Monday, September 27, 2004

The AMA Conspiracy

Butterflies on plateMilton Friedman, in his influential work Free to Choose, puts forth the premise that restrictions on medical licensure and the numbers of physicians in training by the AMA is one of the principal reasons for spiraling health care costs and diminshing quality. In a truly free health care market, the consumer would be free to choose from a large number of health care providers - physicians, non-physician health care providers such as nurse practitioners, midwives, chiropracters, and alternative medicine providers. Competition would drive down prices, and those providers with the highest quality and best service would succeed.

While I respect Milton Friedman, and believe in the power the free market, the law of supply and demand only works in a truly unrestricted free market.

American medicine is far more regulated than Soviet state industry ever was. The idea that physicians fees and resulting healthcare costs will magically drop if somehow the AMA loosens up the supply of physicians (which I am not all convinced is done for purely economic reasons, although no fan of the AMA in general - and not a member) is a fantasy. The vast majority of physicians fees are fixed either by federal regulation or contractual agreement with insurance companies. At the same time, physicians are businesses like any other, with rapidly escalating overhead costs which are beginning to bump against their virtually fixed - or falling - receipts. The reasons for this have been well described, and include spiraling malpractice premiums, unfunded federal mandates such as federal compliance and HIPAA, increasing health insurance costs for employee benefits, as well as a relatively scarce pool of highly qualified employees such as nursing and billing specialists. Opening the floodgates of physician supply will not drop prices, since prices are not determined by the usual supply and demand principles, but rather by federal law and an increasingly monolithic health insurance industry.

In my state, Washington, there were over 80 insurance carriers providing health insurance in the late 1980s. There now are three or four. Single insurers now cover huge swaths of the patient market, and therefore physicians have no flexibility to negotiate contracts. Imagine walking away from a bad insurance carrier contract, when 40-50% of your patients are covered under that plan (and will switch doctors if you're no longer on their plan), and you begin to get the idea. Keep in mind that doctors are currently prohibited from collectively bargaining with insurance carriers under antitrust laws, and you can see how unbalanced the marketplace truly is.

Increasing the supply of physicians would in fact likely result in a rise in healthcare costs, as desperate physicians increase volume in an attempt to compensate for worsening financial viability.

Another myth related to the economic arguments for licensure liberalization is that of alleviating the problem of physician shortages in underserved markets, such as rural America. No offense to folks who live in small towns, but I doubt that physicians will flock to tiny rural villages simply because the AMA lets more doctors be trained. Cities have large populations precisely because they offer greater benefits to those who live there - financial, cultural, convenience, lifestyle. While the urban lifestyle is not for everyone, economics and personal lifestyle preference dictate physician distribution far more than absolute numbers.

Licensure restrictions - while certainly having the potential for conflict of interest and market domination - do in fact serve to standardize quality and predictability of physician care, albeit imperfectly. Anyone who has struggled to figure out who a good physician might be for their particular medical problem can imaging the situation when all bets are off - is the physician you selected adequately trained to bypass your coronary arteries, or remove your brain tumor, or simply a charming, good-looking con man? A low-cost brain surgeon somehow doesn't sound like such a great bargain. Airline fares would drop, too, if you loosened the licendure requirements for pilots and flooded the market. No more overpaid pilots. All aboard, anyone?

Further undermining this argument is the fact that a vibrant market in alternative health care already exists. Billions of dollars are spent on remedies, herbs, manipulations, and treatments which are rarely beneficial, often worthless at best or harmful at worst, promoted using misleading advertising or by playing on false hopes or patient desperation (how many weight-loss products are there? How many work?) This is the free market at work, at its best - unregulated, unlicensed, unrestricted, unaccountable. Let the buyer beware.

There is no free lunch. Quality health care is expensive, and requires reasonable regulation - and therefore restriction - of providers to minimize the risks associated with highly complex advanced health care. Conspiracies about the AMA are superficially attractive, but it's time to look elsewhere for answers to our growing health care crisis.

Tuesday, September 21, 2004

Hospital Charges for the Uninsured

Kitten in inboxLucette Lagnado's article today in the Online WSJ (subscription required),
Anatomy of a Hospital Bill, details a couple financially devastated by an uninsured health care crisis, with the couple owing nearly $40,000 for a less-than-24-hour stay for a cardiac stent for myocardial infarction.
Like many of the 45 million Americans who don't have health insurance, the Shipmans gambled -- unwisely, it turns out -- that they could make do without it. Among the many factors they didn't take into account was the high markups hospitals tag onto care for uninsured patients, charging them far more than what they charge big private or government plans for the same care.

Ms. Lagnado then details a number of line items from the Shipmans' hospital bill, comparing the estimated cost of supplies and services with the line item charge, and Medicare and Medicaid reimbursements. From these comparisons come several unstated conclusions: a) hospital charges are exhorbitant with an excessively large profit margin; and b) Medicare and Medicaid reimbursements are a fair estimate of what should have been charged. The first conclusion may or may not be true; the second is most definitely untrue.

Information on what hospital costs are for mandated coverage for the uninsured, or underinsured (Medicaid/Medicare) patients are the missing ingredient in seeing how fair or unfair such charges are. Physicians deal with this problem on a lesser scale. Medicaid in Washington State where I practice reimburses approximately 40-45% of practice expenses for outpatient care. Medicare reimbursement is at or slightly below expenses, depending on your location in the state (Seattle area receives about 30% greater reimbursement than elsewhere in the state). Hence these patients represent a financial loss to a practice, at the same time driving up overall practice costs with a heavy burden of increased administrative and billing costs, unfunded federal compliance and HIPAA mandates, and significant payment delays (Medicaid typically takes 45-60 days to pay uncontested clean claims). Physicians still have the legal freedom (if not always the ethical freedom) to turn away patients unable to pay, or decline to see patients in Federal programs (45% of physicians in Washington state are no longer seeing Medicaid patients). Hospitals, on the other hand, are required by law to see such patients, under anti-dumping and other regulations. This is high-cost care, typically delivered in Emergency Rooms to sicker patients. Liability risks are also substantially higher in this environment and population.

The hospitals maintain that this is the reason for high-charge line items and large markups. This may well be true, but what I have not seen is any detailed accounting from hospitals or hospital associations on what these unreimbursed expenses actually are. This is the missing piece of the puzzle. Since their insured reimbursement rates are fixed by contract or Federal or state law, they can only recover some unreimbursed costs from collecting from the uninsured. Bad PR and bad policy, to be sure - but the alternative is to sustain large losses which may put the entire health care enterprise at financial risk.

There's another aspect of this story that I find troubling:
Indeed, at the time of Mr. Shipman's illness, the Shipmans weren't poor. Mr. Shipman was earning $80,000 a year in salary and commissions selling furniture. They were living in an attractive rented townhouse in suburban Virginia and driving a leased BMW. In March 2002, the Shipmans say, Ms. Shipman left a job with benefits in order to return to college, and the couple decided to go without health insurance. They figured they were healthy and relatively young; health coverage would have cost them several hundred dollars a month, money they figured would be better spent on tuition.

It would seem that there is a problem with priorities here: a couple making $80,000 a year and living well, as they were, can afford health insurance. They are, of course, free to roll the dice and forego insurance, but should they be allowed this freedom?

Now, I'm not a big fan of government regulation, since I daily struggle with the burdens of the vastly over-regulated health care profession. But there is a balance in society between personal liberty and responsibility to others. I cannot get a home mortgage unless I have homeowners insurance, even though I might have lots of other better things to do with the premiums. Nor can I drive a car legally in Washington without car insurance. The reason is simple: my freedom to forgoe such insurance is trumped by the potential consequences to others should my gamble prove wrong. If my house burns down, or I run my car into yours, another person or institution is forced to pay for my mistake or misfortune. Why should it be any different in health care?

One public policy which I believe should be implemented is mandatory catastrophic health care coverage - large deductible plans designed to cover the worst-case scenarios which can bankrupt a family. Making such coverage universal would provide a broad-based risk pool which would keep premiums lower, and designing the plans for expensive medically necessary care (no tummy-tucks, infertility, or liver transplants for end-stage alcoholics) would further make them more affordable. There would need to be some federal or state support - means-tested, of course - for low-income individuals, which could be funded by reducing or eliminating the tax deduction for employer-provided health insurance. This would serve the additional benefit of beginning to break the pathological codependency between employment and health insurance coverage.

Clearly something has to change, and soon. Class action suits against hospitals for price gouging and heartrending stories of families bankrupted by health care costs will not solve the problems of cost-shifting our health care expenses and responsibilites onto others. We're doing that now, and the system is breaking under the strain.

Thursday, September 16, 2004

Dan the Gnostic

Headline"Fake but accurate." Thus declares the mainstream press about the forged National Guard memos promulgated by Dan Rather and Friends at CBS. What could better typify the postmodern Gnosticism of the Left in today's culture? In essence, this proclamation says it all: we liberals have a higher knowledge than those who are unenlightened, and if the basis of our convictions is proven false, fabricated, or unreliable, it does not invalidate their intrinsic truth and value. So Dan Rather challenges the President to "answer the questions!" - even when the basis of the questions raised is demonstrably false.

No amount of reason or evidence will ever convince those of this mindset to change their worldview. I cannot say whether or not Dan Rather and CBS News will go down in flames, but you can be certain that should this happen - say, Rather gets fired, CBS's ratings tank, or Viacom's stock goes through the basement - that they will never admit it happened because of lack of integrity, dishonesty, or being blindsided by ideology. Instead, fully expect to hear much gnashing of teeth about the viciousness of the political process, the right-wing hate machine, the evils of the out-of-control internet, and the stupidity of the American people for not understanding the truth.

Count on it.

Tuesday, September 07, 2004

Cult of Death or Heart of Man?

David Brooks, in his NY Times Op-Ed piece, Cult of Death, says the following about the Muslim terrorists and the Beslan school massacre:

We should be used to this pathological mass movement by now. We should be able to talk about such things. Yet when you look at the Western reaction to the Beslan massacres, you see people quick to divert their attention away from the core horror of this act, as if to say: We don't want to stare into this abyss. We don't want to acknowledge those parts of human nature that were on display in Beslan. Something here, if thought about too deeply, undermines the categories we use to live our lives, undermines our faith in the essential goodness of human beings.

Calico cat & figureIt should come as no surprise to me - yet it still does - that people have any confidence remaining in idea of the "essential goodness of human beings." Yet this is perhaps one of the most durable myths of our modern secular age. It underlies both public policy and private perception, and forms the basis of many failed government and social programs. If you have the stomach for it and the honesty to look objectively, even a brief glance at human history both ancient and modern reveals vastly more evidence of the depravity of man than his essential goodness. Consider briefly the following examples: the Inquisition, slavery, Ghengis Kahn, the Holocaust, the Bataan Death March, the Cambodian killing fields, Ruwanda, Idi Amin, Columbine, Sadaam's rape rooms and shredders, suicide bombers on school buses and in pizza parlors, the rape of Nanking, the gulags, and Wounded Knee. And these are only the large historical events, easy to bring to mind. Left unmentioned but vastly outnumbering these are the countless murders, rapes, child molesters, serial killings, drug dealing, and any number of other smaller - but still profundly evil - events which now barely if ever make the news.

I am not a misanthrope, and am fully aware of the potential for man to achieve great goodness and nobility. From the selfless volunteer at an inner city school to Mother Theresa, countless examples of such goodness and nobility exist, often hidden and far less noticed than deeds of evil. The issue is about the natural inclination, the deep inner nature of man - is it toward good, or rather toward evil? Your answer to this question profoundly affects your worldview.

By taking the position that man is essentially good, you are left with the problem of understanding inexplicable evil, such as torturing school children and shooting them in the back as they flee, as occurred at Beslan. In evil of lesser scope, psychology and social theory are often recruited for this task: the child molester or rapist was abused as a child; inner city crime is a result of racism; the root of terrorism is poverty, injustice, and the oppression of the Palestinians by the Jews. Even there the answers fall short. But could any such combination of social liabilities give rise to such extreme evil, as seen at Beslan or Auschwitz - particularly in beings whose natural bent is toward goodness?

The Judeo-Christian viewpoint on man's essential nature is that man is fallen: created by a good God to be by nature good, but given free will either to submit to the good or to choose evil. Having rejected the good for personal autonomy independent of God, the natural gravity of the soul is away from God, not toward Him. In God is an unspeakable and unimaginable goodness; in His rejection is the potential for equally unimaginable evil. The Judeo-Christian solution is redemption, not psychology; inner transformation, not social programs.

To resist evil, you must know the face of evil, and recognize the face of good. The secularist denies the existence of God (or counts Him or it irrelevant), and therefore all goodness must have its source within man. The religious liberal believes God is good, but impotent, and therefore man is responsible to do the heavy lifting of all good works. The traditional Christian or Jew understands that man, created by God with enormous potential for good, but corrupted by failure to submit to God and therefore by nature far more prone to evil than good.

Religious affiliation is an unreliable indicator of good or evil behavior. The combination of evil motives with the compulsion of legalistic religion is a potent and dangerous mix, where men pursue their evil goals under the lash of and laboring for an angry god of their own making.

Man's tendency to evil can be restained, either by force of law, by force of arms, or ideally by inner transformation, repentence and submission to the power of humility and service. Wishful thinking and false assumptions about the goodness of man will prove woefully inadequate for the encroaching and fearsome evil of our current century.