Physicians, Business, Professional and Information Technology

 Networking to Restore Accountability in HealthCare & Medical Practice

 Tuesday, October 14, 2003

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In This Issue:
1. Accountability Is Key to Progress, Not Only in Government, but Also in HealthCare
2. Our Monthly Review of the Twenty Myths of National Health Insurance
3. Medical Gluttony or Excessive HealthCare Costs
4. The MedicalTuesday.Network for Restoring Accountability in HealthCare & Government

There are proposals in Congress and many of the state legislatures for a government takeover of health care. An expert who has seen this first hand in two countries provides a global view of what happens when governments take over a program–any program.

Maurice McTigue, QSO, a Distinguished Visiting Scholar from New Zealand, and now Director of the Mercatus Center’s Government Accountability Project reports last week, “I saw first-hand just how big a difference market-oriented reforms can make. Back in 1980s, my country was in very bad shape. New Zealand had one of the most socialized economies in the developed world, and was crippled by debt, excessive regulations, inflation, and high taxes . . .  We instituted market-based reforms that brought true accountability and responsibility to government. These changes weren’t easy, but they proved very successful.

New Zealand was able to:
• move two-thirds of its bureaucrats to the private sector;
• privatize billions of dollars of government assets;
• foster the best regulatory climate of any Western nation; and
• create a simpler, fairer tax system.”

He feels fortunate to have been a Cabinet Minister and a member of the Parliament of New Zealand that applied business principles of accountability to government. “Results, not noble intentions,” he states, “should drive policymakers.” (MedicalTuesday supports these same principles and their application to health care.)

He commends President Bush for cutting taxes and reminds us that New Zealand cut its tax rates by 50 percent and eliminated peripheral taxes thereby producing a 20 percent increase in revenues.Russia dropped its whole income tax system and instituted a new 13 percent flat tax resulting in a 50 percent revenue increase. After struggling with budget deficits that spanned two decades, Ireland created a budget surplus when it dramatically slashed tax rates. (Steve Forbes, in a recent editorial in Forbes, pointed out that if China proceeds with its flat tax proposal, the majority of the world will have eliminated the progressive anti-business, anti-growth income tax in favor of his long recommended flat tax.)

Mr McTigue reports that there is a great deal of change happening in our federal government right now. He is working tirelessly with enlightened members of Congress and testifying before committees concerning the “Results Act,” passed by Congress in the last decade and only recently implemented. (In order to receive the necessary votes to pass the “Results Act,” powerful members of Congress required a “hands off” their favorite programs until after they left office. This delayed implementation of the “Results Act” for about six years.) He feels that President Bush’s utilization of the Mercatus “Outcome Based Scrutiny” has been implemented in 20 percent of government programs already. It was no surprise and quite disturbing that 56 percent of the government programs examined couldn’t produce any information that identified whether they did good, harm or something in between. (The proponents for a Single-Payer or Socialized Medicine program are also unable to produce any information that identifies good results.)

He suggests that members of Congress apply the same cost/benefit analysis before commissioning any new activity. He recommends using the same five questions he used in New Zealand:
• Show me the evidence that a problem really exists.
• Show me evidence this government activity will solve this problem.
• Show me how much this activity will cost.
• Show me how much the benefit will be that will arise from solving this problem.
• Tell me the date the problem will have been eliminated and we’ll no longer have to spend on it.

McTigue says that asking these types of questions helps solve some of the inherent failures in government–that government activities are commenced without evidence a real problem exists, and seldom if ever are these problems solved.

Therein lies the first step in solving the health care dilemma in the U.S. and throughout the world. A bipartisan effort to truly discuss and answer these five questions would eventually lead to patient accountability in health care.

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National HealthCare Systems in the English-speaking World (No 18)
In his recent update of the “Twenty Myths about National Health Insurance,” John C Goodman, PhD, president of the National Center for Policy Analysis (www.ncpa.org), states that ordinary citizens lack an understanding of the defects of national health insurance and all too often have an idealized view of socialized medicine. For that reason, Goodman and his associates have chosen to present their information in the form of rebuttal to commonly held myths. See previous issues or the archives at www.MedicalTuesday.net for the summary of the first seventeen myths or www.ncpa.org for the original 21 chapters of the book, along with the well-annotated references.

Myth Eighteen:    Single-Payer Health Insurance Would Reduce the Cost of Prescription Drugs for Americans.

Advocates of single-payer insurance maintain that it would “simultaneously address two pressing needs: (1) providing all Americans with full coverage for necessary drugs and supplies, and (2) containing drug costs.” It would accomplish this by establishing a national formulary (a list of approved drugs) and negotiating prices of those drugs with manufacturers “based on their costs (excluding marketing or lobbying).”

The idea has appeal to many Americans faced with high prescription drug costs. However, people in countries with single-payer systems of national health insurance do not have free access to a wide range of drugs and, increasingly, many new, more effective drugs. Further, although some drugs cost less in other countries, others cost much more than in the United States. On the whole, prescription drug prices in countries with national health insurance are comparable to U.S. prices, despite stringent rationing of availability.

Do Britons and Canadians Get the Same Drugs for Less Money? Some drugs cost less in Canada, but others do not. For example, the anti-hypertensive drug atenolol costs four times as much in Canada as in the United States. Although many patented drugs are less expensive in Canada, the average retail price for generic drugs is higher. Large numbers of Americans cross the border to Canada to buy drugs that cost less. But large numbers of Canadians travel to the United States to buy drugs because so many drugs are not available in Canada.

Canada tries to control costs through a lengthy approval process for pharmaceuticals. From 1994 through 1998, the federal government approved only 24 of 400 drugs considered, ruling that the rest were not substantial improvements over their predecessors. In addition, each of Canada’s 10 provinces has a review committee that must approve the drug for that province’s formulary.

When a prescription drug is approved, the Patented Medicines Price Review Board negotiates a price with the pharmaceutical company. As a rule, the board will not approve a price for a new drug that is any higher than the most expensive existing drug used to treat the same condition. Still, price controls have had questionable success. A University of Toronto study concluded that their main effect had been to limit patients’ choices, causing them to rely more on hospitals and surgery.

Many drugs found in the United States are simply not available in Britain. Each local health authority often decides which drugs are placed on their formulary based on a limited budget. Those drugs thought to be too expensive are often left off the list. In many cases, budget restrictions created by the NHS have denied patients the best drug therapy. For example:

Dr. Edward Newlands, the British doctor who co-developed the brain cancer drug Temodal, cannot prescribe it to his own patients.

Fewer than one-third of British patients who suffered a heart attack had access to beta-blockers (used by 75 percent of patients in the United States) despite the fact that post- heart attack use of the drug has been documented to reduce death by 20 percent.

Are Prescription Drug Prices Lower in Other Countries? Comparing prices across countries is complicated. Pharmaceutical companies, like makers of other products, charge different prices in different countries. The top-selling drugs in one country are not the top sellers in other countries, so one cannot simply compare top sellers.

Economist Patricia Danzon of the Wharton School at the University of Pennsylvania examined some well-publicized studies of international price comparisons of pharmaceuticals and concluded that their findings of very large price differences between the United States and other industrial countries were based on flawed methodology. Professor Danzon conducted her own comparison, attempting to control these complicating factors. She determined manufacturers’ prices of drugs, including generic drugs, in the United States and eight other countries, and converted the weights of each product to U.S. measures. Depending on the country and the drugs available, she compared from 187 to 484 products. She found that average prices of prescription drugs were comparable to or higher than the U.S. prices in Canada, Germany, Sweden and Switzerland, and lower than the U.S. prices in France, Italy, Japan and the U.K.

How Successful Are Controls at Holding Down Drug Spending? Apparently not very, despite the fact that countries with single-payer systems try to limit both price and availability.  When per capita spending is adjusted for differences in the value of currency from country to country (what economists call “purchasing power parity”):

Germany spends $335 and France $309 per capita on prescription drugs each year, compared to the United States’ $291.

Spending in Italy ($271) and Canada ($255) is only slightly less than in the United States.

Although price controls and cost-containment programs are generally ineffective in holding down drug spending, they do have a substantive impact on research and development spending. Countries with less money to reinvest in R&D have seen their pharmaceutical industries decline or go abroad. The United States, which has no widespread price controls on drugs, produces by far the most innovative drugs.

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Unintentional Increase in the Cost of HealthCare
In this section, we cite examples of excessive health care costs, frequently bordering on Medical Gluttony. Many cases of excess are not simple. Many are not caused by the patients. For instance, we’ve been caring for an asthmatic patient for the past 33 years. Her asthma was very severe, requiring close attention at times. When her husband died, her medical needs increased sharply–not because of her asthma, but because of the lack of understanding by relatives  now assisting in her care. Every time she struggled to breathe (a daily and continuous process for the past 33 years), they took her to the emergency room. Previously, her husband was able to help her take her breathing pills, begin the antibiotic if her bronchitis recurred, help with her inhalation therapy treatments, increase the dose of steroids for exacerbations, and otherwise be present as a calming effect on her existence. In the last three months, she’s had more emergency room visits than she had for disease exacerbation in the past three years. This 12-fold increase in cost of care has now been brought under control by the family; it could not have been managed efficiently by a single-payer, universal health care socialized medicine system. It would be cruel and inhumane to take away patient accountability from the family.

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MedicalTuesday Recommends the Following Organizations for Their Efforts in 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 we review in this newsletter monthly, issues a weekly Health Policy Digest, a health summary of the full NCPA daily report. You may log onto www.ncpa.org and register to receive one or more of these reports. This week be sure to read how welfare reform has reduced dependency in the US by 46 percent and in Canada by 38 percent since 1994.  Sylvia LeRoy and Jason Clemens state that if the objective of welfare reform is to rein in the welfare state, not empower it, the next step is to greater decentralization. See http://www.ncpa.org/pub/ba/ba457/

The Mercatus Center at George Mason University is a strong advocate for accountability in government. Nobel Laureate Vernon L Smith, PhD, who has joined the Economics faculty, is currently visiting Alaska doing a cyberspace study in economics. Please log on at www.mercatus.org to read the government accountability reports–their fourth annual Performance Report Scorecard by author Maurice McTigue, QSO, a Distinguished Visiting Scholar, a former member of Parliament and cabinet minister in New Zealand, and now director of the Mercatus Center’s Government Accountability Project. See item one above concerning his most recent and important report to the membership.

The Galen Institute, Grace-Marie Turner President and Founder, has a weekly Health Policy Newsletter to which you may subscribe by logging onto their website at www.galen.org. The politics of Medicare reform become more complex by the day but always are driven by deep and still-unresolved ideological fissures. The question that is always at the center of the debate over health care in this country is whether government or individuals should be in charge of managing resources and making decisions. This week, Grace-Marie puts it all in perspective in “Trends in the Health Insurance Marketplace.” To see this eye opener slide presentation, go to  http://www.galen.org/news/Iowa.pdf.  If you don’t have ten minutes to study the entire fifty slides, you owe it to yourself, your family and your country to take 66 seconds to look at the first 22 slides.

Greg Scandlen, Director of the “Center for Consumer-Driven Health Care” at the Galen Institute, has a Weekly Health News Letter: Consumer Choice Matters. You may subscribe to this informative and well-outlined newsletter that is distributed every Tuesday, or read this year’s issues by logging onto www.galen.org and clicking on Consumer Choice Matters archives. This is the flagship publication of Galen's new Center for Consumer-Driven Health Care and is written by its director, Greg Scandlen. This week, be sure to read Consumers Choice in Medicare wherein Greg Scandlen presents his research on Medicare (only pays 50 percent of senior health care), projected cost increases, how consumer empowerment is growing, and his lessons for Medicare reformers. Read the full report at  http://www.galen.org/news/Consumer_Choice_In_Medicare.pdf.  If you only have 90 seconds, at least read Greg’s conclusions.

The Council for Affordable Health Insurance (www.cahi.org), 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. They provide educational materials for consumers, legislators, employers and other interested parties. 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. A How-to Manual for Modernizing Medicare can be found at http://cahionline.org/cahi_contents/resources/MedicareHowTo.pdf. If you don’t have time to read the entire nine-page Manual, there’s a two-minute executive summary for a quick overview that can be found at http://cahionline.org/cahi_contents/resources/MedicareHowToSummary.pdf.

• Last month we introduced the Independence Institute, www.i2i.org, a free-market think tank in Golden, Colorado, which has a Health Care Policy Center with Linda Gorman as Director. Ms Gorman is a Senior Fellow, a freelance writer and researcher who was a weekly columnist for the Colorado Daily in Boulder. Her articles have appeared in local newspapers, professional journals and publications such as The Fortune Encyclopedia of Economics. She has worked as an economic researcher for a Denver mutual fund company, and was an adjunct professor and a principal investigator for several military manpower projects at the Naval Postgraduate School in Monterey, California. Her academic degrees are in economics. Review her health care archives at http://www.i2i.org/author.aspx?AuthorID=7. Be sure to sign up for the monthly Health Care Policy Center Newsletter at http://www.i2i.org/HCPCBulletinJoin.aspx.

Martin Masse, Director of the Montreal Economic Institute, is the publisher of the webzine: Le Québécois Libre. Please log on at www.quebecoislibre.org/apmasse.htm to review his free market-based articles, some will allow you to brush up on your French. You may also register to receive copies of his webzine on a regular basis. This week they present the Austrian School of liberal economics as expounded by Mises and Rothbard in Le Monde of the Molinari Institute.  Mises had made himself known in academic circles in 1920, through an article that demonstrated the impossibility of a socialist economy avoiding total bankruptcy. Thus one might now say that Mises was the very first to foresee the fall of the Berlin Wall. The reasoning is simple: all planning involves economic calculations that can be based only on real prices. But real prices can proceed only from voluntary exchanges. Such exchanges require that those doing the exchanging are the owners of what they exchange. In a socialist economy, however, production goods are collectivised. Thus, no real price can arise from exchanging them, and consequently no economic calculation is possible, and errors of investment are inevitable. The article of 1920 had sparked an enormous debate, because many economists, even non-socialist ones, believed that economic calculation in a collectivist economy was possible. (This idea was illustrated last week by my attorney patient who was hospitalized in Sweden last summer for two days for pneumonia. He paid the $2,000 with his VISA card and asked for an itemized statement so he could present it to Blue Cross for reimbursement. He was told that they had never done that before. It took them two months to figure out how to itemize his treatment. In Socialized or Single-Payer HealthCare, no one knows the value of any Health Care item. No wonder gluttony exceeds needs by 100 to 1000 percent unless rationing is forced through waiting in queues or reducing diagnostic tests or pharmacy formularies.)

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. This information is readily available at their site, http://www.heritage.org/Research/HealthCare/ or you can read the current Medicare Maladies at  http://www.heritage.org/Research/HealthCare/mm61.cfm.  You may email topics to your friends or receive regular updates.

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 www.mises.org to obtain the foundation’s daily reports. This week, Jeffrey Cleveland writes on the Nobel prize in economics which was not authorized by Alfred Nobel, but started by the Bank of Sweden 70 years later. Cleveland says that white-coated scientists always harp on social scientists as to why we aren't real scientists: The things they discover stay discovered. But we economists keep changing our minds. You know that if you laid all the economists in the world end to end, they still wouldn't reach a conclusion. (Or as a friend of his said: If you laid all the economists in the world end to end, you should leave them there.) Read the interesting story at http://www.mises.org/blog.asp. You may also log onto Lew’s premier free-market site at  www.lewrockwell.com to read some of his lectures to medical groups. To learn how state medicine subsidizes illness, see http://www.lewrockwell.com/rockwell/sickness.html.

CATO. The Cato Institute was founded in 1977 by Edward H. Crane, along with Charles Koch of Koch Industries. It is a non-profit 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. Toward that goal, the Institute strives to achieve greater involvement of the intelligent, concerned lay public in questions of policy and the proper role of government. Tom Miller, who spoke to the AAPS membership last month, is the Director of Health Care Studies which can be accessed at  http://www.cato.org/healthcare/index.html.

The Ethan Allen Institute is one of some 41 similar but independent state organizations associated with the State Policy Network. 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. Please see http://www.ethanallen.org/index2.html. Click on “links” to see the other 41 free-market organizations throughout the U.S. and Canada, including The Heartland Institute that this week highlights Illinois’ push for universal or single-payer health care. Read the issues at http://www.heartland.org/Article.cfm?artId=12911.  It’s already Universal according to Dr. William Dam, an Illinois physician and member of the Illinois State Republican Central Committee. Dam said he opposes the legislation and hopes key Republicans and conservative Democrats will work against passage of the bill in the senate. Dam said that in a sense, Illinois and the rest of the nation already have universal care by requiring hospitals and doctors to provide treatment to persons who need emergency care. He pointed to a colleague who recently performed surgery on an uninsured man who showed up in a hospital emergency room with life-threatening peritonitis, the result of a burst appendix. “This was a complex surgery, followed by at least a week in the hospital with intravenous antibiotics,” Dam said. “That doctor will get paid not one dollar. There is universal health care. People like this show up for treatment, we provide it and then eat the cost.”

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 onto www.hillsdale.edu to register for the annual week-long von Mises Seminars, held every February, or their famous Shavano Institutes. Please log on and register to receive Imprimis, their national speech digest that reaches more than one million readers each month. This month read Herbert E Meyer, Founder and President, Real-World Intelligence, Inc http://www.hillsdale.edu/imprimis/default.htm.  He has also written The War Against Progress and Hard Thinking. He has also produced a new video entitled The Siege of Western Civilization. The last ten years of Imprimis are archived at http://www.hillsdale.edu/imprimis/archives.htm.

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URL References for your perusal or study at leisure. You may want to Bookmark these or add to your Favorites.

HealthPlanUSA Quarterly Newsletters
January Newsletter:  http://www.medicaltuesday.net/Dec3102.htm
April Newsletter:   http://www.medicaltuesday.net/Apr2903.html
July Newsletter:    http://www.medicaltuesday.net/July2903.html
October Newsletter:  http://www.healthplanusa.net/October2003.htm

Single-Payer Initiatives:  http://www.healthcarecom.net/EditorialNov94.html

David Gibson, MD, National Health Care Consultant: http://www.healthplanusa.net/DavidGibson.htm
Single Payer: http://www.healthplanusa.net/DGSinglePayer.htm
Why are the uninsured, uninsured: http://www.healthplanusa.net/DGUninsured.htm
What’s behind health care costs: http://www.healthplanusa.net/DGRisingHealthCareCosts.htm
Pharmacy costs: http://www.healthplanusa.net/DGPharmacyCosts.htm

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Tammy Bruce: The Death of Right and Wrong (Understanding the difference between the right and the left on our culture and values.)  Reviewed by Courtney Rosenbladt http://www.townhall.com/bookclub/bruce.html

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

Del Meyer, MD, CEO & Founder

"Experience should teach us to be most on our guard to protect liberty when the government's purposes are beneficial. Men born to freedom are naturally alert to repel invasion of their liberty by evil minded rulers. The greater dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding."
--Justice Louis Brandeis, in Olmsstead v. United States, 1928