Community For Better Health Care

Vol IV, No 19, Jan 10, 2006


In This Issue:

1.                  Featured Article: American Universities Profit by Patenting Their Innovations

2.                  In the News: Literacy of College Graduates Is on Decline

3.                  International Medicine: Nationalism and Science Don't Mix

4.                  Medicare: Part D (for Disaster)

5.                  Medical Gluttony: Not Limited to Patients

6.                  Medical Myths: Technology Increases the Price of Healthcare

7.                  Overheard in the Medical Staff Lounge: Medical Journals are Mere Magazines

8.                  Voices of Medicine: Competition Fuels the Market - Part II by Charles B. Clark, M.D.

9.                  From the Physician Patient Bookshelf: Healthy Competition: What's Holding Back Health Care and How to Free It:  Chapter 4 - Too Much of a Good Thing Can Be Very Bad.

10.              Hippocrates & His Kin: Medicare Part D: Doesn’t Help Seniors and Hurts the Juniors.

11.              Related Organizations: Restoring Accountability in HealthCare, Government and Society

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The 3rd Annual World Health Care Congress, co-sponsored by The Wall Street Journal, is the most prestigious meeting of chief and senior executives from all sectors of health care. Renowned authorities and practitioners assemble to present recent results and to develop innovative strategies that foster the creation of a cost-effective and accountable U.S. health care system. The extraordinary conference agenda includes compelling keynote panel discussions, authoritative industry speakers, international best practices, and recently released case study data. The 2006 conference will be held from April 17–19, 2006, in Washington, DC. For more information, visit

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1.      Featured Article: The Bayh-Dole act's 25th birthday of Government Meddling in Academia

A landmark law has allowed American universities to profit by patenting their innovations. But the costs are adding up. by

EVERYONE agrees the reform had the noblest of intentions; yet some now regard it as an assault on the values of academia. A quarter of a century ago this month, America passed the Bayh-Dole act, named after its sponsors, Birch Bayh and Bob Dole, both then members of America's Senate. It was billed as a minor legal tweak—encouraging universities to patent and license the results of federally funded research—but it has had huge effects, both good and ill. It is credited by some with helping pull America out of its economic doldrums by pushing technologies quickly into the hands of industry. In so doing, others complain, it has blurred the line between education and commerce.

The act enables universities to patent any innovation that springs from government-funded research, license it and share the spoils with the inventor. The idea was not to enrich universities, but to give them a reason to propagate the fruits of research, which had been mouldering unexploited. And it has worked. In the past 25 years, more than 4,500 firms have been spun out from non-profit research institutes, based on patents generated as a consequence of this law.

Scores of medical advances and technical innovations have resulted, including MRI body scanning, the vaccine for hepatitis B, the atomic-force microscope and even the technique behind Google's search engine. In 2004 alone, American universities and institutes raked in $1.39 billion in licensing revenue, and applied for more than 10,000 new patents. Impressed with this apparent success, other countries, including Japan and Germany, have adopted similar policies. Indeed, just this month, dons at the University of Cambridge, in England, voted to change their institution's handling of intellectual property so that it resembles the way Messrs Bayh and Dole have organised [sic] things for America. In 2002 The Economist trumpeted the law as “possibly the most inspired piece of legislation to be enacted in America over the past half-century” (see article).

A law of unintended consequences  

Yet the yelps from critics have grown louder over the years. Many scientists, economists and lawyers believe the act distorts the mission of universities, diverting them from the pursuit of basic knowledge, which is freely disseminated, to a focused search for results that have practical and industrial purposes. Whether that is a bad thing is a matter of debate. What is not in dispute is that it makes American academic institutions behave more like businesses than neutral arbiters of truth. For example, a study published in 2003 by Jerry and Marie Thursby, of Emory University and the Georgia Institute of Technology respectively, showed that more than a quarter of the licences [sic] issued by universities and research institutes include clauses allowing the business partner in the arrangement to delete information from research papers. Almost half allow them to insist on publication being delayed.

Moreover, there is ample evidence that scientific research is being delayed, deterred or abandoned due to the presence of patents and proprietary technologies. Researchers (and particularly their minders in university patent-licensing offices) are increasingly reluctant to share materials and knowledge with others unless such sharing is accompanied by legal agreements about “reach-through” royalties on potential findings and the right to restrict publication of results. A study released in October by the American Association for the Advancement of Science noted that 35% of academic biotechnology researchers experience difficulties getting hold of patented technologies that they need for their work, even though non-commercial research is supposed to be exempt from the normal restrictions of patents. The question is just how “non-commercial” such research really is. Lawsuits between universities and researchers over patents and royalties are now common. Indeed, though he was eventually exonerated, a student from the University of South Florida ended up doing a stint on a prison chain gang for “stealing” the intellectual property he created.

Even industry is starting to complain about a gold-digger mentality among academic administrators. The most notorious example is Columbia University, which tested the boundaries of the law by seeking to re-patent a technique whose patent had already expired. (It was for a technology called co-transformation that is used to place external DNA into cells, and is important in making certain drugs.) Columbia eventually backed down, but only in the face of both public criticism and a series of writs from biotechnology companies. Another case ensnared the University of Utah, which licensed its patent on a gene underlying hereditary breast cancer exclusively to one company, Myriad Genetics. That gave Myriad a monopoly on diagnostic testing for the disease, which was controversial enough. But then the firm started suing universities that were using its technology in follow-up research, bringing the non-commercial research exemption still further into question . . .

To read the entire original article including the backlash that has already developed, go to

[Don’t miss the larger picture. A flawed law in the U.S., jeopardizing the mission of academia in its pursuit of excellence, is now being implemented globally to inflict damage on prestigious century-old universities, such as Cambridge. Why do humans have such an insatiable desire to make bad laws? Why are we unable to learn from the errors of the past?]

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2.      In the News: Literacy of College Graduates Is on Decline by Lois Romano, Washington Post Staff Writer, Sunday, December 25, 2005.

Survey's Finding of a Drop in Reading Proficiency Is Inexplicable, Experts Say

Literacy experts and educators say they are stunned by the results of a recent adult literacy assessment, which shows that the reading proficiency of college graduates has declined in the past decade, with no obvious explanation.

"It's appalling -- it's really astounding," said Michael Gorman, president of the American Library Association and a librarian at California State University at Fresno. "Only 31 percent of college graduates can read a complex book and extrapolate from it. That's not saying much for the remainder."

While more Americans are graduating from college, and more than ever are applying for admission, far fewer are leaving higher education with the skills needed to comprehend routine data, such as reading a table about the relationship between blood pressure and physical activity, according to the federal study conducted by the National Center for Education Statistics.

Experts could not definitively explain the drop.

"The declining impact of education on our adult population was the biggest surprise for us, and we just don't have a good explanation," said Mark S. Schneider, commissioner of education statistics. "It may be that institutions have not yet figured out how to teach a whole generation of students who learned to read on the computer and who watch more TV. It's a different kind of literacy."

"What's disturbing is that the assessment is not designed to test your understanding of Proust, but to test your ability to read labels," he added. . .

The results were based on a sample of more than 19,000 people 16 or older, who were interviewed in their homes. They were asked to read prose, do math and find facts in documents. The scores for "intermediate" reading abilities went up for college students, causing educators to question whether most college instruction is offered at the intermediate level because students face reading challenges.

Gorman said that he has been shocked by how few entering freshmen understand how to use a basic library system, or enjoy reading for pleasure. "There is a failure in the core values of education," he said. "They're told to go to college in order to get a better job -- and that's okay. But the real task is to produce educated people."

Other experts noted that the slip in scores could be attributed to most state schools not being particularly selective, accepting most high school graduates to bolster enrollment. In addition, Schneider said schools may not be taking into account a more diverse population, and the language and cultural barriers that come with shifting demographics . . .

Dolores Perin, a reading expert at Columbia University Teachers College, said that her work has indicated that the issue may start at the high school level. . . 

On average, adult literacy is virtually unchanged since 1992, with 30 million people struggling with basic reading tasks. While adults made some progress in quantitative literacy, such as the ability to calculate taxes, the study showed that from 1992 to 2003 adults made no improvement in their ability read newspapers or books, or comprehend basic forms.

One bright spot is that blacks are making significant gains in reading and math and are reaching higher levels of education. For instance, the report showed that the average rate of prose literacy, or reading, among blacks rose six percentage points since 1992. Prose and document reading scores for whites remained the same.

To read the entire article, please go to

[The Finding of a “Drop in Reading Proficiency Is Inexplicable” is only because these are all government funded or government controlled schools. No such drop is seen in private or parochial schools where students and their parents pay for the education. If the student doesn’t learn to read, the parents will not enroll the child the following year and the school will go out of business and the teachers become unemployed. Therefore, the teachers will make sure their students learn the course work. The answer to our education problem, which is similar to the answer to our health care problem, is to get the government out of education.

[School vouchers do not get the government out of education. They just open the door to allow the government to also destroy private and parochial education. Witness the Hillsdale experience of never accepting any funds forcibly extracted from U.S. citizens by the federal government through taxation. Little did they think that by accepting students with GI Benefits and Federal Student Loans that the Feds would reign in on them so viciously to control their institution. School vouchers are equally lethal.]

To Paraphrase Paul Revere: The Socialists Are Coming. The Socialists Are Coming.

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3.      International Medicine: Nationalism And Science Don't Mix by

THE twisted tale of Hwang Woo-suk, a once-feted but now-disgraced South Korean stem-cell researcher, is salutary at many levels. It shows, first, that you can't cut corners in science—at least, not in any meaningful way. The occasional dud result in a low-profile field of endeavour[sic] may escape critical scrutiny, but if you report inaccurate work in an area as controversial and important as human cloning, your slips will catch up with you pretty quickly. Second, it shows the risks to scientists of becoming celebrities. An artistic celebrity's audience may prove fickle, but ultimately it is only that artist's talent that is being judged. A scientific celebrity's success, by contrast, relies both on his talent and on nature delivering the goods to him in a timely fashion—and nature does not bend to a scientist's will, however much he or his audience may wish it might.

Hubris and vanity are all too human vices and, despite occasional propaganda to the contrary, scientists are, indeed, only human. But the third salutary lesson of this episode, though related to the other two, is deeper. It is that nationalism and science are uneasy bedfellows. Dr Hwang's downfall was set in train by his elevation by the South Korean government into an emblem of his country's emergence as a scientific power. That both flattered him and demanded the next great breakthrough from his laboratory. In the end, he came up with a fatally flawed piece of research that has now been disowned by collaborators (see article).

The most famous example of deluded scientific nationalism was Trofim Lysenko, a Soviet geneticist. Or, rather, a non-geneticist. Lysenko was flattered and financed by Stalin because he claimed that an organism could pass on to its offspring characteristics it acquired in its lifetime. That fitted well with Marxist ideology about the mutability of nature, but wrecked the Soviet Union's crop-improvement programme. [sic]

The reverse phenomenon, of discounting something because of its source, applies too. Before the second world war, many of Germany's finest physicists were Jewish. That did not please the Nazis, whose actions persuaded those physicists that their best interests lay elsewhere. It also led the Nazis to refuse to incorporate “Jewish science” into their pure-bred Aryan reality. Which was, perhaps, just as well, for much of the exiled talent ended up on the Manhattan project while Germany's own atomic-bomb programme [sic] was stymied.

In spite of the success of the Manhattan project, engineering can also fall victim to national pride. Because the science behind such schemes is rarely in doubt, they can often “succeed” if you throw enough money at them. But to what end? It is doubtful that America's race with the Soviet Union to put a man on the moon was of much scientific value, although it did produce some great television. The multi-billion-dollar manned space station (allegedly international, but in practice an American enterprise) is an operation looking for a mission.

The truth will out

Compared with these dire examples of waste and destruction, Dr Hwang's mistake looks relatively modest. Those opposed to human cloning may raise a cheer or two that a great leap forward which they had feared seems not to have happened. But, as the Nazis discovered, denying reality just because you don't like it is equally foolish. Eventually, somebody probably will clone a human being. Just not, perhaps, in South Korea.

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4.      Medicare: Part D (Disaster)

We are only into the second week of the new Pharmacy Benefit Program now called Medicare Part D. Most of my patients are having difficulty navigating the federal waters, to put it mildly. Many still don’t have any idea whether their conventional insurance, their HMO or Medicare is paying for their medications. One thing they all seem to expect is that they are not paying and someone else should. So after the first round of prescriptions with a trip to the pharmacy, and a denial, the federal waterfall turns back to the doctor’s office to get something that is covered. The pharmacists aren’t sure yet what’s covered. They just want another round of prescriptions, which they will run through their computer. If you ask, “Just tell me which one is covered?” the response is that they can’t tell until they have the new prescription with the patient’s ID in front of them as they scroll their computer. Then if it isn’t covered, they will just send another fax.

So what’s the economics of this government bureaucracy? After the office visit which includes a minute or two of amenities, a review of the patient’s chart, a brief review of the current problem or status of the prior medical problems, a brief examination, an assessment of the findings, a brief discussion with the patient of the possible treatments, the prescriptions or requisitions are then written and the medical record is completed in case the government reviews the chart to police the actions that occurred. These twenty minutes are paid by the carrier or Medicare at about half the usual rate. The writing of the prescriptions is a huge unknown. We know that there will be numerous faxes from the pharmacists for alternatives.

Before all the faxes have come and gone, before a new treatment program can be implemented, it may be necessary to have another review of the patient’s record, an assessment of the medical problem to see if the requested alternative medication will work, rewriting the prescriptions, faxing them back to the pharmacists, and revising the medical record to reflect the changes. In short, this is another office call essentially in cyberspace. Only this one is not even reimbursed at half rate. So now there have been essentially two office calls for one-half the price of one. Not only don’t the bureaucrats understand the drag on the system, one’s own employees, pharmacists, and patients do not understand this doubling of costs. It cannot go on indefinitely.

The pharmaceutical industry and pharmacists have come to the partial rescue with many large chains giving out a few days supplies to allow the federal government’s incompetence to ameliorate. One of the local pharmacists says he doesn’t have the financial resources to give out free medications. He’s been kept on hold for two hours and then has his phone go dead in an attempt to sort this out for his patients. He says the “D” in Medicare Part D stands for “Disaster” and it’s of Biblical Proportions. (See “Confusion reigns over drug plans” at

No wonder there is this huge exodus away from Medicare and also from private insurers. How sad for patients. Even worse, why are doctors tolerating this?

What’s even more tragic is that this hyperbolic increase in government entitlement has come under the watch of a business president with an MBA who should have known better, rather than a lawyer who sees legal complications as an increase in his professional security. Roosevelt’s Social Security entitlements of the 1930s will run out of funds within our generation, the third generation after implementation. Johnson’s Medicare entitlements of 1966 will reach bankruptcy in our generation, the second generation after implementation. The Bush Pharmaceutical Entitlement will reach bankruptcy during our generation, the very first after implementation. All three disasters must be tackled by us. Are we up to it? Or are we just going to will our gluttony to our children and grandchildren and allow them to be sacrificed to the God of Socialism?

To read about the Medicare Pharmacy Benefit Plan that should have been implemented to allow Medicare to continue for our grandchildren, please to go to

 Government is not the solution to our problems, government is the problem.

- Ronald Reagan

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5.      Medical Gluttony: Not Limited to Patients, but Also Includes Doctors and Hospitals

A reader of MedicalTuesday writes that Medical Gluttony is not limited to patients. Physicians also practice it; to which we would add hospitals also practice it. The interests of consumers (patients), producers and the payer are well aligned in the free market. That’s because the consumer and the payer are the same person. However, in healthcare, the consumer and the payer are not the same person and this creates conflict, loss of accountability, excessive utilizations and total corruption of the Medical MarketPlace. In a free and open Medical MarketPlace, there can be no Medical Gluttony, not by patients, not by physicians and other providers, and not by hospitals. (Please see Cannon and Tanner in Section 9 below.

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6.      Medical Myths: Technology Increases the Price of Healthcare

Remember when? Consumer electronics used to have bigger price tags and smaller memory chips. By Clint Swett -- Bee Staff Writer Friday, December 23, 2005. 

“I remember a few years ago, DVD recorders were $2,000. Now they are just a couple of hundred bucks," said Jim Babb, a spokesman for electronics retailer Circuit City. (2000 prices compared to 2004: Portable DVD $800 down to $144. 256 MB Computer memory from 100 to $25. Flat panel screens $900 to $200, HDTV $13,000 to $2,200.) [Pentium 4 computers for $500 that have more speed and memory than the $5 million IBM Ramdac of 50 years earlier.]

"Falling prices is just one of the essential truths of consumer electronics," he said. That's borne out in a segment of the Consumer Price Index that charts price changes for personal computers and peripherals, and adjusts for advances in technology such as processing power, memory and storage.

According to the index, technology prices have plunged 88 percent since December 1997, while the CPI as a whole is up 22.5 percent over the same period.

Falling prices are one manifestation of Moore's Law, the 1965 prediction by Intel co-founder Gordon Moore that the number of transistors on a computer chip would double every two years. That phenomenon has contributed to more powerful but less expensive devices, ranging from cellular phones to microwave ovens and laptop computers.

[The fall in technology prices was not allowed to decrease the technology of medicine. During the same period above, as Medical Director of the Pulmonary Function Laboratory and Respiratory Therapy Services of American River Hospital, I purchased a new Arterial Blood Gas Analyzer. Although the price was about $2,000, it reduced my technician’s time from 30 minutes to three minutes to perform one ABG. The capital cost could be amortized to about one dollar per blood gas. Hence, the savings in technical labor was huge. I suggested a measly $5 decrease in the price of an ABG from $25 to $20 after demonstrating that my department would more than triple its profits despite this decrease; however, it would be a small step in reducing health care costs. I was overruled by the administrator who immediately increased the charge to $30. He notified me about three months later that Medicare, Medicaid, Blue Cross-Blue Shield and Foundation Health Plan were paying the new rate without discount, thus indicating that his decision was correct. Therefore, he increased the charge further to $35. He said he would continue to increase the charge until he found the maximum that Medicare and insurance carriers would pay. I tried to have an ethics discussion concerning the immorality of gouging the sick patients with obscene prices; he simply turned around and walked away shaking his head.

[The hospital is a major cause of the health care inflation after the advent in the 1960s of Medicare, government medicine and third-party insurance, which removed the patient from the financial interface with their doctors and hospitals. Had physicians been allowed to be an effective voice in medical care, the technological advances of medicine would have brought considerable savings to health care. Free market, competition-oriented physicians are continuing to be sidelined by the Medical-Hospital Complex. Only the open and free Medical MarketPlace can still correct the problems of health-care costs.]

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7.      Overheard in the Medical Staff Lounge: Doctors Discussing Medical Journals

THOMAS P. STOSSEL:  Mere Magazines

“The Journal of the American Medical Association has declared industry-sponsored research categorically untrustworthy, and, to publish it, demands that an academic researcher be an author and take responsibility for its integrity, and also that an independent academic statistician analyze its data. This and other journals rail obsessively against 'financial conflicts of interest' of academic researchers working with companies and conduct inquisitions to identify every possible financial motive that might corrupt researchers' objectivity. . . .

“If reporters understood that journals are magazines, not Holy Scripture, we might not be witnessing ever more onerous regulations inhibiting interactions between academic and industry science. Prestigious biomedical journals are good for our health -- provided they stick to their core business of facilitating imperfect communication between researchers. Leave drug and device monitoring to the FDA -- and theology to theologians.”

Mere Magazines: (Subscription required.)

Termites Ate the Research Data: The British Medical Journal

In 1992, the British Medical Association's flagship journal published a study led by Indian doctor Ram B. Singh with a striking finding: Heart-attack victims who ate more fiber, fruits and vegetables for a year cut their risk of death during that period by almost half.

A year later, Richard Smith, the journal's editor, received two letters questioning the findings. What followed was an extraordinary inquiry stretching over a dozen years and 5,000 miles. Along the way, Dr. Singh contended that termites had eaten crucial data and Dr. Smith spent four years begging a busy statistician to deliver a report . . .

Even Dr. Smith, who stepped down from BMJ last year to take a position at UnitedHealth Group Inc., now says that journals "are not really set up to administer justice in these kinds of cases." (Subscription required.)

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8.      Voices of Medicine: Competition Fuels the Market - Part II by Charles B. Clark, M.D.

So how does competition fuel the market? And how does all this apply to our present status and our future as medical doctors? It is a process called negotiation. Let’s see how it works.

One of our hospitals recently decided that they were not going to contract any longer with one of the larger managed care plans. This was all about reimbursement. We physicians were advised that we would not be able to admit those patients after a certain date. Managed Care had the alternative of admitting their patients to another hospital chain. After a period of negotiation, we were informed that we could admit those patients to our hospital once again. This type of negotiation explains why the hospitals accept such horrific reductions in the fees they submit to their contracted managed care organizations. However, it places an intolerable burden on the uninsured patient who does not have the advantage of a “negotiated contract.”

In terms of Dr. Average Physician, he has a practice whose reimbursement is largely controlled by managed care plans. From the beginning, the effect of managed care was to reduce the reimbursement to physicians. Most physicians passively watched this happen because so many patients were insured by these plans. “A Piece of the Pie

Then we began to see various specialists forming groups. Gastroenterologists and cardiologists, for example, were banding together. The stated purpose of this joining forces was to be able to compete more effectively for managed care contracts.

So the negotiations began. Group A contracts with Managed Care Plan for x dollars a unit. Group B wants a bigger share of the action so they contract with Managed Care Plan for x minus one dollar a unit. Now Group B is getting the business. Group A agrees to contract with Managed Care Plan for x minus two dollars. And so it goes on. Where will it stop? Will it stop? Why should it stop? Virtually all of us have submitted quite passively to this competitive struggle for the patients. Yes, competition fuels the market but the market may be becoming stressed to the brink of extinction in its present form.

As we float quietly down the river into the misty fog of oblivion, who is to blame for our demise? We need look no farther than the mirror.

To review Dr Clark’s earlier posting, please go to

To read additional Voices of Medicine, go to

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9.      Book Review: Healthy Competition: What's Holding Back Health Care and How to Free It by Michael F Cannon & Michael D Tanner, Cato Institute, Washington, DC © 2005, ISBN 1-930865-81-3, 173 pp, $10. Part III –Underlying Diseases, Strong Medicine: Chapter 4 - Too Much of a Good Thing Can Be Very Bad.

“What can policymakers do to make health care of ever-increasing quality available to an ever-increasing number of consumers? The answer begins with an accurate diagnosis of the problem. As discussed in the Introduction, producers in an open market must compete to meet consumers’ needs at the lowest possible cost. Consumers who must weigh different options against one another tend to focus on getting the highest value per dollar spent, and they reward producers who provide it. Consumers and efficient producers both gain. Inefficient ways of doing things are driven from the market. Competition constantly pushes producers to reduce prices and improve quality. However, this process does not describe America’s health care sector.

“Why does health care lack the vigorous competition that produces wonders in other sectors of the economy? As we survey the scene, we see that many of the necessary conditions of healthy competition have been disabled. On the consumer side, government promotes excessive levels of health coverage. On the producer side, it imposes excessive regulation, which dampens competition. In each instance, government usually has a stated goal of making health care more affordable, protecting consumers, or even increasing market competition. However, its interventions often produce the opposite effect. When it limits experimentation and learning in the marketplace, government inhibits the competitive discovery process and most often leaves consumers worse off.

The Trouble with Too Much Health Coverage

“Health insurance plays a crucial role in financing health care. But Americans rely on health coverage beyond its usefulness. Like auto, fire, and homeowner’s insurance, health insurance is supposed to protect against unlikely but high-cost events. Ordinarily, it would not cover regular checkups for the same reason that auto insurance does not cover oil changes: such expenses are neither unlikely nor high-cost. It is easier to pay for smaller, predictable expenses directly rather than through insurance. Of course, there is no reason why someone should not be able to purchase coverage for regular checkups—as long as she is willing to pay the added cost.

“Health insurance works differently in the United States. Rather than have consumers evaluate the costs and benefits of different types of coverage, government actively hides the full cost of coverage from consumers. As a result, consumers demand more generous coverage, and much of the care covered by that health 'insurance' is care that they otherwise would purchase directly. There are two main ways government hides from consumers the cost of their health coverage. First, the federal and state governments grant special tax treatment to employer-provided health insurance. As a result, most Americans obtain health coverage through an employer. That hides the cost of coverage because employers pay a portion or all of the premiums. (It also encourages more generous coverage because it exempts from taxation any medical care covered by an employer’s health plan.) Second, government provides health coverage to tens of millions Americans through government programs. These programs hide the cost of coverage from the beneficiaries by passing the cost on to taxpayers. The cumulative result is that roughly 86 cents of every dollar spent on medical care in the United States today is financed through a third party (see Figure 4.1). Government itself finances nearly half of all medical expenditures. In fact, the United States finances a greater share of its health care bills through third party bureaucracies than 17 other advanced countries, including Canada (see Figure 4.2). By this admittedly crude measure, America’s health care system is more socialized than many others. . . .


Creating Conflict

“Most fundamentally, America’s overreliance on health coverage creates unnecessary conflict. In most markets, the interests of consumers, producers, and payers are well-aligned because the consumer and the payer are the same person. Producers get paid when they give consumers what consumers want. The lines of authority and accountability are clear. When the consumer and the payer are not the same person, however, it creates conflict between all three parties. . . .

“Deductibles and co-payments give the patients an interest in eliminating wasteful expenditures and utilizing only medical care that they expect will provide value. These cost-sharing measures realign the interests of patients, payers, and providers. Having patients choose the terms of their health insurance in advance further harmonizes the parties’ interests. This allows insurers to convey the costs of different ways of dealing with the problems of third-party payment (i.e., different deductibles, co-payments, and other features) and requires consumers to weigh those costs.

“When government hides the full cost of coverage from consumers, however, it makes the problem of conflicting interests worse  . . .

“One result is unnecessary conflict between patients and payers.  Since patients pay an average of only 14 cents for each dollar of care, they utilize more care than they would if they had to shoulder more of the cost. The added utilization imposes costs on the people who ultimately pay for the other 86 percent—workers and taxpayers.  They perceive no benefit from a stranger’s overuse of the health care system. Through their agents (insurers, employers, and governments), they push back by refusing to pay for care that patients want. Excessive coverage also creates conflict between patients and payers by encouraging 'moral hazard.' By reducing the (apparent) costs to consumers of risky behaviors (e.g., obesity, smoking, reckless driving), it encourages consumers to do less than they otherwise would to safeguard their health.

“Encouraging excessive coverage also creates conflict between payers and providers. Providers often see the payers’ coverage decisions as an intrusion on the doctor-patient relationship and an affront to their professional judgment. One result is that providers (and presumably patients) often deceive payers to obtain coverage.  Researchers from Yale University and Beth Israel Deaconess Medical Center in Boston found that 39 to 50 percent of physicians have manipulated third-party reimbursement rules to secure coverage of a particular treatment for a patient (and payment for themselves) (see Figure 4.3). Up to 70 percent of physicians said they would be willing to do so under certain circumstances. The researchers wrote:

'Tactics reported by physicians have included exaggerating

the severity of the patient’s condition, changing the patient’s

diagnosis for billing, or reporting signs or symptoms that the

patient did not have. Deceptions may involve brief change

in wording, as when physicians rule out cancer as the indication

for a test rather than screening. . . (e.g., inventing findings such as breast

lumps to obtain a referral for screening mammography). . .'

“The RAND Health Insurance Experiment confirms that people with excessive coverage utilize care that does nothing to improve health. Families who had to weigh the cost of the first few thousand dollars of medical expenses saw 'little to no net adverse effect on health for the average person,' compared with families with 100 percent coverage. 'Indeed, restricted activity days fell.'

“It may be impossible to estimate the total amount of waste in America’s health care sector. However, it is almost certain to be in the hundreds of billions of dollars. Milton Friedman has estimated that without decades of government encouragement of excessive health coverage, per capita spending on medical care in 1997 would have been less than half the actual figure. . . .

Dampened Competition

“Discouraging patients from shopping for value and distracting physicians from pursuing higher quality care at lower prices cannot help but stifle competition. Michael Porter and Elizabeth Teisberg write,

'The most fundamental and unrecognized problem in U.S. health care today is that competition operates at the wrong level. It takes place at the level of health plans, networks, and hospital groups. It should occur in the prevention, diagnosis, and treatment of individual health conditions or co-occurring conditions. It is at this level that true value is created—or destroyed—disease-by-disease and patient-by-patient. It is here where huge differences in cost and quality persist. And it is here where competition would drive improvements in efficiency and effectiveness, reduce errors, and spark innovation. Yet competition at the level of individual health conditions is all but absent. . . .'

Undermining the Doctor-Patient Relationship

“Most physicians now rely extensively on third-party payers. More than 95 percent of physicians accept Medicare patients. In 2001, about 90 percent of physicians had at least one managed-care contract, and on average physicians received roughly 40 percent of their income from managed care. Only about a quarter of physicians practiced independently, compared with 41 percent in 1983.

“This trend has had a negative impact on the way physicians practice medicine and the doctor-patient relationship. Swiss medical ethicist Ernest Truffer argues that the increasing interjection of 'gate keepers,' 'case managers,' and other forms of bureaucracy between doctors and patients 'amounts to a rejection of the medical ethic— which is to care for a patient according to his specific medical requirements—in favor of a veterinary ethic, which consists of caring for the sick animal not in accordance with its specific medical needs, but according to the requirements of its master and owner, the person responsible for paying any costs incurred.'

“When doctors are paid a set amount per office visit, as they often are, it leads to less time to meet with patients, which can have an impact on effective diagnoses and treatment. After receiving a second opinion that corrected a serious misdiagnosis (which missed three blocked coronary arteries), author Jay Neugeboren observed,

'the way the health care system is now run [has] undermined the traditional doctor-patient relationship. Not only do doctors have less and less time to meet with us, but, given the vagaries of health insurance, the doctor we see one time may not be the same doctor we see the next time, and so we often remain strangers to one another . . . [I]n the words of Dr. Bernard Lown, inventor of the defibrillator, listening to the patient and taking a careful history remains 'the most effective, quickest and least costly way to get to the bottom of most medical problems.'

"A growing movement among some physicians to reject third-party coverage attests to the impact it has had on the practice of medicine and the physician-patient relationship. . . .”

To read the rest of Part III, Chapter 4 – Too Much of a Good Thing Can Be Very Bad, please go to the Cato Bookstore: The price is only $10. At that rate, consider purchasing two or three and surprise your friends, who don't understand that government involvement in health care is destroying affordable health care, with a gift that keeps on giving. There are other excellent recent titles you may want to consider.

For Next month, read Part III: Chapter 5 – Tax Policy and Health Care

To read some of the other book reviews that are available, please go to

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10.  Hippocrates & His Kin: Medicare Part D: Drug Benefit Program

The Medicare Drug Benefit Program (MDBP) has gotten off to a rocky start and appears to be very complicated. Patients aren’t sure if they want to join. One patient came up with a recipe for success: Take your age, divide by your height, multiply times your weight, divide by your lipids, multiply times your blood pressure, subtract the number of donuts you eat per day, and add in your income, and subtract the square root of your taxes. If you come up with a number, any number, you qualify.

Just as we thought: It doesn’t help the current generation but eliminates income for our children.

Hospital Chief Of Staff Which Formerly Was a Sought After Position But Now Is a “No Win” Position

Psychiatrist to the patient on his couch: You must get over this fear of doctors.

Patient: But why?

Psychiatrist: Because you’re the hospital’s chief of staff. (after Benita Epstein)

To read more HHK Vignettes, go to - July/August%201998.

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11.  Organizations for Restoring Accountability in HealthCare, Government and Society:


                      The National Center for Policy Analysis, ( John C Goodman, PhD, President, who along with Devon Herrick wrote Twenty Myths about Single-Payer Health Insurance, which was reviewed in this newsletter during our first twenty months. John C Goodman, Gerald R Musgrave and Devon Herrick, have recently published Lives at Risk. Read a chapter at Read a review at You may log on at and register to receive the weekly Health Policy Digest, a health summary of the full NCPA daily report, Executive Alerts, New NCPA publications, and a number of other fine reports. Be sure to visit their new Consumer Driven Health Care website at for the latest on Market Competition Improving Quality while reducing costs and the value of Medical Research. Read a brief history by the father of the Health Savings Accounts, Dr John Goodman, which started two years ago this month:

                      Pacific Research Institute, ( Sally C Pipes, President and CEO, John R Graham, Director of Health Care Studies, publish a monthly Health Policy Prescription newsletter, which is very timely to our current health care situation. You may subscribe at or access their health page at This month, be sure to read Sally Pipes on Health Savings Accounts which put the insurance back into health insurance:

                      The Mercatus Center at George Mason University ( is a strong advocate for accountability in government. Maurice McTigue, QSO, a Distinguished Visiting Scholar, a former Member of Parliament and cabinet minister in New Zealand, is now director of the Mercatus Center’s Government Accountability Project. Susan E Dudley, Director of the Regulatory Program and Adjunct Professor at George Mason University has just coauthored Primer on Regulation, which can be downloaded at This is a significant document that helps understand regulations and how to tell if they do more harm than good. If you’re strapped for time, at least read the executive summary at the beginning.

                      The National Association of Health Underwriters, The NAHU's Vision Statement: Every American will have access to private sector solutions for health, financial and retirement security and the services of insurance professionals. There are numerous important issues listed on the opening page.  Be sure to scan their professional journal, Health Insurance Underwriters (HIU), for articles of importance in the Health Insurance MarketPlace. The HIU magazine, with Jim Hostetler as the executive editor, covers technology, legislation and product news - everything that affects how health insurance professionals do business. Be sure to review the current articles listed on their table of contents at

                      The Galen Institute, Grace-Marie Turner President and Founder, has a weekly Health Policy Newsletter sent every Friday to which you may subscribe by logging on at Be sure to read her latest report on the Drug Benefit and now AARP’s support for it at

                      Greg Scandlen, an expert in Health Savings Accounts (HSAs) has embarked on a new mission: Consumers for Health Care Choices (CHCC). To read the initial series of his newsletter, Consumers Power Reports, go to To join, go to 

                      The Heartland Institute,, publishes the Health Care News, Conrad Meier, Managing Editor Emeritus until his untimely death last year. Be sure to look over the "Health Care Suite" of columns and articles at

                      The Foundation for Economic Education,, has been publishing The Freeman - Ideas On Liberty, Freedom’s Magazine, for over 50 years, with Richard M Ebeling, PhD, President, and Sheldon Richman as editor. Having bound copies of this running treatise on free-market economics for over 40 years, I still take pleasure in the relevant articles by Leonard Read and others who have devoted their lives to the cause of liberty. I have a patient who has read this journal since it was a mimeographed newsletter fifty years ago. This month, read a very timely article on State Subsidy to Private Schools: A Case History of Destruction by John Chodes:

                      The Council for Affordable Health Insurance,, founded by Greg Scandlen in 1991, where he served as CEO for five years, is an association of insurance companies, actuarial firms, legislative consultants, physicians and insurance agents. Their mission is to develop and promote free-market solutions to America's health-care challenges by enabling a robust and competitive health insurance market that will achieve and maintain access to affordable, high-quality health care for all Americans. “The belief that more medical care means better medical care is deeply entrenched . . . Our study suggests that perhaps a third of medical spending is now devoted to services that don’t appear to improve health or the quality of care–and may even make things worse.” Be sure to read the Trends in Mandated Benefits, the first in a new series, to find out what it costs when the state requires you purchase health insurance benefits you’ll never need:

                      The Health Policy Fact Checkers is a great resource to check the facts for accuracy in reporting and can be accessed from the preceding CAHI site or directly at This week, read the Daily Medical Follies: “Woeful Tales from the World of Nationalized Health Care” at

                      The Independence Institute,, is a free-market think-tank in Golden, Colorado, that has a Health Care Policy Center, with Linda Gorman as Director. Be sure to sign up for the monthly Health Care Policy Center Newsletter at  Read her latest newsletter, give them more money and they will spend it at

                      Martin Masse, Director of Publications at the Montreal Economic Institute, is the publisher of the webzine: Le Québécois Libre. Please log on at to review his free-market based articles, some of which will allow you to brush up on your French. You may also register to receive copies of their webzine on a regular basis. This month, read Take A Bite Out Of Organized Crime - Eliminate Drug Laws by Bradley Doucet at  

                      The Fraser Institute, an independent public policy organization, focuses on the role competitive markets play in providing for the economic and social well being of all Canadians. Log on at for an overview of the extensive research articles that are available. You may want to go directly to their health research section at The current report by Nadeem Esmail, “Pain and Suffering, Guaranteed,” is an analysis of what the medical profession agrees is a reasonable wait, e.g. 12 weeks for a knee or hip replacement vs. the Provinces Benchmark of one-half year at

                      The Heritage Foundation,, founded in 1973, is a research and educational institute whose mission is to formulate and promote public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values and a strong national defense. The Center for Health Policy Studies supports and does extensive research on health care policy that is readily available at their site. This month, be sure to download the 12th Annual Index of Economic Freedom. The higher the score on a factor, the greater the level of government interference in the economy of the 161 countries reviewed and the less economic freedom a country enjoys. The scores of 99 countries are better, the scores of 51 are worse, and the scores of five are unchanged. Of the 157 countries numerically graded in the 2006 Index, 20 are classified as "free," 52 as "mostly free," 73 as "mostly unfree," and 12 as "repressed." The U.S. having slipped, is now back into the top ten. Read the Executive Summary at

                      The Ludwig von Mises Institute, Lew Rockwell, President, is a rich source of free-market materials, probably the best daily course in economics we’ve seen. If you read these essays on a daily basis, it would probably be equivalent to taking Economics 11 and 51 in college. Please log on at to obtain the foundation’s daily reports. You may find this week's report, “The Make-Believe World of Central Banking,” written by Thorsten Polleit to understand inflation at You may also log on to Lew’s premier free-market site at to read some of his lectures to medical groups. To learn how state medicine subsidizes illness, see; or to find out why anyone would want to be an MD today, see Review the latest article on California’s Spendinator: California is de facto bankrupt. The state has many billions in deficits, the exact amount not clearly known because the figures are so politicized and the accounts so inherently messed up. So how does our Terminator Governor propose getting us out of debt? By borrowing at least $222 billion more and spending our way out – of course. Read the entire report by Jack Douglas at 

                      CATO. The Cato Institute ( was founded in 1977 by Edward H. Crane, with Charles Koch of Koch Industries. It is a nonprofit public policy research foundation headquartered in Washington, D.C. The Institute is named for Cato's Letters, a series of pamphlets that helped lay the philosophical foundation for the American Revolution. The Mission: The Cato Institute seeks to broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets and peace. Ed Crane reminds us that the framers of the Constitution designed to protect our liberty through a system of federalism and divided powers so that most of the governance would be at the state level where abuse of power would be limited by the citizens’ ability to choose among 13 (and now 50) different systems of state government. Thus, we could all seek our favorite moral turpitude and live in our comfort zone recognizing our differences and still be proud of our unity as Americans. To obtain their latest book on Downsizing the Federal Government by Chris Edwards, go to  Michael F. Cannon is the Cato Institute's Director of Health Policy Studies. Read his bio at Michael F Cannon and Michael D Tanner have recently written Healthy Competition – What's Holding Back Health Care and How to Free It. Read a portion of Chapter 4 by clicking on Book Reviews at the left. Order your copy at the Cato Bookstore.

                      The Ethan Allen Institute,, is one of some 41 similar but independent state organizations associated with the State Policy Network (SPN). Click on the link at the left. The mission is to put into practice the fundamentals of a free society: individual liberty, private property, competitive free enterprise, limited and frugal government, strong local communities, personal responsibility, and expanded opportunity for human endeavor. If you still think that government subsidies help, you might want to read “Amtrak's Waste Is Being Rewarded - More taxpayer money given to dismal failure” by Adam Summers at Amtrak’s debt continues to climb and is now at $4 Billion.

                      The Free State Project, with a goal of Liberty in Our Lifetime,, is an agreement among 20,000 pro-liberty activists to move to New Hampshire, where they will exert the fullest practical effort toward the creation of a society in which the maximum role of government is the protection of life, liberty, and property. The success of the Project would likely entail reductions in taxation and regulation, reforms at all levels of government to expand individual rights and free markets, and a restoration of constitutional federalism, demonstrating the benefits of liberty to the rest of the nation and the world. [It is indeed a tragedy that the burden of government in the U.S., a freedom society for its first 150 years, is so great that people want to escape to a state solely for the purpose of reducing that oppression. We hope this gives each of us an impetus to restore freedom from government intrusion in our own state.]

                      Hillsdale College, the premier small liberal arts college in southern Michigan with about 1,200 students, was founded in 1844 with the mission of “educating for liberty.” It is proud of its principled refusal to accept any federal funds, even in the form of student grants and loans, and of its historic policy of non-discrimination and equal opportunity. The price of freedom is never cheap. You may log on at to register for the annual weeklong von Mises Seminars, held every February, or their famous Shavano Institute. Congratulations to Hillsdale for its national rankings in the US News College rankings. Please log on and register to receive Imprimis, their national speech digest that reaches more than one million readers each month. This month, let’s join Hillsdale in Barcelona during their Mediterranean Cruise last October where José María Aznar, the former Prime Minister of Spain, delivered the current Imprimis speech: The Choices Facing Europe. The last ten years of Imprimis are archived at

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Stay Tuned to the MedicalTuesday.Network and Have Your Friends Do the Same

Please note: Articles that appear in MedicalTuesday may not reflect the opinion of the editorial staff.


Del Meyer

Del Meyer, MD, Editor & Founder

6620 Coyle Ave, Ste 122, Carmichael, CA 95608

Words of Wisdom

Mark Twain, (1866): Courage is the resistance to fear . . . not absence of fear.

Abraham Lincoln: It often requires more courage to dare to do right than to fear to do wrong.

Winston Churchill: Courage is what it takes to stand up and speak.

Some Recent Postings

THE TIPPING POINT - How Little Things Can Make a Big Difference by Malcolm Gladwell.

Madeleine Pelner Cosman, PhD, Esq: Letter from Osama: KATRINA, OSAMA, AND PREEMPTIVE SURRENDER TO DISASTER.

BIOTERRORISM: How You Can SURVIVE by Russell L Blaylock, MD, Physicians Preference, Inc.(

In Memoriam

VIENNA, Austria (AP) - Dr. Heinrich Gross, a psychiatrist who worked at a clinic where the Nazis killed and conducted cruel experiments on thousands of children, died Dec. 15, his family announced . . . He was 90.

Gross, who was implicated in nine deaths as part of a Nazi plot to eliminate "worthless lives," had escaped trial in March after a court ruled he suffered from severe dementia. No cause of death was given in a brief statement issued by his family.

Gross was a leading doctor in Vienna's infamous Am Spiegelgrund Clinic. Historians and survivors of the clinic had accused him of killing or taking part in the clinic's experiments on thousands of children deemed by the Nazis to be physically, mentally or otherwise unfit for Adolf Hitler's vision of a perfect world.

[What will happen to the doctors today that are involved in perinatal killing and the killing of the infirmed and aged who are deemed to have “worthless lives,” under the euphemistic term of euthanasia?  How did we ever get to this place in our own history without a Hitler?]

On This Date in History – January 10

On This Date in 1738, Ethan Allen, the Revolutionary War Commander, was born. When he demanded the surrender of Fort Ticonderoga, it is said he did so “In the name of the great Jehovah and the Continental Congress.” He regarded himself as an instrument of a Supreme Being next to which the Continental Congress took second billing. How about putting our Congress in second place?

On This Date in 1901, Oil was discovered in Beaumont, Texas, which revolutionized the energy of the world. The rest is history.