Of Physicians and the Business & Professional Community

 The Dialogue, Discussion, and Debate of Medical Practice Issues Worldwide

Tuesday, May 14, 2002

How Does the Medical Market Work?
It is clear from the email responses, a lot of us are having difficulty fathoming how private market-based medicine can be more cost efficient. Aren’t the insurance carriers and HMOs getting the price of drugs and office calls and operations and hospital stays as low as possible? Let’s take a brief look at pharmaceutical cost savings.

We saw a disabled COPD patient with Medicare coverage who obtained pharmacy benefits by being insured under his wife's HMO policy.  When her multiple sclerosis finally precluded her working, he asked his pharmacist for an estimate of the cost of his medications since he would be paying for them in thirty days when his wife's insurance coverage would be terminated. He found the cost to be $600 per month. Since his social security disability income was about $800, he asked me if I could rearrange his medications to reduce the costs. After going through his medication profile, we wrote prescriptions for generic or other alternative medications which we thought would have the best cost-benefit ratio and would do an equally good job of managing his lung and related disease. He returned to thank me saying that he was doing well and we had reduced his medication costs from $600 to $200 per month – a 67 percent reduction. Thus the HMO, whose entire existence was based on reducing health care costs, was still three times more expensive that the private medical marketplace.

This past month I had a similar experience. My non-HMO drug benefit plan stated that I had reached the yearly allocation of my prescription medications. I obtained an estimate of $1000 per quarter for brand names which only reduced to $900 for the available generic equivalents. Recalling the recent reports that some brand names are cheaper than their generic equivalents because of the network of special discounts that the HMOs (corporate socialized medicine) and government forces on pharmaceutical houses which distorts the marketplace, I thought I would price previous generation generic equivalents, e.g. use a standard ACE inhibitor rather than an Angiotensin II receptor antagonist. This brought the cost down to $225 a quarter – a 75 percent further reduction. This is still a higher level of health care than 95 percent of the world enjoys. Thus the insured costs were still four times more expensive than what the private marketplace could produce. There may be other factors including what market distortions Blue Cross itself may have procured or produced. But basically when we’re responsible for paying for a significant portion of anything, including our healthcare, we find ourselves satisfied with driving a Pontiac rather than a Cadillac unless we can divert other people's taxes or premiums for our personal benefit causing them to be bereft of some basic healthcare benefits.

Britain’s National Health Service
Greg Scandlen, of the National Center for Policy Analysis (NCPA), who favored us with his review of Canadian medicare four weeks ago, sent us an email that the official web site of the NHS which advises patients on how long they can expect to wait to get services states, "As an outpatient you can expect to wait no more than 26 weeks. . . . As an inpatient you can expect to wait no longer than 18 months. . . . If you are suffering from chest pain for the first time and your GP thinks this might be due to angina, you will be assessed in a specialist chest pain clinic within two weeks." Scandlen adds, “That is, assuming you aren't dead by then. I suppose death has the added benefit of reducing average waiting times.”

Fatal Medical Mistakes Under Socialized Medicine in Britain is on the increase. Death tolls due to medical errors in British public hospitals were five times higher last year than they were in 1990, according to a new report by the Audit Commission, a government watchdog group.

An author of the report estimates that the health service probably spends the equivalent of $725 million a year rehabilitating people who experienced an adverse incident or errors - and that doesn't include the human cost factor.

Delays in receiving treatment are often caused by a lack of equipment or poor use of equipment, says the report. For instance, there is a five-fold variation in the number of patients per MRI or CT scanner between hospitals. Some hospitals scan more patients with one MRI machine than others do with three or four.

Centralized planning obviously does not seem to improve efficiency as is touted, but actually reduces it which in turn increases costs. Since costs are a government budget item, extra costs has to delay care to other patients in order to remain within budget. This adds further to the waiting time.

State Medicine in France
Across the channel in France, where national health insurance covers more than 99 percent of the population, things are not any better. The government pays 70 percent of patients’ doctors' fees encouraging overuse and over prescribing. As a result, the French take more medicines than any people on earth. France has the highest rate of combined public and private health spending in Europe and the second-highest in the world. According to the NCPA, France is trying to overhaul its hideously expensive, complex and wasteful state hospital system. Despite endless attempts at reform, French health costs have soared relentlessly, surging at a real annual rate of more than 5 percent over 15 years, producing a deficit of $8 billion. The government plan to trim budgets and reduce inefficiencies has caused trade unions to plan strikes. Some hospital directors have been taken hostage.

I was unable to find any attempt to couple outpatient doctors’ visits without patient pharmaceutical, or laboratory, or x-ray costs. Thus a 30 percent patient co-pay for doctors was not able to reduce costs if all other aspects of outpatient medicine are fully covered by funds which the government takes away from taxpayers under threat of incarceration. If the 30 percent copay were added to these other outpatient costs, the marketplace would be brought into play and costs would be brought under control. Government administrative bureaucrats, who in general are hostile to doctors and their unions in most countries, are unable to think of such total overall strategies. Obviously, for then they would have little further to do.

Damaged Care, a Showtime movie. Watch for it on May 26, 2002.
Linda Peeno, MD,  who addressed the Association of American Physicians and Surgeons (AAPS) in October 1998 at Raleigh, North Carolina, regarding her experience working for managed care, was in Sacramento for the preview of the Showtime movie about her life story which chronicles her work with several HMOs and her moral struggles over denying care to patients which she never actually examined. She convinced herself that she was not denying care, only payment for care. National attention was drawn to her testimony in congress when she alleged that she had caused the death of a patient she never saw by her stamp: DENIED.  Her heartfelt story was well documented in the film. A review of the movie has been submitted by a fellow colleague on the editorial board of Sacramento Medicine. Hopefully the review will appear shortly. Meanwhile keep May 26 in your palmtop and sync it with your desktop and laptop.

Healthcare Compare
One of our  goals is to become acquainted with the various options in healthcare, not only in the United States, but around the world. It appears that what we have is far better than what any other country is experiencing. But to win this war against our patients and our profession, we must be ever vigilant, knowledgeable, and articulate in our arguments and share them with our WWW Internet Medical-Business-Professional community. Be sure to send this note to your friends or add their email to our list.

If you’re not interested in a market based private personal healthcare system, send an email to me DelMeyer@HealthPlanUSA.net. Last week we had our first request for removal from the MedicalTuesday.Network. A physician from New York, after reading the review of Code Blue, the story of Canadian Medicare, stated that all his friends and relatives in Canada liked their system. He did admit that they were all from the upper social strata and didn’t have to be in the trenches like the average Canadian. And therein lies the rub. We can be for “Medicaid for all” as long as we and our loved ones have better and more timely benefits.

Always remember that Chancellor Otto von Bismarck, the father of socialized medicine in Germany, recognized in 1861 that a government gained loyalty by making its citizens dependent on the state by social insurance. Thus socialized medicine, or any single payer initiative, was born for the benefit of the state and of a contemptuous disregard for people’s welfare.

Stay Tuned to the MedicalTuesday.Network twice a month and have your business and professional friends do likewise. The life you save may be your own - after you become a patient.

Del Meyer, MD