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Health reform suggestions

Thursday, September 10th, 2009

Next week, I have been asked to speak to a local Republican group on health reform. I have some ideas, as anyone who has read this blog knows, and will try to give some background, as well. What Obama and the Democrats are proposing will not work and will result in titanic deficits, rationing and probably rebellion by the public even more intense than the preview we got last month. What to do then ?

1. We must use market-style incentives to reduce moral hazard and encourage practical limits on what people want from the system. One way to do that is to separate insurance from pre-paid care. What we now call health insurance is a combination of the two. That is one reason why it is too expensive. People are willing to pay out of pocket for routine medical expenses, up to a reasonable limit. Let them do so.

2. Some people like HMOs, so let them join an HMO if that is what they want.

3. The French system asks the patient to pay the doctor, or the laboratory, first, then get reimbursed by the health plan. That is a way to reduce moral hazard.

4. Let the health plans (notice the plural) set a fee schedule and stick to it. That fee schedule is what the plan pays, not necessarily what the doctor is paid. If the patient wants to see a special doctor, pay more but expect only to be reimbursed the set amount. This introduces some negotiation between doctor and patient and some realism on what health care costs.

5. Fees and charges have to be public information, preferably posted in the waiting room or on the internet. Today, they are secret because insurance companies and Medicare compete to get discounts from doctors and hospitals. This locks in a medical fee inflation and keeps the “retail” charges unrealistically high.

6. What about the poor ? Gary Becker got a Nobel Prize for demonstrating that the poor are also capable of responding to incentives. Welfare Reform should have established that as fact. Many people are poor because they are young and are still getting educated. Their health costs are very low but they do run the risk of injury or occasional illness that needs to be treated. Many of the rest of the poor have behavioral problems or lack of education, or both, that will keep them poor most of their lives. They also, because of these behavioral problems, have higher medical costs. They should have access to community clinics and city hospitals that used to provide good care but have been neglected since 1965. Lyndon Johnson was going to provide “mainstream” care to the poor and so the big public hospitals were excluded from the Medicaid program and have suffered as they were overwhelmed by illegal aliens. The “mainstream care” was always a fraud because the payment was poor and the paperwork onerous. As a result, Medicaid is full of fraud and abuse. We need to provide medical care for these people and they probably cannot pay for most of it. Public clinics and public hospitals are the answer. How to staff them ? Too many young doctors emerge from years of training heavily in debt. This is an incentive to seek higher paying specialties and avoid the poor. Why not make a deal ? If young physicians will accept the basic fee schedule as full payment, or work on salary in public clinics and hospitals, forgive the medical school loans. It is already a popular idea and has worked for the military, which offers tuition payment for a commitment to serve as a medical officer. The objection to this sort of solution will be that it establishes a “Two tier” system. So be it.

7. What about employer-based insurance ? Here, I advocate some sort of coop, not a government coop because I don’t trust government, but a coop that is run by a board made up of members, providers and employers if it is work connected. It could be funded by payroll deductions but the members would not be employees of a single company. Maybe it would be organized along vocational lines such as engineers or pilots or unions. There should also be an equality of tax incentives. Either make all health insurance taxable or limit the deduction and make it available to all.

8. What about tort reform ? Some of this is a way to needle Democrats who are so dependent on trial lawyers. There is defensive medicine and there is a way to limit liability. California did a good job of this in 1975 with MICRA. A national tort reform could do worse than copy MICRA. When I began practice in 1972, my malpractice premiums were $3500 per year. Two years later, the premium went to $35,000 per year and my partner and I discovered that our insurance carrier was insolvent. We practiced without insurance for the next three years. Eventually, doctors formed a coop in which everyone agreed to be responsible for losses incurred by lawsuits against members of the coop. We each put up $20,000 to establish a trust fund and the theory was that the interest on the trust fund would be used to pay expenses and claims. We were also assessed each year with our assessment based on the estimated risk for our specialty. As general surgeons, we each paid about $6,000 per year. When I retired from practice 25 years later, I got the $20,000 back as a refund.

I’d say that speaks well for the system. There is one caveat, though. Because we were a coop and were personally guaranteeing the losses, we were allowed to exclude applicants with no explanation. When a new applicant submitted the paperwork, letters were sent to members asking if we had any objection to this doctor joining our coop. I personally submitted objections to a couple of surgeons that I knew had problems. They were not admitted. Doing this on a national basis would be more complicated. Those rejected doctors got insurance from somebody. Caveat Emptor.

Anyway, those are a few thoughts about where to go. This is a problem with a number of solutions. They are incremental and do not require the radical restructuring proposed by the Democrats.

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Medicare rationing

Thursday, August 27th, 2009

rationing

The chart above is a suggestion for allocation of medical resources by age. It make clear, as does this article, that rationing is at the bottom of Obama’s plans for health reform, at least those that involve cost savings. Ezekial Emmanuel, physician and brother of the White House Chief of Staff, puts it clearly in several journal articles on medical ethics.

True reform, he argues, must include redefining doctors’ ethical obligations. In the June 18, 2008, issue of JAMA, Dr. Emanuel blames the Hippocratic Oath for the “overuse” of medical care: “Medical school education and post graduate education emphasize thoroughness,” he writes. “This culture is further reinforced by a unique understanding of professional obligations, specifically the Hippocratic Oath’s admonition to ‘use my power to help the sick to the best of my ability and judgment’ as an imperative to do everything for the patient regardless of cost or effect on others.”

In numerous writings, Dr. Emanuel chastises physicians for thinking only about their own patient’s needs. He describes it as an intractable problem: “Patients were to receive whatever services they needed, regardless of its cost. Reasoning based on cost has been strenuously resisted; it violated the Hippocratic Oath, was associated with rationing, and derided as putting a price on life. . . . Indeed, many physicians were willing to lie to get patients what they needed from insurance companies that were trying to hold down costs.” (JAMA, May 16, 2007).

I agree that there is overuse, often the result of moral hazard secondary due to price distortions by insurance, including Medicare. What these people in this administration do not understand is that there is another way. Why not allow an accurate price for those interventions that are “optional?” John Wennberg has shown that variation is most pronounced in the utilization of those services about which there is the most uncertainty as to value. The incidence of hospital admission for acute MI or fractured hip varies little across the country. If we had an honest market mechanism in health care, that variation would be less of a problem, even as it declined. The statists in the administration are determined that they can control utilization of every medical intervention better than a simple marketplace based on price could do. The Soviet Union tried that for 70 years and collapsed.

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A dose of cold water

Friday, August 14th, 2009

Charles Krauthammer today delivers a useful dose of cold water on the fantasy that preventive care saves money. There are a few measures that probably do save money; mammography is one. Mammography does not, obviously, prevent breast cancer but it does detect the disease at an early stage and probably saves money by avoiding the treatment of late incurable breast cancer in more women. Kaiser, an HMO with a loyal membership, was a pioneer in routine mammography and this is the most likely incentive. More on the issue of preventive care and cost here.

This brings up the difference between prevention and screening for early diagnosis. It also raises the issue of cost-benefit analysis in medicine. I have spent some time studying this subject. The analysis of such issues is called decision theory. It is very commonly used in business to decide on which investments are more likely to make money. The decision tree typically uses software that calculates the costs associated with all possible decisions that could be made. An example is here. The decision tree begins with an initial set of facts, the simpler the better. In medicine, it might be a symptom like rectal bleeding.

A patient comes in with rectal bleeding. How do we proceed ? I used to teach this sort of thing to medical students. Cost-benefit analysis can be part of this process. For example, it sometimes seems to me that junior doctors choose a spiral CT scan as the initial diagnostic event far too often. I know that one third or more of cardiology fellows, graduate physicians in training, cannot hear a systolic heart murmur. This is the most basic examination in cardiology. The stethoscope was the first instrument that allowed doctors to examine the interior of the body. Yet one-third of budding cardiology specialist are incompetent with it. Why ? They have spent years ordering echocardiograms on every patient with the least suspicion of heart disease. Here is a useful role for cost-benefit analysis.

I don’t want to conduct a seminar on this subject. If you want one, there are journal articles going back 30 years on the topic. This is where we get into Bayesian Algebra. Anyone who gets into this subject must understand the basic principles of diagnostic tests, true positive, false positive, true negative and false negative. A true positive test is positive in a patient who has the disease. False positive is, of course, positive in a patient who does not have the disease. Two groups of patients have the disease, true positives and false negatives. From this sort of thing, one calculates the sensitivity and specificity of tests. A test is the most sensitive that has the most true positives. A test that is the most specific, has the most true negatives.

That, of course, has nothing to do with prevention but prevention, aside from immunization, is not medicine anyway. It is public health plus cultural norms. A century after Columbus’ first voyage brought syphilis back to Europe, one third of the residents of Paris had the disease. The importance of virginity in a bride may have arisen from such data.

I have serious doubts that 98% of the advocates of health reform would have any idea what I’m talking about here.

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Health insurance and health reform

Wednesday, August 12th, 2009

UPDATE: The eight questions I addressed below were obviously from John Mackey’s op-ed in the WSJ. Now his leftist customers at Whole Foods Markets are going nuts and threatening to boycott the store. OK by me. I thought the criticism was rather mild and I don’t shop there anyway. It does show the madness of these groups, though.

The Obama campaign seems to be morphing into “insurance reform.” There are lots of mis-statements about insurance out there so I thought I would consider some. One, of course, is the gigantic profits of the insurance companies. First of all, almost all employer based health plans are NOT insurance but are prepaid care managed by an ASO (Administrative Service Organization), almost always an insurance company. Why ? because they have the skills to do this sort of thing. There are two ways that these companies make money. One is to invest premiums and pay benefits out of investment income. That is how life insurance and fire insurance works. Long ago, that sort of thing came to an end with health insurance. Why ? Because health insurance stopped being insurance.

How does a conventional insurance company make money ? Let’s take fire insurance which was founded in this country by Benjamin Franklin. The concept was a mutual company. A group of homeowners paid into a fund that was to be used to pay for fire damage. It also paid for the fire fighters and their equipment.

The first policies had a term of seven years. After the policies expired, the premium money was returned to the policyholders. In the first year of operation, 143 policies were written. Ironically, there wasn’t a single insured property that caught fire in the Philadelphia Contributionship’s first year of operation.

What did they do with the money ? Well, if I know Franklin, the money was invested in the colony and the income from the investments was added to the fund, also called “the corpus.” Since they had no fire, the money was all returned to the investors with interest. This is how mutual insurance works. Blue Cross and Blue Shield are non-profits that were founded by the hospitals and the medical associations to pay medical claims. Mutual companies like this have no profits to distribute as they are owned by the policy holders.

What about Aetna and the other for-profit insurance companies ? Many large assets in the country are owned by these companies as they have, in the case of life insurance especially, a long period in which to earn the money to pay claims. Actuaries are economists who estimate the probability of loss for a particular insured. If I am a 40 year old male who doesn’t smoke, they can estimate my annual risk of death with considerable precision. They set the annual premium and the benefit paid can be even more than it would be if I saved the premium for 20 years. That is because of the investment income.

They can also estimate, with considerable precision, my risk of a heart attack or a stroke or even cancer. In the days before 1970, when insurance only covered events like heart attacks and strokes, it was possible to estimate these risks and to set up a table of premiums that were predictable. Even if medical prices rose, there was a way to deal with that. In 1970, many health policies were of the indemnity type. That means they paid a fixed dollar amount for a medical event, such as an operation or a hospital stay. In those days, hospitals usually billed by the day rather than the enormous, and unintelligible, itemized bills we see today.

Furthermore, for the past 25 years, those bills have meant almost nothing. The insurance companies, and after DRGs came in, Medicare, pay a fixed amount per hospital stay based on the discharge diagnosis. Outpatient surgery has become popular as a way to avoid those limits and the inefficiencies of hospitals, but that also involves contracts that include huge discounts on the “retail” price seen on the bill.

Soon, the indemnity insurance policy went into decline because they often did not keep up with doctor’s rising fees. This was a serious mistake on the part of doctors as they were agents of their own (or at least their successors’) destruction. Had the insurance companies held the line, the doctors would have had to negotiate with patients for the balance over what the policy paid. That might have required explaining why the operation was worth so much. It would be uncomfortable and it was much easier to get them to pay “UCR” rates. That stands for “Usual, Customary and Reasonable.” It’s amazing how fast “customary” can increase once the limits are off.

The insurance companies foolishly insisted on itemized bills from the hospitals and the explosion of health care inflation took off. Medicare paid the going rates for a while. I began practice in 1972 and my partner and I set our fees according to the book of rates called the Relative Value Scale established by the California Medical Association, and called “RVS.” It was begun in 1952 by a group that wanted to set up a fee schedule that could be used by any doctor in any community. The schedule simply ranked items relative to each other. It began with a “hernia unit,” the value of a hernia repair compared to other services like office visits or open heart surgery. Maybe a hernia repair is worth one tenth of a heart surgery. The young physician then took into account the cost of practice, rent and so forth, and decided on a “conversion factor.” The conversion factor for us was $100. If the RVS book said a hernia repair was 4.5 RVS units, our fee was $450. We were on the low end of the scale but did well because we were busy.

Anyway, that system worked pretty well and even Medicare adopted it in spite of the fact that the FTC sued the CMA and forced them to stop printing the RVS Schedule and then even required that they recall all the copies in existence. If you would like to consider how illogical government can get, think about doctors using Xeroxed copies of the illegal RVS schedule to submit bills to Medicare, which required the correct numbers to pay the bills.

Anyway, the real problems began in the 70s when the Nixon administration decided that the way to control costs was the HMO. Paul Ellwood provided the theoretical foundation for the concept. He based his concept on the Kaiser Foundation and the original program devised by surgeon Sidney Garfield for the California Aqueduct and the Grand Coulee Dam, the latter built by Henry J Kaiser. The HMO provided prepaid care for a monthly fee and the doctors were on salary.

Private practice pediatricians and obstetricians were worried because health insurance did not pay for their services. After all, these were not insurable events but routine care. Here, the fatal decision was made and I remember debates in the House of Delegates of the CMA. The CMA must act to protect its members and demand that insurance cover well baby care and routine delivery. I objected but, of course, I was a surgeon and we lost the debate. This was the beginning of the end because, once prepaid care was substituted for insurance, there was no way to stop the inflation. My younger son was born at Huntington Memorial Hospital in Pasadena in April 1969. This was the nicest hospital in the area and the maternity ward was new and beautiful. The hospital bill for mother and child was $375. Five years later, with insurance coverage now universal, that bill would be ten times as much.

I’m sure those who are still reading this are tired of the history so I will consider one proposal being discussed as an alternative to the Obama program.

Here are eight reforms that would greatly lower the cost of health care for everyone:

•Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs).

This would be helpful but far less important unless we get rid of the false “retail prices” that everyone sees on their doctor and hospital bill. To give one small example: I am a Medicare beneficiary now. I also have chronic pain as a result of a back injury and an extensive surgery in 1993. I go to a pain specialist. At hand, I have a May 25, 2009 EOB (Explanation of Benefits) from Medicare. He billed $140 for an office visit. The Medicare payment was $13.90; less than 10% of billed charges. They proudly list the amount I am NOT required to pay him as $126.10. He cannot bill me for the balance. Why not ? It’s illegal.

Let’s say that my pain doctor drops out of Medicare and goes to a cash practice as many internists are now doing. He could set a fee somewhere between what Medicare won’t pay him and what they do pay him, and then I could pay that amount myself and forget Medicare. Soon, that may be the only option as more and more doctors drop out of Medicare. Soem primary care internists are setting up “retainer practices.” Of course, some object to this as elitist.

UPDATE: President Obama has twice made inflammatory and ignorant comments about surgeons the past several weeks. Today the American College of Surgeons, which has been supporting his agenda, finally lashed back at him. It’s about bloody time. First, surgeons do not get the hospital bill as payment. Second, surgical fees and hospital bills have little to do with the “retail” prices that are printed in so many commentaries by non-medical people.

•Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits.

That may help although one reason why employer plans get better rates is the fact that a fully employed population is a better collective health risk than individuals who may be of varying states of health. I do agree that health care expenses should be tax deductible.

•Repeal all state laws which prevent insurance companies from competing across state lines.

This would make a huge difference but only a revolution could bring this to pass. Politicians serve no purpose in life except to do favors for contributers.

•Repeal government mandates regarding what insurance companies must cover.

This would accomplish even more for costs but it would be even more difficult to enact. I spent eight years on the CMAs commission on legislation. I saw how sausage is made.

•Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year.

I tend to think this is less important but that may be because I live in California which did a major tort reform in 1975 and has held the line well on malpractice rates. I have some other ideas on this but this post is already too long.

•Make costs transparent so that consumers understand what health-care treatments cost.

I think this is key and the reason for the lengthy post above.

•Enact Medicare reform. We need to face up to the actuarial fact that Medicare is heading towards bankruptcy and enact reforms that create greater patient empowerment, choice and responsibility.

Yes but this has to come from the same reforms we enact for the whole system.

•Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren’t covered by Medicare, Medicaid or the State Children’s Health Insurance Program.

Nice but fluff.

I think we are headed to a market-based health care system whether or not Obama gets his bill passed. In Canada, it is happening even though it is technically illegal.

UPDATE: This is an interesting analysis of the proposed reform program. The premise is that what is going to happen, if it passes, is a commingling of all the different health care accounts, Medicare, Medicaid and middle class, pitting the classes against each other. I think it shows considerable insight.

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Military Medicine

Wednesday, February 18th, 2009

Here is a powerful account of a doctor’s tour in Afghanistan. Ironically, it from Mother Jones web site but a great account anyway.

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Health Reform – France III

Friday, May 16th, 2008

How is reimbursement accomplished ?

The carte vitale changed a system based on paperwork to one with a very modern and efficient methodology. Prior to electronic billing, the patient had to obtain treatment or prescription forms called feuilles de soins from the doctor, attach any stickers (vignettes) from the pharmacist, which identify the class of drugs dispensed, plus a certificate from the employer (attestation annuelle), or a certificate of unemployment from the national office, and submit them all to the local CPAM. A few weeks later, a statement of amounts to be reimbursed would be received, followed eventually by the money. In 1998, 1.2 billion feuilles de soins were submitted.

If the doctor has the proper card reader (and in 2001 when the report was written, it was a problem), the card is swiped and the proper form goes electronically to the CPAM. Confidentiality is assured because a second card, issued to the doctor and called Carte Professionnel de Sante, or CPS, is required for transmission. Card holders have the right of access to the database where their records are kept by the CPAM.

In 1999, in response to a perception that 25% of French citizens postponed care due to financial concerns, and another 150,000 were still not covered, another system was added for the poor. Couverture Maladie Universale or CMU, now covers a million people who receive free care. There is CMU de base, which enrolls people who are not covered by NHI into CNAMTS and which covers all residents of France regardless of employment status.  This provides free care. A second level, called CMU complementaire covers the supplement for those earning less than 3600 FF per month (as of 2001 before the Euro).  This could be considered analagous to our system in which poor Medicare recipients are eligible for Medicaid payment of the deductable or co-payment.

Applicants must register at the CPAM and those eligible for CMU complementaire, may select a mutuelle to manage the co-payment. Once granted, the free care is valid for a year, after which the person must reregister. The person receives a carte vitale and the care is the same although they must select physicians from Sector 1 who accept the fee schedule (conventionne). Prescriptions, hospital care, some dental care and eyeglasses are included. CMU assurance complementaire covers 4.7 million.

British expatriates living in France can apply for CMU and the rules are described here. That site is one for advice to British retirees living in France and is interesting for other aspects of life in France.

The system is not foolproof as this message board for British retirees shows.

Here is more timely information about enrollment, again from the point of view of British retirees moving to France. This is a very large group and some areas in the southeast have completely English-speaking villages.

Providers

Free choice of doctor is assured, a feature of the French system that is very attractive to us as we are losing that very feature of the American system. The French can go to any doctor, can go to specialists directly without a “gatekeeper,” and can choose a public or private hospital. The private hospitals do not have to accept the government rates and generally require payment at the time rather than wait for the reimbursement from CNAMTS.  Doctors may only advertise in “The Yellow Pages” and there is none of the marketing we see here. Health organizations and private clinics are allowed to advertise (some in the Paris Metro) and all doctors must post their fees. Patients are free to change doctors and seek second opinions. Appointments with GPs are 15 to 30 minutes and direct payment encourages the doctor to treat the patient as an equal, unlike HMOs in the US and NHS hospitals in the UK. Free choice of hospital is also the rule.

Fees

In 1997, 99.6 % of physicians were in Sector 1 or 2. Of these, 74% were in Sector 1, 83% of GPs and 62% of specialists. The Sector 1 physicians are contracted with the NHI and are paid from the negotiated fee schedule ( NGAP ), which is revised annually. By agreeing to the fee schedule, Sector 1 physicians become eligible for pension and sickness benefits. Sector 2 physicians may set their own fees but do not have the pension and sickness benefits. The additional fees, above the national fee schedule, are the responsibility of the patient. When this reform was established in 1980,  Sector 2 became popular, especially with specialists, but initially only 7.5%  joined Sector 2. By 1997, Sector 2 had 57% of physicians and access to the category was limited. This may have been the result of Sector 1 fees not keeping pace with inflation. In 1998, 51% of physicians were specialists (49% GP)  and 75% of GPs were in private practice. Specialists were more likely to be employed by clinics and teaching hospitals but 68% were still in private practice. Many medecine liberale (fee-for-service) GPs are practicing in cabinets liberaux, a one physician office with a small staff. Group practices are more common in urban communities.  Many GPs list themselves as medicins de famille or family doctors and care for entire families. The fee for one of these visits is quite modest, about 11 pounds sterling in 2001.

There is a gatekeeper-like system that is optional and is called medecins referent.  The patient, by giving up the right of free specialist consultation, is rewarded with waiver of the co-payment and the physician receives the co-payment directly from the CPAM. GPs who agree to become medecins referent receive a capitation fee for each new patient. They must use generic drugs for 10% of their prescriptions and additional record keeping is required so only 13% of GPs have agreed to join. There has been considerable resistance from both GPs and specialists, who fear restricted referrals.

There are between 1,000 and 2,000 municipal medical centers with salaried physicans. They are operated by municipalities, trade unions, mutuelles (a remnant of pre-war medicine) and are important in caring for the poor. The institution of the CMU may affect these centers as Medicaid affected county hospitals in the US after 1965.

About 40% of doctors are union members and there are three unions; Confederation des Syndecats Medicaux Francais (CSMF), the pre-war organization; Federation de Medecins de France (FMF), a small federation which broke the resistance to the 1980 reform by signing up, and Medecins generalistes de France (MG-France). These were formerly professional associations but have become unions and are not averse to direct action when provoked. They negotiate fee schedules with CNAMTS each year and concern themselves with professional issues such as regulations and hospitals.

Hospitals

There is a daily hospital charge, forfait hospitalier , although patients may request direct payment for hospital care, called tiers payant, or “one-third to pay”. This is based on the ticket moderateur, a schedule of co-payments.

ticket moderateur —    Co-payment based on Securite Sociale payment schedule

Consultation fee during hospital stay——-20 %

Hospital treatment————————— 20% most cases

Doctor’s fees (specialist and GP)————30%

Paramedic fees and lab fees—————– 35%

Medicines with blue vignette —————65%

Medicines with white vignette ————–35%

Vital or expensive drugs ———————-0%

Ease and comfort drugs (non-prescribed)–100%

Other expenses and transport—————–30%

Private hospitals may charge what they wish (although patients are reimbursed at the national rate) and payment is required at the time.  All hospitals have a fixed charge per day, called taux/forfair journalier, which is a “hotel costs” charge for room, board, etc. US hospitals used to bill this way until the stupidity of insurance companies required itemized billing and set off wild inflation in hospital bills. Children, maternity patients and war veterans on pension are exempt from this charge. Advance approval for some services, such as dentistry, physical therapy and prosthetics is required.

Some cases are eligible for exemption for co-payment. Serious medical conditions such as diabetes, cancer and AIDS are exempt. The exemption pertains only to the diagnosis and other conditions require co-payment.  A cancer patient with appendicitis, for example,  must pay the regular rate for the surgery. More complex services and hospital stays over 31 days are also exempt. The exempt class of patients, such as children, maternity and war pensioners are the third category.

Types of hospital

Two thirds of hospital beds are in public hospitals. The Hospital law of 1991 gave the public hospitals autonomy and the larger hospitals and teaching hospitals are public. In 2000, there were 1,050 public hospitals with 323,098 beds (or 5.5 per 1000).  They included Regional Hospitals, usually in cities and most have medical schools. There are 29 of these. Hospital Centers, which are in Department capitals, and hey tend to provide what we would call tertiary care, such as mental health or cancer treatment. Local hospitals are the third level and correspond to Level III hospitals in the US.

There are private non-profit hospitals, many of them specialized centers such as the 20 cancer centers. They tend to concentrate on long-term care and special care. They have similar rules and financing to public hospitals although staff membership may be restricted. In 1998, there were 24,782 beds in such institutions.

Private for-profit hospitals are mostly acute care and do a lot of surgery. Many are small although there has been a trend to consolidation. In 1998, there were 98, 813 beds in such hospitals and they have 20% of hospital capacity.

The public hospitals tend to have salaried doctors and France has a smaller proportion of hospital-based specialists than other European countries. Private hospitals tend to be staffed by fee-for-service specialists and the public hospitals have been short-staffed, often hiring foreign doctors to fill positions. Since there is no problem with delays and queues for care in public hospitals, the political issue seen in the UK does not exist in France. It is simply a matter of choice.

Hospital budgets have been under strain in recent years and, since 1984, have been under a global budget process. Since 1996, regional hospital associations ( ARH) have established budgets at a more local level based on need. France was the first country to adopt Diagnosis Related Groups (DRG) which became a controversial Medicare reimbursement reform in the US in 1986.  Private hospitals sign contracts with the regional agencies, Schema regionale d’organisation sanitaire, or SROS. Private hospitals are paid on a combination of per diem and fee-for-service. They do not have a central budget like the public hospitals. All the hospitals, including the public institutions, are judged by patients on cleanliness and food quality. Semi-private and private rooms are the rule. There are no wards.

Emergency Services

Pompiers medicaux are the equivalent of paramedics with special training but are not at a level with physicians.

Service d’Aide Medicale Urgente (SAMU) is an ambulance service that is in radio contact with physicians and may involve physicians in the ambulance. There is a high hourly charge that is waived if the patient is admitted to the hospital. If they do not go to the hospital, they are responsible for the copayment of 30%. If they are not a member of Securite Sociale, they are responsible for the entire fee. If they have a mutuelle, it may pay the co-payment. American trauma physicians have been critical of the care of Princess Diana because the ambulance team remained on scene for over 30 minutes before deciding to transport her to the hospital. This may be a feature of SAMU care, which does often treat patients at the scene.  American trauma care strongly supports the protocol of “scoop and run,” which discourages any attempt to stabilize a patient at the scene of an accident except for airway management.

Pharmacy and laboratory

Pharmacies are on every corner in France. Reimbursement requires a doctor’s prescription and is determined by the color of the vignette unless it is a “vital” drug. Both Securite Sociale and mutuelles provide payment so much of the cost may be covered for prescribed drugs. Approval of drugs is through Objectif National des Depenses d’Assurance- Maladie (ONDAM), a national agency, and Commission de la Transparence. There is price regulation although France has always had an excellent pharmaceutical industry. Spending targets are set and penaltes may be levied for violation.

Laboratoires are private and are recognized by display of a blue cross. Results go to the patient, not the doctor, to assure free choice.

French consumption of health services is the highest in Europe. In a 1998 survey of 23, 035 persons, chosen by household, 33% had visited a doctor at least once in the previous month, 19% a GP, 8% a specialist and 6% both. In 1994, mandatory practice guidelines (see my post on Evidence-Based Medicine), were introduced. They are called References Medicales Opposables (RMO) and are mandatory although an attempt to fine doctors for violating them was ruled unconstitutional. In 1998, use of RMOs resulted in a health spending budget below projectons and a “bonus” was provded to GPs. It was protested by the medical associations for rewarding provision of less care but I don’t know if anyone refused to accept it. The same method is often used by HMOs to reward compliance with guidelines for utilization.

Implications for US reform 

I have never been a patient in the French medical care system. I do know that French surgery is of the highest quality and the entire laparoscopic surgery movement originated there and in Germany. In 1987, Eddie Joe Reddick, a Nashville surgeon and good ol’ boy, was vacationing in Paris with his wife. Bored with museums, he got permission to observe surgery in a Paris hospital. What he saw revolutionized American surgery. He returned and got a friend,  Barry McKernan, to teach him laparoscopy. Within a year, surgeons were taking laparoscopy courses, many from McKernan (as I did in 1988), to learn the new technique. In 1992, I attended a laparoscopy meeting in Bordeaux to learn the newest techniques which were still coming from French surgeons. They have remained at the forefront of world medical advances.

The French system has many similarities to our own. It is complex but the components are similar to those of our own system and that fact may permit  integration of gradual changes and allow alteration to respond to problems. The basic reform in France was the Securite Sociale, similar to our Medicare program in 1965. One of the proposals for reform has been to adapt Medicare to the entire population. One way to do this would be to use the existing health insurance industry as the French use the mutuelles, to handle copayment and administration. Health insurance in the US is not really insurance. Employers use insurance companies to administer self-payment programs. Insurance companies have become “administration service organizations.” This is not that much different from the non-profit CNAMTS, which has a board composed of employers, unions and physicians. One difference that may be necessary is to get rid of the adversarial role of the Federal Trade Commisson toward doctors and their organizatons. Any fee negotiation has been banned for 30 years and that inhibits any attempt to deal with for-profit HMOs which are destroying the medical profession, especially in California were they are triumphant. Poor care and bankruptcy for medical groups has been the legacy of for-profit HMOs.

The use of the electronic carte vitale alone would reduce overhead for medical practices by 75%. Estimates of costs of administration for American medicine probably exceed the entire budget for French healthcare. The French have been having problems with cost but much of that comes from factors unrelated to health care, such as the 35 hour work week and the cost of unemployment which discourages employers from adding staff. With a more vibrant economy, the cost of the French healthcare system would be far less than our own as a percent of GDP, and would relieve the burden on manufacturers. Unions would probably resist letting go of their health plans that they administer and have a sense of entitlement to since they were often the trophy of negotiation and even strikes.

Straight single payer with no co-payment, like the Canadian system, will never work here. We are not a people who will accept queues and overt rationing.  The French system looks enough like our own that a transition would be less painful and could be gradual. It already has the Medicare basic format that it shares with Securite Sociale.

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Lies in the service of policy

Tuesday, March 11th, 2008

Politics has always been infested with lies. As it becomes more important in our daily lives, those lies become more significant. Woodrow Wilson said he would keep us out of war. He lied although there is some possibility that he believed it when he said it. Roosevelt said something similar but there is no chance that he believed what he was saying. A few years ago, the issue of minimum wage was influenced by a published report which purported to prove that raising minimum wages, contrary to economic theory, would not increase unemployment for low income workers. The study was deeply flawed but it has remained a popular basis for those who wish to justify the policy of raising the minimum wage.

Now, the major domestic issue that influences public policy is immigration. Sure enough, a new study has appeared that purports to show illegal immigration raises average wages for the native-born poor. Once again, it has been shown that the study in question is bogus.

I’ve always been a little skeptical of the Ottaviano-Peri evidence. A couple of years ago, Jeff Grogger, Gordon Hanson, and I worked on a paper that examined the link between immigration and African-American economic status. As a by-product of that work, we explicitly attempted to replicate the Ottaviano-Peri finding–but couldn’t. Since then, we’ve been quite interested in trying to see what explains the discrepancy between our evidence and theirs.

Then they found why the discrepancy existed. The other authors had doctored the data.

The Ottaviano and Peri data includes currently enrolled high school juniors and seniors. They classify these high school juniors and seniors as part of the “high school dropout” workforce. Their finding of immigrant-native complementarity disappears if the analysis excludes these high school juniors and seniors.

Things that seem too good to be true usually aren’t.

This is not a new phenomenon. I saw something very similar in surgery 30 years ago. At one time, there was a flurry of interest in what was called “The no-touch technique” in colon cancer surgery. The principal author was George Crile Jr, often known as “Barney” Crile. His father had founded the Cleveland Clinic and was a famous pioneer surgeon. The son had ambitions to emulate his famous father and had become a senior surgeon in the clinic his father had founded. He published the “no-touch technique” study when I was a resident in surgery and we all immediately adopted the method as Crile’s study suggested a significant improvement in survival of the patients. Years after it was shown to be a fraud, it is still being studied. It is difficult to find the original paper anymore but it is still being referred to proudly in Cleveland Clinic literature. In that account, Rupert Turnbull is credited with the development of the technique, which involved isolating and ligating the veins from the colon before the tumor bearing area was touched or dissected. It made sense logically in that tumor cells were thought to flow in the venous blood to the liver where they lodged and became metastases. By ligating the veins first, tumor cells disturbed by manipulating the tumor would not escape and flow to the liver. Every surgeon who did colon cancer surgery adopted it.

A few years later, I attended the GI cancer postgraduate course at the American College of Surgeons annual meeting. One of the items on the program was a study of the effect of injecting 5-FU, a chemotherapy drug, into the colon before removing the tumor. The theory here was that the chemotherapy drug would flow, in the same distribution of portal vein blood as the cancer cells, toward the liver. It was a reasonable premise but the study produced one of the most dramatic scenes I have ever witnessed in a medical meeting.

The senior author was describing the 5FU study and pointed out that the control group for his study was the same as that for the “no touch” study. The veins were not ligated until the colon and tumor had been completely dissected. Any tumor cells that would tend to break off and flow to the liver should make the control group results worse than the no-touch treatment group and similar to the control group of the Crile study. In fact, that did not happen. The control group of the 5FU study did as well at five years as the treated group of the no-touch study and the control group of the no-touch study had a significantly lower survival than any of the three other groups. Why ?

The senior author of the 5FU study answered the question for all of us right then and there. He had contacted the Cleveland Clinic statistician to learn why the results were so different and he finally figured out what had happened.

All medical studies that involved time-survival statistics use what are called “time-life tables.” These are usually generated by actuaries for life insurance companies. Over five years, a certain percentage of people will die of various causes and the percentage who die is based on their age and sex and other factors that these tables consider. Any medical study that considers survival over five years or longer must use these tables to be valid statistically. Some people will die from causes unrelated to the treated condition and these must be allowed for.  You have to correct your results for the normal death rates or you will show more deaths in the treated group (and control group) than can be attributed to the disease you  are studying. The 5FU study author had learned that Crile, who had written the “no-touch” paper, had used time-life tables for the treated group in his study (thus improving the survival) but not for the control group. This is not poor statistical method; it is lying. He twisted the data to make his study look like progress in cancer treatment. In fact, there was no benefit to the early ligation of the veins. Cancer is not affected by those theoretical considerations, probably because host resistance is far more important.

Rupert Turnbull, a justifiably famous colon and rectal surgeon, was in the audience at that conference and the author of the 5FU paper invited him to comment. Turnbull declined, saying that they would have to “ask Dr. Crile about methods.” Crile was not there and nothing further was said but the tension was tremendous. Turnbull was, no doubt, humiliated but everybody knew about Barney Crile and his obsession to surpass his father. There were questions about his earlier work on breast cancer and the validity of his papers on that subject. Ironically, his son, a journalist and author of “Charlie Wilson’s War” would become more famous. Also ironic is the fact that CBS was successfully sued for libel by General Westmoreland because of a George Crile III report on Vietnam. Maybe that’s another family tradition; manipulating data.

Isn’t it interesting that the “no-touch” technique is still being promoted as a science breakthrough 30 years after the study was shown to be a fraud? I suspect that few people who were not at that American College of Surgeons meeting are aware of what happened. I suspect the other fraudulent studies will be influencing public policy years from now, as well.

I have been called a cynic.

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Posted in education, History, medical history, medicine, politics, science | 3 Comments »

Health care reform-Part III

Monday, February 4th, 2008

Part I is a post on Evidence Based Medicine.

Part II is here.

The SEIU is planning a big push for universal healthcare in this election cycle. The time seems to be here when we have to think about this.

There is a pretty good post over at Megan McArdles blog with the comments as interesting as the post. She links to Paul Krugman, often a source of misinformation. The topic is the Massachusetts Plan that is seeing cost overruns. Every new health care entitlement, from the National Health Service in England to Medicare here, has seen huge increases in cost that were not predicted. There are a number of reasons. One is the moral hazard problem, in which people will sign up for anything that is free.

One of the comments actually poses a nice outline for a solution:

Response to liberalrob’s question “what’s your solution…”:

Sign up everybody who makes above a certain income threshold for some kind of minimal national health plan that covers ONLY catastrophic health costs. Make the cost based on age, and deduct it automatically from their paycheck like Social Security.

Make it voluntary, but auto-opt-in– that is, you’re signed up unless you fill out a form and say “Thanks, but no thanks.”

If you opt-out, decide not to buy insurance, and get sick– tough cookies.

Everybody who makes below a certain income threshold gets automatically signed up for Medicaid, at no cost.

Oh, and of course either get rid of the employer tax deduction for health insurance or extend it so the employees get the same tax break if they buy their own insurance…

Posted by Gavin Andresen

Let’s take these one at a time:

Sign up everybody who makes above a certain income threshold for some kind of minimal national health plan that covers ONLY catastrophic health costs. Make the cost based on age, and deduct it automatically from their paycheck like Social Security.

I am coming to the reluctant conclusion that a single payer plan of some sort is going to be necessary. The German system has two types of insurance, the state system which is deducted from your paycheck, and private insurance, which is available to those with high incomes who choose to opt out of the state system. The original German system had a number of health plans, some employer based and some community-based, but all had to join one unless your income was quite high, at which point you could opt out. The state system deduction is income determined and is about 14% of gross income. The private system is more like American insurance and is risk-determined, by age and state of health. The Clinton Plan in 1994 was supposed to be based on the German system. This is an attractive option for several reasons.

The present American system has a real problem with “free riders.” These are usually young people who are healthy, could afford insurance but choose to go without because they know that, if disaster strikes, they will be cared for and they can evade the cost of emergency care by bankruptcy if necessary. Some years ago, when I was still in practice, the employee of a colleague, a vascular surgeon who had once been in practice with me, contacted my office because she needed gall bladder surgery. She informed my staff that she had no health insurance even though she was employed full-time. I was very annoyed at my colleague for allowing an employee to be uninsured until I learned that she had opted out because she would rather have the extra money as salary. I don’t know that I would have allowed this but, at least, it wasn’t through any greed of his.

There is the classic free-rider. The famous “47 million uninsured” includes millions of these, as many as a third of the uninsured. Federal laws require that doctors and hospitals care for these people in cases of emergency and emergency is pretty broadly defined. The law is quite onerous and carries severe criminal penalties. Therefore, free riders can be assured of care by specialists and hospitals when emergencies require it.

The consequences for everyone else is the removal from the insurance pool of healthy young adults who would be expected to contribute and would have a low level of utilization. The same factors that make them choose free rider status make them attractive for the general pool of subscribers. This is a classic situation of tragedy of the commons. The sheep herder who grazes his sheep in the communal pasture, depletes the resources of the village without contributing his share. He will profit from this free riding until the system collapses, at which point he may make use of the resources he has taken from the common pool and go on his way leaving others to cope with disaster, or he may suffer the same fate, probably blaming ill luck rather than his own anti-social behavior.

This issue raises the question of mandates. Mandates that everyone buy insurance are part of Hillary Clinton’s plan and not Obama’s plan. Krugman says this will make Obama’s plan fail due to the free rider problem and, for once, I agree with Krugman.

There is another group of uninsured and we will deal with them next.

Point two:

Make it voluntary, but auto-opt-in– that is, you’re signed up unless you fill out a form and say “Thanks, but no thanks.”

If you opt-out, decide not to buy insurance, and get sick– tough cookies.

This is attractive emotionally but is a non-starter because of federal laws that will never be repealed. In the old days of 50 years ago, doctors and hospitals could afford to provide a modest amount of free care to the poor because care was mostly not that expensive for the provider. It was time and not material. Now, much of what is provided to the sick and indigent is expensive and the margin of profit to pay for these cases is far smaller than it once was. There has to be a way to eliminate the majority of the uninsured to prevent bankruptcy of the entire system.

A big share of the problem is illegal immigration. A single payer system without barriers to care would be a further incentive for illegal aliens, especially from Mexico, to seek care in the US. There is already a bus service from Tijuana to Los Angeles County Hospital for Mexican mothers of children who are US citizens to obtain US care for these Medicaid-eligible children. Many suspect pregnant women of entering the country to have “anchor babies” in US hospitals. The 14th Amendment guarantees citizenship for all born in the US. This will never be repealed so provision has to be made for the illegals, another large share of the uninsured.

I spend a day a week at LA County Hospital and about 60% of the patients are Spanish speaking, most of those non-citizens who would not join a single payer plan that required contribution from salary. Just as the federal government has to be the only agency that chooses to enforce the border, they are the only agency to pay for the care of those here illegally. Other community services (like schools) are impacted but we are limiting our comments to health care.

What to do with the poor ?

Everybody who makes below a certain income threshold gets automatically signed up for Medicaid, at no cost.

One problem with Medicaid that few understand is where the money goes.

Medicaid

A huge proportion of Medicaid dollars goes to nursing homes and care of the poor elderly. This will rise as the population ages. The rest goes to pregnant women and children with single men being the least likely to participate. Other conditions like mental health and the disabled from other causes round out the rest of the Medicaid population. Medicaid is not just a program for the poor children. What will we do with the nursing home population ? England does much better with home care than we do. Why ? Much of the population of Britain outside of London lives in villages and small cities that lends themselves to residential care. We have more tendency to warehouse elderly poor, perhaps because our population is more mobile and tends to sever ties with the communities we were born in. We may be more likely to end up alone with no family nearby.

Is the present system, such as it is, less expensive than a government program would be ?

That is a big question and will be Part IV.

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Posted in health reform, medicine, politics | 11 Comments »

A New Blog

Wednesday, November 14th, 2007

I have been content to comment on other blogs until now. The subjects I am interested in are politics, sailing and medical history. I am somewhere between a conservative and a libertarian politically. My sailing history goes back to college, nearly 50 years ago. Medical history is a more recent interest but I was reading original articles as a basis for study even in medical school, 40 years ago.

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