I blog about free markets in medical care and transparent pricing.
After giving a talk to a group of students recently, during which the long waiting lines for surgery and medical care in Canada were discussed, one of the students defended the Canadian system, saying that Canadians received the same care as we did here- just after longer waits. I encouraged her to rethink her discounting of the time during which much pain and suffering occurs during these “waits.” I told her how eye-opening it has been to meet many of these Canadian patients who have been told that they or their children must wait 2-3 years for life-changing, pain-eliminating procedures. What the student then said is the genesis of this blog: ”These individual cases should be considered in the aggregate, though.”
In medical school I was taught that a certain number of unnecessary appendectomies, for instance, was a good thing, as the surgeon who was never taking out a normal appendix was missing some of the diseased appendices that presented more subtly. This made sense to me then and now, as the risk for missing a needed appendectomy far outweighed the risk of undergoing this procedure unnecessarily. Each and every one of these patients presents themselves differently and the decision to operate or not is an individual one, one which includes the patient’s assessment and acceptance of the risk/benefit picture.
As my dad once told me, “whatever the percentage of folks in the population get cancer, it’s 100% for those who do.” His insight makes things clear, doesn’t it? Neglecting individual suffering for the aggregate, greater good, doesn’t feel statistically justified by the victims of this type of thinking. Which brings me to my point.
Thousands of people are wearing the pink ribbons these days to raise awareness of breast cancer, many of them women, many of these women supporters of the man in the white house and his health care plan. Part of Pharaohbamacare is an emphasis on “wellness,” with mandatory suspension of copays and deductibles for many preventative health procedures like colonoscopies and mammograms. Sounds great, doesn’t it? Maybe- until you realize that “scientists” employed by the government are declaring in their “studies” that too many mammograms are being done, resulting in unnecessary breast biopsies. Just as with appendectomies, some normal breast tissue should be removed to insure that the fewest number of cancers are missed. The recent recommendation by “The U.S. Preventive Services Task Force” and “The National Cancer Institute” (both federally funded) serves to undermine Obamacare’s wellness promise. To believe that there isn’t intense pressure on these “scientists” to find what their boss wants them to find, is naive.
“Official” discounting of the importance of mammograms also demonstrates the true intent of “evidence-based medicine:” a rationing tool. After all, if “studies show” that mammograms should be done less often, government and other third party payers will balk at payment for these “unnecessary” diagnostic studies. More cancer for you, but less strain on the budget! Still thrilled that the government is getting more involved with health care?
Female supporters of Obamacare should be protesting this obvious attempt to ration care for breast cancer. I’m surprised that women aren’t burning their bras in mass riots, insisting that any of these government “scientists” and those in the political machine who control them be barred from wearing the pink ribbons on their lapels.
G. Keith Smith, M.D.
Thomas DiLorenzo has a new book out: ”Organized Crime-The Unvarnished Truth About Government.” I highly recommend it as well as his books on Lincoln and the statist, Alexander Hamilton. His discussion of the mechanics of Washington influence peddling will either wake you up to what the vast majority of politicians are about or will make you laugh out loud if you already know.
He actually has a chapter called, “Pay to Play: Why the Fuss?” I think that reading this book will help everyone understand many of the otherwise unnoticed events taking place all around us. Today, for instance, Aetna announced their plans to buy Coventry Health Care for 5.7 billion dollars. If you asked “where did Aetna get 5.7 billion dollars to go shopping for competitors to buy out” you go to the head of the class. If you are having trouble connecting the dots between the high cost of the premiums you pay to Aetna and their buy out of Coventry, you should go to the back of the class.
What if 5.7 billion dollars weren’t taken out of the medical economic marketplace? What would the price of health care look like then? This is a pretty significant overhead, don’t you think? How much more expensive is a cardiac surgery than it should be to ensure that the Aetna suits get their cut, one that stuffs their accounts with numbers like 5.7 billion?
If you read DiLorenzo’s book you will see the real crime, though. Huge corporations (not just heath care giants) will pay politicians giant sums to enable industry consolidation. Simply, the fewer players in any market, the more power those remaining will have. Monopolies or near-monopolies are the goal of the giant corporations as this power frees them from the customer-serving influences of the free market. With Uncle Sam riding shotgun, they can take what they want from individuals, rather than live or die based on the quality of the product or service they provide. Their profits soar no matter how abusive they are to their captive “customers.” I guess deep down, these giant corporations want to act like the government!
So what is the real crime? Think of Coventry’s sale to Aetna as a casualty of Obamacare. Heavy regulations like the Medical Loss Ratio (that don’t really affect the big carriers), have not only forced smaller companies like Coventry (historically better with customer service than the bigger players) to sell out, but to do so at a lower price. Garage sale prices are always lower if the seller is facing bankruptcy. And see how it works? You carefully shopped and bought Coventry but you get Aetna anyway!
You see now that Obamacare allowed Aetna to steal Coventry in a way. Made them sell and for less than what they thought was fair. This is government at work. The same thing is going on with the rural hospitals, forced into the corner with “Recovery Audits,” a predatory activity by Medicare that the big hospitals have embraced. Unable to comply or withstand these “Audits” many if not most of the rural hospitals will fail, a failure which results in consolidation, fewer players.
If this were occurring in the furniture or swimming pool industry, we might shake our heads and shrug it off. That those in Washington are enabling this activity in the health care industry will result in misery and death while their rich benefactors get even richer. Health care is much too important to involve the mob from D.C., the District of Criminals.
G. Keith Smith, M.D.
Several governors aren’t setting up the health exchanges mandated by the Unaffordable Care Act (UCA). Either they see this as constructing their own gallows, or see it as an unnecessary expense if the election goes the way of the GOP. Any honest governor knows that this is the tool that will be used to crush smaller competitors and stifle any innovation in the health insurance industry, both of these components intended to drive costs to levels never seen, levels that will bring people begging to the government on their knees for a single payer system.
My liberty-loving friend Jonathan Small at OCPA (Oklahoma Council of Public Affairs) thinks it’s time for the state government to get going and create an exchange, as Lord forbid the federal government sets one up for us.
He has a point. But think about what he has said. If you agree with him, then you share his fear of being subject to federal control. But why do you fear this wonderful government that has come to our rescue and brought each of us everything we need, even free health care? You know, they’ve done such a great job up to this point, why not just sit back and let them craft an exchange out of whatever mold they think is best for us? Aren’t they there to help us and make our lives better, more secure?
I don’t know the answer. I think many don’t fear the government and are therefore, in my opinion, asleep. The statists are counting on enough folks not waking up until it’s too late. By then these big government types will be long gone with their loot, blaming whoever follows them of mismanagement of their ideas and policies if things aren’t going well.
Maybe the answer is to let the feds set up all of the exchanges so people can see first hand and soon what this bill was meant to accomplish. Maybe the states and the governors shouldn’t soften the blow this health care law represents. Maybe this approach will wake more up faster. Or maybe Jonathan is right. Who knows?
G. Keith Smith, M.D.
Austrian economists, most notably Ludwig von Mises, have written about the business cycle (and the booms and busts that result) and the role that easy credit, created by low interest rates, plays. Government intervention such as artificially low interest rates, or confiscatory taxation, the spoils of which are awarded to certain connected players in the game, causes “investment” in activities that would otherwise lack the resources necessary for their existence. Thomas Sowell once said that if there is truly a need for anything, even charity, the market will provide for it. If the government is paying for something, it has displaced the market’s proper role, or no need existed in the first place. Whatever you think about Sowell’s statement, I think that this concept is helpful to those attempting to ascertain for themselves what government’s proper role in society is.
“Investment” or spending, the result of inappropriately low interest rates or taxation, invariably leads to mal-investment, if you believe the Austrians. Hint: their economic model is the only one that has predicted every economic downturn. Austrian economists shrug, say “DUH!,” and never seem to be surprised by anything that happens in the economic world. Bottom line: if anything is supported by tax dollars, or cheap debt, it is not stable and has a correction in its future. This is the boom and the bust.
Years ago, I began to view Medicare in this way. Since the source of Medicare money was a robbery, I felt that my neighbor would always push his legislator to cut physician reimbursement. All my neighbor knew was that he was being robbed to pay some doctor for the care for someone across town he didn’t know. This is not a stable business plan. Making my long-term plans based on this revenue source seemed a bit foolhardy. I believe the same instability characterizes anything subsidized by the taxpayers.
This instability also applies to medical research funded by the government. Grant writing is an art, one that is aimed at securing federal funds with little-to-no concern with the utility of the planned “research.” The most imaginative grants are the ones that in a premeditated fashion plan for incomplete results, requiring “further study.” This keeps the money rolling in. Sure, there are serendipitous discoveries occasionally, but the goal is always the money.
State governments, including Oklahoma’s, where I live, dole out taxpayer money to “research groups,” hoping to help them along, as this “creates jobs.” Readers of this blog are by now familiar with Bastiat’s “What Is Not Seen,” his irrefutable point that this money, had it been left in the taxpayers pocket would have gone to other uses, sadly never seen or known, due to this theft. Gifting these research companies this taxpayer loot also bestows a credibility of sorts on them, one which helps these companies more likely to successfully make application for and receive…ready?…federal funds, the source of which is yet again, another stick-up. I always find it bothersome when state level actions, such as those here in Oklahoma, result in federal funds raining down on Oklahoma. Legislators are basically using the loot from their stickup to lobby for an even grander larceny of their constituents by Uncle Sam. We can do without these “favors,” I think.
G. Keith Smith, M.D.
I wrote recently how ironic I found it that those in Washington responsible for the high price and short supply of health care here are the very ones claiming to have the “solutions.” Actually they could help solve health care cost and availability issues by systematically repealing every single law related to health care passed for the last 60 years. No “new” programs or schemes will represent anything other than another public sector disruption of the private sector market forces that have been proven in every other industry to result in the best utilization of scarce resources.
Have you noticed the recent bombardment of news articles on the new “epidemic of obesity.” Pretty soon we’ll have a War on Obesity.” Uncle Sam in charge of what we eat. Can’t wait! Actually, Uncle Sam already is in control, somewhat of what we eat, with various regulations and subsidies come to think about it. In fact, since obesity is primarily a problem of the poor and the government feeds most of the poor with their food stamp program, I think it’s fair to say that they caused this epidemic. I’m sure they’ll stay true to their “cause it then take credit for solving it” strategy here, too. I can see the materials that will be distributed to school age children now: a Shetland pony (with a TSA-like food cop saddled on top) named Broccoli, or something like that. How many billions will be squandered on insanity like this?
And why is someone else’s obesity my problem? Articles say all the time that obesity “costs” billions. It shouldn’t cost me anything unless I’m obese, I’m thinking. I think that those who believe that everyone’s obesity is everyone’s problem should be referred to as obesity pimps, just as Walter Williams refers to those who make their living exploiting the poor for their own political purposes as “poverty pimps.” Applying these derogatory labels to the government goons who would control our lives and rob us at every turn helps deny them any degree of legitimacy.
G. Keith Smith, M.D.
When I was first seriously thinking about the concepts of liberty, I was focused on and fascinated by how well freedom “works.” You know the drill: tax cuts actually increase federal revenue, competition actually benefits the poor as this results invariably in a lowering of prices. While I continue to find this interesting to some extent, this approach to liberty, one which I now consider sophomoric, continues to be promoted as the justification for its own existence. In other words, examples of how free markets result in far superior utilization of resources, lets the promoter of liberty off the hook at a dinner party for having uttered such unmentionable concepts as the free market and capitalism.
But here’s the rub. It doesn’t matter what wonderful deed is accomplished with money taken by force from one individual and given to another. The confiscation of the property in the first place is wrong. Someone’s rights have been violated. For me the argument stops there. Folks argue about the advantages of this or that government program. People talk non-stop about the efficacy of one program or another. If you believe in property rights, you see this as nonsense, all based on the false premise of the legitimacy of theft.
The endorsement of any level of government involvement in health care is an endorsement of property confiscation. Even when government health care is at a minimal level, the principle of inviolable property rights has been surrendered, and only the matter of degree is left to quibble about.
Thinking about the proper role of government in terms of property rights helps to identify and avoid the distraction of whether some “greater good” can be achieved with stolen property. The ends never justify the means. So when you hear someone drone on and on with their trumped up statistics about how “we are the unhealthiest people on earth,” or “the health care here is the worst on the planet while simultaneously the most expensive,” or “countries with single payor systems have the best health care in the world,” or “we have the highest infant mortality in the world,” or some such, just before they use these “failures of capitalism” to justify some government intervention, remember that whatever they are about to propose is essentially a robbery. This just flat makes it wrong, in my book, no matter what they have to say after all of the other noise. If the individual you speak or spar with does not respect your or anyone else’s private property, I don’t think you owe them a hearing of what they plan to do with your stuff.
G. Keith Smith, M.D.
Block granting certain entitlement programs to the states, namely Medicaid, is a hot topic. The RSC (Republican Study Committee) led by Rep. Jordan has proposed legislation to effect this. As anticipated, the usual suspects are crying foul. You know, the stupid people out in the individual states just simply can’t make the right decisions without the expert’s guiding hand in D.C. Can’t leave these ignorant and cruel states to their own devices, you know.
But here’s a thought. The same crowd that is decrying the block granting of Medicaid, is the same crowd that finds favor with the health care system in Canada. Why does this matter? Well…ready?...because the Canadian government administers their health care system with block grants to the provinces. Ouch. This inconsistency is just too delicious to pass up.
There’s more. You see, the Canadian government sends the money to the provinces and when it’s gone, it’s gone. That’s why they have waiting lists. Here, Uncle Sam responds to requests for money and what they don’t send is made up for by the states. All the while, Uncle Sam is telling the states what services they must provide, no matter how much of the difference state revenues must account for. A certain recipe for budget problems at the state level, and something that would be remedied with block grants.
Think of a Canadian health card like a pre-paid phone card on a party line. Ever hear your elders talk about the good old days when phones shared a party line, that is, when multiple people shared the same phone line? That’s Canadian health care. You have a pre-paid card, on which millions of others are running up charges, so that at any given time, you don’t know whether the card is worth anything or not. It is certainly worth less on Tuesday than the prior Monday! In the U.S., the card has a backup card held by the state governments, the limits of which are being tapped out by the insanity of federal mandates related to Medicaid.
When I say that the Canadian government sends the money to the provinces, remember where they got it. They took it first from the provinces. Messed around a while, took some hookers out to dinner, golfed at various retreats, then sent it back…well…what was left of it. Having said that, need I point out the obvious: better not to send it to the thieves in the first place.
Block grants are a step in the right direction, but just a step. To stop with block grants is to emulate the Canadian system. I anxiously await some supporter of Obamacare to tell me why block grants are a great idea in Canada and aren’t here when it comes to health care.
G. Keith Smith, M.D.
A surgeon I know recently removed a patient’s thyroid gland. Attached to the gland was a lymph node. Fortunately for the patient, the pathologist found the lymph node normal and the patient’s only inconvenience other than this surgery will be taking thyroid replacement for the rest of her life. All seemed to be going well until the surgeon was contacted by one of the “not for profit” hospital administrators. What follows is their conversation.
Surgeon: Hello. (on phone)
NFPHA (“not for profit hospital administrator): Doctor, we need to talk about the lymph node dissection you did on Mrs. X.
Surgeon: I didn’t do a lymph node dissection on Mrs. X.
NFPHA: Yes you did. There was a lymph node on the pathology report.
Surgeon: Yes. But that doesn’t mean I did a lymph node dissection.
NFPHA: It does in my book. I need for you to change your dictation to indicate that you did a lymph node dissection as this will allow us to bill a much higher amount for the case.
Surgeon: You don’t understand. I didn’t do a lymph node dissection. That is a radical and separate procedure from the thyroidectomy that was done. That there was a lymph node attached was fortuitous but not an indication that a lymph node dissection was done.
NFPHA: You don’t understand how much money is at stake.
Surgeon: Listen to me carefully now. This conversation is over. If you ever ask me to dictate a procedure again that I didn’t do, in order to fraudulently “upcode” a surgery, I will contact the family concerned and several good lawyers that I know and inform them of what you are doing. Do you understand?
As I’ve said before, I couldn’t make this stuff up if I had to. Beginning to see who is behind the high price of health care?
Oh. One more thing. Do you think the administrator would have even asked if this surgeon had been his employee?
G. Keith Smith, M.D.
A colleague of mine told me about an Oklahoma City area hospital that just introduced their electronic medical records system. At first glance, the inefficiencies that these systems introduce are annoying and surprising. Take for instance, the emergency room. The head of the E.R. told the hospital administration that one of the metrics they follow as a contracted group of E.R. physicians is their “walk out rate.” This the rate at which patients, once checked in at the E.R., simply leave, having waited longer than they were willing to wait to be seen. Since this hospital opened, their walkout rate was no more than 3 patients/year. This is quite an accomplishment. The first weekend the EMR was activated, 9 patients walked out due to the increased wait times associated with the system. Now you are saying,”Hey, that’s not fair! The system is new! Once they get their act together, it will be more efficient.”
Not so. Facilities that have adopted these systems have found that the opposite is the case. Inefficiencies having been introduced into the system inclines the working staff to harbor the notion that nobody at the top cares about efficiency and waste, so why should they? This is indeed what has happened. The old rolling snowball.
Enough of our first glance. Taking a closer look makes it clear that the EMR will be used as a rationing tool. Emergency rooms can’t see as many patients if they have to wait longer. Surgeons can’t operate on as many patients if the operating experience is a 40% longer experience. Rather than have surgery next Wednesday, surgery will be 3 weeks from Friday. You don’t think anyone will die waiting, do you? Hospitals, of course, will figure out a way to charge more for doing less. More on this in my next blog.
G. Keith Smith, M.D.
A friend of mine just called. An employee of his required a CAT scan of her abdomen. She was charged by a local “not for profit” hospital $4400. This is $3600 more than the independent facility to which I refer patients charges. After her insurance paid $2200, she was billed $700 and the hospital wrote the rest off as a loss.
What’s my point? Just down the road, a facility with a better radiologist that would like to have more business than they have, would have done the scan for $800. The insurance company didn’t want the patient to go there. You wonder why health care is so expensive? Then there’s this other little nasty bit. If you have followed this blog you are familiar with the phrase “uncompensated care.” You can check out the details of this scam here if you are interested in knowing how the payments to hospitals are calculated. Basically, my friend’s employee as a patient was forgiven the $1500, but not as a taxpayer. This $1500 uncollected amount goes in to the “uncompensated care” pool for the purposes of the calculation that will result in a car dealer like rebate to the hospital at the end of the year’s hospital-government shell game. Actually, current year “losses” result in future increases in payment so the losses are always seen as “now” without acknowledging the future, offsetting payments. This, of course, allows the big hospitals to constantly poor mouth it, while knowing that future loot based on their reported losses is on the way courtesy of the taxpayer.
This is what I call the reverse Enron accounting method. Rather than overstate your earnings, overstate your losses. This fictitious loss translates into big bucks for our cost-shifting, price-gouging hospital friends. I couldn’t make this stuff up if I had too. Can you see from the formula above, that it is the spread between “billed” and “collected” amounts that determines the rebate? Isn’t it therefore obvious that the patient who clearly can’t pay, is the patient most likely to receive the most exhorbitant bill? This explains why the uninsured get blistered by the hospitals and see bills the giant size of which other patients never see. The hospital actually doesn’t want them to pay! The hospital also needs this red ink to maintain the fiction of their non-for-profit status.
All this said, isn’t it clear that little-to-no charitable care is rendered at all at these hospitals? They collect one way or the other.
Health care reform? Yeah, we need it. We need to get the government out of this business. The government and their crony hospital friends will bankrupt all of us if we let them.
G. Keith Smith, M.D.