Archive for July, 2009

Climate change, but which way ?

Friday, July 31st, 2009

The NY Times today notices that this has been the coolest summer in decades. I wonder what that’s about ?

Not one 99-degree day in Central Park. Not a single day that the temperature even approached 90. For just the second time in 140 years of record keeping , the temperature will have failed to reach 90 in either June or July.

The daily average this month has been at or below normal every day but two. The temperature broke 80 on 16 days in New York — one more day than in Fairbanks, Alaska. Depending on Friday’s high, this will be the second or third coolest June and July recorded in New York. If August follows the same pattern — and the latest forecast through midmonth predicts that it will — this could be the coolest summer on record.

Of course, we have to dismiss any effect on you-know-what.

William D. Solecki, a geography professor at Hunter College of the City University of New York and co-chairman of a mayoral panel on climate change, warned that this summer’s unusually mild temperatures should not buoy global warming skeptics.

“Ask them to visit Seattle,” he said, where a record temperature of 103 was recorded on Wednesday.

Well, doesn’t this say something about the science of climate prediction ?

Scientists believe the shift is connected with the temperature of the oceans and their pattern of heating and cooling the atmosphere but, Mr. Gadomski said, “Our understanding of how a persistent pattern locks in isn’t very good.”

Oh, I thought they could predict the next 100 years !

A mini MBA

Friday, July 31st, 2009

I am not much of a businessman but I try to understand economics and the US economy, which is the best example of capitalism since 19th century Britain. I am concerned we are losing it and this article by T J Rodgers offers a sort of five minute version of an MBA course. Read it and the comments and you will have a better understanding of the US economy and what is happening.

Why are the Pharisees of Accounting in the U.S. trying so hard to destroy American business? Having crippled high tech entrepreneurship and made it nearly impossible for any U.S. company to ‘go public’, the people who set the rules of financial disclosure are now making corporate financials so obscure that investors literally have no way of knowing the financial condition of their companies.
In 2002, in reaction to Enron and other perceived corporate excesses of the Boom Congress passed the Sarbanes-Oxley Act. The Financial Accounting Standards Board (FASB) followed suit be revising its Generally Accepted Accounting Principles to make corporate accounting more transparent.

But in my experience, all that these new laws and regulation have done is make corporate finances more opaque – and is killing off the creation of new public companies in the United States.

Rodgers, aside from being a successful entrepreneur in a high tech business, was the first of the Dartmouth alumni to be nominated for the Board of Trustees by petition when the college ignored his wish to become more involved with his alma mater. He and three more petition nominees were elected before the college, dominated by left wing activists, changed the rules to try to ban other conservative board members.

Rodgers is the sort of capitalist we should be encouraging but the government seems intent on a sort of social democracy mediocrity for our future. Let’s hope it can be reversed starting with next year’s election.

Of course, fraud makes accounting harder, especially when government entities are doing it. You know, like Fannie Mae and Freddie Mac ?

In the case of the GSEs, analysts were indeed complicit in the fraud, in some cases because they really drank the kool-aid, some were lazy, and others were afraid – over the past 20 years one of the surest ways for an analyst to get called on the carpet was to make a negative comment about Fannie Mae, Freddie Mac, or AIG. AIG CEO Hank Greenberg would call the offending analyst himself and beat them into submission. Fannie and Freddie, however, would simply go through channels, threatening to reduce the amount of business allocated to the analyst’s firm. Mind you, this wasn’t in response to unjustified slanders on the company. I know of one analyst who received an extremely angry call from the Vice-Chairman of his firm (now a very senior Obama administration diplomat), threatening repercussions for the sin of suggesting to investors that, at a given point in time, Freddie Mac might be a more attractive investment than Fannie Mae.

Hope and Change.

An interesting post and my response

Wednesday, July 29th, 2009

UPDATE: A nice post from a drug researcher stimulated by this post.

Megan McArdle has an interesting post about health care today so I thought I would add some comments. The Atlantic registration system has defeated me on several occasions so I didn’t even try to add a comment. The comments, however, are almost as interesting.

Here goes:

Basically, for me, it all boils down to public choice theory. Once we’ve got a comprehensive national health care plan, what are the government’s incentives? I think they’re bad, for the same reason the TSA is bad. I’m afraid that instead of Security Theater, we’ll get Health Care Theater, where the government goes to elaborate lengths to convince us that we’re getting the best possible health care, without actually providing it.

This is exactly what has happened in Canada where the politically motivated system has provided free primary care, filling GPs waiting rooms with “worried well” and severely rationing expensive care for the really ill.

That’s not just verbal theatrics. Agencies like Britain’s NICE are a case in point. As long as people don’t know that there are cancer treatments they’re not getting, they’re happy. Once they find out, satisfaction plunges. But the reason that people in Britain know about things like herceptin for early stage breast cancer is a robust private market in the US that experiments with this sort of thing.

The US provides a similar service for Canada which no longer produces enough heart surgeons or neurosurgeons to supply the needs of the population. Some provinces have been paying for residents to receive heart surgery in US hospitals. Waiting for less urgent surgery is the standard in Canada. Breast cancer in Canada is even seeing the appearance of private clinics in spite of the fact that doctors working in such clinics cannot also participate in the national health plan. This is similar to US doctors dropping out of government plans like Medicare.

So in the absence of a robust private US market, my assumption is that the government will focus on the apparent at the expense of the hard-to-measure. Innovation benefits future constituents who aren’t voting now. Producing it is very expensive. On the other hand, cutting costs pleases voters this instant. This is, fundamentally, what cries to “use the government’s negotiating power” with drug companies is about. Advocates of such a policy spend a lot of time arguing about whether pharmaceutical companies do, or do not, spend too much on marketing. This is besides the point. The government is not going to price to some unknowable socially optimal amount of pharma market power. It is going to price to what the voters want, which is to spend as little as possible right now.

It’s not that I think that private companies wouldn’t like to cut innovation. But in the presence of even rudimentary competition, they can’t. Monopolies are not innovative, whether they are public or private.

The government Human Genome Project is an example. It was rudely awakened when entrepreneur Craig Venter began a private genome project that quickly got the results that would have taken the government project decades to obtain. I have several posts on Venter and his work.

Advocates of this policy have a number of rejoinders to this, notably that NIH funding is responsible for a lot of innovation. This is true, but theoretical innovation is not the same thing as product innovation. We tend to think of innovation as a matter of a mad scientist somewhere making a Brilliant Discovery!!! but in fact, innovation is more often a matter of small steps towards perfection. Wal-Mart’s revolution in supply chain management has been one of the most powerful factors influencing American productivity in recent decades. Yes, it was enabled by the computer revolution–but computers, by themselves, did not give Wal-Mart the idea of treating trucks like mobile warehouses, much less the expertise to do it.

In the case of pharma, what an NIH or academic researcher does is very, very different from what a pharma researcher does. They are no more interchangeable than theoretical physicists and civil engineers. An academic identifies targets. A pharma researcher finds out whether those targets can be activated with a molecule. Then he finds out whether that molecule can be made to reach the target. Is it small enough to be orally dosed? (Unless the disease you’re after is fairly fatal, inability to orally dose is pretty much a drug-killer). Can it be made reliably? Can it be made cost-effectively? Can you scale production? It’s not a viable drug if it takes one guy three weeks with a bunsen burner to knock out 3 doses.

Once you’ve produced a drug, found out that it’s active on your targets, and produced more than a few milligrams of the stuff, you have to put it into animals, then people. Does your drug do anything in animal studies? Does it do too much, like, say, killing the patient? How about humans? Oral dosing is just the start. Does your drug actually get somewhere after it’s swallowed, or do the stomach/liver chew it up? Is there any way to wrap it in a protective package long enough to let it reach its target? Do clinical trials show efficacy compared to placebo, or other drugs? How big is the market (in other words, how many people want it, how badly, and how much of an improvement is your drug)?

This is the stuff academic pharma doesn’t do, and as you can see, without it, you don’t have a drug; you have a theory. What the NIH does is supremely valuable. But so is all that “useless” effort at the pharmas.

Now, maybe government institutions could be made to produce innovations; I certainly think it’s worth trying Dean Baker’s suggestion that we should let the government try to set up an alternate scheme for drug discovery. Prizes also seem promising. But I want to see them work first, not after we’ve permanently broken the system. The one industry where the government is the sole buyer, defense, does not have an encouraging record of cost-effective, innovative procurement.

The prospect of Hitler getting the atomic bomb was probably the only reason why the Manhattan Project succeeded.

At this juncture in the conversation, someone almost always breaks in and says, “Why don’t you tell that to an uninsured person?” I have. Specifically, I told it to me. I was uninsured for more than two years after grad school, with an autoimmune disease and asthma. I was, if anything, even more militant than I am now about government takeover of insurance.

But you can also turn this around: why don’t you tell some person who has a terminal condition that sorry, we can’t afford to find a cure for their disease? There are no particularly happy choices here. The way I look at it, one hundred percent of the population is going to die of something that we can’t currently cure, but might in the future . . . plus the population of the rest of the world, plus every future generation. If you worry about global warming, you should worry at least as hard about medical innovation.

The other major reason that I am against national health care is the increasing license it gives elites to wrap their claws around every aspect of everyone’s life. Look at the uptick in stories on obesity in the context of health care reform. Fat people are a problem! They’re killing themselves, and our budget! We must stop them! And what if people won’t do it voluntarily? Because let’s face it, so far, they won’t. Making information, or fresh vegetables, available, hasn’t worked–every intervention you can imagine on the voluntary front, and several involuntary ones, has already been tried either in supermarkets or public schools. Americans are getting fat because they’re eating fattening foods, and not exercising. How far are we willing to go beyond calorie labelling on menus to get people to slim down?

It might help to be a bit more honest about the ethnic factors in the obesity epidemic. We are the only society in the history of the world in which obesity was a major problem for the poor.

These aren’t just a way to save on health care; they’re a way to extend and expand the cultural hegemony of wealthy white elites. No, seriously. Living a fit, active life is correlated with being healthier. But then, as an economist recently pointed out to me, so is being religious, being married, and living in a small town; how come we don’t have any programs to promote these “healthy lifestyles”? When you listen to obesity experts, or health wonks, talk, their assertions boil down to the idea that overweight people are either too stupid to understand why they get fat, or have not yet been made sufficiently aware of society’s disgust for their condition. Yet this does not describe any of the overweight people I have ever known, including the construction workers and office clerks at Ground Zero. All were very well aware that the burgers and fries they ate made them fat, and hitting the salad bar instead would probably help them lose weight. They either didn’t care, or felt powerless to control their hunger. They were also very well aware that society thought they were disgusting, and many of them had internalized this message to the point of open despair. What does another public campaign about overeating have to offer them, other than oozing condescension?

Of course, the obese aren’t the only troublesome bunch. The elderly are also wasting a lot of our hard earned money with their stupid “last six months” end-of-life care. Eliminating this waste is almost entirely the concern of men under 45 or 50, and women under 25. On the other hand, that describes a lot of the healthcare bureaucracy, especially in public health.

Once the government gets into the business of providing our health care, the government gets into the business of deciding whose life matters, and how much. It gets into the business of deciding what we “really” want, where what we really want can never be a second chocolate eclair that might make us a size fourteen and raise the cost of treating us.

I realize that to most people, these are airy-fairy considerations that should be overridden by the many “practical” considerations of the awesomenes of central health care. Well, I’m actually pretty underwhelmed by that awesomeness, for reasons I’ll happily elaborate elsewhere. But not here, because fundamentally, to me, the effect on the tax code and the relative efficiency of various sorts of bureaucracy are mostly beside the point. The real issue is the effect on future lives, and future freedom. And in my opinion, they way in overwhelmingly on the side of stopping further government encroachments into health care provision.

The comments on her blog are also very interesting.

Not all the fools are on the left.

Tuesday, July 28th, 2009

John Hood, at the Corner, makes the following statement:

At the same time, medical providers find it expedient to claim, also improbably, that cost inflation is mostly about services they don’t sell, or don’t sell to paying customers, rather than about services they sell too often at inflated prices to third-party payers.

The doctors who are dropping out of Medicare and electing to practice in “retainer practices” and other market settings would be willing to educate him about “inflated prices” but I’m not sure he would be willing to listen.

Medical prices are grossly distorted by the common practice, both of Medicare intermediaries and insurance companies, of boasting of “discounts” obtained while not revealing just how large those “discounts” really are. People complain about $50 aspirin tablets while not realizing that these stories are fiction. In the 1950s, hospitals billed by the day. Insurance companies demanded itemized billing which set off a wild scramble to quantify such intangibles as emergency room care which is a 24 hour per day service that usually runs at a great loss. At one time, emergency rooms were a loss leader, as were obstetric services. The theory was that patients who went to the emergency room or who had their babies at a hospital would become loyal customers for other services. When hospitals, whose accounting services are a hopeless tangle of incentives and hidden subsidies, tried to price services by the individual item, ridiculous “retail” prices resulted. Nobody pays those prices except the unlucky cash customer. The whole story of hospital finance has been distorted and the result is a series of fictions about health care costs.

Those who plan for a wholesale revamp of health care in this country by command and control will be in for a lot of surprises. They may be costly surprises. Some lefties even understand the risks of single payer. Some on the right seem to prefer blaming providers. Contradictions.

Do these people know something we don’t ?

Sunday, July 26th, 2009

The lobbyists are all on board with Obama’s health care reform. Why does this sound like bad news ?

“My gut is telling me that something major can pass because all the people who could kill it are still at the table,” said Ken Thorpe, chairman of health policy at Emory University in Atlanta. “Everybody has issues with bits and pieces of it, but all these groups want to get something done this year.” As a senior official at the Health and Human Services department in the 1990s, Thorpe was deeply involved in the Clinton administration’s failed effort.

This time, the health care industry groups see a strategic opportunity. As lawmakers squabble, the groups are focused on how to come out ahead in the end game.

Everybody but the patient will come out ahead. Doctors, of course, will get screwed but don’t ask the AMA. They are on board as their membership flirts with 20%.

This organization may be the reason the lobbyists are so interested. Obama seems to plan removing health care from the democratic system we have. Fuhrerprinzip I think they called it.

Another government health plan

Friday, July 24th, 2009

UPDATE: The House Blue Dogs stormed out of the committee meeting saying that Henry Waxman is lying to them. I guess they just found that out about Henry. It doesn’t look good for the House bill (and thus it looks better for us).

TennCare was an effort by the state of Tennessee to provide health insurance for the poor and to improve the state’s Medicaid program. How has it turned out 14 years later ?

Not so good. Why ?

Here are a few examples.

A government-run health insurance plan is enacted on the promise of increasing competition and bringing down costs, but over the years, as more people leave their private insurance to take the “public option,” the cost to operate the government plan skyrockets.

Sound familiar ?

TennCare, the managed care Medicaid program that began in 1994, now serves about 1.2 million people in the state and has a $7 billion budget. That’s after cuts were made.

Rep. Marsha Blackburn (R-Tenn.) was a Tennessee state senator through much of the TennCare problems and believes it is a forecast of what would happen under federal health care “public option” plan. While supporters of the Tennessee program said it would save money, it wound up eating 38 percent of the state’s budget, she said.

“As a result of this, insurance rates for those who have private coverage were going through the roof,” Blackburn told a gathering at the conservative Heritage Foundation last week.

“There is no example that you can point to that shows where having private insurance in competition with the public option brings the costs down. It leads to exploding costs,” she said.

What happened ?

“They were tired of insurance companies denying people universal access, and thought they could save so much money with a public plan to cover not only the people on Medicaid but all uninsured. Sound familiar? Costs began to explode immediately,” Matthews said.

Hospitals were paid about 40 cents on the dollar, which eventually rose to 64 cents, while Tennessee became the number one state in the country for consumption of prescription medications because of TennCare, according to Craig Becker, president of the Tennessee Hospital Association.

One of the first steps a troubled health care plan takes is to underpay providers. They are not as well organized as patient advocates and politicians so they have far less power in a political setting. What do they do ? The good ones, especially doctors who have more choice, drop out as providers. This has happened in California’s MediCal program. The result is to leave the program with marginal physicians and “mills” which maximize revenue by excessive testing and prescribing, often dispensing medications instead of writing prescriptions to be filled by pharmacies.

A March 1999 review by PriceWaterhouse Cooper found that TennCare paid providers 10 percent below what would be considered “actuarially sound.”

A state audit in July 1999 reported that the state had spent $6 million to insure 14,000 dead people. Meanwhile, 16,500 enrollees actually lived out of state and 20 percent were found ineligible to be in the program. Further, 450 of those who were ineligible had access to the state’s help insurance plan.

Fraud explodes in these government programs, especially as they drift away from ethical providers and begin to depend on the marginal and the mills. Also, the bureaucracy expands and does less and less. When I was on the board of California Medical Review, Inc (CMRI), the state Medicare peer review organization, we were looking for new business outside the Medicare program. The company, which supervised the federal program in all of California, submitted a proposal to the state Department of Health to take over supervision of the MediCal program. This would be an example of privatization. The state was not interested even though we learned that they had 5000 employees for the MediCal program, more than the entire staff of HCFA, the national Medicare administrator.

TennCare sounds very similar and the implications for Obama’s program are troubling.

UPDATE: I guess we are not allowed to say Government run healthcare. The Congress is now censoring franked mail by GOP Congressmen.

PETA’s Poodles

Thursday, July 23rd, 2009

By Bradley J. Fikes

The animal rights group PETA has a well-earned reputation for extremism carried to such an extreme it’s farcical. PETA recently chided President Obama for killing a pesky fly. According to PETA, Obama should have caught the fly in a humane trap and released it outdoors.

With such deranged views, PETA has a hard time getting taken seriously. So PETA zealots have created front groups that advance its agenda, while proclaiming other motives. One of these front groups, The Cancer Project, recently pulled a classic PETA-style publicity stunt, filing a lawsuit in New Jersey asking for a cancer warning label to be put on hot dogs.

Encouragingly, some journalists are skeptical of The Cancer Project’s claim to be purely concerned with human health. A Los Angeles Times story described it as a “vegan advocacy group.” The article even noted that the project is run by the Physicians Committee for Responsible Medicine, itself created by PETA members.

However, the Associated Press inaccurately called The Cancer Project as “an offshoot of a pro-vegetarian organization“. The perfunctory article didn’t even name the organization. Readers weren’t told it was a PETA front group.


California dreamin’

Thursday, July 23rd, 2009

California is in economic collapse. Without the nearby ocean, the state would have become Michigan by now. The politicians seem to think that the weather and the scenery will bring people no matter how badly the state is governed. They may be right but those people will be tourists and they will go home again to their jobs; the jobs that California doesn’t have. Why aren’t there jobs ?

This might explain it.

In 2006, Gov. Arnold Schwarzenegger and the California state legislature decided that each and every man, woman, and child in California should eliminate 4 tons of CO2 emissions by 2020. And so America’s first mandatory cap on greenhouse gasses, the Global Warming Solutions Act, became law. The state must now reduce its emissions to below 1990 levels, a 30 percent reduction from projected business-as-usual emissions, essentially cutting the allotment of carbon dioxide equivalent from 14 tons to 10 tons per person.

The fixation of California elites on global warming will kill the state’s economy soon. They, of course, don’t need jobs because most of them have trust funds, bloated pensions funded by the state or have income from sources outside the state (like the movie industry which has largely left the state). Are the politicians worried about jobs for the rest of their constituents ?

the California Air Resources Board predicts that increasing energy prices and implementing new regulations in California will improve the state’s economic outlook. A 2007 study by the Electric Power Research Institute begs to differ; the non-profit electricity industry think tank found that “the cost of meeting the stated 2020 emission reduction goal could range from $104 billion to $367 billion of reduced consumption (discounted present value through 2050).”

Last week, the California Small Business Roundtable issued their own report, charging proponents of the 2006 global warming mandate with wild optimism about its alleged beneficial economic effects. The report notes that California’s 700,000 small businesses comprise 99 percent of all employer firms, provide 52 percent of all jobs, and contribute 75 percent of gross state product. Using the California Air Resources Board’s own figures, the new report finds that the annual implementation costs would likely result in a loss of $182 billion in gross state output and 1.1 million fewer jobs. The business losses would occur in part because regulations would increase costs to consumers whose discretionary incomes would be reduced by about $3,800 per year as they paid more for housing, transportation, natural gas, electricity, and food.

Don’t worry, the state will keep its residents employed with “green jobs.”

In 2008, the California Air Resources Board issued a study reassuring Californians that they can make money hand over fist selling each other wind turbines and electric cars. Implementation of the cap “creates more jobs and saves individual households more money than if California stood by and pursued an unacceptable course of doing nothing at all to address our unbridled reliance on fossil fuels,” the study cheerfully declared.

This sounds remarkably like Obama. They have invented a perpetual motion machine. We’ll see if it works.

Tricky, Tricky Facts And Obama Birthers

Tuesday, July 21st, 2009

By Bradley J. Fikes

The “birther” controversy over whether Barack Obama is legally qualified to be president is heating up again, and I just found out why you have to be extremely careful with facts. I’d taken the view that regardless of where he was born, Obama’s American mother automatically made him a citizen, a view supporting by reading the applicable US law.

An Oct. 30 Chicago Tribune article quoted noted blawger Eugene Volokh to that effect:

Even if a person is born outside the United States, courts have ruled any child born to at least one U.S. citizen is a U.S. citizen, Volokh said. Stanley Ann Dunham would have counted even if Obama’s Kenyan father did not.

If this becomes an issue in a post-election eligibility challenge, expect a likely sticking point to be the legal definition in 1961 of how parents could be called U.S. citizens for this purpose, Volokh said. At the time Obama was born, the law stated that a person would be considered a “natural born citizen” if either parent was a citizen who had lived at least 10 years in the U.S., including five years after the age of 14—in other words, 19.

Dunham was three months shy of her 19th birthday when Obama was born. But subsequent acts of Congress relaxed the requirement to five years in the U.S., including just two years after the age of 14, meaning Dunham could have been 16 and still qualified even if Obama was born in another country, Volokh said. Congress made the law retroactive to 1952, doubly covering Obama.

Any legal challenge would have to argue that Congress can’t make someone retroactively a citizen at birth, and prove Obama was born outside of the U.S. after all.

However, Volokh decided later he had made an error in reasoning, an error he painstakingly explained on his blog.

Read the whole thing for the details. The gist is that the relaxed requirements only apply to someone born on or after Nov. 14, 1986. Since Obama was born before that date, the original, stricter law applies.

Worse, the Chicago Tribune story remains uncorrected to this day, as you can read by clicking on its link. Does the Tribune not know or care that its main source has changed his mind? I presume Volohk tried to alert the Tribune, but it doesn’t seem to have had any effect.

Like Volokh, I don’t doubt that Obama was born in Hawaii, something the state has officially confirmed. And the Supreme Court has declined to hear challenges to his eligibility for the presidency. Since the court interprets the Constitution, the supreme law of the land, that legally ends the matter — just as its decision in the 2000 election settled questions regarding the election of George W. Bush.

But it’s still a warning to apply healthy skepticism to what you read in the press, even if it seems solidly based.

DISCLAIMER: As with all else I write here, this is my opinion, and not necessarily that of my employer, the North County Times.

Health reform, one doctor at a time.

Sunday, July 19th, 2009

UPDATE: This article from from the New York Times discusses the “retainer model” of practice but has some misinformation.

Another, more expensive option is concierge or “boutique” care, which comes in two forms. In the most popular kind, doctors accept Medicare and other insurance, but charge patients an annual retainer of $1,600 to $1,800 to get in the door and receive services not covered by Medicare, like annual physicals. Before signing up and paying the retainer, patients should get a written agreement spelling out which services the doctor will bill Medicare for and which the retainer covers. And always check carefully for double-billing.

I do not believe this is accurate. You cannot bill for services that Medicare does not allow, such as annual physicals or more frequent visits. That is why the geriatrics specialists are dropping out of Medicare. Also, the reporter vastly overstates the cost of most retainer practices.

Things are getting so bad for doctors, especially primary care doctors but specialists too, that some are taking radical steps. Medicare is the worst with radical cuts in reimbursement and onerous rules, especially for such specialties as geriatrics. The advent of the RBRVS in 1992, foisted on the profession by a combination of the AMA and Harvard School of Public Health, was supposed to equalize reimbursement for “cognitive services” (thinking) and procedures. The internal medical societies supported this initiative thinking they would be making more money and surgeons less. Of course they were tricked and everyone ended up making less.

Geriatrics is a specialty that should be most concerned with the aged and therefore involved with Medicare. However, Medicare rules prevent frequent visits to frail elderly patients and private care in addition to Medicare is banned. A physician who cares for elderly patients requiring frequent care may have to drop out of Medicare to avoid being harassed or even prosecuted. Geriatrics as a specialty is suffering.

What is the result ? Some primary care physicians are choosing “boutique practice” or “retainer practice.”

Perhaps more than most people, Reitz, a senior HIV?AIDS scientist with the Institute of Human Virology in Baltimore, appreciated the need to be examined quickly. And thanks to a recent trend to help personalize physician care, he got an appointment the same day — but not because of his professional status.
Reitz, like any patient of Dr. Philip Henjum, can get a same-day appointment because Henjum and his partner, Dr. Robert Fields, practice retainer medicine in their Olney office.
Their patients pay a $1,500 annual retainer fee to see them as soon and as many times as they need to. They also make house calls.
As it turned out, Henjum diagnosed Reitz with Lyme disease, an infection from a tick bite, and prescribed antibiotics. If not diagnosed and treated early, Lyme disease can lead to severe headaches, muscle pain and serious heart problems.
Fields and Henjum are two of about a dozen doctors in Maryland and an estimated 600 nationally who won’t take insurance coverage. Instead, they charge a yearly or monthly retainer. Some work out of comfortable medical office such as Fields and Henjum, next to Montgomery General Hospital.

The cost is modest for the patients although more than the poor could afford. It is a growing trend and Medicare may soon have the reputation that Medicaid has now.

Most family doctors will convert to a retainer-type practice within the next 15 or 20 years, said Dr. Christopher Ewin, president of the nonprofit Society for Innovative Medical Practice Design in Fort Worth, Texas.
‘‘We believe that there is a primary care problem in this country,” said Ewin, a primary care physician. ‘‘We have been working for the wrong employer for way too long — the insurance companies and the government.”
Ewin’s retainer practice, he said, reduces the cost of an MRI from about $1,500 to $500. Laboratory blood analysis that would normally cost $300 through insurance costs $33.

This is a small but growing phenomenon. Here is another example.

But the best part of the event for DrRich was getting to meet Alan Dappen, MD, and one of his colleagues, Valerie Tinley, NP. Both write for Better Health. Alan and colleagues have set up a primary care practice in the DC area that really does put patients first.

Dr. Dappen and his colleagues are actually doing what DrRich has been begging disgruntled primary care physicians to do for over two years now – drop out of the grid, and offer medical services to patients who pay them directly. Dr. Dappen does not have a concierge practice, nor does he have a retainer practice. His practice charges patients a fee, in 5-minute blocks, only when patients use his services. Those services can be provided in the office, over the phone, or even in their homes. If they don’t need a doctor patients pay nothing. If they need a doctor they pay only for the services they use. The fees are very reasonable. Patients who can affort to pay a plumber, an electrician, a neighbor kid to mow the lawn, a cell phone bill or a cable bill can afford to have Dr. Dappen as their primary care doctor.

More here.

I am now aware of orthopedic surgeons who have dropped Medicare and are practicing for cash payment now. The Medicare patient may use the program to pay the hospital bills but the doctor does not participate. The basic argument is this:

In the attempt to control healthcare costs (as they have been deputized by society to do), the feds and the insurance carriers have, in uncountable ways, coerced physicians to place the needs of the payers ahead of the needs of their individual patients. That is, they have systematically and purposefully destroyed the doctor-patient relationship, killing medical professionalism, and abandoning patients to their own devices as they attempt to navigate an increasingly hostile healthcare system.

This process has been firmly established. It has been legislated by Congress, embodied in volumes and volumes of rules, regulations and “guidelines” (strictly and ruthlessly enforced), upheld by the U.S. Supreme Court, and finally (and most tellingly) sanctioned as being entirely “ethical” by revered medical organizations.

It has therefore become impossible to fight this reality while remaining a “traditional” primary care practitioner. To escape, one must either become a specialist (since outpatient primary care has been the main lever on which the third-party payers have pushed to date), a deep-sea fisherman – or a retainer practitioner. That is, a primary care doctor must either try to survive in a system that ruthlessly pushes them toward an unethical, demeaning, public-health-destroying style of practice, or (one way or another) get out.

To argue that retainer-style medicine – or indeed, any innovation that somehow restores both the professional integrity of medical practice and the patient’s rightful advocate – is unethical is completely wrong. It is one of the few viable pathways toward restoring the foundational (but currently obsolete) medical ethic of always placing the patient first.

If the Democrats’ health legislation passes, this will become even more important.

Notice this blog post which is about Massachusetts but the comments are really interesting.

I wish health insurance was more like auto insurance – not in the being madatory sense, but in the “designed for large, unpredictable, fairly unlikely losses instead of for paying everything associated with the thing being insured”.
If something unlikely happens, like I don’t notice a pizza-delivery person driving down the street and end up sideswiping a Pontiac, my car insurance covers it. But if I ding the fender on a pylon in a parking lot, or need an oil change or new tires, I pay for it out of pocket. I think health insurance should work more like this – you pay for things like doctor’s visits and minor prescriptions out of pocket, and use insurance if you have a heart attack.

YES ! That is exactly what this is about. We used to have indemnity style health insurance in this country but it was superseded by the prepaid model we have now and which we cannot afford. Maybe we can go back to the old model, at least for those prudent enough to care for themselves.
Here is another useful concept, which is called “reinsurance.

Senator John Kerry’s proposal from 2007 looks very attractive in comparison. At its core is the concept of federal reinsurance, an idea I’ve long wanted conservatives to embrace.

One percent of patients account for a quarter of healthcare costs. And 2 out of 10 patients account for more than 80 percent of all healthcare costs. Under Kerry’s plan, the federal government would reimburse a percentage of these high cost cases if employers include preventative care and health promotion benefits in their health plans, make quality coverage available to all full-time workers, and implement practices proven to make care more affordable. This means lower costs and lower premiums for both employers and employees.

This is another example of the indemnity approach to health insurance. He even makes this assertion.

My long-term preference is for the logic of catastrophic coverage to replace the logic of insurance as pre-payment. The federal government’s responsibility should be providing social insurance against income shocks, not to subsidize health spending per se. The reinsurance approach can help get us there.

All this is useful context but Obama’s approach must be stopped to be able to consider alternatives.

UPDATE: Canada seems to be showing the way although not the way that Obama supporters would choose.