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.


Is the Mandate Really “Essential?”

By Greg Scandlen

A recent column by George Will brought to my attention a new paper by Mark Hall on the constitutionality of the individual mandate in the University of Pennsylvania Law Review.

Will does a nice job of rebutting Hall’s central argument, by writing:

Mark Hall of Wake Forest University, in an article for the University of Pennsylvania Law Review, says there would be constitutional “uncertainty over the mandate in isolation.” But it is “inextricably intertwined” with Obamacare’s “other insurance regulations” — e.g., those pertaining to preexisting conditions — “which indisputably are constitutional.” So the “strongest defense” of Congress’s power to enact the mandate is “the acknowledged undesirability, if not impossibility” of the regulations regarding preexisting conditions, absent the mandate.

Hall says that the mandate “meets a high threshold of necessity to accomplish the overall reform scheme, clearly within congressional power, to create a market structure in which no one is ever again medically uninsurable.” But unless we postulate that Congress has whatever power is required to create such a market structure, this question remains: Does the fact that Congress has the constitutional power to do X — say, guarantee universal access to insurance — make Y constitutional merely because Y is necessary for doing X?

Congress has the constitutional power to combat political corruption, the “appearance” thereof and the “circumvention” of laws for this purpose. But suppose Congress, exercising this power by regulating campaign finances, decides that abridging freedom of speech is necessary for its anti-corruption measures. This necessity, defined by this preference, does not make such abridgement constitutional. The Supreme Court said as much concerning McCain-Feingold.

That is fine as far as it goes, but I want to make a different point – is the mandate really “essential” to the other insurance “reforms” in the bill? The Obama Administration and it supporters certainly argue that it is, but we have seen that this administration never lets evidence stand in the way of their political ambitions.

In fact, there is plenty of real-world evidence that contradicts the argument. These are the insurance markets in New Jersey, New York and several other states that have adopted community rating and guaranteed issue in their insurance markets.

It is true that those provisions create their own problems, but health insurance continues to be available in those states, even without a mandate to purchase. Ipso Facto – a mandate is not “essential” to the workings of community rating and guaranteed issue.  Case closed.

Yes, these provisions create problems, especially that costs rise dramatically. But the mandate itself also causes problems. So whatever is done by the regulators will not be problem-free. Congress has chosen a set of policies that will aggravate these problems. That Congress has chosen one set of problems over another set of problems hardly supports the idea that it can therefore violate the Constitution.

But there are several other ideas in Hall’s paper I want to address. These are found in the first few paragraphs of his paper, which are rife with fuzzy thinking.

He writes:

Congress clearly  would  have  authority,  if  it  wanted,  to  enact  a   single-payer socialized insurance system, using its power to tax and spend “for the general welfare.”

Yes, indeed, it could do that. Why did it not? Because there is no political support for such a program. It decided instead to hide its intentions behind a façade of illusions. This dishonesty hardly supports the constitutionality of its actions.

Hall also writes:

The idea for an individual mandate originated from Republican lawmakers, who never questioned its constitutionality until now.

This is a peculiar argument that says more about Mr. Hall’s political orientation than about any substantive arguments. Mr. Hall seems to believe that all Republicans are required to think alike.  His support for the notion comes from a bill that was introduced in 1993 and an op-ed by Bill Frist from 2009. From that, he concludes that no Republican has ever questioned the constitutionality of an individual mandate.

He continues:

… considering the well-understood economics of health insurance, a mandate to purchase insurance is obviously part and parcel of regulating how insurers design, price and sell their products.

We dealt with this above. Apparently, the “well understood economics” were not well understood by legislators in New Jersey, New York and all of the other states that routinely regulate “how insurers design, price and sell their products.” Indeed, while every state in the Union issues such regulations, only one (Massachusetts) has decided to mandate purchase.

So, the mandate is not “essential” to the regulations of the law, and the states have been issuing such regulations for half a century without mandating coverage, even though they, unlike Congress, are constitutionally able to do so.

The Future of Brokers

By Greg Scandlen

Now that the Medical Loss Ratio (MLR) standards are in effect, the role of producers is once again under scrutiny. Writing in Health Plan Week, Steve Davis reports on the recent NAHU conference in Washington, which included a presentation by former Pennsylvania Insurance Commissioner Joel Ario, who now directs HHS’s Office of Insurance Exchanges. Mr. Ario thinks there may be a role for brokers in the insurance exchanges as “navigators,” but:

Ario said the law envisions “baseline similarities” between navigators and insurance agents. However, he said agents sometimes don’t possess necessary “linguistic capacities” and “don’t necessarily serve all of the different populations as well as they could be served.” Those comments were met with boos.

In a follow-up post on the AISHealth Blog, Rick Biehl fleshes out the situation:

Certain features of health reform will invariably be detrimental to health plans, hospitals, provider groups and pharma companies. But for most of these bloated corporations the impact of reform is likely to resemble a pebble dropping into the middle of a lake. For agents and brokers – many of whom have been productive members of local communities for decades, if not generations – reform could mean the end of their livelihood and perhaps their profession. The lack of reason and fairness of this unintended consequence is palpable.

But Mr. Biehl thinks this is all just a horrible mistake:

While clearly not the intent of Congress, “insurance broker/agent” may be the only job title in America that, on a personal level, is facing such dire consequences under reform. Who else in health care business stands to suffer such enormous personal losses?

Sorry, Rick, but you are wrong on this. Getting rid of agents and brokers was EXACTLY the intent of Congress, and all other progressives of the past 100 years. When these people talk about “administrative waste” they mean broker commissions.

“Getting rid of the middleman” has been a core tenet of socialist policies forever. Salesmen especially are seen as leaches on society who add costs but no value, and the socialist economies suffer because of it. The old Soviet Union actually grew plenty of wheat on the farms, and it had plenty of hungry consumers in the cities. What it was missing were the middlemen who could arrange to transform the wheat into bread and transport it from the farm to the city.

Congressional progressives knew that by reducing loss ratios and creating exchanges, they would drive brokers out of business. They figured that consumer questions could best be answered by community organizers with the “necessary linguistic capacities” and experience in reaching out to “communities.” This was seen as a job for ACORN, not some independent businessmen.

All this has been obvious since before Obama got elected. It is shocking that the brokers still haven’t figured it out.

Who Pays?

By Ross Schriftman, RHU, LUTCF, ACBC, MSAA

Horsham, PA

Tel. 215-682-7075



The argument that everyone must have health insurance so that we who are insured don’t end up paying the medical bills for those who aren’t insured has been repeated by so many people so many times that it has become an irrefutable truth. That is why Obamacare’s linchpin provision requires all of us to have health insurance by 2014. In fact we will be mandated to purchase only the kind of coverage designed by the Secretary of Health and Human Services in Washington.

Interestingly, the fact is that uncompensated care, although a serious problem, is a small part of our overall healthcare costs.  In 2008 it represented an estimated $43 billion of our $2 trillion healthcare bill or about 2%.  I have not seen a study that shows how much of uncompensated care is for health care services received by people who already have insurance but refuse to pay a deductible or copayment or for services excluded by the insurance plan and not paid by the individual who received them.

When did it become one individual’s responsibility to pay for someone else’s expenses? If someone doesn’t have life insurance and dies does everyone who has life insurance have to pay for his funeral and support his family?  If someone doesn’t have disability income insurance and becomes sick do the rest of us get stuck paying his mortgage and utility bills?  Of course not.

So why would it be any different with health insurance.  Whether or not we have health insurance we ultimately are personally responsible for our medical bills being paid.  Over the years the share of out of pocket expenses people pay for health care in our nation has gone from 10.5% in 1970 to only 4.3% in 2009 according to a recent report by the Centers for Medicare and Medicaid Services.  When did we begin to think that our health insurance is supposed to pay for all of our healthcare needs?

Last week a second federal judge ruled that mandating that everyone purchase health insurance is unconstitutional and he voided the entire new law using the government’s own argument that the mandate was a key provision of the legislation and not severable from the rest of the law.

Eventually our highest court will render a decision as the government has appealed the judge’s ruling. If the individual mandate is ruled constitutional by the Supreme Court then why wouldn’t the next step be that everyone is required to purchase long term care insurance?  Using the Obama Administration’s same logic of “public good” could then be applied to this kind of insurance. After all right now the taxpayers get stuck for more than 50% of the cost of long term care services through the Medicaid program.  The vast majority of people receiving benefits under this program failed to purchase private long term care insurance.  The Medicaid program is helping to bankrupt the states and drive the Federal government into deeper debt.

Then take into account that only about 20% of American workers have any kind of disability income insurance and then realize that about 60 million adult Americans have no life insurance.  An individual mandate on health insurance is just the first step of our government mandating that we purchase all kinds of goods and services that could be determined to be “Necessary and Proper” for the public good.  If this first step is successful than the whole concept of our democracy in which free people make their own decisions and are personally responsible for those decisions is gone.  We will no longer be the nation of freedom that we were founded upon


Fixing Medical Liability

By Greg Scandlen

(Note: I am hoping for and expect some vigorous comment and discussion on this issue. Fire away!)

One of the key points for the Republicans going forward is what to do about professional liability. This was ignored in ObamaCare, but is essential in any health reform proposal.

We have been wrestling with it for decades without much success. There have been a handful of states that have taken action, notably Texas and California, with good results. Other states, like Illinois, have tried, but in that case the state Supreme Court disallowed any limit on what plaintiffs could collect, so threw the law out.

As with a lot of intractable issues, sometimes the problem is that we aren’t thinking about it in the right way. The problem needs to be reframed to get us out of the cul-de-sac. Let me try to do that here.

First principles. Tort law is a state, not a federal responsibility. Some of my physician friends are so frustrated by the control the trial bar seems to have over state legislatures, that they are looking to the Feds for relief. I understand the sentiment, but I don’t think it is a good idea to sacrifice Constitutional principles of federalism for expediency. Plus, I’m not sure the trial attorneys are any less influential in Congress than they are at the state level. And, if the Feds take over the issue and get it wrong, it will be nearly impossible to fix in the future.

A better approach would be to remove professional liability from the tort system entirely. There are enormous problems with using the courts to remedy the consequences of poor medical outcomes. Notice I say “poor outcomes.” Many of the malpractice complaints have nothing to do with “malpractice” per se. The physician is not shown to have committed any error, or to have been negligent or incompetent. Things simply didn’t work out the way the patient hoped. If a jury is sympathetic to the plaintiff, it may provide an award regardless of the performance of the physician.

There are other problems with using the tort system in these cases:

  • Many patients are uncomfortable bringing suit or in dealing with lawyers. They avoid courtrooms, so have no mechanism for curing their complaint.
  • Contingency fees often mean that the complainant receives only a fraction of the award, with 25% or more going to the attorney.
  • Marginal cases are likely not to be brought at all. An attorney working on a contingency will cherry pick only the strongest cases and not risk investing time on a borderline case.
  • When there is real negligence or incompetence, the offending physician is not disciplined other than having to pay higher insurance premiums. The medical board may not even be notified of the problem, so the physician is free to continue being negligent or incompetent.
  • If the suit is settled before judgment, there is no record of the outcome, so no one knows that a particular physician has a problem.
  • Finally, using the courts is expensive and slow. It may be months or years before a damaged patient receives any compensation. Those may be months or years of extreme discomfort or pain for the patient, and real economic damage until the case is resolved.

Let me offer a better approach. This would be a no-fault system that would allow, but not require, legal representation. There would be a pool of money for awards financed by a tax on all health care providers, possibly as a percentage of income. This tax would be strictly dedicated to funding the pool. Providers would benefit by not having to pay malpractice premiums. Awards would be made by an administrative law judge (ALJ), kind of like the Workers Compensation system used by most states. The standard for awards would not be punitive, but be aimed at making the patient whole. Decisions by the ALJ could be appealed to a higher level of adjudication. The ALJ would notify regulatory boards of cases of negligence or incompetence, and the discipline of the offending provider would be left to the appropriate regulatory board. All cases and all awards would be public information. Every patient would be notified of his or her rights of remedy prior to receiving a service. Creditors of the damaged patient would be informed that a case is underway, so would be more patient in collecting debts.

This could be a federal system, like the federal bankruptcy courts. It would allow the states to continue their tort law systems in tact, but remove medical liability from those systems.

I don’t know if total costs would be any less than the current system, but I think it would be far more efficient and fair to both patients and providers.

HIPAA, The Glaring Omission

By Ross Schriftman, RHU, LUTCF, ACBC, MSAA

The day that the U.S. House of Representatives began debating repeal of Obamacare the Secretary of Health and Human Services released a report claiming that there are between 50 million and 129 million non-elderly Americans with pre-existing medical conditions.  According to the report many of 

I am not sure why there would be such a wide range in the numbers of people with pre-existing conditions in this report but even on the low end of 50 million the report indicates that we have high health care costs in this country because we have a lot of sick people.  If the report is correct adding the high number of uninsured with conditions to health insurance coverage will most certainly cost lots of money and will result in higher premiums for everyone.  You can say that the need to get these people covered is an admirable goal.  You can’t say at the same time that adding them will reduce costs.

Listening to the debate on repeal I heard one Democratic member of Congress after another claim that if someone changes jobs and has a pre-existing condition they couldn’t get coverage with their new employer or that condition would not be covered.  Between their statements and the report from the Administration there is not one word mentioned of the protections most Americans already had prior to the passage of last year’s massive “reform” bill.

Fifteen years ago the bipartisan Health Insurance Portability and Accountability Act (HIPAA) was enacted.  This landmark legislation was also known as Kennedy (D-Mass.)/Kassebaum (R-Kansas)  The law guaranteed that if a person changed jobs the new employer’s health plan would cover them.  HIPAA eliminated pre-existing condition clauses for anyone who had coverage from their old employer for at least 18 months and didn’t have a break of more than 63 days in coverage.  It also required each state to set up mechanisms to provide that those who had group coverage could get individual coverage without being turned down or having a pre-existing condition clause applied under reasonable rules. In my state of Pennsylvania the Blue Cross Associations act as the insurer of last resort under HIPAA.

The omission of HIPAA in printed materials and debate by those who support Obamacare is a glaring and purposeful act.  It hurts the ability of millions of Americans to make informed decisions about their health, finances and careers.  For example a person who wanted to take a better job and has a sick child could listen to the debate and read the government report and unfortunately think that that the child’s condition would not be covered under the new employer’s health plan.  This person might then turn down the opportunity to get that better job.

Giving out wrong information by our government hurts the very people they claim that they want to help.  To the Republican members’ discredit I didn’t hear one word about HIPAA protections in their response during the debate.

Yes.  There are problems that need to be addressed with our current health care system.  But to make a case and tell people wrong information that can harm them is malpractice on the part of our government officials.



Was I Too Harsh?

By Greg Scandlen

My last post was pretty critical of the House Republicans in their debate over repealing ObamaCare. Was I too mean to them? Not at all. My skepticism about Republicans and health care is well-earned. Most of the leadership of the Republican Party over the past twenty years has been perfectly willing to discard free markets when it suits them.

I am reading George W. Bush’s book, “Decision Points.”  On page 46, he writes, “… I stood with Senators Pete Domenici and Ted Kennedy and signed a bill mandating that insurance companies cover treatment for people with mental illness.” Why did he do this? Because he once had a business partner, Rusty Rose, who had clinical depression. So, it didn’t matter a whit that signing this bill made coverage more expensive for working people, and increased the number of people who couldn’t afford to be covered at all. Good ol’ rich Rusty needed mental health services, so why not make those working stiffs pay for it?

In June of 2008, former Speaker of the House Newt Gingrich and prospective candidate for the Republican nomination for president, said it was “fundamentally immoral” for anyone making over $75,000 a year to be uninsured. He was all for an individual mandate. Gingrich has also been a big proponent of government-mandated health information technology.

The front-runner for the Republican nomination, Mitt Romney, of course was the person who signed the Massachusetts mandate into law, and he defends it to this day. Granted he tries to wiggle out of any comparison of his plan and Obama’s plan, but really the only difference is that one is state and the other is federal. The workings of the two are otherwise identical, to the point that Romney’s point man on his plan, Jon Kingsdale, has written, “We should all feel very proud of having created the model for national health reform. The power of the Bay State’s example is enormously consequential. I believe that national reform would not have happened without it.”

Former Republican Senate Majority Leader Bill Frist is “is urging House Republicans to drop their effort to repeal the health care law,” according to NPR. He went on to wax euphoric over it, saying its elements “need to be preserved, need to be cuddled, need to be snuggled, need to be promoted and need to be implemented… I mean, what came out of Washington, D.C., the vision, the construct, the policy, is beautiful on paper…”

Bob Dole urged Republicans to help pass ObamaCare in October 2009, saying “This is one of the most important measures members of Congress will vote on in their lifetimes if we don’t do it this year I don’t know when we’re gonna do it.” This is the man Republicans chose as their standard bearer in 1996.

These have been the leaders of the Republican Party — former President, former presidential nominee, former speaker of the House, former Senate majority leader, and front-runner for the nomination in 2012.  All could care less about free markets in health care. All want Washington (or Boston) to dictate the health care system.

Fortunately, they are all former office holders. These are the people who destroyed the Republican brand after Ronald Reagan left office. They are the reason Republicans had lower approval ratings than even the Democrats in Congress.

Fortunately there is a new generation now in office. One example is Paul Ryan, who did exactly what needs to be done yesterday. See this short video of his statement during the debate.

These guys have one opportunity – just one – to show the country they have some principles and some spine.