AFTER MANAGED CARE
Kristopher Keller, D.C.
422 Morse Road
Columbus, Ohio 43214
(614) 885-4480
With Jean Field
research assistant
Copyright 1999
AFTER MANAGED CARE
FORWARD
The cover of Newsweek magazine for November 8, 1999 displayed a picture of a woman
in a hospital gown clenching her fists in anger. The headline read HMOHELL. The same
week United Health Care announced that it would no longer try to manage medical care.
They were returning that duty to the physicians who were treating the patient. The
reasoning was that they had found that it cost more money to manage care than they
saved. In their press release they announced their frustration at trying to hold down
health care costs.
United Health Care saw the futility of trying to manage care from the top-down. Still,
they expressed their opinion that without controls, there would surely be another
explosion of costs and a return to an ever-climbing spiral of health care expense. Both
Newsweek and United Health Care remarked that there didn’t seem to be any answer to
controlling health care expenses.
Meanwhile, numerous other managed care organizations around the country are faced
with a growing landslide of lawsuits. Wrongful deaths, permanent disability and injury
suits are being filed against managed care organization while congress appears ready to
pass legislation allowing even stronger consumers’ rights to sue insurance companies.
The insurance industry is crying foul. They claim innocence. They are only trying to do
what no one else seems willing to do. That is, hold down health care expense.
Daily, newspaper and news service accounts bring us another story of someone that has
died or was maimed for life because an insurance company denied payment for a needed
medical treatment. Most often the denials are against the advice of the patient’s own
personal physician.
As congress debates managed care and health care reform legislation, a growing number
of Americans are without even basic health insurance coverage. The cost of health
insurance has become prohibitive for an ever-larger segment of the population. The
Newsweek article reported that over 44 million Americans are without coverage and that
an additional 2 million per year are added to that population. Managed care that was
supposed to make health care more affordable for more people has done just the opposite.
The health care reform package that Congress has been debating all through 1999 will,
according to the experts, be little more than a Band-Aid solution. Some observers of the
Congressional debate predict that the consumer legislation most likely to pass will only
create more costs as the number of lawsuits against managed care companies sky-rocket.
The only thing that will be healthier as a result of this legislation are the bank accounts of
attorneys across the county. Health insurance premiums are predicted to rise faster than
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ever to compensate for millions of dollars in settlements that insurance industry will have
to pay. Some companies will simply fold up their tents and go home.
These bits of evidence point to an inescapable conclusion. Managed care is dying.
Public and political outrage against the managed care system is growing, and will become
one of the hot topics in the next presidential election. Yet, we seem to be no closer to a
solution that we were seven years ago when Bill Clinton rode to victory on the promise of
reforming the health care system. The Clintons hammered out a health care plan that was
subsequently squashed by Republican Congress as being unwieldy, too expensive and,
too much big government.
Some participants in health care want a government run, single-payer system, which
covers everyone, like the national health care systems of Canada and Great Britain.
Others point to those systems and the long waits for care, bureaucracy, and
impersonalized treatment as intolerable. Imagine your health care being provided by the
same people who run the IRS and the postal service.
Aside from the quality of care, is the question of how to fund such a monster. Medicare
is close to bankruptcy as it is. Add to that the rest of America, plus the 40 million or so
currently uninsured. Where would the money come from to operate such a system?
Even with a projected budget surplus, Congress is in no mood to add the taxes it would
take to fund this kind of health care for all Americans. If we combine public and private
money, by adding current business contributions and private health insurance premiums
to available government funds, we aren’t even close to the amount of money needed.
Managed care is dying. The government seems unable to produce a workable national
health care system. Health care costs are predicted to rise at a double-digit rate next year.
Millions are without insurance and millions more join them every year. Is there an
answer?
I would like to think so. That is why I wrote this paper. The answer is as simple as
returning to basic values of American life. In the following chapters you will read about
a concept that I am calling Responsibility-Based Health Care. The core of this concept is
the natural role that each segment of the health care arena would play if the health care
system were healthy. These are roles that are natural to each one of us, but that we have
somehow abandoned over the years for one reason or another.
If the natural responsibility of each segment of the health care system is restored, health
care costs will fall without artificially enforced controls. Quality of care will improve
without oversight committees, national accreditation boards or outcomes analysis. And
the health of the population will improve without increasing expense for new drugs, new
research or new public health programs.
This may all seem impossible to anyone who has followed the national debate
surrounding health care over the last decade. It is not impossible, it is inevitable. I
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believe that the health care system is fumbling and stumbling through the dark towards
the same sort of system I am going to describe in the following pages. What I hope to do
is provide a map so that we can all arrive at a new and better health care system more
quickly and less painfully.
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AFTER MANAGED CARE
CHAPTER 1
WHERE WE ARE
As the nation struggles with health care reform and congress debates laws to prop up a
dangerously archaic system, the average American is finding it harder and harder to find
affordable, effective health care. Is the health care system really that bad, or is the
situation being blown out of proportion by the media because it makes good press?
Anyone who has taken the time to study health care knows that it really is that bad. In
this chapter we will look at the cold, hard statistics that tell us what the system we have
now is like, and how different it is from the ideal. We will see, as one observer in the
medical journal Lancet stated, that “To call the way health care is organized and
delivered in the United States a system is charitable at best.”
America is, without question, the wealthiest and most powerful nation on this planet.
There has never in recorded history been a civilization with so much wealth, so much
power and so much technology at its disposal. Nowhere is that technology and wealth so
evident as in the average American hospital. Magnetic Resonance Imaging,
Computerized Tomography, Positron Emission Tomography, open heart surgery, DNA
analysis, brain surgery, brain scans, bone scans, gene therapy. The list is nearly endless.
Science fiction has a hard time keeping up with the advances that medicine has made in
the last few decades. America must then be the healthiest nation on Earth. Well, that is
where the whole thing begins to unravel.
When compared with other technologically advanced countries Americans, are either in
the middle or the bottom half of the pack, by almost any measure of health that can be
taken. In terms of longevity alone, out of 23 developed nations, 16 have a longer average
life span than America. Countries like Sweden, Australia, France and Iceland all have
average life spans at least a year or two longer than The United States. Japanese can
expect to live four years longer than can the average American.
A statistic at the other end of the scale, which measures the quality of health and health
care, is infant mortality. This statistic measures the number of children out of 1000
pregnancies that do not live to their first birthday. In the United States 7.9 children out of
a thousand will die before their first birthday. In Canada the figure is 6.0, in Germany
5.9 and Belgium 3.0. Of the 23 developed nations only two had a higher infant mortality
rate than the United States.
Worse yet is what we spend for health care. In America 13.6% of the gross domestic
product goes to health care each year. The next closest nation for which figures are
available is Germany at 10.4 percent. The cost of health care in the United States has
5
historically grown at nearly double the rate of inflation. Even under the best years of
managed care health care, costs still grow 20% faster than the rate of inflation.
In 1992 The Congressional Budget Office published an in-depth examination of the
health care system for 1990. In it they state:
“The United States spends considerably more on health care than do other countries, but
there seems to be little difference between the health of its population and the population
of other industrialized countries that spend considerably less. Since the mid-1970’s U.S.
health expenditures have grown much more rapidly as a share of national income than of
those other countries. The United States now stands out as an anomaly.”
In 1996, 13.6% of the gross domestic product was $3,633 for every man woman and
child in America. What is the reason for the high cost of health care in the United States?
John Newhouse of the division of Health Policy Research and Education at Harvard
University writes in the summer issue of Generations magazine, that health care costs
have risen exponentially in all countries studied over the last 35 years. The United States
has for forty years led the world in health care expenditure. So obviously, this is not
anything new. Newhouse analyzed commonly considered causes for this phenomenon,
including aging population, increased income, defensive medicine, rise in administrative
costs, increased efforts to save the terminally ill, inefficiency of service industries and
increased dependence on high technology.
His conclusion is that none of these factors, with the possible exception of continual
introduction of newer, more expensive technologies, can account for the rise in health
care costs. He also remarks that all nations have seen similar increases over the same
time period and that survey evidence suggests that, despite the burden of increased costs,
that people feel value in spending whatever is necessary to improve and protect health.
One can conclude from his data that we spend so much on health care because we can.
The desire to be healthy creates an unlimited demand for health care services that the free
market gladly provides.
There is a concern in other medical literature that the better the insurance coverage is the
more services and more expensive services are provided. In the areas where insurance
coverage for Cesarean sections is a commonly covered expense, the Cesarean rate is
commonly above 25%. In areas where insurance coverage for Cesareans is not
commonly available the Cesarean rate is closer to 19%. A 1996 study found that patients
with good insurance coverage were seven times more likely to have a repeat cesarean
delivery than were patients with Medicaid or no coverage. It is clear that health care
costs expand to absorb the money that is available. The difference is the availability of
money, not necessarily medical necessity.
It doesn’t take much imagination to realize that we will use a service more if someone
else is paying the bills. Health care costs seem lower at the point of sale than they really
are because individuals are typically only responsible for a portion of the costs.
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Individuals pay their portion in the form of co-payments and the insurance company pays
the rest, sometimes even without the individual’s knowledge. This has the effect of
lowering the barriers to utilization of those resources. The cost is hidden from the
individuals making the immediate decision. In reality, individuals indirectly pay for the
increased costs of health care, in the form of higher insurance premiums, higher taxes, or
lower wages. Because the hidden costs are not represented at the point of sale they are
rarely considered in making health care decisions.
As we have seen before, lower health care costs do not necessarily translate into worse
health care. Other nations have comparable levels of health and safety with a fraction of
the money we spend on health care. There, apparently, must be lower cost alternatives
that are just as effective. The state of medical knowledge, today, is such that nobody
knows every possible alternative. There are so many options and so many different
philosophies on health and healing that it would take literally an entire library system to
house them all. Much of the information is folklore and anecdotal reports of miracle
cures without any scientific correlation at all. Yet, how do we know if some obscure tree
bark from Argentina might not really be the fountain of youth or the cure for cancer?
There simply are not enough researchers and money to adequately explore all of these
possibilities. It is nearly impossible to get reliable research data on even the most
common and generally accepted medical procedures. A prime example is the history of
treatments of heart disease. We find that in the progression from debridement to coronary
bypass to angioplasty to laser ablation we have simply replaced previous treatments with
whatever technology could accomplish next, despite the lack of hard research data that
any of them is any better than simply changing the patient’s diet. Even when hard data
about appropriate treatment is available we often fail to use it. As recently as 1993 the
New England Journal o Medicine stated that “estimated rates of inappropriate treatment
have ranged from about 15 to 30 percent, reaching as high as 40 percent for particular
procedures at individual institutions.”
The conclusion could be made that many medical procedures are used just because they
seem to work sometimes. This is despite the fact that these procedures have never been
tested against a control population, and have never been tested against alternative
treatments, for cost or effectiveness. These are minimal standards for any scientific
application of technology, but in health care, the most obvious arena in which technology
touches our lives, we have come to accept an almost experimental application of that
technology. What has been the result?
The result has been a medical system dedicated to very expensive technology at the
expense of human touch, and with questionable efficacy and safety. We have already
covered the efficacy issue. Numerous studies and articles over the last couple of decades
have highlighted the safety issue. Dr. Luciane Leape of Harvard University, for example,
reported in 1990 that 155,000 Americans die in hospitals each year, as a result of
preventable medical errors such as drug overdoses and surgical error. This is three times
more people than die in automobile collisions each year.
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Based on these figures, health care is one of the leading causes of death in the United
States. It is, clearly, a system out of control.
This chapter could have been an entire book in itself; indeed, many books have already
been written on the failure of the modern medical system. But, my experience tells me
that the vast majority of the people employed in health care are there because they truly
want to make a difference in people’s lives. They are dedicated and well trained to the
task of healing. They are just stuck in a non-system that blocks their efforts at every turn.
Because of the daily frustrations that health care workers face there is an ongoing
migration of the best and brightest people out of health care. Our brightest youth are
choosing other, less combative, more profitable, industries for their careers.
The desire for one human being to help another in need seems genetic. We will find a
way to make the system work. Health care is changing rapidly and it is going through
phases that may not seem healthy at any given time. Fortunately a system in motion is
easier to change than one that is mired in inertia. The level of frustration at the current
system helps to open minds to other solutions. The end result, if we can create a shared
vision, will be a far better system than has existed at any time before. We can create
affordable, safe, effective healthcare that self regulates, needs little government
intervention and is accessible to every citizen. Please, read on for a glimpse of how that
might happen.
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AFTER MANAGED CARE
CHAPTER 2
RESPONSIBILITY
Who is to blame for the sad state of our health care system? Is anyone to blame or is it
just a bad system? I have spoken to numerous representatives of each of the interest
groups involved with health care, and in each group I get a slightly different view of the
problem.
Insurance carriers and administrators of workers compensation plans lay the blame on
excessive treatment by doctors and uninvolved, malingering patients. They claim that
physicians and hospitals profit by over treating, over charging and running unnecessary
tests. They point out that people expect insurance companies to pay for every little
sniffle and sneeze, and make unnecessary trips to the doctor and emergency room for
self-limiting conditions.
Doctors and health care workers lay the blame on insurance companies, society and
patients. Insurance companies rake in billions of dollars, build immense skyscrapers in
every major city, hire legions of attorneys and sales people, and then fight tooth and nail
against every cent of every bill submitted to them.
Physicians point out millions of dollars in damages in malpractice suits against
physicians who have dedicated their lives to the service of others. Society produces
underweight babies from teen-age mothers, subsidizes tobacco farming and advocates
violence, unsafe sex and alcoholism on prime time television. Patients won’t lose weight
or exercise and won’t take their prescriptions or otherwise comply with doctor’s orders.
Patients blame insurance companies for unconscionable profits, making it impossible to
access the physicians they want to see, and destroying the sacred patient/doctor
relationship. Patients blame doctors for not taking the time to really listen to their
problem before reaching for the prescription pad, for ever-increasing fees and expensive,
ineffective treatments that don’t really get to the root of the problem.
Everybody blames the government for not solving the problems, for cutting Medicare and
Medicaid reimbursement, for pollution, crime and violence in society, for teenage
alcoholism, for poverty, and for malnutrition.
The Congressional Budget Office report on Projections of National Health Expenditures
lays the blame on what it calls “market failure.” (Congressional Budget Office Study,
October 1992, Projections of National Health Expenditures”, page IX) Market failure is
an economic term that means that the economic forces, which normally keep an
economic system in balance, have failed for some reason in this particular area of the
economy.
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At issue is the question of whether or not the free market should be applied to health care
at all. Maybe health care discussion should be limited to social issues and not economic
issues. As a nation we have attempted, through Medicare, Medicaid, and tax credits, to
make health care available and affordable for everyone. As a nation we seem to treat
health care as a right of citizenship. The existence of Medicare and Medicaid are
evidence that we have decided that the moral imperative is to make sure that everyone
has access to health care despite ability or inability to pay for it. But we are at a loss as to
how to do that.
In a way, the unspoken decision to treat health care as a right of citizenship seems to
invalidate a discussion of health care as a free market issue. But, because health care is
dominated now by large for-profit corporations, health care experts approach health care
from the viewpoint of marketplace economics. The apparent conflict between market
economics and moral imperatives is discussed by Mr. Evan Melhado, in a review of
economic evaluations of the health care system through the last five decades in the
“Journal of Health Politics, Policy and Law” (volume 23, no 2, April 1998, pgs215-261).
What he found in this review was that consideration of the economics of the health care
system was essential for the ultimate goal of providing adequate health care to every
citizen. Without economic responsibility the health care system becomes, and has
become, so expensive and burdensome that health care access becomes limited.
The root of the health care problem relates, in part, to the very fact that we have
developed multiple ways of insulating people from the cost of health care. This has been
done for many reasons, from altruistic attempts to provide care for the poor to business
decisions about keeping workers healthy and productive. Another primary cause of the
health care problem is the way that we traditionally have compensated physicians and
hospitals for their services. They are paid, generally, per the services they provide,
whether or not those services are successful. The result is that there has never been any
financial incentive for the system to create more effective or cost effective means of
treatment. As health care has evolved into a primarily for-profit system it is important to
note that the economic advantage to the health care system is to keep patients sick and
charge them as much as they can pay. Of course, the individuals within the system,
operating with the best intentions, try to provide quality care, but they are been thwarted
by a malfunctioning system with conflicting incentives
Insurance companies, until pressured by industry, had never been too bothered by the
cost of health care. They could just pass on the ever-increasing costs to the employers,
who pick up most of the tab. In fact, insurance companies traditionally make their money
as a percentage of the money they handle. So the more that passes through the system,
the more they are capable of retaining.
Insurance insulates the consumer of health care from the high cost. This encourages
utilization of the health care system. When a patient walks into a doctor’s office with
their insurance card, they have the expectation that, whatever happens, the bill is going to
be paid for, mostly at least, by their insurance. Their responsibility is going to be limited
to the co-pay, which is a fraction of the true cost of the service provided.
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What happens, then, is that nobody is responsible for anything. Health care providers are
not really held responsible for the effectiveness of care because they get paid whether it
works or not. Consumers are not really held responsible because someone else is picking
up the tab, or at least a lot of it. And insurance companies are not held responsible
because, at least in the past, they can just pass the costs along to industry. What this
represents is a system without any feedback mechanism.
“Feedback mechanism” is a term that is used to describe the way systems keep
themselves in balance, naturally. A simple example is the thermostat on your furnace.
When the air becomes cold the thermostat allows the furnace to come on to heat the
house. When the air reaches the desired temperature, the thermostat tells the furnace to
shut off. That is a feedback mechanism. A more complex example could be the
population of wolves in a given area. The wolves survive by eating small rodents. When
there are plenty of rodents, the wolves have plenty to eat; when there are so many wolves
eating so many rodents that the rodent population drops, the wolf population drops also.
If health care operated by feedback mechanism, as the population became more ill they
would spend more money to stay healthy. As they spent more money for health care,
they would get healthier and the need for health care would decrease and spending would
go back down. But it doesn’t work that way in American health care.
Health care in America is a unique kind of feedback mechanism called a “positive
feedback loop.” This is the same type of system that allows four ounces of plutonium to
create enough heat to destroy a city. When a positive feedback loop is set into motion,
the momentum grows at an ever-accelerating pace until it destroys itself. A furnace with
a positive feedback thermostat would add more fuel to the furnace as the house
temperature went up. It would eventually burn down the house. This is the type of
system we have in health care.
The more money that is available for health care, the more hospitals and MRI units are
built, the more diagnostic tests are run, and the more treatment is rendered. The more
treatment a person receives, the more tests they undergo and the more things can be
discovered which require treatment and further testing. And as stated earlier we know
that the health care system is responsible for 140,000 or so deaths every year. One might
imagine that even more people are not killed but are either made worse or at least not
better.
Those patients that survive the system continue to receive more treatment until they
finally are cured, give up or become one of the 140,000. And the way the system is
designed the very procedures that caused those deaths or illness or were ineffective were
still paid for. Providing endless insurance money to pay for it all is like adding more fuel
to the fire or plutonium to the bomb. This is not a healthy system, nor is it one that is
sustainable in the log run. There is always danger of a melt down and if no meltdown
occurs, the fuel (money) will eventually run out one day.
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This is the “market failure” cited by The Congressional Budget Office.
Another term that describes a healthy feedback mechanism is responsibility. If the
thermostat is responsible for keeping the temperature of the house at 72 degrees, it can do
that if all of the wires and connections to the furnace (feedback mechanism) are in place.
If a health care system is responsible for providing effective health care, it can do that if
proper communication with patients and appropriate reimbursement criteria (feedback
mechanisms) are in place. These are naturally self limiting systems that don’t need
intervention to operate properly.
Managed care has tried to put a lid on spending but it is not a natural mechanism. I like
to compare health care to other industries sometimes just to see if we have become
accustomed to situations that don’t make sense when compared with the real world.
Managed care, as it functions today, is like disconnecting your thermostat and regulating
heat by giving the gas company the switch to turn your furnace on and off. If you want
heat, you have to send them a report about what will happen if you don’t get it. Then
they decide whether your rationale for wanting heat is good enough. And, by the way,
they set the prices for heat service, and your monthly bill is the same whether you get
heat or not. They will hire consultants to tell them how much heat the average house
needs and whether you really need it or not.
This managed care system has created some good by forcing health care providers to look
hard at waste and excessively high fees, but the gains have been at a greater cost in terms
of administrative expenses and quality of care. The major flaw in the current managed
care system is that it is top-down management very reminiscent of the failed Soviet
Socialist Republic. A few people at the top are making all of the decisions for the rest of
the population. It is being done with good intentions, but any system whereby one group
of people forces their will against another group will not survive for long. The
resentment created on both sides of the equation will lead to a breakdown of the system at
some point.
As stated earlier one of the accepted causes of the current health care crisis is “market
failure.” Our free market system is a model for the world. The same market forces that
have allowed our country to become the most powerful economic force on the planet can
help save the health care system. For the most part our financial system is based on trust
in the decision-making ability of each individual. The government or insurance industry
does not force you to buy a particular brand of toothpaste, or television set. Yet there are
hundreds of brands of toothpaste, all of which are effective at cleaning teeth and, some
even whiten teeth and prevent gum disease. There are hundreds of styles and types of
television sets available at a fraction of the price, for more features and better quality,
than were available a couple of decades ago. But, we have learned over time that the free
market must occasionally be tempered with some consumer protection mechanisms.
What does this have to do with health care?
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The most elegant and effective systems frequently are those that allow the natural course
of things. In health care that natural course is to let individuals make their own decisions,
with natural and equitable feedback mechanisms in place, so that we are each held
responsible for our own actions. The key is in understanding the natural responsibility of
each segment of the health care system, and finding the appropriate feedback
mechanisms to encourage each segment to assume its natural role in the system. The
remainder of this book will deal primarily with describing a system that operates
effectively and efficiently by using the free market system and natural feedback
mechanisms.
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AFTER MANAGED CARE
CHAPTER 3
NATURAL ROLES IN HEALTH CARE
Simple feedback mechanisms can be established in the health care system that will keep
it from exploding out of control, bring it back to a “human scale” and make the system
more responsive to the needs of society. Before we can establish the feedback
mechanism, we need to examine the natural roles played by each segment of the system.
When we recognize the natural roles of each segment, then the responsibilities of each
segment are identified. By recognizing the responsibility of each segment, then, the
natural consequences of fulfilling or nor fulfilling that responsibility become clear and
the feedback mechanism is established.
The segments I have identified are: a) the consumer of health care, basically everybody;
b) the providers of health care, doctors, hospitals, drug companies, nurses, etc.; and c) the
insurance companies, including managed care, Blue Cross, and so on. Obviously, a
major player in the system that has not been mentioned yet is the government and this
will be addressed in detail later on. The government, rather than a player, is more of a
rule-maker, coach or referee in a free market health care system.
One of the problems with the current health care environment is that nobody has clearly
defined roles. The insurance industry is making medical decisions. Medical personnel
are making decisions based on insurance coverage, rather than medical need. Health
care consumers are caught in a system that tells them their opinions don’t matter. The
doctor they have come to depend on may be dropped from the network next year for
reasons that have nothing to do with quality of care.
Let’s first look at the natural responsibility of the consumer of health care services. As a
member of a free society we have certain responsibilities that go along with that freedom.
These can be summed up in the phrase, “Be a good citizen.” That means to do your part
to maintain the society that we have by obeying the laws, contributing to society with the
talents that we have and not taking more from society than we give. Another aspect of
that responsibility to society is to maintain our health as best we can.
If we act in ways that needlessly diminish our health and well being, we not only damage
ourselves but we deny society the benefit of a fully productive member. Taken to the
extreme we become disabled wards of the state, drawing on the resources being
contributed by other, healthy members of society. This diminishes the quality of life for
everyone. I am not in any way saying that everyone who is disabled is a bad citizen.
Disability often comes not as a direct result of personal decisions, but as a result of
accidents, genetics or unknown causes. I am talking about disease and disability that is
the result of poor lifestyle choices. What we need to discuss is how to influence the
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direction of individual decisions over the course of a life to help people make healthier
choices.
One thing we need to be cautious of is not to stigmatize unfortunate people who have
poor health. They have enough problems already. What needs to be done is establish a
system that recognizes efforts at good health, creates negative incentives to bad health
habits, and provides support when efforts at good health fail. Having said that, the fact
remains that the responsibility for staying healthy belongs to the individual, not to the
insurance industry or the doctors or the government. It lies with each individual. We
will discuss this in great detail in a later chapter.
The responsibility of health care providers is to provide effective health care. Despite the
dedication and individual efforts of doctors, nurses and others, we have a system that is
designed from the ground up to thwart efforts at providing good care. The system has
never recognized, or rewarded, good heath care. The system, up to now, has rewarded
volume of health care without regard to the quality of care being rendered. The phrase
“successful doctor” has always meant one who is successful financially. The more
operations performed, the more luxury items owned, the bigger the house - these things
have been measurements of success in health care. It is time that this changed. A
successful doctor must be recognized as the one who helps patients get well. This may
be the most difficult of all the transitions that need to be made because it is so alien to our
way of thinking, but if I give some examples from other segments of society, it may make
more sense.
Nowhere else in the economy of the United States, outside of health care, is any provider
of services or products exempt from responsibility for the effectiveness of their product
or service. If you buy a toaster and it doesn’t perform as advertised, then the store or
manufacturer refunds your money. If you buy a prescription drug and have a side effect
to it, you are stuck with the cost of the drug and the cost of treatment for the reaction. If
you have your roof replaced and it still leaks, the roofing company will return to fix it at
no additional charge. If you have surgery and the surgeon missed something and needs to
go back in again, you will be charged for another surgery. If you die during surgery, your
family will be billed for the surgery. Insurance companies do not even ask if the
procedure or drug worked, as long as it fits their practice guideline charts, they pay the
doctor. Even if the doctor doesn’t get your 20% co-payment, he still has the 80% from
the insurance company.
Where is the incentive, other than moral imperative, to provide the best quality care?
What has happened is that quality of care is generally measured in relation to “standard
of practice.” Standard of practice means that what everybody else is doing is right. A
doctor on the defense in a malpractice case is judged not by the effectiveness of treatment
but by the standard of practice. How different is “standard of practice” as a rationale
from a ten year old boy explaining why he skipped school by saying, “All the kids do it.”
The concept of “standard of practice”, as sacrosanct as it seems to be, needs to be reexamined for the sake of honesty and social responsibility. Malpractice has become
15
such a big business in this country because it is the only recourse people have for the
poor quality of health care.
The insurance industry’s responsibility is to pay for health care that the consumer needs
and otherwise cannot pay for. Insurance, as an industry, is about spreading risk. The
idea of insurance in America started with Benjamin Franklin and local fire companies. In
those days a fire was a devastating, and all too common, occurrence in homes built of
wood and heated with fire. There were no municipal fire departments. An individual
family was no match for the flames engulfing their home. Benjamin Franklin conceived
of establishing local fire companies supported by money donated by the neighbors in an
area. This donation insured the houses against fire in a way that no individual person
could afford to.
Since that time, all insurance has been designed to spread the risks of catastrophic events
like fire, flood, automobile accident or sudden death, so that no individual had to bear the
brunt of unforeseen disaster alone. Over the years, the marketing efforts of the insurance
industry and, as result of tax law configuration, health insurance became part of what is
called “employee benefits” and used as a tool to attract and retain employees. As a result,
health insurance has evolved into a different animal altogether, with the insurance
company taking responsibility not only for catastrophic illness but also for sniffles and
sneezes, cuts and scrapes, picking your doctor for you and deciding what kind of
treatment should be rendered.
None of this is really within the realm of what insurance is all about and it adds
tremendous, unnecessary cost. In fact, much of what health insurance does falls outside
of the scope of insurance and is often some sort of combination employee perk, forced
savings account, rich uncle and recruiting tool. By muddying the waters, we have
seriously undermined the very important role of health insurance as a protection against
catastrophic loss. The traditional responsibility of insurance companies is to be money
managers of pooled funds, nothing more, nothing less.
In a responsibility-based health care system, each segment of the system will be
performing the tasks that they are each uniquely qualified to do. Each segment will
receive incentives to fulfill their responsibility (positive reinforcement) and disincentives
against performing poorly (negative feedback). The goals will be a population of
individuals who desire to be healthy and are rewarded for healthy behavior, health care
providers focused on providing quality care and an insurance industry that provides the
funds to perform needed and effective health care with a minimum of administrative
expense. The end result of such a system will be healthier people at lower cost.
Let’s look in more detail at how responsibility-based health care works for each segment
of the system.
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AFTER MANGED CARE
CHAPTER 4
THE CONSUMER AND RESPONSIBILITY
This is a great nation. And this great nation was built by men and women who took it
upon themselves to brave the frontiers of a raw land with sometimes no more than their
bare hands against the wilderness. They assumed the risks and responsibilities associated
with the adventure. And they reaped the benefits of their efforts when they succeeded. It
was a land where individual effort made a difference. One man with one axe could clear
enough land in a summer to grow crops the next summer that would feed his family the
following winter.
The people of this country also braved new lands of ideas. A nation by the people and
for the people, with each individual endowed with the God given rights of life, liberty
and the pursuit of happiness. With the rights come the responsibilities of citizenship.
These include the responsibility to vote and to respect the rights and freedoms of those
around you. In this democratic society there is also the expectation that adult members,
within their ability, will be productive members of that society. Each of us will
contribute something to society that is useful or desired; that is our job. In return for that
contribution, we will receive monetary rewards that we can spend however we wish; that
is our salary. This is one of the beauties of a free nation, we get paid in relation to the
perceived value of what we do and we can buy what we want within our means.
We live in a society based on the rights and freedoms of the individual. In our country
the state exists only as an abstraction that represents the group vision. The state is what
we, as individuals, working together, decide it is. In other parts of the world the state is
the primary unit and individual’s rights and freedoms do not exist other than as granted
by the state. In those places all effort and all property belong to the state. Each citizen is
of, by and for the state. While this limits individual freedom, the state also provides what
is needed to each citizen for food, clothing, shelter, health care, etc. But the state decides
for each individual what is provided.
In a nation like ours the efforts of each individual provides each of us with food, clothing,
shelter and other basic necessities. This society is designed for each member to support
him or herself and also to contribute to the common good. This societal structure is the
basis of a free market economy that depends upon the additive effects of millions of
individual buying, spending and earning decisions to keep the economy in balance. To
make sure that less fortunate members of society are cared for, we have also found it in
our hearts to establish support systems to provide basic necessities to those who are
incapable, temporarily or permanently, of providing those needs for themselves.
Medicaid, welfare, aid to dependent children, social services, meals on wheels, lowincome housing are all examples.
17
The organizations that we have established go far beyond help for the indigent or
disabled. We have created numerous institutions to make our lives more secure, even in
the absence of catastrophic circumstances. Insurance protects us from unexpected
disaster of many types. Police and fire departments protect us in other ways. Our homes
protect us from the weather and animals. But there is a cost for this level of insulation
from danger. We have become too distanced from the consequences of unhealthy
behavior to realize when we are doing ourselves harm.
This is not the way of nature, and as brutal as nature is in some regards, it is a system that
works because there are no excuses and no insulation from individual choices. The
pioneer clearing the land for his family faced a natural environment full of real and ever
present dangers. The pioneer family relied heavily upon a strong back and good health
for their very survival. Today, because of the society we have created, we are insulated
from nature and the consequences of our own actions. We can sit in our condos all
through a winter weekend drinking beer and smoking cigars. Because there is no
immediate danger, we are lulled into a false sense of security. We can ignore, for a while,
the fact that a lifetime of this behavior ends poorly, with the increased likelihood of
cancer of the pharynx, liver disease or heart disease.
Because of insurance we don’t even see it as our responsibility to pay for treatment for
the diseases brought about by this lifetime of physical self-abuse. It seems to be someone
else’s responsibility. Even when, as a society, we begin to recognize and take action
against some of the factors that bring us to an early grave, we point the finger in the
wrong directions. The lawsuits against the tobacco industry failed to mention that
millions of people continue to smoke knowing the dangers. Every package has boldly
written warnings that state that this product will kill you, and people still buy it.
Addiction to nicotine is obviously not the whole story because millions of new smokers
start for the first time every year. People buy tobacco products, in part, because they are
insulated in so many ways from the negative effects of the choice to use it.
First of all, the government subsidized the farmers who grow tobacco. This effectively
lowers production costs. Second, the health damages that come from smoking take years
to accumulate, often twenty to thirty years. We know from psychological studies that the
more distant something is, the smaller it appears and that is true for distances of time as
well as physical distances of space. The risk of dying of lung cancer must appear very
small to an eighteen-year old girl out on a Saturday night with her friends. Even the
sixty-year-old woman on a respirator in the hospital often fails to make the connection
between her condition and the cigarette that caused it.
I have seen people get out of their hospital beds to walk to the lounge where they can
have a cigarette. I had a patient who had had three strokes over a four-year period, which
had left him totally paralyzed on the left side of his body. He still continued to smoke
two packs of cigarettes a day despite not being able to feed or bathe himself. When I told
him that stopping smoking was his only hope of not having a fatal stroke in the very near
future, he became very angry with me and said that I was trying to take away the one
thing that he had left in life that he could enjoy. He failed, or refused, to see the irony
18
that this was also the one thing that was killing him. Three months after that
conversation he had one final, fatal stroke.
How can we bring the dangers of destructive behaviors like smoking and drinking into
better focus for people? How can we make the negative impact closer to their vision so
that they have some incentive not to destroy themselves? And how do we make them
responsible for the health care costs associated with such behavior? The groundwork for
a mechanism to do this has been laid in the lawsuits against the tobacco companies. As a
result of this ground breaking legal action, the tobacco companies will be paying several
billion dollars in compensation for health care costs incurred by people who used their
products. Unfortunately, the lawsuit does little to correct the situation or prevent millions
of lives from being lost in the future. It does line the pockets of the lawyers who filed the
suit. The victims will very likely see little benefit from the money. They are dying.
The lawsuit, as it turned out, was more of a slap on the wrist, albeit a pretty heavy one, to
the tobacco industry. The payments are seen as a punishment for the immoral activity of
promoting a known addictive substance and profiting from people’s addiction to it.
While the initial intent of the lawsuit may have been noble, the end result was a media
circus, the exchange of a lot of money and then back to business as usual. There is no
less incentive for people to smoke now than there was before the lawsuit, there is no less
incentive for tobacco companies to sell and promote their products than there was before.
The tobacco companies will just find new and different ways to promote their products.
We are left with the same situation we had before. People will continue to smoke
because of the illusion that they are immune to the health effects. Tobacco companies
will continue to provide and profit from a product for which there is a considerable public
demand. Insurance companies will continue to pay for the huge health care cost
associated with tobacco products and pass the costs along to employers and individuals.
These costs, then, are hidden in the costs of goods and services we all buy, our federal
income tax, and in the higher health insurance premiums we all pay. So what is the
answer?
The answer is to place the burden of health care costs at the point where the decision to
smoke is made. In 1998 the NIH determined that each pack of cigarettes consumed
results in an additional $2.34 cents of health care costs. That cost, adjusted annually,
could be added at the point of sale to accurately reflect the true cost of the product to the
consumer. The additional money could be placed into a national health care fund to pay
for the costs of providing health care to tobacco victims. In this way the actual
consumers, who by their decision to smoke create the cost, will pay the cost, one pack at
a time.
What are the possible outcomes of such a program? With the increased cost at the point
of sale of tobacco products, we might see a decrease in usage. The burden of paying for
health care costs related to tobacco would be shifted and we would see decreased health
insurance premiums and consumer products that are more competitive in the international
markets. There would be less chronic illness and fewer individuals on long term
19
disability due to cancer, heart and lung disease. There might be a hardship placed on the
tobacco industry and some jobs may be lost in that industry, but the overall benefit to
society of decreasing tobacco usage would be a net gain. Government studies have found
that even in the areas which are most dependent on the tobacco industry, the costs of
health care for tobacco related disease are greater than the income derived from the
tobacco. Any argument about damaging the economy of the South by reducing tobacco
consumption is just a smoke screen.
The system to raise funds for health care could be applied to alcohol and other consumer
goods that are known to have a social cost that is yet to be reflected in their market price.
The NIH, or other independent agency, could perform the needed research to apply
accurate costs per unit to any number of consumer products and allow us to fund health
care at the point at which those costs are truly created.
Like the costs to society of smoking, other costs are hidden and often not recognized.
One major hidden cost is excessive or abusive use of health insurance. When I talk about
abuse of health insurance I am not talking about insurance fraud or filing false claims.
Insurance abuse is using insurance in a way that exceeds the original intent of insurance.
Let’s look from a consumer viewpoint how abuse is created and encouraged in the
current system. We need to understand first of all that insurance abuse comes from the
expectation that someone else is going to pay for your health care.
We have been led, over the last four or five decades, to expect that health care is going to
be provided for us free of charge or, at most, with a small co-payment. This system
began in the post war years when business in America was booming and industry was
competing for employees. Health coverage was offered as an enticement to workers, it
soon became a standard and expected part of employee benefits packages. In the
meantime, we got used to going to the doctor, handing the receptionist our “insurance”
card and getting all the health care that money could buy for free, or so it seemed.
Obviously this was not free. Our employers were paying for the care and hiring
insurance companies to handle paying the bills for us. It was a way to give the
employees a little something extra, tax free, and take a corporate tax deduction in the
process.
In reality, what we were calling health insurance was not really insurance, but subsidized
health care. True insurance is a mechanism to protect individuals from catastrophic and
unforeseen risks by spreading the risk among a larger group of people. Going for an
annual physical, getting your mumps vaccine, normal pregnancy and delivery are not
catastrophic nor are they necessarily unforeseen. What subsidizing these ordinary
expenses does is to increase the demand by decreasing the cost to the consumer at the
point of sale. By increasing demand we stimulate growth in the industry providing these
services and permit an increase in prices relative to the rest of the economy. In other
words, doctors and hospitals become in such great demand that they can charge
practically anything they want for services that we didn’t even know we needed a few
years ago.
20
Insurance coverage also creates a false economy by reducing the cost to the consumer of
the covered service. The choice to access the service, whether it is surgery, purchasing a
prescribed medicine or entering a therapy program is ultimately made at the point of
purchase by the health care consumer. Anything that lowers the apparent cost to the
consumer will increase the utilization and encourage higher prices than would be the case
without insurance coverage.
As an example, some of the services provided by physical therapists are very similar to
services provided by other enterprises, such as health spas. The difference is that the
physical therapy is generally covered by insurance while health spa services are not. A
massage provided by a physical therapist lasts about fifteen minutes and is billed to
insurance companies at $35. This is over $2 a minute. A nearly identical service
provided by a massage therapist in a spa will last for an hour and be billed out at $50, less
than $1 a minute. The price, per minute, for the physical therapist is higher than for the
massage therapist only because insurance pays for it. One day in a physical therapy
facility doing exercises will cost nearly as much as a one-year membership to a health
club to use nearly identical machines. The cost difference is primarily due to insurance
coverage.
Using responsibility-based reasoning, consumers should bear the burden themselves of
staying healthy. Normal expected health care costs should not be paid for by insurance
any more than insurance should pay for changing the oil in your car or replacing the roof
on your house when it wears out. The costs of day to day maintenance are not
catastrophic or unexpected. We know we need to have our teeth cleaned on a regular
basis, we may even need glasses, but the cost is hardly catastrophic. A flu shot each fall
will not bankrupt us. We gladly pay out of pocket to have a CD player installed in our car
so that we can hear music better, but we have been taught to expect someone else to pay
for the glasses we need to see where we are going.
If insurance doesn’t pay for basic health care, will people ignore their health and get
sicker faster? That is a good question and there are several good answers to that. First of
all is the fact that the majority of health problems in this country are lifestyle issues, not
matters of under-utilization of health care services. Repeatedly it has been shown that
way to prevent disease is to encourage healthy life styles. Insurance companies can play
a part in this by encouraging healthy lifestyles, with premium deductions for documented
efforts at reducing cholesterol, alcohol and tobacco consumption, increasing exercise and
lowering stress factors. They don’t need to pay for these efforts, but they should be
rewarding them.
Imagine if your insurance company paid for an annual blood test that would show your
cholesterol level, the presence of tobacco by-products, evidence of liver damage from
alcohol and other blood factors that would indicate if you exercise regularly. What if
they used that information to determine your premiums, deductibles and co-payment
percentages? Could you lose that extra fifteen pounds if it saved you ten dollars a month
on your premiums? Could you cut back on the red meat? Could you get out of the house
and walk half an hour three times per week to save a thousand dollars a year?
21
Will not paying for routine office visits to the doctor encourage people to wait until they
are so sick that they end up in the emergency room, at greater cost and risk of exposure to
other contagious and seriously ill people? There are several reasons why people go to the
emergency room. Some go because it truly is an emergency. A very large percentage of
them go to the ER because they can’t afford to see a doctor or they can’t get an
appointment within a reasonable time, The ERs have a history and policy of treating
people without appointments and no matter what their financial situation. The way to
correct that situation is by bringing basic health care services back into the realm of
reasonable expenses.
By reducing the insurance coverage for non-catastrophic medical care, we will effectively
lower the demand; we will bring the cost down to a human scale and actually reduce the
financial risk to the doctor for treating patients. If all office visits to a doctor were on a
cash basis, the administrative costs would be vastly decreased, the cost per visit could be
30 to 40% lower bringing it within the range of affordability for most working people. In
fact a growing number of physicians have found that by not accepting insurance they can
cut their office fees significantly, make a living, and still have waiting rooms full of cash
paying patients.
How can it be that the cost of care could be that much lower for cash than for insurance
coverage? First of all, insurance coverage doesn’t guarantee insurance payment. In this
age of managed care every bill submitted to the insurance company is scrutinized and
compared with insurance company guidelines, which often have very little to do with the
actual needs of the patient sitting in the doctor’s examination room. It is not unusual for
a doctor’s office to write off as much as 40% of a bill because the insurance would not
pay for a procedure. Additionally, the cost of submitting the bills, the correspondence
with the companies in an attempt to get payment and the cost to the insurance company
of having claims reviewers on staff is tremendous.
A couple of years ago I saw a report that estimated that every piece of paper produced by
a business costs about $10. That $10 represents staff time, computer time, postage, and
paper that is required to send one piece of correspondence. As I said, this report was a
couple of years old and by now the cost is probably significantly higher. The
ramification this has for health care is that every visit to a doctor’s office requires at least
two pieces of paper to be generated, the bill and the reply from the insurance company.
Often other correspondence is required as well, such as a doctor’s report explaining what
was done and why. Most often, at least three pieces of paper will be generated for every
visit to the doctor’s office, at a cost of at least $30 per visit.
Instead of trying to rely on insurance companies to pay for ordinary health care expenses,
those that aren’t catastrophic, each of us should take responsibility for making this a part
of our personal budgets. It would take small sacrifices for the average person to pay outof-pocket for basic health care expenses but the end result would be lower health care
costs for everyone. Instead of insurance with low deductibles we should strive for very
high deductibles, so that the insurance only kicks in when expenses become
22
overwhelming. Ordinary expenses should be out-of-pocket and each family should keep
a credit card, with a $5,000 to $10,000 limit, in reserve to cover unexpected, but not
catastrophic, health care expenses. In this way we will take the insurance companies out
of the loop, except in rare instances.
The advantages of that are many. By filing insurance claims only for catastrophic illness,
we can cut administrative costs for the insurance companies and ultimately lower
premiums and make insurance more affordable for everyone. You will be able to choose
your own family physician, instead of the insurance company limiting you to whoever is
on their panel this year. Your treatment will be decided by you and your doctor, not by
some claim reviewer who has never met you. Your physician will be paid for services
immediately, instead of having to fight with the insurance company for months before
being paid.
The physicians would be happy not to have to waste valuable time explaining decisions
to an insurance company reviewer and would have more time to see patients. This would
reduce the burden on emergency rooms and keep costs lower, because people would be
less inclined to wait too long for care and would see doctors in their offices where the
costs are far lower. The lowered burden to the insurance industry, and the reduced
burden of paper trails for non-emergency visits, would reduce the cost of insurance
coverage for everyone. And it would make a visit to the doctor’s office affordable, outof-pocket for most people. For the rest, there are social programs to fall back on and
others can be developed.
Now let’s look at how responsibility-based health care would look from the insurance
company perspective.
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AFTER MANAGED CARE
CHAPTER 5
THE INSURANCE INDUSTRY IN RESPONSIBILITY-BASED HEALTH
CARE
The insurance industry, when reduced to the most basic function, is a re-distributor of
money. It takes money from who has it and gives it to who needs it. Robin Hood in a
gray flannel suit. Without insurance many businesses and public enterprises would be
too risky to undertake. Without insurance a simple car accident could financially ruin a
person for the rest of his or her life, a severe illness would bankrupt all but the wealthiest
of families. Without insurance, risky but life saving, operations would not be performed.
Hospitals would close, and entire communities would be without any health care facilities
at all.
It is not a world we would trade for the one we have, yet as a culture, very few
institutions have received as much bad press and ill will recently as the insurance
industry. Maybe this is because they have become so powerful. And we are, literally, at
their mercy. We see the large buildings in every city across this nation named for
insurance the companies that own them. We see insurance agent offices on every street
corner. They decide whom your doctor will be and what your doctor is allowed to do.
We wonder how much of our premium is actually going to health care, and how much of
it is going to building skyscrapers, leasing cars for sales agents and padding the pockets
of insurance company presidents? According to the organization Physicians for a
National Health Plan, as much as 35 cents of every dollar sent to insurance companies is
spent on administrative overhead.
Today’s insurance companies have grown far beyond the indemnity companies of
decades past. No longer is their sole product protection from bad fate. They have very
successfully expanded into retirement services, wealth building programs, consumer
information providers, real estate, health care network administration and a myriad of
other functions that have grown out of the basic function of accumulating money.
Insurance companies accumulate money in two ways: by making interest on investments
they make with the money they are holding; and, by collecting more money than they pay
out. This creates an incentive not to pay claims or to underpay claims. And here is
where the difficulty and the lack of trust in insurance companies begin.
Because insurance companies have expanded beyond their original intent, as redistributors of money, they have gone beyond the scope of what should be their
responsibility in a healthy health care system. While the average consumer of health care
has abdicated some, or all, responsibility for their part of the health care system the
insurance industry has assumed much of the responsibility for the consumers, and has
also assumed responsibility for much of the health care industry.
24
Insurance companies are now in the business of making medical decisions. The doctor
who just examined you may have less to say about the treatment you will receive than a
consultant, who has never met you, hired by the insurance company. The insurance
company will argue that they are not making health care decisions, rather that they are
merely deciding which health care they will pay for. If you choose to have that
appendectomy, go right ahead, just pay for it yourself.
In practice, denying payment for health care is frequently the same thing as making the
clinical decision not to perform the procedure, because the cost of those procedures is
beyond what the average person can pay out-of-pocket. The insurance companies don’t
really even pretend very hard that they aren’t making medical decisions any more.
Doctors get letters, daily, from insurance companies saying that the bills are being denied
because they have determined that the care was not medically necessary.
The situation is not entirely the fault of the health insurance industry. We have allowed
the insurance industry to take complete control, by sending all of the money we have
allocated for health care to them and not budgeting out a sufficient amount to pay for
moderate and non-catastrophic procedures out-of-pocket. We really have no one else to
blame for our loss of control. But we need to recognize that the system is rolling out of
everyone’s control now.
Certainly, there have been some improvements in health care due to insurance control of
the health care industry and the advent of managed care. A lot of “fluff” has been
trimmed out of the health care system. The down side is that, despite this, we really
haven’t reduced costs that much. What savings in health care costs have been made,
have been offset by increased administrative costs. Each doctor in practice today needs
at least one additional staff member to handle the paperwork, compared to ten years ago.
Insurance company offices are bursting at the seams with review personnel. Millions,
maybe billions, of dollars are being spent on medical consultants and file review doctors,
independent medical exams and physician time to write reports justifying care to some
third-party reviewer. Clinical decisions are being reviewed, and second guessed by
people with varying degrees of expertise and sometimes hidden agendas.
The authors of managed care, the medical directors and insurance company executives,
see the immediate future of health care as being dominated by a few large insurance
carriers who have contracted with industry to manage their health care costs. Those
insurance companies will, in turn, contract with large physician groups who have joined
together to negotiate with insurance companies from a stronger position than individual
physicians can. The insurance companies will take into account the service fees of the
groups, the geographical area they serve and statistics on the health of the patients they
serve in deciding who they will contract with. The individual patient is barely and rarely
considered.
The bright spot in all of this corporate negotiation is that the insurance industry is
beginning at least to give lip service to the making the health of the patient the goal of the
system. They recognize that the market will not, for long, accept a health care system
25
that ignores the welfare of the patients in an effort to reduce costs or gather increased
market share. So the larger physician groups that have already formed are beginning to
keep statistics on their patients’ response to treatment, their overall health, the rate of
utilization of health care services and the costs involved in keeping the served population
healthy. Using this information, the insurance companies can encourage competing
physician groups to improve services and cost effectiveness. Despite this positive
change, there is serious trouble on the horizon for the insurance industry as it exists
today. There are inherent problems with conflict of interest that may not be solvable in a
private system.
It has been long recognized that a healthier population uses less health care resources.
The flip side of the coin is that unhealthy people require more resources. In the long run,
a growing number of people simply cannot get coverage because, in the competitive
insurance industry, no company is willing to risk taking them on. To do so would risk
raising their costs and, in turn, the premiums they must quote to prospective
policyholders. Additionally, a growing percentage of the population is finding the cost of
health insurance to be more than they are willing to spend. Millions of people have
decided that they will forgo insurance coverage and just hope they don’t need extensive
treatment at some point. This may work in the short run but what happens when even a
portion of that population requires medical treatment beyond what they can pay for?
That’s right, it falls back to you and I as taxpayers. They will get treatment through some
combination of Medicare, Medicaid or charity or they will become disabled and unable to
support themselves. Then they will eventually fall onto the roles of Social Security
disability and we will end up paying not only for their health care but for their room and
board for the rest of their days.
At what point does this accumulated individual tragedy become enough of a social issue
to warrant action?
When a significant number of people cannot get or won’t pay for coverage then the
government will be forced to step in and take action. We have already decided, as a
nation, that universal access to basic health care is a moral imperative in a civilized
society. Either the rules governing Medicare will have to be loosened to cover all of
those who cannot get coverage from commercial insurance companies, or some program
will have to be instituted to create incentives for the insurance companies to cover them.
Medicare is already a system at risk of collapsing from overuse and under-funding, so
congressional action to broaden Medicare coverage without a major overhaul of the entire
health care system seems unlikely in the near future. So, it seems that something new
will have to be created or a major change instituted in the way we fund Medicare.
This fact is not lost on the insurance industry. The insurance executives I have talked to
see the writing on the wall. Private control of health care may be doomed, because the
necessities of business do not allow for compassion and moral imperatives. They know
that they cannot continue to abuse their policyholders, and ignore the plight of the
unprotected and suffering, without the government eventually taking some action. The
failure of congress to establish a workable national health care system at the onset of the
26
Clinton years gave the insurance industry a window of opportunity to create a system that
would be workable and acceptable to the government and the public.
It has failed to do that and, in fact, there is more disarray in health care and greater
numbers of unprotected people than ever before. When we look around the world at
other systems of health care, we can see that the overwhelming trend is for some sort of
government program guarantying coverage for all citizens. In fact the United States is
the only industrialized country that does not have some system in place to provide health
care to all of its citizens. Despite horror stories of six-month waiting lists for routine
surgical procedures in Canada, the United States seems destined, eventually, for some
kind of national health care program.
The program most often discussed would most likely be either a reworking of the
Medicare system, with a new infusion of private money, or a new system that replaces
Medicare and commercial insurance plans with some sort of universal insurance system.
The most likely scenario, from those who make policy for the insurance companies and
the political system, is that the Medicare system will be used as a template to provide
coverage for every American citizen through one single payer system. That means that
all health care money will be pooled into a single fund and re-distributed to those who
need care. The insurance industry’s role in this program will be simply to administer the
program locally. They will not have any of the risk of loss from insuring ill people. All
the money will flow from the national fund to pay for treatment.
Under this system, health insurance premiums will go into the national fund rather than to
the insurance companies. Insurance companies will contract with the national program
and compete with one another to manage their preferred geographical areas. They will be
awarded contracts based on their ability to process claims effectively and efficiently, and
they will be paid on the volume of work they handle, rather than on how much they can
keep out of the premiums paid. It will be to their advantage to handle claims quickly and
efficiently because, the more claims they can process, the more money they will make.
This system returns the insurance industry back to its natural responsibility of distributing
financial resources to where they are needed and gets them out of the medical
management business.
The questions that remain then are; what will happen to quality of care? Who is going to
oversee the actions of the health care industry to make sure that we don’t return to the
days free spending and excessive care, excessively priced? What about all of these
physician groups that are competing to see who can be the best? How do we keep the
good that managed care has brought? Do you want a health care system in which some
agency of the government decides who does your appendectomy? Would restoring
responsibility to the health care providers, themselves, solve any of these problems?
We will address these issues in upcoming chapters, but first lets take a look at how the
insurance industry might operate under a system of responsibility based health care. First
of all, we would remove any authority to approve or deny care and return that power, and
the responsibility for those decisions, to the physicians who have the training and the
27
contact with the patients. Insurance companies have no business making health care
decisions.
Second we need to allow the insurance companies to do what they do best, manage the
flow of money. Although physicians should be the ones making health care decisions,
the insurance companies should be able to help them manage the available health care
resources in the most efficient manner possible by providing data on most effective care,
most effective procedures, hospitals, physicians. Let’s use the information in the
insurance company databases to educate the health care providers, not punish, them as in
the current health care environment.
If a national health care system is created, as seems likely, and insurance companies
manage it on the local level, then at least part of the insurance company compensation
must be tied, somehow to the health of the community. If we just pay them a flat
percentage of fees paid, or a flat rate per claim processed, we will create an incentive to
increase health care costs and health care utilization. But, if at least a part of the
compensation is tied to health indicators in the community, such as risk of heart attacks,
or average birth weights, then the insurance company can profit by making the population
it serves healthier.
This type of compensation plan might provide the insurance companies a base rate per
claim processed which would create an incentive to lower administrative costs so as to
make more profit per claim. Then an additional incremental increase in the base rate
could be paid if the selected health indicators exceeded a certain percentage of the
national average. This would provide the incentive to create a healthier community and
might even lead to increased insurance industry support for environmental issues,
community planning, and public health measures. These are just a few of the things that
could be done on the local level to increase overall community health
What this does is put the insurance industry back on the same side as the population atlarge and of the health care community, rather than being seen as a common adversary of
them both. The emotional healing that this could bring about would improve the health
of the nation all by itself. Let’s move on to the look at the responsibilities of the health
care community.
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AFTER MANAGED CARE
CHAPTER 6
THE DOCTOR IN RESPONSIBILITY-BASED HEALTH CARE
When I go to a doctor, it is with the expectation that the doctor will help me make
decisions about my health that are in my best interest and with the greatest likelihood of
returning me to health. I expect that my doctor knows how to find out what is wrong
with me, and how to fix it. I expect that her clinical decisions are based on the latest
scientific research, and that the recommended treatment is the safest and most effective
available for my condition. I trust my doctor because that is what I am supposed to do.
My doctor will examine me in a manner consistent with the teachings of the great
medical schools in our country. She will recommend advanced tests, blood work, MRI,
PET scan and physical capacity evaluations when needed. She will rendered a diagnosis
that is consistent with those examination findings and she will choose from the vast array
of tools available to her the exact treatment that will most effectively, economically and
safely correct my problem
And for the most part this really is the way the system works. It sounds great, it looks
great, but it costs a bloody fortune and it doesn’t result in the best health care that we
could have. Even though all the parts are there, and even though we have hundreds of
thousands of dedicated doctors and nurses and support staff doing the work, they are
hamstrung by a system that has no focus. Or, at least, has a focus that has little to do with
improving health.
Anyone who has had any contact with the health care system in the last twenty years has
left with the distinct impression that something is wrong. They can’t quite put their finger
on it, but for all the nurses running here and there, and all of the tests and needles and
high tech wizardry, there is something missing. We leave feeling that, as patients, we
were rather superfluous to the whole process. If we hadn’t shown up at all, it is likely
that no one would have noticed, the tests would have been run, the therapy prescribed and
the statements sent to the insurance company in our absence and no one would have
noticed much. Well, except that they do need to have some sort of body to draw blood
from and inject medicine into. They might have noticed that the body was missing.
Several groundbreaking studies, in the nineties, revealed a horrifying statistic, well at
least horrifying to the folks involved in providing medical care in America. These
studies revealed a growing, in fact snowballing, trend of patients rushing to alternative
health care providers. By 1998, twice as many visits were being made to alternative
health care providers as to conventional medical physicians. And, worse yet, these
people were paying out-of-pocket for it, paying twice as much out of pocket to see
herbalists and reflexologists and homeopaths as they were to see their family physicians.
This revelation rocked conventional medicine to its core. Conventional medicine that
29
was already reeling from managed care was told that the public valued unscientific,
unschooled voodoo doctors more than they valued medical physicians.
What on Earth was wrong with these people? A couple of studies done on patients of
chiropractors gave some clues. Although more mainstream than most of the other
practitioners, chiropractors are still considered alternative or complementary to
mainstream medicine, by most observers. These studies found that patients were almost
always more satisfied with the care received in the chiropractic office than in the medical
doctor’s office. Quite often, the satisfaction rating was twice as high for the chiropractor.
The reasons stated by the patients were fairly simple – “the doctor actually touched me,”
“the doctor listened to me,” and “the doctor explained what was wrong with me in terms I
could understand.”
In other words, the care focused on the patient, not on the tests or office procedure or
filling out the correct insurance forms. Although the paperwork is an important part of
any health care practice, it was not allowed to distract the doctor’s focus from the patient.
During the same time period, dozens of research papers were published that found that
chiropractic care was often twice as effective as medical care for specific conditions of
the spine. Chiropractors were getting injured workers back to work in half the time, at
half the cost, as medical physicians. Based on these studies, the government actually
published data recommending chiropractic as a first-line of treatment for back pain.
The point of all this is that health care is more effective when the focus is in the right
direction. How did the focus get off of the patient? The focus shifted from the patient
when the doctors and other providers began to be rewarded for something other than
patient health. Show me the money, I’ll show you the focus. Right now the money is in
the hands of the insurance companies, they make the rules, they have the doctor’s
attention
Doctors are focused on where the money is coming from. “You need reports written,
O.K. you’ve got it. You need me to sign up for your provider panel? O.K., you’ve got
it.” “You will pay me more if I perform more procedures even if they aren’t really
necessary? O.K. you got it.” This is not to criticize doctors or health care providers.
These are men and women who have student loans to pay off, mouths to feed and house
payments to make. They want to help people but, to stay in the healing profession they
have to play by the rules, and right now the rules don’t have very much to do with patient
health, except in some very abstract statistical way. The focus of health care is not on the
individual patient. Any mention of efficacy in health care is in the context of provider
panels, treatment guidelines or median outcome analysis. That doesn’t mean much to the
woman in the paper gown in room three. But at the end of the day, the doctor will be
judged, not by whether the prescription given to the patient actually corrected her
problem, but how well did the doctor meet the guidelines of the managed care industry or
how much money he brought into the medical center employing him.
30
Health care for the individual patient can only be achieved when the system recognizes
each individual patient as worthy of attention. That can only happen when focus on the
individual patient is rewarded somehow. And, as stated before, the health of the patient,
in a healthy health care system, is the responsibility of the doctors and other providers.
So how do we reward that focus? How do we restore responsibility to the providers?
The answer may lie in other health care systems around the world. In some places
physicians are viewed differently than they are here. Their role in society is different and
the expectation of them is different. In some places, this difference is due to cultural
influences, in other places political, and, in others still, economic. In some places,
doctors are paid only when the patients are healthy and lose pay when the patients are
sick. In socialist countries the doctors generally work for a fixed salary. In our country,
by and large, physicians, hospitals, drug companies etc. are paid based on the amount of
services or products they provide.
They are rewarded based on the volume of business they do, whether or not the patient
gets better.
This single fact is the reason our health care system doesn’t work. Doctors get paid
whether or not what they did made any difference to the health of the patient. There is no
feedback mechanism to control quality or quantity of care. In fact, the feedback
mechanism is the opposite of what we would hope. As it stands, the greater the quantity
of poor quality care that is provided, and the sicker the population, the more money will
flow into the health care system.
My simple proposal is this: health care providers should only be rewarded for success. In
any other industry, this would be a no-brainer. Should we pay auto manufactures if they
build cars that don’t run? Would we buy books that don’t have the words in the right
order? Would we buy bread that is moldy? The answer, of course, is no. We would not
accept that level of service in any other industry. That is why we have cars that run and
books that are readable and food that is edible. And, in all cases, these are items that
almost every American citizen with a job can afford to buy with their own money. We
can’t all drive Mercedes, but just about anyone with a job can get a used Buick that still
has years of life left in it.
What would be the effect if automobile manufactures were required to build and sell cars
without any warranty? What if General Motors was prohibited from offering any
guarantee that their cars actually run? The American Medical Association (AMA) Code
of Ethics states just that, for medical physicians. The AMA code of ethics states that
guaranteeing the success of a medical procedure is unethical, because it may give the
patient false hope that the service may work. If that doesn’t make any sense to you, then
you are not alone. Nevertheless, if a physician guarantees the efficacy of any treatment it
is considered grounds for malpractice.
Before we go any further, I think it may help if I give you some examples of how this
might relate to your own experiences with the health care system. Imagine you have high
31
blood pressure. Your doctor has prescribed a medication for you to bring your blood
pressure down. So you take the prescription to the pharmacy, pay $153 for the
prescription and take it home. When you get home, you take a pill according to
directions. An hour later you get lightheaded, your vision blurs and you feel faint. You
sit down for a while and the feeling passes, but every time you stand up you get the same
feeling. You call your doctor at home, and he advises you not to take any more of the
medicine and to call him in the morning. In the morning you feel fine, except for a little
cotton-mouth, and the doctor tells you that he is calling in another prescription for a
different blood pressure medication and to flush the medicine you have down the toilet.
That morning you get the new prescription and take it according to instruction and don’t
have any problems. Except that you are out $153, and when you have your next physical,
your blood pressure isn’t any better, despite taking the medication according to
directions.
Now, lets say that instead of medicine which was backed by millions of dollars of
research and carefully prescribed to be just right for you, by a highly trained physician,
you bought, say, a toaster. The toaster, which you found on the shelf along the wall on
the way back to the pharmacy counter of the same chain drugstore, was manufactured in
Mexico by day laborers. Say, when you get it home the toaster doesn’t work; it burns
your toast, no matter the setting. You would take the toaster back, and no one would
argue about refunding your money or giving you another toaster. Now, instead of
flushing the medicine, try to take it back for a refund, or just to trade in on the new
medicine. No dice, huh? Why not?
What if you needed to take your car in to have the muffler replaced, and Bob the
mechanic accidentally cut your brake line while he was removing the old muffler?
Would you have to pay for fixing the brake line? Why not? Imagine your sister-in-law
needs gall bladder surgery. During the surgery a suture is not tied quite right, and she has
internal bleeding. Two days later she has to go through surgery again to repair the bleed.
Does her insurance company get billed for the second surgery? You bet.
Are these unfair examples? I don’t think so. The only thing that makes it seem odd is
that we have been conditioned to accept things the way they have been. If you are over
forty years old, you probably remember how odd it seemed the first time that you saw a
woman news reporter on TV. Does it seem odd now?
I want you to imagine a health care system where nobody gets paid unless the treatment
results in the expected outcome. Every medical procedure has an anticipated outcome
that can be quantified and measured. You can test the blood to see if the cholesterol is
coming down. You can take an X-ray to see that the fluid in the lungs is gone. You can
perform psychological testing to see if depression is better.
What if insurance companies only paid for services that were successful? What if they
stopped trying to second guess the doctors, often delaying needed treatment for months
while their medical consultants try to decide if they should allow the treatment? What if,
32
instead, the insurance company just let the doctor make the decision she is trained to
make, but only pay if the treatment creates the expected outcome?
As a doctor, I would embrace this kind of system because I would be freed of the burden
of proving, ahead of time, to someone who is being paid not to believe me, that a
treatment might be successful. Let me sink or swim on the success of my treatment and
my own clinical judgement. Like I said before, what we call successful doctors in
today’s manner of speaking are the doctors who have the most money. What if the term
successful doctor meant one who got patients well consistently? As a side benefit to
being a successful doctor, he would also be a wealthy doctor, because he would have
been paid for all of his successes. Poorer doctors would be just that.
If drug companies only received money on prescriptions that worked, would they be
paying for television ads, or would they be spending more effort on making sure that the
doctors knew how to prescribe their medicines appropriately? How much of health care
costs would just disappear, if only effective treatments were paid for. How many
marginally competent health care practitioners would have to find other work if only
effective treatments were reimbursed? How would we spend the billions of dollars
saved?
We know that health care must be rationed somehow. Medical science has created more
treatments than we could ever pay for. Various methods of rationing have been discussed
over the years. One medical expert says we should deny treatment to anyone over 80
years old because they have already lived a good full life. Why spend resources on old
people when so many younger ones might benefit? Insurance companies already use a
sort of rationing by limiting access to physicians. It is rationing by patience. If you have
enough patience to wait three weeks to see your doctor then they will pay for it.
And most obvious, is that health care is being rationed by access to money. Those with
the most money have the most access. In a capitalistic country like the United States, we
have come to accept that some people will be able to afford better things than some
others will. What we won’t accept is that basic human needs will not be available to
everyone. There is a significant portion of the population who cannot afford basic health
care services.
Unless we are willing to see people die simply because they are poor we need to find
another way of rationing care.
The most logical way to ration care is applying our resource where they will do the most
good. The proof of the good of a particular treatment is the response of the patient to that
treatment.
It would not necessarily take an act of congress to make this change in the health care
system. It would only take a change in the way insurance companies reimburse for
services. As we have seen in the last decade, insurance companies are very good at
33
finding and implementing new ways of doing things when they think it is in their best
interest. We will see in upcoming chapters that it is in their best interest.
34
AFTER MANAGED CARE
CHAPTER 7
THE ROLE OF GOVERNMENT IN RESPONSIBILITY BASED
HEALTH CARE
If the private sector fails to provide adequate health care for all the citizens of the United
States then the government will feel increasing pressure to devise some system of
national health insurance. There are a number of challenges that the private sector will
have to address to prevent government intervention. First and foremost is the forty
million Americans are without health coverage. We have an entire class of people who
are too sick to get coverage. There are others who are healthy but work in jobs or in
industries that cannot afford to pay for health coverage and remain competitive in world
markets. Other individuals have found health insurance coverage to be prohibitively
expensive and decided that making the house payment is more important than having
insurance coverage.
The leaders of the managed care industry know that the longer the current situation
exists, and the more competitive the insurance industry gets, the more expensive that
health insurance gets the more people there will be without coverage. The leaders and
observers of managed care hoped that the system would somehow correct itself, but it
seems that health care has become a black hole that gets bigger and deeper the farther we
go into it. It may be just a matter of time until the government will have to intervene to
protect the health and well being of its citizens.
Some experts on health care, and the moral implications of health care decisions, are
concerned about other, darker aspects of managed care. Wesley Smith is an attorney who
is involved in the national discussion concerning assisted suicide, sometimes also called
euthanasia. He has followed the media hype and coverage of Dr. Kevorkian (The
medical doctor who has become the symbol for the campaign to legalize assisted suicide).
Mr. Smith has worked to ensure that individual rights are being considered before
someone is allowed, or “helped,” to die. In an interview with Mr. Smith, printed in the
February 1999 issue of The Sun, he discusses a concern that many people have. The
concern is, from a strictly financial perspective, that it would often be far cheaper to
“assist the suicide” of someone with a terminal illness than to provide them with
supportive care throughout the natural course of the disease.
He questions the insurance industry’s ability to draw the line at where assisting with
suicide becomes mercy killing becomes euthanasia for economic reasons if the decision
to pay for the procedures is being made by a corporate entity like an HMO. He cites an
example of an HMO in Oregon which has very limited coverage for hospice care of
terminally ill patients yet which has coverage for assisted suicide benefits.
35
Because of these concerns, and the demonstrated tendency for managed care to leave
behind the people who need their services the most, the debate is once again turning
toward other ways of dealing with health care payment. Lobbyists are descending on
Washington again, and all eyes are watching what congress and the administration will
come up with to fix the system. They appear, so far, to be helpless to create a system that
is at once politically acceptable and fiscally responsible. Yet the debate continues, and
for lack of a better solution, some experts in the field expect us to end up with some sort
of national health care program within five to ten years.
The scenario envisioned is what is a called a “single payer system.” What this means is
that all of the health care money in the United States is pooled together, and health care
expenses are paid out to whoever needs them from this common pool of money. There
will be no more insurance companies competing to cut costs in order to attract business.
There will be one plan, and all Americans will be covered. Immediately, this raises a
whole lot of questions and concerns. What kind of care will be provided? What is all of
this going to cost? Where will the money come from?
We can look around the world and see many examples of national health care programs
that guarantee coverage for all citizens. Most of them have several things in common.
First, they are all being faced with the same dramatic rise in health care costs we have
here in the United States, just to a lesser degree. And second, even in cases where the
physicians make a set salary, suppliers, hospitals, drug companies and other providers are
rewarded based on the volume of services or procedures provided.
In America, Medicare is a national health care system already, with centralized funding
and a “one payer” system. It just doesn’t cover everybody-yet. Only citizens over 65
years old and those who are permanently disabled or the dependents of the disabled or
deceased are covered. Around the country Medicare contracts with insurance companies
to provide the administrative duties of processing claims and enrolling participants in the
plan. They sign up physicians and hospitals to provide care. The insurance companies
make sure that the care is provided according to nationally established guidelines and that
providers meet nationally established criteria. For this service the insurance companies
are paid a management fee.
The role that the insurance companies and the government play in the operation of the
Medicare system is nearly identical to what would be expected under a responsibility
based health care system. The Medicare system already does what a national health care
system needs to do. A national system just needs to be funded better and expanded to
cover all Americans.
Physicians’ groups, and other major health care provider organizations, have already
recognized the likelihood of a coming national health care system based on Medicare.
Many believe that congress will eventually be forced to conclude that the simplest way
out of the health care coverage dilemma is an expansion of current Medicare coverage.
In fact, the lobbying and jockeying for position for coverage under Medicare has become
36
intense. Everyone wants into Medicare, not because it is a great deal for doctors, in fact
the fee structure is horrible for many specialties. They want in because they fear being
left out when Medicare is the only game in town.
But Medicare itself is struggling for survival. The Medicare system is funded by
employee taxes, and the burden is huge. Increasing Medicare taxes is never a popular
consideration, and so the system is caught between stagnant income and the run away
health care cost inflation discussed earlier. Lack of funding has forced ever more drastic
reductions in benefits along with a nightmare of arcane rules and regulations. It will get
worse as the Baby Boomers age and the smaller generations that follow have to bear the
burden of Medicare for the retiring Baby Boomers.
Decision-makers are faced with the quandary of how to fix two failing systems.
Medicare and the private health care system are both sinking. Can it really be right to
merge them together into one really big problem? The plan being discussed is to add the
money that employers pay for health insurance to Medicare taxes, and throw that into one
big pot. Add the money that states and the federal government spend on Medicaid and
you have a considerable sum of money. It is no more money, however, than we already
have available, and that isn’t enough. And don’t forget the forty million or so citizens
that aren’t covered under any plan now that would be covered under a national health
care plan. This is why politicians are not rushing to embrace national health care quite
yet. To do so would require finding additional sources of money for the system, and that
spells taxes. A lot of taxes.
Yet this lack of funding could be handled by applying the responsibility principles
elucidated earlier. If we could cut national health care costs by 25% we would have
enough money in the pot to cove everyone. The reduced administrative burden of
responsibility-based health care would create a 20-30% reduction by itself. This is not to
mention increased efficiency of a system that rewards success rather than mediocrity.
The collection of tobacco and alcohol surcharges would add tremendously to the amount
of money available for health care. If the private sector cannot figure a way to do it then
the federal government may have to step in and create a national system of taxes that
supplant the current state and local sin-taxes. This money could provide another 30-50%
of the funds needed to operate a health care system. There is no reason, other than
partisan politics, that a rational, efficient, effective and responsible health care system
could not be created in America in the next decade.
If we all act responsibly maybe the government won’t have to step in and take over. I’ve
heard it said: “If you like Medicare, the U.S. Postal Service and the IRS you’ll love
national health insurance.” While that may have more than a grain of truth to it, the
situation is getting critical enough to demand some action.
37
AFTER MANAGED CARE
CHAPTER 8
WHY PHYSICIANS SHOULD EMBRACE RESPONSIBILITY-BASED
MEDICINE
Most of the physicians I have presented this idea to dismiss it immediately. They fear an
even greater loss of income and invoke the AMA ethics guidelines against guaranteeing
outcomes. They express the concern that it would be impossible to prove that someone
improved from a particular treatment. Even more troublesome is the problem of patient
compliance. How can a physician or a pharmaceutical company be held responsible
when a fairly large percentage of patients do not comply with instructions and take
prescribed medication sporadically, or not at all. How can it be proven, if a procedure
fails, that it was the doctor’s fault? Why should the doctor be punished for circumstances
beyond his control? I will address those concerns fully in this chapter and show, as is
becoming abundantly clear, the deeper we get into managed care, that the alternatives are
worse.
Many doctors are just looking for a way out of the mess they are in. After devoting a
large portion of their lives to becoming healers, they have found the environment simply
intolerable. They are looking for any opportunity to live their lives without the
bureaucracy that has claimed health care. I know doctors who have left health care to
start other companies, from excavation to car washes, just to get away from dealing with
managed care. Go to any regional meeting of any of the major multi-level marketing
companies, from Amway to Nikken, and you will find physicians among the most
enthusiastic participants. Do you think they prefer selling soap and magnets to being
healers? Not likely, but at least in these fields they have the opportunity to interact with
other human beings without being second-guessed by a claims reviewer or case manager.
They have the promise of a secure future that had been stolen from them by managed
care.
A profession in health care today is a nightmare. Physicians have devoted 10 to 14 years
and hundreds of thousands of dollars to their education before they even get into practice.
They are faced with 36-hour shifts as underpaid residents for years before they can hope
to enter their own practices. The dream of every doctor-a successful private practice is
only a dream in this decade. Ten years ago over 80% of all physicians practiced in their
own independent offices, today only 16% do. The rest have been forced to give up their
private practices and enter huge group practices because of the economic and
administrative demands of managed care.
In these practices the doctors are being evaluated by how much business they bring into
the clinic and how many patient visits, procedures or dollars they can produce in a given
amount of time. Most physicians, especially specialists, have seen a 10% to 50% drop in
income since the advent of managed care. If this were not enough, the time they spend in
38
practice now is increasingly devoted to paperwork, the purpose of which is negotiation
with managed care organizations about the necessity for care. Very frequently, the care
recommended by the treating physician is being challenged and the physician is trying to
convince the insurance company of the need for care.
In the meantime, the patient is suffering and blaming the physician and the insurance
company for their continued ill health. This is especially frustrating for someone who
has trained their whole life to help people. Doctors are frustrated at every turn in the
managed care arena. The insurance companies tell the insured subscribers that they will
pay for care that is medically necessary, yet they often prevent the doctor from supplying
the treatment that, in the doctor’s opinion, would be the most efficacious. So the doctor
treats the patient with one hand tied behind his back.
The managed care industry has also managed to limit consumer choice in choosing
personal physicians. Not infrequently, the physician sees patients that he has been
treating for years shifted to a new insurance plan by their employer which does not
include that physician on its panel of providers. The patients have a very strong financial
incentive to switch to a new doctor, one who doesn’t know them as well. And, in
general, the more ill the patient, the more they rely upon their health insurance. This
creates more pressure to go to the network doctor, despite the fact that they are
abandoning a doctor who has worked with them for years and has the valuable experience
to know their case best.
The provider panels maintained by the managed care organizations are frequently very
limited, so ability of the patient to access a doctor is frustrated by overfilled offices and
three to four week waits for a routine appointment. The doctors feel this pressure in the
form of patients who are already frustrated by the time they see them and who have
suffered, needlessly, for weeks waiting for an appointment. Part of this is no doubt by
design. It is a common axiom in health care that 80% of the patients we see are suffering
from self-limiting diseases. That means that their condition is temporary, the body will
cure itself in time and medical intervention is really not necessary. By delaying access to
the physician, the system gives the self-limiting condition time to resolve and reduces the
demand on the system. In the meantime the patient wants to see the doctor, at least for
reassurance that the condition is not serious. Remember the patient does not have the
training the doctor has, and sometimes assurance is the best treatment.
Because of this situation, many patients are going outside of the managed care arena to
find care for non-life-threatening conditions. This may be one driving force in the rise in
utilization of alternative medicine. Patients are fed up with trying to get an appointment
and are turning to providers outside of the system. Generally, alternative medicine
providers have a lower per-visit cost than orthodox medical providers do because they
have never had to create the infrastructure to deal with the insurance industry. They
don’t need a room full of computers and billing specialists to get paid for what they do, it
is all on a cash basis. This is part of the reason we are seeing a meteoric rise in the
utilization of nurse practitioners, homeopaths, naturopaths and others. It is just too
39
frustrating to deal with the bureaucracy of the managed care-dominated, orthodox health
care system.
Managed care, as it exists today, is having the effect of frustrating the physician,
frustrating the patient, delaying treatment, and driving patients away from traditional
forms of health care. While this is good for the alternative healers, and probably good, in
a way, for the nation to experience an expanded vision of what constitutes good care, it
can be disheartening for physicians. Day after day they get to see frustrated, angry
patients not getting needed care and migrating to other providers of health care.
What responsibility-based health care would do is level the playing field for everyone
involved in health care. The alternative medicine providers, while gaining increased
access to insurance coverage for their procedures, would have the burden to prove that
their treatments are efficacious in order to receive payment. At the same time, because
the burdensome paperwork of managed care would be drastically reduced, traditional
medicine would have far less administrative cost and would be able to hold fees in line
with other health care providers.
The greatest advantage for the medical community under responsibility-based health care
is that the control of health care decisions would be returned to the rightful place, the
physician or other provider, who is in contact with the patient. The physician would no
longer be subject to the whims of the managed care case manager for approval or denial
of treatment but would be free to make clinical decisions based on his or her own
experience, extensive training, current research and the facts of the case. I think that any
capable doctor in America would trade that for the knowledge that he or she will be paid
based on their performance and ability to get people well.
Some questions come up frequently in discussions of fees, the likelihood of fraud, the
determination of efficacy, and duration and cost of treatment that would be allowed under
such a system. The short answer is that the process of managed care actually laid the
groundwork for a lot of the mechanisms that will be necessary for the successful
implementation of a responsibility-based program and all that needs to be done is use
what is already in place.
In the past, fees charged for medical services were based on whatever the market would
bear. Over the last few years, however, a system of determining appropriate fees has
been developed nationally using what are called “Relative Value Units”(RVUs). These
figures are based on expert panel discussions concerning, among other things, the
difficulty of a procedure, the amount of skill required to perform it, the time required to
perform it and how that procedure compares with other similar medical procedures.
Almost all the major medical procedures have been rated according to these RVUs. This
is the system used by almost every insurance company, including Medicare. There is no
reason to reinvent this wheel because it gives a precise number to the value of each
procedure. The numbers do not give actual dollar figures because these need to be
adjusted each year for inflation and regional differences in the economy. But it is
40
relatively easy to calculate a reasonable fee for almost any medical procedure as long as
just a little information about the prevailing fees for other services in the area is available.
Because of these RVUs, there should be no concern among health care providers about
loss of income-if they are competent. The income of a particular provider will depend
upon how many successful procedures are performed each year. The current situation
rewards providers based on the volume of procedures, successful or not. Responsibilitybased health care should only worry providers who do not provide quality service.
Currently, the managed care caseworkers try to determine if procedures are going to be
successful before they are even tried. As any practicing physician knows, what the case
managers believe does not always reflect the reality of the situation. The doctor, therefor,
is rewarded for knowing which kind of cases the managers might be likely to approve.
That knowledge does not necessarily translate into the kind of treatment the patient
actually needs. The more of these kinds of cases the doctor handles, the more money he
or she makes. Again, the incentives in this system support a high volume of procedures
that may, or may not, be successful.
When responsibility for the success of a procedure falls back on the physician, the focus
will turn back to the patient at hand. It will no longer matter how many patients are
treated but, rather how many are treated successfully, and when the incentive is there to
spend more time on patient education, compliance will improve, and the doctor’s income
will improve. One of the greatest dilemmas facing medicine over the next decade or two
is a projected surplus of 200,000 physicians. This surplus is at a time when patients are
being forced to wait weeks for an appointment to see the doctor in their network. Under
responsibility-based medicine we will need all of those doctors because they will be
seeing fewer patients each while giving higher quality of care. Patient health will
improve, and doctor income can improve, if the doctor provides quality care.
How can more doctors make more money and the cost of health care go down? Because
we will no longer need the huge infrastructure of managed care. We will no longer need
three clerical personnel for every doctor. We will need fewer claims reviewers and
independent medical examiners. If procedures and drugs are dispensed with more care,
they will be more effective, and the ancillary costs to care will go down.
In this scenario, doctors will once again be able to work in an environment focused on the
patient and the patient’s welfare. The insurance company and the patient and the
physician will all be working toward the same goals, instead of at crossed purposes. The
problem of patient compliance still will be a concern, but it will be less so when the
doctor has taken more time to get to know the patient. Patient education is one key to
compliance, but as most patients know, communication is the hidden secret to
compliance. It is very common to encounter a patient who remarks that he or she waited
two weeks to see the doctor and then got to spend less than five minutes with him. In that
time the doctor asked a few brief questions, may or may not have touched or examined
the patient, and then wrote a prescription and left the room. End of visit.
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Patients leave such encounters feeling that they were not heard, their concerns not
addressed, the options not discussed. They may or may not get the prescription filled,
may or may not take it even if they do fill it and, probably, will not take it according to
directions. It doesn’t even really matter whether or not the prescription was the correct
treatment for the condition. The end result is failure.
In responsibility-based health care, with a focus on compliance and successful treatment,
the patient is going to become an individual in the mind of the doctor. The treatment will
not end with the writing of the prescription, it will continue with proper follow up to
ensure successful completion of the procedure. The patient’s thoughts, feelings and
emotions, so vital to health, will be more important to the physician. This will not only
improve the quality of health care of the patient. It will improve the quality of life and
the job satisfaction of the physician as well.
Of course, even with an increased focus on patient education and the resulting improved
compliance, the problem of unexpected failure will haunt the medical professional. Why
should they be held responsible for the whims of nature, for random acts of the gods that
strike people down and cause good treatment to go bad? The answer to this question is
that everyone will be playing on the same field. Everyone will be faced with the
possibility of random occurrences. The key is for each practitioner to reduce the
likelihood of the random occurrences happening to his or her patients by extending
extraordinary care. The risk of random chance in health care is no greater than in
farming, ranching, sailing, flying or a hundred other occupations that rely upon
successful completion of goals for their income. Medicine, with the billions of dollars of
annual research should be less a victim of chance than the farmer in his field watching for
signs of hail.
Supplying health care, as valuable as it is, is no more noble or valuable an occupation
than feeding your neighbor. It should not need to play by a different set of rules. The
farmer who can’t produce a crop doesn’t get paid for the corn that didn’t grow, no matter
how many times he pulls his plow across the field. Why should a doctor get paid for
surgeries that don’t provide a cure, or a drug manufacturer for the patient who had an
allergic reaction?
Certainly the physician put forth effort and utilized the expensive and extensive training
of his profession but did he, after all, risk or expend any more of himself in the exchange
than the patient who went under the knife? Assuming financial responsibility brings the
physician off of the pedestal on which he has stood for a long time. But the advent of
managed care has left that pedestal as merely a fading illusion anyway. Tomorrow’s
physicians can be merely cogs in the wheel of the managed care machine, acting as
technicians and prescription writers at the command of the case managers, or they can
choose a different role. They can return to the role of teacher and healer. It may be a
smaller, less grandiose, role than physicians have played in past years but the personal
satisfaction and the impact on individuals’ health and their very lives can be far greater if
played out one patient at a time. The choice for physicians is to increasingly focus their
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attentions on pleasing the shifting whims of the managed care industry, or return to
focusing on the health and welfare of their patients.
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AFTER MANAGED CARE
CHAPTER 9
WHY THE CONSUMER WOULD WANT RESPONSIBILITY BASED
HEALTH CARE
An axiom in marketing is that the consumer wants choice, quality, consistency and good
value. Today’s health care system, dominated by managed care, offers none of that. It
promises value by claiming to control costs, but in reality what it has done is merely shift
cost. Money that used to flow from the insurance industry to the health care providers
now flows to administrative personnel. A lot of that money will soon be flowing into
legal fees as consumers file suit against insurance companies for wrongful death and
inadequate care. Money is also coming out of consumers’ pockets to pay for services that
managed care is denying but the consumer still sees as valuable. Money is also coming
out of consumers’ pockets in the form of higher deductibles and co-payments that have
come in the wake of cost cutting by their employers.
Managed care promises choice by mailing out books full of doctors’ names that are on
the plan. But quite often, these are not the doctors the patient has been going to, nor are
they necessarily the doctors the patient would have chosen without such a plan.
Managed care also limits the types of doctors that are available. Few managed care plans
offer the services of doctors of homeopathy or naturopathy. Most managed care plans
severely restrict access to chiropractors, podiatrists, psychologists and the vast realm of
complementary services that, for many patients and conditions, are preferable to what is
offered by orthodox medicine. The situation is reminiscent of Henry Ford’s comment
that his customers could have any color Model T they wanted–as long as it was black.
The quality that managed care promises is elusive as well. By adhering to strict
guidelines of clinical practice, they promise to ensure that your physician uses only the
most effective and economical treatment. But, despite managed care’s protestations to
the contrary, these guidelines are cookie cutter attempts to mass-produce health care.
The patients who do not fall into these guidelines are shoe-horned into them anyway.
Prescription medicine that works for you may be replaced on the insurance plan
formulary by one that doesn’t work as well for you, because it is cheaper or because the
manufacturer has struck a deal with the insurance company. That might be OK for your
neighbor, but it isn’t O.K. for you because of an allergy or unusual reaction to the
allowed medicine. What is your recourse? Pay out of pocket, change insurance, or get
the company to reverse their decision. None of which is fair to you.
Quality of care is reflected in many ways. One way of measuring quality of care is how
well it works. Treatment that solves the problem is high quality. When I think of quality
service in other industries, I think of getting service that meets my needs. Quality of
service means that the service is available when I need it, not according to someone else’s
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schedule. Quality of service also means that my problem is fixed right the first time.
Quality of service means convenience in location and in time. Not only is the service
available when I want it, but I don’t have to drive to the other side of town to get it. I
don’t have to sit in someone’s waiting room for several hours before it is my turn, and I
don’t have to wait three weeks for something I need now.
How is today’s health care system meeting these criteria of quality?
Consistency can mean several things. In hamburgers it means that if you walk into a
Burger Clown in Topeka, Kansas, your burger will look, smell and taste exactly like the
one you had three weeks ago in Boise, Idaho. This is great if you like Burger Clown
hamburgers. It is also great from a managerial point of view, that the training and
ingredients and process are identical at each of twenty six thousand locations. There is
no need to reinvent a successful franchise every time a new location is built or a new
employee is hired.
From the point of view of the health care consumer, consistency is also valuable. But
consistency from coast to coast is less important, in health care, as is consistency from
visit to visit. We want to see a familiar face when we go to the doctor. It takes time to
establish a rapport of trust and a comfort level with the doctor, who should be privy to the
parts and history of you that even your spouse may not know. The doctor needs repeated
contact over years to learn who you are as a human being and to be able to establish in
her mind your unique individuality. If that doctor changes every time the managed care
contracts change, we never get a chance to develop the type of relationship it takes to get
high quality care. They may be working from the same book of clinical guidelines, they
may be prescribing out of the same drug formulary, but in health care, the person
dispensing the care is often of equal, if not greater, importance than the treatment given.
When 80% of the diseases are self-limiting and the best treatment is reassurance, the
person doing the reassuring is the most important factor in the service. Health care is not
the same thing as selling hamburgers. Relationships make the difference in health care.
The relationship between doctor and patient is the vital essence of healing and can never
be replaced by a book of clinical guidelines.
Good value in health care requires that the treatment applied is the right one for the
individual patient. Treatment guidelines and medication formularies are, by necessity,
gross generalizations. They should be just guidelines to help the physician narrow down
the most effective range of treatments quickly and accurately. However, they are being
used by managed care organizations to control the type of treatment your doctor can
prescribe for you. In addition, the demands of managed care, the low reimbursement and
high overhead required by managed care, decrease the time your doctor has available to
find out the specifics of your individual case. Doctors have been reduced to relying upon
these grossly generalized treatment guidelines just to get you in and out of the door as
quickly as possible so that they can see the volume of patients they need to see to make a
living.
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In responsibility-based health care, the insurance company does not retain the
responsibility to direct your health care. They don’t have the responsibility to tell you
who you can chose as your family doctor. They don’t have the responsibility to tell your
doctor which treatment he or she can provide. The insurance company simply pays the
bill for the best treatment available-the treatment that works for you.
Your health care premiums will decrease because the insurance company no longer will
need to hire hundreds of thousands of nurses and doctors to second-guess your doctor’s
clinical decisions. The nurses and doctors can go back to what they were trained to do,
help people get healthy. Your insurance premiums will go down because only successful
treatment will be paid for. Your insurance premiums will go down because the cost for
treatment of alcohol and tobacco related diseases will be prepaid by the consumers of
those products themselves, one cigarette and one beer at a time, not by your insurance
premiums. Your insurance premiums will go down because everyone will be healthier
when they can access affordable, effective health care.
In responsibility-based medicine, it is in the doctor’s best interest to spend as much time
as is needed with you to find out exactly what the best treatment will be. The doctor will
be paid for the quality of care rendered and not the volume of care rendered. You will be
less likely to receive the wrong prescription. You will be less likely to receive unneeded
surgery. Your doctor will become someone who knows your health history over a number
of years and has all of your records in one place to track your progress and illnesses. You
will no longer have to send for records from one doctor to another every year or two
when your insurance changes or your doctor drops from the “list.”
In responsibility-based health care you will be free to choose any number or type of
providers for your health care. In the past, insurance has strictly limited access to
“alternative” healing professions. With responsibility-based health care you will be able
to access them all and have insurance coverage, as long as the treatment is effective.
Even though there are many, many valid and effective “alternative” health care
treatments to choose from, very few of them have undergone any type of rigorous
research to determine efficacy. How do you know which one to choose? Even within the
traditional medical field some estimates say that as much as 85% of all the procedures
have never been subject to rigorous study. Responsibility-based health care will allow
for the natural selection process to decide which treatments are effective and which
aren’t. Those that are not will fade away, and those that are effective will flourish and
become more readily available.
After just a few years of focus on restoring responsibility, health care could look very
different from what it is today. There may be homeopaths and reflexologists roaming the
halls of the hospitals, and your family doctor may have time to answer all of your
questions. What is certain is that you will get better quality care, more effective care,
your choices will expand, your frustration will decrease, your cost will decrease, and you
and your community will be healthier.
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AFTER MANAGED CARE
CHAPTER 10
WHY INSURANCE COMPANIES WILL WANT RESPONSIBILITY
BASED HEALTH CARE
What do insurance companies hate the most?
Uncertainty.
What has managed care brought them most?
Uncertainty.
What do insurance companies do best?
Assume risk, based on large population groups.
What does health care require?
Assuming risk for one patient at a time, each with unique needs.
What is the insurance industry’s responsibility in responsibility-based health care?
Assume risk for the health of a population of people.
O.K., this is a little too simple, but it is the situation in a nutshell. The primary issue at
hand is that of risk assumption, which is just another word for responsibility. The
problem with the current system is that it does not differentiate risk of becoming ill from
risk of ineffective treatment. The insurance industry, through managed care, has tried to
assume both risks because nobody was assuming the risk (responsibility) for providing
effective care. Physicians, pharmaceutical companies and other health care providers had
established a long tradition of charging for their services, whether they were effective or
not. This tended to encourage the development of the most expensive and ineffective
treatments possible. It became a system out of control.
But instead of creating a system that would force the health care providers to assume that
risk, the insurance companies tried to take it upon themselves to ensure quality care. As
we have talked about earlier, that really cannot be done through managed care as it is
being applied today, or possibly ever. At first, it seemed like a great idea when
management of health care costs actually trimmed some fat from the system and saved
corporations and consumers money on their insurance premiums. The managed care
companies profited handsomely as well. Enough money was saved that some of it was
47
diverted to increased insurance industry profits and million dollar bonuses for the
insurance company executives who pioneered the concepts.
As we all know, this didn’t last. Once the fat was trimmed and competition in the
managed care arena heated up, insurance companies were forced to trim more to stay
competitive. Now the meat of health care is being threatened by the managed care knife.
Consumer complaints of poor quality care and poor access abound. Physicians are
forming groups to offset the power of the insurance companies. And finally, multimillion dollar lawsuits are being filed against the managed care industry all across the
country. The profit is gone for most of the companies who deal with managed care.
They are working with huge expensive staffs trying to manage the unmanageable and
losing money at it.
One bright spot is the current trend in managed care to encourage quality by
accumulating outcome data for various provider groups and use this data to help increase
overall quality of care. This outcome data measures things like patient satisfaction, cost
of treatment per diagnosis, patient response to treatment, and the number of times a
patient returns for the same problem. The insurance companies are attempting to
quantify good health care and use that data to determine which providers will be
permitted to participate in their plans. The intent of this program is to reduce costs
further while maintaining high quality health care. This type of program applies
responsibility-based health care en mass. What we are seeing here is an insurance
company perspective on returning responsibility to the physicians. Rather than applying
it one patient and one doctor at a time they are applying the principles to population
groups and groups of physicians. This will encourage an overall trend toward better
health care and reduced cost while allowing the physicians some leeway in directing care
without as much insurance company interference.
While this system is far better than what we have now, there are some obvious problems,
like added costs to gather and process the data and the question of who should be setting
the standards to strive for. Should the insurance industry be setting the standards for
health care? Shouldn’t that be the result of a collaborative effort between the physicians
and the patients? Of greater concern still, as discussed at length elsewhere, is the
problem of how the individual patient fares in a system run on guidelines and averages.
Tracking outcome data will likely increase the average patient satisfaction numbers. And
while averages are fine tools for corporate managers and company stockholders in
judging company performance, they are less useful when applied to the human issues of
health, well being and quality of life. In our city there are any number of neighborhoods
with average incomes well above the national average. There are people in those
neighborhoods living in very comfortable homes with secure retirement funds. On the
next block, or just across the railroad tracks can be found families living in cardboard
boxes and begging on street corners for food. The statistics say that everything is all
right. The average income is above the norm. The human reality is that things are far
from what they should be.
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In a system judged on averages, there are going to be patients who do not fit into the
mold built for them. The treatment approved by the guideline committee will not work.
The drugs in the approved formulary will not work for every patient. There will be
individual patients for whom the system, as designed, does not allow the optimum, and
which may even require the worst, care. It is these problems that will forever plague any
system of managing health care that does not recognize the primary importance of the
individual patient. Managed care, even at its best, interferes with the relationship
between a patient and a doctor and the responsibility of that doctor to provide the best
care. Not the average care, not the fastest care, not the most economical care, but the best
care for that patient. This in the long run becomes the most economical care because
better care leads to better health and less reliance on the health care system.
The more insurance companies try to micro-manage health care, the more expensive it
will become. By trying to manage health care using top-down approach, they are wasting
the most valuable resource that health care has, hundreds of thousands of doctors and
nurses who are trained and desire to provide good health care. All that needs to be done
to save the health care system is let those professionals do what they know how to do and
reward them for doing it.
So what is in it for the insurance industry if they relinquish control of health care back to
the health care community? The insurance industry will once again be able to focus on
managing financial resources. The insurance companies can cut payroll costs by
allowing the hundreds of thousands of professional staff they have hired, to handle and
review claims, to return to the field where they can help provide care. This shift in the
workforce will provide added competition in health care, which may help drive down
costs.
The only responsibility for insurance companies under responsibility-based health care is
to do what they do best. They will need to study patterns of health care costs, calculate
and collect premiums, and pay for successful health care, based on proof of efficacy after
the fact, provided by the physicians. The paperwork load on the physicians will be no
more than what should be expected of good medical documentation. The insurance
company cost for evaluating that paperwork will be minimal because the criteria for
determining if a treatment was successful should be very specific, with very narrow
ranges for disagreement. The patient is better or they aren’t, end of discussion.
In cases where the evidence is obvious as to the failure of a procedure, the provider
probably will not even file a claim, saving that cost as well. Once the system is in place,
it may only be necessary to actually review claims on a spot basis. Physicians should be
warned of penalties if they file a claim for services that did not result in success.
For some procedures the only documentation possible may be a statement from the
patient saying that he or she feels better. In those, cases the patient’s word may suffice as
documentation. What would this do for a doctor’s bedside manner?
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In summary, the insurance industry should be interested in responsibility-based health
care because it will reduce the uncertainty of assuming the risk for the success of medical
procedures that should not belong to them anyway. It will cut their costs by drastically
reducing the number of medical professionals they will need to have on staff and on
retainer. It may reduce the cost and volume of claims processing because only successful
treatments will be filed. It will reduce their exposure to legal action for denying
treatment based on guideline criteria or consultant opinion. It will allow them to focus on
risk and money management and get out of medical management.
In short, responsibility-based health care will remove the uncertainty for insurance
companies, which should make them very happy. Bored perhaps, but happy.
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AFTER MANAGED CARE
CHAPTER 11
WHAT CAN THE INDIVIDUAL DO TO FIX HEALTH CARE?
The nation as a whole, feels frustrated by the current situation. Everyone I talk to,
doctors, patients, insurance company executives and legislators feels the same way you
do, powerless to make any meaningful changes. But there is something we can do as
individuals to make the system work better. That is to take back our responsibility for
our own health. If we each take responsibility just for ourselves then we are 80% of the
way to a workable health care system. So how do we do that?
Number One: Recognize what insurance is really for. Insurance is a protection against
unexpected catastrophes. It is not free health care. There is no such thing as free health
care. If you pay your premium to an insurance company and then expect them to let you
access the health care system for free, then you should also expect them to tell you, who
to see, when to see them, and what treatment you are allowed to have. Take back control
of your health care by buying only very high deductible insurance and putting the savings
into an account to pay for incidental health expenses throughout the year. If you are
someone who accesses health care quite a bit, you may have to budget a little more
money for health care than you are spending in premiums. If so, you need to look at your
lifestyle, your diet, and your environment.
Nobody should have a deductible lower than $1000, unless your employer pays all of
your health care premiums. But, recognize that what we have been calling health
insurance, when it is paid for by employers, is in reality, subsidized health care. Only a
portion of the money your employer pays is actually for “insurance.” The rest of it is a
tax-free perk that your employer pays to give you more money as an incentive to
continue working there. It is just that the money has one stipulation, it has to be used for
health care. This creates an incentive to use the health care system and, hopefully, stay
healthy and stay productive for the company.
If you want to take control of your health care, ask your employer for a higher deductible
policy and to be paid the savings in premiums as salary or placed into a Medical Savings
Account (MSA). If you take it as salary it will be taxed, but the tax will be about the
same as the administrative costs that the insurance company takes out before it pays for
your health care costs. If your company offers MSAs, the money may not be taxed but
there may be administrative costs that outweigh the benefit of doing it that way.
Anyway, the point is to get the money back into your hands, somehow, so that you make
the decisions for your own health and not an insurance company accountant.
For those of you who are self-employed or pay for your own insurance, you should be
considering $5000 or $10,000 deductibles. Otherwise, again, you are paying for someone
else to make your health care decisions for you. You are paying for someone else to
51
write the check to your doctor that you could just as easily write yourself. And you are
paying them about 30% of your premium, on average, for that service. If the thought of
having a $10,000 risk hanging over your head is too much, then sign up for one of the
hundreds of credit card offers that cross your desk every day. Get one with a $10,000
line of credit and put it in a safe deposit box to use only for emergencies. Then pay for
your health care out of pocket and know that, if you need emergency care, you can pay
for it and, if the care goes over $10,000 you have insurance to cover it.
If you have to use that credit card and are paying 21% interest on the money, it is still
cheaper than paying an insurance company to process claims for every office visit.
Quit thinking of health care as some mystical part of life that you have no control over.
Think of it as another expense to budget for, just like new tires for your car and paint for
your house. You have insurance for the house, but it only covers damage from storms,
fires, accidents and such. If your home-owners insurance paid for every time the furnace
guy had to come out to repair the electronic pilot, or when you needed new paint or
shingles, then your home-owners insurance would be just as expensive as your health
insurance. If you want your health insurance premiums to look more like your homeowner’s insurance premium, then start thinking of your body as something that is your
responsibility to maintain.
That brings us to Number Two:
Look at yourself. Look at what you ate today. Look at what you did all day. Is it any
wonder that we spend hundreds of billions of dollars on health care? Three-fourths of the
world’s population does not get the same diseases we die of. Heart disease, cancer and
stroke are mostly diseases of lifestyle. We have no right to complain about health care
costs when we are the most overweight, sedentary culture that has ever sat on the face of
the Earth. The average American eats a diet that is 40% fat. The three most frequently
consumed foods in America are white bread, coffee and hot dogs. We drink more soda
than water. The average American eats 134 pounds of sugar every year. Do I need to go
on?
We know how to be healthier. But we have traded years of healthy life for the
conveniences of a few seconds. We will cruise the parking lot looking for a closer
parking spot so that we don’t have to walk an extra fifty feet. We drive a half-mile to the
drug store to get our heart medicine. We will eat fast food that we don’t even like to
avoid taking five minutes to pack a healthy lunch.
Many people tell me that they don’t change because there is so much conflicting
information out there. They might as well just keep doing what they are doing because if
they try something different it will certainly be wrong when the next fad diet book comes
out. If you follow the fads and get your health advice from the National Enquirer, you
probably are confused, but a healthy lifestyle is not hard to understand.
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A truly healthy lifestyle is consistent with the USDA food pyramid, the American Cancer
Society and the American Heart Association recommendations. These are not fad diets.
This is not the lunatic fringe. This is the result of billions of dollars of research and
epidemiological studies of populations all over the world. You have heard it all before,
but here it is again.
Eat a diet that is primarily plant-based foods. Eat at least five, and preferably nine,
servings of fruits or vegetables every day. Eat a wide variety of foods. Eat raw, whole
foods to get the most nutrients. If you must cook your food, use low fat methods such as
stir frying, steaming or broiling. Avoid all processed foods. If it is in a box or can and
you don’t recognize the ingredients as something you want to eat, then don’t buy it. Eat
meat sparingly and when you do eat meat choose fish most often.
Don’t put poisons into your body. Avoid tobacco products, alcohol, soda pop, artificial
sweeteners, pesticides, and preservatives and all of the other non-food products we
consume by the ton in this country because the advertisers tell us we need them, or it
improves shelf life, or it makes the food look prettier.
Drink water. Drink clean water from certified sources, or buy a home filtration system to
eliminate toxic chemicals and carcinogens that are found in nearly every municipal water
supply.
Move your body. Don’t be intimidated by the reports that tell you that you have to
exercise thirty minutes, five times a week, or whatever, for optimum cardiac fitness. You
are probably not training to be a marathon runner. But you can do simple things to keep
from dying of a heart attack at 38 years old. Park in the farthest parking spot at the mall
instead of the closest. Take the stairs instead of the elevator. Lose the remote control-on
purpose. Better yet, lose the TV and quit living your life vicariously through the actors
on Friends. Quit watching basketball, football, bowling, golf, etc. on TV and go do it. It
doesn’t matter if you can’t slam-dunk a basketball or kick a 53-yard field goal. It matters
more that you can go up a flight of stairs without getting out of breath. Find something
that is fun to do. If you don’t like it, you won’t do it. The more you do, the more you
can do. Use it or lose it. Just Do It.
Get in touch with who you are. Go to the nearest woods and sit with your back against a
tree and feel your connection with the Earth. You are a product of millions of years of
evolution, or you were created in the image and likeness of God, or both. Feel that power
and the “specialness” that is you, and don’t let anyone or anything, any job or anyone
else’s expectations take that away from you. Create a relationship with God and/or
nature that is nurturing and supportive of your inner self. Find a community of people
who are like-minded and supportive of your right to be who you want to be and will
support you in the search for whatever that might be. Time and again, research has
shown that people with a strong spiritual belief system and a strong social support
structure live happier and healthier lives. Recognize that the goal of life is not to get to
the end, but to live well along the way.
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Find a health care practitioner who understands preventative medicine. I don’t mean just
going in for your annual exam. While these may be useful early detection procedures,
they do nothing to prevent disease. You need someone who can counsel you on lifestyle,
nutrition and exercise who actually has a clue. Look at your doctor. Is she as healthy as
you want to be? Or does she have bags under her eyes, a chronic cough and an extra
thirty pounds? When you ask about vitamins and herbs, does she roll her eyes to the
ceiling and mutter unintelligibly? While more and more medical doctors are learning
true preventative medicine they are in the vast minority.
You will probably need a team approach to your health care. You should have a doctor,
either a MD or DO, who is on staff at a good local hospital, in case you do need that kind
of care. But you also need someone to guide you and support you in creating the type of
lifestyle that will make it far less likely that you will ever need to see the inside of that
hospital. That person might be a chiropractor, naturopath, nurse practitioner or certified
nutrition consultant. Be a regular visitor to that office to allow him or her to help keep
you on track. You might also consider a personal trainer or, at the least, an exercise
buddy to keep you motivated and inspired to be more active. Even a dog that likes to go
for walks can significantly improve your health.
Number Three: Urge your Congressional Representative and Senators to enact legislation
that creates an environment that allows each of us to take responsibility for our roles in
the health care system. Ask them for laws governing health savings plans that are less
cumbersome and less costly to administer. Ask them for laws that allow health care
providers to refund money for services that were not effective. Believe it or not it is
illegal in most states for doctors to guarantee the success of their services. Ask your
legislators to begin the task of creating a national health care system based on
responsibility principles. These principles include: guaranteed outcomes; freedom of
choice of providers; tobacco and alcohol surcharges; and the preservation of the sanctity
of the doctor-patient relationship.
Right now your legislators are befuddled. They know that the writing is on the wall for
managed health care. At the highest levels it appears that a national health care system is
just a matter of time, but there is no clear way to pay for such a massive undertaking
without huge tax increases. Increasing taxes is never popular, and the amount of money
that would need to be raised to support a national health insurance system is absolutely
staggering. Nobody that holds an office wants to be the first to suggest that kind of tax
burden. Responsibility-based health care answers those questions and would create a
sustainable, cost effective health care system for every American, but some of the
concepts are so foreign to the average person that it will take several years to get a
majority vote on anything like this.
The sooner we educate the legislators and administration, the sooner we will have better,
cheaper health care. If you find the ideas in this book reasonable then send a copy to
your elected officials. At the very least we will stimulate some thought, maybe some
fresh discussion, and perhaps even positive action.
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You can start today to change the health care system.
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AFTER MANAGED CARE
AFTERTHOUGHTS
A CASE STUDY AND REFLECTIONS ON DIFFICULT CHOICES
A woman I know, who has a daughter that is being treated for cancer, inspired this
chapter. I had asked her to review this book for me and give me feedback on it. When I
met to speak with her she was very supportive of the basic concepts presented. Her job
requires her to be very aware of the political, economic and social issues surrounding the
health care industry. She remarked that she saw merit in what I was trying to accomplish,
but was afraid that the concepts would have a hard time finding broad based support
because of the opposition from organized medicine, pharmaceutical companies and other
groups with a vested interest in the status quo.
When we got to the issues of outcome based reimbursement for treatment, in other words
paying only for successful therapies, she became visibly agitated. As the conversation
continued, she expressed her fear that if only therapies that worked were paid for, then
the treatments that her daughter was currently receiving may not be available, because the
chances for success were so slim. Here we were with a dilemma. Even though it was
likely that the treatment her daughter was receiving would fail, she wanted them to be
available because they were, after all, the only hope she had. Even though her daughter
would undergo repeated surgeries, radiation therapy and chemotherapy costing hundreds
of thousands of dollars with a very small likelihood of survival, that one slim hope was
all that this mother had to cling to. And who could blame her? Would anyone do any
less for his or her own child, or father or spouse?
While I can’t deny this mother’s dedication to her daughter, and our responsibility to do
everything we can to protect our loved ones, the specter of death sometimes causes us to
make irrational decisions about public policy and the factors effecting the health of the
nation as a whole. The money spent to treat this one case, with a marginal chance of
success, could have provided smoking cessation programs for a thousand people and
prevented hundreds of future cancers. Should we deny this child the best care available
because we might be able to prevent future cancer in someone else? The answer is that
we don’t have to. If responsibility based health care is allowed to operate, we can
provide the best care available to each individual, while moving the system toward more
effective and cost effective treatments.
Cancer therapy, while a gallant effort to battle a frighteningly fatal disease, might also be
the most extreme example of wasted effort and misplaced money in the American health
care system. Most glaring is the fact that the large majority of cancers are preventable
with lifestyle changes. Study after study has shown that every dollar spent on prevention
and public education saves many dollars in treatment costs yet the focus of billions of
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dollars of research is toward treatment after the fact. We are trying to close the barn door
after the horse is out and the barn is burning down.
Therein lies the dilemma. Do we abandon the people with cancer, who need us most, to
focus on preventing future cases of cancer with an intense program of dietary,
environmental and lifestyle improvement for the country? Or do we continue to dump
billions of dollars into research and treatment while condemning future generation after
generation to increasingly greater rates of cancer and invasive, dehumanizing treatment?
And who is going to suggest that we withhold treatment to someone with cancer, for the
sake of spending that money on preventing cancer in someone else? So far the choice has
been made to put the money into treatment, while national efforts at prevention go
underutilized and under-funded.
There can be no argument that cancer therapy is on the frontier of medical knowledge
and technology. The treatment that is rendered in the nation’s cancer centers is often a
combination of well-known and accepted therapies and state of the art experimental
treatments. The money that it takes to provide that kind of treatment is astronomical.
The funding often comes from a combination of insurance, personal funds and research
grants. Very often a family’s financial resources are exhausted in a short time, with no
guarantee that the individual will recover. Yet, what choice does a family have when a
child, or mother or father needs treatment? They make the sacrifices necessary to get the
best treatment they can.
Except for the wealthiest of families, the treatment will be paid for mostly by a
combination of insurance coverage and research grants, which means that the treatment
provided is that which has been approved by the insurance company and/or the research
fund granting agency. Research funding, in cancer therapy, requires a very specialized
grant writing procedure, and there is fierce competition for the money among research
facilities. Only the largest institutions that can afford to hire the best professional grant
writers will get the research money. The largest institutions tend to have access to the
most high technology as well. The tendency when you have high technology available is
to use it because if it isn’t used it can’t be paid for. One of the ways to make sure that it
is used is to get research funds to study it, so research grant writing tends to focus on the
higher cost therapies.
The largest centers also have political and personal affiliations with the grant providing
institutions. Former boards of directors of one become presidents of the other and the
bigger players in the field have insider influence to get the majority of funds. This is
good in the sense that the money will go to the centers that have the resources and people
to use it. The down side of this whole process is that lower cost therapies and
treatments, performed at smaller centers and by individual physicians, will not get funded
to the extent that they should. Thus the “low tech” and “low cost” therapies will never
get insurance coverage because they are not “proven” therapies.
The financial incentive in cancer therapy research is bigger, more expensive and more
invasive. I am sure we have all heard stories of small cancer clinics in Mexico and
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elsewhere that people travel to for herb therapies or live cell injections or any number of
strange sounding treatments. These clinics are denounced for being unscientific and
preying on the fears of cancer patients. Yet we also hear of miracle cures coming out of
these clinics. Hundreds and probably thousands of people go outside of the borders of
the United States every year in search of these therapies. I personally know a man who
cured himself of cancer simply by changing his diet. It is documented in his medical
records that he has been cancer free for fourteen years since going on a strict vegetarian
diet. It is also documented that when he strays from the diet that the cancer comes back.
Yet, where is the research money to prove or disprove any of these claims? What if a
change of diet could work as well as years of surgery, radiation and chemotherapy?
Unless something changes, the entire field of cancer treatment will continue to migrate
toward the most expensive and invasive therapies available.
If insurance coverage were directed to only pay for treatment that resulted in measurable
improvement, then therapies that are effective will become available and therapies that do
not work will get less funding. The simple dietary and herbal treatments that are
acclaimed by thousands of people, but unsupported by research, will either fail or flourish
based on their success in a competitive market along side more conventional therapies.
Quacks, who are only in business to bilk dying people out of their last few dollars, will
fade away because they will compete head to head on equal footing with treatments that
actually work. Low tech and low cost therapies that actually work will flourish and the
public will have more options for their treatment.
Even the high tech, high cost therapies will have an opportunity to add to the funds
available for further research, because insurance will reimburse them for successful
procedures. This will decrease the reliance upon grant writing and public money for
successful cancer therapy. Cancer therapy that does not result in positive outcomes will
have to go back to the drawing board to prove that their therapies are worth additional
money to research.
The trend will be that successful therapies will become more widely available. As they
become more widely available, the prices will come down and more people will have
access to the best therapies. The public money that was being spent on expensive
research programs can be redirected to public prevention programs to reduce the rate of
incidence of cancers even further.
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AFTER MANAGED CARE
Summary
Put simply, the American health care system is a huge, expensive, inefficient, wasteful
mess. The primary reason for this is that health care providers are paid based on volume,
with no consideration to quality. This creates a financial incentive to the system that
rewards the most expensive and ineffective care possible. There is no reward for
providing quality care to the individual patient. This can be corrected simply by applying
the consumer protection standards that apply to every other good and service in America.
Health care providers should only receive payment for successful treatment. Any other
“solution” to the health care problems in this country will only be a temporary Band-Aid
until this core issue is corrected.
A secondary cause of the high cost of health care in America is the suppression of any
alternatives to orthodox medical and surgical procedures. The health care reimbursement
system still penalizes any consumer who tries to look for less expensive, or more
effective, alternative health care methods. Most insurance plans pay only for treatment
that adheres to a narrow philosophy of high tech, highly invasive, highly expensive
procedures.
Managed care has been a large-scale experiment in managing health care costs
bureaucratically. While there was some initial success in reducing health care costs
strictly through financial limitation, eventually this shifted the financial burden more
directly to the consumer while total cost for health care continued to climb at twice the
rate of inflation. Managed care has also resulted in reducing the quality of care by
limiting health care choices, and forcing individual doctors to provide less care for the
same price. With the added expenses of complying with the administrative burdens of
managed care the overall cost of providing health care has increased while quality, from
the consumers’ viewpoint, has decreased. This is not what managed care was supposed
to do.
The long-term failure of managed care is inevitable for another reason. To compete in
the third party payer market the insurance companies must keep the costs down in their
plans by restricting coverage to only the healthiest of the population. A growing number
of Americans, 48 million at last count, have no health insurance coverage. This will only
increase in the future until it becomes a national crisis, if it has not reached that point
already.
On the consumer side of the issue is the responsibility of citizenship to maintain a healthy
lifestyle. Obviously we cannot legislate individual lifestyle, and neither should we try.
But, we can create economic incentives that guide individuals to make healthier lifestyle
decision and at the same time provide funds to pay for the consequences of unhealthy
choices. This incentive program might be compared to previous “sin tax” legislation but
with a few differences. The weakness of the “sin tax” legislation of the past is that there
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was no logic to its implementation other than to raise government operating funds in a
way that was less politically abhorrent than other types of taxes.
There is research available now that gives precise information about the economic impact
of tobacco and alcohol consumption. With that information we can add surcharges to
these products that will be sufficient to pay for the health care needed as a result of their
use. If these funds are used properly it will shift the burden for a large percentage of
health care costs from the average citizen and employer to the users of these products.
Smokers will pay for their future cancer and emphysema therapy one pack at a time. The
additional product cost will also, hopefully, have the long -term effect of reducing
utilization and eventually create a healthier population.
From the point of third party payers, we need to get insurance companies out of the
medical management business. The only thing separating the individual making health
care decisions from the patient should be skin. You can’t manage a patient’s health care
over a fax line, through a computer modem or over the phone. You can’t make
individual health care decisions with any kind of accuracy by simply consulting a
treatment guideline manual. You cannot replace years of experience and the personal
relationship of a doctor and the patient with a book full of names chosen because they
were willing to abide by the rules of the managed care company.
Health care professionals are being held hostage to rules, treatment plans and panel
selection criteria of managed care because the investments they have made in years of
their lives and hundreds of thousands of dollars of education are at stake. The quality of
health care is suffering and the quality of life of the health care providers is suffering.
Health care is no longer about doing what is right for the patient it is about doing what
the case manager on the other end of the phone thinks is right
Because of this situation the medical community is ready for a revolution. It is starting
with lawsuits and physician labor unions. I know good doctors and nurses who have
moved into other lines of work simply because of the pressures of managed care. They
could not, in good conscience, work in a system that continually frustrated their efforts to
provide good health care. These are not isolated cases. There is a growing exodus of the
best and brightest out of health care, which will continue until doctors and other
professionals are allowed to do what they were trained to do, provide quality health care
and be rewarded for doing it well.
But, for this to happen the health care industry will have to accept the financial
responsibilities that apply to the rest of the free market economy. Open competition and
responsibility to the consumer for the quality (success) of their services must become the
cornerstones of the health care system. Health care providers must work with the market
and third party payers to find ways to reward good and effective service. The doctor who
gets people well should also be the doctor who is financially rewarded. The term
“successful doctor” must refer equally to the level of clinical competence and to the
doctor’s financial status if we are ever going to have a cost-effective health care system.
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Health care is people helping people. It is the tribal responsibility of the whole to the
individual in need. As someone said to me once, “Patients are not commodities to be
sold and traded they are people who need help.” The solution to the health care problem
is to return to that point where the patient meets the caregiver, and make sure that that
exchange is in healthy balance.
We can fix health care. But, to do so we have to stop pointing our finger at everyone else
and accept our personal responsibility for making the system work. For this to work we
must all have the same vision and be working toward the same goals. I hope that you
will join me in sharing this vision with others until we can reach enough people that a
critical mass is created. I don’t want to give the impression that I think I have all the
answers. Health care is incredibly complex but the core issues I have outlined here must
be addressed before any other proposed solutions will work. At the very least, I want to
stimulate debate in new and creative directions that don’t involve more layers of
bureaucracy, government intervention, lawsuits and further depersonalization of health
care.
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