HEALTHPLANUSA . NET	QUARTERLY NEWSLETTER
Community For Affordable Health Care	Vol VII, No 2, July, 2008

Utilizing the $1.5 Trillion Information Technology Industry

To Transform the $2 Trillion HealthCare Industry into Affordable HealthCare

In This Issue:            

1.         Featured Article: Moral Health Care vs. “Universal Health Care”

2.         In the News: California’s payroll soars under Schwarzenegger

3.         International Medicine: Canadian Health Care Lies in Ruins

4.         Medicare: A Short History of Government Health Care in the United States

5.         Lean HealthCare: The Most Energetic Area of Lean Practice

6.         Medical Myths: Who pays for the uninsured?

7.         Overheard on Capital Hill: An Obituary: Neoconservatism

8.         What's New in US Health Care: The Presidential Elections

9.         Health Plan USA: Disruptive Technology: Not All Patients Want High-Tech Care

10.        Restoring Accountability in Medical Practice by Nonparticipation in Insurance and Government Programs

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1.         Feature Article: Moral Health Care vs. “Universal Health Care”

This article is from TOS Vol. 2. Winter 2007–2008Vol. 2, No. 4 Full contents of the issue are listed here.

Moral Health Care vs. “Universal Health Care” Lin Zinser and Paul Hsieh

Although American scientists, doctors, and businessmen have produced the most advanced medical technology in the world, American health care is in a state of crisis. Technologically, we are surrounded by medical marvels: New “clot buster” drugs enable patients to survive heart attacks that once would have been fatal; new forms of “keyhole surgery” enable patients with appendicitis to be treated and discharged within twenty-four hours, whereas previously they would have spent a week in the hospital; advances in cancer treatment enabled bicyclist Lance Armstrong to beat a testicular cancer, which, had he lived fifty years ago, would have killed him; and so on.

From an economic perspective, however, such medical treatments are increasingly out of reach to many Americans. Health care costs, as reported by the New York Times, are rising twice as fast as inflation.1 And health insurance, as reported by USA Today, “is becoming increasingly unaffordable for many employers and working people.” A decreasing percentage of employers are offering health insurance benefits to their workers, and many of those who are offering benefits are requiring their employees to pay a greater percentage of the costs. The U.S. Census Bureau reported in 2007 that nearly forty-seven million Americans had no health insurance, a sharp increase of ten million people from a mere fifteen years earlier. In short, there is a major disconnect between existing life-saving medical technology and the ability of Americans to afford it.

This discord is affecting doctors as well. The American Medical Association warns physicians that, due to the lack of affordable health insurance, “more patients will delay treatment and . . . doctors will likely see more uncompensated care.” Hence, each year doctors are working harder and harder but making less and less money, resulting in a “critical level” of stress and burnout. According to a recent survey of doctors, “30 to 40 percent of practicing physicians would not choose to enter the medical profession if they were deciding on a career again, and an even higher percentage would not encourage their children to pursue a medical career.”

Total spending on health care in the United States amounts to nearly 17 percent of the entire economy, and this is expected to rise to 20 percent by 2015, “with annual spending consistently growing faster than the overall economy.” Because of skyrocketing health care costs, the U.S. federal Medicare trust fund is expected to go bankrupt in 2019, less than twelve years from now, potentially leaving millions of elderly Americans without health insurance coverage. American health care is in dire straits and will continue to worsen—unless Americans demand fundamental political change to reverse the trend. Unfortunately, the kinds of changes currently being proposed by politicians will only exacerbate the problem.

Politicians from across the political spectrum, including Democratic presidential candidate Hillary Clinton and Republican candidate Mitt Romney, have argued that the government should guarantee “universal coverage” to all Americans, making health care a “right.” And politicians are not alone; numerous businessmen, union leaders, and insurance executives are united in saying that this will solve our problems.

It will not.

Contrary to claims that government-imposed “universal health care” would solve America’s health care problems, it would in fact destroy American medicine and countless lives along with it. The goal of “universal health care” (a euphemism for socialized medicine) is both immoral and impractical; it violates the rights of businessmen, doctors, and patients to act on their own judgment—which, in turn, throttles their ability to produce, administer, or purchase the goods and services in question. To show this, we will first examine the nature and history of government involvement in health insurance and medicine. Then we will consider attempts in other countries and various U.S. states to solve these problems through further government programs. Finally, we will show that the only viable long-term solution to the problems in question is to convert to a fully free market in health care and health insurance.

Government Involvement in Health Insurance

Although health care and health insurance are often conflated, there is a crucial difference between the two. Whereas health care consists of the actual goods and services necessary for medical care, health insurance is one means of affording such care. The two are closely related but distinct, as are the services of an auto-body repair shop and an automobile insurance company. . .

In financial terms, Medicare and Medicaid are bankrupting our state and federal governments. These two federal insurance programs compose nearly 20 percent of the federal budget, and the percentage keeps rising. In addition, for most states Medicaid is the largest single budget item, averaging 22 percent of states’ spending. Medicaid is generally administered by the state, with matching federal tax dollars. As a result, states seek to expand Medicaid coverage and other medical programs such as SCHIP (State Children’s Health Insurance Program) in order to reap more of the matching federal dollars. Eligibility for these programs continues to expand, and, in some states, families with incomes as high as $55,000 are now eligible for Medicaid benefits. Federal, state, and local governments now pay 50 percent of every dollar spent on health care, even though government health insurance covers only 27 percent of the population. . .

Governments have further interfered with the free market by means of health care mandates—governmental decrees regarding how health care providers and patients can or must act. . .

There are as many as 1,900 separate mandates across the country, and more than half the states have 35 or more mandates, with Idaho having the fewest at 14 and Maryland having the most at 62. These mandates violate the rights of insurers and customers to choose their own policies and coverage. They limit an insurance company’s ability to offer inexpensive and reduced benefit packages for the young and healthy, or to tailor policies to a person’s needs or wants, or to offer low-cost, high-deductible policies that cover only catastrophic events. They force unwanted coverage upon customers, raise the costs of each insurance policy involved, and retard innovation in the marketplace. . .

Several states, including Kentucky, Maine, and Washington, have introduced mandatory guaranteed issue into their individual insurance markets­. After Kentucky introduced the mandate, forty-five of fifty insurers withdrew from the market there, which, in turn, led to fewer options and higher costs for consumers. In 2000, Kentucky eliminated the mandate, hoping to recapture the competition and choice offered by its lost insurance market, and since then several of the insurers have returned. Maine is now down to two insurance companies, and rates have increased 124 percent in six years. The state of Washington has seen the number of insurers decline from thirty to seven while costs have increased. . .

With both mandates in place, those who are healthy tend to wait until they get sick to buy insurance. There is no need to buy insurance while you are healthy if insurance companies charge the same for sick or healthy customers and if they are required to accept you as a paying customer whenever you apply. These mandates quash the very purpose of insurance, which is to spread risk among the healthy; their effect is to spread health expenses among the sick and the less sick. This, in turn, requires insurers to raise their rates or, if states prohibit higher prices, to leave those states. . .

Bearing in mind what government intervention has done to health insurance, let us turn to its effect on medicine.

Government Intervention in Medicine

As with health insurance, government has meddled in the market for medical products and services for decades. Government routinely violates the rights of doctors and other allied professionals by forcing them to act against their best judgment; it regulates the licensing and practices of professionals and facilities; it forces doctors and hospitals to offer services without compensation; it subjects doctors to fines and jail terms for errors in the documentation of patient records and claims; consequently, it stifles productivity, hampers quality, increases the cost of medical goods and services, and causes unnecessary suffering and death. In support of these claims, let us look first at the laws regarding emergency room treatment and medical record keeping. . .

One reason for the overcrowding and overuse of ERs is the Emergency Medical Treatment and Labor Act of 1985 (EMTALA). This law requires that hospitals that accept Medicare patients diagnose and treat anyone who comes within two hundred feet of an emergency room, regardless of whether the person can pay for the treatment. The effect of this law is that anyone can walk into an emergency room at any time and receive treatment—without concern for payment. If a bum wants a free meal and a warm bed for the night, all he has to do is walk into the ER and say, “Doc—I feel like an elephant is sitting on my chest!” By law, the emergency room doctor and staff have to run tests until they can prove that he is not having a massive heart attack and can be safely discharged. And the failure of a hospital or physician to comply with any EMTALA-mandated responsibilities can result in fines of up to $50,000 for each infraction.

Because of the low reimbursement rates paid by Medicaid and Medicare, many recipients have no regular primary care physician and can get decent care only through the ER. Medicaid compounds this problem by not requiring patients to pay any deductibles or co-pays for emergency room visits.

EMTALA enslaves doctors. . .

Another government-mandated problem for doctors and hospitals is the Health Insurance Portability and Accountability Act (HIPAA). Most people know of this act because of the paperwork everyone must now sign when visiting a doctor’s office. Patients must acknowledge in writing their right to medical privacy. Although this is just one more piece of paper for a patient, it is hundreds more for each doctor, and thousands for each large clinic or hospital. And HIPAA’s bureaucratic regulations do not merely mean more paperwork.

A particularly onerous aspect of this coercion is that doctors are subject to civil and criminal penalties for privacy errors in record keeping. The federal Department of Health and Human Services (HHS) may impose civil penalties of $100 per failure to comply with a privacy rule requirement, up to a maximum of $25,000 per calendar year for multiple violations. This means that a doctor may be subject to a fine if he forgets to ask a patient to sign the HIPAA form, even if neither the doctor nor his staff improperly releases any of that patient’s private information. And a doctor who knowingly obtains or discloses individually identifiable health information in violation of HIPAA faces a fine of $50,000 and up to one-year imprisonment.

An emergency room physician told one of the authors of this article that he and his colleagues have to violate the criminal provisions of HIPAA every day because, in order to save lives in an emergency situation, ER physicians must routinely treat patients and release information to their immediate family members without following the HIPAA documentation rules. It would be immoral for ER doctors to strictly comply with the law, as it would delay emergency medical treatment, keep families from understanding their loved-one’s condition, and preclude the crucial sharing of knowledge between family members and doctors about the history and condition of the patient. This law (and others like it) turns doctors into criminals, not for providing substandard medical treatment, but for failing to put government paperwork ahead of the lives of their patients. Fortunately, most ER doctors are still willing to put their patients’ lives ahead of paperwork, even when it means violating federal law. .

Quoting Dr. Peikoff again:

And such charity, I may say, was always forthcoming in the past in America. The advocates of Medicaid and Medicare under LBJ did not claim that the poor or old in the ’60s got bad care; they claimed that it was an affront for anyone to have to depend on charity.

But the fact is: You don’t abolish charity by calling it something else. If a person is getting health care for nothing, simply because he is breathing, he is still getting charity, whether or not any politician, lobbyist or activist calls it a “right.” To call it a Right when the recipient did not earn it is merely to compound the evil. It is charity still—though now extorted by criminal tactics of force, while hiding under a dishonest name.

As shown, charity already abounds in America and would be even more abundant if the government removed its coercive hands from the health care and health insurance industries and consumers. Even with the government violating rights to the extent that it currently does, many examples indicate the sufficiency of charity in this regard. Here are just a few: The Shriners’ Hospitals provide free care to children and adults with orthopedic, spinal cord, and burn injuries. St. Jude’s Hospital provides free catastrophic care for children. Pharmaceutical companies provide enormous quantities of prescription drugs to those who are unable to afford them; for instance, they provided free (or nearly free) prescription drugs to about 6.2 million people in 2003 alone, and have been providing free prescription medicines to those unable to afford them for years. And there are hundreds of other examples.

With sufficient cultural support, eliminating EMTALA would be easy and would cause little disruption of services. It could be phased out over the course of a year with no difficulty. By setting a definite date in the future, for example, December 31, 2008, at which EMTALA would end, everyone would have ample opportunity to learn the law, and willing doctors, hospitals, and philanthropic organizations would have time to ramp up their charity care. . .

Further, we must eliminate all insurance mandates—including mandatory community rating, guaranteed issue, guaranteed renewability, and benefit mandates—and we must emphatically reject any call for individual or employer mandates. Insurance companies have a moral right to offer whatever policies and terms they deem marketable. Under a free market in health care, the types of insurance plans and coverage will undoubtedly change, but such changes will be the result of insurers and consumers acting according to their best judgment—by mutual consent and in each party’s best interest. That is the beauty of a truly free market.

Some states have already begun to curtail benefit mandates. As we mentioned above, Kentucky called for a three-year moratorium on all new mandates; consequently, the market in that state has begun to revive. To enact such measures across the country and to sustain them over time, however, Americans must come to understand that mandates are immoral and impractical and that, consequently, they do harm, not good.

We must work toward the elimination of Medicare, Medicaid, and all other government insurance programs that allegedly benefit the aged and the poor. As we have seen, these programs provide illusory “coverage,” while actually reducing or eliminating patients’ access to doctors. These programs could be phased out over several years beginning with the passage of a law to the effect that no person under the age of thirty-five will pay into or receive any benefits from Medicare. This would enable those under thirty-five to begin planning for their own future, long-term medical costs and enable insurers to plan for the future as well. Likewise, we could start reducing both the extent of Medicaid benefits and the number of beneficiaries, by limiting the number of years that a person could receive Medicaid benefits, in ways similar to those methods used very effectively by the Clinton administration to reduce welfare rolls.

Finally, we must repeal HIPAA and all other government regulations involving health insurance or medical care. It is immoral for doctors to be subject to criminal penalties for documentation errors that violate no rights and have nothing to do with the quality of patient care. These laws do nothing but increase the amount of time spent on useless, or nearly useless, paperwork. Eliminating HIPAA and many other regulations would enable doctors to return to the practice of medicine, providing patients with more access to quality care. Again, eliminating these laws could be done easily, by setting forth a future time at which the law would expire. . .

Although the goal of these proposed changes—a fully free market in health care and health insurance—cannot be achieved overnight, movement in the right direction can and should begin immediately. The only moral and practical way to proceed is to recognize the proper end and to consciously and consistently move toward that end by taking whatever steps in that direction are possible at any given time. What we must not do is shy away from recognizing and proclaiming the proper goal—the complete eradication of every trace of government interference in medicine and health insurance—or the fundamental moral justification for pursuing that goal: the individual’s moral right to his life, liberty, and property.

Only the ideal of the free market—based on the principle of individual rights—provides a solid foundation for genuine and practical reform. And only a free market in medicine can deliver the properly (i.e., voluntarily) priced high-quality health care that Americans deserve. This last point is evident in the sectors of medicine with the least government regulation, such as cosmetic surgery and LASIK eye surgery. The clear pattern in these sectors is a continual decrease in prices and improvement in quality. As health economist Devon Herrick stated in testimony before the U.S. Congress:

[D]espite a marked increase in demand between 1992 and the present, cosmetic surgeons’ fees remained relatively stable. . . Another example of price competition is the market for corrective eye surgery. In 1999, only a few years after LASIK was approved, the price was about $2,100 per eye, according to the ophthalmic market research firm MarketScope. Within a short time, competition drove the price down to slightly more than $1,600. The cost per eye of the standard LASIK is now about 20 percent lower than six years earlier. . .

In other words, the market can and does bring down health care costs while improving services when allowed to operate without government interference.

A free market in health insurance and health care works because it recognizes that health care is a commodity produced by individuals who have a right to offer that commodity for trade on whatever terms they see fit—and that consumers have the right to accept or reject those terms as they see fit. When all parties are free to trade voluntarily, according to their own best judgment, the result is lower costs and higher quality—a fact that is evident throughout the economy and recognized by all reputable economists.

The relatively-free American marketplace has done a magnificent job in providing other necessities of life such as food, shelter, and clothing; it can do the same for health care and health insurance—if we free up these markets.

In a truly free market, other creative and innovative solutions will arise—solutions that have not yet been conceived by any politician, policy analyst, or by the authors of this article. The fact that we cannot foresee all the possible good ideas is not an undesirable “bug” of the free market but rather one of its marvelous features. Just as someone twenty years ago could not have imagined the specific innovations and benefits that would arise from a free market in the then-fledgling internet industry (consider eBay, Amazon.com, Google, iPhones, etc.), so people today cannot imagine the specific innovations and benefits that would arise from a free market in medicine and health insurance. What is certain is that the freer the market, the more innovation and benefits will arise.

Conclusion

We have seen that the myriad problems with American health care and health insurance are the result of decades of government interference in the markets for these goods and services. The systematic violation of the rights of health care providers and insurers to freely produce and trade goods and services has created a dysfunctional system that has harmed countless providers, insurers, employers, and patients.

We have also seen that more government control of medicine and health insurance is not the solution. Evidence and logic show that government interference in the market leads only to rising costs, rationing, and needless suffering and death.

The current system is unsustainable. Unless policy changes are made, American health care and health insurance will not remain in their currently dysfunctional conditions; they will necessarily get worse (recall that health care costs are rising far more rapidly than the rate of inflation). One way or another, the current situation will change. We do not have a choice in that matter, but we do have a choice as to the direction of that change.

America stands at a crossroads. We can continue to recycle the failed ideas of the past, continue to violate individual rights, and impose more government control on medicine and health insurance in a futile attempt to salvage a fundamentally flawed system by extending and building on its flaws. Or we can stand on moral principle, respect individual rights, begin dismantling the broken system, and start working toward a free and therefore thriving market in medicine and health insurance.

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About the Author

Lin Zinser, JD, was a civil litigator for nineteen years. She recently created Freedom and Individual Rights in Medicine (FIRM), an organization dedicated to education and intellectual activism regarding the causes and solutions of the current problems with health insurance and medicine. For more information on FIRM, please visit www.WeStandFIRM.org.
Paul Hsieh, MD, is a practicing physician in the south Denver metro area. He is also a founding member of FIRM.

Please go to www.theobjectivestandard.com/issues/2007-winter/moral-vs-universal-health-care.asp to read the entire lengthy, well-documented important treatise and study it critically to understand the reality of government health care.

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2.         In the News:  California’s payroll soars under Schwarzenegger

State's payroll soars under Schwarzenegger, Erin McCormick, Chronicle Staff Writer SF Chronicle, Sunday, May 25, 2008

Six-figure earners more than double

The state of California's payroll is skyrocketing, even as its budget deficit has grown to billions of dollars in recent months.

In Gov. Arnold Schwarzenegger's first four years, the total bill for state workers' salaries jumped by 37 percent, compared with a 5 percent increase in the preceding four years under then-Gov. Gray Davis, a Chronicle analysis of state payroll records shows.

[State of California's over-$100K earners]

One month before Schwarzenegger took office in November 2003, just eight state employees earned more than $200,000 a year working in the core state government, which excludes universities and the Legislature. In April of this year, there were nearly a thousand, according to records.

And the number of state employees making six-figure salaries has more than doubled since 2003, to nearly 15,000. Meanwhile, the number of state workers has grown by 26,000 under Schwarzenegger after being cut by Davis, who was recalled from office in the midst of a severe budget crisis.

Some of the pay increases in recent years have been out of Schwarzenegger's control, including previously negotiated pay raises for some employee unions and court-ordered pay hikes for medical workers in the state prison system that are estimated to have cost the state hundreds of millions of dollars.

Also fueling the spurt in payroll growth: salary increases for employees in a few politically powerful labor unions, including the state's prison guards, as well as pay hikes for workers in the upper echelons of state government. Elected members of the Legislature, who will decide in the coming weeks how to resolve the state's $17.2 billion deficit for the fiscal year beginning July 1, also received increases last year.

"Salaries have only gone one way - up," said Charles Murray, chair of the California Citizens Compensation Commission, which sets pay for the state's top elected officials. Murray, a Republican from San Marino (Los Angeles County), has called for a pay cut for legislators and other elected officers in light of the state's huge deficit.

"If we had control over the janitors, I'd ask them to take a pay cut, too," he said. "The reasoning is very simple: We're in big trouble moneywise."

Legislators, gubernatorial aides and top medical professionals have received pay hikes in the last 12 months. And as the state looks at drastic cuts in many programs, the governor is proposing about $260 million in salary increases for the state's prison guards, whose pay jumped about 34 percent in five years under their previous contract.

At the same time, pay for many lower-ranking civil service workers has not kept up with the 15 percent increase in the state's consumer price index in the past four years, according to an analysis by the state Legislative Analyst's Office. Most civil service workers saw their pay rise by only 12 percent over that time.

The winners of the payroll race seem to be the unions with the strongest political ties or those who spend big bucks on political contributions and lobbying, said Christina Lokke of California Common Cause, a good-government watchdog group.

"There's lobbying going on among all these groups of state employees - and the outcomes are pretty imbalanced," she said. "Sometimes, politics and money beat good policy, that's when the public loses out."

Schwarzenegger spokesman Aaron McLear said much of the blame rests with the Davis administration, which negotiated some contracts in which workers deferred initial pay raises for bigger gains in later years. . .

California Highway Patrol officers got a 32 percent pay increase over four years through a contract negotiated by the Davis administration that linked their pay to the five largest police departments in the state. The average officer now makes $73,000 a year. The state's professional engineers received a 31 percent pay raise through a similar automatic-increase mechanism negotiated by the Schwarzenegger administration. . .

To read examples of the salary hikes revealed in the state's payroll database and compensation documents go to http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/25/MNI610S459.DTL

-- How much do state workers make? Search a database of the state's top earners at: sfgate.com/webdb/statepay

E-mail Erin McCormick at emccormick@sfchronicle.com.

www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/25/MNI610S459.DTL&hw=Erin+McCormick&sn=001&sc=1000

It doesn’t make any difference which party is in office, both increase government size and control.
We have to look for fiscally responsible candidates wherever we find them

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3.         International Medicine: Canadian Health Care Lies in Ruins

Canadian Health Care We So Envy Lies In Ruins, Its Architect Admits, By DAVID GRATZER | Wednesday, June 25, 2008

As this presidential campaign continues, the candidates' comments about health care will continue to include stories of their own experiences and anecdotes of people across the country: the uninsured woman in Ohio, the diabetic in Detroit, the overworked doctor in Orlando, to name a few.

But no one will mention Claude Castonguay — perhaps not surprising because this statesman isn't an American and hasn't held office in over three decades.

Castonguay's evolving view of Canadian health care, however, should weigh heavily on how the candidates think about the issue in this country.

Back in the 1960s, Castonguay chaired a Canadian government committee studying health reform and recommended that his home province of Quebec — then the largest and most affluent in the country — adopt government-administered health care, covering all citizens through tax levies.

The government followed his advice, leading to his modern-day moniker: "the father of Quebec medicare." Even this title seems modest; Castonguay's work triggered a domino effect across the country, until eventually his ideas were implemented from coast to coast.

Four decades later, as the chairman of a government committee reviewing Quebec health care this year, Castonguay concluded that the system is in "crisis."

"We thought we could resolve the system's problems by rationing services or injecting massive amounts of new money into it," says Castonguay. But now he prescribes a radical overhaul: "We are proposing to give a greater role to the private sector so that people can exercise freedom of choice."

Castonguay advocates contracting out services to the private sector, going so far as suggesting that public hospitals rent space during off-hours to entrepreneurial doctors. He supports co-pays for patients who want to see physicians. Castonguay, the man who championed public health insurance in Canada, now urges for the legalization of private health insurance.

In America, these ideas may not sound shocking. But in Canada, where the private sector has been shunned for decades, these are extraordinary views, especially coming from Castonguay. It's as if John Maynard Keynes, resting on his British death bed in 1946, had declared that his faith in government interventionism was misplaced.

What would drive a man like Castonguay to reconsider his long-held beliefs? Try a health care system so overburdened that hundreds of thousands in need of medical attention wait for care, any care; a system where people in towns like Norwalk, Ontario, participate in lotteries to win appointments with the local family doctor.

Years ago, Canadians touted their health care system as the best in the world; today, Canadian health care stands in ruinous shape.

Sick with ovarian cancer, Sylvia de Vires, an Ontario woman afflicted with a 13-inch, fluid-filled tumor weighing 40 pounds, was unable to get timely care in Canada. She crossed the American border to Pontiac, Mich., where a surgeon removed the tumor, estimating she could not have lived longer than a few weeks more.

The Canadian government pays for U.S. medical care in some circumstances, but it declined to do so in de Vires' case for a bureaucratically perfect, but inhumane, reason: She hadn't properly filled out a form. At death's door, de Vires should have done her paperwork better.

De Vires is far from unusual in seeking medical treatment in the U.S. Even Canadian government officials send patients across the border, increasingly looking to American medicine to deal with their overload of patients and chronic shortage of care.

Since the spring of 2006, Ontario's government has sent at least 164 patients to New York and Michigan for neurosurgery emergencies — defined by the Globe and Mail newspaper as "broken necks, burst aneurysms and other types of bleeding in or around the brain." Other provinces have followed Ontario's example.

Canada isn't the only country facing a government health care crisis. Britain's system, once the postwar inspiration for many Western countries, is similarly plagued. Both countries trail the U.S. in five-year cancer survival rates, transplantation outcomes and other measures.

The problem is that government bureaucrats simply can't centrally plan their way to better health care. . .

However the candidates choose to proceed, Americans should know that one of the founding fathers of Canada's government-run health care system has turned against his own creation. If Claude Castonguay is abandoning ship, why should Americans bother climbing on board?

Gratzer is a senior fellow at the Manhattan Institute and a physician licensed in both the U.S. and Canada, where he received his medical training. His newest book, "The Cure: How Capitalism Can Save American Health Care," is now available in paperback.

To read the entire report, go to www.ibdeditorials.com/IBDArticles.aspx?id=299282509335931

Canadian Medicare does not give timely access to healthcare, it only gives access to a waiting list.

--Canadian Supreme Court Decision 2005 SCC 35, [2005] 1 S.C.R. 791

http://scc.lexum.umontreal.ca/en/2005/2005scc35/2005scc35.html

To read the Jacques Chaoulli, M.D. report, go to www.jpands.org/vol10no3/chaoulli.pdf.

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4.         Medicare: A Short History of Government Health Care in the United States

How to Cure Health Care By Milton Friedman, Hoover Digest

The United States spends a mind-boggling percentage of its GDP on a health care system that virtually everyone agrees is a disaster. Is there any way out of this mess? There is—and Hoover fellow Milton Friedman has found it.

Since the end of World War II, the provision of medical care in the United States and other advanced countries has displayed three major features: first, rapid advances in the science of medicine; second, large increases in spending, both in terms of inflation-adjusted dollars per person and the fraction of national income spent on medical care; and third, rising dissatisfaction with the delivery of medical care, on the part of both consumers of medical care and physicians and other suppliers of medical care.

Rapid technological advances have occurred repeatedly since the Industrial Revolution—in agriculture, steam engines, railroads, telephones, electricity, automobiles, radio, television, and, most recently, computers and telecommunication. The other two features seem unique to medicine. It is true that spending initially increased after nonmedical technical advances, but the fraction of national income spent did not increase dramatically after the initial phase of widespread acceptance. On the contrary, technological development lowered cost, so that the fraction of national income spent on food, transportation, communication, and much more has gone down, releasing resources to produce new products or services. Similarly, there seems no counterpart in these other areas to the rising dissatisfaction with the delivery of medical care.

International Comparison

These developments in medicine have been worldwide. By their very nature, scientific advances know no geographic boundaries. Data on spending are readily available for 29 Organization for Economic Cooperation and Development (OECD) countries. In every one, medical spending has gone up significantly both in inflation-adjusted dollars per person and as a fraction of national income. In 1997, the United States spent 14 percent of gross domestic product on medical care, the highest of any OECD country. Germany was a distant second at 11 percent; Turkey was the lowest at 4 percent.

A key difference between medical care and the other technological revolutions is the role of government. In other technological revolutions, the initiative, financing, production, and distribution were primarily private, though government sometimes played a supporting or regulatory role. In medical care, government has come to play a leading role in financing, producing, and delivering medical service. Direct government spending on health care exceeds 75 percent of total health spending for 15 OECD countries. The United States is next to the lowest of the 29 countries, at 46 percent. In addition, some governments indirectly subsidize medical care through favorable tax treatment. For the United States, such subsidization raises the fraction of health spending financed directly or indirectly by government to more than 50 percent. . .

Why Third-Party Payment?

Two simple observations are key to explaining both the high level of spending on medical care and the dissatisfaction with that spending. The first is that most payments to physicians or hospitals or other caregivers for medical care are made not by the patient but by a third party—an insurance company or employer or governmental body. The second is that nobody spends somebody else’s money as wisely or as frugally as he spends his own. These statements apply equally to other OECD countries. They do not by themselves explain why the United States spends so much more than other countries. . .

We have become so accustomed to employer-provided medical care that we regard it as part of the natural order. Yet it is thoroughly illogical. Why single out medical care? Food is more essential to life than medical care. Why not exempt the cost of food from taxes if provided by the employer? Why not return to the much-reviled company store when workers were in effect paid in kind rather than in cash?

The revival of the company store for medicine has less to do with logic than pure chance. It is a wonderful example of how one bad government policy leads to another. During World War II, the government financed much wartime spending by printing money while, at the same time, imposing wage and price controls. The resulting repressed inflation produced shortages of many goods and services, including labor. Firms competing to acquire labor at government-controlled wages started to offer medical care as a fringe benefit. That benefit proved particularly attractive to workers and spread rapidly.

Initially, employers did not report the value of the fringe benefit to the Internal Revenue Service as part of their workers’ wages. It took some time before the IRS realized what was going on. When it did, it issued regulations requiring employers to include the value of medical care as part of reported employees’ wages. By this time, workers had become accustomed to the tax exemption of that particular fringe benefit and made a big fuss. Congress responded by legislating that medical care provided by employers should be tax-exempt.

Effect of Third-Party Payment on Medical Costs

The tax exemption of employer-provided medical care has two different effects, both of which raise health costs. First, it leads employees to rely on their employer, rather than themselves, to make arrangements for medical care. Yet employees are likely to do a better job of monitoring medical care providers—because it is in their own interest—than is the employer or the insurance company or companies designated by the employer. Second, it leads employees to take a larger fraction of their total remuneration in the form of medical care than they would if spending on medical care had the same tax status as other expenditures. . .

A look at the data is instructive. The effect of tax exemption and the enactment of Medicare and Medicaid on rising medical costs from 1946 to now is clear. According to my estimates, the two together accounted for nearly 60 percent of the total increase in cost. Tax exemption alone accounted for one-third of the increase in cost; Medicare and Medicaid, one-quarter.

Now consider a different breakdown of the cost of medical care: between the part paid directly by the government and the part paid privately. Government’s share went from an eighth of the total in 1919 to a quarter in 1965 to nearly half in 1997. The rise in the government’s share has been accompanied by centralization of spending—away from state and local governments to the federal government. We are headed toward completely socialized medicine and are already halfway there, if, in addition to direct costs, we include indirect tax subsidies.

Expressed as a fraction of national income, spending on medical care went from 3 percent of the national income in 1919 to 4.5 percent in 1946 to 7 percent in 1965 to a mind-boggling 17 percent in 1997. No other country in the world approaches that level of spending as a fraction of national income no matter how its medical care is organized. The changing role of medical care in the U.S. economy is truly breathtaking. To illustrate, in 1946, seven times as much was spent on food, beverages, and tobacco as on medical care; in 1996, 50 years later, more was spent on medical care than on food, beverages, and tobacco.

The Changing Meaning of Insurance

Employer financing of medical care has caused the term insurance to acquire a rather different meaning in medicine than in most other contexts. We generally rely on insurance to protect us against events that are highly unlikely to occur but that involve large losses if they do occur—major catastrophes, not minor, regularly recurring expenses. We insure our houses against loss from fire, not against the cost of having to cut the lawn. We insure our cars against liability to others or major damage, not against having to pay for gasoline. Yet in medicine, it has become common to rely on insurance to pay for regular medical examinations and often for prescriptions. . .

If the tax exemption for employer-provided medical care and Medicare and Medicaid had never been enacted, the insurance market for medical care would probably have developed as other insurance markets have. The typical form of medical insurance would have been catastrophic insurance (i.e., insurance with a very high deductible).

The Black Hole of Bureaucratization

Third-party payment has required the bureaucratization of medical care and, in the process, has changed the character of the relation between physicians (or other caregivers) and patients. A medical transaction is not simply between a caregiver and a patient; it has to be approved as "covered" by a bureaucrat and the appropriate payment authorized. The patient—the recipient of the medical care—has little or no incentive to be concerned about the cost since it’s somebody else’s money. The caregiver has become, in effect, an employee of the insurance company or, in the case of Medicare and Medicaid, of the government. The patient is no longer the one, and the only one, the caregiver has to serve. An inescapable result is that the interest of the patient is often in direct conflict with the interest of the caregiver’s ultimate employer. That has been manifest in public dissatisfaction with the increasingly impersonal character of medical care.

Some years ago, the British physician Max Gammon, after an extensive study of the British system of socialized medicine, formulated what he called "the theory of bureaucratic displacement." He observed that in "a bureaucratic system . . . increase in expenditure will be matched by fall in production. . . . Such systems will act rather like ‘black holes,’ in the economic universe, simultaneously sucking in resources, and shrinking in terms of ‘emitted production.’" Gammon’s observations for the British system have their exact parallel in the partly socialized U.S. medical system. Here, too, input has been going up sharply relative to output. This tendency can be documented particularly clearly for hospitals, thanks to the availability of high-quality data for a long period.

The data document a drastic decline in output over the past half century. From 1946 to 1996, the number of beds per 1,000 population fell by more than 60 percent; the fraction of beds occupied, by more than 20 percent. In sharp contrast, input skyrocketed. Hospital personnel per occupied bed multiplied ninefold, and cost per patient day, adjusted for inflation, an astounding fortyfold, from $30 in 1946 to $1,200 in 1996. A major engine of these changes was the enactment of Medicare and Medicaid in 1965. A mild rise in input was turned into a meteoric rise; a mild fall in output, into a rapid decline. Hospital days per person per year were cut by two-thirds, from three days in 1946 to an average of less than a day by 1996.

Taken by itself, the decline in hospital days is evidence of progress in medical science. A healthy population needs less hospitalization, and advances in science and medical technology have reduced the length of hospital stays and increased outpatient surgery. Progress in medical science may well explain most of the decline in output; it does not explain much, if any, of the rise in input per unit of output. True, medical machines have become more complex. However, in other areas where there has been great technical progress—whether it be agriculture or telephones or steel or automobiles or aviation or, most recently,computers and the Internet—progress has led to a reduction, not an increase, in cost per unit of output. Why is medicine an exception? Gammon’s law, not medical miracles, was clearly at work. The provision of medical care as an untaxed fringe benefit by employers, and then the federal government’s assumption of responsibility for hospital and medical care of the elderly and the poor, provided a fresh pool of money. And there was no shortage of takers. Growing costs, in turn, led to more regulation of hospitals and medical care, further increasing administrative costs and leading to the bureaucratization that is so prominent a feature of medical care today. . .

Expected longevity went from 47 years in 1900 to 68 years in 1950, a truly remarkable rise. From 1950 on, expected longevity continued to increase but at a much slower rate, reaching 76 years in 1997. For our purposes, it is of fundamental importance that, whatever its source, the increase in longevity did not have any systematic relation to spending on medical care as a fraction of income.

On the evidence to date, it is hard to see that we have gotten much for quadrupling the share of the nation’s income spent on medical care other than bureaucratization and widespread dissatisfaction with the economic organization of medical care. . .

Conclusion: Medical Savings Accounts and Beyond

The high cost and inequitable character of our medical care system are the direct result of our steady movement toward reliance on third-party payment. A cure requires reversing course, reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes.

The ideal way to do that would be to reverse past actions: repeal the tax exemption of employer-provided medical care; terminate Medicare and Medicaid; deregulate most insurance; and restrict the role of the government, preferably state and local rather than federal, to financing care for the hard cases. However, the vested interests that have grown up around the existing system, and the tyranny of the status quo, clearly make that solution not feasible politically. Yet it is worth stating the ideal as a guide to judging whether proposed incremental changes are in the right direction.

Most changes made in the final decade of the twentieth century were in the wrong direction. Despite rejection of the sweeping socialization of medicine proposed by Hillary Clinton, subsequent incremental changes have expanded the role of government, increased regulation of medical practice, and further constrained the terms of medical insurance, thereby raising its cost and increasing the fraction of individuals who choose or are forced to go without insurance.

There is one exception, which, though minor in current scope, is pregnant of future possibilities. The Kassebaum-Kennedy Bill, passed in 1996 after lengthy and acrimonious debate, included a narrowly limited four-year pilot program authorizing medical savings accounts. A medical savings account enables individuals to deposit tax-free funds in an account usable only for medical expense, provided they have a high-deductible insurance policy that limits the maximum out-of-pocket expense. As noted earlier, it eliminates third-party payment except for major medical expenses and is thus a movement very much in the right direction. By extending tax exemption to all medical expenses whether paid by the employer or not, it eliminates the present bias in favor of employer-provided medical care. That too is a move in the right direction. However, the extension of tax exemption increases the bias in favor of medical care compared to other household expenditures. This effect would tend to increase the implicit government subsidy for medical care, which would be a step in the wrong direction.

Before this pilot project, a number of large companies (e.g., Quaker Oats, Forbes, Golden Rule Insurance Company) had offered their employees the choice of a medical savings account instead of the usual low-deductible employer-provided insurance policy. In each case, the employer purchased a high-deductible major medical insurance policy for the employee and deposited a stated sum, generally about half of the deductible, in a medical savings account for the employee. That sum could be used by the employee for medical care. Any part not used during the year was the property of the employee and had to be included in taxable income. Despite the loss of the tax exemption, this alternative has generally been very popular with both employers and employees. It has reduced costs for the employer and empowered the employee, eliminating much third-party payment.

Medical savings accounts offer one way to resolve the growing financial and administrative problems of Medicare and Medicaid. It seems clear from private experience that a program along these lines would be less expensive and bureaucratic than the current system and more satisfactory to the participants. In effect, it would be a way to voucherize Medicare and Medicaid. It would enable participants to spend their own money on themselves for routine medical care and medical problems, rather than having to go through HMOs and insurance companies, while at the same time providing protection against medical catastrophes.

A more radical reform would, first, end both Medicare and Medicaid, at least for new entrants, and replace them by providing every family in the United States with catastrophic insurance (i.e., a major medical policy with a high deductible). Second, it would end tax exemption of employer-provided medical care. And, third, it would remove the restrictive regulations that are now imposed on medical insurance—hard to justify with universal catastrophic insurance.

This reform would solve the problem of the currently medically uninsured, eliminate most of the bureaucratic structure, free medical practitioners from an increasingly heavy burden of paperwork and regulation, and lead many employers and employees to convert employer-provided medical care into a higher cash wage. The taxpayer would save money because total government costs would plummet. The family would be relieved of one of its major concerns—the possibility of being impoverished by a major medical catastrophe—and most could readily finance the remaining medical costs. Families would once again have an incentive to monitor the providers of medical care and to establish the kind of personal relations with them that were once customary. The demonstrated efficiency of private enterprise would have a chance to improve the quality and lower the cost of medical care. The first question asked of a patient entering a hospital might once again become "What’s wrong?" not "What’s your insurance?"

A longer version of this essay appeared in Public Interest, winter 2001. Available from the Hoover Press is To America’s Health: A Proposal to Reform the Food and Drug Administration, by Henry I. Miller. Also available is The Essence of Friedman, edited by Kurt R. Leube. To order, call 800-935-2882.

Milton Friedman, recipient of the 1976 Nobel Memorial Prize for economic science, was a senior research fellow at the Hoover Institution from 1977 to 2006. He passed away on Nov. 16, 2006. He was also the Paul Snowden Russell Distinguished Service Professor Emeritus of Economics at the University of Chicago, where he taught from 1946 to 1976, and a member of the research staff of the National Bureau of Economic Research from 1937 to 1981.

Read the entire history at www.hoover.org/publications/digest/3459466.html.

Government is not the solution to our problems, government is the problem.

- Ronald Reagan

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5.         Lean HealthCare:  The Most Energetic Area of Lean Practice

James Womack: How do we judge the progress of the Lean Movement? One critical indicator is our success in extending lean thinking to new industries and activities. In recent years I have been greatly encouraged that lean thinking is moving far beyond its origins in manufacturing to distribution, retailing, maintenance and overhaul, consumer services, construction, and – perhaps most striking – healthcare. Indeed, the latter may be the most energetic area of lean practice today. 

There is much consolidation going on in the health care industry. Groups are merging; Hospitals are merging, ancillary facilities are merging; all in the name of efficiency. What is over looked, is that no value is created with like firms merge.  These actions quickly shift wealth from customers, employees, suppliers, and former owners to the new owners. This may do more good than harm, because otherwise the firm in question may completely fail. But it is often unclear that any additional value has been created in the sense of better satisfying customer needs with a given amount of human effort and capital investment. And, from society’s standpoint, the only way to increase living standards is to change the ratio of human effort and capital going into firms to the amount of value coming out. Otherwise the outcome is basically zero- sum, with some winners and some losers.

By contrast, the objective of a lean transformation is to analyze the core value creating processes of organizations in light of customer needs (which may have changed), then figure out how to create more value with the same resources so the organizations can grow and society can prosper. It’s the difference between shifting wealth from one party to another and creating more value, ideally value that can be shared with customers, employees, suppliers and owners. (Note that Womack never uses the term “adding value” because this is an accounting convention for the difference between the input costs of a firm and its output prices. Often Womack finds that only cost is added by the firm as inputs are converted to outputs, not value from the customer’s [or patient’s] standpoint.)

Managers (and owners) will try anything that is quick and easy even if it doesn’t work before they try anything long and hard that does work (e.g. intense process analysis linked to customer needs to create more value from the same resources.

We thank James Womack for keeping us informed of the lean enterprise goals and will follow through with relevance to health care, which he feels is one of the “more energetic areas of lean practice today.”

Please peruse the Lean Enterprise Institute, at www.lean.org.

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6.         Medical Myths: Who pays for the uninsured?

Optimistic but practical, Aetna CEO Ron Williams defends the U.S. health insurance industry. By Geoff Colvin, senior editor at large

(Fortune Magazine) -- Voters are more worried about health care than about Iraq, according to recent polls, making it a key political issue - and leading many health insurance company CEOs to keep their heads down. Aetna's Ron Williams has been an exception, speaking up on many major issues, though declining to endorse any candidate's health-care proposal. Formerly Blue Cross of California's president, Williams came to Aetna as COO in 2001 when the company was on the brink of failure. He and CEO Jack Rowe engineered a turnaround that increased the company's value from $3 billion then to $21 billion today. Williams succeeded Rowe as CEO in 2006. Before an audience in the Time & Life Building in Manhattan, Williams sat down with Fortune's Geoff Colvin.

In most industries rising revenues are regarded as good. Why is it that in health care, rising revenues are regarded as a grave national problem?

I think the U.S. is conflicted. When it comes to our own health care, we all want the best - access to the latest and most important technology. At the same time, health care is typically purchased in an institutional setting. So we purchase it in the aggregate, but we consume it as individuals. Today the U.S. spends about $2.2 trillion a year on health care. As an industry we have to do a better job of describing how we help people get access to the health care they need and improve the quality of care they're given, and how that $2.2 trillion could easily have been $2.4 trillion.

Why does the U.S. spend so much more per capita than any other country?

We are a wealthy country. We also are the global engine of innovation in health care, whether it's the pharmaceutical industry or the creation of medical devices. Our health-care delivery system is different from many others in that we have a smaller group of primary-care or family-practice physicians and a much larger base of specialists. There's at least one economist who argues that the increase in health-care costs has actually been a positive in the context of productivity in health in the U.S. So in a lot of ways we're getting what we want, which is more health care, more access, and more technology. . .

When buying health care, most of us don't behave like regular consumers. Seven out of eight dollars we spend is somebody else's money, and we don't have very good information about doctors or hospitals. What's the outlook for better information?

At Aetna, in 35 markets, you can go online and know what your physician will charge you before you see that physician. That's helpful for a routine service, but when it comes to, say, a serious cardiac condition, what you really want to know is whether this is a high-quality physician. We think there is data available. There's going to be a huge transformation in this area.

Who are the uninsured, and how can we get them covered?

I'm always amazed that 20% of the 47 million uninsured are eligible today for Medicaid or the Children's Health Insurance Program. They could sign up and have a relationship with a primary-care physician. About 10% of the 47 million are college and university students, very inexpensive to insure. Slightly more than 20% are not citizens but are in the country legally.

We might find a way to link visa entry or other mechanisms with comprehensive coverage. And about 20% have household incomes above $75,000. On this we agree with many of the presidential candidates. Aetna believes there is a place for an individual coverage requirement for individuals who can afford insurance. I think reasonable people could agree that at some point there's enough income that someone should be expected to participate in the health-care system. That leaves us with about 14 million to 17 million who really need tax credits and subsidies or tax deductions.

An individual coverage requirement would force people to buy what you sell. Tell me why this is the best solution.

Today we all pay for the uninsured. If an individual sticks up a bank and walks off with $25,000, there are consequences. If someone who really could have had an insurance policy consumes $25,000 worth of health care, everyone else pays for that. The average employer is paying 12% more in premiums today to cover the uninsured than they would pay if we brought those 47 million into the system. So for every group we bring in, health care becomes more affordable.

Is it going to be possible for consumers to get comparable data and be able to choose a doctor the way they choose a car?

I think it will be possible within three to five years. Important efforts are under way, with the collaboration of physicians, to agree on quality standards. There's collaboration in the industry for all health plans to pool their data to create very rich data sets. So consumers could look at a set of performance indicators that physicians think are appropriate, and be able to judge how their physicians fare.

Explain the strategy behind Aetna's introduction of an online system to provide medical information.

Every person should have a personal health record. I have a personal record. When I log on to the secure, password-protected site, I see the physicians, pharmacists, dentists - everyone who delivers care to me. I see all the tests and procedures that I've had. I see the lab values. And I can supplement that data with family history. If my mother, for example, had breast cancer, that's important for a physician to understand.

Many people think the last thing they want to tell their health insurance company is that their mom had cancer.

The industry was very careful in establishing standards. We have agreed that the data would be transferred from plan A to plan B only after the member was already enrolled in the plan, so the data could not be used for medical underwriting purposes or to deny anyone access to health insurance.

What about genetic information?

Our former CEO, Jack Rowe, helped us develop a policy, which the industry adopted, that we would not use genetic information for underwriting purposes. We also put in place reimbursement for genetic testing where the tests can inform the treatment. For example, if a woman has breast cancer, we will pay for the genetic tests associated with determining the type of cancer she has.

We may be on the verge of an age of miracles, but these new treatments could be very expensive. Is there a risk of a social crisis because not everyone will be able to afford these treatments?

If we're not careful, we're going to have a situation where people who have comprehensive coverage have access to everything, and people without have access to very little. So we have to focus on comparative effectiveness. Physicians and experts should study the science and reach a conclusion about what courses of treatment and technology give society a good payback. It's not necessarily a role we should have as insurance companies. But I think as a society we need mechanisms that help us allocate those dollars so everyone has access to something, and we don't invest strictly in high tech.

Health care is a tax-free benefit if your employer buys it, but if you buy it for yourself, you have to use after-tax dollars. Does that make sense?

No. I do not think it makes sense. We need to provide the same tax incentives to individuals to buy their own health insurance. It's also important to recognize that one of the biggest expenses a retired couple will have is health-care services. So things like health savings accounts, health reimbursement accounts, and special savings accounts will help people directly, or with the assistance of their employer they can set money aside to fund their co-pay and cost-sharing requirement. Tax equality in that regard is something we would support. . .

Senator Clinton in particular loves to pound on the health-care insurance industry. Why isn't the industry better liked, and is that ever going to change?

We do sit in a very uncomfortable intersection. We have the employer whom we lay out the health plans to, and we say, "You can buy good, better, or best." We have the employees who, when they make a plan selection, are thinking about their family budget and not necessarily about the car wreck or the health problem that's around the corner.

Physicians, whom we understand and try to collaborate with, really are concerned with delivering high-quality care, being good advocates for their patients as individuals, and receiving maximum reimbursement for their services. So it's a pretty uncomfortable intersection. And when the employee calls up and says, "I have a plan in which my cost sharing is 20%. How come I don't have a plan where my cost sharing is 5%?" we've found it not to be great for business to say, "We offered your employer one, and he chose the one you've got."

What were the most important factors in your becoming the CEO of Aetna (AET, Fortune 500)?

A willingness to reinvent myself and to recognize that when one has a set of aspirations, and you reach them, there's a huge opportunity to ask yourself what more you can do.

I've been very fortunate. I've worked with some great executives. I grew up in a generation that didn't have a lot of role models who looked like me in the business community. So I've been very deeply committed to increasing diversity in our company and in the industry.

I had a great academic experience. MIT's Sloan School of Management was a terrific school, and it helped transform me from a functional specialist into a real generalist who had a more strategic point of view and perspective. I've always been one who sought out challenges and troubled situations, because I have found that you learn a lot in taking a chaotic situation and creating structure, process, and strategy. I'd have to say luck counts too. Staying healthy counts, which is extremely important. 

UnitedHealth catches the managed-care flu

http://money.cnn.com/2008/04/29/magazines/fortune/colvin_aetna_csuite.fortune/index.htm

'We all pay for the uninsured'

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7.         Overheard on Capital Hill: Neoconservatism

Neoconservatism: An Obituary for an Idea (CD) By C. Bradley Thompson

This lecture examines the intellectual history of the neoconservatives and their plan for governing America. Dr. Thompson introduces the neocons by tracing the evolution of their thought from their youthful Trotskyism in the 1930s to their anticommunist liberalism in the 1940s and '50s and finally to their development of a new kind of conservatism in the 1960s and beyond.

The neoconservatives are generally regarded to be the most intellectually impressive faction of the post-war intellectual Right: they seem to take ideas seriously, they seem to be principled, they seem to support the principles of the American founding, and they seem to support capitalism. But, as Dr. Thompson demonstrates, behind their rhetorical façade, the neocons scorn principles, they scorn morality, they scorn capitalism and, ultimately, they scorn America. Despite their pro-American rhetoric and their appeals to, and defense of, America's ideals and institutions, Dr. Thompson demonstrates that the neoconservatives advocate singularly un-American principles: mysticism over reason, altruism over egoism, duty over rights, collectivism over individualism, socialism over capitalism, war and empire over peace and trade.

Dr. Thompson's lecture focuses on the neocons' attempt to transform the Republican Party and the conservative intellectual movement into a permanent ruling majority, their pragmatic philosophical method, their advocacy of a conservative welfare state, and their attempt to turn America toward a form of Platonic republicanism. Ultimately, he argues, the neoconservatives are a threat to a free society.

(CD; 2-CD set; 90 min., with Q & A)

www.aynrandbookstore2.com/prodinfo.asp?number=CT01M

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8.         What's New in US Health Care: The Presidential Elections

Candidates and Health Care Reform, by Grace-Marie Turner in the Seattle Post-Intelligencer, May 13, 2008

Sens. Barack Obama and John McCain are gearing up for a general election battle -- barring a surprise surge by Sen. Hillary Clinton -- in which they will offer very different visions for health care reform.

Obama -- like Clinton -- sees a much larger role for government in the one-sixth of our economy represented by the health sector. Obama would mandate that all children have health insurance, would require employers to pay for insurance for their workers, would impose significant new federal regulation over health insurance and would expand government programs such as Medicaid.

McCain has a very different vision. "The key to real reform is to restore control over our health care system to the patients themselves," he said recently

He would focus on new financing tools to help people buy health insurance that would be portable from job to job, new mechanisms for those with pre-existing conditions to get coverage, and he would emphasize prevention and better care coordination, especially for people with chronic illnesses.

Obama and McCain agree the key to health reform is getting costs under control. "The reason Americans don't have health insurance isn't because they don't want it, it's because they can't afford it," Obama says. As a result, neither candidate supports a universal mandate for health insurance.

But Obama would lock in the employment-based system with new mandates on employers.

McCain sees a world in which, "Americans (have) new choices beyond those offered in employment-based coverage." He believes that "Americans want a system built so wherever you go and wherever you work, your health plan goes with you."

McCain would boost options for individually owned health insurance by making everyone eligible for a refundable tax credit to help them buy health insurance. He would allow people to purchase health insurance across state lines and would give states new incentives and resources to make sure everyone has access to coverage. He says that bringing millions of new buyers into the health care marketplace will expand competition and force insurers and providers to offer more affordable options.

Obama believes government should require insurers to accept all applicants and would force insurers to charge basically the same premium for everyone, regardless of age, gender, occupation or pre-existing conditions. A healthy young person would pay about the same as a 62-year-old with heart disease and diabetes.

Obama wants a national "pay or play" mandate, forcing employers to cover a preset percentage of their workers' health insurance or pay a fine. Some businesses would be partially subsidized, but that would mean significant federal oversight of all employer health spending.

He would expand Medicaid and the State Children's Health Insurance Program and would create a new program modeled on Medicare. That would force private health plans to compete with a taxpayer-supported public insurance program, which has federal policing authority and the ability to impose price controls -- hardly a level playing field.

Congress will wrestle with the intricacies of reform, but in this election year, the vision is the key, and the contrast between the visions that Obama and McCain offer is stark. The bottom line question will be whether individuals or government will be in control of health care in the future.

Grace-Marie Turner is president of the Galen Institute, a nonprofit research organization focusing on free-market solutions to health reform. She is speaking Tuesday at Washington Policy Center's sixth annual health care conference at the Sea-Tac Doubletree Hotel. For more information call 206-937-9691 or visit www.washingtonpolicy.org.

www.galen.org/component,8/action,show_content/id,13/blog_id,1047/category_id,2/type,33/

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9.         Health Plan USA: Disruptive Technology: Not All Patients Want High-Tech Care

The federal government is trying to foist the Electronic Medical Record down the throats of the medical establishment. They consider this as evolving and improvement. However, it is disruptive in the worse sense of the term. It may be disruptive technology, but it is not disruption innovation. Dr. Clayton Christensen has some valuable lessons for health care. (See World Health Care Congress presentations.)

The term disruptive technology was coined by Clayton M. Christensen and introduced in his 1995 article Disruptive Technologies: Catching the Wave, which he coauthored with Joseph Bower. The purpose of the book is aimed at managing executives who make the funding/purchasing decisions in companies rather than the research community. He describes the term further in his 1997 book The Innovator's Dilemma. In his sequel, The Innovator's Solution, Christensen replaced disruptive technology with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character. It is the strategy or business model that the technology enables that creates the disruptive impact. The concept of disruptive technology continues a long tradition of the identification of radical technical change in the study of innovation by economists, and the development of tools for its management at a firm or policy level.

How low-end disruption occurs over time

Christensen distinguishes between "low-end disruption" which targets customers who do not need the full performance valued by customers at the high-end of the market and "new-market disruption" which targets customers who have needs that were previously unserved by existing incumbents.

"Low-end disruption" occurs when the rate at which products improve exceeds the rate at which customers can adopt the new performance. Therefore, at some point the performance of the product overshoots the needs of certain customer segments. At this point, a disruptive technology may enter the market and provide a product which has lower performance than the incumbent but which exceeds the requirements of certain segments, thereby gaining a foothold in the market.

In low-end disruption, the disruptor is focused initially on serving the least profitable customer, who is happy with a good enough product. This type of customer is not willing to pay premium for enhancements in product functionality. Once the disruptor has gained foot hold in this customer segment, it seeks to improve its profit margin. To get higher profit margins, the disruptor needs to enter the segment where the customer is willing to pay a little more for higher quality. To ensure this quality in its product, the disruptor needs to innovate. The incumbent will not do much to retain its share in a not so profitable segment, and will move up-market and focus on its more attractive customers. After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving. And then finally the disruptive technology meets the demands of the most profitable segment and drives the established company out of the market.

"New market disruption" occurs when a product fits a new or emerging market segment that is not being served by existing incumbents in the industry. The Linux operating system (OS) when introduced was inferior in performance to other server operating systems like Unix and Windows NT. But the Linux OS is inexpensive compared to other server operating systems. After years of improvements Linux is now installed in 84.6% of the worlds 500 fastest supercomputers.^[1]

Comparisons of disruptive and revolutionary innovations

Not all technologies promoted as disruptive innovations have actually prospered as well as their proponents had hoped. However, some of these technologies have only been around for a few years, and their ultimate fate has not yet been determined.

Unresolved examples of technologies promoted as 'disruptive innovations'

• ebooks vs. paper books as well as other content distribution by download (video games, films etc) instead of physical storage media (DVDs).
• VoIP (and VoIP over 802.11) vs. traditional telephone and mobile phone service.
• Reconfigurable Computing as part of a dual paradigm approach to High Performance Computing vs. traditional computing exclusively based on the von Neumann machine paradigm.
• Web TV versus broadcast television.
• Free/open source software vs proprietary software.
• Artificial Photosynthesis vs Biomass production to counter global warming induced by fossil fuel combustion.

Business implications

Disruptive technologies are not always disruptive to customers, and often take a long time before they are significantly disruptive to established companies. They are often difficult to recognize. Indeed, as Christensen points out and studies have shown, it is often entirely rational for incumbent companies to ignore disruptive innovations, since they compare so badly with existing technologies or products, and the deceptively small market available for a disruptive innovation is often very small compared to the market for the established technology.

Even if a disruptive innovation is recognized, existing businesses are often reluctant to take advantage of it, since it would involve competing with their existing (and more profitable) technological approach. Christensen recommends that existing firms watch for these innovations, invest in small firms that might adopt these innovations, and continue to push technological demands in their core market so that performance stays above what disruptive technologies can achieve.

Disruptive technologies, too, can be subtly disruptive, rather than prominently so. Examples include digital photography (the sharp decline in consumer demand for common 35mm print film has had a deleterious effect on free-riders such as slide and infrared film stocks, which are now more expensive to produce) and IP/Internet telephony, where the replacement technology does not, and sometimes cannot practically replace all of the non-obvious attributes of the older system (sustained operation through municipal power outages, national security priority access, the higher degree of obviousness that the service may be life-safety critical or deserving of higher restoration priority in catastrophes, etc).

http://en.wikipedia.org/wiki/Clayton_M._Christensen

www.12manage.com/methods_christensen_disruptive_innovation.html

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10.        Restoring Accountability in Medical Practice by Nonparticipation in Government Programs and Understanding the Devastating Force of Government

·         Medicine and Liberty – Network of Liberty Oriented Doctors, www.MedLib.ch/
Medicine & Liberty (MedLib) is an independent physician network founded in 2007, dedicated to the study and advocacy of liberty, ethics & market in medical services.

·         We support professional autonomy for doctors and liberty of choice for patients

·         We uphold the Hippocratic covenant that forbids action harmful to the patient

·         We defend responsible medical practice and access to therapeutic innovation free from bureaucratic obstruction

·         We work towards a deeper understanding of the role and importance of liberty & market in medical services

MedLib is part of a wide movement of ideas that defends

·         The self-ownership principle & the property rights of individuals on the products of their physical and intellectual work

·         Free markets, free enterprise and strict limits to the role of the State

• Grover Norquist, President of Americans for Tax Reform, www.atr.org/ keeps us apprised of the Cost of Government Day® Report, Calendar Year 2006 Fourteenth Edition, www.atr.org/content/pdf/2006/July/071206ot-costofgovernmentday.pdf. Cost of Government Day (COGD) is the date of the calendar year on which the average American worker has earned enough gross income to pay off his or her share of spending and regulatory burdens imposed by government on the federal, state and local levels. Cost of Government Day for 2006 is July 12th, a one-day increase above last year’s revised date of July 11th. With July 12th as the COGD, working people must toil on average 192.5 days out of the year just to meet all the costs imposed by government. In other words, the cost of government consumes 52.7 percent of national income. If we were to put health care into the public trough, the additional 18 percent would allow the government to control 70 percent or nearly three-fourths of our productivity and destroy our health care in the process. We would have almost no discretionary income. 

·         Duane Parade, President of the National Taxpayer’s Union, www.ntu.org/main/, keeps us apprised of all the taxation challenges our elected officials are trying to foist on us throughout the United States. To find the organization in your state that’s trying to keep sanity in our taxation system, click on your state at www.ntu.org/main/groups.php.   

·         FIRM: Freedom and Individual Rights in Medicine, Lin Zinser, JD, Founder, www.westandfirm.org, researches and studies the work of scholars and policy experts in the areas of health care, law, philosophy, and economics to inform and to foster public debate on the causes and potential solutions of rising costs of health care and health insurance.

• Ayn Rand, The Creator of a Philosophy for Living on Earth, www.aynrand.org/site/PageServer, is a veritable storehouse of common sense economics to help us live on earth. Please see our feature section one above. To review the current series of Op-Ed articles, some of which you and I may disagree on, go to www.aynrand.org/site/PageServer?pagename=media_opeds.

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Stay Tuned to the MedicalTuesday and the HealthPlanUSA Networks and have your friends do the same.

Articles that appear in MedicalTuesday and HPUSA may not reflect the opinion of the editorial staff. Sections 1-7, 9 are entirely attributable quotes in the interest of the health care debate.

Editorial comments are in brackets.

ALSO NOTE: MedicalTuesday receives no government, foundation, or private funds. The entire cost of the website URLs, website posting, distribution, managing editor, email editor, and the research and writing is solely paid for and donated by the Founding Editor, while continuing his Pulmonary Practice, as a service to his patients, his profession, and in the public interest for his country.

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Del Meyer

Del Meyer, MD, CEO & Founder

HealthPlanUSA, LLC

www.HealthPlanUSA.net

DelMeyer@HealthPlanUSA.net

6945 Fair Oaks Blvd, Ste A-2, Carmichael, CA 95608

Words of Wisdom

When the government seeks to enforce a counterfeit right—such as the “right” to medical care—no expansion of freedom results. Instead, government power expands—to everyone’s detriment. –Sheldon Richman

Washington is no place for a civilized man to spend the summer. –President James Buchanan, 1857-1861.

Washington is not a place to live in. The rents are high, the food is bad, the dust is disgusting and the morals are deplorable.  –Horace Greeley, July 13, 1865.

There are a number of things wrong with Washington. One of them is that everyone has been too long away from home. –President Dwight D. Eisenhower, May 11, 1955

Some Recent Postings

www.healthplanusa.net/NewsLetterIntro.htm

www.healthplanusa.net/January08.htm

www.HealthPlanUSA.net/April08.htm  

www.HealthPlanUSA.net/July08.htm

This Month in History - July

This is Freedom Month. It was not given that distinction because it is the beginning of the most popular vacation month-July; freedom from the daily grind is fine but the kind of freedom that July represents is somewhat more basic.

July 1 is Freedom Day because it marks the beginning of the month in which so many nations, including our own, gained their freedom. Canada became a self-governing dominion of Great Britain on this day in 1867. France celebrates the anniversary of its first revolution on July 14. Such other nations as Algeria, Argentina, Colombia, Belgium, Peru, Liberia and Venezuela gained self-government and freedom during this month. So our theme today is freedom—freedom seen from several points of view: first, how do we keep it and second, what do we do with it. Third, I suggest, how strongly are we committed to it.

On July 1, 1863, was the beginning of the Battle of Gettysburg in 1863, a battle memorable both for the bravery and dedication of those who fought it and for its role as a turning point in the Civil War. The Battle of Gettysburg, as Abraham Lincoln said a few months later, must be remembered so that from its honored dead “we take increased devotion to that cause for which they gave the last full measure of devotion.” In the largest sense, that cause was, again as Lincoln said, “that government of the people, by the people, for the people shall not perish from the earth.”

On July 1, 1966, Medicare—the idea of providing care for those who, by reason of age, are both the most vulnerable to illness and the least able to pay for help—went into effect in the United. As Medicare has evolved over the next 40 years, can we be certain that our gluttonous utilization of unnecessary health care has not outstripped our resources and left us far worse off? Perhaps jeopardized the security that it was to prevent? Time will tell. Perhaps our increased life expectancy was a far better security.

After Leonard and Thelma Spinrad