Planning the Patient-Centered Health Plan for America

Current Issue:

Medicare’s long-term financing challenges

Since 1965, Medicare has played a vital role in providing health care benefits to nearly all Americans age 65 and older. The program, however, faces long-term sustainability challenges. Medicare spending will increase dramatically over the next few decades as the Baby Boomer population ages into the program and health spending per beneficiary grows. At the same time, the number of workers supporting each enrollee will shrink. As a result, benefit payments are expected to exceed payroll taxes, threatening solvency of one of its major trust funds. In addition, increases in Medicare spending will increase the pressure on beneficiary household budgets and the federal budget, potentially reducing the resources available for other needs.

Medicare’s Financial Challenges

Medicare provides a wide range of health care benefits that are financed through two trust funds. The Hospital Insurance (HI) trust fund supports Medicare Part A, which covers inpatient hospital care and post-acute care services such as skilled nursing facility care and home health care services. The Supplementary Medical Insurance (SMI) trust fund supports Medicare Part B—hospital outpatient care, doctor visits, lab tests, and medical supplies—and Part D prescription drug coverage.

A small share of Medicare beneficiaries accounts for a large share of Medicare spending. The most costly 5 percent of Medicare’s traditional fee-for-service (FFS) program beneficiaries account for 40 percent of Medicare FFS spending.[6] The most costly 25 percent of beneficiaries account for 82 percent of spending. The least costly 50 percent of beneficiaries account for only 5 percent of spending.

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

– Ronald Reagan

* * * * *

Current Issue:

The Report of the American Academy of Actuaries Academy Publishes 2020 Election Issues Guide

The American Academy of Actuaries has prepared a series of guides focusing on several major issues to help voters become better informed leading up to the 2020 elections. These issue-focused guides offer information on select campaign topics on which actuaries have expertise. The Academy hopes candidates for higher office will provide details on their proposals to address the challenges addressed by these guides and the positions they would support as duly elected public officials.

American Academy of Actuaries –Social Security Committee

One option is Raising Social Security’s Retirement Age

Read the entire report at

The following is the one-page conclusion of the 35-page report.

The problems facing Social Security, when placed in the context of the enormous U.S. economy, are not nearly as daunting as they might seem when presented in stark dollar terms. In the 75-plus-year history of Social Security, the tax rate has increased from 2 percent to 12.4 percent of taxable payroll; the estimated tax increase required to fund the current system over the next 75 years is far less. Further, the need for such tax increases can be reduced, or even eliminated, by changes in benefits and other features; and any required changes can be phased in gradually.

Does this mean we can do nothing and just wait to see what develops? Waiting until the last minute to make changes is not a good idea and can lead to inequities, intended or not, in the distribution of benefit reductions. Drastic benefit changes would not give current beneficiaries or workers near retirement sufficient time to change their retirement plans. This, in turn, could lead to needless dissatisfaction with and loss of confidence in the system. With a longer lead time, changes can be designed with greater care and introduced more gradually. Although a longer lead time may not change the ultimate level of benefit cuts or tax increases required to eliminate the deficit, reductions introduced gradually can be less abrupt and therefore less onerous to those who have planned accordingly.

For these reasons, the American Academy of Actuaries’ Social Security Committee believes that Congress should act soon to make changes that include sustainable solvencyas an ultimate goal. For example, consider workers who are age 45 when the program is changed. When these workers reach the Social Security retirement age of 67, they will have been paying increased taxes, or saving more to compensate for lower expected benefits, for 22 years. Each year reform is delayed means these workers will have fewer years to be part of the solution, and fewer years to prepare for the changes that reform will inevitably bring.

There are numerous potential reforms that could address Social Security’s financial problems. Options within the current defined-benefit structure include increasing the tax rate, reducing benefits by changing the benefit formula, reducing benefits by changing the way they are automatically adjusted for inflation, reducing benefits to dependents, changing the way trust fund assets are invested, and raising the age at which unreduced benefits are paid. Alternatively, the system could be fundamentally changed so that all or some of the benefits are paid from individual accounts. This report presents the committee’s analysis of these and other options, without the endorsement of any particular change.

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

–Ronald Reagan

Current Issue:

America is looking disturbingly like Europe For health policy that works, look at the evidence By Linda Gorman, opinion contributor

When a policy generating a lot of fame and fortune starts to go wrong, the temptation to ignore new data can be irresistible. For over 50 years, mainstream U.S. health policy makers have promoted research supporting Kenneth Arrow’s 1963 assertion that “it is the general social consensus, clearly, that the laissez-faire solution for medicine is intolerable.” That is, only government intervention can reduce medical spending, raise medical quality, and provide care for all.

Evidence compiled since Arrow’s paper suggests that government is more likely to be the cost problem than the cost solution. Unfortunately, those invested in the proposition that government control lowers costs tend to avoid engaging with evidence that suggests the opposite.

The mandates created a system of “integrated” care depressingly similar to the centrally controlled health systems in other industrialized countries. It was designed to limite total health spending, develop tracking systems to control physician and patient behavior, and establish clinical pathways dictating the “right” tests and treatments for every single person. Unaccountable experts combine their notions of “value” with average results from population health studies to cut spending by deciding whether you should get the medical care you need.

In practice, the ObamaCare restructuring has forced the adoption of immature health information technologies, raising costs and exposing millions of Americans to identity fraud. It has imposed costly administrative burdens on clinicians with little evidence of a commensurate improvement in care. In 2016, Sinsky et al. reported that physicians providing ambulatory care in 4 specialties now spend two hours on electronic record keeping and other paperwork for every hour of direct patient contact. In response to spiraling administrative burdens, the American College of Physicians has called for quality-of-care impact reviews for new and existing administrative tasks imposed by oversight organizations, payers, and vendors.

There is growing evidence that ObamaCare’s substitution of government run care for private sector arrangements increases costs. Health coverage premiums were artificially raised when ObamaCare made many private coverage arrangements illegal. Eliminating those arrangements forced many people into Medicaid, likely reducing their access to physicians, preventive care, and high quality treatment.  

Charles Blahous has explored the expenditure side of Medicaid. He notes that a June 2017 Centers for Medicare & Medicaid Services (CMS) estimate of future Medicaid expansion costs predicts per capita costs will be $7,436 per person in 2022. In 2013, CMS predicted 2022 per capita costs would be just $4,875. Meanwhile, the Medicare Payment Advisory Commission (MEDPAC) estimates that one of ObamaCare’s more hyped health system transformations, Medicare Accountable Care Organizations, increased Medicare spending by $216 million in 2015.

How do ObamaCare proponents even know the U.S. spends too much on health care? People place a high value on health and physical functioning. Why not conclude instead that countries with long waiting lists for medical care spend too little on health care rather than that the U.S. spends too much? We know that before ObamaCare U.S. patients benefited from higher spending with more preventive care, faster diagnosis, more rapid access to curative medicines, a higher likelihood of surviving cancer, and lower chronic disability rates in old age.

To be knowledgeable in the medical care industry and where we went wrong, please read total paper.

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Government medicine does not give timely access to healthcare, only access to a waiting list
with costly delay in necessary care, increased morbidity and lower quality of care.

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Current Issue:

4. Government Healthcare: Single Payer is more Expensive than Private Care

How to Make Health Care Unaffordable and Inaccessible

By Bradley Thomas | September 09, 2019 | Fee.Org

Third-party payment systems destroy normal market forces. Currently, in the US nearly 90 percent of medical care expenses are paid by a third party other than the consumer.

Whether it’s Medicare for All or some other variant of a single-payer plan, the leading 2020 Democratic presidential candidates agree that more government control will make health care more affordable and accessible.

The presumption behind these plans is that there is currently too much freedom in the health care industry, and only more state intervention will reign in costs and make health care more accessible to more people.

But the opposite is true.

Indeed, if one set out to intentionally make health care more expensive and less accessible, the surest way to do so would be to implement the kind of market-distorting interventions the government has been enacting for decades.

If I wanted to make health care unaffordable and inaccessible, the best place to start would be to inflate demand while restricting supply.


The most reliable way to inflate demand for a good or service is for the consumer to be insulated from all or most of the cost of the product at the point of purchase. If I wanted to make something more expensive, I would see to it that a significant share of it was purchased through third-party payments.

Currently, in the US nearly 90 percent of medical care expenses are paid by a third party other than the consumer. Consumers now only pay 10.5 percent of medical care expenses directly, and the rest is paid by Medicaid, Medicare, and insurance companies.

The share of health care expenses being paid by a third party has increased significantly over the past several decades. According to an analysis by economist Mark Perry, almost half (47%) of health care expenditures in 1960 were paid by consumers out-of-pocket, and by 1990 that share had fallen to 20% and by 2009 to only 12%.

Third-party payment systems destroy normal market forces. People will undoubtedly be less careful shoppers when someone else is picking up the tab. Moreover, for those paying hefty monthly insurance premiums so they pay little out of pocket at the point of service, health insurance plans work as a de facto pre-paid expense. Because we’ve already paid big premiums and pay little more for the actual medical care, we are incentivized to get our money’s worth when we do see a doctor or need a hospital stay.

Unnecessary Testing and Treatments: Expensive and Deadly

When patients are largely insulated from the cost of care at the point of purchase, there will inevitably be a tendency to demand more medical treatment and testing than may be necessary. And because doctors are paid on a fee-for-service basis, they have the incentive to oblige.

A 2017 study published by the Public Library of Science found physicians self-reported that a

median of 20.6% of overall medical care was unnecessary, including 22.0% of prescription medications, 24.9% of tests, and 11.1% of procedures.

Such unnecessary care comes with a devastating price tag.

PBS reported in 2017 that unnecessary care has cost America’s health care system at least $200 billion annually and stunningly generated “mistakes and injuries believed to cause 30,000 deaths each year.”

More unnecessary care not only means billions in unnecessary costs but also, tragically, tens of thousands of deaths every year.

Health Insurance Costs

If I wanted to make health insurance more expensive, I would restrict consumer choice, incentivize employers to substitute more generous health benefits for salary, and require all plans to include pricey bells and whistles regardless of whether consumers wanted them.

The tax exemption for health insurance incentivizes employers to offer more generous health benefits rather than higher salaries as a form of compensation. Additionally, federal law requires that several services and providers be included in all health insurance plans. States add on dozens more of such mandates. Some estimates say that states have enacted more than 2,000 different coverage mandates over the last 30 years.

Forcing people to pay for mandates consumers don’t need—drug counseling for non-users or pastoral counseling for atheists, for instance—limits choice and drives up insurance premiums. It’s like forcing all car buyers to purchase a Cadillac when many would be happy with—or can only afford—a Ford Taurus. Moreover, no two states impose the same set of coverage mandates, restricting consumers’ ability to purchase insurance from another state.

This narrows the risk pool from a potential national pool of consumers to several smaller risk pools segregated by state.

These factors, however, are not the only ones driving up health insurance premiums. Thanks to Medicaid and Medicare offering reimbursement rates to providers well below their costs of services, hospitals and doctors are compelled to engage in cost-shifting by requiring much higher reimbursements from their private insurance patients.

According to the Centers for Medicare and Medicaid Services (CMS), the two programs combined accounted for 37 percent of total national health care expenditures in 2017.

The American Hospital Association, however, calculated that Medicare and Medicaid combined for $77 billion in “underpayments” to hospitals in 2017, with underpayments being defined as payments lower than the cost of providing care.

Such massive cost-shifting plays a significant role in the rising price of insurance premiums.


If I wanted to make health care unaffordable and inaccessible, I would make every effort to restrict supply.

On this score, the American Medical Association plays a vital role. As reported by The American Conservative, “The American Medical Association (AMA) artificially limits the number of doctors, which drives up salaries for doctors and reduces the availability of care.”

For more than a hundred years, the AMA has been successfully lobbying governments to enact laws that would restrict the number of new doctors in the country.

AMA activities have included dramatically decreasing the number of medical schools across the US and turning the process of becoming a doctor into a monumental feat that “requires navigating a maze of accrediting, licensing, and examining bodies.”

The result of such restrictions is a worsening doctor shortage that is “bad for patients and the country” but “definitely good for doctors’ pay.”

The United States could see a shortage of up to 120,000 physicians by 2030, which would affect patient care across the nation, according to a 2018 report published by the AAMC (Association of American Medical Colleges).

And it may be worse than that. In a 2016 survey by the Physicians Foundation, 46.8 percent of survey respondents are considering an early retirement for reasons unrelated to age or physical health. Combine these shortages with the added stress on the system of the aging baby boomer generation, and access to care could reach crisis levels.

Government Restrictions on Facilities and Providers

Another key player in restricting the supply of medical care is Certificate of Need (CON) laws. CON laws, which are still active in 35 states plus DC. require providers to first seek permission before they may open or expand their practices or purchase certain devices or new technologies, as the Mercatus Center at George Mason University describes.

The applicant must prove that the community “needs” the new or expanded service, and existing providers are invited to challenge a would-be competitor’s application.

For instance, in my home state of North Carolina, home of some of the nation’s most restrictive CON laws, Mercatus estimates these restrictions drive up health care spending by more than $200 per capita per year and have deprived the state of more than 50 hospitals that would exist now absent the CON restrictions.

Yet another avenue for restricting the supply of medical care is scope of practice limitations. As discussed in a 2018 Forbes article,

Scope of practice laws, or SOPs, specify the tasks members of different occupations can perform, as well as the level of oversight required. They vary by state and occupation.

When certain tasks require a certified physician, for instance, the cost of that service is higher than if a nurse practitioner performed it because of the physician’s higher salary and opportunity costs.

Forbes highlighted research showing that health care costs are lower in states that allow nurse practitioners to do more. Specifically, the article notes a study that found  the price of child well-care visits is 3% to 16% less in states where nurse practitioners are free to work independently. Other research finds that eliminating restrictions on nurse practitioners would result in annual savings of $543 million nationwide in emergency room use for ambulatory care-sensitive situations.

Creating Monopsony Power for Hospitals

If I wanted to make health care unaffordable and inaccessible, I would create policies that encouraged the consolidation of hospitals and providers into large networks.

Provisions in Obamacare did exactly that, creating incentives for hospitals to merge and to acquire physician practices. As US News & World Report pointed out in 2016, Obamacare was “specifically

designed to foment such consolidation” and [n]o part of health care was supposed to be spared – doctors, hospitals, insurers, pharmaceutical companies and others were given regulatory and financial incentives to merge.

In that regard, Obamacare has been a success. A 2018 study published by the National Council on Compensation Insurance (NCCI) determined that 2017 was a record year for hospital mergers and acquisitions. The study also noted: In addition to mergers, hospitals are also buying up provider practices. Between 2015 and 2016, hospitals acquired 5,000 physician practices.

When based on market forces, such consolidation can frequently lead to greater efficiencies and lower prices for consumers. But as the NCCI study found, this hasn’t been the case with hospital consolidation.

According to the study, the operating costs of providing care have fallen, but the research also showed                                                  that hospital mergers increase the average price of hospital services by 6%−18%.

Larger provider networks mean greater bargaining power with private insurance companies. The hospital can become a regional monopsony—the term economists use for the single purchaser of a good or service.

As such, these larger hospital systems can command higher reimbursement rates from insurers, because the insurers fear losing out on what is oftentimes the sole provider in a geographic area.

Government Intervention Means More Bureaucracy

Finally, if I wanted to make health care unaffordable and inaccessible, I would encourage greater government intervention as a means to increase compliance costs and bureaucracy.

When a good or service is rationed according to government administration rather than market forces, a spike in administrative costs will naturally follow.

The number of health care administrators grew by 3,200 percent from 1975 to 2010. Compare that to the 150 percent growth of physicians during that time, a rate that largely tracked population growth in general.

The growing number of administrators is driven by ever more complex regulations. The regulations are often inspired by government cost control measures put in place to rein in prices set spiraling by previous government interventions.

We are told that “something” must be done to make health care in America more affordable and accessible for more people.

But what if that “something” being proposed is just more of the same of what is causing ballooning health care prices and shortages in the first place?

The trouble with the health care industry is not too much freedom and a lack of state meddling. Indeed, if a person set out to intentionally make health care unaffordable and inaccessible, they could find few better paths than the one the US government set out on decades ago.

By opposing government programs like Obamacare and Medicare for All, libertarians are accused of opposing affordable care for millions of citizens. But the opposite is the case. Instead of arguing over the next government program to address the problems in health care caused by previous government intervention, we should instead be making the case for why freeing the health care market from state interference is the best way to make health care more affordable and accessible for more people.

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Bradley Thomas

Bradley Thomas is creator of the website and is a libertarian activist and writer with nearly 15 years’ experience researching and writing on political philosophy and economics.

Follow him on Twitter: ErasetheState @erasestate

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Government is not the solution to our problems; government is the problem.
– Ronald Reagan

– Ronald Reagan

Previous Issue:

4. Government Healthcare: The Medicare Enslavement Web

The longer a government program is in effect,

the more complicated it becomes.

When the government introduced managed care in an effort to control costs, there were progressive controls on all segments of the medical/healthcare complex. This included doctors, hospitals, health insurance companies, laboratories, imaging facilities (x-rays, scans, CT, MRI, etc., et. al.,) pharmaceuticals, druggists, medical supplies and equipment.

Private insurance, BC-BS and others normally sent out circulars to all their members which usually were 2 to 6 pages in length. These could be read during a physician’s mail break or between patient appointments.

When Medicaid was begun in the 1960s, we received large ring binders of rules and regulations, procedures and obligations. These of course, could not be read during an office mail break or between patients, and were largely topically reviewed or further visually scanned. No one would eliminate several hours of productive patient care to read the ring binder page by page.

There were frequent revisions of these rules and regulations and updates for ring binders was laborious and frequently not read. To send these out to physicians and other providers proved to be a costly endeavor. As the electronic transition occurred, we received CDROMs to keep us up-to-date.

Physicians who had difficulty in finding time to listen to medical tapes and now CDs of medical information, did not budget additional time to read the rules and regulations that would limit them in the care of their patients.

This, however, did not influence the purveyors of government healthcare from continuing to overwhelm us with new rules and regulations which primarily were practice restrictions.

I closed my office when I became a senior citizen at age 80 in 2015. I informed my patients and the managed care organizations. A colleague advised me not to inform Medicare and Medicaid because he had to reapply if he wanted to be paid for the receivables from his active practice.

We experienced a similar situation when we went from a hospital-oriented practice to a strictly office base practice by moving away from being adjacent to the hospital but still in Carmichael with no change in phone numbers. We had to reapply for membership in Medicare and Medicaid if we wanted to be paid. It took three months for our new applications to be accepted.  

Therefore, we felt it would not be financially prudent to notify Medicare and Medicaid for several months until all the past due statements were processed or we might have had to complete a new applications process again. as before which caused us rather significant financial hardship for seven months.

Now, four years later we are still getting updates for Medicare and Medicaid as if we were still in practice even though we have not submitted any claims since 2015.

We are so thankful that we are no longer in practice or subject to the Medicare and Medicaid rules and regulations with their never-ending web.

We shudder to think that at some time in the future all physicians will be in the Medicare-for-all enslavement web, probably without recourse to an alternative practice setting.

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Government is not the solution to our problem;

government is the problem.

– Ronald Reagan

* * * * *

Past Issue:

Medicare Advantage creates an environment for fraud

Cloud of secrecy’ in Medicare Advantage plans can create an environment for fraud.

By Jeanne A. Markey and Raymond M. Sarola
STAT, February 8, 2019

Over the last two decades, federal and state governments have dramatically increased their payments to private health care companies that manage Medicare Advantage and Medicaid managed care plans, now paying them around $400 billion a year.

Although these companies take in a tremendous amount of taxpayer money and have immense power regarding how to distribute these funds, a cloud of secrecy shields from public view their financial operations and profitability. The unique environment in which Medicare Advantage and Medicaid Managed Care plans operate — enormous amounts of money to be spent, a thicket of government reimbursement guidelines, little transparency, typically no party with equal bargaining power, and what amounts to an honor system — can create a recipe for cooking up fraud. . .

In September 2018, the federal government issued a report that revealed another type of fraud in this area: “widespread and persistent performance problems related to denials of care and payment.” This report found that Medicare Advantage organizations improperly denied coverage for health care services in many cases and forced patients to endure lengthy appeals processes to obtain their proper coverage. The types of fraud that can arise are likely to increase over time. . . When companies that manage Medicare Advantage and Medicaid managed care plans receive hundreds of billions of dollars from the government on what is basically an honor system without sufficient transparency into how that money is spent or retained, fraud almost always ensues. Anyone who witnesses such unscrupulous activities and steps forward to bring it to light is doing the right thing for his or her fellow Americans.

Jeanne A. Markey, J.D., is a partner at Cohen Milstein Sellers & Toll LLP and co-chair of its Whistleblower/False Claims Act practice group.
Raymond M. Sarola, J.D., is an associate in that group.

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

* * * * *

Past Issue:

Government Ethics is a Paradox

Following the Judeo-Christian code of ethics could be a prosecutable crime.

Governments could make the entire Mosaic Code Legal. This would put all believers in Jeopardy for saying or teaching the Mosaic Code. This would in effect eliminate all parochial schools and religious education. Not only primary schools, but also secondary schools as well as colleges and universities. Many of the Eastern Ivy League schools were founded by religious or church bodies, primarily by Calvinists (Congregational, Presbyterians) and Baptists (Brown). These schools gradually became secular. The transition may begin very innocently which eliminated\s all effective debate. To speak Biblical truths can be interpreted as hate speech. To do so could cause one to be prosecuted.

Abortion was debated in the majority of states and each state approached their own moral turpitude quite amicably in the 1960s and 1970s.  This dialogue was resolving the abortion issue and was respected by the people in each state. However, the dialogue stopped in 1973 with the Jane Roe, et al. v. Henry Wade, decision by the Supreme Court. Thereafter, each state had to accept prenatal killing which euphemistically is called abortion even though many religious groups felt it really was “prenatal killing.”

What could have been an amicable resolution of an ethical dilemma in 1973, has continued to be a disruptive force in the United States for these 46-years. It was the basis of a very acrimonious Supreme Court debate this past year.  The pro-abortion senators found a psychologist who described a sexual confrontation in a high school.  (This is the period in life when, according to the Freudian theory of personality development, one is searching for and finding their comfort zone of their sexual identity development.) Senators that voted favorably for the nominated justice’s previous judgeship now voted with great anger against his appointment because of his known disapproval of abortion. The psychologist, who obviously should understand personality development, stooped to severe character assassination because of this issue. Mature senators recognized this as vindictiveness and thus did not change their vote. A similar situation occurred when the pro-abortionist found an attorney to testify against the Clarence Thomas’ nomination in October 1991. This too was a character assassination attempt which also did not change one vote in the senate confirmation process. But each was a low point in our American Historical development. Now it seems to have developed into a rather serious Diversity crises throughout academia.

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

– Ronald Reagan

Past Issue:

Obamacare: What We Know Now

By Michael D. Tanner The CATO Institute

January 27, 2014

For all intents and purposes, the Patient Protection and Affordable Care Act (ACA), also known as Obamacare, has been fully implemented. And while much of the media coverage has been dominated by the technical failures of the program’s initial rollout, we are also learning much about the impact of health care reform on employers, providers, patients, taxpayers, and individual consumers. Much of this was suspected even before the law was passed, but it is now becoming clear as implementation moves forward.  (more…)

Past Issue:

The Fifth Circuit tees up a major separation of powers case

Calling Judge Kavanaugh

By The WSJ Editorial Board

July 29, 2018

One exciting prospect for a Supreme Court that may soon include Brett Kavanaugh and Neil Gorsuch is reining in the excesses of the administrative state. The Fifth Circuit Court of Appeals this month teed up a potential early blockbuster by ruling that the Federal Housing Finance Agency (FHFA) is unconstitutional. . .

One irony of Collins v. Mnuchin is that it was brought by Fannie Mae and Freddie Mac investors to overturn the 2012 decision by the Obama Treasury to sweep all Fannie and Freddie profits for the government. The constitutional argument was almost an afterthought. (more…)

Past Issue:

Sham Peer Review

Editorial: Sham Peer Review: The Fifth Circuit Poliner Decision

Lawrence R. Huntoon, M.D., Ph.D.

In a sham peer review hearing, the truth and the facts do not matter because the outcome is predetermined and the process is rigged. In a court of law, where hospitals and peer reviewers are granted absolute immunity, the truth and the facts do not matter, because the outcome is predetermined and the process is rigged.

On July 23, 2008, the U.S. Court of Appeals for the Fifth Circuit reversed the judgment of the district court in the Poliner case, [1] and essentially granted absolute immunity to the defendants. In so doing, the court destroyed the intent of the Health Care Quality Improvement Act (HCQIA), which was to provide qualified and limited immunity to peer reviewers, and it opened the doors wide to further abuse of peer review. Absolute immunity, like absolute power, corrupts absolutely and invites abuse. (more…)

Past Issue:

Involving doctors can help improve US healthcare

Front Line of Healthcare Report 2017: Why involving doctors can help improve US healthcare

Bain report | May 11, 2017

By Tim van BiesenJosh WeisbrodMichael BrookshireJulie Coffman and Andy Pasternak

Executive summary

The US healthcare industry is still in search of a cure—a breakthrough model that can deliver high-quality care at lower cost. Over the past five years, hospitals, healthcare groups and medical practices have adopted new management structures and systems to curb spiraling costs. But none has proven to be a compelling way forward, and the pace of change since 2015 has slowed substantially.

Bain’s 2017 US Front Line of Healthcare Survey reflects an industry in the crosscurrents of change. No disruptive innovation has altered the rules of the game in healthcare the way online retail banking has transformed the financial services market or technology has upended other industries. Finding a better model in healthcare will take more time—and physicians want a hands-on role shaping it.  (more…)

Past Issue:

Seven New CMS-855 Forms to Enroll

Medicare is spawning its own entrepreneurship
Private Firms Explaining Medicare Forms

In order to enroll in the Medicare program, different providers of healthcare services or products, must now use seven different CMS-855 forms. These forms are long, detailed and sometimes confusing. Not only must they be filed initially for a given provider, they must be maintained and updated as appropriate. Due to the increasing complexity of healthcare delivery, integrated delivery systems or large multi-specialty clinics may have to maintain hundreds of these forms. The Medicare program also uses a revalidation process that periodically requires all healthcare providers to resubmit their various 855 forms in order to assure compliance.  (more…)

Past Issue:

The Federal Gov’t Penalizes Doctors and Hospital for long stays

But then the push to discharging early, creates more readmissions which the gov’t also penalizes.

CMS penalized 2,597 hospitals in FY2017 on account of unnecessary readmissions. This year the CMS under HRRP will withhold $528 million in payments in 2017– an all-time high and an increase of about $108 million from FY 2016. New evidence-based research is coming out every day on recommendations to help reduce unnecessary readmissions. But what can a hospital to do prevent unnecessary readmissions?  (more…)

Past Issue:

Hospice Care

Hospice care, the Medicare program designed for the terminally ill in the 1980s has mushroom beyond any bureaucratic expectations. Initially projected to cover the final 180days of life, by 2013 paid for an average of 1000 days spread out over four or more calendar years. They cost Medicare 14% of its hospice spending, even though they accounted for just 1.3% of its hospice patients.

WSJ Fri Fed 19, 2016, front page by Christopher Weaver, Anna Wiolde Mathews and Tom McGinty

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

– Ronald Reagan

Past Issue:

The Essential: Ludwig von Mises

FEE is happy to present the Essential series, five free ebooks collecting the key works of five great freedom philosophers: Leonard Read, Ludwig von Mises, Henry Hazlitt, F.A. Hayek, and Frédéric Bastiat. In each of these compact anthologies, you will find a powerful case for liberty.

But the ideas within are not mere fodder for debate. Like all great sages, these authors offer true wisdom that can inspire you and benefit you personally in your own life. Here is a discussion of just a few of the included works. We will review these to help us understand how the government intrusion into health care has decrease medical quality and decreased access.

The Essential Ludwig von Mises

An essential feature of money prices is that they share a common denominator, so they can be subjected to arithmetic. Entrepreneurs can use them for cost accounting, and to determine if their investments resulted in profit or loss. The great economist Ludwig von Mises (1881-1973) identified such “economic calculation” as the key characteristic of the market economy. “Profit and Loss” (which is the name of an included essay) give the entrepreneur a simple metric that communicates how much his or her rearrangement of production has either boosted or impaired consumer welfare.

As Mises brilliantly demonstrates in “Planned Chaos” (also included), there can be no economic calculation under socialism. This is because there would be nothing to calculate in the absence of money prices, which presuppose market exchange and private property. Without profit and loss, socialist planners are economically adrift at sea without a compass.

Also featured is “Liberty and Property,” a speech in which Mises presented the most important features of free market capitalism. In order to earn profits and avoid losses, entrepreneurs must strive to arrange production so as to please consumers. Thus in the market economy, consumer wishes are the guiding stars of production. Mises called this “consumer sovereignty.”

Moreover, the serious money is to be made by serving mass markets. Therefore it is the average, not the elite, consumers who most sway and are served by the market. Capitalism, as Mises argues, means “mass production for the masses” and widespread, ever-rising prosperity for humankind.

Socialism is no substitute for capitalism. And neither is the “middle road” of “interventionism.” Every market intervention by the government harms the general public by countermanding the orders delivered by the sovereign consumers. If the government tries to address the ill effects of intervention with further intervention, the maladies will mount and elicit ever more intervention until every corner of the economy is subjected to government control. Thus, “Middle-of-the-Road Policy Leads to Socialism,” as Mises titled another included essay.

The Essential Ludwig von Mises

  1. Liberty and Property
    2. Profit and Loss
    3. Planned Chaos
    4. Middle-of-the Road Policy Leads to Socialism
    5. The Place of Economics in Learning

Read more: In the market economy, consumer wishes are the guiding stars of production.

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

– Ronald Reagan

Past Issue:

The Essentials: Henry Hazlitt

FEE is happy to present the Essential series, five free ebooks collecting the key works of five great freedom philosophers: Leonard Read, Ludwig von Mises, Henry Hazlitt, F.A. Hayek, and Frédéric Bastiat. In each of these compact anthologies, you will find a powerful case for liberty.

But the ideas within are not mere fodder for debate. Like all great sages, these authors offer true wisdom that can inspire you and benefit you personally in your own life. Here is a discussion of just a few of the included works. We will review these to help us understand how the government intrusion into health care has decrease medical quality and decreased access.

The Essential Henry Hazlitt

Henry Hazlitt (1894-1993) was another great economics educator. Like Mises, Hazlitt was a perceptive critic of interventionism, which is the theme of his “The Lesson” and “The Lesson Restated” (both excerpted from his classic Economics in One Lesson). Hazlitt’s “Lesson” (which is a modern update of “Seen and Not Seen,” included in The Essential Frédéric Bastiat) is that the art of economics lies in looking beyond the direct, narrow, and intended consequences of intervention. The vision of a true economist encompasses the long-term, indirect, and widespread repercussions of a policy as they ripple throughout society.

In “The Problem of Poverty,” Hazlitt eloquently tells of how economic freedom allowed the West to grow amazingly rich after untold millennia of almost universal grinding poverty.

And in “The Early History of FEE,” Hazlitt lovingly tells the origin story of the Foundation for Economic Education, of which he was a founding board member.

These are just some of the highlights of these wonderful collections. Download the FEE Essential series today to be inspired by five of the greatest communicators of the freedom philosophy.

Tables of Contents

The Essential Henry Hazlitt

  1. The Lesson
  2. The Early History of FEE
  3. Understanding “Austrian” Economics
  4. The Problem of Poverty
  5. False Remedies for Poverty
  6. On Appeasing Envy
  7. Planning vs. The Free Market
  8. Can We Keep Free Enterprise?
  9. The Lesson Restated

Read more: Every Price is the knowledge and values of millions boiled down to a single number

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

– Ronald Reagan

Past Issue:

The Essentials: F. A. Hayek

FEE is happy to present the Essential series, five free ebooks collecting the key works of five great freedom philosophers: Leonard Read, Ludwig von Mises, Henry Hazlitt, F.A. Hayek, and Frédéric Bastiat. In each of these compact anthologies, you will find a powerful case for liberty.

But the ideas within are not mere fodder for debate. Like all great sages, these authors offer true wisdom that can inspire you and benefit you personally in your own life. Here is a discussion of just a few of the included works. We will review these to help us understand how the government intrusion into health care has decrease medical quality and decreased access.

The Essential F.A. Hayek

The distinguished economist F.A. Hayek (1899-1992) also noted the strong association among prosperity, freedom, and personal responsibility. In “The Moral Element in Free Enterprise” (included), he writes:

“Free societies have always been societies in which the belief in individual responsibility has been strong. They have allowed individuals to act on their knowledge and beliefs and have treated the results achieved as due to them. The aim was to make it worthwhile for people to act rationally and reasonably…”

The importance of individuals acting on their knowledge was the theme of Hayek’s groundbreaking article “The Use of Knowledge in Society” (included). Hayek asks, how are the innumerable scarce resources in a global economy to be used to best satisfy human wants? Of all the practically infinite possible ways of combining them, which is to be chosen?

Every tiny detail about the economy is relevant to this question. This includes every single preference of every single soul, and every relevant fact about every material resource. Existing knowledge about those myriad details is dispersed among billions of minds. How can all those bits of knowledge be integrated and utilized to inform the use of society’s resources? A central planning board could not possibly hope to gather and get a handle on so many bits, much less keep up with constant changes in knowledge and values. For a central planner to think otherwise would be “The Pretense of Knowledge” (which is the title of Hayek’s Nobel Prize acceptance speech, also included).

Hayek argues that the market price system is the only way that humanity has discovered to meaningfully cope with “the knowledge problem.” Every resource price is essentially the knowledge and values of millions of minds concerning that resource boiled down to a single number. All individuals can use these simple, yet information-rich prices to guide their economic choices. Describing what he calls the “marvel” of the market price system, Hayek writes:

“In abbreviated form, by a kind of symbol, only the most essential information is passed on and passed on only to those concerned. It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement.”

Tables of Contents

The Essential F.A. Hayek

  1. The Case for Freedom
  2. The Use of Knowledge in Society
  3. The Pretense of Knowledge
  4. Intellectuals and Socialism
  5. The Moral Element in Free Enterprise
  6. Why I Am Not A Conservative

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

– Ronald Reagan

Past Issue:

The Essentials: Leonard Read

FEE is happy to present the Essential series, five free ebooks collecting the key works of five great freedom philosophers: Leonard Read, Ludwig von Mises, Henry Hazlitt, F.A. Hayek, and Frédéric Bastiat. In each of these compact anthologies, you will find a powerful case for liberty.

But the ideas within are not mere fodder for debate. Like all great sages, these authors offer true wisdom that can inspire you and benefit you personally in your own life. Here is a discussion of just a few of the included works. We will review these to help us understand how the government intrusion into health care has decrease medical quality and decreased access.

Leonard Read

Leonard Read (1898-1983), FEE’s founder, dedicated his life to spreading “the freedom philosophy.” In addition to facilitating the contributions of others, Read himself was a prolific author and a font of wisdom. For example, in the included “How Socialism Harms the Individual,” Read explains how the forced transfer of wealth degrades and cripples everyone involved. In addition to being directly harmed, the victim of the transfer becomes less provident and charitable. The beneficiary becomes less self-reliant and capable. And the enforcer of the transfer becomes power-addled and contemptible. Power corrupts and captivity degrades. Read cuts through the weeds of public policy debate, and counsels the reader to renounce any role in the redistribution of wealth “for his own mental and spiritual health.”

In “I, Pencil,” his most famous work (also included), Read charmingly adopts the voice of a pencil who recounts the tale of its own ancestry. Despite its humble appearance, the pencil is the end result of a mind-boggling, globe-spanning feat of cooperation among millions of strangers. This triumph of coordination is all the more marvelous for having no mastermind. Indeed no central planner, however brilliant and public-minded, could have pulled it off. Such an intricate order can only emerge out of the voluntary interplay of free people. Read imparts to the reader his own sense of wonder at the miracles of the market. After reading Read, you’ll never look at the abundance that surrounds you the same again.

Tables of Contents

The Essential Leonard Read

  1. I, Pencil
    2. Neither Left nor Right
    3. A Break with Prevailing Faith
    4. Socialism Is Noncreative
    5. How Socialism Harms the Individual
    6. How Socialism Harms the Economy
    7. The Most Important Discovery in Economics
    8. The Greatest Computer on Earth
    9. The Service Motive
    10. Why Freedom Works Its Wonders
    11. Asleep at the Switch
    12. In Pursuit of Excellence

Read more: Power corrupts and captivity degrades.

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

– Ronald Reagan

Past Issue:


“Socialism is a philosophy of failure,
the creed of ignorance, and the gospel of envy,
its inherent virtue is the equal sharing of misery.”
— Winston Churchill

These are possibly the 5 best sentences you’ll ever read. Unfortunately, most voters don’t know this:

1. You cannot legislate the poor into prosperity, by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it.

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them; and when the other half gets the idea that it does no good to work, because somebody else is going to get what they work for, that is the beginning of the end of any nation.

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

– Ronald Reagan

Past Issue:

Medicare’s Benefits exceed Contributions by 300 Percent

Obama’s ‘Conversation’ on Entitlements

A couple retiring last year paid $109,000 into Medicare but can expect $343,000 back from the system.

Nobody should be surprised that public-sector workers in Wisconsin and elsewhere are fighting to preserve every penny of their promised benefits.

Nobody should be surprised that state governors—and it doesn’t matter which party—are trying to trim those privileges and benefits. . .

News reporters may be naïve, and some of the protesters may pretend to be. But this fight was penciled in long ago, when politicians and union leaders made the strategic decision to negotiate benefits without negotiating for the funding to make good on them. The mock shock and horror is all the more laughable given that events in Wisconsin are a perfect microcosm of the battle that every sentient American knows, and has known for a generation, awaits Medicare and Social Security.

In keeping with the theatrics of naïveté, President Obama now calls for “beginning a conversation on entitlements.” One wonders what it was, then, that G.W. Bush began at the 2004 Republican convention, or what thinkers and activist groups that have been pushing visions of entitlement reform for decades have been doing.

Has the president not heard of the private sector’s pioneering work on “defined contributions”? Or Bill Clinton’s landmark Medicare commission in 1999? One might as well wonder what pain is coming to those Obama followers who have yet to suspect their thoughtful liberal might be a visionless apparatchik.
Don’t doubt that Mr. Obama’s real impulse . . . is to let things ride and then simply, amid a crisis, start slashing benefits for the “rich” while also raising taxes on “the rich.” Unspoken has been a Democratic assumption that an aging electorate, in a crisis, would be willing to tax itself to the hilt to prop up an unreformed or barely reformed Social Security and Medicare. . .
Medicare is the real killer. According to Eugene Steuerle of the Urban Institute, an average couple retiring last year can look forward to consuming Medicare benefits with a present value of $343,000, having paid Medicare taxes with a present value of $109,000.
And don’t let that figure get your hopes up, because even that $109,000 is not available today. That money was spent long ago. The government’s trust funds are a fraud. Indeed, by some large amount, society missed out over many decades on domestic savings and investment that would have taken place had workers not been relying on unfunded government promises to support them in retirement. . .

Read the entire Medicare Report in the WSJ (subscription required) . . .
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Government is not the solution to our problems, government is the problem.
– Ronald Reagan

Past Issue:

While the US Gov’t is insolvent, the states aren’t far behind

The Hidden State Financial Crisis

My latest research into opaque state financial statements suggests taxpayers will be surprised by how much pensions are underfunded.


Next month will be pivotal for most states, as it marks the fiscal year end and is when balanced budgets are due. The states have racked up over $1.8 trillion in taxpayer-supported obligations in large part by underfunding their pension and other post-employment benefits. Yet over the past three years, there still has been a cumulative excess of $400 billion in state budget shortfalls. States have already been forced to raise taxes and cut programs to bridge those gaps.

Next month will also mark the end of the American Recovery and Reinvestment Act’s $480 billion in federal stimulus, which has subsidized states through the economic downturn. States have grown more dependent on federal subsidies, relying on them for almost 30% of their budgets.

The condition of state finances threatens the economic recovery. States employ over 19 million Americans, or 15% of the U.S. work force, and state spending accounts for 12% of U.S. gross domestic product. The process of reining in state finances will be painful for us all.

The rapid deterioration of state finances must be addressed immediately. Some dismiss these concerns, because they believe states will be able to grow their way out of these challenges. The reality is that while state revenues have improved, they have done so in part from tax hikes. However, state tax revenues still remain at roughly 2006 levels.

Expenses are near the highest they have ever been due to built-in annual cost escalators that have no correlation to revenue growth (or decline, as has been the case recently). Even as states have made deep cuts in some social programs, their fixed expenses of debt service and the actuarially recommended minimum pension and other retirement payments have skyrocketed. While over the past 10 years state and local government spending has grown by 65%, tax receipts have grown only by 32%.

Off balance sheet debt is the legal obligation of the state to its current and past employees in the form of pension and other retirement benefits. Today, off balance sheet debt totals over $1.3 trillion, as measured by current accounting standards, and it accounts for almost 75% of taxpayer-supported state debt obligations. Only recently have states been under pressure to disclose more information about these liabilities, because it is clear that their debt burdens are grossly understated.

Since January, some of my colleagues focused exclusively on finding the most up-to-date information on ballooning tax-supported state obligations. This meant going to each state and local government’s website for current data, which we found was truly opaque and without uniform standards.

What concerned us the most was the fact that fixed debt-service costs are increasingly crowding out state monies for essential services. For example, New Jersey’s ratio of total tax-supported state obligations to gross state product is over 30%, and the fixed costs to service those obligations eat up 16% of the total budget. Even these numbers are skewed, because they represent only the bare minimum paid into funding pension and retirement plans. We calculate that if New Jersey were to pay the actuarially recommended contribution, fixed costs would absorb 37% of the budget. New Jersey is not alone.

The real issue here is the enormous over-leveraging of taxpayer-supported obligations at a time when taxpayers are already paying more and receiving less. In the states most affected by skyrocketing debt and fiscal imbalances, social services continue to be cut the most. Taxpayers have the ultimate voting right—with their feet. Corporations are relocating, or at a minimum moving large portions of their businesses to more tax-friendly states.

Boeing is in the political cross-hairs as it is trying to set up a facility in the more business-friendly state of South Carolina, away from its current hub of Washington. California legislators recently went to Texas to learn best practices as a result of a rising tide of businesses that are building operations outside of their state. Over time, individuals will migrate to more tax-friendly states as well, and job seekers will follow corporations.

Fortunately, many governors are addressing their state’s structural deficits head on. Unfortunately, there is a lack of collective appreciation for how painful this process will be. Defaults in a variety of forms by states and municipalities are already happening and more are inevitable. Taxpayers have borne the initial brunt of these defaults by paying higher taxes in exchange for lower social services. And state and local government employees are having to renegotiate labor contracts that they once believed were sacrosanct.

Municipal bond holders will experience their own form of contract renegotiation in the form of debt restructurings at the local level. These are just the facts. The sooner we accept them, the sooner we can get state finances back on track, and a real U.S. economic recovery underway.
Ms. Whitney is CEO of Meredith Whitney Advisory Group LLC.

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Read the entire OpEd . . . .

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

– Ronald Reagan

Past Issue:

Greek Jobless Lose Health Benefits

Amid Cutbacks, Greek Doctors Offer Message to Poor: You Are Not Alone


NYT: ATHENS — As the head of Greece’s largest oncology department, Dr. Kostas Syrigos thought he had seen everything. But nothing prepared him for Elena, an unemployed woman whose breast cancer had been diagnosed a year before she came to him.

By that time, her cancer had grown to the size of an orange and broken through the skin, leaving a wound that she was draining with paper napkins. “When we saw her we were speechless,” said Dr. Syrigos, the chief of oncology at Sotiria General Hospital in central Athens. “Everyone was crying. Things like that are described in textbooks, but you never see them because until now, anybody who got sick in this country could always get help.”

Life in Greece has been turned on its head since the debt crisis took hold. But in few areas has the change been more striking than in health care. Until recently, Greece had a typical European health system, with employers and individuals contributing to a fund that with government assistance financed universal care. People who lost their jobs received health care and unemployment benefits for a year, but were still treated by hospitals if they could not afford to pay even after the benefits expired.
Things changed in July 2011, when Greece signed a supplemental loan agreement with international lenders to ward off financial collapse. Now, as stipulated in the deal, Greeks must pay all costs out of pocket after their benefits expire.

About half of Greece’s 1.2 million long-term unemployed lack health insurance, a number that is expected to rise sharply in a country with an unemployment rate of 25 percent and a moribund economy, said Savas Robolis, director of the Labor Institute of the General Confederation of Greek Workers. A new $17.5 billion austerity package of budget cuts and tax increases, agreed upon Wednesday with Greece’s international lenders, will make matters only worse, most economists say. . .
The change is particularly striking in cancer care, with its lengthy and expensive treatments. When cancer is diagnosed among the uninsured, “the system simply ignores them,” Dr. Syrigos said. He said, “They can’t access chemotherapy, surgery or even simple drugs.”

The health care system itself is increasingly dysfunctional, and may worsen if the government slashes an additional $2 billion in health spending, which it has proposed as part of a new austerity plan aimed to lock down more financing. With the state coffers drained, supplies have gotten so low that some patients have been forced to bring their own supplies, like stents and syringes, for treatments.

Hospitals and pharmacies now demand cash payment for drugs, which for cancer patients can amount to tens of thousands of dollars, money most of them do not have. With the system deteriorating, Dr. Syrigos and several colleagues have decided to take matters into their own hands.

Earlier this year, they set up a surreptitious network to help uninsured cancer patients and other ill people, which operates off the official grid using only spare medicines donated by pharmacies, some pharmaceutical companies and even the families of cancer patients who died. In Greece, doctors found to be helping an uninsured person using hospital medicines must cover the cost from their own pockets.
At the Metropolitan Social Clinic, a makeshift medical center near an abandoned American Air Force base outside Athens, Dr. Giorgos Vichas pointed one recent afternoon to plastic bags crammed with donated medicines lining the dingy floors outside his office.

“We’re a Robin Hood network,” said Dr. Vichas, a cardiologist who founded the underground movement in January. . .

In a supply room, a blue filing cabinet was filled with cancer drugs. But they were not enough to take care of the rising number of cancer patients knocking on his door. Many of the medicines are forwarded to Dr. Syrigos, who set up an off-hours infirmary in the hospital three months ago to treat uninsured cancer patients Dr. Vichas and other doctors in the network send his way.

Dr. Syrigos’s staff members consistently volunteer to work after their official shifts; the number of patients has risen to 35 from 5. “Sometimes I come home tired, exhausted, seeing double,” said Korina Liberopoulou, a pathologist on site one afternoon with five doctors and nurses. “But as long as there are materials to work with, this practice will go on.”

Back at the medical center, Dr. Vichas said he had never imagined being so overwhelmed with people in need. . .

. . . [Elena] was dismayed that the Greek state, as part of the bailout, had pulled back on a pillar of protection for society. But the fact that doctors and ordinary Greeks were organizing to pitch in where the state failed gave her hope in her bleakest hours. “Here, there is somebody who cares,” Elena said.
For Dr. Vichas, the most powerful therapy may not be the medicines, but the optimism that his Robin Hood group brings to those who have almost given up. “What we’ve gained from the crisis is to come closer together,” he said.

“This is resistance,” he added, sweeping his eyes over the volunteers and patients bustling around the clinic. “It is a nation, a people allowed to stand on their own two feet again with the help they give each other.”

Dimitris Bounias contributed reporting.

The “tax, spend, & enslave your children” parties around the world do not understand that there are limits on everything. The United States is falling into the same trap. By putting health care into the government “fiascos” it will only be time before we experience Greece where government health care is not free anymore and human suffering prevails.

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

– Ronald Reagan

Past Issue:

Obamacare: What We Know Now

By Michael D. Tanner The CATO Institute
January 27, 2014

For all intents and purposes, the Patient Protection and Affordable Care Act (ACA), also known as Obamacare, has been fully implemented. And while much of the media coverage has been dominated by the technical failures of the program’s initial rollout, we are also learning much about the impact of health care reform on employers, providers, patients, taxpayers, and individual consumers. Much of this was suspected even before the law was passed, but it is now becoming clear as implementation moves forward.
For example:

  • Millions of Americans who are happy with their current health insurance will not be able to keep it;
  • Americans may find it difficult to keep their current doctor unless they are willing to pay more;
  • While there will be both winners and losers when it comes to the cost of insurance, millions of Americans will find themselves paying higher premiums or facing higher out-of-pocket expenses;
  • The law’s final cost is difficult to predict, but is likely to exceed early projections;
  • Far fewer Americans will be covered than expected, leaving millions still uninsured;
  • The law is already having serious economic consequences and will likely lead to a loss of jobs and slower economic growth; and
  • There is a significant danger that young and healthy people will not enroll, leading to an “adverse selection death spiral.”

In short, the more we have learned about ACA, the more it looks like its critics were right. The law’s problems go far beyond a failed website. By imposing a bureaucratic, centralized, top-down approach to health care reform, Obamacare has created far more problems than it solved.

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

– Ronald Reagan

Past Issue:

The Shifting Landscape of HealthCare Economics Part I

The rise of “managed care”, embodied most notably by the Health Maintenance Organization (“HMO”), has transformed doctor-patient relationships from the days when a doctor would come with their little bag to your home, to one of high costs and long waits. The battles over Healthcare Reform have only served to further confuse the dilemma we face and make solutions even harder to get at. The 25,000 page Affordable Care Act, called Obamacare by both critics and supporters, is perhaps the most obvious example of just how complex and confused our healthcare has become.

To understand where we are, we must first review how we got here.

What Happened to House Calls?

Once upon a time you’d start feeling that scratchy throat and you’d pick up a phone and within an hour or two, a knock at your door meant the doctor would see you now. He’d give you a look, perhaps write a prescription and you’d hand over some money and that would be the end of it.

That’s long gone. Very few of us are able to say we recall those days.

Today, no other professional service provider, not attorneys, real estate agents, accountants, auto mechanics, contractors, plumbers or anyone else is so far removed from their customer and getting paid than a physician. But why? Don’t people work harder for their money when they know ‘the boss’ (the person paying them), is watching? Medicine no longer works this way, but it did once.

The trend for physicians and patients alike for the last 40 years has been away from direct interactions and compensation to ones buffered by insurance company HMOs and government agencies such as Medicare and Medicaid. Need to see a specialist? Call your HMO and get a referral. The wait too long? Tough luck. Want that new device you saw on TV for your diabetes? Sorry, not covered by Medicare. Why does it work like this?

The Beginning of the End

In the not too distant past (the late 60s), over 75% of all healthcare expenses were covered in the private sector, with individuals paying nearly half of all costs. You read that right. Half.

Think of this for a moment. If you were an individual physician, this meant that most of your annual pay came directly from your patients paying you cash. If patients liked you, you likely made more and got busier. If they didn’t, you suffered as patients simply left your practice for Dr. Joe down the street.

The average doctor, even specialist, would not likely have even one full-time administrator handling insurance or government reimbursement. The next time you happen into your doctor’s office, take a look around. Ask the receptionist how many people work on reimbursement. It’s likely as many or more people than deliver actual care to patients. The cost to employ all those people, fill out all those forms and pay all the people on the other end who read and fill out more forms is tremendous and provides zero healthcare to anyone. None of this ever existed in medicine until the early 70s. So what changed?

Shift from Consumer-Pay to Government-Sponsored Insurance

The first major change was the introduction of Medicare and Medicaid to support insurance for the poor and elderly in 1965. The law’s passage marked the first real major intervention into healthcare by the federal government. The goal was to help expand medical coverage to populations who either were unable to afford it or were not receiving care. One unintended consequence, however, was that it put a third party between the caregiver and the patient. Payment for service and the incentives to control cost were limited as the actually payer (Medicare) was not reviewing the performance of the caregiver. Physicians needed additional personnel to process billing and receive payments which led to higher costs. Unexpectedly higher costs led to government needing to exercise greater cost-controls for various services rendered and direct control over services offered (“Mandated Benefits”).

As consumers enrolled in the program became less aware of the cost for services, overutilization of healthcare services grew. The chart here shows the growth in health care expenditures relative to the Consumer Price Index:

Whatever your political leanings, everyone agrees these programs are extremely expensive at over $600 billion annually. Medicare & Medicaid are projected to top out at one trillion annually by 2020. The non-partisan Government Accountability Office lists Medicare as a “High-Risk” program rife with fraud and abuse. Each year less than 5% of claims on the program are audited for accuracy.

To Make Matters Worse

Partly in response to the escalating cost of healthcare, in 1973 Congress passed The Health Maintenance Organization Act of 1973 (Pub. L. 93-222 codified as 42 U.S.C. §300e). The law’s principle sponsor was Massachusetts Senator Edward Kennedy and was signed into law on Dec. 29, 1973 by President Richard Nixon. It was touted then much as the Affordable Care Act has been touted now. Government needed to do something in order to get inflating healthcare costs under control. More consumers needed to be pushed into coverage and costs needed to be controlled.

The mechanism the law designed to cover more consumers and control prices was the “Healthcare Maintenance Organization”, the HMO. This new entity would be administered by the health insurance companies and would offer insurance HMOs which would be federally qualified by the government. Health benefits would be subject to federal requirements and costs were hoped to be controlled by limiting the kinds of care one would be able to secure under the HMO. Visits to specialists would need to be first approved. Certain tests and procedures would be limited. The hope was that by shifting more consumers into a ‘controlled’ market, their options would be limited and thereby costs could be controlled more effectively while not causing much harm to care.

While HMOs certainly don’t have the best reputation, we’ll leave the quality of care discussion to more experienced health care professionals. However, in evaluating their effectiveness on controlling costs, one need only look at the above chart. Here it is again as I think it tells the story well enough:

Purely as a cost-cutting measure, the HMO was an obvious failure. The increasing costs and overutilization of care which started in earnest under the Medicare & Medicaid laws only seemed to exacerbate with the HMO law. An ever-increasing number of consumers paid less and less of their own expenses, yet used more and more services. It’s as though they had an open bar tab that was never to be paid back. Whereas roughly half of all expenses were paid directly by patients, today it is only 1/10. Doctors are no longer accountable to patients, patients no longer accountable for their own expenses. Care suffers as medical innovation wanes. The incentives to invest in medical innovation which yields better treatments is increasingly becoming limited as government and insurance companies tried to get a handle on the ever-increasing costs they are forced to pay.

Never Too Much of a Bad Thing: To be continued in July 2014…

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

– Ronald Reagan

Past Issue:

Never Too Much of a Bad Thing

As costs have grown more and more over time, the legislative answer from both Republicans and Democrats has typically been to attempt ‘reform’ to these programs and insurance offerings. Each decade has seen attempts at reform which have generally added to the programs’ complexities and become fodder for lobbying. Certain treatments became mandated as part of insurance coverages, others excluded and costs continued to escalate.

Enter the Affordable Care Act. The debate over ‘Obamacare’ was an obvious political football, however very few democrats or republicans actually argued over the government’s role in healthcare or in the coverage guidance it mandates through federally regulated insurance plans.

In fact, Republican Representative and Vice Presidential Nominee Paul Ryan stated “we will restore the $716 billion raided from Medicare to pay for Obamacare”. Obama and likeminded democrats defended this move as a way to shift cost from one government program to another, in effect moving money from one ‘pocket to another’.

In the end, neither side’s points address the actual reason for exponential cost increases or the diminishing role of physician-patient relationship in medicine. The third party ‘buffer’, whether government agency or insurance company, creates inefficiencies and incentives for increasing costs and decreasing quality of care.

The Answer? Boob Jobs

There is a model functioning today in medicine with consumer and doctors dealing directly with one another and prices being determined in a market.

Cash-pay medicine is everywhere. Botox®? You pay cash. Breast Augmentation? Cash. You go to whichever doctor you think is the best. He has to treat you right otherwise you’ll go to a different doctor. Good plastic surgeons are booked out weeks in advance, new doctors or unsupervised ‘medipass’, they advertise on Groupon.

Friends will say “But what about high-cost procedures? Surely a heart surgery isn’t a breast lift.” This is true. However, surgical procedures that are covered by insurance or Medicare/Medicaid are grossly overpriced as hospitals are forced to cover costs related to regulation (think of all those bookkeepers and Medicare-compliance administrators) as well as the cost of unpaid ER visits, among many other things. Cash-paid treatments tend to be much more price-elastic as competition forces prices down and increasing market entrants offer the same services for lower prices.

In addition, financing options are usually available for elective medical treatments, which is not possible with Medicare/Medicaid treatments due to regulation and a lack of demand as no one in their right mind would finance a treatment that they can get “for free” from Medicare.

Cash-pay medicine is something consumers want and something doctors want too. Patients hate their HMOs, as the service stinks. It’s the medical equivalent of the DMV, and rightfully so. What does an HMO, with its government-sanctioned monopoly, have to be ‘nice’ or provide good service?

Markets that serve their customers well grow over time. For example, “lifestyle medicine” is growing a projected 15% annually. Physicians are flooding into this market as ‘managed care’ (the term given to insurance/government managed healthcare) continues to squeeze doctors for longer and longer hours with less and less compensation. A report by George Washington University recently looked at over 9,000 recently graduated doctors, and fewer than 25% chose to become a primary care physician. Doctors are voting with their careers, turning away from the managed care world and seeking out specialties where they can directly interact with patients with less overhead and higher margins.

With all this growth in direct, cash-pay medicine and high demand from doctors to go into fields of medicine without the headaches and overhead of insurance and government control, what can this mean for the rest of medicine, what can we learn?

Back to the Future

There’s a place for government and insurance in healthcare, but it should not be in the middle of the patient and their doctor. The possibility of fraud, overutilization, skewed incentives, career dissatisfaction for doctors and lack of medical innovation makes state-of-the-art, quality care impossible. While it’s too early to see what will come of Obamacare, it’s very likely to do little to stem the tide of cost and poor patient care. Like its many well-intended predecessors both democrat and republican, it’s unlikely to improve the situation much.

Only a system that incentives doctors to treat patients’ right and charge reasonable prices will be sustainable.

In some parts of the country doctors are now practicing “concierge medicine”. You feel that scratchy throat? You pick up the phone and call your doctor. Within an hour or two they show up knocking on your door. They treat you in your own home. Heck, they even give out their cell phone number in case of emergencies. They don’t take insurance, not PPO or HMO nor Medicare, but they do take cash or credit. They even bring their little black bag with them.

Someday soon it may no longer be called “concierge medicine”, it may just be called “medicine”.

To be concluded in Oct 2014 HPUSA
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Government is not the solution to our problems, government is the problem.

– Ronald Reagan

Past Issue:

The Shifting Landscape of Health Care Economics Part III

Lessons from The Clinton Era
Jeff Selberg 

The U.S. health care landscape is changing in a way that’s reminiscent of shifts that occurred during the Clinton Administration. As a former hospital CEO who experienced first-hand that earlier land rush, I’m struck by the similar dynamics that are at work again in health care.

To be sure, there are great differences between the two periods: at the core, the Obama health care plan was enacted; the Clinton plan was not. Yet the Clinton plan still had significant impact. As one hospital CEO at the time recalled recently,

Most of us believed that the method of payment would shift immediately to capitation and that we needed to control the revenue stream by buying physician practices. It was a disaster: we agreed to ‘capitated’ contracts that were way under-priced, and we over-paid for practices that immediately lost productivity. Patients were lost and alienated in a complex system of gatekeepers and referral authorizations. To this day, policymakers are loath to use terms like ‘capitation’ or ‘lock-in’ and instead speak of ‘attribution’. *

The similarities between the two periods, however, are profound: both plans put health care at the top of the domestic policy agenda and captivated public attention; both led to dramatic mid-term election losses by the President’s party and to Republican majorities in the U.S. House of Representatives (and the U.S. Senate in 1994), and both altered the health care landscape. Stanford University economist Victor Fuchs described the Clinton initiative at the time as “encouraging the formation of integrated health care plans that will have responsibility for defined populations.” Interestingly, that quote aptly describes where we are today – only this time we are talking about the creation of accountable care organizations (ACOs) and medical homes.

My concern now is that health care administrators will do the same thing we did last time: attempt to buy up everything, spend our energy on developing new structures, and never get to the real issue, which is building the capability to improve health and increase the value of health care. We took our eyes off the ball: instead of focusing on patients, we focused on expanding our reach.

To center our attention on advancing the health of the population and improving the delivery of health care, the proposed rules for ACOs that have just been issued by the Centers for Medicare and Medicaid Services are heavily anchored in care coordination, safety, and patient-centeredness. As a result, I offer the following considerations to my colleagues at leading hospitals and health care organizations: . . .

Do administrators know the current level of engagement and alignment among their clinical and administrative staff and know how to improve that as well? The CEO of a major highly acclaimed hospital said recently that 2011 would be the first year in which he would have no growth measures in Board-approved annual goals. Expectations of physical or financial growth have been replaced by improvement goals. In that context, the role of the CEO has changed dramatically: rather than being held primarily responsible for the finances and the physical plant, CEOs are now being judged on health care outcomes. That requires closer alignment among clinical and administrative staff and a strategy to ensure greater collaboration. The best care is provided by teams in an environment of service and support, with the CEO setting the culture of the organization, so that staff excel on behalf of the patients and families they serve.
Do hospital administrators know their population health? Increasingly, population health will be key both to health care providers and to the nation’s economy. Per capita health care costs will be especially crucial to health care providers, and the trends are not encouraging. The rate of diabetes in the United States, for example, has nearly doubled in the last 10 years, according to the Centers for Disease Control and Prevention, and now costs the nation more than $174 billion annually, according to the American Diabetes Association. It is likely only to increase, given the growth in obesity. Improving population health will become a preoccupation of hospital administrators as well as elected leaders who are on the hook to balance public budgets. It will also create the need for collaborative relationships with several different types of social agencies in the community.

In many ways, the role of hospital administrators will be more important and challenging than ever. They will become responsible not just for their facilities but for the health of the people they serve. Knowing the right questions to ask, building trusting relationships, and focusing on the patient and the health of the community, will all be crucial.

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

– Ronald Reagan

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