Monday, June 29, 2009

Dissecting the Obama Healthcare Infomercial

For those of you unable to stomach the Charlie Gibson-Barrack Obama Healthcare Love Fest last week, this is required viewing. The CATO Institute has performed an outstanding service in distilling the President's paternalisitc pedantics down to a five minute video clip. Included in this presentation are responses to the President's comments which the most transparent Presidency ever has been unwilling to honestly address.

Quaere Verum

Sunday, June 28, 2009

We're Burning Daylight

The healthcare debacle will put our nation in socialist chains, cap and trade and the global warming snake oil salesmen will destroy the one means to avoid the coming socialist catastrophe…the engine that had once been the American economy. While some people may be able to get job training making windmills for a time, the end result will be a loss of 2-3 jobs for every job that might be created (or will it be created or saved) in the “green economy”. Sky high energy prices (will conservatively cost the average family of four $2000/year) are coming if this passes folks. More detail on the great global warming scam, and the impact of cap and trade (cap and tax), here, here and here.

Our fear mongering President tells us that “we have to have courage. The time is NOW.” Apparently for everything….healthcare reform, energy reform etc. Anyone who is not on board is guilty of spreading disinformation or is a coward. Everything you need to know about the honesty and transparency of this administration was on display last Wednesday night. The President’s infomercial on healthcare, produced by ABC “news”, permitted no formal presentation of opposing views regarding healthcare reform. Courage Mr. President? Your subjects, I mean the American citizenry, might ask that you, Sir, find the courage to debate the reasonable concerns regarding all these matters, and put away the Rahmbo porculus (stimulus) bill tactics. That will not be happening in this Administration.

The House of Representatives was handed a 1000 plus page piece of legislation related to cap and tax Friday night. There was not even time to package the bill and its 300 amendments in a single document. The President shifted into the only real gear he knows…crisis. “We need this now.” “We have to have the courage to face the future.” “America can no longer continue on its current path.” “If we don’t get it done now we never will.”

Madame Speaker, reminiscent of Gollum responding to her master’s call for action, pushed this bill through with an extremely tight vote. Eight Republican House members provided cover for the Democrats. These GOP pretenders, in obtaining prime seating on the Speaker’s taxpayer funded jet services, sold their souls in order to obtain the liberal cred they perceive they need to maintain RINO status and hold onto their office. For pols it’s generally not about principle, it’s about staying in office.

These turncoat Republicans allowed eight challenged Democrats to vote no on this legislation. These Democrats, with electoral challenges in 2010, are now able to return to their districts and report that they courageously stood on principle to vote against this bill.

Pictured are the GOP traitorous eight. If they supposedly represent you, please let them know how you feel. The cap and tax bill will now go to the Senate. It is not clear when a vote will take place. Start the calls to Senators now. Melt the phone lines. Your calls, letters and visits matter! Info for Senate contacts is available here.

To some it may seem far fetched that Dem leadership could be so conspiratorial in nature. If you feel this way, you simply aren’t paying attention. Did you miss porculus (the “stimulus bill”), the auto takeover, the ownership of banking firms and co-opting of the home finance business by the government?

At this point healthcare is a crapshoot for the Administration. We can only hope the President’s reform push will fail, but at this point it is not absolutely critical for the administration. Whether it has been the plan all along or not, healthcare has become a screen for getting cap and trade through. The Obama gang MO, orchestrated by Chief of Staff Rhambo Emmanuel, is to push 2 or 3 major issues hard and see how the shot sets up. It is all about misdirection, overwhelming the public and GOP leaders and isolating a target. Right now, the administration may lose healthcare (I may be a little too optimistic here), but they have a good chance at sap and trade, cap and tax, or knee cap our trade. Whatever you call it, it is economic suicide. The Obamafia reran the porculus drill for this. You know, produce a 1000 page cap and trade bill which doesn’t even really exist (there was no complete, physical comprehensive bill for legislators to review, even for the speed readers in the group), throw it into the House and Rahm it through. In this case even make some of our fine Democratic colleagues from challenging districts look good with the help of some GOP traitors.

The President can bide his time on healthcare, if he doesn’t get it now. Cap and tax he needs now. Some of the wheels are coming off the global warming bus (like the coolest temps in decades, reports suppressed by the EPA and the defection of numerous scientific types). Re healthcare, the government already owns 50% of the current system. With budget cuts at the state and Center for Medicare and Medicaid level, payments will be whittled away. As payments for government patients dives, provider organizations (hospitals etc) will be put in crisis mode. More and more cost will need to be shifted to private payers. There is not much more cost shifting room there. Purchasing groups (insurers, brokers etc) will be driven to make tremendous cuts, eventually being driven out of the market. As more and more folks are unable to get the private insurance they need at a reasonable price (unreasonable because the government calls the ball on the reimbursement for services), choice will become limited. Hospitals and provider groups will be forced to limit services, cut personnel, and go out of business. If unsuccessful now, there is still possibly time for our President to resurrect this issue and offer the hope of a government takeover later.

Simply put, a frontal assault on healthcare may not matter at all because, if one takes a little longer view, the administration has the tools right now to erode the healthcare system and make perhaps even a stronger case for Obamacare later.

The question is when do people wake up and see these arrogant, self-serving, power hungry miscreants for what they are? Despite quadrupling down on Hoover’s progressivism and laying the socialist ground work for a depression within the Depression, FDR was re-elected in 1936. We have a long history in this nation of obsession with personalities and inability to grasp the issues of the day, even when they directly threaten us as individuals.

There is ZERO leadership emerging on the GOP side. At this point the GOP is worse than the gang that couldn’t shoot straight. It seems that even a gathering of the most unfortunate village idiots could not repetitively inflict so much injury on themselves (see Sanford, McCain still supporting cap and tax, defectors on porculus and cap and tax, alternative healthcare bills offered by Republicans). It almost seems that this is intentional and that some GOP members are complicit in this absolute failure of leadership.

Bottom line, there is no visible GOP party leader, no rallying voice. I fear 2010, an enormous opportunity to propose an agenda to advance the principles which have led to America's exceptionalism, could turn into a route of the few remaining loyal GOPers. The hope is in new blood at the local and state levels but there needs to be a national voice differentiating and identifying a clear Republican alternative to the statism of the left. I would recommend that this effort be unapologetically based on the foundation laid by the Founders and the Constitution.

If loyal opposition is to be a memory, at least let Americans know that they have made a clear decision to make it so by discarding the principles of our founding. Without this type of clarity it will be extremely difficult for even the best of new local candidates to break through the mind numbing rhetoric from the left which saturates all elements of our lives.

Who will supply this leadership? Divine intervention formed us; will it continue to maintain us? I absolutely believe that such leadership exists. Time is running short, however, and she or he is burning daylight.

Quaere Verum

Wednesday, June 24, 2009

Getting Back To Normal?

In my industry we pay very close attention to the Consumer Confidence Index. Primarily because this helps us gauge the consumers desires to buy or not buy things. As the U.S economy and my industry is largely based on consumerism this helps us forecast future trends.

We have noticed recently an increase in consumer interest to purchase as well as following through with such purchases over the last three weeks. There doesn't appear to be any significant market conditions that would encourage this behavior. I could argue just the opposite and that certain indicators trend to a further slowing of the economy.

One idea I have as to why this sudden surge is that the Obama hysteria is fading. It has been over two years of fanatic slobbering of what was to come from this self proclaimed messiah that reality is starting to settle in that he isn't anything more than a community organizer with no business experience. Many who voted for this accomplished party guy are beginning to awake to a hangover illuminating a President who really does want America to become a Socialistic Country.

Any good American politician understands that the United States people are conservative in nature. So when Obama starts inviting Iranian leaders to our 4th of July celebrations or entertains Huffington post bloggers at an international press conference the hearts of these elected officials start to skip a beat.

So as the Obama rage disappears then the political rhetoric of both aisles increases thus the grinding engine of the U.S. Congress begins to slow. I believe Americans are now seeing things getting back to normal and thus are able to come out of there homes and start living their lives again.

Monday, June 22, 2009

Leader of the Free World

The world is in turmoil. North Korea is threatening nuclear war and a missle launch at Hawaii. Iran is in flames as freedom fighters attempt to topple its Mullah Thugocracy. Can you identify the Leader and Best Hope for the Free World? Polls are open.



Quaere Verum

Friday, June 19, 2009

Wile I was Away

So it has been a bit since I last wrote and as I sit overlooking the ocean I wonder why write now? It is because now while I am alone with nothing but the ocean breeze in my face and a cardinal chirping do I have some peace to reflect that I believe I was in moat mode. Moat mode is when you say 'I'm out of here' to the rest of the world. I am going to take my family, secure them in my castle and protect them from the outside evils with my moat and other capable tools.

Building a moat is different then sticking your head in the sand. I know what the threats are out there in the real world I just don't want my family to have to confront them. I understand sticking your head in the sand and not wanting to even acknowledge the problems but that's not beneficial long term.

With a clear head I realize that at some point I am going to have to come out of my castle, lower the bridge and take on the wicked head on. Its a battle that I subconsciously chosen to avoid thinking it may just pass us by but it won't and as I overlook the sea realize I must come out strong, with a fierce will not to fail because its not me I am fighting for, its my babies back in the castle.

Monday, June 15, 2009

How to Destroy a Healthcare System (Part IV)

The "Uninsured" Masses

In case you hadn’t heard within the past hour, there are reportedly 46,000,000 Americans without healthcare insurance.

Where did this number come from? This number is derived from the American Community Survey (ACS) conducted annually by the Census Bureau and supplemented with data from the Annual Social and Economic Supplement (ASES). This is a staggering figure endlessly cited by collectivists home and abroad as exhibit one in the case for the need to rush to a government run medical system in America. Those interested in this socialist vision disingenuously create the image that 46,000,000 are wandering aimlessly through our streets ravaged by diseases with no opportunity to receive medical care.

This horrifying picture should prompt at least two comments. First, could this picture possibly be a reasonable rendering of current conditions? The answer would be no. Under EMTALA (Emergency Medical Treatment and Labor Act) it is illegal for a hospital to deny emergency and delivery care. Secondly, who are these 46,000,000 unfortunate victims who, while they do have access to medical care, may not have access to what we all might consider optimal medical care? Can it be possible that we as a nation have ignored the plight of 46,000,000 citizens who lack health insurance, requiring us to radically revise an irreparable healthcare system?

In order to determine who the 46,000,000 are it is necessary to consider definitions used by the Census Bureau. This number repeated ad nauseum by proponents of a single payer, government run system is based on the annual Census Bureau estimates of individuals who have spent at least part of the year without health insurance. The Census defines an individual as “uninsured” if they were not covered by any type of health insurance at any time in that year. The report does not specify the periods of time that individuals might have been uninsured. Included in this number are uncertain numbers of citizens who after being laid off or switching jobs may have had some period without insurance but were back on insurance roles during the year.

In addition, the latest Census Report states, “Health insurance coverage is likely to be under reported in the Current Population Survey (CPS). While under reporting affects most, if not all, surveys, under reporting of health insurance coverage in the latest ASES appears to be a larger problem than in other national surveys that ask about insurance. Some reasons for the disparity may include the fact that income, not health insurance, is the main focus of the ASES questionnaire.”

Somewhat more reliable data is available from the Congressional Budget Office (CBO). In a report issued in 2003, “How Many People Lack Health Insurance and For How Long?”, the CBO, commenting on the most recent year of reliable data (1998), “In recent years, the number of uninsured people in the United States has been pegged at approximately 40 million, or about 16 percent of the non-elderly population. By CBO's analysis, that estimate overstates the number of people who are uninsured all year and more closely approximates the number who are uninsured at a point in time during the year. A more accurate estimate of the number of people who were uninsured for all of 1998--the most recent year for which reliable comparative data are available--is 21 million to 31 million, or 9 percent to 13 percent of non-elderly Americans.” There is no more recent CBO estimate of the number of individuals who may be uninsured for a significant portion of the year. So, if CBO estimates are to be believed, over a given year and based on current numbers, there might currently be closer to 25 to 35 million with sustained lack of medical insurance.

So the numbers of individuals going without health insurance for a full year is far less than some would have us believe; but for some, not all, a short period without health insurance could be difficult. Who are the individuals being denied the opportunity at least 245,000,000 of us now enjoy? The medically uninsured is talked of as a homogeneous group but nothing could be further from the truth. Many individuals move in and out of this group based on employment transition over the course of a year. For those truly interested in developing the best possible healthcare system in this nation, it is critical to further describe the remaining very heterogeneous group of “uninsured”.

The CPS provides reasonable descriptions and estimates of the subgroups which constitute this whole. Based on the CPS, at least 9.7 million foreign born, non-citizens are part of this group. These are illegal aliens, generally in low income categories based on the CPS, who are not on the current insurance roles. The federal government has abetted the influx of illegal aliens for decades. We now are counting 10,000,000 of them as uninsured “Americans.” No other nation on the planet assumes they have an obligation to provide medical care to illegal aliens. There is none.

The CPS also reports that 8.4 million households with an income greater than $50,000 and 9.1 million households with an income greater than $75,000 are without insurance. According to the American Health Insurance Plans (AHIP) survey for 2006-2007, the average national individual and family medical policy premiums were $2613 and $5799 respectively. A significant number of these households are single wage earners but that data is not readily available from the CPS. The Commonwealth Fund reports that one of the fastest growing segments of the uninsured population is the 19-29 demographic. While many in the $50,000 to $74,999 category may be single, let’s assume these are all large families incapable of purchasing medical insurance. We then have 9.1 million households (uncertain number of individuals) that should reasonably be able to afford medical insurance with an income above $75,000.

The catch is that the average policy costs are significantly higher in a number of states. This is because of government meddling. The cost of insurance is directly related to state required mandates placed on health insurance policies offered within the state. The largest number of mandates, is, not surprisingly, found in blue states. In New Jersey, for example, the average individual and family premiums were an astounding $5326 and $10398. Like it or not policy purchasers in New Jersey will be covered for in vitro fertilization, autism, ostomy supplies, breast reconstruction and contraceptives.

The last subgroup to be considered in the pool of 46,000,000 is those who are eligible for government insurance (Medicaid, SCHIP and Medicare) but are not enrolled in the proper program. This number is estimated at 12-14,000,000 individuals.

So lets put this all in context. After subtracting illegal aliens, households which theoretically could afford insurance (>$75,000 income only) and those eligible but not enrolled in government programs, we are left with approximately 13-15 million who fall into the category of without health insurance for some period of time during the year. This number (perhaps 8-10,000,000) includes a large number of individuals with chronic medical problems who are chronically underinsured and are unable to support their healthcare needs. In the end, we are talking generously about approximately 10-15,000,000 individuals whose needs are not capable of being met by the current healthcare system. This constitutes at most 5% of the current population of the United States.

One would never know that the real crux of the healthcare debate is 5% of the population. Those interested in a government run healthcare system lie and distort numbers to create the picture of a nation abandoned and without medical services. Government should play a role in supporting a free market environment which is encouraged to provide care for the 5%. That, however, is not what the President and his minions have in mind. The President is interested in the federal government assuming the power and responsibility for the healthcare sector, which is now responsible for 16% of GDP. Car companies, tobacco companies, even the banking industry takeovers pale in comparison to what government ownership of healthcare would mean.

Healthcare is the Holy Grail of statists in America. Once less than 50% of people pay income tax and the central planners control their healthcare, the citizenry has become a ward of the state.

And who wouldn’t want the government to oversee the healthcare industry. The 45 year old government adventure in health care, Medicare and Medicaid, is bankrupt and unsustainable. It only makes sense that in the name of 5% of the population we would hand over the remaining 50% of healthcare to the lunatics who are burning down the asylum.

Quaere Verum

Friday, June 12, 2009

How to Destroy a Healthcare System (Part III)

As the rhetoric of the healthcare debate heats up, the quality of American health care is a prominent target. Daily we are hectored with tales of the inadequacy of our medical system. We’re told by the President regularly that we have the most expensive health care system in the world but we are not any healthier for it.

From President Obama on May 18th in New Mexico:

We spend more per capita than any nation on Earth…in some cases we've got worse outcomes. We've got higher infant mortality rates; we've got higher rates of some deadly diseases. That doesn't make sense.

WHO You Gonna Believe?

You’re right Sir, it doesn’t make sense. Do we really believe that we rank 37th in the world behind Cyprus, Morocco, Colombia, Portugal and Costa Rica? That’s what the last World Health Organization (WHO) Report (2000) claims and that’s what supporters of a government run health system proclaim.

There is much to critique in the WHO Report. Thinking people might ask are the measures used defined similarly in all countries, or is it apples and oranges time? On the subject of infant mortality, which is a critical element in calculating life expectancy, the Colombians, ranked ahead of us, would say "confundir la mierda con la pomada". Nevertheless, WHO uses its calculated value of life expectancy, built on faulty assumptions to derive life expectancy as an indicator of health system performance.

An additional reason for the head scratching view of healthcare systems which results from the WHO survey is the heavy weighting of “fairness” of health care distribution in developing rankings. From the Report:

Together, the levels of health and of responsiveness receive a weight of three-eighths of the total. The three distributional measures, which together describe the equity of the system, account for the remaining five-eighths.

Lets review this statement. WHO is not interested in whether your nation's care is good. WHO is most interested in everyone getting the same care, good or bad. Even if WHO could determine accurately the “distribution of healthcare”, a nation with overall stellar care, super stellar at one end of distribution and stellar at the other end, would be penalized! Yes, health tourism in Morocco is booming.

Nations unwilling or unable to invest in healthcare, who sentence all their citizens to the same mediocre care, are revered by the WHO. Commitment to mediocrity, our battle cry! Welcome to the brave new world of socialized medicine.

Infant Mortality

Infant mortality in the US is regularly cited by WHO and others as an indicator of the poor return we get on our health care dollars. The fact is that the US reports on all births more completely than any other nation. A livebirth in the US refers to any infant who on birth shows any evidence of life, including respiration, pulsation of the umbilical cord, or voluntary muscle movement. While there is some state variation for reporting, almost all states mandate reporting for infants greater than 20 weeks gestational age.

From US News and World Report (2006) and Dr. Bernadine Healey:

In Austria and Germany, fetal weight must be at least 500 grams (1 pound) to count as a live birth; in other parts of Europe, such as Switzerland, the fetus must be at least 30 centimeters (mean length at 22 weeks gestation) long. In Belgium and France, births at less than 26 weeks of pregnancy are registered as lifeless. And some countries don't reliably register babies who die within the first 24 hours of birth. Thus, the United States is sure to report higher infant mortality rates. For this very reason, the Organization for Economic Cooperation and Development, which collects the European numbers, warns of head-to-head comparisons by country.

Infant mortality in developed countries is not about healthy babies dying of treatable conditions as in the past. Most of the infants we lose today are born critically ill, and 40 percent die within the first day of life. The major causes are low birth weight and prematurity, and congenital malformations. As Nicholas Eberstadt, a scholar at the American Enterprise Institute, points out, Norway, which has one of the lowest infant mortality rates, shows no better infant survival than the United States when you factor in weight at birth.

Form Kramer at al in Pediatric Perinatal Epidemiology in 2002:

The huge disparities in the ratio of fetal to infant deaths less than 750 grams (1.6 lbs) and in the proportion of live births less than 750 grams among these developed countries probably result from differences in birth and death registration practices. International comparisons and rankings of infant mortality should be interpreted with caution.

Infant mortality rankings are not an issue of poor quality of care for the US, they are an issue of our willingness to attempt to support extremely tiny babies and reporting bias. There are disparities in infant outcomes in the US, especially along racial lines, but these have less to do with the healthcare system than societal and cultural factors which the healthcare system has little control over. Our strict definitions of live birth lead to the reporting of thousands of infant deaths annually which are never given a second thought even in Western Europe, the purported mecca of high quality healthcare.

Life Expectancy

Life expectancy in the US is another crude indicator of healthcare system quality frequently cited by critics of American healthcare as emblematic of our deficiencies. While average life expectancy in the US is 78, we still rank behind thirty other countries including Japan, France, Sweden and Hong Kong. What life expectancy as an indicator of quality in healthcare fails to account for are detrimental cultural and societal behaviors which limit life expectancy. US reporting of infant mortality certainly has a negative impact on this number but so do two other vital factors, homicides and car accidents. For 2004, the US homicide rate was 5.9/100,000. The rate was 1.95 in Canada, 1.64 in France and 0.98 in Germany. The US auto fatality rate is also higher. In 2006 the rate was 14.2/100,000 in the US. The rate in Canada was 9.25, in France 7.4, and in Germany 6.19.

The fact that the U.S. has a disproportionate number of individuals who die as the result of fatal injuries compared to the other wealthy nations of the world should be considered in any discussion of life expectancy rankings, but rarely is this recognized by those eager to find fault with American medicine. The destruction of inner city communities and mandates for a nation of automobile nomads to drive increasingly more fuel efficient and less safe automobiles does not reflect upon the quality of health care in the U.S. Death in these situations almost universally occurs independently of the condition of health of the individuals who die as a result of these factors.

When authors Robert Ohsfeldt and John Schneider in The Business of Health (2006) adjusted international life expectancy data for these variables, it turns out the US leads the world in life expectancy:

Table 1-5: Mean Life Expectancy at Birth, OECD Countries, Actual and Standardized by OECD Mean Fatal Injury Rates, 1980-99

OECD Nation 5

Actual (Raw) Mean (Does Not Account for Fatal Injuries)

Standardized Mean (Accounts for Fatal Injuries)

United States



United Kingdom













































The President is correct when he reports that Americans experience higher rates of deadly diseases. Specifically, America has high rates of heart disease and diabetes. The cause of this, however, is not the American Healthcare system. It is directly related to the fact that 31% of Americans are obese compared to 14% of Canadians, 13% of Germans and 9% of the French. According to Ron Bailey, science correspondent at Reason Magazine:

Taking all these unhealthy proclivities into consideration, the American health care system is most likely not to blame for our lower life expectancies. Instead, American health care is rescuing enough of us from the consequences of our bad health habits to keep our ranking from being even lower.

Statists interested in further expansion of government power eagerly proclaim that medicine has neglected its responsibilities in wellness and preventative care. Speaking to a crowd in Wisconsin this week the President, when asked about wellness and personal responsibility, immediately redirected the question to the responsibility of employers, government and medicine to keep individuals slim, trim and disease free. The canard of wellness will be used by statists interested in tightening control over the medical sector, which has no ability to influence societal ills created by decades of central planning. This heavy club will also be used to bludgeon other industries (tobacco, food) into submission, all in the name of health and “bending the healthcare cost curve downwards.”

Miracles of American Healthcare and the Mediocrity of a Single Payer System


For those genuinely interested in maintaining the best medical system in the world, there are many factors well beyond the control of the healthcare system which determine an individual’s health. While US critics are fond of inaccurately attributing quality deficiencies of our healthcare system, rarely do we hear of the incredible success stories that have resulted from American medicine. It is more likely that we will hear about the wonders of Cuban medicine in mainstream media.

“Cancer” is the word that strikes fear into the heart of all when they sit in a physician’s office. Should it strike more fear for patients in different healthcare systems? Short answer, yes it should.

From an article entitled Socialism and Cancer, written by Dr. David Gratner, a Canadian, in The New Atlantis:

A working group associated with CONCORD (the European NGO Confederation for Relief and Development) recently completed a study comparing five-year cancer survival rates for several malignancies: breast cancer in women, prostate cancer in men, and colon and rectal cancer in both women and men. Combining the efforts of some hundred researchers and drawing data from almost two million cancer patients in thirty-one countries, the study, published in the August 2008 issue of The Lancet Oncology, is groundbreaking.

The CONCORD study finds that the United States leads in the field of breast and prostate cancer. France excelled in treating women’s colorectal cancer and Japan in men’s colorectal cancer. And the United States clearly leads other nations in overall survival. Regrettably, great discrepancies do exist between white and black Americans and among residents of different cities. That said, given a cancer diagnosis, patients overall do better here than anywhere else.

Why the difference in cancer care in the American healthcare system? The short answer is better access to screening (preventative care), specialists, medications (expensive chemotherapeutic agents) and technology. Yes, you read that right, we do cancer prevention better than any country on the planet.

Heart Disease

While cancer takes a considerable toll on residents of developed nations, heart disease remains the number one cause of death. There have been multiple developments in the field of cardiology and cardiothoracic surgery over the last several years. Significant advances include the introduction of cholesterol lowering medications, use of aspirin and other medications in the face of heart attack (MI), emergency percutaneous coronary interventions (PCI) for unstable MIs, use of coronary stents and advances in by bypass surgery.
The British Medical Journal in 2006 published “National variations in the provision of cardiac services in the United Kingdom: second report of the British Cardiac Society Working Group, 2005.” The report is notable for several findings:

The UK cardiology workforce has grown significantly over the past five years (fig 4 , table 1 ). This has been most obvious in England (180 new posts advertised and appointed in the past three years), which initially had the fewest cardiologists per million population. Cardiologists are therefore now more equally distributed across the UK; nevertheless, staffing levels remain well below those reported in comparable western European countries and much lower than those recommended by the BCS workforce committee.

An analysis of audit data from the National Pacemaker Database for the period 1998–2002 has shown that the UK as a whole implants far fewer ICDs than most western European countries… Expert commentators have pointed out that these stark differences probably stem from limited access to cardiac catheterisation laboratories or a shortage of appropriately trained electrophysiologists or device specialists in many parts of the UK.

Cardiac resynchronization therapy (CRT) is a complex form of pacemaker therapy that has been shown to improve the morbidity and mortality of selected patients with heart failure. The working group has found evidence of a very patchy uptake of this technology across the UK and believes that this reflects a shortage of the relevant expertise and difficulties in funding. Our first report identified alarmingly low coronary intervention rates in Wales.

Even allowing for the substantial number of patients who reside in North Wales but are referred to England
for treatment, most forms of specialist activity in Wales remain worryingly low. There seem to be two reasons for this. Firstly, there have been difficulties in commissioning. The NSF for CHD has never been adequately funded in Wales and has become aspirational rather than pivotal in healthcare planning. Tertiary cardiac and other specialist services are commissioned nationally by Health Commission Wales; their budget has not been increased in line with the emergence of NICE-approved evidence-based technologies, and the new arrhythmia chapter to the NSF, which was introduced in England more than a year ago, is still to be approved in Wales. Secondly, the consultant cardiology workforce appears to comprise many physicians who have substantial general medical duties and relatively few specialists with skills in coronary intervention and electrophysiology. Unfortunately there seems little prospect of eliminating these inequalities in the near future.

This report should be required reading for misinformed supporters of nationalized health care. While there are some bright spots in the UK’s efforts to upgrade its cardiology services, the report overall is a critical look at a healthcare system struggling to support the cardiac needs of its citizens. For us it might be a look into the future.

Heart Surgery

Surgery remains a mainstay of therapy in severe cases of coronary disease. Most disconcerting is wait times for surgery for bypass cases. It is known that exceeding recommended deadlines for CABG, staged on the basis of a patient’s clinical condition, absolutely affect mortality. While coronary artery bypass surgery is serious business, it is not exempt from efforts by nationalized health care systems to push the envelope for waiting times.

The Canadian Medical Association published in 2008 “The Economic Cost of Wait Times in Canada.” This study evaluated the economic impact of having disabled Canadians wait to receive definitive medical care. Costs were reflected in loss of productivity, support payments and ongoing non-surgical medical care. The impact of just four conditions was examined. The analysis concluded that waits for these conditions cost Canada $14.8 billion in 2007. How long are the waits?

Waits are long. For cardiac patients not treated within the maximum recommended period, the average wait for coronary artery bypass surgery is over 3 months, more than double the maximum recommended wait. The situation for patients requiring an MRI is grave. The maximum recommended wait is 30 days, but the median patient still waits 56 days, while patients who do not get their scan within that maximum recommended period wait an average of 85 days.

From the vaunted Swedish single payer system comes a report published in 2005, in which the median wait times for patients classified as imperative (recommend surgery within 14 days), urgent (recommend surgery within 12 weeks) and routine (recommend surgery within 6 months) were analyzed.

The median waiting time for the 5453 patients that underwent CABG was 55 days (interquartile range 21 to 105 days). The median waiting time was 17 (7–39) days for the patients in the imperative group, 82 (49–133) days for the patients in the urgent group, and 100 (67–172) days for the patients in the routine group. A total of 3014 patients (55%) were operated on within the intended waiting time in their respective groups: 46% in the imperative group, 44% in the urgent group, and 77% in the routine group).

The authors, based on delays in surgery for patients at all acuity levels, were able to determine, unfortunately, the increase in deaths related to each month on the waiting list. From a previous analysis of this data the authors reported that “mortality risk increased with time after acceptance by 11% a month.”

There is no wait list for a CABG in the US. When Italian Prime Minister Berlusconi needed heart surgery in 2006, he didn’t use his nationalized health service. He flew to the Cleveland Clinic.

Other Surgeries

In Canada, wait times for surgery and other diagnostic procedures would be incomprehensible to most Americans. The major Canadian wait time metric is 90% wait time. This is the time at which 90% of cases are completed. Each province has set a goal for the 90% wait time for multiple procedures, and also carefully reports the actual 90% wait times for same procedures. The data is horrifying. For example, in the province of Ontario (includes Toronto), the provincial target for wait time for breast cancer surgery is 84 days. Fortunately, most centers achieve this benchmark, but the overall provincial wait time is still 38 days…for breast cancer surgery. While as inadequate as this may seem, it is clear breast cancer surgery has received the attention it deserves, especially when compared with prostate least attention by Canadian standards. The provincial target for prostate surgery is a wait of 84 days. The actual overall wait is 89 days!

For overall cancer surgeries, the targeted wait time is 84 days in Ontario. The actual wait time outperforms the benchmark, however. In Ontario the average wait for a cancer surgery is 61 days. That would be two months waiting for a potentially curative surgery living with the fear that your cancer is growing.

Orthopedic surgeries are rarely life saving surgeries, but they have an enormous impact on productivity and quality of life. In Manitoba (Winnipeg), the median wait time for a hip replacement is 14 weeks. Not days, weeks, and that’s the median. At this point another 50% of replacements are still not complete. In New Brunswick the median wait time is 12 months. That would be a dream, however, for natives of Nova Scotia, living the glory of a single payer healthcare, where the 90% wait time for a hip replacement is 540 days. Nineteen months!

Well, it’s nationalized healthcare right. We have to ration services somewhere. Why not start with the aging population? While it might seem insensitive to some that we send early the message to the aging that they have a duty to die, surely a compassionate, government run, single payer system will make certain the children are cared for.

So how about children’s surgical services? The province of Ontario includes several well known Children’s facilities, most notably the Hospital for Sick Children in Toronto. The 90% wait time for all pediatric surgeries in the province is 226 days! When one considers subcategories for more serious surgical conditions, the 90 day wait for neurosurgery is 71 days. The same wait for cardiovascular surgery is 206 days! There are not words to describe what I expect would be the reaction of anyone familiar with medical care, especially pediatric care, if the President told them the truth.

Diagnostic Tests

If the wait times for surgeries make you shudder, consider the fact that most surgical plans are formulated only after proper diagnostic testing is done. How long does it take to get these studies performed in a nationalized healthcare system?

A key imaging study performed regularly and with minimal delay in the US is MRI. In Ontario, the provincial target is a wait of 28 days, the actual wait time is 105 days! Well, maybe MRI is an expensive and overused technology whose value is totally overstated by greedy American hospitals and physicians. Okay, while many will point to the deficiencies of CT in numerous diagnostic areas, maybe the Canadians are just better at it. Surely that would mean easy access as well. The Ontario provincial benchmark for CT wait is 28 days, the actual wait time is 40 days!

So while it may seem that waiting 6-12 months for your hip replacement or 70 days for your child’s neurosurgical procedure is a lifetime, add in the time that has already passed as you waited for the imaging study required prior to a surgical intervention.

The National Health Service in Great Britain is no better. According to the Times (in 2005):

Ms Rachel King, 32, from Erith, Kent, was knocked down by a car in January. She suffered a broken collarbone, five broken ribs, a shoulder blade broken in three places and head injuries. She was in hospital for 17 days. After she suffered dizzy spells and reduced vision, her consultant referred her for an MRI scan. She said that she was appalled to receive the letter from King’s, saying that, because of “heavy demand”, the scan would be delayed.

What added insult to injury was the handwritten note on the bottom, which read: “If you want to go privately call 0845 6080991 for prices.”

When she did, the telephone was answered by King’s College Self Pay, who said that the cost of such a scan was £983, and she could have the procedure in a couple of weeks.

“It’s insulting” she said. “I was absolutely distraught. I need reassurance that the damage isn’t permanent. All I want is to know if it is going to get better.

“I still have falls, and I can’t return to work or drive. I’ve never signed on the dole in my life but I have had to now.”

King’s College Hospital said in a statement that it recognised that an 80-week wait for scans was unacceptable. It had recently received funds to expand its services, with the aim of getting waiting times down to 26 weeks by next March.

Ms King’s case is the starkest example yet of widespread delays in diagnostic tests across the health service. One in five trusts has waiting times of more than a year for MRI scans, and two in five have waits of more than six months.

A quarter of trusts said that 25 per cent or more of their scanning capacity was not used but lack of staff and resources prevent increased usage.

From the Telegraph:

An ex-serviceman is being left to go blind in one eye before the National Health Service will consider treating him for a condition affecting 250,000 people in the UK. Leslie Howard, 76, noticed problems with his right eye in November and was diagnosed with wet age-related macular degeneration (AMD) two months ago.

His sight could be saved by a course of treatment involving new drugs which could cost more than £6,000 a year.
But the local Primary Care Trust has told him it will only considering funding in his case once he has gone blind in one eye and developed wet AMD in the other.

A study sponsored by the Canadian Medical Association reports on the hidden cost of wait times:

Wait times in just 4 areas — joint replacement, sight restoration, cardiac bypass surgery and MRI scans — cost Canada $14.8 billion last year and lowered government revenues by $4.4 billion during the same period. The data, from a study done for the CMA by the Centre for Spatial Economics, were released in Toronto during a Jan. 15 speech by President Brian Day. “Our estimates are extremely conservative,” Day said. “Moreover, they do not include the costs, short and long term, of the deterioration that occurs while waiting. As an orthopedic surgeon, I have seen patients develop chronic and severe, irreversible damage, addiction to painkillers, and depression. And it need not happen.” Day looked back at the causes of today’s problems and ahead to potential solutions. He said causes range from decisions to cut medical school enrollment in the early 1990s to “self-serving” moves to protect the status quo.

Day also said Canada has fallen to 24th among OECD countries in physicians per capita, after ranking fourth in 1970. “How many of you have a doctor who is 50 or older? Who do you think will look after you when you are older and need medical attention?” Just to reach the OECD average of 3 physicians/1000 people, said Day, Canada would need to add 26 000 physicians, or more than 10 years’ output from its medical schools, at once. “It is not our role as physicians to passively accept the prolonged suffering of patients,” Day concluded. “We want to manage patients, not wait lists.”

The Canadians dedicate significant time and resources to trending and documenting waiting times in their medical system. While we all will be subjected to rationing and waiting periods that severely impact our health and welfare as we leap to a single payer system, the upside is that there will be more of the jobs created which the President makes best...government jobs. Armies of government agents charged with reporting on and examining time management in US healthcare will be put to work.

Medical Research

Stated simply, the United States puts more money into medical research than any nation on the planet. From Tyler Cowen in the NY Times in 2006:

In real terms, spending on American biomedical research and development (R&D) has doubled since 1994. By 2003, spending was up to $94.3 billion (there is no comparable number for Europe), with 57 percent of that coming from private industry. The National Institutes of Health’s current annual research budget is $28 billion, All European Union governments, in contrast, spent $3.7 billion in 2000, and since that time, Europe has not narrowed the research and development gap. America spends more on research and development over all and on drugs in particular, even though the United States has a smaller population than the core European Union countries. From 1989 to 2002, four times as much money was invested in private biotechnology companies in America than in Europe.

The 2009 NIH Budget alone is $40.9 billion. The pharmaceutical industry spent an additional $40 billion on R&D last year. America produces more than half of the health care technology products purchased globally. The Canadian 2009 budget allocates $5.1 (US) billion for all science and technology research. The Canadian Institute for Healthcare Research (CIHR) is budgeted $917 million for research this year. In Canada there are minimal contributions from the private sector given government regulation of the healthcare market. The UK through the Office of Strategic Coordination of Healthcare Research (OSCHR) has budgeted $2.75 (US) billion on medical research. US GDP is (was) 9.4 times larger than Canada’s and 5.3 times bigger than the UK’s.

One may argue the role of government support for scientific research of any sort, but the national commitments to medical research based on public funding alone are clear. As a percentage of GDP the US government spends four times as much as Canada and the UK on medical research. This does not include private funding for medical research, which at least doubles health research spending in America, dwarfing the commitments of other nations to research. Much as we militarily support the survival of the “great” European democracies, so do we support advances in their healthcare.

Quality Conclusions

While many have noted the so called “poor performance” of American health care with regard to the strawmen of infant mortality and life expectancy, what is rarely noted is that social and political experimentation in this nation over the last fifty years has created a Tower of Babel, not only linguistically but culturally. Health care is saddled with government mandated multilingual requirements and the need to support expensive interpreting services. We have an enslaved underclass in our inner cities who generations ago abdicated personal responsibility in favor of the snake oil peddled by statists who still find believers in the promise of a government sponsored utopia. We are bending under the weight of an illegal alien population lured here by open borders policies supported by politicians on both sides of the aisle.

The real wonder is that the American healthcare system functions at all. The fact that we achieve what we do is nothing short of miraculous, and is a tribute to the amazing men and women who are committed to health care service in all its facets.

“Worse outcomes” Mr. President? Compared to who? The President views a takeover of healthcare as one more brick in the wall of massive government expansion and central planning. The President assured us yesterday in Green Bay that he has no interest in a government run healthcare system. This would be the same President who now appoints the Board for Chrysler, GM and AIG.

The question is not what the motives of a statist President and liberal Congress are, those are clear. The President and the rubber stamp statists in the Congress tell us American medicine is in crisis, we have to reform now! Deja vu all over again...the banking industry, the housing industry, the auto industry. Next up, medicine and energy. Remember the battle cry of Rahm Emmanuel, "Never let a good crisis go to waste." The Alinsky corollary is to never miss an oppoortunity to create a good crisis. Team Obama is actively making the case that, despite the well meaning intentions of some, American medicine is failing the citizenry on all fronts.

The question is not what tactics the White House will employ in attempting a complete governement take over of healthcare. They will lie as they will diminish the amazing acheivements of Amercian medicine. They will ignore the terrible results of failing or failed governement run healthcare sytems across the globe. They will demean the benefits of capitalism and free markets which has made this country the greatest example of freedom and liberty the world has ever known. They will resort to the tactics which have successfully overwhlemed our nation and suckered a majority of Americans into believing they live in a hopelessly mediocre and greedy country whose success, if any, has been built on the exploitation of its citizenry.

Once again the President and Congress, creating an atmosphere of fear and chaos, will attempt to convince the American people that more government is the answer. We witnessed the President demanding "stimulus" legislation earlier in the year that "could not wait." In fact, the President, promising to be the most transparent President of all time, didn't even give legislators 24 hours to read a 1000 page spending bill! Americans and Congress yielded to our flim flam Presdient. The President, speaking about healthcare, has stated several times over the last week,"If we don't get it done this year, we're not going to get it done." Who says so? Why the rush? The rush is designed to prevent any reasoned discussion of the issues.

So the strategy in the White House is clear here. The important question is have Americans learned anything over the last year? Will Americans wake up and recognize what the President offers in trade for our current healthcare system? If we are willing to scratch beyond the rhetoric and look, we have clear previews. At home Medicare, Medicaid, SCHIP, Tricare and the VA are the 50% of our healthcare system the government currently operates. The government side of the house, if it were a business, would be bankrupt…much like Social Security. We only have to look across our border to see the full effects of government run healthcare.

Is this what we want as Americans? Do we want to wait a year for an MRI scan when we are experiencing dizzy spells and blurry vision 2 weeks after a car accident? Our healthcare system is imperfect but, when objectively examined, is the best healthcare system on the planet. There is a role for government in our health care system but history here and abroad demonstrates that it needs to be defined and limited. The current level of involvement has been devastating to our country, has destroyed the health care systems of other Western nations and has led to a stampede of nationalized health care systems trying to restore the private options they outlawed.

The reform required for American healthcare is not a government takeover, it is government divestment.

Wake Up America!!!!

Quaere Verum

Monday, June 8, 2009

How to Destroy a Healthcare System II

At this point we are all able to recite the litany of healthcare horror talking points that foam from the mouths of rabid statists determined to do for healthcare what they have done for education, the auto industry, commercial air travelers, the banking industry, real estate, the environment, the Israelis, immigration etc. Space is somewhat prohibitive but a few of the more familiar refrains are worthy of deconstruction.

Myth #1: Medical Expenses are Responsible for the Majority of Personal Bankruptcies

Citing a 2005 study from Harvard the President regularly states that “half of all personal bankruptcies stem from medical expenses.” He has also stated, “"The cost of health care now causes a bankruptcy in America every 30 seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes." This is pure political deception from the President. From Gary Langer at ABC News, the extrapolation of Harvard’s data to “a bankruptcy every 30 seconds,” which the President has mentioned on numerous occasions is from from a 2005 Washington Post piece by Prof. Elizabeth Warren, a co-author of the Harvard paper. reports that even using Harvard’s numbers, it’s more like a bankruptcy every minute; indeed if you add up all bankrputcies in a year you barely get one every 30 seconds. (I've e-mailed Warren for comment.) But more to the point is that the Harvard data are clearly inflated, or at best, mischaracterized.

Even if one accepts fully the study cited, at best it supports a bankruptcy occurring only once every minute. While more dissembling from the great dissembler, the details are less critical than the fact that the whole concept is complete prevarication. Here is more from Gary Langer at ABC News, citing the response of Professor David Dranove from the Kellog School of Business at Northwestern published in the journal Health Affairs in 2006:

The Harvard report claims to measure the extent to which medical costs are “the cause” of bankruptcies. In reality its survey asked if these costs were “a reason” – potentially one of many – for such bankruptcies. Beyond those who gave medical costs as “a reason,” the Harvard researchers chose to add in any bankruptcy filers who had at least $1,000 in unreimbursed medical expenses in the previous two years. Given deductibles and copays, that’s a heck of a lot of people.

Moreover, Harvard’s definition of “medical” expenses includes situations that aren’t necessarily medical in common parlance, e.g., a gambling problem, or the death of a family member. If your main wage-earning spouse gets hit by a bus and dies, and you have to file, that’s included as a “medical bankruptcy.”

When I asked the lead author, Dr. David Himmelstein, about his definitions of medical bankruptcy back in 2005, he said, “It’s a judgment call,” and added that any death, for example, “to our mind is a medical event.”

A last problem was sampling: The Harvard researchers surveyed bankruptcy filers in five federal court districts accounting for 14 percent of bankruptcies nationally; projecting this to the other 86 percent is sketchy. Said Himmelstein: “Obviously the extrapolation is rough.”

In the end, based on the Dranove analysis of the Himmelstein study, perhaps 17% of bankruptcies might be linked to medical care costs. A more recent study by the Center for Studying Health System Change indicates that in 2007 about eight-tenths of one precent of Americans lived in families that filed for bankruptcy as a result of medical costs. This represents a total of 5% of bankruptcy cases. The authors noted that the vast majority of cases resulted from personal debt accumulation followed by unemployment.

Myth #2: Administrative Costs are Lower in Government Healthcare Plans

Candidate Obama’s health care proposal stated the following:

One-quarter of all medical spending goes to administrative and overhead costs…Insurance administrative overhead has been the fastest-growing component of health spending. The 2007 Commonwealth Fund Commission on a High Performance Health System reported that between 2000 and 2005, administrative overhead – including both administrative expenses and insurance industry profits – increased 12.0 percent per year, 3.4 percentage points faster than the average health expenditure growth of 8.6 percent.

Since his election the President has made similar references to the potential savings to be realized from a system that simplifies healthcare and reduces administrative costs. Recent Medicare Trustee reports describe such costs as 1.5 to 3% of total expenditures. For private health care, supporters of a government system report such costs at 10-20% of expenditures. Not discussed by same supporters are studies from the Council for Affordable Health Insurance that shows Medicare costs at 5.2% and private admin costs at 8.9%. Price Waterhouse Cooper has demonstrated that 6% of private healthcare fees go to overhead and that 86% of premiums go to the provision of actual medical care.

From the Heritage Foundation’s Walton Francis:

As the case of Medicare's anemic anti-fraud efforts painfully illustrates, less manage­ment and lower administrative costs do not neces­sarily mean the program is really less costly. Many argue that a public plan would cost less than private plans because its administrative costs are lower. This is a terribly misleading assertion and entirely an artifact of false comparisons that do not include all public and private costs. For example, assuming that fraud levels in Original Medicare are 10 percent of payments after spending 5 percent on adminis­tration, and in private plans fraud levels are reduced to 5 percent of payments after spending an extra 1 percent on administrative costs for effective fraud prevention (some think the differential is far greater), Original Medicare's failure to have effective fraud controls raises the denominator while lower­ing the numerator. On these numbers, for $100 of delivered care, Medicare seemingly spends $5 but actually spends $15 ($5 in administrative costs and $10 in fraud), while the private plan spends $11 ($5 plus $1 plus $5 lost to fraud) for the same $100 of delivered care. What is worse, the higher the actual fraud level, the "better" the Medicare administrative cost appears as a percentage of total spending.

So the purported administrative savings are entirely illusory when both numerator and denominator are appropriately adjusted.

There are many other missing or misrepresented costs in direct Medicare–private plan comparisons. For example, average enrollee medical costs in Medicare are roughly double those in the private sector simply because of enrollee age, so Medicare achieves per-enrollee economies of scale unavail­able to any plan (including Medicare Extra) cover­ing a less elderly population. Unlike private plans, Original Medicare does not cover most prescription drugs, small claims where administrative costs are much higher as a fraction of benefits. Government accounting does not assign the costs of capital to federal programs, or even estimate the economic welfare burden costs of using taxes to finance public programs.

Most important, the administrative costs that Medicare imposes on providers are not accounted for in government budgets. If a Medicare claim costs the government $2 to process, and the provider $3 to prepare, the administrative cost of a $100 claim is counted as $2, not $5, in the federal budget. Again, the purported lower cost of Medi­care administration is overstated.

Some of these factors have been adjusted in com­parative studies. But no existing study accounts for all these differences, or for some of the largest ones, such as fraud control.

Finally, government healthcare attempts to control cost via cost cutting or rationing. The inadequate payment schedules set by government entities results in hospitals, in order to maintain income, charging private insurers more for the same procedure. This cost shifting (well documented by the NY Times) from Medicare, Medicaid, and Tricare to private payers shifts an estimated $5 billion in California alone to the private sector. On top of this is the $45-50 billion annual bill for healthcare for the uninsured (illegal aliens) that hospitals subsidize via costs not to government programs (those rates are fixed), but by increased rates for private payers.

None of these factors are ever considered by those touting the administrative and overhead savings supposedly unique to government health plans. It really is an apples and oranges comparison. Government administrative healthcare costs are simply not visible.

Myth #3: The Magic of Health Information Technology

The belief that we can drive down healthcare costs with the magic of information technology is a concept espoused by President Obama, “We will restore science to its rightful place, and wield technology’s wonders to raise health care’s quality and lower its cost.” The Department of Health and Human Services received $167 billion in the National Recovery (Generational Theft) Act. A part of that funding is committed to, “Computerizing Americans’ health records, which will improve the quality of health care, reduce medical errors, and save health care costs.”

This all could be possible, and if so with proper planning should be done. American health care is comprised of a patchwork collection of proprietary electronic and paper systems with limited ability to interact and analyze data in a manner which would promote the greatest health care value. The question is not whether a revolution in healthcare technology would be advantageous? The question is why would we assume that the government is the best entity to create such a revolution, and more importantly, could government intervention actually hinder needed progress in our healthcare system?

As is often the case, history provides some insights to the real questions we should be considering in the discussion. In 1996 the government passed the Health Insurance Portability and Accountability Act (the dreaded acronym is HIPAA and is familiar to all working in health care). The effective date of HIPAA legislation was 2001. HIPAA addressed three areas that were intended to revolutionize healthcare. First was portability and limitations on the ability of employers to exclude employees from insurance coverage based on existing conditions. The second was to guarantee patient privacy in the health care system. Third, HIPAA was to streamline communication across the healthcare industry.

From Scott Withrow, author of Managing Healthcare Compliance:

The final HIPAA privacy rule estimates net costs (not savings) of $17.5 billion over ten years (2003-2012). Industry estimates of the cost of HIPAA compliance exceeded the government's estimates by up to six-fold. The proposed security rule recognizes, but does not attempt to estimate, the significant costs to comply with the security procedures. HIPAA's only hope for achieving savings lies in standardization of electronic transactions. DHHS estimates were that electronic processing would generate savings of $1.00 per claim for health plans, $1.49 for physicians and $0.86 for hospitals. HHS assumed that electronic processing would grow with standardization, creating a total savings of $29.9 billion over ten years (2002 to 2011), before the offsetting costs of implementing privacy and security protections.

A major study of HIPAA impact was undertaken by the American Hospital Association (AHA). Amongst the findings was this:

Given that the five major hospital system vendors cannot currently provide all of the functionality implied by the proposed HIPAA privacy rule, hospitals could require more significant upgrades, potentially making the information system costs substantially higher.”

Substantially higher would be higher than the $22.5 billion cost identified in the study. The DHHS estimated that HIPAA implementation would cost $3.8 billion. Their analysis amazingly did not include the most costly HIPAA provisions. From the AHA Report:

By excluding from its impact analysis the most costly and burdensome provisions of HIPAA privacy on providers (such as the minimum necessary use standard, the monitoring of business partners and state law contracting), HHS’ projected 5-year total cost of $3.8 billion to all covered entities (health plans, providers and clearinghouses) cannot be considered comprehensive.

Many of HHS’ cost calculations are derived from dollar and percentage numbers that lack a stated or logical source, and some specific assumptions appear inappropriate. Calculations are not based on an approach that reflects the likely tactical and operational approach that hospitals will take to comply.

HHS assumes an alignment in the timing of the HIPAA privacy rule with that of other HIPAA components that will not likely occur. HHS grossly underestimates the likely costs of the technical requirements.

Eight years after implementation the health care industry is still reeling from and paying for the cost of HIPAA. From Sally Pipes, health economist, in The Top Ten Myths of American Health Care:

There are currently 12 different federal agencies with overlapping oversight when it comes to health information technology (HIT). The dirty dozen already produces a mountain of red tape…This is hardly the best way to spur HIT innovation. With all these different governing bodies private IT companies have an even harder time creating solutions because their products need to comply with a morass of regulations.

Some postulate a partnership between government initiative and private know how. Its one thing for an HIT product to succeed as a result of competition in the marketplace; its quite another for an HIT product to be the outcome of complying with complex government mandated specifications.

We don’t need government to bribe companies to innovate. The $2.3 trillion health care marketplace is already an enormous opportunity for the HIT sector and private companies realize this. Google has announced a service that will allow people to track and monitor their health records.

Somewhere down the road advancements in HIT may truly revolutionize medicine. And make it more affordable. Its already starting to happen. The irony is that by trying to speed up HIT innovation, government may end up slowing it down and costing taxpayers a boatload of money in the process.

Myth #4: Big Pharma is Killing American Healthcare

On the campaign trail, President Obama made clear his feelings about one of his pet peeves…profit:

Another, more controversial area we need to look at is how much of our health care spending is going toward the record-breaking profits earned by the drug and health care industry. It's perfectly understandable for a corporation to try and make a profit, but when those profits are soaring higher and higher each year while millions lose their coverage and premiums skyrocket, we have a responsibility to ask why.

The free market, capitalism and profit are what have made this nation great and unique. The net effect of individual pursuit of prosperity has been the evolution of a nation which has been an economic tour de force unsurpassed in human history. The innovation nurtured by the free market has led to some of the greatest advancements in the history of humankind…light bulb, assembly line production, automobile, steam boat, airplane, vulcanized rubber, telephone and cell phone, air conditioning, MRI scanner, and computer operating systems…to name a few. All of these efforts have been enormously profitable.

While American industry is on increasingly unstable ground, we continue to lead the world in innovation. We are in this position because those innovations, at least for the moment, remain profitable. Statements from those making the case for more government health care cite the profit margins of leading industry sectors as a remedial element in the healthcare debate.

Health care is expensive, so goes the argument, because of profits being generated by these sectors. The demagoguery in this debate focuses on “Big Pharma”. There’s always a “big something” bent on our destruction in the name of the unspeakable notion of "profit." The "Bigs", “Big Oil” or “Big Banking” or “Big Energy” or "Big Tobacco" are all committed to our ruin and their own success. “Big” in liberalspeak is a synonym for “profitable, despicable and taxable." When "Big" is spoken, brace yourself, the demagoguery is about to begin.

One might assume Big Pharma was the most profitable industry sector in the nation based on the demonizing rhetoric promulgated by President Obama and his staff. In fact it was the third most profitable sector in 2008 according to Fortune Magazine. Network and Other Communications Equipment was number one, followed by Internet Services and Retailing sectors at number two. These sectors generated profits of 20.4 and 19.4% respectively. How about some individual companies? Microsoft, a member of the Software sector which didn’t even make the top ten for profitable industry sectors, had profits of $17 billion or 18%. If Microsoft were a pharmaceutical firm, they would have led all companies in profit. We don’t hear much, however, about “Big Networking” or “Big Internet” or “Big Software” right now. If I were them, though, I would be very nervous.

The President, ala Saul Alinsky, has aggressively attempted to isolate, freeze, demonize and attack the pharmaceutical industry. The welfare of the citizenry would be best served by an honest discussion of the economics of drug costing and the value many, admittedly not all, contribute to ours and the world’s health. Rather than chasing after profitable and valuable companies like villagers with pitchforks after Frankenstein (H/T to The Absurd Report), lets explore the facts.

In 2007 the US spent $286 billion on prescription drugs. As Sally Pipes reports, that is more than the entire GDP of Ireland. Drug spending is a greater portion of healthcare than ever, currently responsible for 10-12% of healthcare costs. The simple fact, however, is that we are living longer than ever before, we are more obese than we ever were, and as a result chronic disease is more prevalent.

Given the latter two how is the former possible? The pharmaceutical industry is one of the reasons. When the average life expectancy in 1940 was 62, cancers, heart disease, stroke and diabetes were less

common concerns, and less well understood. In 1970 the average life expectancy was 71, it is now 78. As we live longer and add obesity as an increasing complication, the development of chronic diseases requiring a myriad of potential management approaches is unavoidable… unless we decide that an additional seven years of life has no value. The health needs of an increasingly aged and expanding population are different, more intense and if we intend to value life and the quality most Americans appreciate as a result of their added years, we will need the pharmaceutical industry.

The simple choice in many cases is would you rather pay for Lipitor or undergo an emergency coronary artery bypass graft (CABG) surgery?While drug costs are enormous, numerous studies document that spending on a variety of medications (to treat diabetes, hypertension, asthma, depression and elevated cholesterol) can provide a net reduction in healthcare costs. More upcoming about the role American drug research pioneers play not only in supporting the quality of American healthcare, but how they support medical quality the world over.

Do newer, more expensive drugs always add to this potential benefit of medical therapy. The answer is no. Have drug companies pursued development of look alike drugs given upcoming patent expirations in order to maintain profit in the market? Yes. The answer to such behavior, however, is not to demonize an industry which has added years to the lives of millions around the world.

So why are drugs so expensive? And only in America? How come those nationalized systems get cheaper drugs? Why don’t we purchase our medications from overseas? That’s the ticket, we’ll teach those evil pharmaceutical executives? This approach was proposed by both John McCain and Barrack Obama during the election. Punish these uniquely repulsive, heartless individuals.

Would that such a strategy would fix the problem. It won’t. First off, while ideologues may choose to believe it, it is unlikely that pharmaceutical executives are any greedier than Bill Gates, Warren Buffet, George Soros, T. Boone Pickens, Sergey Brin, Al Gore, Oprah Winfrey, Tiger Woods or Jay-Z. And there’s a big difference. The successful pharma corporations have produced products which have directly and regularly improved our own life or the life of someone we care deeply about. Traditionally America has begrudged no one the opportunity to succeed and profit. In fact, that some of the individuals noted above can be so successful is a tribute to this country and should give everyone hope that they are capable of greatness. So lets assume rational people can accept that while yes, there may be some in the drug industry who are more interested in profit than the well being of Americans, they are a minority.

Drugs are expensive because they cost a lot to develop. For every 5000 compounds tested, five will make it to clinical trials. Estimates vary but bringing a drug from concept through the animal and then human clinical trials required for FDA approval takes 5-15 years. At any given time there are 2000-3000 new drugs undergoing FDA review for thousands of medical conditions. From Sally Pipes, “Of course many of these drugs will never make it to patients, but these drugs offer hope to the countless individuals who suffer from cancer, Alzheimers, and other debilitating and life threatening diseases.” The cost of this process is estimated at between $500 million and $1.3 billion per drug. Money for drug research and development comes from investors. If pharmaceutical companies are not attractive investment opportunities, investors will invest elsewhere.

If the cost is high, so are the rewards. There clearly are monetary benefits that accrue to investors (that would be many of us) in successful pharmaceutical companies. The fact that average Americans share in the success of drug companies through a variety of investing vehicles is almost as rarely mentioned in these debates as is the effect of human lives saved.

As for overseas, brand name drugs are cheaper there. In Canada, prices may be up to 70% cheaper than in the US. Tapping into the Canadian markets would seem to be an obvious solution to our drug cost problem, or is it? The reason many drugs are cheaper overseas is that all government run health systems have placed price controls on prescription drugs. They have to do this. Otherwise they would be unable to sustain and fund their health care systems. Back to Sally Pipes, who hails from Canada:

In Canada, an agency called the Patented Medicine Prices Review Board ensures that drug prices are not excessive. This board strictly monitors the prices at which manufacturers may sell drugs to wholesalers and pharmacies, and the price at which pharmacies may sell to the public.

To save funds Canadian health officials routinely delay the approval of new and more expensive drugs. After the drug is approved and a price set, the provincial governments decide whether to put it on the formularies.

A report from the Fraser Institute, an independent non-partisan research and educational organization based in Canada, puts it succinctly:

Health Canada takes up to a year to approve new medicines as safe and effective. And while private insurance plans will immediately cover those medicines, the provinces can take up to another year to decide if they will pay for the same drugs," said Brett Skinner, Fraser Institute Director of Health, Pharmaceutical and Insurance Policy Research and author of Access Delayed, Access Denied: Waiting For New Medicines in Canada.

That additional one year delay keeps these new medicines out of reach for the one-third of Canadians who rely on provincial drug plans.

The study shows how two separate stages of Canada's drug approval process contribute to delays or result in new drugs being unavailable for some patients. First, Health Canada must certify a drug is safe and effective for public use, then provincial governments must decide if the drug will be covered by public health plans.

On average, Health Canada took 380 days to approve new drugs for sale, while the provinces added another 323 days to approve new drugs for coverage under provincial drug plans in 2006. This is an improvement from the waits recorded in 2004 when Health Canada took an average of 548 days and the provinces took 546 days to approve new prescription drugs, a total of 1,094 days or almost three years.

The study also found that while delays for access to new prescription drugs remain unnecessarily long, the provinces are also increasingly denying coverage for many new prescription drugs altogether.

According to 2006 data, only 39 per cent of new drugs approved by Health Canada were being fully reimbursed by provincial drug plans, a drop from the 44 per cent that were being fully reimbursed in 2004.

“Canadian patients are facing lengthy delays for government permission to get new medicines and then provincial drug plans aren't covering the costs of many new medicines," Skinner said.

"This is in direct contrast to most private insurance plans which cover 100 per cent of all new drugs certified by Health Canada. Ultimately, public drug plans cover less than half of the drugs covered under private sector insurance plans."

Why? Delays may cost lives, but they save the system money.

A number of brand name drugs that are price controlled are cheaper abroad; but there is no generic market and many new and effective drugs are not approved. Many inexpensive drugs here cost more overseas because there are no generic products in other nations. Generics account for 65% of the drug market in the US. The reason generics are cheaper here…a thriving free market which encourages competition…unlike the economic environment in Europe or Canada. With prices already controlled to less than profitable levels there is no profit for generics in these systems. The Wal-Mart $4 generic drug plan will not be available in Toronto, London, or Brussels any time soon.

So government run programs ration and offer a more limited menu of medications. Can’t we still import the brand name drugs that they sell at 50% discounts?

The larger question is why do drug companies even agree to ship drugs to these nations which mandate unprofitable price controls? There are two reasons. First, as long as America supports the majority of drug costs, companies can afford to sell their products at a discounted rate to smaller markets and maintain a profit margin. If we embarked on a large program of drug reimportation to the US, the drug companies would be forced to make a decision. Accept a significant reduction in revenue or forgo the Canadian market. In other words, just as we have militarily, the US supports the pharmaceutical needs of the rest of the world.

Why don’t drug companies demand higher reimbursement rates and refuse to ship to nations with draconian price controls? One phrase…patent theft. If a manufacturer were unwilling to sell its products at the government determined price, the country could, in some cases, allow a generic manufacturer to produce and sell a copy without the approval of the patent holder.

Myth #5: Disease Prevention, the Untapped Reservoir of Health Savings

The administration, in discussing methods to reduce healthcare costs, is fond of talking about the need to shift our focus from disease treatment to prevention.

From President Obama during the campaign:

We have to ask what we can do to provide more Americans with preventative care, which would mean fewer doctor's visits and less cost down the road.

Preventative care and population health have great potential to improve overall health and quality of life. Preventative care has repeatedly been shown, however, to increase healthcare expenditures. Living longer means more healthcare costs, albeit at a later point in life for many of us. The cold, hard truth is that healthcare is cheaper if a citizen dies. From the New England Journal of Medicine during the 2008 campaign:

Sweeping statements about the cost-saving potential of prevention, however, are overreaching. Studies have concluded that preventing illness can in some cases save money but in other cases can add to health care costs.

Our findings suggest that the broad generalizations made by many presidential candidates can be misleading. These statements convey the message that substantial resources can be saved through prevention. Although some preventive measures do save money, the vast majority reviewed in the health economics literature do not. Careful analysis of the costs and benefits of specific interventions, rather than broad generalizations, is critical. Such analysis could identify not only cost-saving preventive measures but also preventive measures that deliver substantial health benefits relative to their net costs; this analysis could also identify treatments that are cost-saving or highly efficient (i.e., cost-effective).

We should pursue disease prevention strategies but understand that preventative care is similar to health information technology. We should carefully consider who guides its development, and implementation but it is pure deceit to promise that investing in these strategies offers a treasure trove of healthcare cost savings.

It is difficult to find any mention of merit in our current healthcare system in the rhetoric of those supporting a single payer, government run health system. "Big Healthcare", like all the other “Bigs”, refers to the collective of pharmaceutical companies, private insurers, private healthcare purchasers and physician groups more interested in profit than serving citizens. What the single payer proponents conveniently ignore is the fact that a majority of our current system is government health care. It is Medicare, Medicaid, SCHIP, Tricare and the VA.

Based on 2008 WHO data, U.S. government programs accounted for over 45% of US health care expenditures. This makes the U.S. government the largest insurer in the nation. We are well down the road to a government system already. What we are being asked to accept is increasing doses the same. Reasonably observant individuals might notice that the increasing cost and inefficiencies of our health system track with increasing government involvement and regulation of our health care system. In the Wonderland of Barrack Obama things are never what we have traditionally been taught, but it seems pretty clear that our increasing health system difficulties are more attributable to “Big Government”, not “Big Healthcare”.

Are there ways to reduce cost in the US healthcare system and retain value? Yes.

Is the President’s plan the answer to healthcare costs? No.

Simply put by Robert Moffit at the Heritage Foundation, the President’s proposal offers “hopeful savings and costly change.”

Part III of "How to Destroy a Healthcare System" will review two other important criticisms of our current system...quality and access. This exercise will continue then with a dissection of the propoganda surrounding the Obama Health Care plan and a discussion of what it will mean to patients, families, providers and employers. Then we can consider real opportunities to improve what absolutely is, by any honest reckoning, the best healthcare system in the world.

Quaere Verum