votes in the Senate, five or six Democrat Senators cobbled together a list of amendments to the original Senate Bill – the so-called Manager’s Amendments. It is in the Manager’s Amendments that one can find such famous niceties as the bribes paid to Nebraska. But the Manager’s Amendments (which, contrary to the expectations of the actual Managers, are now part of our new healthcare law) contained lots of other stuff as well.

One of the more interesting parts of the Manager’s Amendments (Section 10320) is entitled, “Expansion Of The Scope Of, And Additional Improvements To, The Independent Medicare Advisory Board.”

Section 10320 (which can be found way down on page 2210 of the new law) grants the Immutables (beginning in 2015) the authority to limit all healthcare expenditures, and not just expenditures by Medicare or government-run programs.

To emphasize this expanded authority, Section 10320 changes the name of the Immutables from the Independent Medicare Advisory Board to the Independent Payment Advisory Board. It directs the Immutables (and now readers will understand why DrRich has resorted to this more descriptive name), at least every two years, to “submit to Congress and the President recommendations to slow the growth in national health expenditures” for private (non-Federal) healthcare programs. Furthermore, it allows that these “recommendations” may be implemented by the Secretary of HHS or other Federal agencies administratively.

Ostensibly, the justification for this expansion of the Immutables’ authority is that controlling private healthcare expenditures will directly impact Medicare, since the “target” Medicare growth rate which the Immutables are charged with achieving will be determined by overall healthcare expenditures. More practically, if Medicare patients (who are subjected to arbitrary cost-cutting measures) see their younger counterparts enjoying less restricted healthcare, the old farts are likely to become rowdy. But DrRich suspects there was an even stronger reason to give the Immutables this authority over private healthcare expenditures.

DrRich has often speculated that the real fight regarding healthcare reform will come when the government attempts to limit the ability of American citizens to spend their own money on their own healthcare. This limitation is absolutely necessary if we’re to have a single-payer healthcare system, since if you can spend your own money on your own healthcare, that would be at least two payers. (It would also be “unfair.”)

Many of DrRich’s readers think it’s absurd to think we’re headed toward a single-payer system. DrRich hopes these readers are correct. But he also thinks there’s plenty of evidence that some of our leaders are intentionally taking us there. The new healthcare law, at least arguably, is entirely consistent with such an ultimate goal. And if we are ever to have a single-payer system, the government ultimately will need the authority to limit private expenditures.

DrRich does not believe that the Immutables will act immediately to limit the ability of private citizens to spend their own money on their own medical well-being. Such an action would create a great uproar today, and likely for several years to come, at least until those of us who still cling to the quaint notion of individual autonomy are finally worn down, or re-educated, or otherwise made to see the light.

But whenever that time comes, Section 10320 of the new healthcare law appears to give the Immutables all the authority they will need.

(At the same time, those who castigate DrRich for paranoia might consider reading just how far our healthcare system has already come in limiting the prerogatives of individuals.)

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 Healthcare Reform Explained - An Updated Guide For The Perplexed [15:42m]: Play Now | Play in Popup | Download (20)

Now that the great campaign to transform the American healthcare system has passed a critical milestone – the passage of President Obama’s healthcare reform legislation – many Americans find themselves confused about what it all means. What just happened here? What will happen to our healthcare insurance? How much will it cost, and who will pay for it? Why does the whole process seem so darned difficult and confusing?

The confusion is quite natural, since, in fact, nobody really understands what the new legislation says. It is common knowledge that only one or two of our legislators actually read the whole 2700 pages, and those who did only read it so they could make trouble for the President at his Bipartisan Healthcare Roundtable this past spring. (You know who you are, Paul Ryan.)

Remember when Nancy Pelosi said, “We have to pass the bill so we can all find out what’s in it,” and all the Republicans jumped all over her for making such a stupid remark? Well, DrRich is here to tell you that Nancy was displaying uncommon wisdom. Because DrRich now has read large parts of the legislation himself, and can say with confidence that the bill is not merely lengthy, convoluted, and difficult to understand. Rather, its meaning is fundamentally indeterminate.

The indeterminacy of the bill’s language was, of course, intentional. It was done so that, for instance, some legislators could be assured that the bill disallowed Federally funded abortions, and other legislators could be assured that the bill encouraged Federally funded abortions, while the actual language of the bill could be construed to bolster either assertion. Therefore, Speaker Pelosi’s silly-sounding statement was not only correct, but also was probably the most insightful commentary on the bill we’ve heard from any public official.

The bill is now being torn into bits by multitudes of officious bureaucrats, and translated into millions of pages of rules, regulations and guidelines, and then key aspects of those new rules, regulations, &c. will be fought over in courts of law. Once all that is finished, we can all find out what was in it. Just like Nancy said.

In the meantime, whatever the details of our new healthcare system turn out to be, there is a certain clear narrative to our ongoing healthcare saga that, once you understand it, will go a long way toward enlightening you about what’s really going on.

And so, as a public service, DrRich will now explain all this to you in a very simple way, so that – whatever jive you’re hearing from politicians or journalists – you will always get it. For, once you understand a few key concepts, this thing is really pretty easy to follow.

The Fundamental Problem

The fundamental problem with American healthcare is this: None of the pools of money we have created (or ever could create) to pay for our healthcare – whether those pools of money reside with the insurance companies or the government or both – can possibly buy all the healthcare that might benefit all Americans. This means we have to ration healthcare (i.e., intentionally withhold at least some beneficial healthcare from at least some of the people who would benefit from it). But because we’re Americans and Americans don’t ration, we (and in particular, our political leaders) are unable to address this need to ration openly and forthrightly. Therefore, the unavoidable rationing is being conducted covertly.

Until now, most of the covert rationing has been overseen by the health insurance industry. This, indeed, from the very beginning was the primary purpose of modern health insurance companies, as determined by Congress itself when it legislated the formation of HMOs. (See the ruling of the U.S. Supreme Court in Pegram et al. v. Herdrich (98-1949), 530 US 211, 2000.) So, when the health insurers engage in cherrypicking patients, denying medically necessary services, coercing doctors to ration at the bedside, retrospectively canceling the policies of patients after they get sick, and doing everything short of dispatching teams of Ninjas in the dark of night to slaughter some of their more expensive subscribers in their sleep, they are not really being evil. They are only carrying out the job that had been assigned to them by our society. Covert rationing is a dirty, thankless job, but somebody’s got to do it.

The major sin of the health insurers is that, despite their Herculean efforts to harness covert rationing to control costs – and despite the wondrous incentive of greater profits if they do so – they have utterly failed in their assignment. Healthcare costs continue to rise at 3 – 4 times the rise in the cost of living, and within the next couple of decades promises to bring our republic to its fiscal knees (even without all the other stuff that’s making our deficit explode).

This is the healthcare crisis, and it’s real. We simply cannot actually spend $40 trillion on Medicare patients over the next three or four decades (as we’ve explicitly promised the baby boomers). The only real question is whether we will avoid spending all that money thanks to societal disruption and revolution, or by some more civilized means. (The fiscal implosion of our society would of course finally fix our healthcare crisis. Healthcare, far from being an essential and indispensable human need, actually is a luxury, a recent artifact of our advanced, stable, and affluent culture. Runaway healthcare costs, by bringing down our societal stability, will eventually provide its own cure.) Our current “healthcare reform process,” such as it is, is our stab at a more civilized means of addressing our looming impossible fiscal obligations.

What Is Healthcare Reform Actually Going to Reform?

What we are witnessing today is merely a rather messy changing of the guard. The primary responsibility for covert healthcare rationing is going to shift from the health insurers to the government.

The health insurance industry has run out its string. They have had 15+ years of virtually unfettered opportunity to get healthcare costs under control, and they have utterly failed. Over those 15 years, their attitude has evolved from arrogance to concern to abject fear. They finally and starkly realize that they have no clue as to how to control costs. As DrRich has pointed out for three years, the insurance industry has not been looking to block healthcare reform, but rather, was partnering with the reformers in the hope of finding for themselves a graceful exit strategy. They hope to gain one last windfall in profits and stock prices (from mandates and insurance subsidies for the tens of millions of currently uninsured Americans), and once that happens, they hope to settle into the business of administering, and processing transactions for, government controlled healthcare. That is, the insurers hope to become public utilities, since that’s way better than collapsing into oblivion.

So the overriding aim of healthcare reform, with the complete support of the insurance industry, is to conduct an orderly transfer of the pools of money with which we pay for our healthcare – along with the responsibility of managing “risk” and controlling the cost of care (i.e., covert rationing) – away from private insurers and to the government.

Understanding the Players

Government control of healthcare, of course, is precisely what the Republicans accuse the Democrats of wanting, and what the Democrats angrily deny they want.

Understanding the Republicans. Republicans as a group cling to the quaint notion that competition among insurers is all that is needed to reduce healthcare costs; that given the right market incentives, the insurance industry – in its wisdom – will bring healthcare inflation under control. They utterly fail to hear what the insurance companies themselves have said (by their actions): “No mas!”

The Republicans’ arguments ring hollow. It is useless to protest that the Democrat plans will lead to rationing, when not only do we already have rationing, but covert rationing in fact has been the official cost-cutting “plan” assigned to HMOs for decades now. It is useless to protest that 85% of Americans like their current health insurance, when the fiscal reality is that health insurance will change drastically for all Americans over the next decade or so, whether we change it by design or not. It does not matter that a lot of Americans like the health insurance they have now. Keeping it over the long term is not an option.

To a very large extent (DrRich is sorry to say, what with his conservative leanings and all), with such arguments the Republicans have made themselves nearly irrelevant in the current discussion.

Understanding the Democrats. The Democrats were handed the opportunity of a generation. They had a major advantage that Democrats of the Clinton era did not have: the health insurance industry is finished, and the industry knows it. The insurance industry was not going to let this effort fail.

The chief difficulty remaining for the Democrats is that (for their own survival) they must pretend they are not engineering a government takeover of healthcare, when in fact they are. As we have seen, there is not really much choice here. They must take over healthcare even if they don’t want to (though many of them do), because the health insurance industry is finished. The pretense is necessary, however, because the notion of government-controlled healthcare is not something the people – or even many Democrats – want, or are willing to tolerate.

Like the odious job of rationing healthcare (which they have now inherited in entirety), the Democrats must attempt to keep the complete government takeover of the healthcare system as covert as possible.

Which brings us to the biggest problem of all for the Democrats. They now have to take control of covert healthcare rationing. Covert rationing will be much more difficult for a government-run system than it has been for insurance companies. A government healthcare system will not have the opportunity to incorporate the most effective rationing techniques that have been available to the insurance industry – cherrypicking patients, for instance, or canceling the policies of people who get sick. Nor will the government be able to get away with summarily denying patients needed medical services – a standard tactic of HMOs. This is especially true now that chief Republican intellectuals have called everyone’s attention to the possibility of death panels. The unwashed masses, having been duly alerted to the government’s intentions of withholding life-saving healthcare, will now be on the lookout for “unreasonable” denials of care. Any move by the government to refuse to pay for a particular medical service will have to be supported by extremely convincing clinical data (which itself will be very expensive to collect), and even then Americans may not quietly accept such denials. The “death panel watchdogs” will be alert for every move the government makes, and will be quick to howl an alarm.

So the Democrats have won a huge and historic victory. But they are just beginning to figure out what a tiger they have by the tail.

The Bottom Line

As long as we pretend we don’t have to ration our healthcare, any reforms we invent – whether we do it as Republicans or Democrats – will merely add to the confusion, inefficiency, waste, inequity, and ineffectiveness of our healthcare system. How anyone can think that a process so fundamentally grounded in obfuscation and deception as the one we’ve just witnessed will result in anything good is quite beyond DrRich’s comprehension.

Real reform would require us to:

A) Minimize the necessity of imposed rationing by having patients themselves make as many of the spending decisions as possible, using their own money. (Subsidies could be provided to people who don’t have enough of their own money to pay for routine healthcare.)

B) Provide everyone with a high-deductable, catastrophic insurance product to cover non-routine medical expenses. This is where the necessary rationing would take place, but the rationing would be open, transparent, and determined through a public process.

C) Create a private market for “extra” health insurance for those who choose to supplement the universal catastrophic plan with their own funds.

But of course, any plan that relies on both personal responsibility and open rationing is a non-starter. Which is why we are going to get what we are going to get.

Loyal readers will know that DrRich has long believed that passage of healthcare reform was inevitable – but not because the President wanted it, or because Democrats controlled Congress, or because the people wanted it. It was inevitable because the American health insurance industry absolutely needed it.

Health insurance companies find themselves at the place in their industry’s life cycle where, for the very first time, they have to try to make a profit by actually taking care of sick people. They have never done that successfully, and never will. They have tried every underhanded trick imaginable to avoid paying benefits to their subscribers, and have already raised insurance premiums to the very breaking point. But patients are getting older and sicker, and expensive drugs and medical devices and other technologies keep coming on line. The insurance industry’s profit margins (already small) are rapidly eroding. Its business model is irreparably broken. What the health insurers need more than anything else is a graceful exit strategy – whether it’s a buyout from the government, or a conversion to a public utility. And the only way they’re going to get such an exit strategy is through a fundamental reform of the American healthcare system. Hence, this is what they must have.

It is already difficult to remember how remote the possibility of healthcare reform seemed only two months ago, immediately after the election of Scott Brown in Massachusetts. Conventional wisdom at that time was that the kind of sweeping reforms the President wanted (and that we’ve now received) had become impossible. And the President himself seemed to confirm that opinion in his State of the Union message, in which he gave healthcare reform only a few, almost wistful paragraphs, and only after talking for 20 minutes about more pressing concerns. NPR’s take was, “Obama Treads Lightly On Health In State Of The Union,” and reported that the President seemed now “willing to reopen the discussion to accommodate better ideas on how to remake the nation’s health system.”

DrRich believes he was the first to point out, on February 18, that the health insurance companies, faced with a broken business model and in imminent crisis, would not allow healthcare reform to die, and must necessarily act in some dramatic way to resurrect it, and indeed – with the announcement of a 39% premium increase by Anthem Blue Cross in California – had just done so. While other, more mainstream pundits entirely missed its significance, DrRich patiently explained to his readers that Anthem’s ostensibly ill-timed announcement was actually a purposeful strategy, carefully calculated to inject new life into healthcare reform. And of course, it worked.

Now, belatedly (i.e., on March 20), lesser pundits (such as those who work for the New York Times) have come around to DrRich’s way of thinking, and have pointed to the Anthem announcement as a major turning point in the healthcare reform saga. Indeed, some reporters (who, admittedly, are even more on the fringe than DrRich) claim to have uncovered a conspiracy, in which Angela Braly (the CEO of Wellpoint, parent company of Anthem) is claimed to have actively conspired with the Obama administration to save healthcare reform.

This is an interesting allegation, but DrRich generally does not believe in conspiracies, at least, not in conspiracies which are larger than those necessary to cheat at bridge. The fact is, one does not need to invoke any kind of conspiracy here. Anthem/Wellpoint was merely acting in its own corporate best interests. If their announced rate hike proved insufficient, we would have heard of even more astounding rate hikes by other insurance companies. Whatever it took.

DrRich has been saying since 2007 that the health insurance industry, more than any other player in the healthcare system or in the government, absolutely needed healthcare reform, and needed it now, and for that reason alone, in one way or another, we would get healthcare reform.

And that’s exactly what happened.

DrRich is not smart enough to predict what specific bribes, threats or subversive parliamentary maneuvering will finally win passage of the President’s healthcare reform. However it comes about, DrRich thinks the result will be bad.

DrRich arrived at this opinion through a long process, lasting many years, that changed his thinking on the proper role of our government in our daily lives. One key event within this long process, which he related in his book, first opened DrRich’s eyes regarding the essential benignity of our government as it administers its assumed role as guardian of the people’s healthcare.

DrRich reproduces this vignette here:

One afternoon in June of 1994, I was summoned to a meeting by a vice president of the hospital for which I worked at the time. Meetings, especially unannounced ones, are the bane of employed physicians; but this one, I was led to understand, was mandatory.

I found the meeting room filled with high-ranking hospital administrators, hospital attorneys, and my clinical chairman. A gathering of luminaries such as these, especially on short notice, was decidedly rare. As I walked into the room all eyes were on me. I knew all these people; they’d been my friends and colleagues for years. We’d been fighting the healthcare wars side by side. But now they studied me as if seeing me for the first time.

“Who died?” I asked, just to break the ice.

“To be determined,” responded one of the lawyers.

They got right down to business. The chief hospital attorney explained: The federal government, in the guise of the Office of the Inspector General (OIG), had launched a major investigation of allegedly improper Medicare billing practices related to the use of investigational implantable cardioverter defibrillators (ICDs) in the late 1980s. This investigation, I was told, had begun as a whistleblower law suit out on the west coast, and the feds were now expanding their inquiry. The OIG had just subpoenaed records from approximately 120 of the largest hospitals in the country that implanted ICDs. We were one of the 120.

Now I understood why I was here. As Chief of Cardiac Electrophysiology, research with the ICD was one of the major endeavors of my career. The ICD is a device that is designed to prevent sudden death in patients whose cardiac disease makes them susceptible to such an event. Once implanted, the ICD recognizes the sudden, lethal heart rhythm disturbances that cause nearly instant death, and automatically delivers a shock to the heart to restore it to a normal rhythm. It is a remarkably effective device, and was obviously so from the very beginning. Seldom, in fact, has a more dramatically effective life-saving therapy ever been devised for any illness or disease. For this reason, as long as I had access to these devices I (and most electrophysiologists), felt morally obligated to offer them to any eligible patients who were at high risk for sudden death.

So now I understood why I had been summoned to the meeting. What I didn’t understand was why the Feds thought we’d done anything wrong.

“We shouldn’t have any problems there,” I protested. “You’ll recall that we looked into the legality of billing for ICDs back in ’87 when I first started working here. And Medicare said it was okay.” While I was an employed physician (and so the hospital handled all the billing for my services), I’d had enough concern about billing Medicare for investigational devices that I’d insisted the hospital get clarification from our Medicare Intermediary (the local agent and representative for Medicare) on the matter.

One of the attorneys answered. “That’s right. The Medicare Intermediary indicated at the time that there was nothing illegal about billing for the ICDs, but couldn’t guarantee they’d pay for them. As it turns out, they’ve paid for each one we’ve implanted, and never questioned our using them.”

“Then what’s the problem?”

“Medicare now says we’ve been in violation by sending the bills,” the lawyer replied. “There’s apparently an obscure instruction in the Intermediary’s guidebook that prohibits billing for some investigational devices.”

“But we got clearance from the Intermediary,” I protested.

“And that’s the defense we’ll take. The Intermediary itself didn’t know about this instruction. But unfortunately, Medicare operates a little like the IRS. If you call the IRS with a tax question and they give you bad advice, it’s your fault if you follow that advice. The fact that the Medicare people were unaware of their own rules, and apparently told us the wrong thing, doesn’t absolve us.”

“So what’s the worst case scenario?” someone asked. “That we’ll have to pay all the money back?”

“The monetary penalties are much worse than that,” intoned the CFO. “We’re looking at over 100 investigational ICDs that the good doctor here has implanted,” he said, glaring at me. “And at about $25,000 each, that’s a pretty penny right there. But the Feds are also talking about a $10,000 fine per incident, plus triple damages, so we’re really looking at several tens of millions of dollars we can’t afford. What’s worse, the fact that the OIG joined the whistleblower’s actions suggests that they’re going to claim we intentionally violated Medicare regs – which could mean jail time.” He was looking at me again when he said “jail.”

“Don’t worry,” a vice-president said to me sympathetically. “We’re all in this together. We’ll help you as much as we can.”

“What do you mean, you’ll help me?” I shot back. “I just work here. You do all the billing, keep everything you collect, and pay me a paltry salary.”

“Like I said, we’re all in this together. But those bills do go out under your name, Dr. Fogoros. As far as Medicare is concerned, they’re your bills.” As I’ve since learned, when the feds begin pointing their fickle finger, it’s customary for everybody to dive for cover.

For the next two years my life was plagued by a series of complex machinations – legal probes and parries – made in response to the Feds’ investigation of our supposed “fraudulent” submission of bills. I won’t bore you with the details – I’ll just hit a few highlights.

First, my hospital threw in with two dozen other large hospitals from all over the U.S. that were also affected by the OIG’s subpoena, and together we hired a fancy inside-the-beltway law firm that specialized in healthcare law. These attorneys ultimately determined that the obscure regulation the OIG was invoking against us had itself been illegally promulgated, and therefore should not be enforceable. Accordingly, our hospitals sued Donna Shalala, Secretary of Health and Human Services (HHS) in federal court to prevent her from enforcing this obscure, previously unknown, and (we held) illegal rule. “We have maybe a 50-50 chance of winning this suit,” I was told by one of our attorneys, “but it won’t be settled for years.”

While all this was going on, the subpoenaed hospitals also lobbied Congress to act on the essential unfairness of it all. “Look,” the hospitals said, “we’ve got one agency of the federal government (Medicare) coming after us for doing research that had been duly approved by another agency of the federal government, the Food and Drug Administration (FDA). We need laws to make the Feds behave consistently. When the FDA approves clinical research, Medicare should allow patients to avail themselves of that approved research.” Finally, in November of 1995, Congress passed just such a law. “So we’ve won!” I exulted when the hospital attorney called me with the good news. “Not exactly,” was the reply, “The OIG prevailed on Congress not to make the law retroactive. So the OIG is still coming after us for what they say we did in the 1980s.”

Then, in January of 1996, the Feds launched a new attack. Senator Roth, Chair of the Senate Finance Committee, decided it would be in somebody’s best interest to have a showcase hearing, highlighting the grievous crimes against Medicare that are being promulgated by avaricious physicians and institutions like me and mine. So the Permanent Subcommittee on Investigations sent subpoenas to the CEOs of several hospitals from the OIG’s list of 120, mandating that they appear before that committee on Valentines Day (i.e., heart day) to answer questions regarding the allegations that we’d committed Medicare fraud in our use of the ICD. It was to be a real circus – it was to be covered on C-SPAN, with major networks in attendance and lots of national publicity. The works.

Immediately, there was a mad rush to have the subpoenas quashed. All the hospitals from states whose Senators were members of the Finance Committee managed to be excused from appearing. At the end of the day, only four hospitals remained. Mine was one.

I was sure my career had ended. My family, friends, patients and colleagues were about to see the CEO of my hospital appearing before a hostile Senate Investigational Committee answering questions on the Medicare fraud that I supposedly had committed. I knew it didn’t matter that I hadn’t done anything wrong. Truth is only a compilation of some facts, whereas perception is everything.

I spent two days in Washington helping the fancy beltway lawyers prepare our CEO for his testimony. I failed miserably in my emotional pitch to be allowed to testify in his stead (the CEO had been subpoenaed, not me; and besides, anyone who seemed eager to testify before Congress must be crazy enough to get us in trouble). But at least I managed to convince the CEO that we should take a hard line with the subcommittee. After all, we had truth, righteousness, ethics, and possibly even the law on our side. We shouldn’t allow ourselves to be intimidated.

Each witness was to be permitted to read a statement into the record before the questioning began. Our attorneys had prepared a 10-page statement that was vague, wishy-washy, filled with legalese, and as nearly as I could tell, didn’t deny wrongdoing as much as it promised we’d be more careful next time.

So I prevailed on the CEO to tear up this lawyered-up document and instead use a one page statement that I wrote for him, saying, in essence: 1) We implanted investigational ICDs in Medicare patients because they were at high risk of dying without them, and to withhold such life-saving devices when they were available to us would have been unethical and would have constituted malpractice. 2) Before implanting the investigational ICDs, approval for their use was obtained through the FDA. 3) Before billing for the investigational ICDs we asked for and received clearance to do so from our Medicare Intermediary. 4) The records and documents we sent Medicare in support of our billing for these ICDs clearly indicated that the devices were investigational, and yet Medicare reimbursed us each time, over a period of several years and without questioning our actions or our bills. 5) The rule Medicare is now invoking was unknown to us during this period of time, and also, apparently, was unknown to the Medicare Intermediary. 6) In any case, as we have asserted in federal court, that regulation was illegally promulgated, and is therefore not a legal rule. 7) Congress has agreed that regulation to have been at least an ill-advised one, as evidenced by the fact that Congress recently passed legislation that now renders that regulation illegal, whatever its previous legality. 8] If they now assert that our actions constitute fraud, then the message the OIG, Medicare and the Senate subcommittee is sending to the public is that doctors and hospitals are expected to discriminate against the elderly, and will be called to task by the federal government if they refuse to do so. 9) Thank you for your attention.

The hearing was indeed quite a show. The whistleblower himself was the first witness, and he entered the chamber wearing a hood to hide his face, sat behind a screen, and spoke with his voice electronically distorted. This was the first time in history, I was told, that a witness had appeared before Congress disguised in this way, except in hearings featuring Mafia turncoats, drug lords, and the like. The implication, I presume, was that I and my fellow cardiac electrophysiologists were no less evil or potentially violent than other, more famous sorts of felons; and that if we learned this guy’s identity his life wouldn’t be worth a nickel.

Then it was us perpetrators’ turn to testify. The CEOs of the other three subpoenaed hospitals, after reading their lengthy, lawyerly and seemingly contrite statements into the record, were grilled mercilessly by the Senators of the subcommittee. Our CEO was the last witness. Once he read our brief but much more aggressive statement, the Senators seemed not to have any substantial questions for him. His testimony was over almost before it had started. Our hard line had paid off.

One more blessing occurred on that day. Somebody apparently found some Whitewater documents that weren’t supposed to have existed, so ten minutes before the hearing, C-SPAN pulled out and went running down the hall to televise the Whitewater doings. All the other news media went with them. Our hearing, despite the big build-up, the dramatically disguised whistleblower, and the fact that it was Valentine’s Day, barely made the news. The lack of national news exposure (and as a result, the lack of local news coverage) spared my reputation and that of my hospital.

Then finally, later in 1996, a federal judge ruled in our favor in our suit against HHS – the regulation Medicare was invoking, the judge ruled, had indeed been illegally promulgated. The OIG still didn’t give up, but in the end offered a settlement deal to the hospital for a mere million or two (which, by this time, was less than we had already spent defending ourselves), and nobody would have to admit to wrongdoing or go to jail or have a criminal record.

DrRich is not complaining. This episode could have turned out a lot worse. And the whole ordeal provided him with enough amusing anecdotes to last a lifetime. But having the Feds coming after him for more than two years was truly an eye-opening experience.

As DrRich sees it, the rightness of his actions seemed completely obvious. He had used those ICDs because his high-risk patients needed them, and from every indication their usage was legal and proper. But, in the service of his patients he had failed to discover a vague, obscure and difficult-to-interpret rule that existed in the Medicare Intermediary’s guidebook (a guidebook to which he had no access). As a result DrRich had been caught up in the Fed’s great anti-fraud initiative.

For over two years DrRich could never be sure of what was going to happen to him. There were periods of days at a time, usually just after another round of legal punches and counter-punches, when there was little else he could think of. (Would he lose his job, his career, his reputation, all his worldly possessions – would he go to jail?) During those times DrRich was of little use to anybody – colleagues, family or patients.

Of course, in the end it all turned out just fine – but the reason for the favorable outcome wasn’t that the Feds finally agreed that DrRich’s actions had been appropriate and non-fraudulent. It was because his lawyers had found a legal technicality in the Fed’s own actions. Had it not been for this entirely fortuitous discovery, who knows what might have happened?

So DrRich has seen a side of the Feds that most doctors have not, and he is willing to admit to a more robust paranoia on the subject than most would have at this moment. The way it looks from here, the government – at least sometimes – is willing to go to great lengths to prove just how rife with fraud is our healthcare system, and, once the Feds set their sights on an alleged perpetrator, they are pleased go to equally great lengths to bring that supposed perpetrator down. At least sometimes they’re willing to base their prosecution on bad rules that are poorly written, illegally promulgated, and hidden away in obscure manuals; they’re willing to ignore the fact that the alleged perp had relied on advice from the Feds’ own agents before proceeding; they’re willing to summon that perp before a televised, circus-like inquisition to be publicly humiliated for actions that, just a few months earlier, they themselves had passed explicit laws to endorse; and they’re willing, when all legal justifications for their persecutions have at last been taken away, to make a final demand, that some might consider extortionate, for a cash payment before they’ll go away.

At least, that’s how it looks from here.

It is not DrRich’s position that the Feds have been engaging in an unmitigated orgy of illegitimate anti-fraud activities over the past dozen years or more. He is sure they have not. Indeed, most of the anti-fraud activities the Feds have undertaken have undoubtedly been legitimate and useful. Furthermore, DrRich fully understands that any get-tough government initiative – whether it be anti-fraud or anti-terror – has got to have teeth, and that it is natural if regrettable that occasionally, a few innocents will be ensnared in such efforts. DrRich admits the possibility that his frightening experience may represent nothing more than the collateral damage that will naturally happen whenever the sovereign power finds it necessary to wield its great hammer in the overriding interest of the public good.

But forgive DrRich if he believes it is more likely that the experience he has just related represents instead an early glimpse into the government’s methods of intimidating and controlling doctors who, without these kinds of necessary checks, will, in caring for their patients, simply keep doing whatever they’d like with the government’s money. DrRich happens to believe that the utter unpredictability, arbitrariness, doggedness and seeming absurdity of the government’s actions in his own case was not accidental. These techniques are essential to the Feds’ goal of keeping their prey (i.e., physicians) intimidated, completely off balance, and in their thrall.

As evil as we all know the health insurance industry to be, DrRich (and any physician who knows anything about it) would much rather attempt to appeal to/defy/maneuver against/manipulate private insurers for the benefit of their patients (since the worst these entities can do is withhold payment), than do anything whatever – either for the patient’s benefit or for any other reason – that would risk engendering the enmity of the great, slavering, merciless sovereign authority.

Just a thought, as we embark on our new government-controlled healthcare system.

Podcast:

 

 PCPs: Here's All You Need To Know About Our New Healthcare System [14:47m]: Play Now | Play in Popup | Download (11)

DrRich has decided it is time to begin studying the 2700-page healthcare reform bill that the Senate passed on December 24, as that is the bill which will actually become the law of the land. In the fall, DrRich had spent quite a bit of time with the House bill. This was such a painful and useless exercise that DrRich decided he would not waste any more of his time with proposed legislation, but instead (as Nancy Pelosi has wisely suggested) would wait until Congress passed a bill so he could find out what’s in it.

Now, DrRich does not have the stamina to study the new law all at once, as a whole. He must bite off little pieces. And the first thing he sought in embarking on his study of our new healthcare system was evidence of how the new law would rescue the Primary Care Physician.

This is important, since everyone acknowledges that we have a severe shortage of PCPs already, and when we add 32 million Americans to the rolls of the insured, that shortage will become extremely acute. Further, we know that very few medical school graduates are deciding to become PCPs, and further, that the PCPs who are in practice today are becoming older rapidly, and many may not be around in 10 years (or even in 10 months, once this reform bill passes).

As we all have heard, our President and his Congress have explicitly recognized the problem, and have frequently explicated on the need to build up and support our beleaguered primary care workforce. They have promised that their healthcare reforms will aggressively address this issue. And it is largely due to this promise that prominent physician organizations, like the AMA (which really represents a relatively small minority of the medical profession) and the American College of Physicians (which represents a large proportion of internists, of whom many are PCPs), have come out in support of the President’s reform efforts.

DrRich believes, of course, that for the Feds to suddenly make themselves the champions of PCPs, after spending nearly two decades systematically rendering primary care medicine a completely untenable proposition for American physicians, would be an unlikely outcome for any reform bill. Just to remind his readers, here’s what DrRich has previously observed about the carefully engineered plight of the American PCP:

“Their pay is determined arbitrarily by Acts of Congress, not by what they’re worth to their patients or to the market, and indeed in this way PCPs have a lot in common with workers in the old Soviet collectives.

They are directed to “practice medicine” by guidelines and directives which are handed down from on high; guidelines which, being forcibly based on what is called “evidence-based medicine,” necessarily address the average response of some large group of patients to the treatment being considered and do not allow much if any latitude for an individual patient’s needs; and which are often promulgated less to assure the excellent care of patients and more to further the agenda of various and competing interest groups, professional, governmental and otherwise.

They are limited to between 7.5 and 12.5 minutes per patient encounter (depending on the third party that controls a given patient’s medical care), and the content of what must occur during those 7.5 minutes is strictly determined by sundry Pay for Performance checklists, so as to strictly limit any interchanges between doctor and patient that do not meet the approved agenda for such encounters.

Their every move must be carefully documented according to incomprehensible rules, on innumerable forms and documents, that confound patient care but that greatly further the convenience of healthcare accountants and other stone-witted bureaucrats who are employed specifically to second-guess every clinical decision and every action the PCP takes.

They are expected to operate flawlessly under a system of federal rules, regulations and guidelines that cover hundreds of thousands of pages in immeasurable volumes that are never available in any readily accessible form. If they do not operate flawlessly according to those rules, regulations and guidelines, they are guilty of the federal crime of healthcare fraud. Furthermore, the specific meanings of these rules, regulations and guidelines are not merely opaque and difficult to ascertain, but indeed they are fundamentally indeterminate – that is, no individual or group of individuals in existence can say what they mean. So, PCPs operate under a massive quantum cloud of rules as best they can, but their actual status (regarding healthcare fraud) is, like Schrodinger’s cat, fundamentally unknowable – until the “box is opened” (typically through criminal prosecution), whereupon the meaning of the rules is finally crystallized in a court of law, and doctors who had been practicing in good faith find that they have at least a 50- 50 chance (like the cat) of learning that they are actually professionally dead.

Worst of all, PCPs have been charged with the duty of covertly rationing their patients’ healthcare at the bedside, and they have been pressed to nullify the classic doctor-patient relationship, by the healthcare bureaucracy that determines their professional viability, by the United States Supreme Court, and by the bankrupt, new-age ethical precepts of their own profession.”

How does our new healthcare law propose to “fix” these problems? DrRich can find two proposed solutions in the Senate bill.

First, the new law promises to address some of the pay discrepancy which punishes doctors for going into primary care specialties. It is unclear to DrRich how much this new pay fix will bring to PCPs. He will merely observe that, until now, the Feds have intentionally rendered primary care medicine such a soul-wrenching, personally and professionally demeaning endeavor that it has pushed most PCPs beyond mere anger, frustration, or resignation. Many of them are desperately looking for any practicable exit strategy. And to DrRich’s thinking, since it is not primarily their relatively low income that has caused all this anguish, a mere boost in income cannot overcome it.

But, of course, that’s for the PCPs themselves to decide.

Second, the new law proposes to fund new training opportunities for PCPs. This also sounds nice. But DrRich wonders what effect these new training programs will have, when the training programs that already exist cannot come close to filling their slots.

DrRich contends that these two stated “fixes” for manufacturing more PCPs cannot possibly provide an actual solution to the PCP shortage, and further, that the authors of the Senate bill cannot possibly believe they will. And so, DrRich decided to look a little deeper.

The answer to the PCP shortage – at least, the answer our political leaders are actually relying upon – is revealed deep in the Senate bill, in Section 5501, where the definition of “Primary Care Practitioner” is actually provided. Note, first of all, that once this bill becomes the law of the land, “PCP” will no longer mean “primary care physician,” but rather, will mean “primary care practitioner.”

And here’s how the new law defines Primary Care Practioners:

The term ‘primary care practitioner’ means an individual who —

(I) is a physician (as described in section 1861(r)(1)) who has a primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine; or

(II) is a nurse practitioner, clinical nurse specialist, or physician assistant (as those terms are defined in 9 section 1861(aa)(5))

And so, to his readers who are primary care physicians, DrRich must report that the real “fix” your political leaders have envisioned for the PCP shortage has been to declare you and nurse practitioners to be functionally (and legally) equivalent. This, DrRich submits, is all you need to know.

Having painstakingly reduced you unfortunate practitioners of primary care medicine to tools of the state – whose job is to follow the guidelines and place chits on the checklists which are handed down from on high, and to fill out the electronic forms which are designed not to advance patient care but to convenience the healthcare accountants who will thereby judge your “quality” – it is only natural for the central authority to eventually notice that you really don’t need all that training to do the kind of job they have invented for you. Nurses – who can be “trained up” much more rapidly than you, who will work for much less money than you, and who (they think) will be much less recalcitrant about following handed-down directives than you – will fill the gap. And you, doctor, can go pound salt.

DrRich must hasten to add, by the way, that, regarding the nurse practitioners, he believes the Feds have miscalculated. DrRich knows a lot of nurse practitioners and greatly admires their professionalism. He believes that “PCP” has been so successfully demeaned that many fewer nurse practitioners than our political leaders think will actually jump at the opportunity to become one (especially when you take into account the liability you assume when you become a PCP in a non-tort-reform paradigm like the one our leaders have made for us). Trusting in their common sense, DrRich will leave the nurse practitioners to their own wise counsel.

To his primary care physician friends, who have bravely held on, clinging to the promises made by our political leaders that their noble efforts will not go unrewarded, and to the assurances made by their own professional organizations that all will be well once the system is reformed, DrRich is forced to say: Told you so.

He also reminds you that it is still not illegal to opt out, and urges you to consider that it soon might be.

The U.S. Congress has been distracted from the vital issue of healthcare reform in recent weeks, due to the prospect of elections of one form or another (that is, Scott Brown’s, or their own). It may be a little difficult to understand why the Democrats – who still hold the Presidency, a large majority in the House, and a 59 to 41 majority in the Senate – suddenly seem to be so very disheartened, to the point of virtual paralysis, on healthcare reform. Healthcare reform, after all, is the crowning jewel in their agenda to fundamentally change America as we know it.

While President Obama, Speaker Pelosi, and a few other stalwarts seem to understand that passing healthcare reform would be worth almost any price that might be extracted by the electorate in November, less principled (and more at-risk) members of Congress, who are apparently less dedicated to a certain ideology than their leaders, apparently see it another way.

And so, from all appearances, things appear to have stalled on healthcare reform.

But while our political leaders seem willing at this moment to take a breather – either to lick their wounds and regroup, or to celebrate an important tactical victory – one interested party in the healthcare reform wars cannot afford to rest.

That would be the health insurance industry.

As DrRich has pointed out before, the health insurance industry is the one entity that simply cannot afford to wait. They need healthcare reform now.

The health insurance industry has pretty much run out its string. The era in which insurers can increase their market cap by acquiring public assets (i.e., non-profit institutions) for a fraction of their true value, and by making mergers and acquisitions, is pretty much over. For the past few years insurance companies, for the first time, have had to try to make a profit by taking care of sick people. They have never done that successfully, and never will. They have tried every underhanded trick imaginable to avoid paying benefits to their subscribers. They have already raised insurance premiums to the very breaking point. But an uncooperative public insists on getting older and sicker, and greedy drug and medical device companies insist on bringing ever-more expensive technologies to the clinic. The insurance industry finds its profit margins (already small) rapidly eroding. The industry’s business model – taking in inflated insurance premiums, then attempting to withhold medical services – is irreparably broken.

As a result, what the health insurance industry needs more than anything else is a graceful exit strategy. And Mr. Obama’s healthcare reforms promised them that very thing. (What, exactly, they have been promised is largely a matter of conjecture, but most likely they will take on a role in administering government-funded healthcare, quite possibly assuming the role of a public utility.)

Whatever may be the particulars of the “deal” the health insurance industry struck with the reformers, that deal offered them enough to purchase their silence during the entire roiling debate over healthcare reform through the summer, fall and winter. They have stoically (almost cheerfully) accepted their assigned role as “villain” in this set piece, and have silently borne the public “attacks” the President and his soldiers have dutifully launched against them in an effort to drum up support for their reforms. All the nasty things the Democrats have said about them, the industry understands, are necessary components of their last best hope to salvage something serviceable out of their broken business model. No Harry and Louise this time!

Despite this symbiotic relationship, the reforms envisioned by the Democrats and the insurance industry have now faltered. The stalling of the reforms, however, means very different things to these partners.

For the Democrats, while abandoning, or even substantially diminishing, the ambitious reforms they had in their sights might prove modestly embarrassing for a time, such is the nature of politics. When one overreaches, one pulls back and waits for a while, until the other side overreaches. Look at where the Republicans were just a year ago. A year or three from now, they may be back in a similarly diminished state – and the time for passing healthcare reform may again become propitious. If you’re a Democrat politician, you must take the long view.

But the insurance industry does not have that luxury. They are at the end of their tether, and their only alternative to a graceful exit strategy of the type (whatever it was) the President promised them, is a completely graceless one. Whatever happens or doesn’t happen with healthcare reform, the insurers can’t keep doing business as usual. DrRich believes the health insurance industry has been backed into a corner, and the doorway the Democrats were making for them is being nailed shut.

In such a situation, it is entirely predictable that the insurance industry will take some kind of drastic action, to try to force healthcare reform back on the table.

And last week, Wellpoint did so. Wellpoint’s California subsidiary, Anthem Blue Cross, announced it is raising its already-astronomical health insurance premiums by as much as 39%, a move that promises to greatly increase the number of Californians who are uninsured.

Kathleen Sebelius immediately fired off a public letter to the company, demanding that they justify this unconscionable rate increase. And Wellpoint, lustily assuming its assigned role as villain, was delighted to comply. We’re in a recession, Wellpoint brazenly asserted, and in a recession, like it or not, people exercise their prerogative to drop their health insurance. The only people who don’t drop their health insurance are the sick people or those who are likely to become sick, which means that our cost per subscriber goes way up. So naturally, we have to increase premiums. By a lot. It’s just business. That’s just the nature of our current, unreformed healthcare system. So choke on it.

Wellpoint was also kind enough to mention (for anyone dense enough to have missed the point) that the need for higher premiums would be nicely mitigated if everybody was mandated to purchase health insurance.

Wellpoint’s premium increase immediately triggered great volumes of delighted outrage by thankful Democrats, who really need a large dose of “evil insurance company” right about now, but it elicited only a few lame and uncomfortable attempts by stunned Republicans to diminish the significance of the unfortunate action.

DrRich would like to point out that, from a pure business standpoint, there was no good reason for Wellpoint to stir the soup at this moment. Wellpoint is the most financially sound private health insurance company. While its California subsidiary did lose money last year, overall the company performed quite well, and reported a very nice profit growth for the year. And with several of its competitors in trouble, Wellpoint stands to do comparatively well for the foreseeable future. So it stands to reason that, if Wellpoint really wanted healthcare reform to go away, they would have waited a few months before announcing their rate hike. It would have cost them very little to do so. The last thing they would have done is to throw the reformers a critical lifeline just as they were going under for the last time.

Wellpoint’s astounding premium increase was, DrRich submits, a strategic move to push health insurance reform back to the front burner.

The Republicans, many of whom believe that the failure of Obama’s healthcare reform will spell the failure of his presidency, have been thereby served notice. An angry electorate – which, at the moment, seems ready to punish Democrats for their attempt at passing an unpopular government takeover of healthcare – is likely to become even angrier if it turns out that the failure to reform healthcare will give the haughty insurance companies the green light to price even more millions of hard-working Americans out of the health insurance market. That species of anger will be directed toward the Republicans, and not the Democrats.

DrRich has always maintained that if healthcare reform is to happen, despite the incompetence of the Democrats who control everything, the reason it will happen is because the insurance companies cannot survive without it.

Accordingly, Republicans who understand what Wellpoint is telling them will think twice about skipping President Obama’s proposed bipartisan summit on healthcare, or behaving intractably if they do show up. If they fail to get the message, DrRich suspects that we will soon be hearing about additional, even more astounding, rate hikes.

In his last post, and not without some little trepidation over the propriety of doing so, DrRich offered to enter into a “constructive dialogue” with Bob Doherty of the ACP Advocate Blog, regarding the important topic of medical ethics. What occasioned this offer was the fortuitous selection of each of us as finalists in the 2009 Medical Weblog Award Competition, in the category of Best Health Policy/Ethics Blog.

Ever since the inception of the Covert Rationing Blog (and even before that, in his book) DrRich has taken strong exception to the new code of “medical ethics for a new millennium,” formally promulgated in 2002 by the American College of Physicians and several of its equally respected sister organizations (a grouping DrRich has termed the Millennialists). And when he saw that the ACP Advocate Blog (an official publication of a principle component of the Millennialists) had become a co-finalist for a Weblog Award in the category of medical ethics, DrRich could not resist offering to engage in a discussion over same.

DrRich is delighted to report that Bob Doherty, who, in addition of being the author of the ACP Advocate Blog, is also the ACP’s Senior Vice President of Governmental Affairs and Public Policy, has graciously agreed to the suggested exchange of ideas. Mr. Doherty reports that he will be posting a reply to DrRich’s “challenge,” once he finishes consulting with the ACP’s Center for Ethics, Professionalism and Human Rights. And so, dear readers, it appears that DrRich (your humble correspondent) has gotten himself into a situation. It appears he will be engaging – at his own instigation, no less – with actual, certified experts on medical ethics, regarding the topic: medical ethics.

DrRich can almost hear some of his loyal readers gasping: “Why, he’ll be skinned alive!”

But fear not. DrRich will not hurt him. DrRich does not flay anybody, and promises to remain entirely civil and friendly in this exchange. DrRich, upon his honor, will see to it that Mr. Doherty (and whatever friends he may enlist in the cause) will emerge from this encounter entirely intact, integumentarily speaking.

In fact, to show his great good faith (and to level the playing field), DrRich will now break with all the conventions of debate, and before Mr. Doherty posts his reply, will lay the rest of his cards upon the table, so that the opposition will have the advantage of knowing ALL of DrRich’s arguments before they commit themselves to an answer. That is how dedicated DrRich is to keeping this competition friendly and respectful and fair.

DrRich’s Argument So Far

In his previous, challenge-issuing post, DrRich described how the “New Ethics” advanced by the Millennialists obligates the physician to strive for the ethical precept of Social Justice, which is to say, for “the fair distribution of healthcare resources.” So the doctor is now charged with deciding which patients may receive, and which may not receive, certain healthcare resources. To say it another way, under this new conception of medical ethics the doctor is assigned the duty to ration healthcare, covertly, at the bedside.

DrRich further described how this New Ethics fundamentally wrecks the doctor-patient relationship, and thus leaves patients to their own devices within a hostile healthcare system. In addition DrRich asserted that, once they adopted this New Ethics, physicians surrendered their claim to the title “professional,” and accordingly, made themselves fair game to whatever treatment, tactic, or travesty that any more powerful interest group (such as trial lawyers or Congress or regulators or insurers) may choose to foist upon them. Physicians no longer have any ethical standing for turning such attacks aside. Rather, as non-professionals, their ability to withstand attacks can only be proportionate to whatever socioeconomic or political pressure they can muster. So, as DrRich sees it, the New Ethics promulgated by the Millennialists is pretty much a disaster for both doctors and patients.

This is the extent of the argument DrRich has advanced so far.

Here Are The Rest Of DrRich’s Cards

The Millennialists did get one thing right in this effort. They correctly diagnosed the fact that old-fashioned, “classic” medical ethics, as advantageous as it may have been to both patients and doctors, is no longer consistent with reality.

Under classical medical ethics, the doctor’s one and only ethical obligation was to the individual patient. And so, classic ethics did not allow for any limits whatsoever on the medical services a patient may receive. If some bit of available medical care might offer even a small nugget of hope, doctors were obligated to provide it, no matter how expensive it might be to do so.

It is important to recognize that classic medical ethics evolved during a time when medical technology was relatively primitive, limited, and cheap, and more importantly, at a time when patients paid for their own healthcare. So when classic medical ethics was formulated, “healthcare spending limits” (though nobody talked in such terms back then), were self-imposed, by the patient.

But over the past 60 years medical technology has become very advanced and very expensive. And even more to the point, we have evolved a payment system in which people who receive healthcare are spending not their own funds, but rather, are spending publicly-funded, pooled resources. (Those pooled resources are either funded directly through the government, or are subsidized by the public indirectly, through tax-deductable insurance premiums).

It is this collective funding arrangement that has made classic medical ethics obsolete. It is neither feasible nor ethical to leave all decisions on how to spend society’s pooled healthcare dollars to individual doctors and individual patients, who can “take” as much of this pooled resource as they think they’d like to have, with absolutely no constraints. Such an arrangement eventually and inevitably leads to fiscal ruin.

By the 1990s, because spending limits were absolutely necessary, but at the same time classic medical ethics precluded setting such limits, doctors were being coerced by the private insurers and government payers to establish those limits covertly, through bedside rationing. This was the problem faced by the Millennialists when they set out to reformulate medical ethics, and they were right to make the attempt.

But unfortunately, this is where the Millennialists dropped the ball and, as DrRich has shown, settled upon an answer that just made things worse.

The Right Medical Ethics

Medical ethics would be “right” if it could be made to comport with the classic notion that the doctor’s primary obligation is to his/her individual patients (thus preserving the classic doctor-patient relationship), and yet still respected society’s need to control the spending of its pooled resources. That is, the “right” ethics will recognize both society’s needs and the needs of individual patients, will recognize that those two sets of legitimate needs are often in conflict, and will provide an ethical framework for resolving these conflicts.

That ethical framework, DrRich is pleased to announce, is not that hard to conceptualize.

We can solve this problem if we think of the ethics of healthcare as being organized into two concentric spheres. The outer sphere holds the ethical precepts adopted by society to guide the behavior of the healthcare system for the benefit of the entire population; for example, to set overall limits on spending. These outer-sphere precepts help to ensure that the needs of society as a whole are served in an ethical manner by the healthcare system.

Contained within (and therefore subject to) that outer sphere of societal precepts is an inner sphere, which holds the ethical precepts that govern the behavior of individual doctors and patients within the healthcare system. Inner-sphere precepts help to ensure that the rights and needs of individual patients are addressed in an ethical manner.

So, while the physician’s primary ethical obligation must always be for the benefit of the individual patient, and therefore the physician must operate according to ethical precepts that honor this duty to individual patients (the inner-sphere precepts), their behavior must also conform with the ethical constraints imposed by society on the entire population (the outer-sphere precepts).

We can think of the inner-sphere precepts as an immutable core of ethical beliefs that serve the fundamental American commitment to the autonomy of the individual, and of the outer sphere as a coating, fashioned by society and therefore changeable, that places an adjustable (and ethically derived) limit on the individual’s ability to consume pooled resources.

The Inner Sphere – Ethical Precepts For Individuals

The inner sphere of ethical precepts – the core – fully preserves the two precepts of classic medical ethics: the precept of Patient Welfare, which requires the doctor to always act to the benefit of his/her individual patient; and the precept of Patient Autonomy, which requires the doctor to respect the individual patient’s right to medical self-determination. So the inner sphere precepts completely restore the physician’s sacred obligation to the interests of their individual patients. And thus, also restored are both the classic doctor-patient relationship, and medical professionalism.

But while individual welfare and individual autonomy are critical (and comprise the chief ethical obligations of the physician), there are still legitimate limits to what the patient (and doctor) can reasonably expect to receive from pooled resources. When a patient demands that everything possible be done for them, they are exceeding the bounds of autonomy if doing “everything” means that other individuals would thereby be deprived of what otherwise would be rightfully their fair share of those pooled resources. These necessary bounds on individual autonomy are defined by the outer sphere.

The Outer Sphere – Ethical Precepts For Society.

Under any equitable healthcare system we are going to have to carefully define our outer sphere ethical norms, because those are the standards that bound and govern the inner-sphere behaviors of individual doctors and patients. This “outer sphere ethics” is also comprised of two ethical precepts, Societal Beneficence and Distributive Justice.

Societal Beneficence (or social welfare) requires the healthcare system to attempt to maximize the overall public good realized from whatever pooled resources society expends on healthcare. Social welfare is not the same as patient welfare, because what is optimal for an individual patient may often reduce the overall benefit to society, and vice versa.

Distributive Justice requires the benefits of the healthcare system to be distributed fairly, that is, in a way that does not discriminate against individuals or groups based on who they are.

The outer-sphere precepts honor society’s right to accrue optimal benefits from whatever collective resources society provides toward healthcare. That is, the outer-sphere precepts recognize society’s legitimate interest in limiting and equitably distributing those collective resources – and indeed, recognizes its ethical obligation to do so.

Medical Ethics And the Spheres

With this framework it is easy to see why the American healthcare system is presently inequitable and unethical. A hallmark of our present system is the lack (thanks to our culture of no limits) of any attempt to define effective outer-sphere societal norms, which would bound the appropriate behavior of individual physicians and patients. This deficiency makes it entirely feasible, and very common, for some patients to soak up a disproportionate share of publicly funded healthcare resources, while others (though they are also paying into the system) are left with next to nothing.

Achieving equity should have nothing whatever to do with adjusting the inner-sphere precepts. Individuals in the United States (to paraphrase the Declaration of Independence) have a self-evident right to their individual autonomy. The inner-sphere precepts are granted to us by our founding documents, and as Americans we should avoid modifying the inner-sphere precepts at all costs, since, once we do, we are abandoning our foundational principles. (This means that the Millennialists have done more damage, with their New Ethics, than merely harming doctors and patients. They have begun – or continued – undermining the principle of individual autonomy upon which the United States was founded. ) (Sorry to have to mention it.)

It is the outer-sphere precepts – those that can be negotiated legitimately by society, and which can legitimately limit the scope of inner-sphere behaviors – that we need to get into proper order.

A properly functioning system of medical ethics, therefore, would require society to devise workable outer-sphere precepts, and through these ethical precepts, establish transparent rules for setting necessary limits on collective healthcare spending. Then, within that system of rules, doctors and patients would work together, under a fully restored doctor-patient relationship, to assure that every patient has access to all legitimately available medical options. And the doctor would be allowed (and expected) to leave no stone unturned in obtaining those legitimate medical services for his/her patient.

This arrangement is analogous to the attorney-client relationship, where the attorney, acting within the bounds imposed by the law (outer sphere norms), is expected to do everything within his/her power to see that the client gains every conceivable, allowable advantage (inner sphere behavior) as they navigate the complex legal system.

To further illustrate this point, we Americans are now engaged in a debate over whether the Christmas Underwear Bomber ought to be eligible to receive all the legal protections afforded to an American citizen under the law. It is notable that ALL the discussion in this case is in regard to whether American outer-sphere legal norms should apply to the terrorist. Nobody is suggesting that his attorney ought to abrogate his (or her, as the case may be) sacred “inner-sphere” obligations to this client, in order to achieve some sort of “fair distribution” of society’s legitimate interests. Nobody expects the terrorist’s attorney to refrain from advising him remain silent, for instance, even though that silence may expose us all to substantial additional harm. The lawyer’s inner-sphere obligations are secure, even here. Rather, the argument we’re having is strictly limited to how we should apply outer-sphere legal protections to this case.

It is the right argument to have. And it’s the very argument we should be having in regard to medical ethics.

And as much as DrRich does not like lawyers, he very much admires the tenacity with which they have preserved their fiduciary relationship with their clients – even in cases like this one. If physicians (and their organizations) had behaved with the professional integrity displayed by the despised attorneys, doctors and their patients would be in much less difficulty today.

A Plea

It is instructive to re-consider the New Ethics, which now has been formally implemented by the Millennialists, in light of DrRich’s proposed two-sphere system of ethics (which he audaciously labels “right ethics,” but to show his humility he will not use caps). The New Ethics can be seen to have resulted by the simple expedient of moving the outer-sphere principles of Societal Beneficence and Distributive Justice (lumped together as Social Justice) down into the inner sphere, where individual doctors are expected to deal with them.

You can’t actually do that, of course, because these are intrinsically outer-sphere norms. But nonetheless, New Ethics formally puts doctors into the position of having to serve the best interest of their patients (individual beneficence and autonomy) while at the same time, covertly rationing their patients’ healthcare (societal beneficence and distributive justice). It is quite impossible for individual physicians to reconcile these competing interests in any equitable sense, and charging them with the job of doing so is illogical, nonsensical – and (DrRich respectfully submits) unethical.

Doctors and patients would be much better served if physicians’ professional organizations, such as the ACP, would revisit their new-age Physician’s Charter on ethics. DrRich understands that our modern society is exceedingly reluctant to establish outer-sphere rules for limiting pooled healthcare resources, and for distributing them equitably. But that reluctance is not a sufficient justification for physicians themselves, through their professional organizations, to initiate and implement new ethical standards that sacrifice their sacred obligation to their patients.

My goodness, can we not muster up at least the ethical sensibilities of lawyers?

In what has quickly become a bad habit, DrRich once again provides a misleading title. Obviously, there’s plenty of waste and inefficiency in our healthcare system, enough to suit almost any taste, and DrRich deplores every bit of it.

Indeed, DrRich strongly suspects that at least 20 to 30% of all healthcare spending is completely wasted, and has seen claims (masquerading as proof) that the actual value is as high as 50%. So again, despite the title of this post, no matter how you look at it there is plenty of waste and inefficiency to go around.

It’s just that there’s not, well, enough.

Before you go away mad, let DrRich quickly explain (quickly, at least, for DrRich) what he means here. Healthcare reform is in the air, and we all know that any effective healthcare reform is going to have to find a way to control healthcare spending. And a central assumption of any reform plan yet proposed is that we can control spending by eliminating – or at least substantially reducing – the vast amount of waste and inefficiency in the healthcare system. Some propose to do this by incorporating the efficiencies of the marketplace (though these individuals have now been run out of town and won’t be bothering us anymore), some by adopting and enforcing stricter regulations, others by introducing a single payer healthcare system, and still others by mandating new technologies such as electronic medical records. But one way or another, each scheme for reforming healthcare proposes to bring spending under control by reducing waste and inefficiency.

Another way of describing what the reformers are telling us is: There is so much waste in the system that we can avoid healthcare rationing by getting rid of it. Most Americans believe this. Most policy experts believe this. DrRich suspects that even most of his loyal readers believe this, despite what he’s been telling you all this time.

But this is unfortunately false. No matter how much waste and inefficiency you think might be plaguing our healthcare system today, there’s not enough to explain the uncontrolled rise in healthcare spending we have been seeing for decades, and therefore, not enough to allow us to avoid rationing altogether.

And in this sense, there is not “enough” waste and inefficiency in healthcare.

DrRich has tried to explain this before, but he will now try to do it better, because it’s important. He will do it using one of the three universal languages, the language of Math (the other two being the language of Love and the language of Healthcare Rationing, both of which are encumbered by expressions of impassioned pledges, heartfelt exaggerations, and other blandishments, and are thus unsuited to a sober discussion of unpleasant truths).

But first, there is an underlying concept we must agree upon, a concept our political leaders are loath to address. To wit: The real fiscal problem with our healthcare system is not simply that we’re spending a lot of money on healthcare, or even that we’re spending a large proportion of our GDP on healthcare. Surely, if we simply had to live with continuing to spend 15% of our GDP on healthcare, we could figure out a way to do that. But that’s not really the problem. The real problem is that healthcare expenditures are growing at a double digit rate of inflation, several multiples faster than the overall inflation rate, such that, over time, an ever larger proportion of our annual GDP is being consumed by healthcare expenditures. Unless this disproportionate rate of growth is stopped, eventually healthcare spending will consume our entire economy. (Rather, what will actually happen is that it will grow to the point of producing societal upheaval, sending us back to a more typical era for mankind, where healthcare is a little-thought-of luxury, and not a necessity or a right. This will happen well before healthcare consumes 100% of the economy.)

To reiterate, it’s not the amount of spending on healthcare that is creating a fiscal crisis, it’s the rate of growth of that spending.

There are only two things that can possibly account for this excessive inflation in healthcare expenditures. Either it is caused by unrelenting growth in wasteful spending (as we are assured by our political leaders), or it is caused by unrelenting growth in useful healthcare spending. If it is the latter, then in order to get spending under control we must ration. So therefore (we all fervently pray), the rate of growth must be caused by wasted spending.

This desired conclusion, unfortunately, leads to mathematical absurdities, and therefore (for anyone who eschews magical thinking) turns out to be utterly false.

DrRich is going to show you data from a spreadsheet. It illustrates what would have to happen in order for wasteful spending to account for our current healthcare inflation. The spreadsheet is based on the following four assumptions:

Assumption 1) The proportion of healthcare spending today that is wasteful is taken as 25%. The actual number, of course, is not possible to discern with any real confidence. It depends, for one thing, on who gets to define “wasteful.” If I’m a 92-year-old man who gets a $12,000 stent procedure to eliminate my angina, I and my doctor might consider it money well-spent, while you might consider it wasteful. DrRich has arbitrarily chosen a number that falls within the range of popular estimates. But it’s a spreadsheet. If you don’t like 25%, substitute your own estimate. You will find that the rate of wasteful spending we assume for Year 1 in this spreadsheet has little effect on the outcome.

Assumption 2) The annual overall rate of growth of healthcare spending (i.e., healthcare inflation) is 10%.

Assumption 3) The annual growth rate of useful (i.e., not wasted) healthcare spending is economically well-behaved. That is, it matches the rate of overall inflation. The spreadsheet therefore assumes a 3% annual inflation rate for useful healthcare spending. (DrRich begs his readers to notice that this assumption is the one implicitly invoked whenever anyone says that all we need to do in order to control healthcare costs is to eliminate waste and inefficiency. In effect, our spreadsheet is designed to test the logic of this assumption. This assumption must be true if we are to to avoid healthcare rationing, because if useful healthcare spending were not economically well-behaved, then no matter what the rate of growth for wasted healthcare spending, we would still have disproportionate healthcare inflation – and rationing would be unavoidable.)

Assumption 4) The difference between the “well-behaved” growth of useful healthcare spending and the overall rate of healthcare inflation is accounted for by spending on waste and inefficiency. This of course, is the assumption that underlies all proposals for healthcare reform.

(Note: If you would like to play with the actual spreadsheet itself, e-mail DrRich and he’ll send it to you: DrRich at covertrationingblog dot com)

We see from this table several things. First, as expected, the amount of money we’re spending on healthcare, assuming a rate of healthcare inflation of 10%, is doubling roughly every 8-9 years, a growth rate that is ultimately unsupportable.

Second, in order to account for this unsupportable growth in healthcare spending by invoking waste and inefficiency, the proportion of healthcare spending that is caused by waste must increase to ridiculous proportions very rapidly, such that (for instance) by the 10th year we will have more than doubled (59%) the proportion of all healthcare expenditures that are wasteful; and by the 20th year, nearly 80% must be wasteful. Similarly, the proportion of the annual increases in healthcare spending that would have to be due to waste and inefficiency rapidly climbs to equally ridiculous proportions. By year 5, wasteful spending will have to account for 82% of the annual increase in healthcare expenditures, and that proportion continues to climb, eventually approaching 100%.

To DrRich, these numbers seem absurd on their face. But if you still need to be convinced, consider that in real life, runaway healthcare inflation has already been taking place for decades – so our position on such a spreadsheet would not be at year 1, but at year 20 (or higher). And no matter what value for wasteful spending we might have plugged in at year 1, by year 20 wasteful spending would have to be well above 80%, and more likely approaching 100%. In order for waste and inefficiency to account for the situation in which the American healthcare system finds itself today, therefore, one would have to believe that virtually all healthcare spending is wasteful. (And if you believe that, then what does it matter that tens of millions can’t afford healthcare?)

Now let us illustrate the same point in a slightly different way. This time, let’s assume that as recently as 2006, our healthcare system was 100% efficient. That is, only three years ago there was no waste whatsoever. Then let’s allow that the remaining three assumptions given above are still operative. The following table results:

We can see from these results that, even if only three years ago we had a completely efficient healthcare system, in order for waste to account for the excess growth in healthcare spending we’ve experienced since that time, then as much as 74% of today’s annual increase in spending has to be due to waste and inefficiency. Indeed, unless at some point within the second term of George W. Bush we actually had a completely efficient healthcare system (which seems doubtful), this spreadsheet tells us (again) either that our fervently held belief that waste and inefficiency accounts for healthcare inflation is completely wrong, or that today virtually all of our annual increase in healthcare spending must be due to waste and inefficiency, and none due to useful healthcare.

Play with the spreadsheet yourself. You will quickly see that as long as we insist that wasteful spending must account for the unsustainable growth we’re seeing in healthcare costs, then whatever our assumptions may be regarding the current proportion of wasteful healthcare spending – whether we say it’s 20% or 50% or 0% – we very quickly encounter the same mathematical absurdities.

One can only surmise from this analysis (done, DrRich reminds you, with actual Math) that our desired conclusion is wrong. A substantial proportion of our growing healthcare expenditures must necessarily be coming from real, honest-to-goodness, useful healthcare. And if we’re going to substantially curtail that growth, we’re going to have to curtail useful spending. Which means we have to ration.

But, once again, we’re Americans and Americans don’t ration. Which is why we’ve commissioned the big insurers and the government to do the rationing covertly, a task they have accepted with great gusto. DrRich is compelled to point out, once again, that waste and inefficiency is the sine qua non of covert rationing. Disguising all the rationing activity as something other than rationing fundamentally requires opaque procedures, unnecessary complexity, bizarre incentives, Byzantine regulations arbitrarily and variably enforced or ignored, and the diversion of healthcare dollars to non-healthcare ends (such as corporate profits, expanding layers of government bureaucracies, and other massive bureaucracies within the healthcare system created to defend against government bureaucracies). Covert rationing multiplies waste and inefficiency, and does so systematically. To reduce the necessary rationing to the smallest amount possible, we will have to figure out a way to do the rationing openly, and not covertly.

In the meantime, DrRich does not kid himself that exposing the mathematical absurdity of the chief assumption espoused by our political leaders, in their brave efforts to reform healthcare, will change hearts and minds. American political partisans, not to mention the American media, eat mathematical absurdities for lunch. And magical thinking amongst the populace, at least when it comes to the exuberant accumulation of household (and national) debt and the application of medical science, far from being discouraged, is actively promoted.

Podcast:

 

 Introduction to Covert Rationing [15:20m]: Play Now | Play in Popup | Download (22)

The purpose behind DrRich’s Covert Rationing Blog is to explain healthcare rationing in America – why rationing is unavoidable, why we’re doing it covertly, and why covert rationing produces the most destructive kind of healthcare system we could ever imagine.

Many definitions for “healthcare rationing” have been advanced, and most of them talk blandly about such things as the allocation of scarce resources, or the fair distribution of available benefits, or goods, or commodities. DrRich objects to such definitions on the grounds that they are misleadingly soothing. There’s nothing pretty about healthcare rationing. Rationing is bad. And if we’ve got to do it, we ought to face up to exactly what that implies. Facing the facts might keep us more honest.

So, here’s the definition that DrRich likes:

To ration healthcare is to intentionally withhold at least some useful medical services from at least some of the people who would benefit from them.

This definition has the virtue of being straightforward. It does not try to pass the onus of rationing onto those “scarce resources” themselves, or to hide what’s actually going on behind comforting euphemisms.  This definition should make it more difficult for us to dance around the real issue, which is: Healthcare rationing is bad. It will hurt at least some people at least a little bit, and quite possibly it will hurt a lot of people quite a bit.

So if we decide we have no choice but to ration, then we should feel obligated to do it in the least harmful way possible.

Having defined healthcare rationing in this way, it is possible to lay out the entire foundation of the Covert Rationing Blog with a simple four-point thesis.

Point #1: Healthcare rationing is a fiscal imperative. Rationing is fundamentally unavoidable, and therefore, we are not avoiding it.

There are two ways of explaining why healthcare rationing is unavoidable, the short way and the long way. You can read the long way if you wish in DrRich’s book, or in the parent website of this blog. But here, we’ll stick to the short version.

In any advanced society, where a centralized agency of one species or another creates a pool of money from which most of the society’s healthcare bills are to be paid, whether that pool of money is controlled by the government, or by private insurance companies, or by some combination of these, then even if that centralized agency is very large, very powerful, and very coercive, there will always be limits on how much money can be placed into the pool. On the other hand, the amount of money that could conceivably be spent to purchase all the available healthcare for every individual in the population who might benefit from it is essentially limitless.

This limited supply, and limitless demand, means that somebody, somewhere, will not receive all the available healthcare that would be potentially useful to them. So rationing is occurring. Q.E.D.

Point #2: We’re Americans, and Americans don’t ration. So the unavoidable rationing must be, and is being, done covertly.

An endearing trait of Americans, endearing to us Americans at least, is our limitless optimism, our undying belief that anything good that we can imagine can, and will, actually be accomplished. This refusal to recognize limits is responsible for much of the creativity, inventiveness, and productivity that has come from American society. And it has led to much good in the world, resulting, for instance, in most of the remarkable advances in healthcare we’ve seen over the past half-century.

The American culture of no limits, however, can be carried to counterproductive extremes. And that is what has happened with regard to healthcare.

Our “no limits” attitude about healthcare is typically American. It goes like this:

In America we have, and will continue to have, the best healthcare in the world – the best doctors, the best hospitals, and the best technology. Since one cannot place a price on a human life, anything that can be done for a sick person must be done, as long as there is some small hope of even a tiny benefit. Every disease is potentially curable, and as a matter of policy we will strive to learn how to cure very disease that exists (and when we run out of diseases to cure, we’ll invent new ones). Indeed, death itself is merely a manifestation of insufficient technology.

In summary, where healthcare is conderned, there are, and can be, no limits.

We can see the problem right away. While we have inherent spending limitations that unavoidably require healthcare rationing, we find that there can be no limits, and therefore, no rationing. Indeed, there can be no discussion of rationing, except to bitterly condemn the very idea. Any political leader or policymaker who would seriously suggest the idea of healthcare rationing would run squarely into this deeply ingrained culture of no limits, and would immediately become toast.

So, these two basic imperatives shaping our healthcare system – the unavoidable need to ration that will always accompany publicly-funded healthcare, and the culture of no limits – are, in their essence, completely incompatible with one another. Given our deep-seated need to simultaneously cling to both of these incompatible imperatives, our only option is to do the unavoidable rationing in a way that maintains the fiction that no rationing is necessary, in a way that allows us to ration while declaring that there are no limits, and to deny that any rationing is occurring at all. We can ration secretly. We can ration deceptively. We can ration covertly.

And that is what we are doing.

Point #3: Covert rationing is inherently and extravagantly destructive, not only to patients and their doctors, and not only to the healthcare system, but also to our basic American social contract.

Most of the commentaries that appear on the Covert Rationing Blog directly address Point #3. So DrRich will not elaborate on this point here, except to make two brief assertions, whose truth, he believes, should become quickly apparent to anyone reading more than a handful of the posts appearing here.

First, while there are plenty of problems with the American healthcare system, the truly intractable ones are intractable largely because of our need to ration covertly. As long as we continue rationing our healthcare covertly, these problems will persist.

Second, by its very nature covert healthcare rationing is a deeply ironic construction. The whole purpose of rationing is to reduce spending on healthcare, and to control costs. But covert rationing (ironically) always increases expenditures. If we could ration healthcare openly, then it is possible that we could arrange, or at least try to arrange, the rationing in such a way to optimize the efficiency, effectiveness and equity within our healthcare system.

But rationing covertly fundamentally means rationing in whatever way you can get away with it. So, in order to hide the rationing, it imperative to obfuscate, misdirect, complicate, juke, jive, shimmy and shake and do whatever else you must to to convince everyone – often including yourself – that whatever it is you’re doing, it’s not rationing. That is, you’ve got to create an environment of complexity and opacity in which you can get away with it.

As a direct result of this simple truth, simplicity, transparency and efficiency are lethal to a system based on covert rationing, and thus, are systematically rooted out. Covert rationing absolutely requires opaque processes and procedures, superfluous complexity, bizarre incentives, Byzantine regulations which are arbitrarily enforced or ignored in various times and places, and the diversion of healthcare dollars to a complex host of non-healthcare ends, such as commissions, study groups, various czars of this and that, ever-expanding layers of government bureaucracies, and the establishment of other massive bureaucracies within the healthcare system whose purpose is to defend against or manipulate those government bureaucracies.  Covert rationing, by its very nature, demands and creates more waste within our healthcare system, and therefore costs us far more money than it can ever save us.

It is, in this way, a deeply ironic construction.

Point #4: As painful as it may be to contemplate, any reform plan that hopes to provide fair, effective, and efficient healthcare through public funds, and hopes to keep the necessary rationing to a bare minimum, and hopes to preserve the long-term feasibility of a vibrant, and reasonably equitable society, is going to have to acknowledge the unavoidability of rationing, and to devise a completely transparent and open system for doing it.

In general, DrRich will not be addressing detailed solutions to our healthcare crisis on the Covert Rationing Blog, but he does wish to point out that he has, in fact, addressed such solutions in substantial detail elsewhere – in substantially more detail, he submits, than is generally provided by the people who we pay to do this work.

If you would like to find out more about DrRich’s proposed solutions to our healthcare problems, you can look in his book, or on the parent website of this blog.

Before closing this introduction to covert rationing, DrRich would like to add a personal note. In writing the Covert Rationing Blog, DrRich has affected a certain persona that, he humbly submits, is quite unlike his actual self. DrRich of the blogosphere is a bit haughty, perhaps even with a bloated sense of self-worth – insisting, for instance, on referring to himself in the third person. He intentionally employs complex sentence structures, and archaic verbiage, and, in describing the American healthcare system, he often resorts to exaggeration, satire, sarcasm, and above all, irony.

DrRich does all this, first and foremost, because he finds it amusing. He enjoys writing in this manner, especially after having spent several decades writing large quantities of stuff in the stereotypical, dry academic style insisted upon by editors of medical journals and textbooks. Nowadays he enjoys making some of his readers smile. He also derives a certain, perhaps somewhat perverse pleasure in scandalizing some other of his readers, mainly, those who insist on interpreting the written word entirely at face value, and so who will believe, for instance, that DrRich actually likes the fact that 47 milliion Americans have no health insurance, and that he really believes that what our healthcare system needs most is even more waste and inefficiency.  The indignant e-mails he receives as the result of such literal-mindedness – each one of which is a treasure – makes DrRich feel positively Jonathan Swiftian.

But perhaps more relevantly, the arms-length, stand-offish effect of referring to oneself in the third person, and the liberal employment of devices such as circumlocution, sleight-of-hand, faux sincerity, and all manner of irony, are, DrRich hopes, useful and uniquely illustrative in a blog which, after all, purports to illuminate a healthcare system that is behaving in exactly the same way.

DrRich thinks it is important for others to understand covert rationing in the same way he does, and he is not above recruiting every trick he knows in his attempt to accomplish this goal. For as long as we insist on rationing covertly, our healthcare system will remain hopelessly mired in waste, inefficiency, inequity and destructiveness. On the other hand, we can fix this if enough of us understand what we are facing. With the Covert Rationing Blog, DrRich hopes to entice at least a few other people to have a look behind that curtain.