I Get a Kick Out of Uwe

By Greg Scandlen

Princeton professor Uwe Reinhardt is a really funny guy. Really. If you have ever caught one of his talks, he will leave you in stitches. Not the medical kind of stitches, but the other kind usually associated once-smoky nightclubs and a lone comic on the stage.

But he tops all of his previous comedic efforts in a single letter to USAToday. He begins by trying to rebut a recent op-ed:

One of the more mindless clichés trotted out in the health care debate is that “one size doesn’t fit all.” In seeking to rebut USA TODAY’s fine editorial on “RyanCare,” a proposal by Rep. Paul Ryan, Ed Haislmaier trots it out once again. He does this in a country whose entrepreneurs discovered a century ago that there are huge economies of scale in the idea that one size does indeed fit all to meet common human needs.

But, then his comic gifts kick in. He just can’t help himself:

KFC, McDonald’s, Burger King, Holiday Inn, Marriott Hotels and many more now global companies all base their business models on the idea that one size fits all. And Wal-Mart might soon teach us that the idea also applies to medical clinics, and someone might show it for hospitals as well.

Wal-Mart as an example of how “one-size fits all?” I know a lot of my liberal brethren would rather be caught dead than be seen inside a Wal-Mart, and there may not be any in the rarified environs of Princeton, New Jersey, but c’mon – are there no photographs in Princeton? Every Wal-Mart I’ve ever seen includes acre upon acre of variety.

And, in case someone doesn’t find anything to his liking in the Wal-Mart, there are thousands of other stores from Dollar General to Saks Fifth Avenue to choose from.

Now, my friend Uwe may prefer the old Soviet-style GUM Department stores for his retail needs, but is that really the model he wants to apply to health care? I can’t wait to hear the reaction once all the Princeton professorate is required to shop only at Wal-Mart.

Fortunately, right below Uwe’s letter is one from a Frank Zoz of Waterloo, Iowa, that is not nearly as funny, but might actually work –

I am absolutely convinced that health care costs will never be brought into control until people are spending their own money, or at least think they are. “RyanCare” changes to Medicare seem to be a step in that direction.

I think the ultimate solution is Health Savings Accounts (HSA) for everyone, with which they pay for insurance premiums and health care. The question is how these accounts are funded.

I am a John Deere retiree and on Medicare. John Deere provides insurance for its retirees. It provides money into an account (similiar to an HSA) from which we can pay for insurance and medical bills. My wife and I happen to have a Medicare Advantage plan and are very happy with it. The HSA covers our premiums and any significant additional costs. We have leftover funds that can be used for emergencies. If the government must be in health care, the best thing it could do is help fund HSAs for everyone.

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House of Mirrors

By Greg Scandlen

So, you think the debate over ObamaCare was frustrating? You ain’t seen nothing yet.

Just as Massachusetts provided a preview of that debate, it is also debuting the coming argument over cost control. An article by Amy Goldstein in the Washington Post  tells us exactly how it will play out.  The internal contradictions are mind-boggling.

She begins by explaining that,

Massachusetts Gov. Deval L. Patrick (D) is trying to “shove,” as he put it, the health-care system here into a new era of cost control.

Yes, “shove,” — kind of like Obama shoved us into his version of Wonderland.

She explains,

The governor’s proposal builds on a surprising consensus among leaders from the state’s insurance and hospital industries, medical society, legislature and governor’s staff who served on a special state commission assigned to diagnose the culprit behind the soaring medical spending. Fee-for-service medicine “is a primary contributor to escalating costs and pervasive problems of uneven quality,” the commission unanimously concluded in 2009.

This, even though it is patently untrue.  Fee-for-service does not drive inflation in health care – or in any other sector of the economy. What drives inflation in health care is the one thing that makes it different from any other sector – third-party payment. Of course, all of those “consensus makers” benefit enormously from third-party payment, so they aren’t about to kill this golden-egg laying goose.

The article also disavows any responsibility the state may have for the unique cost increases in Massachusetts.  It says,

The spending per person on health care is 15 percent higher than the national average — even taking into account the comparatively high wages here and outsize role of medical research and training. The move to near-universal coverage, state figures show, accounts for a sliver of recent increases in insurance premiums, which have soared above inflation. The main reason has been a rapid escalation in prices.

The state is saying, “Don’t blame us, it is the ‘rapid escalation in prices’ that is to blame, not the universal health program.” But why is Massachusetts having a “rapid escalation in prices” that no other state is seeing? Golly. It’s a mystery!

What to do, what to do? I know! We will pay doctors more for doing less!! INSPIRATION! Blue Cross has already begun —

The arrangement is a version of the accountable care organizations that the federal government also is trying to encourage in Medicare. They pay teams of doctors or hospitals a lump sum or what is called a “global budget” for the patients assigned to them. If a team can provide care for less, it keeps some of the savings, assuming it also meets enough of 64 measures of quality that Blue Cross has defined. Today, about one-third of the primary care doctors in Blue Cross’s network are taking part. A half-million HMO patients have been put in them — but not told by the insurer.

The article goes on to say the arrangement is “voluntary,” but voluntary for whom? Apparently not the half-million people who have “been put into them” and not told about it. Is this part of the “shoving” the Governor was so proud of?

Another part of the shoving were the arbitrary denials of insurance rate increases the Governor directed the insurance commissioner to make. The article reports the commissioner rejected 235 of 274 proposed rate increases last year.  Not because costs weren’t going up. The article already said they are. But for crass political reasons, dictated by the Governor who was up for re-election.  What a swell way to run a health care system!

But the article also contains the seed of what a real solution could be. Ms. Goldstein writes:

Attorney General Martha Coakley used new subpoena power to produce a report laying out large disparities in hospitals’ prices and concluding that they are unrelated to the quality of their care, the sickness of their patients or whether the institution is a teaching hospital.

Well, golly, again. If there is a wide variety of hospital prices unrelated to the quality of the care provided, is it possible – just possible – that consumers spending their own money might be able to shop around for the best deal and thereby punish those hospitals that overcharge and reward the ones that provide value?

And is it possible – just possible – that what gets in the way of that is not “fee-for-service” but third-party payment?

Can anyone say – YOU BETCHA!?

GAO Report Insults Consumers, Attacks Agents

By Ross Schriftman, RHU, LUTCF, ACBC, MSAA

Tel. 215-682-7075, rfs270@aol.com

“The great enemy of the truth is very often not the lie – deliberate, contrived and dishonest, but the myth, persistent, persuasive, and unrealistic. Belief in myths allows the comfort of opinion without the discomfort of thought.” – John F. Kennedy (1917-1963)

A report published recently by the Federal Government Accountability Office (GAO-11-392-R) shows a massive lack of understanding about economic markets, insults consumers and attacks health insurance agents.  On page 24 of the report it states, “Currently, insurers typically pay agents and brokers to sell health insurance through commissions based on the price of the product sold.  This may motivate them to sell higher cost products or products that may not best meet the needs of individuals.”  Although the report lists “experts” who provided information for the report, after requesting it GAO could not document how they made such a ridiculous statement.

The statement insults the buying public since people do not simply accept the most expensive insurance if they have an alternative.  Any agent that operates in such a way will soon lose his or her clients and quickly go out of business.  I know an agent who had a client that claimed he was gouging her because her price for her insurance was $1.43 per month more than her neighbor’s premium.

There is a paternalistic assumption among those in government that Americans are incapable of shopping for insurance. Therefore the government needs to create a massive system of state exchanges to help us. State Legislators and Governors have now been thrust into the role of creating health insurance markets and new entities that don’t exist currently. All of this is in the name of reform.  Who will pay for the cost of implementation, staffing and housing these exchanges?  We will.

Further evidence of a poor job by GAO in their report is this strange footnote on Page 19.

“Employers may be reluctant to bring insurance agents into the workplace or to adequately compensate them, and appropriate compensation mechanisms need to be developed to ensure employees are steered into the most suitable plans rather than those that maximize revenue for the brokers.”

Does our government really understand how health insurance is sold, enrolled and serviced?  An agent who is not on site meeting with employees and taking care of their needs will not be in business very long.

Why would employers be reluctant to have their agent take care of this function?  Most of my small business owner clients don’t want to be in the position of taking care of the enrollments and explaining benefits.  They have their businesses to run.  They “hired” me to handle this for them.  I earn my commission, which is the revenue to run my business by performing these important tasks for them.

GAO has done many excellent and professional reports in the past.  This report on how people acquire insurance and suggested alternatives is not one of them.  The entire concept of exchanges is based on an insulting myth that we Americans can’t make our own decisions.  The exchanges will be an expensive, unnecessary and bureaucratic addition to all the other costs of Obamacare implementation.  We taxpayers have already paid $105 billion for the government’s administrative costs for the “reform.”  Where are the savings they promised us?