Eliminating the Middleman

Everything that is really great and inspiring is created by the individual who can labor in freedom. — Albert Einstein

Lower costs, improved outcomes, better consumer experience – isn’t that what we would all like in health care? That’s not just a dream – it is the actual result of a growing number of physicians you might label “Do-it-yourself Health Reformers”. They haven’t been waiting around for politicians to fix the broken health care payment system; they have been implementing new models for the practice of health care.

Improved outcomes? How about 91% of patients achieving their target blood pressure within 6 months? (Compared to a national average of less than 50% of patients.) How about being named one of only four Cardiovascular Centers of Excellence in the state?

These physicians focus on keeping patients healthy and out of the expensive parts of the health care system, such as specialist offices, emergency departments, and hospitals. ER visits are down 62%, specialist referrals are down 55%, advanced radiology down by 48% and surgeries down by 73%.

The net result of better primary care was a savings of 20% to 30% in overall health care costs. Customers of this new model of health care delivery provided their employees a better health benefit and also saved 20% compared to what they had been paying. How often do you hear about health care costs actually going down?

Or consider this case. A diabetic woman had been spending $5,000 per year on medical care. When she switched doctors, her new doctor reported that “When she arrived her HGBA1C was 11.9 – meaning very poorly controlled. One year later her A1C was 6.8 (well controlled) and she had only spent about $450 for an entire year of care with us – including the annual physical, all of her follow-up visits, all of her lab work and ancillaries.”

So how do these doctors deliver better health care at lower cost? The answer is surprisingly simple: They eliminate the middle man between doctor and patient, i.e. the insurance company or government (Medicaid or Medicare). Removing the bureaucracy from the mix cuts 40% of fat out of the process. Not just money, it saves paperwork and frustration, leaving more time for the doctor and patient.

A traditional primary care practice has a large staff just to deal with the paperwork. The national average is 3.9 non-medical staff members per doctor or nurse. A typical Direct Primary Care (DPC) practice has just one staff member for two doctors. Some have zero staff. This reduction in overhead allows a DPC physician to charge much lower fees yet still spend more time with each patient.

Many DPC practices provide lab services in-house, further reducing costs and providing better service to their patients. Most negotiate with lab companies. The lab companies offer huge discounts for avoiding the time and hassle of billing insurance companies or the government. One DPC physician reported that he could get a cholesterol test for $3 versus the $90 the lab would have billed an insurance company. An MRI was $400 compared to a typical rate of $2,000.

In addition to primary care, most DPC offices also provide urgent care such as stitches or casts, handling many of the same problems as an emergency room. They provide treatment for about 80% of health care needs.

Most DPC providers operate on a mixture of monthly membership fee, typically $75 per month, and per visit charges. Members receive an annual exam, a discount on fees, and access by phone or email. About a third of the patients are uninsured, some because they cannot afford insurance premiums, others due to preexisting conditions such as diabetes. Ironically, uninsured patients at a DPC practice receive better service than insured patients at a traditional practice.

Insurance is a terribly inefficient way to pay for most health care. Primary care, even including occasional urgent care, is relatively affordable – much more affordable than the insurance premiums. It is more economical to pay the doctor and nurse, than it is to pay the doctor and nurse, and pay their non-medical staff to process paperwork, also pay the insurance company staff to process paperwork, and also pay the insurance company profits.

The most sensible way to pay for health care is with a high-deductible catastrophic policy that we hope we never need to use, put the huge savings in premium cost into a Health Savings Account (HSA), then pay a DPC physician via a debit card from the HSA. There is much, much less overhead, the DPC practice spends more time keeping patients healthy, resulting in lower costs for specialists, surgery, or hospital care.

What doctors enjoy is interacting with patients, solving problems, helping their patients stay healthy. What they hate is paperwork, overhead, and a bureaucracy pushing them to spend less time with patients. They are so frustrated by middleman-governed health care that 9 out of 10 are unwilling to recommend health care as a profession.

DPC eliminates the paperwork, overhead and bureaucracy, leaving doctors happily working to improve their patients’ health. These doctors say “I am finally back to practicing medicine the way I was trained.” And that is the major reason that surveys show that 16% of primary care physicians plan to move to DPC or other retainer-based practice.

Has America seen its best days?

Author Aaron Clarey suggests that America is so far gone that we might as well sit back and Enjoy the Decline. “We mock classical American culture, we ridicule ‘hard work,’ we villainize success, we reward inferior performance and mediocrity, and we spend more time finding ways to feel sorry for ourselves and be ‘victims’ than we do finding ways to produce and succeed,” he observes.

The first step in solving a problem is realizing that there is a problem. The good news is that polls indicate by a more than 2:1 margin that people realize that we are on the wrong track. But it is not too late to change direction and fix our problems.

In the words of one of our great statesmen, “The crisis we are facing today … does require, however, our best effort, and our willingness to believe in ourselves and to believe in our capacity to perform great deeds; to believe that together, with God’s help, we can and will resolve the problems which now confront us.
“And, after all, why shouldn’t we believe that? We are Americans.”

ObamaCare – the beginning of the end

“Never believe anything in politics until it has been officially denied.” — Otto von Bismarck 

Seems like just yesterday that I wrote about the Law of Unintended Consequences. Then just a few days later several union leaders fired off a letter complaining about the unintended consequences of ObamaCare, “The unintended consequences of the ACA are severe. Perverse incentives are causing nightmare scenarios.”

Seriously, what did they expect from a 2000-page bill that nobody had time to read before they voted on it? If there is one thing that everybody should have learned about gigantic bills is that there will certainly be unintended consequences. The politicians ought to take time to read the bills and allow the public to read them, and they should allow extensive time for thorough debate. Will they learn? No.

But back to ObamaCare. July 2013 should go down as the beginning of the end – or perhaps the end of the beginning – of this terrible act. Right now, some reader of this column is disagreeing, thinking that “universal health care is not terrible; it’s a great idea.”

There is a huge difference between a good idea and a good bill. Even if we were to agree that the idea was good, the bill was terribly written. By now, all but the true believers must realize that its implementation is proving next to impossible and the unintended consequences are destroying jobs. As the Wall Street Journal opines, “The law’s implementation is turning into a fiasco for the ages.”

The unraveling began on April Fools’ Day. The government announced that a key part of the law, the Small-business Health Options Program (SHOP), would be delayed a year. Even though the law had passed a full three years earlier, the government had not written final rules until the previous month. The Chamber of Commerce announced that without SHOP the federal exchanges “will be of little or no value to employers, or by extension, their employees.”

Later in April, Sen. Max Baucus, chief author of the bill, said the law’s implementation would be a “train wreck.” A Democratic colleague, Sen. Jay Rockefeller, described the massive act as “beyond comprehension.” The government’s chief technical officer for the insurance exchanges remarked, “I’m pretty nervous . . . Let’s just make sure it’s not a third-world experience.”

Also in April, a union leader called for the repeal of ObamaCare, saying that “in the rush to achieve its passage, many of the act’s provisions were not fully conceived, resulting in unintended consequences that are inconsistent with the promise that those who were satisfied with their employer-sponsored coverage could keep it.” (There’s that phrase again – unintended consequences.)

In May, a separate group of union leaders grew “frustrated and angry about what they say are unexpected consequences of the new law – problems that they say could jeopardize the health benefits offered to millions of their members.”

When the government wants to hide bad news, it usually issues a press release just before a weekend or holiday, hoping it will get little attention. Thus it was when the administration finally had to acknowledge that ObamaCare was a shambles. The Treasury Department announced at 6 pm on July 2 that they were delaying the employer mandate for one year, until January 2015, conveniently after the November 2014 elections. Can anyone seriously doubt that politics was a major reason for his decision to delay the mandate? Clearly, Obama and his political advisors know that ObamaCare is more and more unpopular with voters.

Which brings us back to the union leaders at the start of this missive. Shortly after the Treasury’s announcement, the leaders warned that ObamaCare would “shatter not only our hard-earned health benefits, but destroy the foundation of the 40 hour work week that is the backbone of the American middle class.” One of the unintended consequences of the law is a perverse incentive for businesses to convert full-time employees to part-time. “The impact is two-fold: fewer hours means less pay while also losing our current health benefits.”

In another instance of hiding bad news, the government buried in the Federal Register an acknowledgment that without the employer mandate in place, it had no mechanism to verify an individual’s eligibility for subsidies. It would rely on the “Honor System”. And without employers reporting the insurance status of employees, the individual mandate is not enforceable.

For consumers that’s not such bad news. By a 2-1 margin, voters want the individual mandate to be delayed one year. Even Democrats (by a 43%-35% margin) favor a delay. Majorities of Republicans (84%) and independents (57%) favor eliminating the mandate completely. The only voter group still strongly supporting ObamaCare is Liberal Democrats. Surprisingly, even “Moderate Democrats are quitting on Obamacare” (Washington Post-ABC News poll).

So, after three months of bad reports from his own administration, from allies in Congress, and allies in the labor unions, President Obama felt it necessary to defend his law. It is hard to find a single major media outlet praising his speech – the Associated Press labeled it “another round of exaggeration”.

The point of this essay is not to highlight all that is wrong with ObamaCare – that would take many more volumes. It is to emphasize that the Law of Unintended Consequences can never be repealed. Politicians who ignore that law do so at our peril.


A cri de coeur from a teacher

“A school in which I used to teach was failing. Is failing. Has always failed. Our staff … couldn’t make a dent in that school. … The only reason that the 60% of the kids who bothered to show up daily even came to school was for the 2 free meals and the climate control.” Such is the lament of a frustrated teacher.

Here are a few more highlights (lowlights?):

  • [The kids] had no desire to learn. They did not CARE if they failed.
  • [They] were usually passed up to their current grade based on age
  • I had kids who read at 2nd grade level [in 11th grade]
  • 4 years of prison-without-bars, as [some kids] called it.

Money is not the answer. This teacher says that the failing school had “great gobs of money”. The school that teacher finally moved to has very little money – “I have to buy my own equipment. All of it.” – but that school is succeeding.

ObamaCare Poses a Massive Privacy Risk

With all the other flaws in ObamaCare, one that is rarely mentioned is a massive risk to privacy. The Data Hub which will interconnect the IRS, HHS, Social Security Administration and four other federal agencies is late (like every other part of ObamaCare) and security will suffer.

“It will create a huge opening for identity thieves and other such criminals” says Investors Business Daily. “It could create a privacy nightmare for millions of Americans.”