The Jones Plan for Healthcare Reform

The FDA Has Become a Tremendous Net-Negative for Americans

2012-01-01T11:46:00.001-06:00

According to a recent new article (http://news.yahoo.com/insight-shortage-adhd-drug-adderall-seen-persisting-2012-151543814.html), the ADHD drug Adderall is in short supply, due to the FDA’s misguided micromanagement of the supply chain. This demonstrates once again how the FDA is an out-of-control agency trampling our liberties, diminishing productivity and choices in healthcare, decreasing innovation in medical science, and ratcheting up crime world-wide. Please recall that:

1. 1. Until the Harrison Narcotics Tax Act of 1914, an American could walk into any pharmacy and buy, without a prescription, any needed medication, including narcotics.

2. 2. Prior to the 1951 Durham-Humphrey amendment, you could obtain any medication (except narcotics) without a doctor’s prescription.

3. 3. There is no Constitutional authority for the government to tell Americans what drugs we can or cannot use for our health or recreation. On the contrary, any citizen who is sufficiently intelligent and motivated to manage his or her own health care has that right. The current violation of our fundamental freedoms is a major cause of spiraling healthcare costs.

4. 4. There is no evidence that this gross violation of our civil liberties has any more net benefit on crime than did alcohol prohibition in the 1920’s. On the contrary, this ridiculous criminalization of addiction commerce costs American taxpayers approximately $100 Billion annually, causes the murder of over 10,000 Mexicans, keeps about half a million US citizens in prison, fuels the multi-billion dollar worldwide narcotics trade, and make the US a world laughing stock.

In summary, the FDA is an out-of-control agency that is trampling our constitutional freedoms, driving up healthcare costs, and creating a tremendous net-negative effect on our economy and culture. It’s time to put the FDA back in its box, and liberate American healthcare.

Quality Assessment in Healthcare

2011-04-03T13:01:00.000-05:00

The following was submitted as a response to John Goodman’s article, “Why is There a Problem with Health Care Quality?” You can read his article at:

http://healthaffairs.org/blog/2011/03/24/why-is-there-a-problem-with-health-care-quality/

In a free market economy, isn’t reputation the primary quality metric? Consumers are jaded about marketing hype. If you need an orthopedist, you ask your primary doc, or your friends and relatives, "Who's the best hip surgeon in the neighborhood?" As a small-town family physician, I asked every new patient how they heard about the practice (why they came). My number one source of new business was "word of mouth," which far out-ranked any marketing efforts (newspaper ads, billboards, etc.).

Two factors diminish the effectiveness of reputation in our current system:

1. Physician selection is often restricted by insurance affiliations. You can't see the best doc if he or she isn’t in-network with your insurer (unless you can afford to pay inflated fees completely out-of-pocket). This problem can be dispatched by banning (or at least discouraging) contracting between physicians and insurers. That would free patients to select any provider they choose, and would allow patients to pay more out-of-pocket for greater perceived quality. This simple measure would, of course, also remove the single greatest driver of healthcare inflation: the consumer-payer disconnect.

2. The pervasive culture of secrecy and elitism in healthcare. Doctors, legislation and policies have long fostered the perception that physicians have such esoteric knowledge that they are above quality comparisons; and even if there are quality differences, non-physicians are too ignorant to evaluate them. This cultural attitude has allowed doctors to avoid quality concerns or even the requirement to explain their decisions.

In general, our society has become more open. Most meetings of public officials are now subject to “sunshine laws,” and you can read consumer evaluations of products and sellers on Amazon.com. In healthcare, the trend has perhaps been the opposite. For example, the Health Insurance Portability and Accountability Act (HIPAA) of 1996 gives virtually everyone in the healthcare system additional cause for paranoia and additional justification for secrecy.

Also, our increasingly urban and mobile populace seems less able to rely on “local reputation” for quality assessments than their small-town forbears. This problem can probably be solved by innovation in social media and online physician services, although the current climate of over-regulation and third-party revenue control greatly hampers such innovation.

(The elitist attitude in healthcare also fosters dependency on physicians, another major cost driver. For example, the Durham-Humphrey amendment of 1951 makes it quite explicit that all patients are too ignorant to manage their own healthcare, by mandating a physician consultation to obtain the great majority of medications.)

In summary: a) The only valid and efficient evaluators of quality are the consumers of goods and services.

b) The only proven efficient method of applying quality indicators is for consumers to “vote with their feet” according to their quality perceptions.

c) The current system is rigged, both by convention and law, to discourage consumers from evaluating quality; and to prevent them from voting with their feet.

Dan Jones, MD

How To Fix Congress

2011-02-12T14:11:00.001-06:00

I have alluded in previous posts to the incompetence (politely speaking) of the US Congress. This is reflected in the public discourse seen in such places as the New York Times editorials and reader comments. The majority of articles and comments seem to focus not on the merits of specific issues; but rather on the absurdities and paralysis of our two-party system.

Our two-party system has always been flawed, but its inadequacies have been amplified by the growing complexity and diversity of contemporary culture. Simply put, our two-party system has become totally dysfunctional, disruptive, bankruptive and corruptive. It’s time we ended it.

The two-party system is absurdly illogical. How can you possibly throw the multitude of important issues facing us into just two bins, and then say we have to vote for one or the other? What if I believe the government should be aggressive in protecting the environment, but that individuals should be responsible for their own health care? Two parties are simply inadequate. And, no, the solution isn’t a multi-party system. As exemplified by many European governments, multi-party systems are even more ineffective and chaotic.

Instead of endless ideological arguments about political parties, we should be individually voting on the issues near and dear to our hearts and minds. Now, for the first time in history, we have the technology to do that. When we can individually vote our hearts and minds on the issues, then we can argue about what really matters--the issues.

This won’t require a Constitutional amendment, or even an act of Congress. Such a desirable situation can, and probably will, arise organically from the grass roots and internet technology. If a Congressional candidate said, “Look, my party affiliation doesn’t matter. I’m just going to represent YOU. If you elect me, you can go to my web site and vote on any issue you care about; and I’ll vote in accordance with the majority of my constituents on that issue.” Would you vote for that Congressman? I certainly would.

All this transformation will require is:

1. Some benevolent tech company or philanthropist to create the software. (Are you listening Google, Facebook? Bill Gates?)

2. A few courageous legislative candidates to lead the way.

We, the people, will take it from there and reclaim control of our government. Party ideologues simply won’t be able to compete with representatives who empower their constituents to vote on the issues.

As always, “the devil’s in the details,” and this transformation won’t happen painlessly or overnight. Many will object, “That’s not what the Founding Fathers intended. True democracy means mob rule!” To that I ask, “Do you think the Founding Fathers intended our current corrupt, ineffective and profligate Congress controlled by special interests and party ideology?” No, the new system won’t be perfect. But it will probably be much better than what we have now. In any event, the status quo is no longer acceptable to rational citizens.

Once we, the people, are back in charge, what will we do with the political parties? I have an idea: how about Saturday Afternoon Naked Network Mud-wrestling--Republicans Versus Democrats. Enjoy your mud-slinging. And good riddance.

Dan Jones

Government Flaws Are Destroying Our Liberty and Prosperity

2011-02-04T20:14:00.000-06:00

In his recent State-Of-The-Union address, Mr. Obama was inspiring, as always. We’ve had lots of inspiring speeches in the past few decades, but our government is increasingly incapable of leading the country according to any sound principles. And the President’s suggestions do little or nothing to address the fundamental problems afflicting our nation.

Today, the average American pays about 40% in taxes (federal, state and local). That means for every 3 days you work for yourself and your family, you must work 2 days for the government. Or go to prison.

The 13th Amendment says “Neither slavery nor involuntary servitude, except as a punishment for crime...shall exist within the United States.” Working two days a week to support the government may not be slavery, but it certainly feels like “involuntary servitude” to many people.

Some argue that working two days a week for the government is amply rewarded by the services provided. This is demonstrably false, as detailed below. The government is squandering exorbitant amounts of our money. This is no bargain. And even if it was, what right does the government have to force you or me to buy its bargains?

The 4th Amendment to our Constitution says, “The right of the people to be secure in their persons, and in their houses, papers, and effects, against unreasonable searches and seizures, shall not be violated…” The government has no right to know our personal affairs, including how much money we make or how we earn or spend it. Yet, come tax time every year, we are forced to reveal the details of our personal finances. Or go to prison. Is this the freedom from tyranny so many Americans have fought and died for?

Of course, the politicians cleverly conceal our exploitation with tactics such as employer withholding, so we never even see the money they’re extorting on threat of imprisonment. But the simple fact is: if you are an average American, for every 3 days you work for yourself and your family, you must work 2 days for the government, and you must divulge your private finances. Or go to prison. If you think about it, that’s pathetic. We should either end it, or stop claiming to be a free people.

Alas, the courts have consistently ruled the income tax constitutional. How did that happen? Simple: our courts and judges have been duped by the same gradualism as the citizenry. I doubt there is an acting judge today who was born before the income tax existed^*. People born into servitude and domination tend to accept it as normal--until it becomes intolerable.

^*(Because an income tax was originally explicitly unconstitutional, it required the 16^th Amendment to the Constitution, ratified in 1913, before it could be enacted. The income tax was initially only 1-7% and applied to less than the wealthiest 1% of citizens… But the camel’s nose was under the edge of the tent.)

How much should we pay in taxes? That depends on what we expect of government. Projects such as interstate highway systems, management of natural resources, and national defense clearly merit taxpayer support. Others, such as our counterproductive never-ending “wars” on terror, poverty, and drugs clearly do not. And arguably appropriate projects such as Social Security and “universal healthcare” are being pathetically bungled, leading us toward national bankruptcy.

Our government currently spends about the same on our military as all other nations on earth combined. American taxpayers now pay to station armed forces at more than 820 installations in at least 135 countries.

It is fabulously expensive to be the world’s policeman, but some people say that should be our role. After all, being world policeman worked pretty well for ancient Rome and imperial Great Britain. Yes, if you’re the world’s only superpower, being its policeman can be economically rewarding. But only if you enslave foreign countries and pillage their resources as Rome Great Britain did. But that’s not our thing, is it?

We are now approaching one trillion dollars ($1,000,000,000,000) spent on the “war on terror.” What should have been an aggressive policing action against a few thousand criminals has morphed into a trillion-dollar, multi-decade nation-building project in Afghanistan and Iraq. We have already spent nearly $3,300 for every American man, woman and child to give democracy to people who didn’t ask for it, don’t deserve it, and probably won’t accept it.

Now suppose you have a family of five. And suppose your Congressman came to you in 2002 and said, “Would your family like to donate $16,500 (that’s $3,300 per family member) to democratize Iraq and Afghanistan? There’s, oh, maybe a 20% chance we’ll succeed, and we’ll have to blow up a few thousand American boys, but, hey, let’s give it a try. How about it? Wanna donate $16,500?” Nobody asked me. They just spent my money. Did they ask you?

Some enormous government expenses border on insanity. For example, our government now pays "food stamp" subsidies averaging about $133 per month to about 43 million Americans, totaling about $55 Billion per year. But nobody is starving in America. Nobody is even skinny in America. Our only significant nutritional problem is our rampant obesity epidemic, which is worst in the poor, and increases diabetes, cancer and cardiovascular disease.

Stand by any check-out line in any inner city supermarket, and you will observe that the great majority of food-stamp users are seriously obese, and their carts are loaded with the unhealthiest sugar-, salt- and fat-laden foods. At the same time the government raids our wallets before we even see our wages, to buy free food for millions of obese people, we get further robbed to provide free health care for the millions of cases of diabetes, hypertension, heart attack, stroke and cancer our government is so generously facilitating. Is that just idiocy… or is it insanity? You decide.

Now, lest you think me personally stingy, let me be clear: I’m really a nice guy with good intentions and a kind heart. I'm neither a Democrat or Republican, just a citizen who thinks we deserve responsible and effective government. I want very much for all of us to be as healthy and happy as possible. This is not a discussion about whether or not we should prevent malnutrition, ensure affordable healthcare and comfortable retirements, and lift up the less fortunate among us. This is just a discussion about how we cannot accomplish such things. (How we can accomplish such things is another discussion, but there’s is no point in having that discussion until we stop squandering our resources on things that don’t work.)

Some things our government, despite good intentions, is simply incapable of doing in any efficient or affordable manner. For example, healthcare. Our government’s mismanagement has caused healthcare costs to increase at three times the average rate of inflation for several decades now. Since healthcare costs unavoidably get included in wages, this makes our products and services uncompetitive. How can our manufacturers possibly compete, in either the domestic or international markets, when they have to pay $8000 per year, on average, in healthcare costs for every employee and family member?

As a clinic builder and primary care physician, I have seen this from the inside. Our healthcare system has become a government-controlled Marxist dystopia, pure and simple. The CMS (Center for Medicare and Medicaid Services) is virtually a replica of the Central Planning Committee of the now-defunct Union of Soviet Socialist Republics. It sets product specifications, fixes prices, and micromanages growing armies of bureaucrats, creating an every-more costly and inefficient system. The Soviets gave up on Marxism two decades ago. Why is our government still promoting it?

Sixty years ago, a young doctor could borrow a few thousand dollars, hire a receptionist and nurse, hang out his shingle in virtually any town in America, and be making a decent living in a few months. He or she competed with other doctors in a free market. Healthcare was 4.5% of GDP, compared to 17.6% today. You didn’t have to sell your house to have your gallbladder removed.

Today, it’s virtually impossible for a single doctor with a small staff to succeed in private practice. Fewer and fewer are fool enough to try it. You need deep pockets and a small army of “coders,”, “billing specialists,” accountants and lawyers to cope with the tsunami of counterproductive laws, rules and regulations gushing forth from the rapidly metastasizing pus-pockets and cancers corrupting our federal government (and increasingly, our state governments as well).

Or consider “Social Security.” Due to our government’s profligacy, this “retirement plan” has become a gargantuan Ponzi scheme. If you think the government has saved all that money you’ve been paying into Social Security, to be available when you retire, you’ve been duped. Our government has already spent your retirement money on democratizing Iraq, free groceries for fat people, artificial legs for blown-up soldiers, treatment for the diabetes and heart attacks the free food you’re buying for fat people is causing, and the growing army of overpaid “public servants” required to orchestrate this cornucopia of extravagance and corruption. Bernie Madoff’s Ponzi scheme was peanuts compared to this. Bernie Madoff is in prison. But the US Congress is still at large.

It would be criminal enough if the government was only spending the dollars we’ve already earned. Not so. Today, our government is squandering our future incomes, and those of our children and grandchildren. Our federal government is now spending so much that is must borrow 41 cents of every dollar it is spending. Our federal government is now in debt $45,600 for every man, woman and child in America^*. If you have a family of four, you and your family owe $182,400 and growing, on an unlimited “line of credit” signed by the US Congress and president.

^*(This only includes the debt on the books. If you include the government’s unfunded Social Security and Medicare obligations, the total government debt is much greater).

Now, suppose your neighbor Bob came over and said, “Look, I’m spending $1000 every week, but I’m only making $590, so I’m short on cash. Can you loan me the other $410?” My guess is you’d think Bob must be insane, immoral, criminal, stupid, drunk, or maybe just pathetically irresponsible. Instead of getting out your checkbook, you’d probably suggest Bob check in with his pastor, priest or psychiatrist. Well, folks, meet Bob, your US federal government. And guess what? Bob doesn’t even need to ask! He already has carte blanche on your paycheck.

Our federal government has demonstrated excellence at projects where it can pay a few billion dollars to American engineers to perform technological miracles. For example, building the interstate highway system, controlling Mississippi River floods, putting a man on the moon, or building missile shields. But our government has demonstrated only utter incompetence, corruption and unbounded waste when it comes to ongoing social projects such as the “war on poverty,” Social Security, “food stamps,” the “war on drugs” or universal healthcare. We must get it out of those businesses!

We are fools to think a committee of 500 elected officials, mostly lawyers, can effectively engineer grand social projects or redesign our healthcare system. There is no science of “social engineering” or “economic engineering.” You can’t get degrees in those subjects from MIT or Georgia Tech. What the US Congress is doing is like a Paleolithic tribe designing the Space Shuttle. It's that delusional. And we need to accept that, stop them, and move on… before they destroy all that we have built.

On its current trajectory, our government will be bounded only by the bankruptcy and impoverishment of our nation. We can’t fix this by "throwing out the bums" and voting in new ones. We’ve tried that. Republicans or Democrats--Coke or Pepsi. Insanity has been defined as doing the same thing, over and over again, but expecting different results. Let us not be insane.

The problem is deeper: as currently constituted, our government has an inherent tendency to grow ever larger, to create ever more complex laws and bureaucracies, to gobble up ever more of our nation’s resources, and to nibble away ever more of our rights and liberties. Simultaneously, the net benefit per tax dollar spent keeps shrinking.

We came to America from all corners of the earth, to find a better life and build a better world. Now we must continue that project with new vigor and resolve. In the words of our Founders in 1776:

“We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness--That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed, that whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its Foundation on such principles, and organizing its Powers in such Form, as to them shall seem most likely to effect their Safety and Happiness.”

It is our right to alter our government, and that is what I believe we must do. What alterations are required? Let’s begin by listing the fundamental defects that need to be corrected: (I am referring to the federal government here, although, alas, many of the same issues are increasingly applicable to state governments.)

1. The government is spending too much, and has no ability to control its expenditures.

2. The government is financing many programs that lack broad taxpayer support; or are simply ineffective or inefficient.

3. The government is continuously increasing the costs and complexity of doing business in America, by creating ever more laws and regulations; while rarely removing outdated, ineffective and counterproductive laws.

4. Laws and regulations increasingly infringe our personal liberties, to which we are entitled by the US Constitution and by our heritage of common law and traditions.

How can these defects be corrected? We now have ample evidence they can’t be corrected by either legislation or by electing new representatives. Congress has enacted multiple laws to prevent deficit spending, and then just rescinds or alters them, at its convenience. No, these problems can only be solved by decreasing the power of Congress.

In general, there are only two legal and constitutional ways we can decrease the power of Congress:

1. Amend the Constitution so as to further limit Congress’ ability to tax, spend, create laws, and infringe our liberties.

2. Create new organizations or technology that increase the electorate’s ability to control Congress.

I will consider these options in more detail later. Please stay tuned.

Dan

Poverty in America and Social Policy

2011-01-11T19:14:00.000-06:00

The following (slightly edited and expanded) was originally posted as several reader comments on the New York Times, in response to Tina Rosenberg’s article of January 3, 2011, titled

To Beat Back Poverty, Pay the Poor

http://opinionator.blogs.nytimes.com/2011/01/03/to-beat-back-poverty-pay-the-poor/

I think the problem in the US (with cash transfers to the poor), and what scares conservatives is this:

1. Bureaucrats and politicians in the US who are doling out tax money always seem to develop a curious linguistic deficit: they forget how to say "no." Any strict rules regarding the eligibility requirements necessary to make such programs effective in lifting people from poverty would likely be watered down or disappear.

2. From conservatives' perspective (paranoid or not), that is because the objective of "social liberals" in the US is not to liberate the poor, but to maintain a dependent class who will vote to keep them (the bureaucrats and politicians) in office, and personally well above the poverty level.

We have seen this in the past, with "welfare" programs that only created a hopeless underclass of people with a multi-generational culture of entitlement expectation, but with no work ethic or economic skills.

I don't believe that conservatives, Republicans, or whomever can or would resist a program that demonstrates a strong ability to sustainably elevate people from poverty or solve other major social problems. But they certainly can/will resist programs that commit massive amounts of federal dollars for decades for unproven liberal adventure (e.g., Obamacare).

Those who wish to promote such programs as "conditional cash transfers" or "workfare" should design short-term, limited-scale test programs, to be advanced and expanded as they prove themselves. That's the difference between, e.g., the highly successful man-on-the-moon program and the disastrous Obamacare.

One big problem with cash transfers I’ve seen in the US is that, because the great majority of the poor are above the subsistence level, the money tends to be spent on “luxury” items that may actually be detrimental. For example, food stamp user’s grocery carts are often loaded with the most toxic “foods” (sodas, chips, pastries, ice cream, etc.). If actual cash was provided, much of it would no-doubt be spent on cigarettes, alcohol, drugs, junk food and Nikes.

Riddle me this: How do you reconcile the following facts anywhere within the realm of human sanity?

1. Our government now pays "food stamp" subsidies averaging ~$125/month to MORE THAN 40 MILLION Americans.

2. NOBODY IS STARVING in America. I've worked as a physician in emergency and primary care in 3 states in the South for 30 years. I’ve never seen a single starving person, or anyone suffering malnutrition from lack of food.

3. The number one health and nutrition problem in America is our RAMPANT OBESITY EPIDEMIC. Obesity greatly increases your risk of diabetes, hypertension, cardiovascular disease and cancer.

4. Stand by any check-out line in an inner city supermarket, and you will observe that the great majority of food-stamp users are SERIOUSLY OBESE.

5. At the same time that those of use with a grain of sanity left get our wallets raided before we even see the paycheck, to buy more groceries for millions of obese people, we also get further robbed to provide free health care to take care of all the diabetes, hypertension, cardiovascular disease and cancer our government is so generously facilitating with our hard-earned incomes.

I’m sorry, Folks, but it’s just been too long since the revolution.

So what to do about poverty in the US?

Conditional cash transfer programs seem to be effective in much of the undeveloped world, but “poor” is a relative term. There are no masses of poor people in the US living in dirt-floored shanties without water or electricity. We have no starving masses; the obesity epidemic is worst in our poor. Children aren’t dropping out of school for economic reasons; parents don’t take them out of the 5^th grade to work in a sweat shop or pick fruit. What is it like to be poor in the US, and what should we do about poverty here?

As a physician and small-businessperson who has worked in emergency rooms and primary care clinics, and nurtured small businesses for three decades, I have met thousands of our nations poor people as Medicaid or uninsured patients and their families; and others as neighbors and employees. As a small child my own family lived in a 3-room share-cropper shack without indoor plumbing. As a teenager, I traveled this great land, hitch-hiking and sleeping under bridges, from one minimum-wage job to another. I have observed there are two classes of poor in the US.

First there are the “upwardly mobile poor.” These people work long hours at menial jobs, such as deboning chickens at Tyson’s for $8-10 per hour. Most of them have a high-school education or less, though intelligence ranges from low to above average. What distinguishes them is their gritty work ethic, their “scrimp and save” financial habits, and their belief in the “American dream.” Those who are younger are “working their way up,” and often succeed. Those who are middle-age and older don’t expect any more for themselves than hard work, relative poverty, and a modicum of comfort in their old age from Medicare and Social Security. But they smile and brag about their children in community college, studying to be nurses and computer technicians.

Second, there are the “hard core poor,” who are trapped in persistent poverty by one or more of the following:

1. A fundamental lack of “adaptive personality traits” such as a strong work ethic, self-esteem, or persistence. They either shun work, or flit from one low-paying job to another, never persisting long enough to obtain any modicum of financial security or advancement. Additionally, these people tend to be less intelligent and more impulsive on average, and tend to make poor choices with adverse long-term consequences, such as dropping out of school, getting pregnant without the necessary resources, buying things they can’t afford, etc.

2. Poor “life skills”: no ability to balance a check-book, make out a household budget, plan for the future, or negotiate simple compromises with a partner, neighbor, landlord or employer.

3. Lack of good “mental hygiene.” These are simple habits of mind that most of us take for granted, although we probably acquire them from family and culture: “positive thinking” (e.g., counting your blessings, seeing the cup as half-full instead of half-empty), accepting responsibility for your situation, understanding how to control your own emotional state, etc.

What can we do to help the poor in our own country? The two types of poor require very different types of assistance.

For the upwardly mobile poor, we just need to make the path upward as easy and obvious as possible. That is, we need to promote a strong economy, with an abundance of both entry-level, mid-level, and high-level jobs. Easier said than done, right?

In times of recession and high unemployment, a strong argument can be made for Keynesian measures such as deficit stimulus spending. But that is a dangerous double-edged sword that needs to be wielded with more restraint and wisdom than our government has shown in the past. In the long run, deficit spending is just as dangerous to our nation as to our households and businesses.

The primary advantage of stimulus spending is its immediacy. That is also probably its greatest danger, because that makes it prone to abuse as a “quick fix,” when recessions are often a natural economic cycle, implying a need for bubbles to burst, lessons to be learned, and for individual and business habits and policies to be adjusted at the grass-roots level. Government has very limited ability to control the economy, and no wisdom regarding its own limitations.

The best thing government should do, in my opinion as a small businessperson, is to keep taxes low. Every dollar spent re-cycles through the economy multiple times, whether it is originally spent by the government, individuals, or businesses. But money spent by businesses is more likely to be invested in new products, services and jobs that will provide long-term economic growth. Many times I would have created new products and hired more employees, if only the government hadn’t robbed me of the money I would have used to do that.

What can we do about the hard-core poor in the US? These people are not starving or living in dirt-floored shanties. But many are trapped in multi-generational poverty by their self-defeating personality traits, relatively low intelligence and education, and lack of basic life skills. Parents with such deficits tend to pass them on to their children. It is extremely difficult to change the fundamental habits and personality traits of adults; and educating adults is far more difficult than educating children. So these efforts should focus most on the children. I suggest the following measures:

1. Tuition and book/supply subsidies for adults to attend community colleges. Cash transfers are questionable, and if used at all should be conditioned on school performance. Since most of these people already have the basic necessities, cash is as likely to be spent on junk food, cigarettes, alcohol, and drugs, as on anything of long-term benefit.

2. Community colleges should provide programs on “life skills” to teach poor adults such basic skills as impulse control, decision-making, household budgeting and how to negotiate with family, friends and employers.

3. Counseling programs should be available to counsel struggling individuals regarding life planning, budgeting, etc. These should be grass-roots volunteer programs. The only such government-sponsored programs I’ve had any experience with were staffed mostly with incompetent counselors who wasted their clients time.

4. Stop the food stamp program, and consider “regressive” taxes on all foods except whole fruits and vegetables (which should be untaxed, and possibly subsidized). The obesity epidemic affects the poor most, and the resulting diseases and disability only exacerbate their plight.

5. End farm subsidies. We spend billions every year subsidizing the corn, beef and dairy products, all of which should be minimal components of a healthy, low-calorie diet. The evidence is overwhelming that the most healthy and nutritious foods are whole vegetables and fruits. Only those foods, if any, should be subsidized.

6. Encourage or subsidize inner-city neighborhood gardens.

7. Subsidize public daycare, so young parents can afford to work; and so educational activities can begin at an early age.

8. Reform our schools! Even when I was a teenager, urban public school was mostly a “baby-sitting service” to keep us off the streets so our parents could work. Many urban schools are much worse now (e.g., see “Waiting For Superman”). Education is key to breaking the intergenerational cycle of poverty. But we need more than the “3 R’s” (readin’ and ‘ritin’ and ‘rithmetic). Traditionally, schools were supposed to provide the 3 R’s, while family and church provided the ethical principles and life skills required for success in life. But many impoverished kids are not exposed to those essential principles at home or church. (For a graphic depiction that is both heartbreaking and inspiring, see “Precious”). For such children, our schools must have a broader mission. (Try getting consensus on those requirements at the national level!)

9. Abolish or radically redesign the SSDI (“disability”) component of Social Security/Medicare. In my experience, only a shrinking minority of the growing millions of people “on disability” are truly disabled or actually benefit from this program. Most are harmed by it; and it is creating another multigenerational category of “entitled” people with no work ethic, but tremendous finesse at gaming the system. This is the inevitable result of politicians’ and bureaucrats’ congenital inability to say “no” to anyone who might complain about, or vote against them. Certainly there are truly needy disabled people among us, and we should take care of them. But it is folly to think our federal government can provide a solution.

In general, all such programs should be done as close to the “grass roots” level as possible, at the neighborhood, city/county and state levels, with little or none at the federal level. Our federal government has demonstrated its excellence at projects where congress can pay billions of dollars to a few hundred engineers to accomplish miracles in a decade or two. For example, creating the interstate highway system, controlling Mississippi river floods, putting a man on the moon, and conquering foreign countries. It has demonstrated its utter incompetence at such grand social projects as Social Security (a bankrupt Ponzi scheme) and Medicare/Medicaid (which have caused healthcare costs to increase at three times the rate of inflation for 4 decades now, creating the most expensive and inefficient healthcare system on the planet).

Finally, we should be humble, and understand both our obligations and our limitations. In Deuteronomy 15:11, the God says, “Since there will never cease to be some in need on the earth, I therefore command you, ‘Open your hand to the poor and needy neighbor in your land.’” No federal bureaucrat or politician will ever know the needs of our neighbors as well as we do.

Dan Jones

PS: The above analysis seems to leave us with the following categories of “poor” in the US:

1. The “upwardly mobile poor.” These are on their way up, and are no problem.

2. The “coping poor.” These people aren’t likely to migrate up the socioeconomic ladder due to a variety of possible factors (age, education, intelligence, personality, minor disability, etc.), but are employed most of the time and meeting their basic needs. The most efficient and effective public policy strategy for these people is to encourage a robust economy, so that ample “low-wage” jobs are available that pay enough for a decent life.

3. The disabled, whose family cannot or will not provide for them. Clearly a “social safety net” is required for these folks, to ensure adequate nutrition, clothing and shelter. (Assuming they want such; some schizophrenics would rather be Napoleon sleeping under the stars than disabled Joe living in a shelter, and I think they should have that right.)

4. The “marginally able” (referred to as “hard core poor” above). These are those who would be “coping poor” if they had better education, life skills or mental hygiene. Clearly, it would be wise to assist these people to migrate into the “coping poor” category whenever possible. Any who can’t, with best efforts, be migrated into the coping category probably actually belong in category 3 (disabled), or category 5 or 6 (below).

5. The lazy or parasitic. These people give poor a bad name. They’re why liberals call conservatives cruel and uncaring, and why conservatives call liberals bleeding heart fools. Such people always have a story, and depending on how inclined you are to believe it, they’re either good people down on their luck, or lazy parasites mooching off the taxpayer.

From any objective psychological or even moral viewpoint, I don’t think “laziness,” as a personality trait, is any more the fault of the individual possessing it than any other disabling mental trait or defect. So for both theoretical and pragmatic reasons, I think these people should just be put in category 4, and be done with it.

I’ve singled out the lazy parasites, though, because they have an effect on the social assistance debate that is disproportionate to their numbers. Those opposed to generous social programs for the poor will always be able to point to such individuals as evidence that assistance is abused or too generous. In effect, such people will always set an “upper bound” on assistance programs for the poor or disabled; and too the extent that their “laziness” is subject to reward and punishment, such individuals may tend to migrate to category 2 (coping poor) or category 3 (disabled), depending on the generosity of benefits and liberality of definitions. At least, that is the theory of social conservatives that gets them branded as “stingy” or “uncaring” by liberals.

6. The criminal. Crime occurs in all socioeconomic strata, but is clearly related to poverty in several ways.

a) Poverty increases crime. It is an obvious truism that most people will steal to prevent themselves or their family from starving. You can argue, and no doubt people do, about the relationship between lesser forms of poverty and crime, but clearly poverty does increase crime, and the associated costs to society.

b) Crime increases poverty. For example, a young person incarcerated is unable to attend school. And having a criminal record decreases employment opportunities later on.

c) Some “crimes” are not defined as such based on any clear-cut moral or social principles, and may needlessly contribute to criminality and poverty. For example, defining drug manufacturing, importing, sales and use as crimes probably has a tremendous net-negative effect on society, as exemplified by our national experience with alcohol prohibition during the 1920’s. About half the people in federal prisons are there for drug-related crimes. And according to a paper in the American Sociological Review (http://www2.asanet.org/media/blacksinjail.html), about 20% of young black men spend time in prison. While in prison those men have no ability to contribute to the finances of their families; and their criminal records decrease their employment opportunities when released.

To close, poverty and near-poverty are significant problems in America that could be improved through effective social programs. Alas, most current federal and state programs appear to have net-negative effects, while squandering fabulous amounts of our nations treasure.

Social Security Disability Destroys Lives

2010-09-17T15:57:00.002-05:00

NOTE: this was submitted as a comment to the article “America’s Hidden Welfare Program,” which you can read at

http://www.slate.com/id/2266819/

The 300+ reader comments following the article reveal how deeply the SSDI system is embedded in our culture.

This article is not intended to disparage the minority of Social Security Disability Insurance recipients who are seriously disabled. The problem is, they are only a minority of recipients.

As a physician I’ve seen many patients “get on disability.” Social Security disability destroys lives, pure and simple. I’ve seen this many times. A patient is a normal person--they have medical or mental problems (like most of us), but they struggle, as we all struggle. Sometimes they’re happy because they’re succeeding in some way. Sometimes they’re despondent because they hurt, or because life I hard. But they manage.

Then they get the notion, often from advertising by lawyers who exploit the SSDI system, that they should “go on disability.” Then life will be better. I warn them what will really happen, but they ignore me.

There are no objective criteria for SSDI benefits. You can qualify because you’re depressed or because your back hurts. In truth, there are no objective medical criteria for disability. The only SSDI qualification is having a good lawyer and determination. So a year later, despite my warning, the patient is “on disability.” Then what happens?

When they come to my clinic, there are no longer good days and bad days--only bad days. The money is not enough for any sort of “financial security,” so they live in chronic poverty, without hope. They no longer work, even part-time, for fear of losing their benefits, or due to lack of motivation. They are now officially disabled and incompetent to make their way in the world.

They no longer struggle. Even if depression was not the reason for their disability, they become chronically depressed. If they had chronic pain, it becomes worse and more constant, if only because they have nothing to distract their attention from it.

It is our daily struggles that bring us joy and self-esteem. Alas, the same anticipation of reward that motivates our struggles, also makes us prey to the delusion that “getting on disability” will solve all our problems. In truth, SSDI just promotes chronic misery, and deprives citizens of that most fundamental Constitutional right to “life, liberty and the pursuit of happiness.”

I have described the most common person on disability. The second most common recipient, in my experience, is the non-disabled abuser. These people are well-adjusted and often do work, either part-time or “under the table,” so as to keep their benefits.

In summary, SSDI is widely abused, and causes far more misery than it relieves. For that reason, it should be abolished. There is a minority of those on SSDI who are truly disabled. One might argue that we only need to tighten the criteria. But to anyone who’s seen such systems evolve, that argument is absurd. Such systems inevitably succumb to the political and bureaucratic expediency that result in incrementalism, abuse, exploitation, waste, and harm to the very citizens they attempt to help. It is time to abolish SSDI because it causes far more harm than good, and it is not repairable. -Dan

How to Pay for Healthcare Fairly

2010-04-10T16:17:00.001-05:00

This issue is both morally and politically complex. Ideally, it seems that for healthcare financing to be “fair,” those people who engage in behaviors known to increase their risk for expensive health problems should pay more. “Fairness” in this sense implies two desirable results:

1. Those who choose to take more risks are required to pay more for their resulting increased costs.
2. Attaching increased charges directly to high-risk behaviors will discourage such behaviors, resulting in net improvement in health and net reduction in costs.

Alas, Congress’ recent alleged “healthcare reform” does the opposite by:

1. Prohibiting insurance pricing discrimination based on behavior (smoking possibly excepted).
2. Ignoring the issue of fair taxation of health-impairing products, services and behaviors. Examples might include:
a) taxing cigarettes sufficiently to pay for the increased incidence of cancer, chronic lung disease, and cardiovascular disease they are known to cause.
b) increasing fines for speeding, ignoring red lights and stop signs, drunken driving and reckless driving sufficiently to pay for the immediate medical trauma and long-term medical disability that results from auto accidents.

Taking a broader, top-down perspective on the issue, it seems that:

1. We must have some kind of “safety net” for sick people with no resources, for both moral and political reasons. Although the libertarian in me would prefer to leave this to local charity, it’s obvious there will be some kind of national, tax-funded safety net.

2. Under any scenario, patients with high-risk behaviors are those most likely to be unemployed, underemployed and/or to avoid buying insurance. I won’t argue this point here, but I think there is ample evidence, e.g., that smoking is more prevalent among lower-income citizens; that people prone to risky behavior are less likely to buy insurance, etc.

3. High-risk patients’ increased tendency to avoid taxes and insurance, combined with the free safety net, precludes any general attainment of “fairness,” or discouragement of high-risk behavior, by charging higher taxes or insurance rates to high-risk patients.

4. Therefore, the only way to obtain “fairness” and to discourage high-risk behavior in general is to tax the high-risk products, services or behaviors that cause increased healthcare costs. For example, I have been able to get many more patients to stop smoking since the tax per pack increased about $2.00 a few years ago.

It is also important that insurance companies be allowed to charge more for patients with high-risk behaviors, for both financial fairness, and to induce healthier lifestyles. For Congress to make that illegal is simply “malpractice” of the grossest sort. But, as argued above, differential insurance rates won’t affect many of the highest-risk patients, making direct taxation of high-risk products, services and behaviors a desirable public policy.

Yours for Better Healthcare,
Dan Jones, MD

Response to Senator Lincoln's Defense of the Healthcare Reform Bill

2010-04-03T15:12:00.001-05:00

Senator Blanche Lincoln (Democrat, Arkansas) voted FOR the alleged healthcare "reform" bill, despite my admonitions not to (such nerve!). She recently sent me a detailed defense of the bill, which I will include in this post if she grants me permission to do so. In the meantime, I think my response below is quite readable, as is. - Dan Jones

Dear Senator Lincoln,

Thank you for your detailed response to my recent email. I appreciate your hard work on the reform bill. Clearly, our healthcare system needs improvement, and no doubt some aspects of the bill would improve things.

Alas, the fact remains that Congress doesn’t have the ability to legislate the fundamental laws of economics and human behavior, any more than it can change the laws of gravity:

1. When people are enabled to compete on quality and price, they do so. That is why many segments of our economy are the envy of the world.

2. When people are forced to “game the system” to survive, that’s what they do. That is why our healthcare system is the world’s most expensive, and least efficient.

Ever since Medicare introduced price controls and central bureaucratic management policies, it has become increasingly impossible for hospitals and doctors to compete on quality and price. They have been forced to spend ever-increasing amounts of time and energy “gaming the system” to survive. Please remember, healthcare was only 6% of GDP in 1965, when Congress created Medicare. The reform bill only escalates the fundamental problems of price controls and central bureaucratic meddling. This will have a tremendous net negative effect on our healthcare economy.

Alas again, several features of the bill are patently ludicrous. For example:

1. No annual or lifetime insurance limits. Given that 25-50% of Medicare expenses occur in the last year of life, and that many of these expenses have highly questionable benefit, this is clearly an invitation to unbridled costs in the future.

2. Prohibition on insurance discounts for healthy lifestyle. The evidence is now clear that up to 90% of diabetes, hypertension, heart disease, chronic lung disease, stroke and cancer (the major chronic diseases in our society) can be prevented by better lifestyles. Yet this bill prohibits discounts for healthy lifestyle (nonsmoking possibly excepted). This forces those with healthy lifestyles to subsidize those who choose unhealthy lifestyles; and prevents economic incentives for people to choose healthy lifestyles.

3. Starvation and under-nutrition are virtually non-existent in America. On the contrary, we have a growing epidemic of over-nutrition, obesity, and obesity-related diseases. This problem is most severe in low-income people. So why is Congress giving away billions of dollars every year for food stamps, at the same time you ask tax-payers for billions more to treat all those people’s obesity-related health problems? Have you stood in a grocery store line recently, and observed how grossly overweight the average food stamp purchaser is, and how their carts are loaded with fatty, salty, sugary, literally poisonous processed foods? Has Congress lost all sense of logic and proportion?

Your actions reveal a lack of faith in the American people, in our creativity, productivity and generosity. Your 2700-page bill massively aggravates the fundamental problems of over-regulation and price controls that strangle innovation, efficiency and competition. To add insult to injury, it attempts to rob every citizen of one more freedom: the freedom to spend another fraction of our hard-earned wages as we see fit.

I know you have tremendous personal investment in this bill, and I am not under the delusion that anything I say will alter your convictions. I only ask that you keep my points in some dark corner of your mind. And I ask that, in another few years, after healthcare costs and the deficit have continued to soar, while our productivity and international competitiveness decline, that perhaps you will consider the possibility that I am right. Perhaps the way to make America a better place it to defend and protect our freedoms. Perhaps the way to make America a better place is to encourage people to take responsibility for their actions. And perhaps Congress should realize it doesn’t have the power to re-write the fundamental laws of economics and human behavior.

Dan Jones, MD
Eureka Springs , Arkansas
www.JonesPlan.BlogSpot.com

PS: I am posting this response on my blog. In the interest of fairness, I would like to also post your email to which I am responding. Can I have your permission to do that? Thank you again for your sincere efforts on the behalf of Arkansans.

It’s Time Doctors Stopped Taking the Blame

2010-03-27T13:33:00.001-05:00

I posted the following on www.Sermo.com, a physician web site, earlier today.

Dear Fellow Physicians,

Did you feel “left out of the loop” in the recent healthcare reform debate? I did. Not one of my Senators or Representatives asked for my input. Did yours?

On the contrary, I felt vilified by numerous comments implying we somehow caused the healthcare crisis. Comments like:
> “We need a better way to pay doctors…”
> “Fee-for-service is the problem…”
> “Physician behavior is driving costs…”
> “Doctors have the wrong incentives…”, etc., etc…

Wrong incentives? My chief concern, in every encounter with every patient, is “how can I most help this person improve their health?” It pisses me off when people insinuate otherwise. I know the vast majority of you feel the same. And we will never alter those priorities.

So the next time someone suggests physicians caused this crisis, I suggest you point out the following:

1. When federal policy began promoting widespread abuse of health insurance during World War II, healthcare was less than 5% of GDP, not the 17.3% it is today. When Medicare/Medicaid was created by Congress in 1965, healthcare was 6% of GDP, not the 17.3% it is today. When Medicare/Medicaid started price controls and central bureaucratic management policies in the early 80’s, healthcare was 9% of GDP, not the 17.3% it is today. Federal laws and policies created this healthcare mess, not doctors.

2. Fee-for-service is an efficient bulwark of our free-market economy. To work effectively, it requires that consumers negotiate directly with the providers of goods and services to obtain the best quality for the lowest price. It works just fine for plumbers, accountants, lawyers, piano tuners and washing machine repairmen. And it worked just fine for doctors until the federal government mandated widespread abuse of insurance, price controls and central bureaucratic management policies for healthcare. Federal laws and policies created this healthcare crisis, not doctors.

3. Doctors sincerely want to do the most we can to help our patients. But we are increasingly obstructed and frustrated by counterproductive rules, regulations and red tape imposed by Medicare and Medicaid, aped by the private insurance companies. Federal laws and policies created this crisis, not doctors.

4. Obamacare attempts to swindle the public by punishing the insurance companies (not a bad idea) and promising the moon for a song. But it does nothing but magnify the policies that caused this mess: abuse of insurance, price controls and central bureaucratic management policies. It will drive healthcare costs, the federal deficit and taxes ever-higher, while crippling our productivity and international competitiveness. Federal laws and policies continue to worsen this crisis, not doctors.

What can we do to improve the situation? First of all, realize this: we hold the trump card in this game. I suggest the following measures.

1. We can speak loud and clear at every opportunity to correct the misconceptions mentioned above. For example, I have had excellent luck getting local and regional newspapers to publish my views on these issues.

2. Speak directly and often to our patients about what needs to be done. I’m developing a short “newsletter” to give every patient at check-out, encouraging them to vote for candidates who promise to repeal Obamacare and implement real reform. We have a direct connection to every patient in America. Let’s use it.

3. We can refuse to renew our memberships, in droves, in those corrupt organizations that pretend to represent us, but bent over bare-assed and passed out the Vaseline when Congress came calling.

4. We can increasingly “opt out” of the bankrupt Medicare/Medicaid/contract insurance system, by not accepting those insurances for new patients, one insurer at a time. That way, we don’t abandon our patients, and we give both our revenues and potential new patients time to adjust. Most importantly, we can refuse to contract with the new “qualifying” plans mandated by the alleged “reform” legislation. In general, we can progressively exit all contracts with insurances. Our only contracts should be with our patients. Signing those first contracts with Medicare and insurance companies was our original sin.

With these simple measures, we can quickly unmask the lie that is Obamacare, and send an ever-louder message to Washington: We’re done with your pathetic hubris and economic idiocy. Find another whipping boy. And when you’re ready to consider real reform of American healthcare, consider consulting the source -- American docs.

Yours for Better Healthcare,
Dan Jones, MD

A Timely Article on Healthcare Economics

2010-03-26T10:07:00.001-05:00

Here's an interesting and timely article on healthcare economics from the viewpoint of physicians. Note the illusion of efficiency: from the viewpoint of individual or small-group doctors, they are drowning in so much red tape and bureaucracy, that the only escape is to band together (or be bought) into big groups. That's the only way they can afford the small army of "suits" and low- and mid-level clericals to cope with all the insurance and government red tape and regulations strangling the system. But massive amounts of human resources are still being squandered. The wasted labor is just shifted away from the docs, to growing armies of "coding specialists," "insurance specialists," etc. And the migration from solo and small-group practices to obtain "economies of scale" is sucking primary care out of rural areas, small towns, and poorer urban neighborhoods. Meanwhile, Obamacare just adds another 150 federal bureaucracies for us to cope with. REPLACE, REPEAL, AND REFORM... REAL REFORM! - Dan

(You may need to paste this link into your browser. It's an article from the 3/26/10 New York Times.)
http://www.nytimes.com/2010/03/26/health/policy/26docs.html?pagewanted=1&fta=y

Response to Senator Coburn

2010-03-14T12:40:00.001-05:00

Senator Tom Coburn, M.D. (Oklahoma) recently requested physician opinions on healthcare reform on a popular physician Web site. This is my response.

Thanks, Tom, for standing up for real healthcare reform. I would like to make a few comments and suggestions from the viewpoint of both a businessman (founder and original CEO of Challenger Corporation) and a struggling, private-practice primary care doc.

First of all, There was a time when a young doctor could take out a small loan, buy a few supplies and an ECG and x-ray machine, hire a receptionist and nurse, and be making a decent living in a few months. Those days are gone, along with easy, affordable access to primary care in many areas.

These days you would have to hire an extra full-time front office person to deal with insurance verification and pre-authorizations; and an extra full-time back-office person to create, scrub and submit the bills; and then fight with insurance dingbats to collect every dime. Your personnel costs, by far the highest cost for most businesses, just tripled, because these two new positions require a lot more training, intelligence and initiative than do receptionists and nurses.

In no other industry, to my knowledge, does it require more resources just to get paid for your products or services, than it does to produce or provide them. This massive inefficiency results directly from Congress' past blunders of mandating insurance abuse, and applying price controls and central bureaucratic management to healthcare. Before that, healthcare was less the 5% of GDP, not the 17% it is today!

Alleged "economists" have been blaming doctors, and saying "we need a better way to pay doctors" for so long that even doctors have begun to believe it's our fault. Why not let doctors compete with each other on price and quality, just like accountants, plumbers and auto mechanics? That worked just fine until -- you guessed it -- Congress' past blunders of mandating insurance abuse, and applying price controls and central bureaucratic management to healthcare. Before that, healthcare was less the 5% of GDP, not the 17% it is today.

So what really needs to be done to fix healthcare? In my opinion, the most critical changes are these:

1. End the widespread abuse of insurance. (I'm not talking here about controlling how insurance companies accept or deny patients; that may also need to be addressed, but that's not what's causes rampant healthcare inflation.) Patients should pay doctors, who compete for those patients on price and quality. Medicare, Medicaid and insurance companies, should reimburse patients, and compete for them based on quality and price. What a concept -- a free-market economy where suppliers compete on quality and price! In contrast, what a lunatic idea to have doctors ordering, and patients accepting, high-priced services and products when neither knows or cares about the costs! Is this real, or are we living and working in some alternative universe?
Alleged economists claim there's something special about healthcare that somehow paralyzes the invisible hand of Adam Smith. But, believe it or not, a true free market in healthcare hasn't existed since before the onset of widespread insurance abuse during World War II. And guess, what -- yeah, you guessed it -- before that, healthcare was less the 5% of GDP, not the 17% it is today.

2. End the Marxist price controls and central bureaucratic management of healthcare imposed by Medicare/Medicaid, and aped by the private insurance companies. If doctors had been offered to change to the current Marxist system "in one fell swoop," back when Medicare first began to introduce price controls and CPT coding, in exchange for triple-inflation, ever declining incomes, public scorn, and the opportunity to run on hamster wheels all day, we would have screamed in unison, "NO WAY." Like most things that rot you from the inside out, this happened so gradually and insidiously, we barely noticed. Is it too late? If the Soviet Union, after forcing its citizens to stand in long lines and pay inflated prices for shoddy goods and services for seventy years, could abandon Marxism and it's rampant inefficiencies, frustrations and perversities, why can't US healthcare?

In closing, Tom, I have to ask, why isn't every Republican (and, for that matter, every Democrat a few inches right of Vladimir Lenin) standing up and demanding loud and clear these simple measures that must be done to restore sanity, efficiency and American values to our healthcare system? Namely:
1. End the rampant government-mandated abuse of insurance.
2. End the government-imposed Marxist price controls and central bureaucratic management.

Yours for Better Healthcare,
Dan Jones, MD
Eureka Springs, Arkansas
www.JonesPlan.BlogSpot.com

A Question for the Congressional Budget Office

2010-03-12T13:45:00.001-06:00

I submitted this question via email today to the Congressional Budget Office (CBO). The CBO is the “non-partisan” office tasked with estimating the federal budget implications of proposed legislation. If I get a meaningful response, I will post that later. I suggest that motivated readers also submit this question, not only the CBO, but also to your representatives in Washington. The only email addresses I was able to find for the CBO are congressionalaffairs@cbo.gov, costestimates@cbo.gov, and communications@cbo.gov.

Yours for Better Healthcare
Dan Jones, MD

PS: As of 5/1/10, I had received no response from the CBO.

A Question for the Congressional Budget Office

Dear Sir or Ma'am:

As a primary care physician, I have a question and comment about your estimates of the cost of healthcare reform. I have lived through the "partial government takeover" of our healthcare system by Medicare and Medicaid over the past 30 years. Currently, I and my staff spend about half our time and resources coping with the “cost control” measures already imposed by Medicare and Medicaid (and aped by the private insurance companies). As you must be aware, if enacted, the 2700 pages of proposed legislation will be ballooned by enforcing bureaucracies into hundreds of thousands of pages of rules and regulations to further complicate all aspects of our healthcare economy. Those costs are incalculable, but in my estimation, will certainly many times the CBO's previous cost estimates. How can you, in good conscience, offer cost projections that don't account for the tremendous increase in costs of business implied by this legislation?

Yours for Better Healthcare,
Dan Jones, MD
Eureka Springs, Arkansas
www.JonesPlan.BlogSpot.com

Patients’ and Doctors’ Bill of Rights

2010-02-20T19:47:00.001-06:00

“They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” —Benjamin Franklin

“...every unjustifiable intrusion by the Government upon the privacy of the individual, whatever the means employed, must be deemed a violation of the Fourth Amendment.” —Justice Louis Brandeis

Preamble: Eternal vigilance is the price of liberty, and from time to time it becomes necessary for free people to stand up and shake off the yoke of government oppression. Now is that time for American patients and physicians.

The United States of America is the world’s wealthiest nation because we enjoy a free-market economy where the providers and consumers of goods and services compete and negotiate freely to determine the most desirable goods and services, and their most efficient prices. But for many decades now the US government, through Medicare and Medicaid, has insidiously promoted widespread abuse of insurance, and imposed Marxist price controls and central management policies on our healthcare industry, in defiance of both fundamental economic principles and American ideals. (NOTE: We use the word “Marxist” not to be inflammatory or insulting, but only to be accurate: past US Government healthcare policies, and those in recent House and Senate bills, alas, fit the definition.)

Prior to World War II, when abuse of health insurance first became widespread, healthcare accounted for less than 5% of the US GDP (Gross Domestic Product). Prior to 1965, when the US Congress introduced Medicare, enshrining massive abuse of insurance in law, healthcare was less than 6% of GDP. And prior to the 1980’s, when the US Government forced price controls and central management policies on doctors and hospitals, healthcare was still less than 9% of GDP. Now it’s 17.3% of GDP and climbing, thanks primarily to the US Congress.

The obvious and predictable result of our government’s violation of economic principles and American ideals has been rampant healthcare inflation, unbridled inefficiency, ever-increasing frustration of both patients and physicians, and the flight of medical innovation overseas. Instead of admitting and correcting the obvious blunders of the past, Medicare and Medicaid have intruded ever-deeper into the patient-doctor relationship, requiring doctors to “code” medical bills in an arbitrary, complicated and expensive way for the sole purpose of enabling computers to probe into private medical records and to automatically refuse payment for tests and treatments.

Amazingly, even now, Congress is trying to further mutilate our healthcare system, at a cost of trillions of taxpayer dollars, through a virtual government takeover of all aspects of our healthcare economy. We are not, and will never be, a communist or socialist nation. Rather, we are a nation of free people, willing and able to care for ourselves, and those who are less fortunate. We will not tolerate a government that robs us of our freedoms and the fruits of our labors.

Therefore, in defense or our rights as a free people, we hereby declare:

1. Whereas our Constitution guarantees us freedom from government intrusion into our private affairs, and one of our most private relationships is that between patient and doctor, we hereby declare: It is unconstitutional for government or its agents to intrude in the patient-doctor relationship; and it us unconscionable for us, as citizens, to permit such interference in our private relationships.

2. Whereas we have a fundamental Constitutional freedom to live our private lives free from government control or interference, we hereby declare: Patients have the right to select their doctors, and doctors have the right to select their patients, free from government dictates or interference.

3. Whereas our government has no constitutional authority to impose price controls and central planning on our economic activities, and such government interference has been demonstrated to have disastrous economic consequences for our healthcare system, we hereby declare: We have a right to a free and vibrant healthcare economy, where doctors and hospitals compete based on quality and price; and where patients and doctors determine among themselves the desirability and value of medical goods and services, free from government dictation of what goods and services will be provided or the value thereof.

4. Whereas we have paid taxes for the purpose of providing us with health insurance in our old age; and the government and its’ agents have no right to intervene in our private affairs, or to dictate medical goods and services or their value, we hereby declare: We as patients have a right to be compensated for any and all medical expenses covered by our tax-supported health insurance upon presentation of a legitimate bill for such expenses from a licensed physician and written in plain language. More specifically, the government and its agents have no right to access our medical records, or require bills to contain “ICD codes,” “CPT codes,” or an other contrivances intended to reveal the contents of our medical records to the government or its agents for any purpose, including the determination of what tests and treatments are provided or reimbursed, as the right to make such decisions belongs solely to patients and their doctors.

5. Whereas our government has no Constitutional authority or right to dictate the nature or contents of private contracts, we hereby declare: In our employer-employee relationships we have the right to negotiate compensation and benefits that best meets our needs, free of government-dictated requirements for health insurance or any other benefits that we may not want or need.

6. Whereas we have a fundamental Constitutional freedom to spend the fruits of our labors according to our own preferences and values; and the government has no Constitutional authority to force us to buy any specific types of products or services, we hereby declare: We have the right to buy or NOT BUY health insurance and all other products and services according to our own needs and preferences. Furthermore, the government has no right to dictate the nature of any such insurance or other products or services that we choose to purchase.

7. Whereas we are a free people, responsible for our own actions and their consequences, and entitled to the benefits thereof; and whereas the risk of most serious or chronic illnesses is well proven to depend more on personal lifestyle choices than genetics or chance (for example, 50% to 90% of diabetes, hypertension, heart disease, stroke and many cancers can be prevented by optimum diet and lifestyle), we hereby declare: We have the right to enjoy both the health and financial benefits of our lifestyle choices; and the government has no right to force those who choose healthy lifestyles to subsidize the increased medical risks of those who choose unhealthy lifestyles; and we have the right to choose health insurance that rewards us for healthy lifestyle choices.

Patients and Doctors of the United States of America

Congress Should Look in the Mirror…

2010-02-11T08:30:00.002-06:00

for the Cause of Healthcare’s High Cost

Many in Congress blame doctors and hospitals for the high cost of healthcare. In reality, Congress should be looking in the mirror for the culprit.

Healthcare costs have been increasing at approximately twice the average rate of inflation for several decades. That’s because greedy doctors and hospitals must be getting rich, right? Wrong. These cost increases are not making doctors or hospitals rich. Average inflation-adjusted physician incomes have steadily declined, in sharp contrast to the wage trends for other professionals [9, 10]. Meanwhile, many hospitals have gone belly-up, and many others have been forced to consolidate into large chains to survive, reducing competition and availability of care [1, 2, 3, 4, 5, 6]. In truth, the meteoric rise in healthcare costs is directly attributable to past Congressional actions. It happened as follows.

There was a time when doctors “took care of sick folks” and those same sick folks paid the doctor at the end of the visit. If a doctor over-charged, patients went to a different doctor who charged less. Healthcare costs were low, less than 5% of GDP [7, 8]. That’s how it was until the middle of the 20th century.

U.S. Health Care Costs in Dollars and as a Percentage of GDP [8]

1950 $12.7 billion 4.5% of GDP
1965 $40 billion 6% of GDP
1980 $230 billion 9% of GDP
2000 $1.2 trillion 14% of GDP
2009 $2.6 trillion 17.3% of GDP

Then came the temporary wage-and-price controls of World War II, and the subsequent post-war economic boom. There is no fundamental reason why employers should be involved in health insurance. In general, that only increases the costs and complexity of doing business. But during the war, employers were prevented by wartime price controls from competing for employees by raising wages. So they were forced to compete with fringe benefits such as health insurance. Then during the post-war boom the unions, at the peak of their power, demanded generous fringe benefits, including employer-paid health insurance.

Check any dictionary: the purpose of insurance is to pay “a guaranteed and known small loss to prevent a large, possibly devastating loss” [11]. Using insurance to pay for a flu vaccine or a routine doctor visit is akin to using auto insurance to pay for a flat tire repair, an oil change or a brake job. It is fundamentally inefficient because (a) it introduces a third profit-seeking, resource-using entity into every transaction; (b) it complicates every transaction; and most importantly, (c) it removes responsibility for payment from the consumer, thereby removing the consumer’s incentive to bargain-shop and economize.

Contrary to the fundamental purpose of insurance, post-war employer-paid insurance plans often included coverage for expenses such as office visits, tests and minor medical procedures. Employers didn’t mind because coverage for office visits didn’t cost much because doctors, then still in the habit of competing on price for patients’ business, didn’t charge much. The insurance companies certainly didn’t mind because, big expense or small, they always get their cut for juggling the money.

How Doctors Got Caught With Their Hands In The Cookie Jar

At this point, due to the sudden widespread miss-use of health insurance, the payers of medical services became increasingly disconnected from the consumers of those services. Doctors soon discovered that, although a patient might complain about $50 for an office visit, they could send a bill for $250 to the patient’s insurance company, and oddly enough, the insurance company would usually pay without question. So they started doing that more often. Who could blame them? The patients were perfectly happy for their doctors to buy big new mansions next to their banker’s, as long as someone else was paying. Of course, this couldn’t go on forever…

That was the situation when Medicare first appeared on the scene, in 1966. Initially, Medicare functioned essentially as any other insurance company, albeit one created by the federal government explicitly for seniors (more precisely, for Social Security beneficiaries). And since seniors are mostly retired and have time to vote, and because many were recently retired from jobs that provided medical insurance that covered minor expenses such as office visits, Congress enshrined that fundamental abuse of insurance in Medicare.

Initially Medicare, like the private insurance companies at the time, pretty much paid whatever bills doctors submitted, without questioning. How could they question the bills? They didn’t understand “medicalese,” and they had no idea what the items on the bills represented or how much they were worth. So the doctors smiled and dug deeper into the cookie jar.

If Medicare hadn’t been involved, the fundamental problem of insurance abuse (and the resulting payer-consumer disconnect) would almost certainly have been corrected by free-market forces. Due to increasing costs, the insurance companies would have been forced to increase their rates dramatically for policies that included frivolous coverage, forcing most patients back to just catastrophic coverage (the only valid purpose for insurance, remember). Or the insurance companies would have been forced to limit coverage for office visits and other minor expenses to reasonable limits; beyond that, patients would have to pay out-of-pocket. In either case, patients would again have been forced to comparison shop, and doctors would again have been forced to compete on price.

But that’s not how it came down. Apparently Congress was afraid to tell Grandma she might have to shop around again for a doctor she could afford. So instead of taking appropriate measures to correct the root problem of insurance abuse and the resulting consumer-payer disconnect, Congress, through Medicare, radically compounded the problem by imposing price controls and central planning on medical goods and services (for all doctors and hospitals accepting Medicare). This occurred incrementally, primarily during the period from 1983 through 1992. Predictably, efficiency has been going down, and costs have continued to rise much faster than inflation, ever since.

Healthcare costs have done exactly as would be expected for an industry subjected to Marxist economic policies for 3 decades. And no one is to blame but Congress. Unfortunately, the recently introduced “healthcare reform” legislation does nothing to address this fundamental problem. On the contrary, recent legislative proposals only strengthen the bureaucratic mechanisms for price control and central bureaucratic management. This will surely backfire as more and more doctors exit the increasingly meddlesome, punitive and cost-driving Medicare, Medicaid and private insurance contracts; and as millions more patients with insurance cards can’t find doctors willing to accept them.

Daniel R. Jones, MD
Eureka Springs, Arkansas

Footnote: Certainly, other factors have contributed to the rise in healthcare costs, such as the deterioration of our diet, increasing use of technology, our archaic tort system, and our increasing elderly population. But the primary driver of increasing costs and decreasing efficiency and innovation is clearly government interference that contradicts both fundamental economic principles and American ideals.

Response to DANIEL HENNINGER's 1/28/10 WSJ Article

2010-01-29T13:03:00.004-06:00

Daniel, Thank you for your insightful commentary.
(http://online.wsj.com/article/SB10001424052748704094304575029331665110908.html)
It's very important to announce naked emperors. We also have a window of opportunity to propose real reform. I’m a private solo-practice primary care physician. I would like to point our the root cause of the problem, from my perspective, and what needs to be done to fix our healthcare system.

The Root of the Problem: I and my staff waste half our time coping with the "cost control measures" inflicted on doctors, pharmacists and hospitals by Medicare and Medicaid (aped by the private insurance companies). Each of these rules obviously saves somebody, somewhere, a few cents. The net effect is to double the work required to accomplish anything. It is TRULY A SICK SYSTEM. No one would ever have signed up for this lunacy. It happened by degrees - a classic case of the camel's nose under the edge of the tent. First, doctors and hospitals became dependent on Medicare and other contract insurance revenue. Then the screws were applied and gradually tightened. Now things are totally out of control and at the breaking point. So what did Congress propose? Add more screws, and tighten them harder and faster!

Root Two: The payer-consumer disconnect caused by rampant abuse of insurance. It makes no more sense to use health insurance to pay for a doctor visit than to use auto insurance to pay for a brake job. Expenses are out of control throughout the system because the patient receiving services is almost never paying the bill. Even when the patient does end up paying, it's 12 months later, after receiving 19 undecipherable bills from 15 unknown entities, and arguing with 27 "patient representatives" trained to say "no" in 11 different idioms, until the poor patient finally gives up. Medicare didn't start this insane abuse of insurance. But it was Medicare that enshrined it in law, forcing it on doctors and patients in perpetuity, and preventing free-market forces from correcting the problem.

The Solution: The only way we will ever have a cost-efficient healthcare system is to restore free-market economics, where doctors and hospitals compete for patients based on quality, reputation and price. That will only happen when:
1. Doctors and hospitals stop contracting with Medicare and other insurances; and insurance reverts to its true purpose: to pay for catastrophic expenses.
2. Doctors and patients "just say no" to the intrusion of Medicare and other contract insurances into the doctor-patient relationship and decision-making.
3. Medicare abandons its Marxist economic policies of price-controls and central planning. After forcing its citizens to stand in long lines all day for scarce, over-priced, shoddy goods and services for 70 years, the Soviet Union finally gave up on Marxist economic policies in the 1990's. It's high time the US Congress did the same.

Yours for Better Healthcare,
Dan Jones, MD
Eureka Springs, Arkansas,
www.JonesPlan.BlogSpot.com

Lunatic Idea-of-the-Day #1: Mississippi seeks restrictions on pseudoephedrine purchases

2010-01-22T13:37:00.001-06:00

Following similar action taken by Iowa, Illinois, Kansas, Louisiana and Missouri, the AP (1/22) reports that Mississippi law enforcement officials "are lobbying lawmakers to require a prescription to buy cold medicines containing pseudoephedrine -- a key ingredient in methamphetamine -- as the state's drug problem reaches unprecedented levels." The pharmaceutical industry "has responded with a proposal to create a real-time electronic system that would let law officers track all sales of pseudoephedrine," and even "offered to pay for the systems in states with serious meth lab problems." Hearings on the proposal are said to be scheduled for next week.

Dr. Dan’s Commentary: Oh, wonderful. Now, in addition to the 10 patients-a-day in my office with real “bad colds” who don’t need to be there, I’m going to have 27 meth-heads sneezing and coughing all over me and my staff, faking “bad colds” so they can scam me for pseudoephedrine prescriptions! Have the fools in Mississippi’s congress forgotten prohibition? Have they failed to notice that our pathetic “war on drugs” is killing thousands of innocent Mexicans every year? Have they not noticed how our absurd policies are fueling narcotics trafficking and gangsterism all over the world and overflowing our prisons? When will they learn that the ONLY RATIONAL way to deal with substances of abuse is:

1. MAKE THEM LEGAL.
2. Apply reasonable restrictions (e.g., no sales to minors).
3. TAX THEM sufficiently to pay for the damage they cause, but not so much as to stimulate bootlegging or smuggling.

Other approaches have been proven time and again to be both ineffective and counterproductive. Idiotic legislators who propose such nonsense should be ridiculed and spanked, if not tarred and feathered.

Yours for Better Healthcare,
Dan Jones, MD

Congress’ BIG LIE About the Cost of Healthcare Reform

2010-01-16T12:34:00.005-06:00

(Submitted to GoldCoastChronicle.com 1/13/10.)

Congress is telling us a big lie that needs to be exposed: The Congressional Budget Office's estimate of the cost of healthcare reform only includes the government's direct costs. Amazingly, Congress is not telling us about American industry's costs to implement these bills!

The 2700-page-and-growing bill will be ballooned by the bureaucracies responsible for its implementation into tens or hundreds of thousands of pages of new rules and regulations to be forced on employers, doctors, clinics, hospitals and insurance companies. It is very expensive to implement thousands of regulations throughout industry. Great news for the legal and accounting professions! Even if all these new regulations only increase the cost of healthcare by 10% (probably a conservative estimate), that will add another 2.2 trillion dollars over the next 10 years, at least tripling Congress’ cost estimate. But wait -- there’s more!

Implementation costs aside, these are not regulations carefully designed and tested by industry experts. Rather, they have been hastily conceived by a Congress racing to meet a arbitrary deadline. Furthermore, these bills are not really healthcare “reform” at all. They are, in essence, just more of the same “micromanage, monitor, scold and spank the doctors and hospitals” approach that Medicare (aped by the private insurance companies) has been dishing out for three decades, with spectacularly disastrous results. Since this approach has worked so well for doctors and hospitals, now Congress has decided to bestow similar blessings on the insurance industry!

As an example of Congress’ and Medicare’s economic mutilation of healthcare, you would be amazed what a massive industry and work force has developed purely to support the Medicare requirement that every medical bill must be “properly coded” to be paid. Schools all over the country now offer degrees in medical coding! Virtually every clinic in

America

has at least one additional full-time employee just to cope with these codes that contribute absolutely nothing to healthcare quality or affordability. On the contrary, the net effect is to squander resources, decrease efficiency, and ultimately drive up costs dramatically.

That is typical of the sort of superficial knee-jerk “cost control” measures previously applied by Medicare and multiplied by the current legislation. Each regulation obviously saves the government a few dollars by controlling what healthcare providers do or what they get paid. But, as always, the net effect of price controls and bureaucratic central management is decreased efficiency and increased net costs. So in addition to the costs of implementation, Congress should also be telling us about the high cost of the inefficiencies imposed by all their shiny new short-sighted regulations. I won’t even attempt to estimate this cost factor, but as a 30-year healthcare insider, I can assure you it’s bound to be huge.

Does Congress really expect us to believe this smelly pile of horse trades, payoffs and amateur economic engineering is really going to increase healthcare availability and affordability? Alas, despite the best of intentions, Congress cannot legislate the fundamental laws of economics and human behavior. If this legislation passes, we can say good-bye to healthcare eating up 17% of our GDP. Hello 25% and climbing. Meanwhile, that steady splashing sound you hear will be both patients and jobs swimming overseas.

Dan Jones, MD

Response to the Institute of Medicine November 9, 2009 Rosenthal Lecture, by the Hon. David M. Walker

2009-11-22T15:04:00.002-06:00

Response to the Institute of Medicine November 9, 2009 Rosenthal Lecture, by the Hon. David M. Walker

http://www.pgpf.org/newsroom/oped/nim-rosenthal/

I would like to compliment Mr. Walker on his beautifully concise and insightful overview of the healthcare problem and his mostly realistic appraisal of what needs to be done. But having witnessed the rotting of our healthcare system from an inside perspective, I must disagree on a few key points.

Why do we “spend $2.5 trillion a year on health care, twice as much per capita than any other industrialized nation, and with no better — and often worse — results”? As a primary care physician since 1980, during the period when Medicare and Medicaid took over more than 50% of US healthcare expenses, I can tell you exactly why:

I and my clinic staff waste about half of our time and other resources coping with the suffocating bureaucratic red tape imposed on our healthcare system by government and insurance companies. Virtually everything I do as a physician is now subject to being second-guessed, micromanaged, or rejected as “not medically necessary” by bureaucrats in the employ of Medicare, Medicaid, other insurance companies and “benefits managers.”

I recently sat through a typical 90-minute hospital staff meeting. As usual, the great majority of discussion focused NOT on healthcare quality, patient satisfaction, or efficiency. Rather, of bitter fiscal necessity, such meetings are ALWAYS primarily about how to cope with the multitudinous and often counter-productive regulations and requirements of Medicare and Medicaid, so the hospital can get paid for services rendered. That, my friends, is why your healthcare costs twice what it should. That, combined with systematic and government-encouraged abuse of the fundamental concept of insurance (as correctly noted by Mr. Walker).

How true that, “Candidly, our current health care system is like a condemned house built on a sinkhole of sand and mortgaged for more than it is worth. Who in their right mind would build a new wing onto a collapsing structure that is headed for foreclosure?” Not only does the current healthcare reform bill build on a sinking, over-mortgaged edifice, but it certainly is NOT "reform." It is, in fact, about 2700 pages more of the same "dictate, monitor, scold and spank the doctors and hospitals" approach to healthcare "improvement" that Medicare and Medicaid have been dishing out for several decades, with spectacularly disastrous results.

Regarding financing of the current bills, Mr. Walker says, “Recently, we asked the Lewin Group to analyze the Senate Finance Committee's health care reform bill and the results are now in. The bill passed the first two fiscal responsibility tests… First, the reform should pay for itself over ten years. Second, it should not add to deficits beyond ten years.” WRONG! The Congressional Budget Office's cost estimate of approximately one trillion dollars DOES NOT include industry’s costs of implementation!

The CBO's estimates ignore the fact that 2700 pages of legislation, if passed, will be ballooned by the various bureaucracies responsible for implementation into many hundreds of thousands of pages of regulations and requirements to further complicate and constipate the work of everyone involved in healthcare.

Even if all these new regulations only increase the cost of healthcare by 10%, that will add another 2.2 trillion dollars over the next 10 years, tripling the CBO's cost estimate. As I pointed out above our healthcare costs are already twice what they should be primarily due to all the bureaucratic requirements already imposed on the industry. The additional requirements imposed by the current bills are almost certain to cause healthcare inflation to go from twice to three times the overall rate of inflation.

Mr. Walker makes another major, and unfortunately widely promulgated error when he says “we won't be able to stay within any sort of overall federal budget for health care, until we move away from our current fee-for-service payment system. This, more than anything, is the reason we can't control costs.” Fee-for-service is not a major cost driver.

Fee-for-service is, in fact, a pillar of our economic system. It is the standard in virtually all industries: legal services, accounting, home appliance repair, plumbing, automotive repair -- you name it. And none of those industries has a problem with costs growing at twice the rate of inflation. No, the reason for the rampant growth is healthcare costs is a combination of (1) abuse of insurance, combined with (2) the Soviet-style price controls and bureaucratic micromanagement of healthcare increasingly imposed by Medicare and Medicaid, aped by the private insurance industry.

Furthermore, to force any kind of payment system on healthcare providers makes no more sense that forcing an arbitrary payment system on accountants, priests, plumbers or auto mechanics. As a physician who grew up in this allegedly “free country,” I can tell you that I and a growing number of my fellow physicians are increasingly fed up with the misguided and spectacularly failing outside micromanagement of our profession. ENOUGH ALREADY.

Elaborating on this mistaken line of reasoning, Mr. Walker says, “By basing payments on the volume of procedures — diagnostics, tests and so on… our fee-for-service system incentivizes providers and patients in all the wrong ways. The more procedures, the more revenue that goes to doctors and hospitals…” Just let me point out that exactly the same dynamics apply to the legal, accounting, home repair, auto repair -- you name it -- industries. Yet those industries aren’t plagued with double-inflation, and no one is proposing they be “Sovietized.”

The second part of Mr. Walker’s equation is, however, right on the money: “Patients, meanwhile, have few qualms about getting more care since their insurance provides the illusion someone else is paying for it all.” The true source of the rampant cost escalation is exactly that, combined with the fact that everyone involved in the healthcare industry is squandering enormous resources to accommodate the suffocating bureaucratic requirements already imposed by the federal government.

It is very important to point out that the current healthcare “reform” bills will only seriously exacerbate the two major cost drivers: abuse of insurance, and Soviet-style price controls with central bureaucratic management. If you are interested in reality-based alternative proposals, please see the Jones Plan at http://www.jonesplan.blogspot.com/. It’s about restoring fundamental American principles of freedom, accountability, efficiency, innovation, compassion and competition to our healthcare system.

Yours for Better Healthcare,

Daniel Jones, MD

Eureka Springs, Arkansas

Response to ‘Why "free market competition" fails in health care’

2009-11-14T20:06:00.002-06:00

Response to 'Why "free market competition" fails in health care,' By Joe Flower

(www.thehealthcareblog.com/the_health_care_blog/2009/11/why-free-market-competition-fails-in-health-care.html)

In this 11/3/09 Op-Ed piece Joe makes a superficially appealing argument that free-market competition can’t work in health care. My response is:

Nice try, Joe, but you should think a little deeper. The free market might work in healthcare. That hasn’t been tried in recent times, thanks to our federal government.

#1. You say, “True medical demand is wildly variable, random, and absolute.” That’s only partially true, and only for catastrophic health problems, which comprise only a minority of healthcare needs -- things such as heart attacks or strokes and acute surgical emergencies, such as appendicitis. Those are the things people should buy insurance for; or use the public “safety net” if they can’t afford insurance. Most things, such as routine primary care, high blood pressure, obesity, diabetes, chronic arthritis, etc., are NOT wildly variable, random, or absolute.

Furthermore, most things that are “absolute” are not “wildly variable” or “random.” For example, if you don’t smoke, eat a low-calorie vegetarian diet, and exercise regularly, you are far less likely to have a heart attack or stroke than someone who chooses an unhealthy lifestyle. People who drive drunk go to jail. What do you suggest for people who eat and smoke themselves into a heart attack?

#2. You say, “All demand apes this absolute demand… the doctor, operating both as seller and effectively as agent for the buyer, is often rewarded for selling more…” This is somewhat true in medicine, just as it is somewhat true when you consult with an attorney or accountant, take your car to a mechanic, or call an appliance repairman to fix your washing machine. And it’s no more a reason for the government to take over healthcare, than for the government to take over the legal or accounting professions, or the automotive or appliance repair industries. Is it?

#3. You say, “The benefit of medical capacity accrues even to those who do not use it… Having police benefits you even if you never are the victim of a crime… Every part of health care, from ambulances and emergency room capacity to public health education to mass vaccinations to cutting-edge medical research, benefits the society as a whole, even those who do not use that particular piece…” Certainly parts of healthcare (you gave some good examples) are best provided as a part of “public infrastructure,” just like the public highway system. But you seriously over-generalize: most of healthcare is not a public infrastructure issue. The fact that government should manage the highways in no way implies government should buy people cars, pay for their repairs, and provide public gasoline. In the same vein, government has no business treating Bob’s high blood pressure or paying for his medication. In a free country, many of us think Bob should take care of those things himself, if he has the capacity to do so.

Dan Jones, MD

Eureka Springs, Arkansas

Healthcare Reform - Bad Medicine for a Sick System

2009-11-01T12:41:00.005-06:00

Healthcare Reform - Bad Medicine for a Sick System

Dear Family, Friends, Colleagues, Patients and Neighbors,

Do you wonder why we spend nearly twice as much on healthcare as other countries, with no better outcomes? As a primary care doctor, I know why: it’s mostly because I waste about half my time coping with the suffocating bureaucratic red tape imposed on our healthcare system by government and insurance companies.

No one would like to see effective healthcare reform more than me. Unfortunately, as explained below, the proposals currently coming from Congress will do nothing to improve quality, and will certainly drive healthcare costs into the stratosphere. As evidence for this claim, please consider the following common-sense truisms, and how they apply to healthcare:

1. The top priority should be health, not “coverage,” “insurance,” or even “healthcare.”

2. Too many cooks spoil the broth.

3. The purpose of insurance is to protect against catastrophes.

4. Soviet-style price controls and central planning do not work, and are not compatible with our free-market economy.

Let me expand on these issues briefly:

1. Priorities: The top priority - for patients, doctors and Congress - should be health, NOT “coverage,” “insurance,” or even “healthcare.” “Healthcare,” as packaged and sold by doctors, hospitals, physical therapists, dentists, etc., is and always will be expensive. “Health,” on the other hand, is far more dependent on individuals’ personal health habits and the genes they are born with, than on anything doctors or government can do. Alas, the current proposals are focused almost exclusively on “insurance” and virtually ignore the fact that a lot more could be done to improve Americans’ health with a lot less money in other ways.

2. To many cooks spoil the broth: Virtually everything I do as a physician is now subject to being second-guessed, micromanaged, or rejected as “not medically necessary” by bureaucrats in the employ of Medicare, Medicaid, other insurance companies and “benefits managers.” The purpose of this is to “save money” by forcing doctors to do fewer or cheaper tests and to give fewer or cheaper treatments. The true effect is to drive up costs because:

a) The naysayers are non-physicians, mindlessly following simplistic cook-book rules that are inevitably out-of-date, out of touch, and totally incapable of effectively critiquing physician actions in the real world.

b) Doctors end up wasting much of their time finding ways to work around the rules so as to accomplish what needs to be done. This is not only wasteful of doctors time and energy, but very frustrating and fatiguing and often downright infuriating.

The long-term effect of these practices will be even more devastating: few smart young people will choose medicine as a career; and many physicians are already looking for alternatives.

3. Insurance is for catastrophes: Check any dictionary: the purpose of insurance is to protect against catastrophic losses. Using insurance to pay for modest and/or ongoing expenses (e.g., doctor visits, medications, groceries, gasoline, rent, routine auto repairs, etc.) is fundamentally inefficient because (a) it introduces a third profit-seeking, resource-using entity into every transaction; and (b) it removes responsibility for payment from the consumer, thereby removing the consumer’s incentive to economize. Yet all proposals coming out of Congress are focused on providing “comprehensive insurance coverage” for “every American” -- a sure-fire recipe for inefficiency and escalating costs.

4. Soviet-style price controls and central planning do not work, and are not compatible with our free-market economy: In the 1990’s the Soviet Union, after forcing its citizens for 70 years to spend much of their time in long lines to obtain scarce and shoddy goods and services, finally admitted the failure of central economic planning. Communist China is now doing the same thing by degrees. But for some mysterious reason, some people in Washington seem to think they can make our healthcare industry more efficient by subjecting it to Soviet-style price controls and central planning.

Medicare and Medicaid (aped by the private insurance industry) have been doing exactly that, progressively, over the past several decades, with the result that healthcare costs have consistently increased at about twice the rate of inflation. Just as mysteriously, the proposals currently coming out of Congress are, for the most part, just more aggressive and detailed application of price controls and central planning, not only to hospitals and physicians, but now also to the insurance industry!

Furthermore, Congress is grossly underestimating and misrepresenting the cost of this legislation to the American people. Congress claims the current bill would cost more than $1 trillion over the next decade. But Congress’ cost estimate only includes the direct impact on government expenses, while totally ignoring the tremendous healthcare industry costs of implementation.

The current 2700 pages of legislation, if passed, will be ballooned by the various bureaucracies responsible for their implementation into many tens or hundreds of thousands of pages of regulations and requirements to further complicate and constipate the work of virtually everyone involved in healthcare. The industry costs to deal with this complexity will be enormous. If you run the math using reasonable assumptions, the true cost to American taxpayers will be several times what Congress claims.

If you have time, please read my discussion below on the specific flaws in Congress’ current healthcare proposals, and the following “Jones Plan,” a reality-based approach to healthcare reform. I think I can convince you that the current proposals are not only on the wrong track, but headed for a disastrous train wreck. But whatever else you do, if you value your healthcare and America’s future, please contact your representatives in Washington now and tell them in no uncertain terms:

Dear [put YOUR CONGRESSPERSON’S NAME here],

1. Please forget “comprehensive healthcare reform” until you have a program to address the following concerns. We don’t want a “rush job” on something this important and expensive!

2. Please get costs under control BEFORE you commit my tax dollars to extend coverage!

3. Healthcare is so expensive primarily because of the interferences previously imposed by Medicare, Medicaid and insurers. Yet, amazingly, the current healthcare reform proposals are primarily just more of the same knee-jerk, short-sighted policies that got us into this sorry state.

4. The Congressional Budget Office cost estimates ignore the fact that 2700 pages of legislation will be ballooned by the various bureaucracies responsible for their implementation into tens or hundreds of thousands of pages of new rules and regulations to be imposed on all sectors of the healthcare industry - including patients. It is very expensive to implement complex new rules and regulations throughout an industry; it requires imposing many new responsibilities on existing personnel, extensive revision of policies and procedures, and hiring many additional personnel. Even if all these new regulations only increase the cost of healthcare by 5%, that will add another 1.1 trillion dollars of costs over the next 10 years. The true cost is likely to be much greater.

5. Current legislative proposals will surely further frustrate both patients and physicians, will make our healthcare system even less efficient and more expensive, and will damage our economy and international competitiveness.

If this legislation passes, within a few years everyone will realize it was a BIG mistake. Unfortunately, by then we will have endured more years of increasing costs and inefficiency, and ballooning federal deficits that we must all eventually pay for.

Please consider the Jones Plan for healthcare reform at www.jonesplan.blogspot.com. It’s about restoring fundamental American principles of freedom, accountability, efficiency, innovation, compassion and competition to our healthcare system.

Sincerely,
[put YOUR NAME here]

The list of Web sites below will let you contact your representatives and tell them how you feel on this issue. Also, please forward this to anyone and everyone you know who is concerned about the future of our health, our healthcare, and America’s economy.

Sincerely,
Dan Jones, MD

Email Addresses:

House of Representatives: http://houseofbills.com/email-entire-house-representatives-time/

Your Representative: https://writerep.house.gov/writerep/welcome.shtml

Your Senators: http://www.senate.gov/general/contact_information/senators_cfm.cfm

President Obama: http://www.whitehouse.gov/Contact/

Multiple officials: http://www.congress.org/congressorg/issues/alert/?alertid=13934791&type=ML

A Message For Your Representatives

2009-11-01T12:36:00.001-06:00

Dear [put YOUR CONGRESSPERSON’S NAME here],

1. Please forget “comprehensive healthcare reform” until you have a program to address the following concerns. We don’t want a “rush job” on something this important and expensive!

2. Please get costs under control BEFORE you commit my tax dollars to extend coverage!

Sincerely,
[put YOUR NAME here]

House of Representatives: http://houseofbills.com/email-entire-house-representatives-time/

Your Representative: https://writerep.house.gov/writerep/welcome.shtml

Your Senators: http://www.senate.gov/general/contact_information/senators_cfm.cfm

President Obama: http://www.whitehouse.gov/Contact/

Multiple officials: http://www.congress.org/congressorg/issues/alert/?alertid=13934791&type=ML

2009 Healthcare Reform Legislation: Flaws and Fixes

2009-11-01T12:30:00.002-06:00

2009-2010 Healthcare Reform Legislation: Flaws and Fixes

by Dan Jones, M.D. and Alicia Jones, Ph.D.

The U.S. House bill H. R. 3200 (‘‘

America

’s Affordable Health Choices Act of 2009’’) [10] and its successor H.R. 3962 [12] aspire “To provide affordable, quality health care for all Americans and reduce the growth in health care spending.” But a careful reading of these bills shows they will certainly decrease healthcare quality and affordability, while further ratcheting up costs. As will be explained, the major measures in the bills currently being debated in Congress ignore fundamental economic principles, human behavioral factors, and the major structural problems of the healthcare and insurance industries.

In essence, current bills attempt to extend Medicare-style federal price controls and central bureaucratic management to virtually all aspects of healthcare and medical insurance. Why base a new program on an existing one that has spectacularly failed to improve quality or control costs? Medicare and Medicaid expenditures now account for 23% of the federal budget, and have consistently grown at 2.5 percentage points above GDP growth. From 2000 to 2005 alone, Medicare’s share of GDP grew 17 percent [4]!

Despite this rampant increase in expenditures, average inflation-adjusted physician incomes have steadily declined, in sharp contrast to the wage trends for other professionals [1, 2]. The rampant healthcare cost increases are not making doctors or hospitals rich! Federal mismanagement of healthcare has now created so much inefficiency, stress and misery for front-line physicians (I know; I am one) that, according to the American Academy of Family Physicians, "the number of US medical school students going into primary care has dropped 51.8 percent since 1997.”

This problem cannot possibly be solved by 2700 pages of band-aids and bailing wire “fixes” cobbled together by political committees under pressure to “deliver healthcare reform” in only a few months. Congress should abandon this rushed approach, and take a more measured, rational and incremental approach to healthcare reform.

Flaw #1: Current bills will perpetuate and expand today’s counterproductive medical price controls. The federal government (through Medicare and Medicaid) is now the largest single payer for medical goods and services. Which specific services and treatments are covered, and the prices paid, are set by federal bureaucracies. As any economist knows, price control is artificial, inefficient, incapable of adapting to free-market dynamics, and inevitably leads to all sorts of perverse and inefficient behaviors throughout the system. It didn’t work in Soviet Russia, it didn’t work in the

U.S.

economic crisis of the 70’s, and it will never work in American healthcare. It is this counterproductive economic behavior on the part of the federal government (and increasingly aped by private insurance companies), more than any other single factor, that has been driving the rapid rise in healthcare costs and rampant inefficiency throughout our healthcare system.

Fix: Get rid of price controls and allow healthcare providers to compete based on quality, reputation and price. The fact that many will consider this a radical idea only reveals how pathetically disconnected from both economic reality and American ideals our battered healthcare system has become. We will never have efficient or affordable healthcare unless we get rid of price controls and restore competition to the system.

Flaw #2: In response to the obvious variability in quality among hospitals, proposed legislation will implement schemes to vary reimbursement based on quality (actually, some bureaucratic estimate of quality). Any bureaucratically imposed monetary rewards and punishments will have questionable validity; and any resulting economic gains will certainly be more than offset by stakeholders “gaming the system,” thereby increasing inefficiencies even further.

Fix: As in any other industry, the people best qualified to judge the quality of a product or service are its consumers. And the most efficient way to give feedback to producers is for consumers to comparison-shop and “vote with their feet.” In this regard Congress should (1) promote publication of reasonable statistics on provider quality, (2) promote public education regarding healthcare quality indicators, and (3) leave patients free to “vote with their feet.” This would cost far less than the additional layers of bureaucracy envisioned in the current legislative proposals, and would actually improve quality and patient satisfaction.

Flaw #3: Current legislation proposes to fund expanded coverage partly by forcing employers to provide medical insurance. In an economy with ever-increasing worker mobility, fluctuating unemployment, and increasing outsourcing of jobs to cheaper labor markets abroad, burdening employers with the costs and hassles of providing health insurance makes no more sense than forcing them to provide homeowners insurance or piano lessons!

Fix: Insurance laws should be changed (1) so that insurance companies cannot charge individuals more than they charge large groups for similar policies; (2) so that individually purchased medical insurance is tax-favored (or not) the same as employer-provided insurance; and (3) so that insurance is portable across state lines.

Flaw #4: Current legislation mandates that all qualified insurance plans provide comprehensive and preventative healthcare coverage. Check any dictionary: the purpose of insurance is to pay “a guaranteed and known small loss to prevent a large, possibly devastating loss” [6]. Using insurance to pay for a flu vaccine, a school physical or to treat poison ivy is akin to using auto insurance to pay for a flat tire repair or an oil change. It simply encourages over-utilization of services, while greatly increasing costs of basic services by adding the costs of extra paperwork, money-shuffling and reimbursement disputes. Furthermore, by removing the consumers role as payer, it removes the consumer’s incentive to economize.

Fix: Congress should encourage high-deductible insurance policies with non-deductible coverage of proven preventive care, in combination with tax-exempt HSAs (Health Savings Accounts). That would decrease overall costs and discourage over-utilization of primary care services, while encouraging individual accountability and retirement planning.

Flaw #5: Current legislation fails to encourage personal responsibility for health outcomes, despite the fact that more than half of all chronic disease and disability in the U.S. is attributable to individual lifestyle factors (e.g., lack of exercise, over-eating, poor food choices, smoking, excessive alcohol consumption, reckless driving, etc.) [8, 9]. This issue also strikes at the heart of the fairness issue: Why should citizens who choose a healthy lifestyle be forced to subsidize the bad habits of those who don’t (as would be required by current proposals)?

Fix: To discourage unhealthy or risky behavior, public healthcare should be financed to the maximum extent feasible through targeted taxation of products and behaviors that contribute to disease and disability. And insurance companies should not be prevented from charging more to patients who choose unhealthy lifestyles.

Flaw #6: Carefully targeted new insurance regulations are needed to (1) prohibit specific egregious practices by the insurance industry and (2) increase insurance portability and continuity. But instead of mandating only needed reforms, and in defiance of all known principles of economics, current legislation essentially forces a socialistic business model on the private insurance industry, by prohibiting price variation based on anything other than age, geography and family size!

Fix: Congress should impose only the minimum insurance regulations needed to prevent egregious practices, to promote insurance policy portability and continuity, and to promote competition in the insurance industry.

Flaw #7: Every resource is limited, and when demand exceeds supply, as often happens in healthcare, rationing in some fashion will occur. The only question is, will we admit this fact, and ration healthcare intelligently? Or will we deny this fact, and let it continue to be rationed in obscure and arbitrary ways? The late Senator Kennedy asserted, no doubt with the best of intentions, “Every American should be able to get the same treatment that

U.S.

senators are entitled to” [7]. But in

America

, healthcare, like other essentials such as housing and transportation, comes in an infinite range of sizes, features and prices. We can no more afford to provide “the best” healthcare for everyone than we can afford to provide everyone the best house, car, or espresso machine.

Fix: Every American should have access to quality healthcare, and no one should have to drop out of college, sell their house or file bankruptcy to pay for it. To provide a medical “safety net” for all Americans, Congress should consolidate existing government health programs (CHIP, Medicare, Medicaid, Veterans Administration health services, etc.) into a simplified and federally managed “healthcare safety net” for those who need healthcare they cannot pay for. This safety net will not provide “the best” healthcare, anymore than public housing is the best, but it will ensure that everyone has access to essential medical care without bankrupting our nation, without discouraging individual initiative and responsibility, and without destroying our free-market healthcare economy.

Flaw #8: The high cost of dying may kill us all yet. Last-year-of-life expenses constitute approximately 25 percent of Medicare expenditures [5]. While H. R. 3200 pays vague lip service to this issue (by promoting “Advance Care Planning Consultation”), it actually promotes end-of-life over-spending by prohibiting “any annual or lifetime limit on coverage.” There is virtually no limit to how much can be spent extending the life of a dying person another few weeks or months. For that matter, in a creative and entrepreneurial culture such as ours, if this law passes, there will soon be no limit on how much can be spent in one year to treat a typical teenager’s acne!

Fix: Now that modern medicine has robbed us of our innate, God-given right to die with dignity from natural causes, we must develop legal and socially accepted ways to die with dignity when our bodies are so decrepit and our brains so demented that meaningful life is no longer possible. In the meantime, Congress should not compound this problem, and virtually guarantee rampant increased healthcare costs in the near future, by prohibiting “any annual or lifetime limit on coverage.”

Flaw #9: The Congressional Budget Office estimates current proposals will cost roughly 1 trillion dollars over 10 years, but, amazingly, their estimates totally ignore what is by far the greatest net cost to the American people: the cost of implementation! [13]. Their estimates totally ignore this simple fact: the 2700 pages of current legislation would be ballooned by the various bureaucracies responsible for their implementation into hundreds of thousands of pages of new rules and regulations to be imposed on all sectors of the healthcare industry. It is very expensive to implement complex new rules and regulations throughout an industry. That requires imposing many new responsibilities on existing personnel, hiring many additional personnel, and a very long and expensive adjustment process that ends with substantially increased ongoing costs to accommodate the additional regulations. Even if all these new regulations only increase the cost of healthcare by 5%, that will add another 1.1 trillion dollars of costs over the next 10 years, more than doubling Congress cost estimates. The true cost is likely to be much greater.

Fix: By this point it should be obvious: there is no real fix for Congress current approach to healthcare reform. It is a failed effort, and should be abandoned.

In summary, a careful reading of current legislation in the light of fundamental principles of economics and human behavior shows it is unlikely to accomplish its stated goals. On the contrary, is virtually certain to further ratchet up healthcare costs, with significant negative impacts on quality, accessibility and innovation. So where does that leave us?

The BIG FIX: see The Jones Plan: A Reality-Based Approach to Healthcare Reform