As Obamacare is set to Raise Costs for Old Sick People and Export Jobs Democrats suffer Buyer’s Remorse

Posted by PITHOCRATES - December 16th, 2012

Week in Review

The Republicans warned that Obamacare was too expensive.  But did the Democrats listen?  No.  They were hell-bent on passing anything remotely resembling national health care.  They even voted for it without reading the final bill.  Though at 2,000+ pages chances are they knew what was in it.  As it was probably sitting in a drawer someplace waiting for the perfect time to introduce it.  And that time came in 2010.  With liberal Democrats in charge of the House of Representatives, the Senate and the White House.

The vote was along party lines.  No Republican voted for it because it was too costly.  Some Democrats voted against it but they were able to bribe a couple of holdouts with some political favors and kickbacks to get the necessary votes to pass it into law.  Now some of these same Democrats are saying whoa, now, let’s not be so hasty implementing the law (see Obamacare’s Tax Chickens Come Home to Roost by Peter Roff posted 12/13/2012 on US News and World Report).

Call it politics as usual. Call it hypocrisy. Call it whatever you like—the fact remains that Obamacare’s chickens are coming home to roost and some Democrats don’t like it one bit…

… As the Republicans warned, time and again, Obamacare includes any number of hidden and not so hidden tax increases that are going to hit everyone where it hurts, right in the wallet.

This is especially true for sick people, who are very soon going to have to pay a new medical device tax that is scheduled to go in to effect on January 1, 2013. It’s a $20 billion tax, the Medical Device Manufacturers Association says, based on a 2.3 percent excise tax assessed on a manufacturer’s yearly gross sales—regardless of whether they show a profit. And, like anything else, the cost of the new tax will be passed along to consumers and taxpayers in the form of higher prices.

The medical device industry is one of the few flourishing in America these days. By taxing it, Obamacare creates an incentive to move operations overseas or, as the Democrats like to put it, “exporting jobs.”

Taxing sick people is bad politics. Exporting jobs is bad politics. Which is probably why, it should come as no surprise, that a large number of Democrats in the U.S. Senate who voted for Obamacare and its medical device tax in the first place now want Senate Majority Leader Harry Reid to put the breaks [sic] on its implementation.

At first the thought of taxing businesses $20 billion was no doubt too delicious for these Democrats to pass up.  But now that they risk cheesing off one of their core constituencies, old sick people who they’re supposed to be looking out for, as well as exporting one of the few remaining domestic manufacturing industries, they’re having a change of heart.  And they’re worried.  Because they don’t have any way to blame this on the Republicans.  For Obamacare was a straight party vote.

And it’s only going to get worse.  There will be more taxes.  And higher costs.  Resulting in budget cuts.  Increase waiting times.  And rationing of health care.  Just like the British have to do in their NHS.  Including a quasi death panel.  Something they call the Liverpool Care Pathway.  All in the name of reducing costs.  Because national health care is so expensive.

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Obamacare to Penalize Hospitals for Readmitting Sick People

Posted by PITHOCRATES - December 1st, 2012

Week in Review

Now that we passed Obamacare we’re starting to find out what was in that bill.  Which, according to Nancy Pelosi, was the only way for us to find out what was in it.  By voting blindly for it.  Then wait for them to implement it.  They’re doing that now.  And some of the things that we’re learning are in the bill are a little scary (see Hospitals Face Pressure From Medicare to Avert Readmissions (from the New York Times) by JORDAN RAU posted 11/26/2012 on The New York Times).

Medicare last month began levying financial penalties against 2,217 hospitals it says have had too many readmissions. Of those hospitals, 307 will receive the maximum punishment, a 1 percent reduction in Medicare’s regular payments for every patient over the next year, federal records show.

One of those is Barnes-Jewish Hospital in St. Louis, which will lose $2 million this year. Dr. John Lynch, the chief medical officer, said Barnes-Jewish could absorb that loss this year, but “over time, if the penalties accumulate, it will probably take resources away from other key patient programs.”

The crackdown on readmissions is at the vanguard of the Affordable Care Act’s effort to eliminate unnecessary care and curb Medicare’s growing spending, which reached $556 billion this year. Hospital inpatient costs make up a quarter of that spending and are projected to grow by more than 4 percent annually in coming years, according to the Congressional Budget Office.

There are two ways to look at this.  The government’s way.  Keeping those greedy hospitals from readmitting patients just to bill the government more.  Or the patients’ way.  Seeing Obamacare forcing hospitals not to readmit sick people.  Which would be basically the same as telling them to go and die.  It’s not called a death panel.  But someone in the hospital will have to decide whether to readmit the patient and suffer financial consequences.  Or please the government and not readmit these people.  Which, of course, would be a decision probably resulting in death for these patients.  Not the warm and cuddly Obamacare they told us about.  But it would be the only way the government could reduce health care costs.  Simply refusing to give people medical care.  For death is cheaper in the long run than hospitalization.  Something no doubt the government bureaucrats have factored in their Obamacare.

Medicare’s tough love is not going over well everywhere. Academic medical centers are complaining that the penalties do not take into account the extra challenges posed by extremely sick and low-income patients. For these people, getting medicine and follow-up care can be a struggle…

Various studies, including one commissioned by Medicare, have found that the hospitals with the most poor and African-American patients tended to have higher readmission rates than hospitals with more affluent and Caucasian patients…

Some researchers fear the Medicare penalties are so steep, they will distract hospitals from other pressing issues, like reducing infections and surgical mistakes and ensuring patients’ needs are met promptly. “It should not be our top priority,” said Dr. Ashish Jha, a professor at the Harvard School of Public Health who has studied readmissions. “If you think of all the things in the Affordable Care Act, this is the one that has the biggest penalties, and that’s just crazy.”

Interesting.  Not only does Obamacare use death as a cost-cutting means it also will discriminate against the poor and minorities.  While at the same time making hospitals less safe as money will go to the government in fines instead of combating infections and preventing surgical mistakes.

Death panels and less safe hospitals.  Funny, I don’t recall them telling us this is what they were giving us Obamacare.  Then again, if they told the truth they probably wouldn’t have gotten the votes.  So health care will get incredibly worse.  These policies and our aging population will accelerate our once quality health care system to something akin to what we could find in a third world country.

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Obamacare will likely Include a Liverpool Care Pathway type of Death Panel

Posted by PITHOCRATES - November 10th, 2012

Week in Review

There are no death panels in the NHS.  At least, by name.  Though some would say the Liverpool Care Pathway is a death panel (see NHS constitution reform to include new end-of-life care commitments posted 11/4/2012 in the guardian).

New commitments on end-of-life care and single-sex wards are set to be included in the NHS constitution under proposals unveiled on Monday…

Rules on involving patients and families in treatment decisions are being strengthened following an outcry over secretive use of the Liverpool Care Pathway which involves withdrawal of fluids and food…

Imelda Redmond, director of policy and public affairs at Marie Curie, said: “The Liverpool Care Pathway has enabled thousands of people to experience dignified care in the last hours and days of life. It was developed to spread the hospice model of end of life care into hospitals and other healthcare settings.

“We have become increasingly concerned about the damaging media coverage which reports negative experiences of people in hospital and the end of life. That is why we are calling for the next independent national audit to be brought forward so that we can identify as soon as possible where these failings are taking place.

One thing the British have learned is that sick people who don’t have the decency to die quickly cost a lot of money.  And these sick people who refuse to die quickly consume a lot of NHS resources.  Resources that they are no longer paying for as they have long since left the workforce.  So some family members have had their loved ones placed on the Liverpool Care Pathway even though some questioned why later?  Was the decision made in the best interests of the patient consuming all of those health care resources?  Or was the decision made in the best interests of the health service trying to make those limited health care resources stretch as far as possible?

They don’t call it a death panel.  But when it appears they’re choosing to let some people die for economic reasons (to stretch those limited health care resources as far as possible) one can’t help but think of the Liverpool Care Pathway as a death panel.  Hence the revision of the NHS constitution.

Obamacare doesn’t include any death panels.  By name.  But it includes a lot of ‘as the authority shall determine’.  Which means some bureaucrat has the last say on spending decisions.  And if those spending decisions involve the withdrawal of fluids and food it is a life and death decision.  Exactly the kind of decision a death panel will make.

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FUNDAMENTAL TRUTH #22: “The only problem with health care these days is that it’s approached from a cost basis more than a medical basis.” -Old Pithy

Posted by PITHOCRATES - July 13th, 2010

THE PROBLEM WITH cost cutters is their vision.  They see costs.  Not the big picture.  Rockefeller was a notorious cost cutter.  Even determined he could save money by using a few less welds on his oil barrels.  But he saw the big picture, too.  He grew sales.  Something that cost cutters have trouble doing.  He didn’t.  In fact, he was so good that it took the government to stop his sales growth.

Roger Smith was a numbers man.  He managed costs.  Starting in the accounting department of GM, he reorganized GM to make better sense.  On paper.  To make nice, neat, bookkeeping-like ordered sense.  Things tend to work better on paper, though, than in reality.  Suffice it to say that few laud Smith as the greatest CEO of GM.

Robert McNamara was also a numbers man.  And he ran the Vietnam War by the numbers.  He carefully determined what U.S. forces could NOT attack.  (Any place outside South Vietnam was basically a sanctuary for the enemy.)  And he introduced the body count.  There was no strategy to win.  Just a policy to verify you were killing more of theirs than they were killing of yours.  Wars of attrition, though, take years.  And lives.  On both sides.  Americans don’t like sitting back and waiting for enough of their sons to die to declare victory.  McNamara failed to see the big picture.  Strategy.  He just tried to make the combat efficient.  Which did little to inhibit the enemy from making war. 

Managing costs is important.  It can improve profits.  But it can’t grow sales.  And if you can grow sales, you’ll be able to pay your costs.  Even if they are high and inefficient.  Few companies fail because they have a cost problem.  They file because they have a revenue problem.  They lack sales.  Cost cutting cannot fix this problem.  It can temporarily help reduce operating losses.  But if you don’t increase sales, you’ll probably fail in the long run.

There are detail people.  And people with vision.  Rarely are people both.  Rockefeller was.  Smith and McNamara were detail men.  They could not see the forest for the trees.  And this is the problem in health care.  We’re not looking at the big picture of medical care.  We’re looking at the details of cost. 

YOU WOULD THINK that doctors would oppose the government taking over health care.  Because when governments do, they tend to put salary caps on doctors.  Kinda diminishes the return on all that costly medical training.  I talked to two recently who favor a national solution.  Why?  Because of costs.  They like Medicare.  Because it’s simple.  Most of their patients are seniors.  So the bulk of their billings are uniform.  Medicare reimbursements.  They like anything that simplifies their overhead costs.  Private insurance companies don’t do this.  They’re not all the same.  Different people to call.  Different procedures.  Different approved tests.  Different paperwork.  And more of it.  And a bigger staff to handle it.

Doctors hate paperwork.  No doctor ever went through medical school because they wanted to shuffle paper.  Or because they wanted to fend off malpractice lawsuits.  Doctors are under a bureaucratic assault.  They spend more time with paperwork than with patients.  And paperwork does have a cost.  As do frivolous lawsuits.  A government takeover would standardize the one.  And, hopefully, eliminate the other.

I understand these doctors’ concern.  But they can’t see the forest for the trees.  Government is not going to approach health care from a medical basis.  They’ll approach it from a cost basis.  They’ll use statistical analysis.  They will manage care to maximize cost efficiency.  They will approach health care like Smith did in GM and McNamara did in Vietnam.  They’ll crunch the numbers.  Then determine what health care is cost effective.

THEY PROBABLY NEED no introduction.  Most people are family with the British comedy troupe called Monty Python.  Funny, a bit naughty and rather bookish, they’ve appealed to the masses across generations.  They spent a lot of time researching before making some of their movies.  Reading books.  The realism it adds made some of the funniest scenes.  A Roman centurion gives a Jewish terrorist a Latin lesson at the point of a sword (Life of Brian).  Dennis the constitutional peasant arguing with King Arthur (Monty Python and the Holy Grail).  And this scene from The Meaning of Life during a live birth lampooning the British National Health Service:

Nurse:  The administrator’s here, doctor.

First Doctor:  Switch everything on!

[They scramble to do so.  Machines turn on with flashes and sounds.  The administrator enters.]

Administrator:  Morning, gentlemen.

First and Second Doctors:  Morning Mr. Pycroft.

Administrator:  Very impressive. Very impressive.  And what are you doing this morning?

First Doctor:  It’s a birth.

Administrator:  Ah, what sort of thing is that?

Second Doctor:  Well, that’s when we take a new baby out of a lady’s tummy.

Administrator:  Wonderful what we can do nowadays.  [A machine makes a ‘ping’ sound.]  Ah!  I see you have the machine that goes ‘ping’.  This is my favorite.  You see we leased this back from the company we sold it to.  That way it comes under the monthly current budget and not the capital account.  [They all applaud.]  Thank you, thank you.  We try to do our best.  Well, do carry on.

This is funny.  Because it’s true.  When we approach health care on a cost basis.  You must show you need and use every piece of expensive equipment you have so it stays in the budget.  And the administrators administrating health care don’t understand health care.  They understand and make their decisions based on numbers in columns.  And speaking of numbers in columns.

 ONE THING STANDS out more than everything else when looking at numbers in columns.  In one cost column in particular.  Of all the costs in columns, one dwarfs all others.  The costs in treating very sick and very old people.  You can cut and trim the budget everywhere else but you won’t make a dent in overall costs.  Unless you cut and trim this one column.  Manage these costs.  Do some statistical analysis on these costs.  For if you cut THESE costs, it will make a difference.  It could even stave off bankruptcy without having to further raise taxes.  Yes, we can make the system more financially sound if we just stop treating so many sick and old people.

But it’s a body count mentality.  You have to willingly accept a defined number of additional deaths.  The Soviets were willing to trade 10 lives for one against the Nazis.   A steep price to pay.  But it did wear the Nazis down and lead to victory.  There was a similar ratio in Vietnam with America on the better side of that ratio.  But it was still too high a price for Americans.  It goes against our nature to think in terms of ‘acceptable’ losses.

But there will have to be a line that health care will approach but does not cross.  Where there are ‘acceptable’ losses.  Statistical analysis will take into account probable remaining years of life in a potential patient.  If few, the system will assign an appropriate value of care to match the health care expenditure with the expected return on the medical treatment.  People with more probable years of life left will receive more health care treatment.  People with fewer years left will receive less.  We’ll help manage their pain until they no longer feel that pain.  For it would be inefficient to spend a lot of money on someone who is going to die ‘soon’.

Perhaps I can best summarize this in song.

When you were young and your heart was an open book
You used to say live and let live
(you know you did, you know you did you know you did)
But in this ever changing world in which we live in
Makes you give in and cry
Say live and let die
Live and let die
Live and let die
Live and let die

(Live and Let Die, Paul McCarthy)

And that’s what bureaucrats will use all that statistical analysis for.  To determine who to let die.  You can sugarcoat it anyway you’d like, but it comes down to this.  A bureaucrat, not a doctor, will have the power of life and death as they decide what health care is appropriate and prudent.  As it must be under a system where bureaucrats distribute limited resources on a cost basis.  They will have no choice but to deny care that is not in the budget.

ONE PUZZLING THING about health care is that it is perfectly acceptable to approach it from a cost basis but not on a revenue basis.  For it is immoral to profit on health care.  Pity, because introducing market forces is one sure way to bring down costs.  People are willing to pay for medical services.  They pay for abortions.  And abortion clinics are readily available.  The free market laws of supply and demand work for abortions.  And so they would for other outpatient medical services. 

Instead of running a battery of tests because an insurance company requires this incremental approach of the cheap stuff first, you could go to an MRI (or some other expensive procedure) clinic and pay out of pocket.  Because they do nothing but MRIs, they achieve economies of scale.  The clinic makes money by offering low cost, high quality MRI scans that result in a high sales volume.  You benefit because you miss less work.  The doctor benefits because he gets your MRI scan results without additional paperwork to process.  I’m sure a market is there just waiting for an entrepreneur to come along.  I mean, if you can make money by performing abortions, you should be able to make money with some non-invasive, high-tech machines.

HEALTH CARE SERVICES will not become more affordable and more readily available by cutting costs.  If the bean counters try, they’ll damage the quality of health care.  Because the bean counters rarely look at the big picture.  You need someone with vision.  Because no cost cutter ever saved a business.  Or made the world better.

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