I have been working very hard on my book-in-progress, and, given my time constraints (which must take into account the various organizations that are actually paying me to do things), have tried to ignore everything else that would normally induce me to post on this blog. But it is difficult to ignore the Supreme Court.

The Supreme Court of the United States heard arguments last week on whether the individual mandate provision of Obamacare is constitutional, and if it is not, whether the whole bill must be overturned (or just the mandate itself).

Readers will know that I think the mandate should not stand. I agree with Justice Kennedy, who last week observed that the individual mandate fundamentally changes the relationship between the federal government and the individual. My belief is that this would be a negative outcome. The fact that healthcare is really, really important should not trump the freedom of individual action guaranteed by the Constitution, especially since it is entirely possible, in many different ways, to fix our healthcare problems without tossing out individual liberty or killing the Great American Experiment.

The Court’s decision appears to hinge on whether five justices will agree that either A) fundamentally changing the relationship between the federal government and the individual is a good thing, or b) overturning the largest legislative effort in history is a bad idea. Our political punditry tells us that four justices are locked into position A by virtue of their Right Thinking regarding the Constitution, so the outcome will hinge on whether one of the remaining five, who most often lean toward Wrong Thinking, can be convinced that position B is true (and that, for instance, overturning Obamacare would diminish the credibility of the Court).

It was interesting to listen to the left-leaning commentators lamenting the presentation made to the Court by the Solicitor General. Despite having more than two years to spiff-up the government’s arguments, and despite several “practice sessions” in the lower courts to fine-tune the message, the government’s lawyer was strikingly inarticulate when explaining the constitutionality of the individual mandate. This, of course, is because there is no good constitutional argument for it. If the government is allowed to promulgate this mandate, then one is hard pressed to articulate a cogent limit to the government’s power over the individual. And so, the government’s lawyer could not articulate one (despite pointed attempts at coaching from the Bench by few of the Justices partial to position A).

If the mandate is overturned, this unfortunate man will be scapegoated to the Progressive’s Perpetual Penalty Box.

President Obama, it should be noted, could have easily kept this issue from reaching the Supremes until after the election, but he did not. Rather, he opted for a risky path that would result in the Supreme Court rendering a possibly negative decision on his signature legislative accomplishment a mere four months before the election.

And this leads me to speculate on why he would do such a thing. I agree with those who say President Obama is a very smart man, and so I have to believe that he is gambling that any decision the Court makes can be turned to his benefit.

There are, in essence, three possible outcomes: 1) The mandate, and Obamacare, will be upheld. 2) The mandate will be overturned, but the rest of the legislation can stand. 3) The mandate will be overturned, and so will the entire package.

If Outcome One occurs, not only will Obamacare stand, but also the Supreme Court of the United States will have agreed that the government can direct the economic activities of individuals, to the extent that the Central Authority can force individuals to enter into contracts with private companies against their will. (Until now, in order to form a valid contract both parties had to enter the contract voluntarily.) This would be such a fundamental change in the relationship between the government and individuals as to entirely negate the basic premise underlying the Constitution. And while Outcome One might galvanize the Tea Party to sweep Republicans back into power at all levels, this fundamental victory for Progressives would dwarf the mere winning of an election by the opposition. President Obama would become a Perpetual Hero of the Progressive Pantheon, and, in fact, would be a strong candidate again in 2016. (By that time, the mess Obamacare will have become will be blamed on the Republicans’ mismanagement of it.)

If Outcome Two occurs, the issue upon which President Obama will base his re-election campaign will be set. Instead of having to rely on bogus issues like a Republican War on Women, he can run on healthcare.

Outcome Two leaves Obamacare intact, except for the mandate. The mandate is “merely” the funding mechanism for the legislation. The whole package can then be salvaged simply by re-instituting the mandate, but this time explicitly calling it a tax. (If they would have called it a tax in the first place, there would not have been any grounds for a constitutional challenge).

To do this, of course, the President will have to be re-elected, and will have to hold the Senate and gain a majority (or near-majority) in the House. In engineering this electoral sweep, healthcare will be his ticket.

His campaign would likely be based on three elements related to healthcare. First, of course, he will remind us of all the good stuff we will lose if we don’t put Democrats back in power – the uninsured will remain uninsured, people with pre-existing conditions will again be unable to get insurance, and our 25-year-old “children” will have to fend for themselves. Second, he will point to the Republican’s alternative healthcare plan which (unless some miracle occurs between now and the summer) is no plan at all; it’s chaos. Third, he will rely on the assistance of the Evil Health Insurance companies. The health insurance industry, as I have pointed out, is desperately relying on Obamacare, which is their only path to a viable business model. This is why they pulled out all the stops to see that Obamacare was passed in the first place. If saving Obamacare depends on electing Democrats, electing Democrats is what the industry will try to do.

So the moment the Supreme Court chooses Option Two, the insurers will do everything in their power, once again, to demonstrate their fundamentally ruthless, evil natures. They will raise their premiums 90%; or rule that they will no longer pay for newer cancer therapies; or announce that they are doubling their rescission efforts. Whatever it takes to demonstrate that, if you people elect Republicans, when you get sick you will have hell to pay. “Welcome back into our tender mercies, ” the heartless health insurance executives will laugh. “We, who have no sense of human decency or compassion, are very pleased to wallow once again in your pain and suffering and despair, in the name of profit.”

The Republicans will not know what hit them.

Outcome Three throws out Obamacare altogether. This outcome (like Outcome Two) re-establishes healthcare as the President’s only necessary re-election issue.

President Obama might. of course, take the same tact as he would take under Outcome Two – that is, re-instating Obamacare as originally written, but fashioning the mandate as a tax. He could then enlist the help of the Evil Insurance Industry, as above.

Or, he could go for the Brass Ring.

President Obama, it will be recalled, was originally against an individual mandate, and invoked as reasons for opposing it all the reasons the Conservatives argued before the Supreme Court. The mandate was placed into Obamacare as the only viable funding mechanism for a reform plan that included private insurers; and private insurers were included in the plan as the only feasible way to pass any reform plan at all.

But what Progressives – and President Obama himself, according to his own words – have wanted all along was a universal, single-payer healthcare system run by the government. (And indeed, in my view, Obamacare was designed to evolve to just that outcome after a few years.) Outcome Three will give the President a real chance of getting what he really wants, right now, in one giant step.

To this end, the President could address the nation, saying:

“My fellow Americans, we tried! Nobody can say we didn’t. We presented our nation with a healthcare plan that would cover almost everybody, and which would have saved the private insurance industry. But now, thanks to the the actions of the Republican naysayers, the Supreme Court has ruled out the only mechanism that would have allowed our healthcare reform plan to include the participation of the private insurance industry. And now, with this ruling,  and with the Republican-led demise of our visionary healthcare plan, the insurance companies tell us that in order to remain in business they will have to price their products so high that the number of uninsured Americans will soar – my advisers tell me that soon, over 100 million of you will be without health insurance. You and your loved ones and your neighbors face imminent death or disability, thanks to Republican nihilism.

Republicans should know that it may be easy to destroy, but it’s difficult to create. Where is their plan to save our healthcare system, and spare the lives of our citizens? All they have to offer are platitudes and chaos, and vague mutterings about “the markets.” This is all they have, after destroying our new centrist, market-based healthcare plan, which was made law by your elected representatives, and which would have brought high quality healthcare to everyone.

But thankfully, we still have a choice. And thankfully, the time to choose is now.

I and my Democratic colleagues did not want it this way. We fought hard against it. But our Republican opponents and their allies in the reactionary Court leave us with little choice. My fellow Americans, re-elect me, and send Democrats to the Senate and the House, and we will act to save the American healthcare system. If you re-elect me, and give me a Democratic Congress, I pledge that within 60 days, we will pass into law my new program to expand Medicare to cover all Americans. This is not the path I would have chosen if there was a real choice, and indeed it is not the path I chose. But our opponents saw to it that all the other paths have been closed to us; such was their blind zeal to destroy.  And if you don’t like it, as I myself do not, you know who to hold responsible at the polls.”

If the individual mandate is overturned, the Republicans had better have an alternative healthcare reform plan ready to go that they can articulate immediately, simply, compellingly and often. If they do not, the President will play them like a fiddle.

This is Chapter 4 of my book-in-progress, “Open Wide And Say Moo! – The Good Citizen’s Guide to Right Thoughts And Right Actions Under Obamacare.” Comments are fervently sought; you can leave them here.

You can read my rationale for undertaking this project, and thus opening myself up to the possibility of public failure, humiliation, derision, disapprobation, and unwanted scrutiny, here.

And here is the up-to-date archive for all the chapters that have been posted so far.

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Chapter 4 – The Four Ways To Control Healthcare Spending

In the first three chapters of this book, I have attempted to show how and why our nation’s healthcare expenditures have become entirely untenable, and why the heroic measures we have taken so far to contain those expenditures have been not only an abject failure, but also quite counterproductive. Indeed, the cost-containment measures at which we have been flailing away for twenty years (primarily employing the multfarious techniques of covert rationing) have left more than merely our treasury in a “spent” state.

Our health insurance industry has worn itself down to a still-blustering but empty shell. And our physicians have allowed themselves to be reduced to an abject community of supplicants. In neither the insurers nor organized medicine are we likely to find the ideas, the energy, or in any manner the wherewithal that will be necessary to lead us toward a real solution to the mess we have made of our healthcare system. At best, they will be followers.

It is true that our political leaders are certainly not spent. Our Progressive leaders, using their typical end-justifies-the-means approach to the Constitution, have made Obamacare the law of the land. And our Conservative leaders are invigorated with the idea of nullifying that law in the courts, or repealing it after the next election.

But amidst all the accusations and counter-accusations, vituperations, abuse, and scurrility that passes for debate between these two factions, neither faction has clearly articulated its plan for controlling our healthcare expenditures.

Any Progressive healthcare system – including Obamacare – will of course have an inherent, built-in methodology for reducing expenditures. Namely, government-approved experts will determine that some healthcare services will not be provided to anyone, and that other services will not be provided to some. But our Progressive leaders do not like to talk explicitly about that methodology in public. So instead, they talk about fairness, reducing the number of uninsured, and stifling the greedy doctors and biomedical companies.

With a few notable exceptions, Conservatives seem to be in an even sorrier state, since they seem to be relying on the health insurance industry and a vague notion of “free markets” to take care of everything once they get rid of Obamacare. They seem not to realize that we have already tried this strategy, and it has failed abysmally. This kind of talk most likely frightens health insurance executives more than anyone else.

Worse, the less-than-useful debate that has taken place between the two parties – with neither party forthrightly addressing the kinds of actions that will really be necessary to rescue our healthcare finances (and thus our society) – has created a general sense among the public that the problem is so confused and chaotic, so rifled by conflicts of interest, and so very complex, as to be fundamentally unsolvable. If that were the case, it would mean that our society is doomed, and in the relatively near future.

I myself have suggested, just a chapter or two ago, that this outcome does not seem particularly unlikely at this moment.

However, there are, in fact, solutions to our healthcare spending crisis, and so descending into chaos is not the only possible outcome. In fact, I will assert in this chapter that there are actually four (but only four) entirely different ways to meaningfully reduce our healthcare expenditures.

By understanding these four methods of solving the problem, it is entirely possible – as we listen to all the debating, fighting, and reciprocal castigations, aspersions, distortions and lies being exchanged by and amongst the various interest groups – to understand which method is actually being espoused by which parties.

We have, obviously, already settled upon one of these methods, at least for now. Obamacare is a nice example of Method Two – the Progressive plan. We have settled on it above the others, I believe, because it is easiest (if you do not dig too deeply) for its proponents to make Method Two sound a lot less difficult, a lot less painful, and a lot more fair than the other methods. Indeed, while the people “selling” Method One or Method Three (nobody is trying to sell Method Four) usually make it sound like they’re asking us to pick the least bad of all the bad choices, proponents of Method Two are true proselytizers. They honestly believe that their option will represent a pinnacle of human achievement (and thus, that people who disagree with them are tools of the devil).

As I have already stated, I believe the Progressive viewpoint is dangerously incorrect. Before giving a detailed picture of why I think this is the case, it is only fair for me to briefly review all the alternatives that will remain to us if we should decide to turn away from the Progressive style of healthcare reform.

And so, without further ado -

Method One: Make All Healthcare Spending The Responsibility Of The Individual.

That Method One, when baldly stated as I have just done, seems so outlandishly inappropriate and hard-hearted today is a tribute to just how far down the Progressive path all of us have already traveled. But it is, in fact, a legitmate method for getting control of our national healthcare expenditures.

Further, the necessity of paying ouselves for products and services we consume ourselves, as we have seen, is a fundamental law of economics. And, as our society is about to learn, while we can get away with violating this law for a couple of generations, we cannot get away with it forever.

Also consider the fact that, just a few decades ago, this is exactly how we all paid for healthcare. Indeed, this is the method by which all of mankind has paid for its healthcare for all but a few brief decades out of the millions of years we have graced (or plagued, if you must) the planet. It has always been thus: If you want or need healthcare (and if it exists), simply pay for it yourself.

Those few brave souls who remain proponents of this method – who often count themselves as Libertarians – offer two general arguments to support their position; an ethical one and a practical one.

It is fundamentally unethical to insist that your own individual healthcare services must be provided by others – claiming, as you do so, that healthcare is somehow intrinsically different from any other product or service which you may wish to acquire (such as food, clothing, housing, and iPads). Proponents of Method One quaintly cling to tne now-outmoded idea that there is no such thing as a right that creates an obligation upon another person. So to them, insisting that healthcare is a right that must be provided by others is, a priori, unethical. Furthermore, they point out, much of a person’s health (and therefore, a person’s healthcare needs) is determined by lifestyle choices, so it is only right and proper for the individual to bear responsibility for those choices. But more importantly, demanding any “right” that creates a burden on one’s fellow citizens will inevitably lead to tyranny by some Central Authority. Therefore, this demand is unethical.

Method One also holds that, by returning to the individual the responsibility of paying for healthcare, we would be achieving a great good – namely, we would be returning healthcare back into the realm of actual market forces. When that happens, the laws of supply and demand will kick in once more, and will determine which services are actually needed, and what the rightful price for those services ought to be.

So from a practical standpoint, Method One will truly recruit the efficiencies of the marketplace into the workings of the healthcare system. (In contrast, placing dictatorial powers into the hands of insurance executives, which is what the HMO movement of the 1990s actually did, accomplished no such thing.) And the cost of healthcare services will at last come back down to a level which individuals can actually afford. As an added bonus, since everyone will know that paying for future illnesses will be their problem, people will suddenly become more likely to begin making lifestyle choices that will lower their odds of having to do so.

But whether or not individuals can afford medical services, at least the spending on those services will no longer be the burden of society – and the fiscal doom we now face will be cured.

Opponents of Method One point out that, inevitably, there will be individuals – and likely many, many individuals – who simply will not be able to afford to pay for healthcare services which are needed, and which are readily available for the right price, and will therefore suffer preventable pain, disability, and death. Without some kind of public support for healthcare, heart-rending tragedies will abound, our civilization will become coarsened, anger will build, and insurrection will become a constant threat. Such a result, of course, would be suboptimal.

Method Two: Make All Healthcare Spending The Responsibility Of A Central Authority.

Proponents of Method Two hold (because of ethical reasoning that is as obvious to them as the opposite ethical reasoning is to proponents of Method One), that healthcare is a fundamental right; that whether one receives a healthcare service – a service that can relieve pain or prevent disability or death – ought not to depend on one’s ability to pay, but instead, that such services, so fundamental to human life, ought to be equally available to everyone. And the only way to achieve this goal is to collectivize and centralize healthcare decisions and healthcare spending.

This is what I have called the Progressive plan.

For proponents of Method Two, healthcare services are indeed fundamentally different from all other human needs – food, clothing, etc. – since the kind and the amount of healthcare services one needs are most often not a matter of individual choice, but are very often foisted upon one by fate. Burdening individuals with the need to pay for such arbitrary and uncontrollable costs is not only unethical, but destabilizing to our society.

Requiring individuals to pay for their own healthcare is destabilizing because, if a person’s lifetime of work and saving can be wiped out in an instant by an unexpected illness, people will be much less willing to work hard, take risks, and otherwise engage in the economic activities that drive our society. “Healthcare security,” which can only be provided by collective efforts, is thus necessary to a robust and sustainable civilization.

The methods by which healthcare costs can be controlled under a centralized system are straightforward. Obamacare, for instance, does so by explicitly empowering a (nearly) all-powerful Independent Payment Advisory Board with all macro-level healthcare spending decisions. Furthermore, “guidelines” promulgated by various other government-approved expert panels will control spending at a more granular level, by determining which specific services doctors will be permitted to offer to which patients, and under what circumstances. Doctors will be strictly held, under the threat of criminal prosecution, to these guidelines. Finally, recognizing implicitly that many healthcare needs are indeed determined by individual lifestyle choices rather than purely by chance, public health experts will advance enforceable policies that will determine what individual Americans will be permitted to do and not do, purchase or not purchase, eat or not eat. (The public health experts are off to a very good start in this effort!) If everyone within the healthcare system (and in our society) will simply follow the multitudinous directives laid out by the legions of sanctified experts, everybody will have their healthcare, costs will at last be contained, and all will be well.

Proponents of Method Two obviously do not sell their plan to the public by saying such things. Rather, the emphasize that the benevolent, caring, non-conflicted, government-approved experts will make sure that all the inefficiency and greed are squeezed out of the system, and that by doing so, everyone will get what they need, and costs will be controlled.

I will spend Part II of this book showing why Method Two is a bad choice. Here I will only state the bottom line: Implementing Method Two requires an all-powerful Central Authority, which will inevitably lead to tyranny (or anarchy), and will necessarily destroy the Great American Experiment.

Method Three: Provide Strictly Limited Public Support For Some Healthcare Services, With Individuals Responsible For The Remainder.

Method Three attempts to combine the benefits of Methods One and Two, while avoiding the major disadvantages of each.

Method Three recognizes that paying for all of one’s own healthcare is beyond the means of many individuals, and that therefore a modern, civil society ought to provide at least some healthcare to at least some of its citizens. At the same time, Method Three recognizes that the public funding of all healthcare is beyond the means of society, leads to tyranny, and that (both for these practical reasons and for ethical reasons) individuals ought to be responsible for paying for as much of their own healthcare as they can, within reasonable limits.

The key to controlling costs is that the dollars which society will spend on healthcare for individuals must be strictly defined and strictly limited, and cannot be open-ended. Economic principles dictate that public healthcare spending must be limited to pay-as-you-go, and cannot accumulate inter-generational debt. Any other healthcare expenditures beyond those which society is able to provide in an economically responsible way must be paid for by individuals. Therefore, most individuals should not and cannot rely entirely on public funding for their healthcare.

At the same time, Method Three seeks to assure that individuals will have ready access to, and the means to pay for, basic healthcare services, and that the chances of being financially ruined by a catastrophic illness are very low.

Numerous configurations are possible under Method Three, and indeed, the creativity it allows (in distinction to Methods One and Two) is one of its attractions. Possible configurations might include something like the plan Congressman Ryan proposed in 2011, which would place a strict limit on Medicare expenditures by providing seniors with a fixed amount of money – on a means-tested sliding scale – with which to purchase their health insurance of choice.

But a more radical (and I humbly submit) a more complete Method Three configuration would be that which I proposed in my 2007 book, Fixing American Healthcare. That book describes my plan at great length, but in outline here it is:

an imaginary Method Three healthcare system

My model calls for a 3-tiered healthcare plan. (See the figure.)

Tier 1 consists of a modified Health Savings Account. Each individual has his or her own HSA, into which they can deposit some amount of money each year (say, $2000) tax-free. For people in lower income levels, HSAs will be funded by the government on a sliding scale. Funds in the HSA can also grow tax-free, are the property of the individual, and cannot be taken away. Unspent funds that have accumulated above $10,000 can be transferred to an IRA at age 70.

The HSA is there for a very specific purpose: All individuals are responsible for paying for all their own healthcare expenses, up to $2000 per year. The HSA is aimed at providing funds for these annual personal expenditures.

Tier 2 is a Universal Basic Health Plan (UBHP), which will cover every person who resides in the United States legally. The UBHP kicks in after the individual has maxed out his or her $2000 annual personal healthcare expenditures. The UBHP I described in my book would operate under a system of completely open, completely transparent healthcare rationing. That is, it would cover all healthcare services that achieve a target level of cost-effectiveness, and would not cover anything else. The methodologies used to determined what is covered and what is not must be objective, measurable, and fully transparent to the public. My book describes such a rationing methodology in great detail*. However, the kind of open rationing system I described in my book is admittedly very complex, would likely be difficult to operate, and would certainly be difficult to explain to the public. There are simpler ways to administer Tier 2, and these simpler ways should be entertained.

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*My earlier book employed a novel method of calculating Quality Adjusted Life Year (QALY) values for various medical services, in order to rank the cost-effectiveness of those services. That section of my book was extremely boring and tedious and full of math, and I am led to understand that several individuals who actually tried reading that section died in situ. I am only mentioning it here because the term QALY shows up in the figure. For the purpose of the present discussion you can think of the QALY values in this figure as indicating “some defined amount of money that can be spent on your healthcare.”

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The key point, however, is that the UBHP must indicate, very openly and plainly and for everyone to see, which medical services are covered, and which are not. It will not pretend to cover all beneficial healthcare services, or that uncovered services are necessarily worthless. It is a basic health plan, and not a comprehensive one. Its mission will be to cover all the proven healthcare services it can afford to cover without unreasonably jeopardizing the security of future generations of Americans.

Tier 3 is optional for individual Americans. It consists of insurance products which will be designed to cover healthcare services that a person wants or needs, but which are not covered (for whatever reason) under the UBHP. Accumulated funds in HSAs may be used to help pay premiums for Tier 3 coverage. Among other things, Tier 3 insurance products would resurrect our moribund health insurance industry. It would give them the opportunity to develop an array of products that do what insurance is actually supposed to do – to provide financial protection against the unlikely chance of something prohibitively expensive occurring.

If you don’t like my plan, that’s fine. I’m merely offering it as an example of the kinds of schemes that are possible under Method Three. The main points I want to emphasize are: a) This plan strictly limits the amount of public funding that will be spent on healthcare (and therefore solves our healthcare fiscal crisis). b) At the same time, it provides for both basic and advanced healthcare for every American (The advanced healthcare is provided with limits, to be sure, but those limits are completely transparent, and can be mitigated by electing to participate in Tier 3.) c) Since everyone will be paying out of pocket (from their HSAs) for basic healthcare services, those basic services will become subject to normal market forces for the first time in a half-century, and as a result their cost will inevitably drop.

How Will We Choose?

At this moment it appears that we have chosen Method Two. This is perfectly understandable. Progressives, in promoting their solution, have been able to make it seem far more desirable to the average American than have any proponents of Methods One or Three. Their message is: We will make sure that fair-minded, dedicated government agents (who care nothing for the evil of profits) will squeeze all the waste and inefficiency out of the system, and distribute just the right amount of healthcare at just the right time, and everyone will get exactly what they need. Even better, the rich people (i.e., the profit mongers) will bear most of the freight by paying high taxes.

That’s a far more pleasant message than the ones that have been tried by those who favor Method One or Three, both of which require different – but significant – degrees of personal responsibility on the part of every American. Therefore, these other two methods, on the surface at least, sound a lot riskier, more difficult, and a lot more complicated than the easy, Let-Uncle-Sam-Do-It Method Two. In fact, given the way these choices have been sold to the public, it’s hard to imagine we would choose anything except Method Two at this critical juncture.

Still, one can always hold out hope that we might reconsider. The main point of this book is to induce such a reconsideration by showing what Method Two will really be like for all of us.

And, if we do reconsider, I suppose it is obvious by now that I am partial to Method Three.

Method One is simply a non-starter. For all practical purposes, and for good or for bad, we moved irreversibly beyond a purely self-pay healthcare system over 60 years ago. So if there is to ba a real battle, it will be between Method Two and Method Three.

The key difference between these two methods, both practically and philosophically, is whether individuals are to be expected – indeed, whether they are to be permitted – to pay for at least some of their own healthcare with their own money. Progressives, for reasons I will describe later, are absolutely adamant about the answer to this question – by no means will individuals be expected (or permitted) to pay for any of their own healthcare. It is absolutely imperative, if we are to achieve the perfect healthcare system that Method Two promises, that all healthcare decisions and all healthcare spending be centralized. There can be no compromise on this.

Indeed, the moment a compromise is made, true Progressives understand, we will inevitably wind up under a Method Three healthcare system. So Progressives are in no mood to compromise.

I will be delving into this crucial question – whether some amount of personal responsibility should be expected, or even allowed – later on in some detail, as I believe it is the most pivotal as-yet-unaswered question we will have to face going forward. For, while we have ostensibly chosen Obamacare, we have not all agreed on what that ultimately means for each of us. And once we do understand what it means, I believe we may be in the mood to reconsider our decision.

For now, I will simply make a simple assertion which I would like you to begin thinking about.

Here it is: If I am correct that Progressives will fight very hard – possibly to the death – to prevent individuals from spending their own money on healthcare, that fact carries with it an unavoidable implication. The only logical reason Progressives would fight so extremely hard to prevent such a thing is that their actual prime objective must be something other than merely fixing the healthcare system and controling healthcare expenditures. Rather, their actual prime objective must be to employ our healthcare system’s fiscal crisis as the most immediate and expeditious, and indeed the most ideal, vehicle for achieving their overall Program.

If you will allow even the remote possibility that this is the case, then we had better take a look at what the Progressive Program actually is. In the next chapter, that is what we will do.

Wait! What about Method Four?

Oh, yeah. I forgot to talk about Method Four.

There’s really very little reason to talk about the fourth and final method for controlling our healthcare expenditures. This is because nobody likes it. There are no proponents for it, so nobody discusses it.

Still, Method Four, at this moment, seems to be the most likely outcome for us. Indeed, at this moment it appears to be our default method of choice.

Method Four is formulated as follows: Our skyrocketing healthcare expenditures are the chief driver of our national debt. Our national debt burden, unless we get control of it by controlling healthcare expenditures, will inevitably destroy our civil society. At the same time, our modern, sophisticated and very expensive healthcare system utterly requires a complex, modern, highly organized, high-tech society in order to function.

Therefore, our skyrocketing healthcare expenditures ultimately provides its own cure. Once society collapses, “healthcare services” will revert back to the roots-and-poultices methodologies that served mankind so well for millions of years. Healthcare will ecome very cheap again. And healthcare, as well as other modern geegaws like cable TV, Internet, iPhones and automobiles, will no longer be considered by so many to be fundamental human rights, but will become a mere afterthought (if thought of at all), in a more primitive kind of society where life is nasty, brutish and short.

If we neglect to settle on any one of Methods One, Two or Three, or if we pick one and execute it poorly, we will, Chutes-and-Ladders-like, be deposited right back to Method Four where we all started.

Method Four is therefore only important in the way of helping us to keep things in perspective. For, whatever the outcome turns out to be, our current fiscal crisis in healthcare will ultimately be viewed by posterity, should any record of it remain for posterity, as a temporary matter of not much immediate concern.

This is Chapter 2 of my book-in-progress, “Open Wide And Say Moo! – The Good Citizen’s Guide to Right Thoughts And Right Actions Under Obamacare.” Comments are fervently sought; you can leave them here.

You can read my rationale for undertaking this project, and thus opening myself up to the possibility of public failure, humiliation, derision, disapprobation, and unwanted scrutiny, here.

And here is the up-to-date archive for all the chapters that have been posted so far.

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Chapter 2 – The Demise of the Health Insurance Industry

I fear that, in Chapter 1, I may have left you with the impression that our healthcare expenses have been piling up for the past 50 years, to the point where our entire culture is about to collapse under the weight, without anyone or any organization doing anything about it.

If so, I apologize, for nothing could be further from the truth. In fact, our healthcare expenses have been piling up for the past 50 years, to the point where our entire culture is about to collapse under the weight, in spite of the heroic efforts on the part of our health insurance companies, our doctors, and our government to stem those costs.

Indeed, their efforts have been little short of astounding. The health insurance industry has driven itself upon the shoals in a daring attempt to rescue our healthcare finances, and lies there today, foundering and needing rescue itself. Doctors have made what amounts to a suicide attack against the rising costs, essentially throwing away the very essence of their own profession in the attempt, and leaving for posterity a signed suicide note. And our government – well, our government of course has tremendous resources, and has spent or pledged the lifetime earnings of the next three or four generations of its citizens in what appears to be an entirely fruitless effort to bring healthcare costs under control. (Our leaders assure us they feel very badly about this, however.)

So it’s not for lack of trying. It’s that what they have all been trying – namely, covertly rationing our healthcare – not only does not and cannot work, but also intrisically makes things much, much worse.

This and the next chapter will demonstrate the sorry state to which such misguided efforts to control costs have reduced our healthcare system and its participants – and well before Obamacare ever came along.

A Bit On Covert Healthcare Rationing

I have been writing a blog for the past five years about the covert rationing of America’s healthcare, so there is plenty I could say about this. However, I will limit myself, with exquisite difficulty no doubt, to just saying what covert rationing is and why it’s a problem.

First, let’s be clear on the definition of healthcare rationing. 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.

To ration covertly is to do the above without admitting to it, and most often while indignantly denying it.

I will not go into an exhaustive argument here to “prove” we’re rationing our healthcare covertly, or that covert rationing intrisically wastes far more money than it can ever save. I have done that elsewhere. Instead, I will simply lay out a 3-point thesis which makes it intuitively obvious that covert rationing is what we’re doing, and that by doing it we’re compounding the underlying fiscal problem.

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

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, and even if that agency is able to borrow (say) trillions and trillions of dollars, 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 every bit of all the available, potentially useful 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, and must actually be accomplished. This refusal to recognize limits is responsible for much of the creativity, inventiveness, and productivity that has come from our American culture. 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 every 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 concerned, 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 allows us to deny that rationing is occurring; in a way that allows us to ration while declaring that there are no limits. We can ration secretly. We can ration deceptively. We can ration covertly.

And (QED) that is what we are doing.

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

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 the need to ration healthcare covertly exists, these problems will persist.

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 as 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. So, in order to hide the rationing, it is 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, astoundingly wasteful transactions, and the diversion of healthcare dollars to a complex host of non-healthcare ends, such as commissions, study groups and panels, 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 aggressive government bureaucracies. Covert rationing, by its very nature, demands and creates waste within our healthcare system, and therefore costs us far more money than it can ever save us.

So, while the fiscal mess in which we find our healthcare system is destined to screw all of us, by attempting to fix it with covert rationing we’re converting a simple screwing into a gang rape.

It will be instructive to have a look at how this has all worked out.

A Recent History of American Healthcare (continued)

It did not take long after the institution of Medicare and Medicaid in 1965 for astute economists and politicians to realize that, perhaps, we had just stepped off a financial cliff.

Smart people became alarmed about healthcare spending as early as 1970, when we were spending a “mere” 7% of our GDP on healthcare (a little more than a third of the proportion we’re spending now). And indeed, in 1972 Richard Nixon, demonstrating in yet another way that not all Progressives are Democrats, planned to propose in his second term a universal healthcare system. (So perhaps if those Progressives who today are so desperate for one hadn’t made such a big deal about Watergate, they would have had their heart’s desire 40 years ago.)

After Nixon was deposed, Gerald Ford got distracted trying to “Whip Inflation Now;” Jimmy Carter busied himself actually whipping inflation to heights not seen since the Weimar Republic; Ronald Regan dedicated himself to spending the Soviet Union into oblivion; and George Bush 41 beat up Sadam Hussein and raised taxes while trying not to move his lips. You know, stuff happened.

And the next thing you know it was 1992 and healthcare spending had nearly doubled as a proportion of the GDP since the time of Nixon.

Subsequently, the Clintons took up healthcare reform as their signature issue. Bill turned the effort over to Hillary because (as he explained it) she was smarter than he was, but some say possibly also as a reward for her amazing loyalty in the face of, well, you know.

In any case, at the beginning of the Clintons’ effort to reform healthcare, they had the goodwill and support of most Americans, of doctors, the media, and most importantly, the American health insurance industry. Hillary appeared to start off well, making a successful appearance before Congress, and, with great fanfare, convening numerous expert panels and other groups to gather their ideas, suggestions, and recommendations on healthcare reform, as if she intended to take them into account. Optimism was high.

But Hillary is a true Progressive, and so she already knew how to reform healthcare. Having made a great show of democratizing the process, she then retreated behind closed doors with a few hand-selected advisors, and soon emerged with a 1300 page bill of her own devising – Hillarycare.

Many were horrified by what was in that bill, which in fact gave the government full control of our healthcare system. Not the least among the newly-horrified were executives of the health insurance industry, who to that moment had been major supporters. They realized that if any law passed that was remotely like Hillarycare, their industry would soon become infeasible if not illegal. And so, acting with the alacrity of people who are in imminent mortal danger, the insurers quickly introduced the American people to Harry and Louise, a typical middle class couple who were depicted, in print ads and on TV, discovering numerous appalling provisions of the Clinton plan.

The rest was history.

The collapse of the Clintons’ reform plan caused a sudden deflation in Americans’ expectations, but the fiscal crisis remained. In fact, the one thing the Hillarycare effort had indeed accomplished was to create a general awareness among the public that the healthcare system was in dire financial straits, and that business as usual was not an option. And nobody (except for the doctors, wallowing as usual in wishful thinking) believed things could simply go back to the way they were before.

Into the breach stepped the very health insurance industry that had just torpedoed Hillarycare. And they had a plan.

“Citizens!” they said, “We have just dodged a bullet. Thanks to us, the frightening socialist reforms of the Clintons have been soundly defeated. But where does this leave us? We stand now between Scylla and Charybdis, between the specter of nationalized healthcare on one hand, and continued, wasteful, traditional fee-for-service medicine on the other. And we cannot countenance either.

“But wait! Here is a third way, a painless way, based on the sound principles of managed care, open markets, and free enterprise. Let us in the health insurance industry, successful businessmen all, wielding the tools of efficiency and sound business practices, step in and save the day. We will apply our proven tools and methods of efficiency to American healthcare, through our new vehicle for medical excellence – our for-profit HMOs. And we will demonstrate to the world the wonders that modern, free-market management principles can bring to American healthcare.”

And not having any other viable choice that any of us could see, we Americans gave the go-ahead.

The Brief But Remarkable Era of For-Profit HMOs

By this time, HMOs had been around, here and there, for 20 years. They were inventions of pipe-smoking, elbow-patched academics and other well-meaning naifs, who envisioned user-friendly, non-profit organizations which, by inculcating their clientele to the benefits of good health habits, disease-prevention lifestyles, and regular check-ups would – you know – maintain the health of its members. Until the collapse of the Clinton health reforms, HMOs were widely regarded with some bemusement, as the typical sort of ineffectual but benign social engineering experiment you generally get from cloistered academics, or as an eccentric aunt puttering about the attic of the healthcare homestead.

The for-profit HMOs which the health insurance industry introduced to America after the fall of Hillarycare were a different species altogether. If you asked the CEO of one of the old-fashioned HMOs what the mission was, she would say something like, “Why, it’s to maintain the good health of our clients, of course.” Not so for the new-style HMOs. Their mission (quite explicitly, since this is the message they used to sell all of us on the idea of turning American healthcare over to them) was to apply the modern management techniques of American business to make American healthcare efficient at last. And how does one assure that such modern business techniques will be fully and enthusiastically applied? By doing what every business must do to be successful – by focusing like a laser beam on profitability.

So if you asked a 1990s, new-style HMO executive what was his mission, he would reply, “Why, it’s to take this wasteful, inefficient puppy and turn it around into a profit-generating machine. Of course, as a spin-off you will get more efficient healthcare and the like. But the mission – and indeed the measure of our success, the evidence that we’re making healthcare more efficient – is our profitability.”

And with the mantra, “Profits = Efficiency” emblazoned on their standards, and with “Deus Lo Volt!” on their lips, the new-style HMOs went forth in the crusade to save American healthcare.

However, just as the real Crusaders became distracted on their way to the Holy Land by the opportunity to sack and pillage Constatinople, so did the HMOs become distracted by an unprecedented opportunity to sack every city, town and village in the land. Because it was the prospect of profits which would at last make American healthcare efficient, HMO executives argued, it only made sense for all the non-profit hospitals in America to be turned over to them. This way, the HMOs could incorporate those old, creaky, inefficient institutions into their new, machine-like, ultra-efficient, healthcare paradigm. When the city fathers and state commissioners of America seemed interested, the CEO would add, “We’ll even pay you for them.”

During the next six or seven years, virtually every non-profit healthcare organization in America – hospitals that had been owned and operated for decades by cities, counties, states, or religious organizations – were acquired by for-profit institutions. The way these transfers worked was: a) the hospital’s board of trustees (many of whom later wound up with well-paying jobs with the acquiring HMO) would approve the transfer; b) the state insurance commissioner or state attorney general would determine the intrinsic value of the hospital; c) the HMO would reimburse the appropriate entity with the assessed amount of money, often by establishing a charitable foundation.

For reasons I cannot fathom, the state officials seemed congenitally unable to estimate, even within an order of magnitude or two, the true intrinsic value of the transferred asset. Only the hospital’s value as a charity was considered, and not its potential as a business. They failed to consider the market value of trademarks, name recognition, decades of community goodwill, provider contracts, or subscriber lists. There were no competitive bidding processes; no formal valuations. So the new HMOs acquired thousands of major, publicly-held community assets, all across America, for pennies on the dollar.

If state officials were inefficient in this process, the markets were not. And the HMOs found that each time they acquired a formerly non-profit institution, the market would immediately reward them with a nice boost in their market valuations. HMOs suddenly became hot investment vehicles, and investors jumped in with their dollars. HMO executives were very, very happy.

This asset-acquisition phase of the for-profit HMOs was largely responsible for the great financial success these organizations enjoyed in the 1990s. And the hugely important story of the massive transfer of public assets to private companies went largely unreported.

Once they had gobbled up all the public hospitals, the for-profit HMOs immediately entered into a prolonged period of negotiated mergers with one another, thus consolidating the industry into a few massive players. This interval also produced large boosts in their market valuations, and it sustained the facade of corporate success for a few more years.

And that pretty much covers the glory years of the modern HMO. For a decade or so these companies were extremely successful, and performed very nicely for their shareholders. But their success, such as it was, had relatively little to do with their ability to make American healthcare more efficient. Rather, like those holy warriors who fought in the Fourth Crusade, their profits came mainly from sacking Constantinople, the city of their supposed allies and co-religionists.

To be sure, HMOs did work as hard as they could at improving healthcare efficiency during this period of time. They did this mainly by instituting efficiencies of scale. When you are managing several hospitals, or several scores of hospitals, you can streamline and consolidate your processes and procedures in some very big ways – with more pointed negotiations with vendors, for instance, or by computerizing and standardizing billing and ordering, or limiting drug formularies. You can also conduct fancy efficiency studies to show that, really, you could probably get away with an 8:1 nursing ratio instead of a 4:1 ratio. (By “get away with,” apparently, the efficiency experts meant that while the “downside” of such cutbacks might be suspected or even perceived by people on the ground, it was unlikely that it could ever be accurately measured – or therefore, proven – by a few local troublemakers.)

So the efficiencies of mega-corporate bigness were broadly applied, and as a result, during the latter half of the 1990s we saw less healthcare inflation than during any 5-year period over the previous 30 years. But the thing about applying this kind of cost-cutting measure – the kind that is applied on a global basis to the whole system – is that it is a one-time event. That is, the savings are realized right away, and as a result you successfully establish a new and lower spending baseline. But because (as we saw in the last chapter) the rate of growth in healthcare spending is not caused by the inefficiencies you’ve just eliminated, the increase in healthcare spending will thereafter simply resume and continue apace (albeit from a lower baseline).

This is just what happened. By the turn of the century, healthcare inflation was headed back up into the double digits.

And so, if they had not realized it before, by the early 2000s it finally occurred to the HMO executives that, at long last, if they were going to remain profitable they were going to have to figure out how to cut healthcare costs by doing what they’d always told everyone they were so good at doing, but which they had never yet accomplished – actually managing the medical care of sick people.

This is when the panic began setting in.

Their panic was not inappropriate. For the HMOs had not been sitting on their hands when it came to making actual patient care less expensive. In fact, they had already tried everything they knew how to try – and it had not worked.

The business model of the HMO, simply put, is to gather the health insurance premiums from its subscribers, use that money to efficiently manage their healthcare, and keep whatever is left.

Therefore, to the HMO executive (the steely-eyed business executive we had all deputized to control our healthcare costs), the biggest risk to the business is: sick people.

Sick people are a huge problem. They are not subject to the usual “efficiencies” you can apply to most businesses. Simply streamlining business processes (admission and discharge procedures, consolidating laboratories, computerizing records and the like) does not work with sick people. You could implement these sorts of efficiencies all day long, and sick people will still be sick, and each one of them could blow through tens of thousands of your dollars each and every day.

Sick people, unlike the widgets which businesses typically process and manipulate to make their money, are not all alike. Each of them has a different constellation of medical problems, different needs, and different responses to testing and therapy. A medical service that makes Patient A recover in two days puts Patient B in the ICU for three weeks. Patients who recover enough to go home, but then stop taking their medications (or cannot afford to take them), or immediately resume an all-pizza-diet, will bounce right back in your hospital, and recommence consuming even more of your resources.

There can only be one answer to this problem. What you need to do is something you learned on your very first day of MBA school (where basically all you did was get your seat assignment, and eye-up the rest of the class to decide which ones you think you can work with and which ones you’ll need to sabotage in order to smooth out the curve). Namely, eliminate unnecessary expenditures. Which means: you need to avoid the sick.

Find ways to keep the sick (or potentially sick) from enrolling in your HMO. For sick people who manage to make it through the obstacle course you are going to set up for them, you will need to find ways to make things so unpleasant for them that they’ll go elsewhere. For the really sick who won’t (or more likely, can’t) leave, you’ll need to find ways to just toss them out.

And so, naturally, this is what HMOs did.

They made their best insurance products available to employers only, on the theory that people who have jobs are less likely to have serious, chronic illnesses or severe disabilities, or addictions. The inferior, “individual” insurance products (when HMOs could not avoid them altogether) were pre-loaded with onerous pre-existing condition clauses, so that only healthy young people were likely to be eligible. When HMOs held “open enrollment” drives for Medicare patients, they were invariably located on the second or third floor of buildings without elevators, often in affluent suburbs or at country clubs, and in any case in places that were at least two bus transfers away from “undesirable” neighborhoods. Such methods came to be known as “skimming” or cherry-picking, and were aimed at avoiding the sickest 10% of the population that accounts for 75% of all healthcare spending.

Sometimes, despite increasingly sophisticated cherrypicking techniques, a sick person would still get through the door. Or more likely, a formerly healthy subscriber, by virtue of a newly-acquired illness, would transform – werewolf-like -  into a voracious, healthcare-consuming monster. Techniques were developed for these, as well. In fact, the academic managed care literature (and yes, there is such a thing) paid particular attention to this issue – that is, how to frustrate undesirable patients sufficiently to entice them to go elsewhere. One interesting article titled “Demarketing of healthcare services,” appeared in the Journal of Healthcare Marketing in 1994. It said, among other things:

Decreasing accessibility to services . . . can be accomplished by “managing” the information distributed to patients regarding services available and how to access them. For example, an organization might excessively promote less-costly preventive procedures . . . and repress information about other elective and/or expensive services. In addition, providers can strategically locate and number specific services to make them easy (e.g., primary care) or difficult (e.g., specialists) to utilize. Furthermore, lag periods . . . also serve as containment strategies. Lags may be affected by the need for referrals, limited number of contracted specialists, restricted or inconvenient appointment availability, and increased office-visit waiting periods.

I would like you to notice a couple of things about this excerpt. First, of course, it nicely demonstrates that driving patients away was not an unintended consequence of HMO inefficiencies. The inefficiencies were manufactured specifically to achieve that end. But second, please observe that this is probably the most straightforward statement about covert healthcare rationing you’re ever likely to see from the people who are actually doing it. It graphically demonstrates that much of the inefficiency in our healthcare system is not accidental. It is carefully engineered for a very specific purpose. It is, in fact, an investment, aimed at improving the bottom line.

Here’s another example. In the late 1990s, the famous Jim Clark, the first Internet genius, the man who had founded both Silicon Graphics and Netscape, decided to launch a new venture which he called WebMD. While today WebMD is muddling along as a reasonably successful information portal, it was originally conceived by Clark as a powerhouse that would revolutionize healthcare in America. He wanted WebMd to become a platform for seamlessly interconnecting all the players in the healthcare system – doctors, patients and insurers – to improve communication, streamline transactions, reduce medical errors, and otherwise create efficiencies that would benefit American healthcare (and at the same time build shareholder value for WebMD). When he finally had built up the infrastructure for doing all this, at enormous cost, he went to the health insurers with his first can’t-miss proposition, the very can’t-miss proposition that had enticed his investors to put up the money for WebMd in the first place. Namely, he offered (in exchange for a tiny transaction fee) to process the HMOs’ medical claims for 70 cents per transaction (as compared to the $7.00 per transaction it currently cost them), and furthermore, to complete the transactions in a matter of minutes instead of a matter of months. Much to Clark’s amazement, there were no takers. None. And his dream died on the spot.

Astute readers will see the problem right away. HMOs, of course, have no interest whatsoever in streamlining their transactions. Quite the opposite. HMOs only make money if they do not have to pay out claims. And if they do have to pay claims, the longer they can hold on to the money before they actually pay it out, the longer they can keep it invested. And so, claims processing procedures have been carefully engineered into the most inefficient, Byzantine, and frustrating endeavors the devious human mind can conceive of. Unless a doctor’s practice hires a cadre of “claims specialists,” who spend all their time in an elaborate dance with the “claims specialists” employed by the HMOs, they would never collect any money at all. As it is, it is so expensive to chase smaller claims that many doctors simply don’t send in bills for them – which means the HMOs get to keep that money. Which means that doctors are reluctant to offer the medical services for which only a small bill is generated.

Are you starting to see how covert rationing works?

The End Game For HMOs

By the middle of the last decade, the health insurance industry realized it had run out its string. It saw no pathway forward to continued profitability.

The insurers had tried every sneaky and underhanded idea they could think of for reducing costs – cherry-picking the healthy patients, treating chronically ill patients like pariahs so they would go away, making access to specialty care as inconvenient as possible, forcing doctors to sign “gag clauses” to prevent them from telling their patients about certain treatment options (more on this shortly), browbeating primary care physicians into zombie-like compliance with handed-down care directives, refusing to cover expensive-but-effective medical services, and canceling the policies of tens of thousands of patients after they got sick, based on trumped-up technicalities. Indeed, they had tried everything short of dispatching teams of Ninjas in the dark of night to slaughter their most expensive subscribers in their beds. And still, their costs – essentially, the money they could not avoid spending on people who needed healthcare services – increased relentlessly.

All these efforts were to little avail. The cost of providing healthcare continued to skyrocket, entirely unabated. Finally, when all else failed, the insurers began instituting huge and unsustainable annual increases in premiums, to the point of driving their customers out of the market.

This latter move, of course, was an open acknowledgment that the industry had entered its death spiral. In fact, it was an SOS, a cry for help. It was the health insurance industry wailing, “No mas!”

The Health Insurance Industry And Obamacare

By 2009, when President Obama began his push for healthcare reform, the insurance companies knew they had no prospect of long-term profitability. Their business model was no longer viable, and, while telling soothing stories to avoid shareholder panic, they were urgently casting about for an exit strategy.

A drowning man will cling to any piece of flotsam that comes his way. What the insurance industry found floating by was Obamacare.

In return for its support in the healthcare reform battle, President Obama offered the insurance industry the graceful exit strategy it so desperately needed. Under Obamacare, for at least a few years the insurers hope to get One Last Windfall – namely, profits from the influx of previously-uninsured Americans whose premiums will be paid, or at least subsidized, by taxpayers. Here, the insurers are relying on the likelihood that the inflow of new premiums will, for a year or two at least, greatly outweigh the outflow of money they will have to spend caring for these new subscribers. Obviously, they will use every trick in their well-worn book to stave off expenditures for these new subscribers for as long as they can, but if they actually knew how to avoid paying healthcare costs indefinitely, they wouldn’t have sought a government bail-out. In any case, an inflow of new subscribers will be a very temporary source of profit for insurers. Hence, at best it is One Last Windfall.

What happens to the insurers after they exhaust this last windfall is still up in the air. Obamacare may, of course, eventually transition to a single-payer system, an outcome which many Conservatives desperately fear, and many Progressives fervently desire. Should this happen, there may very well be some final compensatory buy-out (or a buy-off) for the insurance companies – a truly-last windfall.

But more likely, the insurance companies under Obamacare will continue to exist essentially as public utilities. That is, they will exist as companies chartered by the government, which administer healthcare under the direction of the government, with the products they may offer, the prices they may charge, the profits they may keep, and the losses they may incur, determined solely by the government. It’s not glorious, but it’s a living.

And it’s a far better exit strategy than anything the insurance companies could devise for themselves.

So, when the time came, the insurance industry did whatever it needed to do to make sure President Obama’s reforms became law. Their assistance consisted of four simple steps:

1) Do not actively oppose Obamacare. In stark contrast to its behavior during the Clintons’ effort to reform healthcare, this time the insurance industry never employed its vast public relations resources to stifle healthcare reform. While they resurrected the original Harry and Louise, this time, like the insurance industry itself, they were older, wiser, sadder, and fully in support of the proposed reforms.

2) Submit quietly to demonization. A key strategy of proponents of Obamacare was to remind Americans repeatedly that the for-profit health insurance industry is fundamentally evil. This strategy was based on the time-honored precept that it is easier to get the unwashed masses to cooperate through hatred than through reason, and so, to gain their cooperation, one must give them something to hate. Obviously, this strategy meant that the health insurance industry had to accept its role as the bad guys in the reform debates without complaint, and without engaging in any serious self-defense. They did so.

3) Offer subdued public support to Obamacare. The AHIP (America’s Health Insurance Plans) issued public statements every so often that cautiously supported President Obama’s healthcare reforms. But its support had to remain subdued and tepid, since Satan can’t be seen leading the hymns. It was just enough public support to signal opponents of Obamacare not to expect much help this time from this quarter.

4) Whenever necessary, rise up and demonstrate to the world just how evil you really are.  At the end of the day, this was the most important role the insurance industry played in advancing Obamacare. It was certainly their most active role.

It was not a difficult role to fill. Since 1994 the health insurers had engaged in the sorts of truly evil, inhumane, and reprehensible practices that are naturally engendered by covert healthcare rationing, and that harmed or killed many of their subscribers. The only difficult part was choosing which reprehensible behaviors to feature, and when to do it.

In at least two key moments during the fight over healthcare reform – June, 2009 and February, 2010 – when the proponents of reform felt their momentum lagging, the insurance industry intervened with gratuitous evil behaviors whose chief function was to remind Americans just how unremittingly wicked and inhumane they really are. In the second case, at least arguably, the insurance industry turned the reform effort from apparent defeat to almost certain victory. Indeed, it is not too much of an exaggeration to assert that, in the end, the health insurance industry saved Obamacare.

June, 2009: Say Hello To My Little Friend

The debate over Obamacare entered a new phase in May and June of 2009. It was during those months that the opposition to healthcare reform found its voice, and it began to seem as if perhaps the Obama steamroller could really be slowed, if not stopped. People were even beginning to say that many Democrats in Congress, after getting an earful from their constituents when they held their summer town hall meetings, would abandon any idea of supporting President Obama’s healthcare reforms.

Supporters of Obamacare decided it was time to invoke the demons. So in mid-June, the House Subcommittee on Oversight and Investigations called three health insurers to testify on the practice of rescission, and to face not only indignant Congresspersons, but also some of the people who had been personally harmed by their practices.

“Rescission” is when an insurance company voids subscriber’s health insurance when they get sick (after happily accepting premiums from that subscriber, often for many years). Under some circumstances, rescission might be justifiable. It is legal and proper to cancel a policy if the subscriber is found to have purposely lied on the insurance application about a prior illness that is material to the current illness.

But health insurance companies for years have actively and aggressively practiced rescission on subscribers whose insurance applications contained inadvertent and non-material inaccuracies. Furthermore, the health insurance industry does not merely engage in occasional unfair rescission practices; it has industrialized the process (which, after all, is what they’ve always told us they would do to reduce costs). It employs health insurance detectives whose job is to comb the prior medical records of subscribers who are newly diagnosed with certain, expensive medical conditions, looking for even trivial discrepancies on insurance applications, which they can inflate to “fraudulent” omissions, thus voiding the policy. These health insurance detectives are paid by commission, according to how much money their efforts can save the company. Many of them find it a very lucrative career.

So, at the cost of perpetrating a bit of inhumanity, rescission can save insurance companies a lot of money.

Consider some of the individuals who testified in Congress along with the insurance companies on that day:

- A nurse in Texas had her insurance canceled after she was diagnosed with breast cancer because she had failed to reveal that, years before, she had consulted a dermatologist about acne.
- A man (whose surviving sister had to testify) had his insurance canceled before he could begin expensive cancer therapy, because he had not revealed (and indeed he had not known) that a prior CT scan had showed gallstones and an aneurysm – conditions unrelated to his cancer.
- A woman had her insurance canceled – and due to the rescission could not find replacement insurance – because she failed to reveal that, at one time, she had been on medication for irregular menstruation.

During the hearing, the three health insurance executives were caused to listen, on camera, to these and other mind-bending stories describing some of the inexcusable pain, suffering and death their unfair rescission practices had caused, and then were forced to listen to withering commentary by stunned Republicans and Democrats on the Subcommittee, whose own investigation had found that the three companies on the docket had retrospectively canceled the policies of 20,000 sick subscribers over the past 5 years.

After these heart-rending testimonies and the blistering attacks from extremely angry congresspersons, the executives were challenged by Chairman Stupak (D-Michigan) to now commit to discontinuing the practice of rescission unless intentional fraud could be shown.

All three replied, in turn, “No.”

Such a reply, in such a setting, almost defies belief. The only possible explanation, in fact, is that the insurance industry was stepping up to the plate, and embracing its assigned role as the Evil One in the great healthcare debate.

Even the most stone-hearted insurance executive can see that canceling the health insurance of a newly-diagnosed cancer patient, because she’d forgotten she had required acne medicine before the prom 20 years ago, is just a bit unfair. But how did these three executives react? They did not attempt to deny such reprehensible behavior, or to explain it, or to defend it. They were simply defiant about it.

One is put in mind of Tony “Scarface” Montana, bereft of friends, family, allies and bodyguards (albeit because of his own actions), hopelessly surrounded by an army of heavily-armed assassins, screaming, “Say hello to my little friend!” then launching defiantly into a wild, bloody and spectacular suicide.

One cannot for a moment believe that Richard A. Collins, chief executive of UnitedHealth’s Golden Rule Insurance Co., Don Hamm, chief executive of Assurant Health, and Brian Sassi, president of consumer business for WellPoint Inc., would have been stupid enough to publicly defy Congress over such an indefensible practice, if doing so was against their own long-term interests. Appearances to the contrary notwithstanding, they were not auditioning for a remake of Scarface.

This is not how an industry behaves which wants to court the goodwill of Congress at a critical juncture in its life cycle. This is not the strategy of an industry that wants Congress to defy its own party’s President and defeat healthcare reform, or that is begging Congress to give them another chance to figure out how to bring healthcare costs into check. This is not the behavior of any industry that wants to elicit any sort of favorable action from Congress. Indeed, these executives would have seemed more sympathetic and deserving if they had proposed instead to place live puppies on a spit and roast them over an open fire during half-time at the Super Bowl.

There is only one explanation for their astounding public defiance on this matter. Which is, it must have suited their long-term interests.

Recall that at the time of this remarkable hearing, there was growing skepticism about President Obama’s healthcare reform efforts, not only on the part of Republicans, but also on the part of a critical minority of Democrats in Congress. And for the first time since the election, there was some question about whether his reform plan would succeed in gaining sufficient support.

In this light the stark, defiant, public “no” uttered by the three insurance executives makes sense. “Look at us,” they were saying, “See how evil we are! We are utterly devoid of human decency, ethical constraints, or a sense of fair play. If we behave this defiantly when we are in the position of mere supplicants to your eminences, just think how we will behave if you fail to rein us in with new reforms! Abandon all hope, those of you who rely on us for your healthcare, and behold the congressional dogs that placed us in this position of power over your very lives!”

Given the headwinds the healthcare reform effort was to face during the next nine months, it is difficult to say with any certainty how much good the insurance industry did in June, 2009, when it took such an extraordinary step to remind Americans just how incredibly evil it is. But when the time came to help boost the President’s reform efforts, nobody can deny that the insurance industry stepped up and did its duty.

February, 2010: Raising Obamacare From The Dead

Things looked especially bleak for healthcare reform in early February of 2010. The incredible, Constitution-defying, machinations Congress had employed in its desperate attempt to pass healthcare reform had disgusted a majority of Americans, and momentum was clearly shifting to the opponents of Obamacare. And when Republican Scott Brown incredibly won the Senate seat in Massachusetts, robbing the Democrats of their crucial, filibuster-blocking 60th vote, many thought healthcare reform was dead.

But then out of nowhere, in early February, Wellpoint’s California subsidiary, Anthem Blue Cross, announced it was raising its already-astronomical health insurance premiums by as much as 39%, a move that promised to greatly increase the number of Californians who are uninsured.

The demoralized Democrats in the administration greedily capitalized on this new opportunity.

Secretary of HHS Kathleen Sebelius immediately fired off a very 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 reply, equally publicly.

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 insurance premiums would be nicely mitigated if everybody was mandated by the government to purchase health insurance.

Wellpoint’s anounced premium increase immediately triggered great volumes of delighted outrage by thankful Democrats, who desperately needed a large dose of “evil insurance company” at just that time. Wellpoint’s action reignited the proponents of healthcare reform, who were inspired to remind all Americans that this is what would happen to everyone if healthcare reform failed, and the greedy insurance companies had their way.

Stunned Republicans, seeing their impending victory over Obamacare evaporating before their eyes, could only issue a few lame and uncomfortable attempts to diminish the significance of Wellpoint’s unfortunate action. But to little avail. The momentum had shifted. At least arguably, it was Wellpoint’s decision to announce an unconscionable rate increase at this extremely critical juncture that put healthcare reform back on the road to adoption.

From a pure business standpoint, there was no good reason for Wellpoint to stir the soup at that moment. Wellpoint at the time was the most financially sound private health insurance company. While its California subsidiary did lose money in 2009, 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 stood to do comparatively well for the foreseeable future.

Furthermore, it has since been learned that Wellpoint’s math was bad. An independent actuary working for the California Department of Insurance reported on May 5, 2010 that the company had made “numerous errors” in calculating is rate increases, and further, that Wellpoint could cut its rate hikes substantially, and still meet its required 70% medical-loss ratio threshold. So, uh, oops.

It stands to reason that if Wellpoint really wanted healthcare reform to go away, they would have first checked their math before announcing seismic rate increases, and then, if such astounding rate increases were really needed, they would have waited a few months – while Obamacare died – before announcing their rate hike.

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.

In any case Wellpoint’s action, especially at that moment, seems entirely gratuitous. Wellpoint could only have chosen to do its demon dance, at such an inopportune moment, in order to revive Obamacare during its darkest hour.

And that’s precisely what happened.

What This Means

What this means to those of us who would like for Obamacare to go away ought to be quite obvious. Simply nullifying or repealing Obamacare simply will not do. The insurance industry simply will not tolerate it. If we decide we need to get rid of Obamacare, to shed ourselves of the spectre of government-controlled healthcare (and far worse, government-controlled covert rationing), we’ll need to have another solution in hand.

Podcast:

Being Thankful for the Uninsured [ 11:33 ] Play Now | Play in Popup | Download (750)

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(In what has become a tradition over the past few years, DrRich proudly reprises his annual Thanksgiving message to his beloved readers.)

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Gathered around the Thanksgiving table, DrRich’s large extended family, carrying out a longstanding tradition, each offered in their turn one reason for being thankful on this most reflective of American holidays. DrRich listened respectfully as each of his loved ones, and each of the ones he was obligated to tolerate benignly because they had married (or in some other manner had committed to) one of his loved ones, recounted a cause for thanks. There is no need for DrRich to recite their utterances here, because they were all perfectly predictable and fairly mundane, having mostly to do with items such as maintaining good health, finding a job, being able to afford one’s mortgage payments, getting a passing grade in French, receiving a new puppy, Mr. Obama’s remarkable Presidency, the apparent continued structural integrity of the Universe despite Mr. Obama’s Presidency, &c., &c.

When it was at last DrRich’s turn, he, in retrospect perhaps somewhat inadvisedly, was unable to refrain from displaying his keen insight and superior analytical abilities on matters related to healthcare (a topic, anyone would have to admit, about which most of us would very much like to feel thankful). Lifting his glass, DrRich pronounced that he was most deeply and humbly thankful for the 47 million Americans without health insurance; and further, especially thankful that their ranks  must surely be growing, given the recession, advancing unemployment, imminent collapses of businesses and indeed entire industries, &c. And even though Obamacare promises to significantly reduce that number, DrRich went on to express his fervent wish that large numbers of the uninsured might still be with us a year and two years and even ten years hence, for the great and good benefit of us all.

Enjoying the remainder of his Thanksgiving meal out on the back porch with the new puppy, DrRich composed in his mind this explanation which you now behold for the keen appreciation he has developed for the uninsured. He now offers this explanation both to his readers, and to the few members of his extended family who, he believes, might have been inclined to hear him out, had Mrs. DrRich not offered at that moment to consider remaining married to him only if he would retire from the table immediately. (Believing his marriage to be a union sanctified in heaven, he did so.)

In any case, for those who have an open mind, there are two compelling reasons we should be thankful for the uninsured, and should be particularly loath to allow them to disappear.

The first reason is that it is largely thanks to the uninsured that we are able to maintain the fundamental and dearly-held American fiction that there need be no limits on healthcare. (The image DrRich conjures up when he says “dearly held” is that of Gollum caressing the Ring.) Simply put, when we have tens of millions of uninsured Americans who don’t have ready access to regular and routine healthcare, then it’s relatively easy to pretend that “healthcare” should include everything we might want it to include.

Our current healthcare system relies heavily on using the uninsured as a huge fiscal safety valve. That is, in lean times (such as now), we open up the valve, increasing the number of people who are ineligible to consume routine healthcare. Increasing the number of uninsured Americans has become perhaps our most effective mechanism of covert healthcare rationing.

This simple expediency alone goes a long way toward enabling us to avoid having to consider or discuss limits. Openly recognizing the unavoidable limits to healthcare, much less having to figure out how to implement such limits fairly and rationally, would be exquisitely painful and disruptive. (Just ask Gollum how unpleasant it is to be forcibly separated from that which we love and deeply value.) For helping us to avoid such pain and societal disruption, we clearly owe a great debt of thanks to our uninsured brethren.

The second reason came to light recently in an article in the Journal of the American Medical Association.* This article showed that – contrary to both popular lore and to stern pronouncements by policy experts bent on convincing us that (next to global warming) reducing the number of uninsured Americans is the most important task of mankind – the overcrowding in American emergency rooms is NOT due to the uninsured. Rather, it is due to insured Americans who cannot get in to see their primary care physicians.

DrRich has discussed at some length the primary care crisis and its causes. That is a very important topic, but it’s not the topic of this particular posting. This posting is about the great and abiding value of the uninsured.

It really should not be a great surprise that emergency room overcrowding doesn’t have all that much to do with the uninsured. While it is difficult to generalize about such things, a large proportion of the uninsured are people who have assets. (If they had no assets they likely would be eligible for Medicaid.) That is, they are people who have jobs, homes, cars, &c., but their employers (who, in many cases, are themselves) cannot afford to provide them with health insurance. The chief point being, of course, that these individuals have something to lose.

These are not the people who will voluntarily enter an emergency room for their healthcare, at least, not for a medical problem that they can somehow convince themselves might go away on its own if they give it a chance (such as, perhaps, crushing chest pain, or paralysis of the left side, or some other such eventuality which might cause some of us less circumspect, more insured people to just go ahead and dial 911, all willy-nilly). They realize that the moment they set foot into an emergency room they will generate a bill of at least several thousand dollars, which they will either have to pay, or spend months or years fighting off the increasingly aggressive bill collection professionals being dispatched these days by their local hospitals. They are putting their assets and their futures at risk if they come to the emergency room.

Rather, the overcrowding is due to people who have insurance – whether it’s Medicare, Medicaid or private insurance – and who are therefore entitled to their healthcare by whatever means they calculate is the most convenient for them. Increasingly, because primary care practices are hard to find, are booked for weeks in advance, and are less and less user-friendly by the day, the convenience calculation tends to default (incredibly) to the emergency room. (That insured people are choosing emergency rooms – notoriously one of the most unpleasant experiences American citizens can encounter in peacetime – instead of the offices of their primary care physicians should itself set off major alarms about the state of American primary care.)

This is all fairly intuitively obvious, and the JAMA article really should surprise only those who habitually believe all the prevarications being promulgated as Gospel today by politicians, media, and various authorities on healthcare.

It should be plain that suddenly providing tens of millions of Americans with health insurance will decidedly not relieve emergency room overcrowding, as the policy “experts” all promise us (the same experts, apparently, who promised us that the stimulus package would rescue the economy and prevent increased and prolonged unemployment, and who confidently spout a host of predictions which fly in the face of history, common sense, and laws of economics, physics, and human nature). On the contrary, creating tens of millions of newly insured individuals, without simultaneously revolutionizing our attitudes and policies toward primary care medicine, will quite obviously make our already overcrowded emergency rooms absolutely burst at the seams, and render even more hellish than it is today – even deeper down within “grief’s abysmal valley” – the prospect of entering such a place. Indeed, if we suddenly insure all these people, the rest of us who currently have insurance really won’t have anywhere to go to get our healthcare.

So. QED. As DrRich said at the Thanksgiving meal, thank God for the uninsured.

Clearly if DrRich had been permitted a mere five minutes to explain himself, not only might he have avoided eating runny mashed potatoes in a steady drizzle, but he also might have salvaged his reputation among some of the more remote members of his extended family, who really don’t know what a swell and reasonable guy he can be. Next year when his turn comes, DrRich will choose to be thankful for some more traditional value, in the hopes of being allowed to eat his meal in a warmer, drier, friendlier environment – perhaps he can be thankful for the growing number of obese Americans, and the great service being provided by these patriots-to-mankind as they reduce global warming.

* Newton MF, Keirns CC, Cunningham R, et al. Uninsured Adults Presenting to US Emergency Departments: Assumptions vs Data JAMA. 2008;300(16):1914-1924.

Podcast:

Republicans Blithely Enter The Individual Mandate Trap [ 13:52 ] Play Now | Play in Popup | Download (121)

Progressive Americans have this much going for them: they can, without any reservations, second thoughts (or perhaps even first thoughts), enthusiastically and wholeheartedly support Obamacare’s individual mandate. For them, the individual mandate is an unalloyed good. Not only does it enable Obamacare to proceed, thus giving the government unprecedented control over every aspect of American healthcare, but it also establishes the authority of the government to control the economic activity of individuals. This new authority will come in very handy as our leaders continue working toward redistributive justice. So if you’re a Progressive, what’s not to like about the individual mandate?

Conservative Americans do not have it so easy. In principle, of course, the very idea of an individual mandate is constitutional heresy to a conservative, since it violates not only the letter but the very spirit of the Constitution. This is why, over the past three years, opposing the individual mandate has become for conservatives a more fundamental litmus test than opposing abortion. Accordingly, it is conservatives who have launched the constitutional challenge to the individual mandate, and who have now succeeded in bringing it before the Supreme Court, and who have based their chief strategy for bringing down Obamacare on the idea that the Supremes will agree with them about it.

DrRich, like most conservatives, is aghast at the idea that the Court might actually find the individual mandate to be compatible with the Constitution. Such an expansion of the power of the Central Authority over the lives of individuals will essentially gut the main idea behind our founding, and send us even more rapidly down the path toward tyranny.

But as he contemplates how he might feel on the day the Supreme Court finally strikes down the individual mandate, DrRich can’t help conjuring up the last scene from The Graduate. In that scene, Dustin Hoffman, who has just burst into the church and fought through a horde of wedding guests to grab his girl from the altar, and, with her in tow, has fought his way past the stunned groom and back through the angry crowd, and having at last jumped with her onto a city bus, is now sitting breathlessly, his hard-won love at his side, as the bus pulls away leaving their pursuers behind. And as that last scene fades, his look of elation at finally winning his heart’s desire gradually slackens, and transforms into a look of utter panic, a look that silently beseeches, “Now what?” Or, perhaps, “What have I done?”

DrRich thinks that’s what will happen to Republicans on the day the individual mandate is declared unconstitutional.

There is a reason, dear reader, that Mitt Romney, Newt Gingrich, and the Heritage Foundation, all of whom claim to be conservatives, at one time or another supported something very much like Obama’s individual mandate. That reason is: it is very difficult to conceive of a workable, market-based solution to our healthcare mess without one.

Any scheme for reforming healthcare that is based on private health insurance will fail if a substantial proportion of the population declines to purchase health insurance. Whether people have chosen to acquire health insurance or not, they will still get sick. And when the uninsured get sick there are only two choices.

The first choice is to refuse them care. Libertarians have no problem with this. They believe that if you want some healthcare, you should pay for it yourself. If you choose not to buy health insurance, or otherwise fail to make arrangements to pay for healthcare should it turn out that you need some (as well you might, if you engage in all the activities and abuse all the substances that libertarians say is your right), well, that’s too bad for you. Let your painful and untimely demise serve as an object lesson to everyone else, so that perhaps they will make better personal choices. Most non-libertarians, however, find this option abhorrent.

The second choice is to take care of the uninsured anyway. If you do that, not only do you drive up the cost of health insurance for people who have chosen to buy it, but you also create a huge incentive for people to not buy it in the first place.

This is why Republicans or conservatives who have thought deeply about healthcare reform (Gingrich, the Heritage Foundation), or who have actually instituted healthcare reform (Romney), will often settle upon a solution that incorporates something very much like President Obama’s individual mandate. Unless everyone is strongly “incented” to buy health insurance, a market-based healthcare system will collapse.

More to the point, Republicans ought to recognize that, while it seems to have wound up that way, the individual mandate in Obamacare did not start out as a sneaky way to undermine the Constitution. It was, in fact, a necessary concession to the more conservative of the Democratic members of Congress. President Obama and his minions (or handlers, depending on which talk show hosts you listen to) are on record as saying that their real goal is a single-payer, government-controlled healthcare system. And there is no reason in a single-payer, government-controlled healthcare system to invoke anything like an individual mandate to purchase insurance. The President would have been quite happy without any individual mandate, if he could have gotten his way in the first place.

The individual mandate was inserted into Obamacare purely as a necessary component of healthcare reforms that are ostensibly based on private health insurance, which is the only kind of reform the President could possibly get through even a Democratic Congress in 2010.

If the Supreme Court declares the individual mandate to be constitutional (which will violate everything DrRich holds dear about America), then it’s a huge win for Obamacare.

But if they declare it unconstitutional, that will trigger the Republican’s real problems.

Republicans, Democrats and federal judges all seem to agree that without the individual mandate, Obamacare is infeasible. The moment the mandate is declared unconstitutional, Obamacare disappears.

And this will create a “Graduate” moment. There the Republicans will be, sitting on the bus with the healthcare system they have just saved from the handsome-but-arrogant groom who had Big Plans for it, and heading to – where?  They can’t just go back to the old healthcare system; we’re past that. The health insurance industry has made it plain that their business model is broken, which is why they acceded to and even campaigned for Obamacare (a system under which they are to become federally-regulated public utilities) in the first place. Should Republicans institute their own market-based healthcare reforms? Good idea! But what do they do about the people who choose not to buy private insurance, now that they have had mandates to purchase declared unconstitutional? And even if they have an answer to that question (which they do not), do they have a plan ready to go, one that can be implemented quickly, before the healthcare system implodes? (Remember, Republicans, you will be dealing with a health insurance industry that has run out its string, and that will be at least angry if not panicked at the demise of its public-utility end-game.)

As it happens, DrRich himself has proposed a fix for the healthcare system that addresses all these problems – a system that is based on individual choice and incorporates private insurance, and at the same time covers everyone without any individual mandate, and controls healthcare costs to boot. The details are entirely irrelevant at the moment, and DrRich will not bore his readers with them now. (If you’re interested you can buy a copy of his book in Kindle format for five bucks, or if that’s too steep you can read an outline of his plan here for free.) The point is that workable solutions to our healthcare problems are indeed imaginable. The likes of DrRich has imagined such a thing, and so have others. But Republican candidates for President, and Republican congressional leaders, are not creating these solutions. Instead, they are steering us into a blind alley.

Here is what DrRich fears. When the individual mandate is declared unconstitutional next June, the Republican celebration will last all of 7.5 minutes. The insurance industry will make it very clear very quickly that they simply will no longer be able to function, and to have any hope of survival they will have to resume cherrypicking healthy patients, massively increasing premiums, denying recommended care, and dropping subscribers when they get sick. Even with these drastic steps, they will say, there’s no guarantee that health insurance will still be available for most Americans in a year or two. And at the time these astounding revelations are made, the Republicans won’t even be finished choosing a nominee, let alone be able to articulate a coherent plan for replacing Obamacare. By Independence Day panic will reign across the land.

The President will then make a speech. He will say, “We tried, America. In the spirit of bipartisanship we tried to give Republicans a system of market-based healthcare reforms, just like they say they wanted. But that kind of system requires an individual mandate, and our misguided friends on the right have now shot the individual mandate through the head. And when the American people ask those same Republicans who brought this disaster upon us, “Now what?” the American people get no answer. The Republicans are quite good at destroying healthcare solutions, but are hopeless when it comes to creating them. And you can hear for yourselves what the health insurers are now threatening to do to all of us when we get sick. It will be just like it was before, but much, much worse.

“We tried, America. We tried to create a market-based healthcare system that would be fair to all. But the Republicans, caring for nothing but their own selfish political fortunes, have blocked our efforts, and have left us all for dead.

“Fortunately, in a few short months you will be able to exercise your God-given right as Americans to choose. If you want to, you can vote into office the Republicans, the people who have traded your healthcare security and that of your family in favor of the chaos we are all witnessing today. Or you can re-elect me, and you can give me a Congress I can work with, and let us try to salvage something good from the ruins of the glorious reforms we fought so hard for the last time. Let us try to give you the best healthcare system that is still possible, given the new constraints the Republicans have now made for us. While you and I might not have started out wanting a healthcare system run entirely by the government, today our choice is either that, or the chaos, pain, suffering, disability and death that, thanks to the good offices of the Republicans and their friends in the health insurance industry, are now staring us in the face. But this is not the first time Americans have stared evil in the face. We have done it before, and we have always prevailed.

“We tried, America. We tried – but the Republicans denied, and babies died.

“My fellow Americans, in November you will have the opportunity to say no to the forces of evil, and to set this travesty right. I know the heart of Americans, and I know that you will do the right thing, not only for your own sake, but for the sake of your children, and your grandchildren, and generations of Americans yet unborn.*”

And when President Obama is finished laying out his argument, the Republican nominee, whoever he or she turns out to be, won’t know whether to cry, “Oops!” or “Nein, nein, nein!”

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*DrRich is a conservative but also a capitalist, and so his speechwriting services are available to the highest bidder. Mr. Obama, mutual “friends” in the DOJ have proven adept at tracking DrRich down when necessary, and will know how to contact him.

Podcast:

An Epiphany On Direct-Pay Practices [ 12:32 ] Play Now | Play in Popup | Download (1078)

DrRich’s recent posts on the death of primary care medicine elicited several responses from readers, not all of them positive.

Most of the complaints DrRich harvested from these posts had to do with his suggestion that the physicians formerly known as PCPs ought to drop out of the dysfunctional healthcare system altogether (the system that has, purposefully and with malice aforethought, wrecked their chosen careers), then strike out instead on their own, and establish private practices in which they are paid directly by their patients.

This suggestion creates, among many in our society (and apparently, among many of DrRich’s readers), a viscerally negative reaction. Many people believe that DrRich is exhorting doctors to embrace their inner greed, and abandon the great lot of patients in order to satisfy their own selfish desires and foolish professional pride.

A reasonably typical comment came from one Tracy, who avers, “Only the rich will be treated. I don’t think we want to do that do we?”

Now, if DrRich were a Progressive, he would take advantage of the fact that Tracy (who thoughtfully provided his website address) is a health insurance agent, and would dispense with him using a scathing ad hominem attack, something like: Look who’s talking about somebody selling a vital healthcare product at such a high price that people can’t afford it!

But DrRich is not a Progressive. So he will ignore the delicious irony in Tracy’s complaint, and address the substance of his comment. To restate Tracy’s objection (and, in fact, all of the objections that have been made to physicians dropping out of the system and establishing direct-pay practices): For doctors to demand that patients pay them directly is elitist and unethical; only the rich will be able to afford this kind of care; a two-tiered healthcare system will develop, and public health will suffer.

DrRich will answer this objection in two ways. First, he will make a philosophical argument as to why direct-pay practices are the right thing to do. Then he will give a real-world example that demonstrates how a direct-pay practice is, in fact, good for patients and for society.

The fundamental argument that supports the rightness of direct-pay practices has been made numerous times on this blog. In summary: In the attempt to control healthcare costs, the Feds and the insurance companies have, in uncountable ways, entirely coerced physicians (using and exercising the threats of loss of income, massive fines, and jail) to place the needs of the payers ahead of the needs of their individual patients. In so doing, they have systematically destroyed the doctor-patient relationship, in the process killing medical professionalism, and reducing patients to objects, to cost centers, and abandoning the sick to their own devices as they attempt to navigate an increasingly hostile healthcare system.

This process is now firmly established. It has been legislated by Congress, embodied in volumes and volumes of rules, regulations and “guidelines” (strictly and ruthlessly enforced), upheld by the courts, and finally (and most tellingly) sanctioned as being entirely “ethical” by the physicians’ own professional organizations.

It has become impossible for doctors – especially the PCPs, who have been most directly affected – to fight this reality. If they want to escape, their only options are to become a medical specialist (since outpatient primary care is the main lever on which the Feds are pushing), a deep-sea fisherman – or a direct-pay practitioner.

So primary care doctors must either resign themselves to a system that ruthlessly pushes them toward an unethical, demeaning, public-health-destroying style of practice, or (one way or another) get out.

The only means that will allow them the freedom to practice primary care medicine in a way that is compatible with true medical ethics – which allows them to place the needs of their individual patient above all other considerations – is the direct-pay model. And this means that the only way for a patient to have a primary doctor who treats them the way patients are supposed to be treated is to find a direct-pay doctor.

To argue that direct-pay practices – or any innovation that would somehow restore both the doctor’s professional integrity and the patient’s rightful advocate – is unethical is completely upside down. It is one of the few viable pathways toward restoring the foundational (but currently obsolete and officially repudiated) medical ethic of always placing the patient first.

To argue that direct-pay practices threaten public health completely ignores reality. In fact, this is one of the few viable pathways toward restoring protections that the public is supposed to have when facing a healthcare system that is utterly bent on avoiding spending money on them.

To argue that direct-pay practitioners are creating a two-tiered healthcare system is ridiculous on its face in a society that gives mere lip service (though, to be sure, plenty of it) to the problem of 47 million uninsured.

To argue that direct-pay medicine will create a subpopulation of elites (because it provides a mechanism by which some individual patients can escape the deadly obstacles that have been intentionally laid before them), is as absurd as arguing that George Washington was wrong to free his slaves upon his death (or even that New York State was wrong to abolish slavery at about the same time), because it created a subpopulation of “elite” (i.e., free) African Americans; that until all slaves were freed, no slaves should have been freed. But freeing at least some slaves – and forthrightly stating why it needed to be done (see: Declaration of Independence) – was not only ethical, but also showed what was possible, and over time created an expectation that eventually could no longer be ignored, and that, at huge cost, was finally fulfilled.

It is important to note that any innovation that can potentially spare patients from some of the harm the healthcare system has in store for them will necessarily be applicable to only some patients at first. That’s how disruptive processes work. They begin as niche products or services, attractive only to a few high-end users; too expensive or too marginal for the vast majority; ignored, ridiculed or castigated by current providers. But if at their core they’re offering something fundamentally useful, they will slowly demonstrate their worth – and eventually all the potential users will see the light, and demand for the product will become explosive. When that happens, the means are found to make the new product affordable and available to meet the demand – often by making significant adjustments to the original concept, that nonetheless preserve the core benefits. And when that happens, the traditional providers (who never saw it coming) are suddenly out of business.

It may not be that direct-pay medicine plays the personal computer to the traditional healthcare system’s mainframe. But it is inarguable that what it offers to patients – at its core – is every bit as vital and every bit as indispensable. And if a critical mass of the public can be made to understand what is really being offered here, there will be no holding it back.

Unfortunately we have a limited window of opportunity. The vociferousness of the complaints against direct-pay practices indicates just how threatening these are to the Progressive program. Unless this practice model gains a sufficient toehold, and quickly, it will be made illegal. Because Americans cannot be permitted to spend their own money on their own healthcare.

DrRich will finish by pointing his readers to a real-world model of a direct-pay practice which, he believes, graphically demonstrates the potential benefits of such a model.

Epiphany Health is a direct-pay primary care practice recently begun by Dr. Steven Shell and Dr. Lee Gross in southwest Florida. These doctors took pains to make their services affordable to many of the uninsured (and underinsured). For about what you would pay for a cell phone contract or for cable TV, they will be your doctors.

Doctors, that is, in the original sense – a professional who knows you well, a personal advocate for your health, who is dedicated to placing your interests above all the other competing interests within the healthcare system. Because they are paid by you, it is you they must satisfy in order to have a viable career.

As Dr. Shell told Sun Newspapers, “Our simple, preventative healthcare plan has several advantages that include true price transparency (cost of services ahead of time), high quality care, affordable fees, no copays, no deductibles, no pre-existing condition exclusions and a plan not tied to an employer.”

In addition to price transparency, Epiphany offers major price discounts to their patients. They have negotiated these discounts with pharmacies, physical therapists, imaging centers and laboratories. These discounts are often in the range of 75 – 80% of the cost to non-members.

Now, if this kind of practice is unethical, elitist, or damaging to the public welfare, DrRich just does not see it. In fact, as much a benefit as this kind of practice might be to doctors, it is far more beneficial to the patients lucky enough to have such an option available to them.

You who aren’t so lucky should look at what Epiphany is offering – and demand it for yourselves. If you do, you will have it. There are thousands and thousands of disaffected doctors who would love to practice medicine like this, but they have been cowed to inactivity by the naysayers (and Progressives) with their cries of, “Elitist! Immoral! Unprofessional!”

If these doctors heard from their patients, all the negatives would be forgotten, and they too would have their own epiphany.

Especially since the events of last week, it would be absurd for DrRich to think that everybody is out to get him. Still, it seems plain that, of late, not all individuals enjoy his efforts here at the Covert Rationing Blog.

Two years ago, for instance, DrRich was “invited” to testify as a witness before a federal grand jury in a matter involving one of his consulting clients. While under oath, DrRich was caused to understand that the Feds (at least certain members of the DOJ) are well aware of this blog, and of the general tenor of its content. The impression left by this experience makes DrRich doubt whether many of his fans come from that particular precinct.

Further, the CRB has been the victim of two targeted denial-of-service attacks just in the last several months. Perhaps this is a common experience for healthcare bloggers, but then again, perhaps not. Finally, there’s the fact that last May (some readers may recall) a nasty hacking exploit completely trashed the CRB at the server level, resulting in the loss of the first three years of DrRich’s endeavors here (which, some have said, is the greatest tragedy to befall posterity since the burning of the Library at Alexandria).

And so, Dear Reader, while DrRich is certainly happy to be hosting Grand Rounds for the fourth time, and is particularly delighted with the quality of postings which he has the honor of featuring this week, it occurs to him that hosting an event with such high (and well-deserved) visibility might draw certain “extra attention” here.  So perhaps you had better read this quickly.

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We begin with HealthAGEnda, the John A. Hartford Foundation blog, which is posting a remarkable series of articles by Amy Berman, a senior program officer at that foundation, who has recently been diagnosed with an incurable form of breast cancer. Ms. Berman discusses very openly and frankly both the good and the bad aspects of the American healthcare system she is encountering  as she deals with this likely fatal illness. In this post, the second in a series, Ms. Berman talks about her ordeal in confirming what she already strongly suspected was a very bad diagnosis, and describes the comfort she experienced, while “meeting the enemy,” from compassionate but frank healthcare professionals. She had a much less favorable experience, which she describes in her first post, demonstrating just how devastating it can be for a patient to encounter a one-size-fits all physician. The impact such an encounter has on a patient who needs real medical help is especially relevant in an era in which doctors are being urged (coerced) into following just such an approach. Ms. Berman is an extremely brave and gracious woman, and the important insights she is providing in her efforts to chronicle her illness ought to be read by every health professional.

Henry Stern of Insureblog discusses the documented, systematic mistreatment of the elderly under the British National Health Service. Stern points out that while similar mistreatment of the elderly also happens in the American healthcare system, here it is sometimes not systematic, but rather is most often due to sloppiness or inadvertent error, and further, when it happens remedial actions (such as lawsuits) are often available. In contrast (evidence suggests), treating the elderly badly in the NHS seems to have become virtual policy. DrRich, of course, longtime president and sole member of Future Old Farts of America (FOFA), is confident that nothing of the sort will ever happen here in the U.S. where the government always has our best interests in mind, and he is sure that when government officials refer to the NHS as an ideal to which we should all aspire, they are probably not talking about this part of it.

Writing on a related topic, Julie Rosen of Bedside Manner tells about steps doctors and families can take to resolve disagreements on how aggressive one ought to be when deciding on the use of certain treatments for elderly and mentally incapacitated patients. DrRich finds Ms. Rosen’s recommendations appropriate, since all of them take place at the local level, with full participation of the patient’s loved ones, and do not (explicitly, at least) involve the heavy hand of any Central Authority.

And still speaking of the role of authority in deciding on aggressive treatments, The ACP Internist posts a news report about a court-ordered spinal operation on a 16-year old who was injured during a wrestling competition. Neither the young man nor his parents wanted the operation, which they feared might cause paralysis.  (Apparently, they were actually paying attention during the “informed consent” process.) Further, as the mother apparently demonstrated in a video shown on local TV, her son had a “full range of motion” prior to surgery. Nonetheless, the young man was removed to protective custody, and the court-ordered surgery was performed (apparently successfully, thank goodness, or else this might have turned into a controversial decision). One hopes the judge, in making his determination that the family was not acting reasonably, was not swayed by their expressed partiality to herbal medicine and homeopathy. Wacko as such practices may be, they do not appear particularly relevant in this case, given the family’s seemingly cogent argument that the risk/benefit calculation, as it had been presented to them by medical professionals, simply did not meet their threshold for such aggressive treatment. Apparently, it met the state’s.

The ACP Hospitalist offers a post from a doctor at Grady Hospital entitled: “10 ways to know that the nurses hate you.” These 10 clues as to nurses’ disapprobation are both amusing and true. However, after observing for over 30 years the kinds of behaviors to which nurses are forced to resort when they see that things are greatly amiss, but at the same time they are powerless to directly intervene, DrRich thinks this post more accurately ought to be entitled, “10 ways to know that the nurses think you are killing your patients.” The nurses may or may not actually hate the doctor for it, but they wish he/she would stop – and here are 10 ways in which they may often express that wish.

While some states are big troublemakers (and you know who you are), others are moving to implement provisions of Obamacare just as the Central Authority has decreed. Louise from Colorado Health Insurance Insider tells us that Colorado Senate Bill 168 was introduced last week to create the nonprofit healthcare cooperative which is required by all states under Obamacare. (Shouldn’t somebody tell the Colorado state senators that writing long tracts like this in ALL CAPS is considered impolite, as it is the documentary equivalent of shouting?) Louise notes that the healthcare cooperatives mandated by Obamacare may help to reduce the number of uninsured, but adds that Obamacare “will do little to address a range of other problems, including rising healthcare costs, the unaffordability of healthcare even for people who have health insurance, over-utilization of care, and the problems created when we link health insurance to employment.” While these are all legitimate points, regular readers will know how little DrRich himself goes in for such grousing.

Obamacare, after all, does so much! As a case in point, David Harlow at HealthBlawg writes about Accountable Care Organizations, a new entity which figures prominently under Obamacare, and which will be a chief vehicle for controlling the cost and quality of healthcare (i.e., for controlling physicians’ behavior). A lot of scary things have been written about ACOs (including, truth to tell, things written here at the CRB), but Harlow points out that ACOs might not turn out to be such a bad idea after all. For evidence, he points to some of the successes realized by AQCs (Alternative Quality Contracts) in Massachusetts, under admittedly favorable practice environments, and notes that some of these successes might be translated directly to ACOs. DrRich hopes he is right. But it is a little worrisome that nobody, including Harlow (as he himself allows), really knows what ACOs will end up looking like. Their structure is, as we speak, being fought over by numerous federal agencies (like a carcass being fought over by a pack of dogs), and among these agencies (DrRich shudders to contemplate) is the Department of Justice. But Mr. Harlow knows far more about this stuff than DrRich, so let’s all hope for the best. Short of defanging Obamacare, that’s about all one can do.

Amy Tenderich of Diabetes Mine submits a guest post from Valentine’s Day, written by Wendy Strgar, entitled “Healthy Sex, Healthy Love.” Ms. Strgar, who is known in some circles (circles of which DrRich himself is innocent) as a “loveologist,” and who markets the sexual-aid products to prove it, actually makes a pretty convincing argument that sexual activity can be an important part of reducing one’s risk for all sorts of medical problems. So: Are you one of those folks who has thought about having more sex, but you’re just not sure the pay-off is worth all the trouble? Read this post.

Dr. Pullen at DrPullen.com posts about the problem of anti-personnel mines, which continue killing and maiming innocent people all over the world, and for decades after hostilities cease. He rightly thinks the US ought to do more to resolve this problem, and in particular, he decries apparently serious suggestions some have made that we ought to deploy mines on our southern border to prevent illegal crossings. DrRich agrees with Dr. Pullen, but does not believe that mining the U.S. border will ever become a serious consideration (unless it is to prevent American citizens from sneaking southward to receive black market healthcare).

Doug Perednia at The Road to Hellth is writing a fascinating series on the wonders of Pay for Performance. In this, his second offering, Perednia provides some pretty overwhelming evidence, including evidence from studies which proponents use to justify P4P, that P4P demonstrably does nothing useful. Actually, DrRich should qualify that statement: It does nothing useful in terms of improving clinical outcomes. What it does do (as Perednia demonstrates) is to forcibly distract physicians from listening to their patients, to fully consume all the time allotted for a patient visit, and to actively discourage other forms of doctor-patient interactions which might lead to additional healthcare expenditures. So despite a now-well-documented lack of any improvement in patient outcomes, P4P is in fact achieving its actual designed ends, and thus must be counted a great success.

Dr. Joe Smith, who writes the Dr. Unplugged blog (a Medscape blog which requires free registration), travels the globe seeking out emerging technologies related to wireless healthcare. In his latest article Smith laments the fact that, so far, the healthcare consumer has completely missed out on the ongoing wireless revolution, a revolution that has greatly empowered consumers in virtually every other economic sphere. He concludes that despite this slow penetration, wireless technology inevitably will also transform the lives of healthcare consumers. DrRich agrees that this outcome is indeed inevitable, but thinks it may take a while. Resistance to the empowerment of individual healthcare consumers is deeply entrenched, massively well-funded, extraordinarily powerful, amazingly ruthless, and very widely distributed (from the beltway to the bedside). Such resistance is akin to the all-pervasive power of the Church 500 years ago, a power that was eventually broken, but that required the technology (printing press), the killer app (Bibles printed in the vernacular), the catalyst (Martin Luther’s 95 theses), the poorly-expressed but ultimately deep-seated desire of the populace for the knowledge being offered, and the fortitude to persevere through 300 years of reformational bloodshed. So, yes, history ultimately will win out with regard to wireless healthcare, but one fears it may take more than just the healthcare equivalent of the iPod or Facebook to see it happen.

The anonymous author of The Notwithstanding Blog is a Canadian medical student with a background in economics. In the short time this blog has been around, he (or she) has done some very cogent writing applying economic insights to medicine. The featured post describes why medical ethicists (despite their constant yammering about honoring the autonomy of the individual) almost always decide specific ethical questions the other way, that is, against individual autonomy. DrRich, in his ham-fisted style of analysis, always tends to blame this phenomenon on the fact that Progressives in recent decades have largely taken over the Ethicists’ house, just as they have taken over in most academic fields, and that Progressives as part of their DNA must always come down on the side of the collective. But Dr. Notwithstanding offers what is likely a better explanation, based on economics (the science of human behavior) instead of on political ideology. As you’ll see, in addition to being an original thinker Dr. N is an engaging writer. You should give this blog a try.

In stark contrast to Notwithstanding’s anonymous blog is Carolyn Roy-Bornstein‘s eponymous one. Here she describes one of the absurdities doctors see every day with the modern-day electronic medical records which are being adopted all over the place, with great fanfare (and with public subsidies), to streamline healthcare, reduce redundancy, eliminate waste, and assure quality care. Namely, while these new electronic records may greatly simplify the lives of the federal regulators and the forensic accountants who keep track of which doctors are being naughty and which are being nice, they often gum up the works for the people on the ground who are actually trying to take care of sick people. EMRs can do this in many ways, and Dr. R-B nicely describes one of them: She laments the reams of redundant, boilerplate, tree-killing verbiage these records spit out, each and every day, for each and every patient, a characteristic which makes the formerly simple task of figuring out how the patient’s doing today a constant challenge, a perpetual exercise in patience and persistence. and a powerful attractor for medical errors. She ends by speculating whether it might make things easier to have somebody sing these records to her. A nice thought, but DrRich thinks it would not help. What you’d get is an early Phillip Glass composition, in which the same nonsense phrases are repeated over, and over, and over, and over. . .

The Happy Hospitalist discovers that latex examination gloves (powdered, one-size-fits-all, Spic and Span brand), are available at 10 for one dollar at the local dollar store. His discovery suggests a couple of things. As Happy points out, hospitals which are expected to survive on Medicaid payments now have someplace to shop. And, if you want to bring down the cost of healthcare products and services, simply make them available for direct purchase by consumers.

Carolyn Thomas of Heart Sisters writes of journalist Melissa Mia Hall who died in her Texas home in January after avoiding medical help for her severe and persistent chest pain (regarding which she wrote a running commentary to friends – and ultimately to posterity – via e-mail). Ms. Thomas concludes that had Ms. Hall had health insurance (which she did not), she likely would have done more than just document the progression of her fatal heart attack. DrRich has no personal knowledge of Ms. Hall, and so cannot contradict this conclusion, nor does he wish to. However, a recent survey by the American Heart Association showed that in 2009, only 50% of women (regardless of insurance status) said they would call 911 if they thought they might be having a heart attack. DrRich, who has long lamented the feminization of men in our society, now utters his dismay at the converse – the masculinization of women. Ladies, if you have symptoms suggestive of a heart attack, don’t try to tough it out. Call 911.

Steven Wilkins of The Mind Gap tells how sessions of culturally-sensitive “storytelling” can break down certain cognitive barriers for some patients, and more fully engage them in their medical treatment. Wisely, Wilkins is not suggesting that beleaguered PCPs develop a stable of appropriate yarns they can spin for their recalcitrant patients during the 7.5 minutes the Central Authority has allotted for each “patient encounter.” Rather, he has several helpful suggestions for incorporating such storytelling into existing systems, which would leave the doctors alone to do what they’re paid for – making little electronic chits on Pay for Performance checklists.

Vineet Arora at FutureDocs talks about the universally-recognized phenomenon of the over-ordering of radiological diagnostic tests, which is detrimental both to patients’ health and to the healthcare budget. She discusses the many reasons too many of these tests are ordered. It boils down to the fact that the healthcare system provides physicians with extraordinarily strong incentives, at many levels, NOT to rely on their clinical judgment, but instead, in order to optimize their odds of professional survival, to just go ahead and get the test. Unfortunately the solutions Dr. Arora suggests to this difficult problem do not hinge on restoring the doctor’s clinical judgment as a legitimate decision-making tool. (This is no fault of hers; to restore respect for the doctor’s clinical judgment would require a wholesale change in how the healthcare system now operates.)  Instead, she suggests counterbalancing the strong coercions doctors feel to order too many of these tests, with new, and equally strong, coercions not to. Laboratory rats faced with similar, unresolvable imperatives to respond to two opposite stimuli, of course, quickly die of the stress.

Dinah from Shrink Rap notes that the FDA is about to take an action that may effectively render electroconvulsive therapy (ECT) a thing of the past. Specifically, the FDA is likely to reclassify ECT machines (which have been in clinical use since long before the FDA controlled such things) as Class II medical devices. If so, then for these devices to remain on the market, the two companies that manufacture them would have to conduct expensive new clinical trials to document safety and efficacy within 30 months. Observers judge that these companies would not have the resources to do so. ECT is a highly controversial procedure, and there are vocal groups which are trying to ban it – but for some patients with severe depression, Dinah points out, ECT has been a very effective and potentially life-saving last resort therapy. These unfortunate patients, apparently, can now join all the others whose response to various treatments resides in the tail of the standard distribution curve, and for whom the tailored, individualized therapy they require will no longer be an option.  So they will just have to make do with the guideline-driven treatments that suit the average patient just fine. Nonetheless DrRich predicts this change can be implemented with minimal outcry, since severe depressives, being often imbued with great inanition, likely won’t complain very vociferously about it.

Speaking of shrinks, Philip Hickey of the Behaviorism and Mental Health Blog writes about his observations regarding how and why “mental illness” has become such a growth industry. He says, “’Mental illness’ is a spurious explanatory concept whose purpose is to medicalize for profit the ordinary problems of human existence which our ancestors tackled and resolved without drugs for thousands of years.” While DrRich might not buy his entire thesis, there is much more truth in what Hickey says than one would like to think.  Among other things, when healthcare becomes a right, then the more struggles of the normal human experience we decide to turn into a medical diagnosis, the more it becomes society’s obligation to alleviate those normal struggles. There is a natural endpoint to this process of over-medicalization, of course, but it is not pleasant to contemplate.

Dr. Wes speculates on what is really different about the new pacemaker leads which recently have been declared officially MRI-safe by the FDA. Wes suggests that much of the extraordinarily expensive and time-consuming effort that was made in obtaining the “MRI-safe” label had more to do with the incredible regulatory maze that had to be navigated, than with any actual engineering changes. DrRich, who a few years ago was peripherally involved as a consultant in a similar effort (with a different company), declares Dr.Wes’ speculation to be likely pretty accurate. But fear not, for Medicare will be reimbursing the manufacturer for its regulatory ordeal for many years to come.

The venerable DB of DB’s Medical Rants offers a timely rant about how those who create the clinical guidelines which dictate the practice of modern medicine often do so inadvisedly, and sometimes with their own (possibly cryptic) agenda in mind, and as a result of such guidelines, patients may die. DrRich himself has covered this same topic lately. DB’s commentary hits the mark.

Paul S. Auerbach of the Medicine for the Outdoors Blog provides this post on cholera vaccines. It turns out that cholera vaccination is a little less than straightforward, and given the relatively small amount of vaccine available worldwide, would not be suitable for wide-scale use. So as far as cholera prevention goes, pray for sanitation.

Rich Elmore and Paul Tuten at HealthcareTechnologyNews write the wonderful news that the Direct Project has launched. The Direct Project, they tell us, is an implementation of a secure, health-related e-mail standard designed to “allow health practitioners to securely exchange health data, medical records digitized to be easily shared between doctor’s offices, hospitals, benefit providers, government agencies and other health organizations, all across America.” This sounds like a pretty good idea, except perhaps for the “government agencies” part, since, for many of us, these are the very folks we’d least want looking at our most private personal information. As for the patients themselves, it is not clear whether they also will have ready access to all this extremely secure information about their own health, or whether instead they will have to wait until the information finally shows up on Wikileaks.

February 24 – DrRich has been petitioned by the authors to issue a correction for this last item. In order to do complete justice to them, DrRich reproduces their suggested correction in its entirety:

“The Direct Project encrypts the information being transmitted.  No one other than the intended received can get the information.  There is nothing stored using the Direct Project technologies – it serves only as a transport mechanism to enable, for example, a provider to securely send information to a consulting physician.  The goal is to replace the pervasive fax machine with something more secure, more modern and able to be used by healthcare stakeholders with the most basic technology (internet access and a PC) up to the most sophisticated user of an electronic health record.”

DrRich thanks the authors for correcting any misapprehensions he may have inadvertently introduced.  To be clear, when the Feds get your personal health information, and when you have difficulty obtaining it yourself, that will not be the fault of Direct Project, whose purpose is merely to assure that the data gets sent only to the person/agency which is targeted to receive it, and no one else.  DrRich leaves it as an exercise for his readers to determine whether his original commentary may still offer any value.

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Thanks for speed-reading Medical Grand Rounds this week.

Next week Grand Rounds will be hosted by The Examining Room of Dr. Charles.

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Podcast:

The Constitutionality Briar Patch [ 11:35 ] Play Now | Play in Popup | Download (336)

“Drown me! Roast me! Skin me alive! Do whatever you please!” cried Br’er Rabbit. “Only please, Br’er Fox, please – whatever you do, just don’t throw me into that briar patch!”
- Joel Chandler Harris

Quite a lot has happened on the healthcare front over the holidays, even in addition to the Telltale Pacemaker story, and DrRich suspects that more than a few of his readers – busily eating, drinking and being merry – may have missed some of it. But fear not. DrRich is committed to catching you all up.

One story even the most dedicated of you revelers might have heard something about is that a U.S. District Judge, Henry E. Hudson, has declared the Obamacare individual mandate to be unconstitutional.

This ruling has no immediate practical result, since the individual mandate is not scheduled to go into effect until 2014. But Hudson’s ruling has given a great boost to Tea Partiers, certain Republicans, constitutional fundamentalists, and other recalcitrants who keep trying to disrupt the modern Progressive program by invoking the Constitution, and other old-timey scripture, written by slave-holding, wig-wearing, pompous old white men who didn’t even like each other very much, let alone Diversity, and who had never even heard of Twitter or Facebook or 4G networks, and whose scribblings therefore cannot possibly have anything important to say to modern-day people like us. In any case, Hudson’s ruling is not dispositive, and the matter of the constitutionality of the individual mandate will finally be decided in the U.S. Supreme Court.

In a related matter, also over the holidays, President Obama phoned the president of the Philadelphia Eagles to praise him for giving Michael Vick a second chance.

Some readers will not immediately see how President Obama’s phone call to the Eagles is relevant to Hudson’s ruling on the individual mandate, but that’s what DrRich is here for. You see, Dear Readers, Mr. Obama is a very brilliant and subtle man, whose actions and words can never be taken at face value, but which (like, as it happens, the actions and words of Christ) must be interpreted in the context of the entirety of his life’s work. Accordingly, his phone call to the Eagles can only be properly interpreted if one understands (as the President undoubtedly does) that Judge Hudson is the selfsame judge who sentenced Mr. Vick to the federal penitentiary for engaging in unsavory sporting activities involving dogs.

It should be clear then that President Obama’s real message, for those few of us who are perceptive enough to understand it, is: “Judge Hudson has a history of making rulings whose ultimate result is the precise opposite of what one might originally think. His Vick ruling was seen by everybody as an action that would ruin Mr. Vick’s career forever. But, as a result of that action, Mr. Vick dedicated himself as never before to becoming a great quarterback, and has already achieved heights he might never have reached if Hudson had been more lenient. So when Hudson says the individual mandate is unconstitutional, take heart! The final effect of his ruling will be – as in the case of Michael Vick – the opposite of what everybody thinks.”

The loud protests you hear from Mr. Obama’s side regarding the challenge to the constitutionality of the individual mandate, for the most part, are genuine. Most Progressives, lacking Obama’s subtlety, are outraged that something as important and as groundbreaking as Obamacare is threatened by mere scratchings made by old men in ancient days on a piece of cracked parchment. The official defense of the individual mandate made shortly after Hudson’s ruling, by none other than Kathleen Sebelius and Eric Holder, stresses this point. These eminences (one of whom is the Attorney General of the United States for goodness sake!) were utterly unable to come up with a legal or constitutional justification for the individual mandate, and based their defense entirely on the proposition that Obamacare is really, really important, and that the individual mandate is vital to Obamacare. The notion that if something is important enough the Constitution must be pushed aside (or, more accurately, “re-interpreted” in light of modern-day exigencies) is a given for Progressives, and they just don’t understand how any reasonable person could think otherwise.

Mr. Obama, DrRich believes, looks at it differently. Let us review some basic facts:

1) President Obama favors, and is working toward, a single-payer healthcare system. He has said so publicly many times. (Here’s one example.)
2) Obamacare places us on the road to a single-payer system – either a direct single-payer system run entirely by the government, or a single-payer system which is administered by minutely-regulated “health insurance utilities.”
3) The health insurance industry is currently running out the string on its fundamentally broken business model, and desperately needs Obamacare as a pathway to a graceful exit strategy.
4) The sole reason for the individual mandate was to get the health insurance companies on board with Obamacare, that is, the individual mandate buys the insurance industry a few more years of life – one last windfall – in return for which they will become heavily regulated utilities,  and likely avoid the ignominious and catastrophic failure their current trajectory suggests.
5) On the other hand, if we instead went to single-payer healthcare like the President and his Progressive friends want – such as Medicare for all – then the constitutionality of the individual mandate would immediately become moot.

If these facts – particularly the ones about the state of the health insurance industry – are correct (and DrRich believes he has amply demonstrated that they are), then declaring the individual mandate to be unconstitutional will actually play into Mr. Obama’s hands quite nicely.

If the individual mandate is declared unconstitutional and Obamacare becomes entirely defunct, the insurance industry will remain on their path to imminent disaster. They will be forced to price nearly everyone out of the insurance market, and themselves out of business, and we Americans will be left with no obvious choice but single-payer, Medicare-for-all healthcare by default, as the only obvious constitutional option. (There are, of course, other options – such as the one DrRich has proposed – but these likely will continue to be ignored.)

Mr. Obama will go on TV and say:

“We tried! Nobody can say we didn’t. We presented our nation with a healthcare plan that would cover almost everybody, and which would save the private insurance industry. But now, the actions of the Republican naysayers have destroyed the only mechanism that would have allowed the insurance industry to continue to function.  And now the insurance companies are falling like dominoes, and uninsured Americans will soon number over 100 million.  You and your loved ones and your neighbors face imminent death or disability from Republican neglect.  We must act, and we must act now.

“I and my Democratic colleagues did not want it this way. We fought hard for our centrist, market-based plan.  But our Republican opponents and their allies in the reactionary Court leave us no choice.  My fellow Americans, as a matter of national security, and of national survival, we must pass into law, within the next 30 days, my new program to expand Medicare to cover all Americans. All other paths have been closed to us. And if you don’t like it, as I myself do not, you know who to hold responsible at the polls.”

On the other hand, of course, the individual mandate may be declared constitutional by the Supreme Court. (DrRich does not understand how this could happen under the Constitution as written, and neither, apparently, does Mr. Holder. But given the “living document” proclivities of many justices these days, one must admit it is reasonably likely to happen.) And if the individual mandate is declared constitutional, then the federal government will have been granted the authority to dictate any behavior it wishes upon individual Americans, as long as those behaviors are deemed to be important enough by the government to the collective interest.

Either outcome to the constitutional challenge to the individual mandate, therefore, will be more than convenient to the ends of President Obama. He understands this very well as he stands there, entirely serene and above the fray, watching Sebelius and Holder, and his other minions, caterwauling over the constitutional challenge to the individual mandate.

“Please, Br’er Elephant,  whatever you do, please don’t throw my individual mandate into that briar patch!”

The obese, like the poor and the uninsured, will always be with us. And like the poor and the uninsured, the obese have served as a useful foil to healthcare reformers. But while their fellow foils are portrayed as sympathetic victims of hard-hearted right-wingers, the obese serve a different purpose. It it their role to illustrate for the rest of us how too much individual latitude invariably leads to bad choices (in this case, sloth, gluttony, greed and self-indulgence) which do grave harm to the collective; and which, for the good of the collective, justify (indeed, require) firmly (but kindly) applied limits on that individual freedom. In these articles, DrRich elaborates on the critical importance of demonizing the obese.

Defending the Demonization of Obesity, Part 1

Defending the Demonization of Obesity, Part 2

Don’t Sweat the Obesity Dividend

How Fat People Reduce Global Warming

Defending the Anti-Obesity Movement, Again

Why Big Health Insurance Supported Obamacare, Part III

Podcast:

How the Health Insurance Industry Saved Obamacare [ 18:24 ] Play Now | Play in Popup | Download (457)

When the time came, the support the insurance industry gave to President Obama’s efforts to reform healthcare followed four simple rules:

1) Do not actively oppose Obamacare. In stark contrast to its behavior during the Clinton’s effort to reform healthcare in 1993-94, this time the insurance industry never engaged its vast public relations resources to stifle healthcare reform.  There was no Harry and Louise this time. (Actually, Harry and Louise – the original actors – did make a brief appearance, but now, like the insurance industry itself, they were older, wiser, and sadder, and this time they fully supported the proposed reforms.)

2) Submit quietly to demonization.  A key strategy of the Democrats in passing Obamacare was to remind Americans repeatedly that the for-profit health insurance industry is fundamentally evil.  This strategy was based on the time-honored precept that it is easier to get the unwashed masses to cooperate through hatred than through reason, and so, to gain their cooperation, one must give them something to hate. Obviously, this strategy meant that the health insurance industry had to accept its role as the bad guys in the reform debates without complaint, and without engaging in any serious self-defense.

3) Offer subdued public support to Obamacare. The AHIP (America’s Health Insurance Plans) issued public statements that cautiously supported President Obama’s healthcare reforms. But its support had to remain subdued and tepid, since Satan can’t be seen leading the hymns.

4) Whenever necessary, rise up and demonstrate to the world just how evil you really are. At the end of the day, this was the most important role the insurance industry played in advancing Obamacare. It was certainly their most active role.

It was not a difficult role to fill. Since 1994 the health insurers had engaged in the sorts of truly evil, inhumane, and reprehensible practices that are naturally engendered by covert healthcare rationing, and that harmed or killed many of their subscribers. The only difficult part was choosing which reprehensible behaviors to feature, and when to do it.

In at least two key moments during the fight over healthcare reform – June, 2009 and February, 2010 – when the proponents of reform felt their momentum lagging, the insurance industry intervened with gratuitous behaviors whose chief function was to remind Americans just how unremittingly wicked and inhumane they really are. In the second case, at least arguably, the insurance industry turned the reform effort from apparent defeat to almost certain victory. Indeed, it is not too much of an exaggeration to assert that, in the end, the health insurance industry saved Obamacare.

June, 2009: Say Hello To My Little Friend

The debate over Obamacare entered a new phase in May and June of 2009.  It was during those months that the opposition to healthcare reform found its voice, and it began to seem as if perhaps the Obama steamroller could really be slowed, if not stopped. People were even beginning to say that many Democrats in Congress, after getting an earful from their constituents when they held their summer town hall meetings, would abandon any idea of supporting President Obama’s healthcare reforms.

Supporters of Obamacare decided it was time to invoke the demons.  So in mid-June, the House Subcommittee on Oversight and Investigations called three health insurers to testify on the practice of rescission, and to face not only indignant Congresspersons, but also some of the people who had been personally harmed by their practices.

“Rescission” is when an insurance company voids subscriber’s health insurance (after happily accepting premiums from that subscriber, often for many years) once they get sick. Under some circumstances, rescission might be justifiable. It is legal and proper to cancel a policy if the subscriber is found to have purposely lied on the insurance application about a prior illness that is material to the current illness.

But health insurance companies for years have actively and aggressively practiced rescission on subscribers whose insurance applications contained inadvertent and non-material inaccuracies.  (Just to put it in perspective, this kind of bad behavior is to be expected under a system of covert healthcare rationing, which again, is rationing by whatever means you can get away with.)

Furthermore, the health insurance industry does not merely engage in occasional unfair rescission practices; it has industrialized the process. It employs health insurance detectives whose job is to comb the prior medical records of subscribers who are newly diagnosed with certain, expensive medical conditions, looking for even trivial discrepancies on insurance applications, which they can inflate to “fraudulent” omissions, thus voiding the policy. These health insurance detectives are paid by commission, according to how much money their efforts can save the company. Many of them find it a very lucrative career.

So, at the cost of perpetrating a bit of inhumanity, rescission can save insurance companies a lot of money.

Consider some of the individuals who testified in Congress along with the insurance companies that day

• A nurse in Texas had her insurance canceled after she was diagnosed with breast cancer because she had failed to reveal that, years before, she had consulted a dermatologist about acne.
• A man (whose surviving sister had to testify) had his insurance canceled before he could begin expensive cancer therapy, because he had not revealed (and indeed he had not known) that a prior CT scan had showed gallstones and an aneurysm – conditions unrelated to his cancer.
• A woman had her insurance canceled – and due to the rescission could not find replacement insurance – because she failed to reveal that, at one time, she had been on medication for irregular menstruation.

During the hearing, the three health insurance executives were caused to listen to these and other incredible stories describing some of the inexcusable pain, suffering and death their unfair rescission practices had caused, and then were forced to listen to withering commentary by stunned Republicans and Democrats on the Subcommittee, whose own investigation had found that the three companies on the docket had retrospectively canceled the policies of 20,000 sick subscribers over the past 5 years.

After these heart-rending testimonies and the blistering attacks from extremely angry congresspersons, the executives were challenged by Chairman Stupak (D-Michigan) to now commit to discontinuing the practice of rescission unless intentional fraud could be shown.

All three replied, in turn, “No.”

Such a reply, in such a setting, almost defies belief. The only possible explanation, in fact, is that the insurance industry was stepping up to the plate, and embracing its assigned role as the Evil One in the great healthcare debate.

Even the most stone-hearted insurance executive can see that canceling the health insurance of a newly-diagnosed cancer patient, because she’d forgotten she’d required acne medicine before the prom 20 years ago, is just a bit unfair. But how did these three executives react? They did not attempt to deny such reprehensible behavior, or to explain it, or to defend it.  They were simply defiant about it.

One is put in mind of Tony “Scarface” Montana, bereft of friends, family, allies and bodyguards (albeit because of his own actions), hopelessly surrounded by an army of heavily-armed assassins, screaming, “Say hello to my little friend!” then launching defiantly into a wild, bloody and spectacular suicide.

One cannot for a moment believe that that Richard A. Collins, chief executive of UnitedHealth’s Golden Rule Insurance Co., Don Hamm, chief executive of Assurant Health, and Brian Sassi, president of consumer business for WellPoint Inc., would have been stupid enough to publicly defy Congress over such an indefensible practice, if doing so was against their own long-term interests.  Appearances to the contrary notwithstanding, they were not auditioning for a remake of Scarface.

This is not how an industry behaves which wants to court the goodwill of Congress at a critical juncture in its life cycle. This is not the strategy of an industry that wants Congress to defy its own party’s President and defeat healthcare reform, or that is begging Congress to give them another chance to figure out how to bring healthcare costs into check. This is not the behavior of any industry that wants to elicit any sort of favorable action from Congress. Indeed, these executives would have seemed more sympathetic and deserving if they had proposed instead to place live puppies on a spit and roast them over an open fire during half-time at the Super Bowl.

There is only one explanation for their astounding public defiance on this matter. Which is, it must have suited their long-term interests.

Recall that at the time of this remarkable hearing, there was growing skepticism about President Obama’s healthcare reform efforts, not only on the part of Republicans, but also on the part of a critical minority of Democrats in Congress. And for the first time since the election, there was some question about whether his reform plan would succeed in gaining sufficient support.

What must the health insurance industry do in the face of this faltering support for its desperate end-game? It must act to bolster Obamacare.

In this light the stark, defiant, public “no” uttered by the three insurance executives makes sense. “Look at us,” they were saying, “See how evil we are! We are utterly devoid of human decency, ethical obligations, or a sense of fair play. If we behave this defiantly when we are in the position of mere supplicants to your eminences, just think how we will behave if you fail to rein us in with new reforms!  Abandon all hope, those of you who rely on us for your healthcare, and behold the congressional dogs that placed us in this position of power over your very lives!”

Given the headwinds the healthcare reform effort was to face during the next nine months, it is difficult to say with any certainty how much good the insurance industry did in June, 2009, when it took such an extraordinary step to remind Americans just how incredibly evil it is. But when the time came to help boost the President’s reform efforts, nobody can deny that the insurance industry stepped up and did its duty.

February, 2010: Raising Obamacare From The Dead

Things looked especially bleak for healthcare reform in early February of 2010.  The incredible, possibly Constitution-defying, machinations Congress employed in its desperate attempt to pass healthcare reform had disgusted a majority of Americans, and momentum was clearly shifting to the opponents of Obamacare. And when Republican Scott Brown incredibly won the Senate seat in Massachusetts, robbing the Democrats of their crucial, filibuster-blocking 60th vote, many thought healthcare reform was dead.

But then out of nowhere, in early February, Wellpoint’s California subsidiary, Anthem Blue Cross, announced it was raising its already-astronomical health insurance premiums by as much as 39%, a move that promised to greatly increase the number of Californians who are uninsured.

The demoralized Democrats in the administration greedily capitalized on this new opportunity.

Kathleen Sebelius immediately fired off a very 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 reply, equally publicly.

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 insurance premiums would be nicely mitigated if everybody was mandated by the government to purchase health insurance.

Wellpoint’s anounced premium increase immediately triggered great volumes of delighted outrage by thankful Democrats, who desperately needed a large dose of “evil insurance company” at just that time. Wellpoint’s action reignited the proponents of healthcare reform, who were inspired to remind all Americans that this is what would happen to everyone if healthcare reform failed, and the greedy insurance companies had their way.

Stunned Republicans, seeing their impending victory over Obamacare evaporating before their eyes, could only issue a few lame and uncomfortable attempts to diminish the significance of Wellpoint’s unfortunate action.  But to little avail. The momentum had shifted. At least arguably, it was Wellpoint’s decision to announce an unconscionable rate increase at this extremely critical juncture that put healthcare reform back on the road to adoption.

From a pure business standpoint, there was no good reason for Wellpoint to stir the soup at that moment. Wellpoint is the most financially sound private health insurance company. While its California subsidiary did lose money in 2009, 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 stood to do comparatively well for the foreseeable future.

Furthermore, it has since been learned that Wellpoint’s math was bad. An independent actuary working for the California Department of Insurance reported on May 5, 2010 that the company had made “numerous errors” in calculating is rate increases, and further, that Wellpoint could cut its rate hikes substantially, and still meet its required 70% medical-loss ratio threshold.

It stands to reason that if Wellpoint really wanted healthcare reform to go away, they would have first checked their math before announcing seismic rate increases, and then, if such astounding rate increases were really needed, they would have waited a few months – while Obamacare died – before announcing their rate hike.

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.

In any case Wellpoint’s action, especially at that moment, seems entirely gratuitous. Wellpoint could only have chosen to do its demon dance, at such an inopportune moment, in order to revive Obamacare during its darkest hour.

And that’s precisely what happened.

In the final post in this series of articles, we will take a look at the implications of the insurance industry’s support of Obamacare, as we who find Obamacare less than desirable contemplate what we ought to do about it.
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Why Big Health Insurance Supported Obamacare

Part I – Another Reason He Should Have Kept the Bust

Part II – Why the Health Insurance Industry Supported Obamacare

Part IV – What It Means That the Health Insurance Industry Saved Obamacare
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Now, read the whole story.

DrRich explains it all in, Fixing American Healthcare – Wonkonians, Gekkonians and the Grand Unification Theory of Healthcare.

Now on Kindle!