Sunday, March 28, 2010

Health Care Reform: Who Won and Who Won More?

The Patient Protection and Affordable Care Act was signed into law earlier this week by President Obama. The ceremony was notable for the president’s use of 20 pens to sign the bill, and for a vice-presidential expletive that has gone viral. Biden’s presumed private verbal ‘high five’ to the president was heard and widely circulated. Don’t these guys know that when they’re in public that they are never off mic? Our macho vice-president was emulating his vice-presidential predecessor who dropped a similar verbal bomb onto Senator Patrick Leahy in 2004. Cheney’s muscular rhetoric was no aerial drone attack; he delivered his message face to face to the Vermont senator. I wonder if Dick ever invited Pat on a hunting trip?

Obamacare is now law. Will this lead us to Armageddon or to the Garden of Eden? I confess that I haven’t read the bill, but then neither did the legislators who voted for or against it. Sure, the specifics are important, but what we really crave to know is what the score is. Who won and who lost?   Indeed, the press feeds us daily with their ‘who’s up and who’s down’ reportage. They do it because we demand and consume it voraciously.

I wanted to give my spin on the winners and losers in the contest, but I was stymied. After considering the various players in the game, I realized that everyone won. The health care reform bill is the tide that lifts all boats.  No one loses.  See for yourself.



Entity                      Outcome         Explanation
Hospitals                   Win!               Millions of new customers

Trial Lawyers           Jackpot!        Do you need an explanation?

Pharma                       Win!               Billions from doughnut closure

Uninsured                  Win!               32 million winners

Rush Limbaugh         Win!               'Ditto head' material for years

Press                              Win!              Partisanship is their mother's milk

President Obama       Win!              Pulled off a legislative triumph

Primary Care Docs      Win!             Will reap a windfall of pennies

Government                  Win!             More power and control

Deficit                              Win!             Dems guarantee it!

Health Care Costs        Win!             See above explanation

Affluent Americans     Win!             Pride in paying their fair share.

Medicaid                         Win!              16 million new members

Public                              Win!              Perfect low cost high quality care

Tea Party                        Win!             Awesome recruitment tool

The GOP                          Win!             Wait 'til November


Congratulations to everyone for a spirited race and a great victory.  There's room in the winner's circle for everyone.  No second place finishers here.  In the Obama Health Care Games, every contestant walks away with the gold. 

Why, then, don't I feel victorious? 

There are some choice words and phrases that I've left out of this post.  Perhaps, if I were Vice-President of the United States, then I could fire off my verbal fusillade with impunity.  However, as a small town blogger, I have to be more careful.  I know that I'm not 'off mic'.

45 comments:

LeisureGuy said...

I don't think this will be a big win for the GOP. So I also will wait until November to see. The GOP misplayed this quite badly.

Teresa said...

Actually, the GOP and the American people played this masterfully. The sleeping giant has been awakened. The GOP listened to the American people, unlike Demoncrats. Democrats shoved this disastrous health care "reform" bill down our throats and the Tea Party approach, as well as many other Americans approach is to boot out as many Democrats as possible in the November elections. If GOP members are replaced, they will be replaced with a more conservative Republican.

John said...

The dripping sarcasm of your post makes me reluctant to leave a comment, but from the tenor of several past posts you strike me as someone who can approach a subject with an open mind.

Two items:

First, here are three easily understood concepts that are confusing the arguments about the new law.
1. Professional compensation is not the same as profits. Health care is not furnished by insurance companies.
2. Health care is furnished by medical professionals, not insurance companies. The mission of insurance is to manage risks.
3. Medicare Advantage, a private, for-profit insurance product, is not Medicare. Medicare is government-managed and private insurance is not.

Second, Maggie Mahar describes in a recent post the symbiotic, incestuous relationship between legislators and lobbyists that trap them into political positions that keep them from making hard decisions.

Maggie tends to be overly dramatic, but the core of her observation is solid. The changes that are certain to come about will be measured in years, not months.
And in the course of time I predict that company-sponsored group insurance plans may not be any more attractive than private plans, giving US companies a competitive advantage in the global marketplace now missing in a world where other countries have found ways to provide health care to their citizens without saddling a disproportionate share of the costs on business and commerce.
(See this excellent analysis of the challenge from the American Enterprise Institute, a place with pristine conservative credentials.)

Michael Kirsch, M.D. said...

Appreciate comments. Appears that LG and Teresa might be cancelling out each other's vote. Thanks to John for suggesting that I can consider 2 sides of an issue. I am very familiar with Maggie's blog, which leans far to the left. Indeed, I have left comments there from time to time, and have been a lonely voice. The majority of her commenters are Maggiophiles. I remain a deep skeptic of the health care bill. It will cost much more than is currently predicted, as always occurs with government initiated projects. ATT just took a $1 billion charge for anticipated health care costs, and other corporations will follow. The states, even those not suing the Federal Government, are worried about shouldering costs of HCR. For example, in 3 years, the states will have to assume their share of the 16 million new Medicaid enrollees. Many states are already in dire financial straits. Beyond the costs, I am also skeptical that the plan will deliver the quality and volumen of services promised. Do you think that this landmark legislative achievement is a great bill?

Evan Falchuk said...

Good stuff, Michael. We haven't even gotten started on the 'doc fix' problem yet - this is going to be an issue for a long time to come.

Hey, you should submit this to Grand Rounds - the theme this week (I'm hosting) is health care reform.... (details here: http://bit.ly/doOSA5)

Cheers,

Evan

The Medical Contrarian said...

Losers - next generation who inherits the financial calamity created by yet one more program which borrows from the future to pay for the present.

John said...

Thanks for your measured response to my other comment. All I ask of anyone is accuracy in characterizing details, disciplined clarity of thinking and the avoidance of ad hominem arguments. When I cite a scholarly paper from AEI and cite a policy plank from the Bush years I don't believe that is a "hard-left" approach to the subject.

I want to reply to this:

...in 3 years, the states will have to assume their share of the 16 million new Medicaid enrollees. Many states are already in dire financial straits. Beyond the costs, I am also skeptical that the plan will deliver the quality and volume of services promised.

That is factually correct. Probably. But what is the alternative?
Health care inflation absent any attempts to curb the trend will be worse than the scenario you describe. (Of course it is pointless to argue about the future when all we have to do is wait and see what happens.) A swollen future Medicaid population is a given, with or without the new law, and the sad state of the economy is certain to become worse before it gets better, again absent any impact of the new law.

Maggie's link to the Ezra Klein column is flawed. This is the link for anyone looking. He points out that the new law retains Congressional oversight but that oversight is now forced into the light of day rather than the currently hidden "oversight" which has become yet another pork item more for lobbyists than constituents.

The bottom line is that IPAB creates a continuous system for controlling costs in Medicare and trying out new reforms and experiments. For all those disappointed by Congress's fecklessness when it came to cost controls in the Affordable Care Act, know that Congress actually agrees with you, and is trying to do something about it. Or at least let someone else do something about it.

Put another way dear to the hearts of industry and other special interests, Medicare rates and policies are being "outsourced" to MEDPAC, now rebranded as IBAP (Independent Payment Advisory Board). That's not as glamorous as outsourcing to commercial banks (as in the case of student loans) or for-profit insurance companies (as in the case of Medicare Advantage) but there is good reason to expect that a panel of TECHNOcrats will cost fewer tax dollars than all the BUREAUcrats working day and night. These appointees (who have been around for years, incidentally, but only charged with making "recommendations") will have teeth in their recommendations.

Whether or not this approach will "bend the costs" is up for discussion. None of us can predict the future. But it is my belief from the homework I have done during the past two years that the right people are finally being heard and I trust them with the fiscal scalpel far more than I do those who got us to the steaming pile of health care inflation that threatens to sink the rest of the economy without radical intervention.

In terms a physician can appreciate, tax dollars mixed with medicine (read Medicare, Medicaid, tax-advantaged non-profits, MSA's, HSA's, business deductions for group insurance and much more) have resulted in something like an e.coli contamination of a meat processing plant or a MRSA community outbreak. Drastic interventions are needed. Doing nothing (i.e. status quo) is no longer an option. I appreciate the first-do-no-harm concept, but health care in America is now facing something like the aftermath of the Haitian earthquake. Amputations or other disagreeable measures are all we have left.

John said...

I know this is getting long, but one final point. Please take a look at the AEI link I furnished. Your line that ATT just took a $1 billion charge for anticipated health care costs, and other corporations will follow is exactly the point. And uncoupling health care from employment is the only way out.

It is my expectation that when the insurance exchanges mature in the various states and everyone in the country no longer is handcuffed by "job lock" because of company-subsidized group insurance, the economy will flourish, exports will have a competitive advantage in the global marketplace and an array of private insurance plans will offer products to suit every household budget, a state of affairs the at the moment sounds like magical thinking.

This is not coming from Left, Right or Center. This has more to do with technocracy than bureaucracy. Please give careful attention to what I have taken this morning to leave. At some point this conversation must be wrested from the political arena to the medical arena. Otherwise, the distinction I point out between corporate profits and professional services is without meaning.

I am confident that your professional expertise as a physician (and blogger) far outrun any influence that either of us (you and I both) has as a politician. Our role is to be good citizens among our peers and professionals when we go to work. As a responsible citizen and fellow blogger I urge you and others to tease out business and politics from the more important professional goals in this acrimonious debate. As in all matters the cream will rise. That's why good and needed physicians, both general and specialized, will be well compensated. Not because they played their politics right, but because they are good at what they do best, delivering a high standard of health care.

Evinx said...

Some interesing posts - but some simply confuse wishful intentions and the liklihood of their happening.

Many agree on what HCR should accomplish.That is the easy part. Will this new law accomplish those objectives at a cost that is actuarily sound?

Medicare did not.
Medicaid did not.
Romenycare is not.
Amtrak is not.
DOD projects do not.

Why would anyone believe a politically charged organization (Congress + WH) would be able to solve such problems when there is zero evidence they have succeeded elsewhere?

Frankly, I hope there isn't a "docfix" - the sooner the system implodes from the effects or price controls as a system of allocation of resources, the sooner we can get own with building a better system that we can afford.

Michael Kirsch, M.D. said...

@Evinx, of course, there will be a 'doc fix', but there won't be any offet to pay for it. This may be good for the medical profession, but isn't good for the country.

@John, thanks for your thoughtful comments. I will offer a brief comment, as to respond to your expansive remarks would require that I cancel an afternoon of patients.
With regard to your comment, “At some point this conversation must be wrested from the political arena to the medical arena”, I fully agree. However, I do not believe this is possible. One thing we all learned this past year is that politics permeates the health care issue. It cannot be separated from it. This was well illustrated in the USPSTF mammogram recommendations, which were pilloried by various advocacy groups, which caused the Federal Government to walk aways from its own panel’s recommendation.

Of course, there are serious defects in the current health care system. I am skeptical, however, that the recent bill the president signed will remedy them. On paper, 32 million uninsured will have coverage. Even with higher taxes and declining reimbursements, I don’t think there will be nearly enough money to pay for their coverage, and for the other promised benefits. Does anyone know exactly where the $500 billion of Medicare cuts will come from? It is inconceivable that these cuts will not be contaminated by the politics of the issue.

I don’t see costs decreasing.
I don’t’ see medical quality increasing.
There will be greater access to care, but I’m not sure how it will be paid for or who will see these patients as we already face a shortage in primary care.

John said...

Two points. This time I'll be quick.
You put your finger on the nub of the problem here:

One thing we all learned this past year is that politics permeates the health care issue. It cannot be separated from it.

Point #1. The operative word is "recommendations." You are correct that the Feds copped out, but that has been happening since the group was empaneled years ago. The difference is that this time the political dimensions of the problem were in the spotlight. I'm not sure that the whole matter may have been the political equivalent of a brick up the side of the head of a few Congressmen to make them see how destructive and expensive the status quo has become.

Point #2. The panel of experts will still make "recommendations" but those ideas will no longer be as easily countermanded. This is how Klein said it in his column.

If Congress approves the board's recommendations and the president signs them, they go into effect. If Congress does not vote on the board's recommendations, they still go into effect. If Congress votes against the board's recommendations but the president vetoes and Congress can't find the two-thirds necessary to overturn the veto, the recommendations go into effect. It's only if Congress votes them down and the president agrees that the recommendations die. “I believe this commission is the largest yielding of sovereignty from the Congress since the creation of the Federal Reserve,” says Peter Orszag, who's been one of the idea's most enthusiastic supporters.

The bulldog now has teeth. The same group will have input into Medicare rates as well as treatment regimens. And with Donald Berwick at CMS there's a new sheriff in town.
This is from one of Maggie's tireless comments...

IPAB isn't just about changing fees, it's about saving Medicare dollars without cutting benefits for Medicare beneficiaries. That means making structural changes that change the way care is delivered--which includes looking at excess capacity.
I suspect that 10 years from now, people will be astounded by how much IPAB had accomplished. The key is that it is so well insulated from Congress.
Legilsators can't "edit" the proposals-- cutting one part of the package, or including a special exemption for Florida, LA or Manhattan.


Ten or fifteen years from now we will look back at these fears and reservations, puzzled that we were so reluctant to make the changes that have finally been put in place.

Anonymous said...

Not sure how trial lawyers won anything. Feds were never going to do much, if anything, about what is essentially a state matter.

But then, logic isn't often used when physicians start discussing legal matters.

John said...

Trial lawyers are a straw man. The threat of malpractice suits, however, has struck fear into the hearts of medical professionals for years. We have the insurance industry to thank for that, not the lawyers. A guest post from Health Beat perfectly illustrates the point.

Many health care providers will be willing to implement these changes in their practices if the government provided them with cover by setting standards and explaining the standards to both providers and the public. This is partly because most providers really do want to provide the best possible care (and almost all believe they do,) and partly because establishing practice standards could protect against inappropriate lawsuits.

The most dramatic example of this can be seen in the history of anesthesiology. In the mid-70’s, anesthesiologists faced the highest malpractice insurance premiums of any specialty – often as high as $100,000 a year (and those are 1975 dollars, remember.) The Society of Anesthesiology, realizing that this was threatening the viability of many practices, created a national panel which developed a set of specific standards for anesthesia practice.

They then created a task force of lawyers and academic experts that offered its support to any practitioner who could document that they had followed the standards but was still being sued. Verdicts against anesthesiologists plunged ,and--since plaintiffs attorneys cannot afford to lose regularly –the number of lawsuits declined sharply Insurance premiums fell by 90%.

More importantly, complications of anesthesia and deaths from anesthesia also declined .The standards not only had the desired result of ending the malpractice crisis in anesthesia, but also made anesthetic management safer and more effective. This created an impressive win for the patients as well as the doctors.

This effect of practice standards on the malpractice climate could be helped along mightily if states passed legislation to codify the fact that documented proof of following best standards promulgated by federal agencies would serve as a clear and binding defense against charges of malpractice. This is not to say that patients do not deserve to be compensated when real malpractice occurs, but that the public also deserve protection from inappropriate and sometimes dangerous procedures, tests, and treatments ordered as “defensive” medicine to try to avoid lawsuits.


That was dated last year.
This year, thanks to the law, some legal "cover" is now part of federal law. As you point out, it is now up to the states to follow up in a meaningful way.

Michael Kirsch, M.D. said...

@Anonymous, Regarding my view that lawyers have prevailed, feel free to query your own (or any other) physician on this issue. Keep us posted on your findings.
@John, thanks for bringing excellent content and thought to this post. Regarding your comment, "Two points. This time I'll be quick." Yikes! I wonder how many pages your 'longer comments' are. I appreciate your tort reform comments excerpted from HealthBeat. My views on tort reform and the dysfunctional medical liablity system appear on several posts in the blog. Of course, the trial lawyers are not the villains. They are operating legally in a system that I believe is unfair. Keep in mind, there is not a vocal minority of physicians who oppose the current system. Hostility against it is nearly unanimous. This alone, from a (medical) profession that still enjoys some measure of public respect, should indicate that the system should be examined and reformed. Would physicians, for example, support a policy that served our financial interests, but harmed patients? In this case, physicians are obligated to set aside our own interests to serve the public's interest. I don't think that this ethos exists in the legal community.

Anonymous said...

"Regarding my view that lawyers have prevailed, feel free to query your own (or any other) physician on this issue."

Asking other physicians about legal matters doesn't really give one much insight. They know little of the law, and what they do know is at best anecdotal.

Again, how does this law affect "trial lawyers" in any way? In short, it doesn't. Perhaps you're mad because we didn't federalize state law actions?

"Hostility against it is nearly unanimous."

One might also say that a lack of understanding is as well. Although I wouldn't say it's completely unanimous. Physicians don't hesitate to resort to litigation when they're the plaintiffs. Millions of them have sued for and recovered billions in class actions against health insurers. Physicians are just nearly unanimous in being against anyone else recovering, especially against other physicians no matter how egregious the harm. It all depends on whose ox is being gored, I guess.

"Would physicians, for example, support a policy that served our financial interests, but harmed patients?"

You do. That's what the tort reform you support's goal is. You're supporting your own financial interest, and that of your liability carrier, at the expense of injured patients. How you are able to consider this in the "public's interest" is a twist of logic I'm not limber enough to replicate.

John said...

...there is not a vocal minority of physicians who oppose the current system. Hostility against it is nearly unanimous.

Thanks to insurance company hype this is due to the "fear of litigation" rather than actual litigation.

This alone, from a (medical) profession that still enjoys some measure of public respect, should indicate that the system should be examined and reformed.

Exactly. That "system" is a three-legged stool: Medical pros who provide care, insurance companies who manage risk and lawyers to profit from all parties.

Would physicians, for example, support a policy that served our financial interests, but harmed patients? In this case, physicians are obligated to set aside our own interests to serve the public's interest.

I know it was way up the thread, but I have to repeat here:

1. Professional compensation is not the same as profits. Health care is not furnished by insurance companies.

It is in the interest of physicians to heal patients and be handsomely compensated for their work. However a fee-for-service business model has proved to do but not the other. The same can be said for physician-owned clinics and hospitals as well as device manufacturing companies, all of which offer a financial moral hazard to double-dip. Your question is a valid one, but it is important to tease out the difference between professional compensation (which should be as high as market conditions permit) and corporate profits (which have no place in any portfolio of a medical professional who may be faced with even the appearance of a conflict of interest if it means priming that profit pump). I'm sure you see where this is going.

I don't think that this ethos exists in the legal community.

Please.
Never use the words "legal" and "ethics" in the same sentence.

Anonymous said...

" That "system" is a three-legged stool: Medical pros who provide care, insurance companies who manage risk and lawyers to profit from all parties."

As usual, people forget the victims of malpractice. We know the medical pro who injured them isn't interested in helping them, and we know the insurance company is - so who's left?

"Never use the words "legal" and "ethics" in the same sentence."

Nonsense. Every attorney has an ethical duty to THEIR CLIENT. This is something physicians don't understand, because their payment model no longer promotes the physician-patient relationship. The thought of loyalty only to the patient has become a tough concept to grasp. However, attorneys understand it quite clearly. Society is best served by every attorney doing the utmost for their client within certain boundaries. While others may not think this is "ethical" (typically meaning not promoting their interests), as a whole we're all better off.

Now, physicians, and indeed the other party in any case, thinks everyone on the other side is "unethical" because they can't imagine anyone not agreeing with them. However, that does not make the actions of the other side objectively unethical.

Michael Kirsch, M.D. said...

To the commenters, please review my above comment to verify that I did not use the words legal and ethics in the same sentence, though this misread did spark some reaction.

@anonymous at 9:19 a.m. misunderstands physicians' views. We categorically do not aim to benefit financially at the expense of our patients' health. This is a blasphemous allegation and I hope you will reflect upon it. I vigorously support, and have written repeatedly, that patients who are injured by negligent medical care should be made whole. Separate from this, we need to reform a system that targets innocent physicians routinely, which is the stimulus for billions of dollars of defensive medicine.

@John regarding the moral hazard claim. I acknowledge your point. Keep in mind, that everyone who is paid for services, rather than on salary, also operates under the moral hazard scenario. In other words, they benefit personally by selling folks more stuff. This is not tantamount to corruption.

@anonymous at 4:39 p.m. We all recognize that a lawyer is obligated to serve his client's interest, which may not be a pursuit of the truth. Physicians are trained and, indeed, strive for the truth. Our missions are different. This contributes to the gap between the professions.

John said...

In case you didn't notice, my line of argument is aimed against "tort reform" (a code term for limiting the dollar amount of damages). This is a conversation with a physician who like most of his colleagues believes that "tort reform" will make the cost of malpractice insurance go down.

No one -- certainly not I -- has "forgotten the victims of malpractice." Victims of malpractice deserve every penny they receive in judgments. Of course lawyers and insurance companies are interested in the biggest dollar amount since both stand to collect more. There may be some pro bono malpractice lawyers but I'm sure most are working for a percentage of the judgment. And the higher the judgment the higher malpractice insurance premiums will be charged by insurance companies.

Actual malpractice is rare but when it happens the damage should have no limits. But defensive medicine has expanded almost to the point of overkill. (I'm waiting for a case of "malpractice" citing too many tests and/or treatments resulting in death or disability of a patient who otherwise may have recovered.)

Now can we go on?

John said...

Dr. Kirsch, that last entry was intended for the anonymous entry at 6:12PM. I didn't know you and I were writing simultaneously.
Anyway, you catch my drift.

And no, fee for service is not tantamount to corruption. In fact, it's a good method to document against malpractice suits which I'm sure accounts for a lot of swollen bills from hospitals as well as individual practitioners.

I wish I had a folder full of stories like the one about the anesthesiologists in the 1970's (cited above) but that's the only one I have come across. There may be more but they remain as hidden as sex scandals. Too many interests stand to lose if stories like that get out.

Anonymous said...

"We categorically do not aim to benefit financially at the expense of our patients' health. This is a blasphemous allegation and I hope you will reflect upon it. "

Perhaps that's not your goal. However, it is the goal of the legislation you support. There is no other reason to support damage caps, which are the centerpiece of virtually every tort reform legislation. Why do you think the tobacco industry started the tort reform movement? If you don't like being associated with that goal, then stop supporting the legislation?

". Separate from this, we need to reform a system that targets innocent physicians routinely, which is the stimulus for billions of dollars of defensive medicine. "

This "stimulus for defensive medicine" claim keeps being made, yet we've tried your cure, again and again for decade. And it has not been shown to reduce costs or "defensive medicine" (a notoriously difficult thing to identify in practice). Texas has been cited as the holy grail of your "reform", yet costs are no less. Your payment model is the reason costs are so high, not lawsuits.

The facts speak for themselves, Dr. Kirsch.

Anonymous said...

"And the higher the judgment the higher malpractice insurance premiums will be charged by insurance companies."

If one believes insurance is only determined by dollar in premium less dollar in payouts, this might be true. But that's not how the industry works. Most casualty insurance is written at a loss on that basis alone. The money in insurance is in the float.

". But defensive medicine has expanded almost to the point of overkill."

And as I mentioned above, whenever we have tried the "reform" that is supposed to fix defensive medicine, it never works. So why are we lamenting that the same old "reform" is not in the latest round of legislation?

The truth is, tort reform is about protecting large companies against the individual. So when one supports it, they should ask - how does this benefit me? Unless you are an executive for a large insurer or other corporate entity, the short answer is that it doesn't. It only limits your rights.

Anonymous said...

Now, I'm sure someone is going to come on and wax poetic about how that's not the "reform" they're talking about. They have some other kind they are thinking of, and it's fairer and so on and so forth.

That may be true. But I'm talking about the legislation that EXISTS. That is likely to become law. Not some highminded plan which will never see the legislative light of day.

John said...

Then I'll be the poet.

It is a mistake to conflate medical risk management with financial risk management. That was the original hazard of the HMO model when it was conceived in the Seventies.

Insurance companies manage financial risks none of us can live without them. But the HMO model vividly showed what happens when medical issues conflict with financial challenges. The original HMO model was a study in failure, but it didn't take long for the insurance industry to come to terms with the challenge. What evolved was a two-tier system with group insurance at one level and the open market at another.

Group policies are straightforward. Non-insurance companies arrange for an insurance company to administer their group plan as a TPA (third-party administrator) charged with handling claims, EOB's and other technicalities. The TPA then sends the company a bill which includes an over-ride for their services. The arrangement is tax-advantaged so everyone is happy.

The open market is a more hazardous place for the insurance company, partly because they don't want to insure risky clients but mainly because the risk is not shared by more manageable company groups. Each case is separate and represents a financial ticking bomb which in financial terms can explode in a case of cancer or some other expensive outcome. (Whence commeth rescissions, lifetime caps and exclusions of pre-existing conditions.)

How's that for poetry?

In the same way the security companies do not prevent burglaries or robberies, medical insurance cannot prevent medical problems. In both cases all they can sell is "peace of mind." Life insurance salesmen know this better than anyone because in the case of life insurance getting dead is a certainty. In the end (to coin a phrase) the only distinction made in life insurance is between term policies and those that collect premiums until the end. And the actuarial experts, (good at stats but poor at medicine) hold all the cards.

For the first time since the advent of Medicare the new law returns the power of medical risk management to medical professionals. Readers are urged to do some homework on how MEDPAC (a non-partisan independent panel of medical experts) has been rebranded as IBAP. My windy comment above (March 29, 2010 6:47) refers to that change.

The problem with the current system is a perfect reflection of a similar (though less critical) challenge I faced in the food business. I'm no expert in medicine, law or insurance. With undergraduate study in history and music I don't even have the advantage of academic creds. I'm just an old guy blogging in retirement. But several decades in the labor intensive cafeteria business dealing with many thousands of the great American public has taught me a lot about business and how the marketplace works.

in fact, a lot of business benefit plans are called "cafeteria plans." The FEHB insurance offered to federal employees is such a plan.

John said...

Cafeterias are something like buffets, but there are a few differences. Cafeterias separate servers from the public for two reasons: sanitation and portion control. Buffets, on the other hand, are self-service. (No one stops a kid from picking up something, taking a bite and returning it to the display if he doesn't like it. Or the patron who serves himself more than he can possibly eat either to see if someone else wants more or to save a future trip to the buffet.)

You can see where this is going.
This is where the poetry starts...

Q. What is the difference?
A. Pricing and quality.

No need to go into details about menu mix, price points and the like. Some people like one system, others prefer another. But the point I make has to do with how delicately balanced the equation is between medical risk and financial risk.

There is no quick, one-size-fits-all solution. But the new law makes two important changes. First, it levels the playing field for insurance companies by making them all play by the same rules, eliminating some of their most egregious limitations on (their own) financial risks in return for compelling the entire market to get in the boat one way or another. And second, it returns medical risk management to medical professionals in a way that allows them once again to go about their mission without having the insurance industry looking over their shoulder.

"But the government is doing the same thing," you say.

Yep. That's correct. It's called reform or regulation or whatever else you want to call it. We have seen that "the system" (see above) has had three decades to work and the result has been runaway health care cost inflation unmatched by any other country. The system is dramatically broken. A free market approach as resulted in a medical financial train wreck which is unsustainable and a new model has to be tried.

I am optimistic that the medical pros will do a helluva lot better job at managing medical risks than insurance companies have done. And the insurance people will finally be allowed, along with their colleagues in the field of law, to apply their professional expertise as they should, unencumbered by trying to assess medical risks because their professional colleagues in medicine will have that covered.

Dr. Kirsch, please excuse my long comments. We live in a time when everyone wants soundbites and quick summaries. And I'm sure I don't need to tell a physician how hard it is to explain something to a patient in fifteen minutes all the medical reasons that led you to a diagnosis. Thanks for reading.

Evinx said...

Fascinating how those who compare our system to those of some other country, never compare our legal/tort system to that same country.

Tort reform (not just caps) will have a profound effect on medical practice. Face it - the ER has become the gateway to hospital admissions bcs of the fear of litigation (due to exams/test results being performed elsewhere).

Fear of litigation (not so much the trial but the tremendous amount of time + money involved for a system that tugs at heart strings not science)determines how patients are told to go to an ER if they should arrive with a medical issue like bleeding from the ear or eyes.

Fear of litigation even determines the voice greeting when you telephone a Dr office - "if this is an emergency, hang up and go. . . "

And yes, litigation affects insurance premiums which affects overhead (even if you never have been sued) which affect the entire medical experience.

Tort reform can do much to change the dr/patient culture -- and those who know the trial attorneys are the biggest donors to Dems understand why. Every litigator (plaintiff or defense) knows the phrase "slam-dunk" -- and regardless of the facts, your case is never a "slam-dunk." So SETTLE - the fastest + easiest way for the lawyers to make a buck.
And settlements drive up the costs of insurance in your specialty regardless of how clean your personal record may be.

Yes, tort reform is needed for a whole host of reasons - but politics prevents it. Might it have to do with the trial lawyers lobby? Hmmm.

John said...

@ Evinx:
I'm curious. You bring up two good points, legal forms of other countries and out of court settlements.

Please don't take me to have made up my mind. In the case of medical malpractice the arithmetic is easy to measure, but I have a feeling the measurements have only to do with actual judgments. I think "settlements" may well be outside those metrics. As far as I can tell "tort reform" is a code term for damage settlement caps. I note Dr. Kirsch used the term "made whole," which may have a different implication.

What is the actual meaning of "tort" in the medical sense?
And what is perhaps a broader meaning to "reform" than damage caps?

(I can dig into these questions for myself, but I want to better understand how they are viewed by those opposing the new law. Help me with that connection.)

I take issue with this...
the ER has become the gateway to hospital admissions bcs of the fear of litigation.

I understand the argument but I submit that the ER is the gateway to hospital admissions more to uninsured people who have learned to use that portal in place of primary care. In metro Atlanta we have a situation where people actually call in advance to two or three hospitals before they come to see which has the smallest waiting line! What kind of "emergency" can that be? Everyone knows that ER's can't refuse treatment, so a large and growing population has learned to take advantage of that.

You are right about the phone messages for established patients. In fact, living phone nurses are probably trained to give the same advice. And fear of litigation is very likely part, if not most of the reason.

Some years ago my wife required back surgery. But before we got to that point it was necessary to go through at least four unrelated orthopedic practices on the way, all of which offered no help other than pain medicine and PT.

At one practice the doctor looked straight at us and said "I can tell you this. I'm not going to operate on you. My partner and I have decided that the insurance for both of us is too expensive, so he is the one with the coverage. If you receive surgery HE will be the surgeon."
This happened over twenty years ago and I'm sure premiums have gone up considerably since then.

Malpractice insurance and lawsuits are not a trivial problem. Why else would the president have tossed that up during his SOTU speech? It's a political tragedy that the wall of opposition is so obdurate. Barack Obama seems to be throwing himself on his sword every chance he gets. That SOTU reference and his most recent consideration of off-shore oil drilling are just two examples from a growing list.

How will tort reform play into the new law? And what modifications, additions or deletions might correct the problem?

Anonymous said...

The sole goal of tort reform is limiting the access of the individual to the courtroom. Period. The modern tort reform movement was begun by the tobacco industry and is largely funded by that industry and other industries who stand to benefit from restricting that access. Note that no one wants to make it harder for business to sue, even though most lawsuits are businesses suing businesses. And no reform proposal tries to restrict what the defense can pay their lawyer, just the plaintiff. Why do you think that is?

Physicians have been pushing their brand of reform for a couple decades now. They promise all sorts of things from lower healthcare costs to more access. Yet it never comes true.

The truth is most physicians have no idea how many suits there are but they're all convinced there are too many. They also claim to want less government in medicine except they want more govt in malpractice. It makes no sense. How can you decide there are too many and we need to change when you have no idea how many there are?

At the end of the day physicians won't like any system that reviews their actions. They'll bitch no matter what. But we shouldn't discard the constitution and weaken individual rights just so some insurers have their exposure limited. Because that's all tort reform is about.

Michael Enders said...

You should have put off your blog post a few days. Today would have been perfect for an explanation about how everyone wins and no one loses under the Patient Protection and Affordable Care Act. Come to think of it, April 1 would also have been the perfect day for President Obama to sign the act that bears such a name.

Anonymous said...

"Malpractice insurance and lawsuits are not a trivial problem. Why else would the president have tossed that up during his SOTU speech? It's a political tragedy that the wall of opposition is so obdurate."

This paragraph is odd. They're not a "trivial problem"? By what metric? Is car insurance not a "trivial problem"?

Why would the President mention them? For political purposes. He knows that the corporate paymasters of the Republican Party, and to the extent his own party, desperately want to limit access to the courthouse. Throw them a bone. Just because a politician says something doesn't mean it's particularly important.

As to being obdurate in support of our Constitution, it's a shame more people aren't just as stubborn in preserving individual rights. We give them away at an alarming rate.

"And yes, litigation affects insurance premiums which affects overhead (even if you never have been sued) which affect the entire medical experience."

So because your overhead goes up or down this affects the entire medical experience? What happens when you have to pay your nurses a little more? Does the "experience" decline?

"Yes, tort reform is needed for a whole host of reasons - but politics prevents it. Might it have to do with the trial lawyers lobby?"

What reasons? Might it also have to do with the Constitution? Hmmmm. . .? Might it also have to do with preserving the rights of the individual? Hmmmmm. . . ?

Michael Kirsch, M.D. said...

No one aims to abrogate a deserving individual's right to seek and receive legal redress. There are, however, other rights in conflict. Innocent citizens have a right to be victimized routinely. Society also has rights. If money is squandered on lawsuits that should not be filed, then society has lost resources that could have been used to serve the greater good. I received a letter just today from my medical malpractice carrier that the frivolous suit that I was dismissed from (See blog post http://bit.ly/7FxWX9) cost $9,120.85. As detailed in my post, even my lawyer who reviewed the medical record couldn't divine an allegation against me. Had the plaintiff's lawyer read the record, I would not have become a defendant. Nearly $10,000 was incinerated that could have been used for a more noble purpose.

John said...

That's pretty incoherent.
I'm looking for more than "Hmmm...?" and a few platitudes.
Anyone else?

John said...

Dr. Kirsch!
Again we post simultaneously. What are the odds?
Again, that last post was for anon at 8:32PM.

I recall reading your other post in December. I said to myself, "Here's a doctor with balls."
I would add "Congratulations" but it seems you and the lawyers have a handle on frivolous suits.
That may be what I have been digging for, the problem of frivolous suits... throw a bunch of shit out and see if anything sticks. I can see how that is a problem and an expensive one at that for all concerned. Finding a way to stop that practice would help a lot.
Your point about wasted money is well-taken.

Atlanta's Neal Boortz is a talk show host who grates on my nerves, but he was a practicing lawyer in his early years. His solution to the tort issue is simple, he says "loser pays" would put a stop to it. He claims that if the losing side of a suit is obliged to pay all costs of the suit it would put an end to frivolous lawsuits.

I dunno. Maybe so, but it sounds too much like the Citizens United decision which gives the advantage to the side with the biggest legal team, but I'm not informed enough to say anything intelligent about it.

Meantime, I very much like the Anesthesiologists' approach and hope it will become a model for other groups.

==> Here's an idea: It seems to me that any physician or practice that strictly follows the forthcoming IBAP recommendations is standing on firm new grounds for defense should the results need a legal defense.

Anonymous said...

"No one aims to abrogate a deserving individual's right to seek and receive legal redress"

Sure you do. That's the very point of "tort reform". If you support it, that's your goal.

" Society also has rights."

You really want to go down that road, doc? What rights does the Constitution give "society"? Does "society" have a right to low cost healthcare?

" If money is squandered on lawsuits that should not be filed, then society has lost resources that could have been used to serve the greater good."

Are you really sure you want this to be your position? Think hard about this being reversed on you - I mean, what's to stop "society" from deciding that paying physicians almost twice their brethren in other countries isn't serving "the greater good". How about we stick with individual rights?

"Had the plaintiff's lawyer read the record, I would not have become a defendant. Nearly $10,000 was incinerated that could have been used for a more noble purpose."

Such as? Paying the shareholders of your insurer? Paying the executives additional bonuses? Is that the "noble purpose" you have in mind? Because that's what would have happened with it. You should really avoid this "societal good" argument. It does not behoove you when applied to your own profession.

Anonymous said...

"That may be what I have been digging for, the problem of frivolous suits... throw a bunch of shit out and see if anything sticks. I can see how that is a problem and an expensive one at that for all concerned."

I can see this in a car wreck situation, where the cases are rather cheap to try. But this makes little sense in the medical malpractice arena, when the cases are prohibitively expensive, the insurers rarely offer the cost of defense, and physicians win so often at trial. From the economic perspective of a lawyer, filing a bunch of truly unmeritorious med mal cases doesn't make sense. Does it happen occasionally? Sure. Just like physicians operating drunk happens occasionally. But I don't think we need to restrict the rights of all physicians because a tiny minority are idiots.

"His solution to the tort issue is simple, he says "loser pays" would put a stop to it. He claims that if the losing side of a suit is obliged to pay all costs of the suit it would put an end to frivolous lawsuits."

A simple solution which is unlikely to work. First, poor people aren't going to be able to pay that cost regardless. At best, you've scared some of them from pursuing close claims. Should our legal system only be utilized for slam dunks? And what if we have a situation with contributory negligence - for example, while I'm drunk and driving but in my lane, you cross over and hit me. I might have had a chance to avoid you had I been sober, so maybe I'm 15% at fault. Who pays? The experience of those countries with loser pays is not as cut and dried as many proponents think.

But really, loser pays is yet another way for the wealthy to prevail regardless of the merits. If you believe that Wal-Mart truck crossed the line and struck you, you still have to consider the fact that they can throw teams of lawyers at the case. What if the jury disagrees with you? Should you not have the ability to put your case before the jury simply because of your financial circumstance?

"I'm looking for more than "Hmmm...?" and a few platitude"

If you're talking to me, I wasn't replying to you. Perhaps if you ask a specific question though, I can give you a more detailed response. As to the Constitution reference, check out the 7th Amendment.

Anonymous said...

The real issue in US medical costs are the toxic incomes of doctors. The doctors keep the number of graduates down to keep their disgusting incomes high. Its interesting how 'conservatives' go on about labor unions, yet allow the doctors to run the most outrageous closed shop known to man.

Time to stop doctor control over doctor numbers - now!

John said...

@anonymous 12:19PM
Baloney.

Evinx said...

"The real issue in US medical costs are the toxic incomes of doctors"

To me that is scary. Are we ever going to stop this jealousy based warfare? What is next - toxic incomes of prof athletes, movie stars, real estate moguls, lawyers? Price controls do not work - someone needs to read some economics.

I am not a fan of caps on damages - though, I certainly have reservations about punitive damages (and that is where the beef is).

The real benefit to tort reform (and I acknowledge this may not be what most are talking about) is it can change the way medicine is being practiced for the better.

For those who say Drs are safe from lawsuits if they practice according to guidelines, not so. Tobacco companies get sued every day, even though there isn't a person on the planet who does not know smoking is bad for you. Nothing stops lawsuits bcs the objective in the majority of case is a settlement - not a court fight.

BTW, some may not want to believe it, but the uninsured are not the overall problem with crowded ERs, and the fact is the ER is becoming the gateway to hospital admissions more and more - and that is litigation based.

Dr K - when you wrote this post, did you think it was going to generate this many comments? You hit a nerve.

Anonymous said...

"I am not a fan of caps on damages - though, I certainly have reservations about punitive damages (and that is where the beef is)."

Not really. Punitives are rarely a factor in medical malpractice actions, unless the physician is drunk, or a hospital has knowingly (or recklessly) employed someone with a history that should have thrown up warning flags. When you say "I'm for tort reform", you're talking noneconomic caps. Plain and simple. You may also be talking caps on what one side can pay its lawyer, periodic payments, and the like as well.

"The real benefit to tort reform (and I acknowledge this may not be what most are talking about) is it can change the way medicine is being practiced for the better."

And yet, it hasn't. After 30 years of it. Nothing has changed, despite umpteen promises of benefits that never materialize.

"Nothing stops lawsuits bcs the objective in the majority of case is a settlement - not a court fight."

Clearly a statement by someone who has never filed a lawsuit. Insurers, particularly med mal insurers, don't pay just because they receive a claim.

Lawsuits are a dispute resolution system, and we will always have one, no matter whether it's called a "lawsuit", or "flowers and candy". Physicians don't like being involved in them any more than anyone else, but we will have a system for gathering information, and presenting it to a third party to make a decision.

And physicians are going to bitch about it regardless.

" and the fact is the ER is becoming the gateway to hospital admissions more and more - and that is litigation based."

Because. . . you say so?

Michael Kirsch, M.D. said...

Thanks for the many excellent and provocative comments. Two items I spied today.
(1) In Washington state, 30% of physicians intend to stop adding new Medicare patients to their practices because of inadequate reimbursement. Walgreens pharmacy will stop filling Medicaid prescriptions because they lose money on them.
(2) Alan Greenspan, who knows something about budget projections, stated that the Congressional Budget Office's estimate of deficit reduction from HCR is too optimistic.

Nothing shocking here, just some coming attractions.

Anonymous said...

I have a hard time believing that 30% of physicians can stop adding Medicare patients. This talk of physicians leaving the government en masse makes little sense, when you consider the govt. pays 50% of all healthcare expenditures. Where will they all go?

And correct me if I'm wrong, but don't the insurers base their reimbursements on Medicare reimbursement rates? So they're going to cut back too.

Basically, while physicians have spent the last 5 years fighting for tort reform to benefit their liability carriers, something that only slightly affects their bottom line, if at all, the real battle has been fought and lost on reimbursement rates.

They can't all dump the government paymaster. The reality is being a physician is getting ready to become much less lucrative.

Evinx said...

Anon (why can't you use a screen name?)

" and the fact is the ER is becoming the gateway to hospital admissions more and more - and that is litigation based."

Because. . . you say so?


No... bcs a knowledge doc at U of Chicago has looked into this and said so (see "http://glasshospital.com/2010/01/07/the-mystic-portal-awaits/).


Clearly a statement by someone who has never filed a lawsuit. Insurers, particularly med mal insurers, don't pay just because they receive a claim.

Wrong again. I've been involved in more depositons than most non-litigating attorneys. I can guarantee you the objective is a settlement. Yes, insurance companies do not automatically pay a claim; however, they analyze the costs of litigating vs the cost of settling. They continuously do that - and the attorneys KNOW that. The fact is the merits of their case are only a probability calculation (for both sides) so settlement is the name of the game. You may not like it (I surely don't) but that is the reality.

As for drs refusing to take on new Medicare patients, the CMS (in 2008) reported 29% of patients had difficulties finding a doc who would accept Medicare. For Medicaid, the figure is much worse (around 50%).

Sorry if the facts get in the way.

Anonymous said...

Your link is just an opinion piece. Not a fact.

" I can guarantee you the objective is a settlement. Yes, insurance companies do not automatically pay a claim; however, they analyze the costs of litigating vs the cost of settling. They continuously do that - and the attorneys KNOW that. "

In a car wreck case, you might have a point, although I'd love to know the names of these insurers who are settling cases for more than a couple thousand just because a lawyer files suit. But in most med mal cases the cost of trying the case is far less than the potential damages.

"The fact is the merits of their case are only a probability calculation (for both sides) so settlement is the name of the game. You may not like it (I surely don't) but that is the reality."

Settlement is a reality for the insurer based on the probabilities, true, but not for the plaintiff. But the probabilities for the insurer are far more complex than you'd think, and involve lots of factors beyond just cost of defense. For the plaintiff, a recovery is the goal - how the plaintiff gets to a number they'll accept is secondary.

"As for drs refusing to take on new Medicare patients, the CMS (in 2008) reported 29% of patients had difficulties finding a doc who would accept Medicare. For Medicaid, the figure is much worse (around 50%)."

That doesn't tell me how many docs dropped it though. That could simply mean there are more patients on medicare/medicaid. A number that will only increase as the baby boomers age. So unless the number of physicians increases, even if no physician left Medicaid/Medicare, then it would be more difficult to find a physician.

At the end of the day, though, the government pays 50% of all healthcare expenditures. And the health insurers set their reimbursement rates based on government reimbursement. There's only so many who can leave and still stay afloat.

Anonymous said...

Anonymous, get in touch with reality...

Anonymous said...

I like it. Succint, yet saying nothing. Good post Anon 2:44.

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