Republican “Healthcare”

Who needs death panels? People are dying of neglect.

Healthcare cost American’s 5 trillion dollars a year. This is what 5 trillion dollars looks
like: 5,000,000,000,000. That’s about $16,500 per American per year.

Have you noticed that just about every hospital in the country is expanding and hundreds
of new “Medical Centers” are being built? One under construction just off of I-95 north
of Trenton, NJ is being built at an estimated cost of $500 million, and another, less than
20 miles away near Princeton is being build with a similar price tag of $500 million. I
liken these facilities to those inflatable sports arenas that depend on air compressors to
keep them inflated – only in this case, we’ll be pumping in a constant stream of money.
These facilities need to be staffed, cleaned, maintained, powered and heated forever. The
more medical facilities we build, the higher the costs. Even in my small NH town, our
local hospital has been expanding for over 10 years, with no end in sight. Clearly, the
demand for services has grown – the question is, what’s driving the demand?

I used to think that healthcare was a finite resource, but given the unchecked growth in
just one decade, I’m not so sure. I used to argue that, because it is a finite resource,
decisions to spend money on, say, cosmetic surgery, would limit resources spent on more
important medical care, like preventative care for children. But, as we spend more and
more of our GDP on healthcare, and a growing part of that on boutique healthcare like
“breast enhancement” – there’s actually a lobby demanding insurance coverage – I’ve
become convinced that rational decision making has been overrun by a plethora of
special interests. Of course, end-of-life care takes up the largest share of our healthcare
dollar, but we’re a long way from dealing with that rationally, so I just as soon leave that
subject for another day.

What has become clear is that our ability to fix problems, any problem, is hamstrung by
competing interests in Washington. (Is this how civilizations fail; under the weight of
competing, entrenched interests? Is this why China has been able to accomplish so much
in such a short period of time – because they aren’t replacing anything, entrenched or
otherwise; they’re building infrastructure from scratch?) Anyway, moving on…

Here are some proposals that Republicans have made. A few are worth considering, with
caveats.

People should pay. One Republican proposal that has currency is this: if people had to
pay for their own healthcare and had insurance only to cover catastrophic expenses, they
would more likely know how much healthcare cost. This knowledge would be all that
would be needed to hold down costs. People would, the argument goes, seek out less
expensive services and demand that doctors charge less. The “commonsense” simplicity
of this idea is its attraction. However, in recent years, as insurance premiums have
grown, families have been saddled with higher and higher deductibles and less and less
coverage. It’s not unusual for group plans to have $1500 or $2000 deductibles. Yet
there’s little evidence of pushback by patients. Why? While some people may be bold
enough to negotiate prices or challenge their doctor’s fees, most people are less inclined.

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It takes a confident, well-educated patient to challenge his/her doctor. Most people are
intimidated by their physicians. It’s not in their nature to challenge a doctor’s fees, much
less the fees assessed by their hospital or health center. The more likely response is that
people will avoid seeing a doctor and, worse, avoid taking their children for checkups,
until a problem is serious and they end up in the emergency room. In fact, the effect of
higher deductible is twofold; it discourages families from utilizing services and it
increases insurance company profits. (Note: even for plans that increased deductible
limits, premiums increased. And, Anthem Blue Cross in California just announced a
40% increase!) Most plans require co-payments of anywhere from $15 to $25. While
that may not seem like much, to someone who is struggling financially, it’s enough to
discourage irresponsible over-utilization of services.

While I don’t reject the need for people to be aware of the cost of care or of having to
bear some of the responsibility for their healthcare, these aren’t a solution to escalating
costs. We need to employ other mechanisms. But what?

I find it ironic that while Republicans complain that the bills in Congress do nothing to
hold down costs – a debatable point – they’ve resisted remedies like comparative
effectiveness research, which can provide doctors with information about the most cost-
effective remedies, and they resist Medicare cuts. That they vigorously fought the
establishment of Medicare in the 60s and now fight attempts to reduce its costs 50 years
later is a puzzle, but there you have it.

Selling insurance in any state. The argument is that insurance companies ought to be
able to sell policies in any state; that the increase in competition, especially in states with
only a few plans available, would lower costs. Here’s the objection: Consider the recent
history of credit cards. What has happened to that industry since federal law pre-empted
state regulation? State usury laws were overturned, interest rates and fees escalated,
credit card promotions to individuals least able to pay exploded, and so on. (“Hey kid --
want a credit card”?) OK, so the health insurance industry wants the same freedom. As
was the case with credit card companies, insurance companies want to be able to
establish headquarters in states with the fewest restrictions and offer insurance to other
states, overriding local state regulations. If this were just one feature of a comprehensive
healthcare bill that specified a reasonable floor of coverage nationwide, it might be
acceptable. But that’s not what the Republicans are promoting. If the credit card analogy
holds, a piecemeal approach that overrides states’ ability to write rules for their own
citizens would result in less coverage and higher costs.

Malpractice reform. When asked on the PBS NewsHour what he thought healthcare
reform should consist of, former congressman Dick Armey’s only suggestion was
“malpractice reform”. That from the former Republican Majority Leader and now
chairman of FreedomWorks. Malpractice reform. It’s hard to take Republican proposals
seriously when virtually all lead with “malpractice reform”, as if this would miraculously
provide coverage to 50 million (or more) Americans. That said, I think that some sort of
malpractice reform to tamp down the most egregious lawsuits is worth considering, even
if for purely political reasons. But, what are the details of the Republican proposal?
According to the NY Times (2/14/10), “Republicans … are bent on capping damages for

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pain and suffering at $250,000 and generally want punitive damages capped at
$500,000.” The NY Times doesn’t mention compensatory damages, which covers direct
economic affects of an injury including such things as medical cost and loss of income.
Assuming that the legislation is mute on compensatory damages, it seems to me there
should be room for compromise here. Several states already set limits for pain and
suffering and punitive damages. The question is, how have these affected doctors
premiums and medicals costs generally, and, most important, are injured patients being
treated fairly? Are the caps on punitive damages sufficient to serve as a deterrent? (Note
that punitive damages are rarely applied, since, according to the website
law.freeadvice.com, you have to prove “willful, wanton or malicious” actions by a
physician.)

When contemplating award limits, several questions come to mind. 1) Do the limits only
apply to doctors, or would they applied more broadly to medical facilities or drug and
equipment manufacturers? 2) Wouldn’t a larger damage award be appropriate for these
corporate entities? 3) Are there other ways to punish or fine a corporate entity for
corporate malfeasants other than by rewarding the victim and his/her lawyer inordinately
large amounts of money? 4) Instead, should larger punitive awards be applied to some
kind of damage fund designed to improve healthcare generally? 5) Should limits be
written with cost of living clauses? (Ans: Yes.)

So, yes, I can accept that some limits (and perhaps a less confrontational tort system)
might be helpful to ameliorate doctor’s malpractice premiums; everyone’s legal fees; and
unnecessary defensive medical practices, but the mechanism must put the welfare of the
patient first. And, consider this question. With or without threat of malpractice, do
doctors have a financial incentive for ordering tests? Many unnecessary procedures
performed today are due to the fact that many doctors have a vested interest in the
equipment used such as MRI, CATscan or robotic surgical systems, or in the services
provided by outside vendors in which doctors have a ownership stake. Too often doctors
order tests to boost equipment utilization and their own profits. In this case, so-called
defensive medicine plays a minor role. And, might doctors refer you to another doctors
because of finder’s fees or for mutual financial benefit, rather than to address a medical
need? (I’ve had this happen to me.)

The reality is that we don’t have the answers to the malpractice conundrum. That’s why
the healthcare legislation in Congress offers funding for states to experiment. That, it
seems to me, is the sensible way to approach this problem. Even if it were determined
that the savings from malpractice reform had a minimal effect – such as the 1% the GAO
predicts – that’s still $50 billion a year. Experimental state programs may confirm or
improve on these predicted savings. One can only hope.

Don’t touch my Medicare! As for Medicare savings, I think there’s a lot that could be
done to cut costs there without undermining quality. My father relates the story that
when his wife lie dying in a hospital, doctors would stick there head into the room
(literally), ask how she was doing and then send a bill. He received many bills from
doctors he didn’t know, frequently months later, amounting to tens of thousands of
dollars. Medicare paid all of them. Admittedly this is anecdotal, but I’ve heard enough

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stories just like it to be reasonably certain this problem is epidemic. What better time to
curb this kind of abuse then when expanding coverage? All of the physicians wandering
around padding their bills will be needed to serve the millions of new healthcare
customers. Here’s a chance to put them to work. A goal of $400 billion savings over 10
years when compared to the 50 trillion (do you want to see what that looks like? No?) is
less than 1%! Why would Republicans object to provisions to curb Medicare abuse by
1% except to needlessly worry seniors and kill the bill?

Returning to the question of escalating costs, one reasonable objection to the bills now in
Congress is that neither does enough to slow medical costs. I agree. They’re not devoid
of remedies, but nobody can claim they’re comprehensive. But, the healthcare bills do
greatly expand insurance coverage and make it more affordable, and that’s a good first
step. No one disagrees that the cost question – “bending the curve” – is a tough one.
That’s why the healthcare bills address this by promoting experimentation by the states.
Replacing fee for service with a system that rewards physicians for keeping people
healthy sounds promising, but we need to see how such as system works on a smaller
scale before adopting it nationally. Meanwhile, there are millions of people desperately
in need of care who aren’t receiving any services, fee-based or otherwise. They should be
our first priority.

Another cost-cutting remedy that has gotten too little press is medical information
technology. The rollout of medical information systems, some financed by the stimulus
package, is our best opportunity to improve quality of care and reduce costs. The only
thing standing in the way is grey haired docs – and all doctors need to be pressed to make
it happen. But is a topic that is best discussed in a separate paper.

As President Obama sits down with Republican to debate healthcare next week, it’s
important that we all have a clear understanding of what is being proposed by both sides.
It’s our responsibility to press for solid answers, not sound bites. One thing that
Republicans need to explain is this: Why is it that in 1993 Republicans were in favor
most of the provisions now in the healthcare bills, but now are against them? And
we’re not talking about different legislators; were talking about people like Orin Hatch
and Chuck Grassley. In fact, the only real difference in the bills they sponsored in 1993
and the one before them now is that it included provisions for malpractice reform. Mark
Pauley, one of the authors of that 1993 bill, recently voiced regret that Republicans have
shifted their position (NPR website, 2/15/2010.) President Obama needs to press these
Senators, in particular, for answers as to when and why they’ve changed their positions.
Sadly, today politics depends on short memories.

Most Americans have recoiled at the legislative process, complaining about deals and
concessions. Get over it. That’s how democracy works! David Brooks (NY Times)
recently suggested on the PBS NewsHour that our government has become too
transparent and that if it were more opaque, it would be easier to get things done in
Washington. There may be wisdom in this, but another way to look at it is that maybe,
just maybe, the long-term benefit of this new openness is that Americans are being
educated and eventually will come to understand and accept how the system really works.
Hmm. As I write that, I recall the recent Pew Research Poll that found that only 25% of

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Americans know that it takes 60 votes to pass a bill in the Senate and the just 27% knew
that no Republicans voted for the healthcare bill. (Whatever happened to Olympia
Snow?) When you add those finding to other measures of mass misconception (a.k.a.
ignorance) – geography quiz anyone? – Well, maybe David’s right.

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