What you can do for your country

A Sensible Strategy to Curtail Ebola in US

Influenza became a pandemic during World War I in part because troops with different immune systems (i.e. recruits from Kansas) were exposed to a whole new viral stew in Europe.  For years  Ebola outbreaks have been curtailed in Africa because those "Back water" 3rd world folks applied practical measures of containment to curtail further outbreak.  They did this without bio hazard suits, respirators, etc.

In this outbreak, the NGOs flooded in to Liberia to offer help, introducing new players without any natural immunity to Ebola.  This influx of care, even using the most sophisticated modern protection methods, resulted in higher incidence of healthcare workers getting sick. Locals depended on others to save them rather than use traditional containment practices.  

As the outbreak grows in the US, perhaps we could apply some of the old lessons (common Sense) from west Africa with a bit of modern thinking:

1. If someone is exposed, insist they stay home for the period of incubation - no questions asked. Track their cell phone.
2. If someone feels sick, don't go to the hospital, call a central national health line or answer an online computer assessment form. Been to Liberia recently? We will connect you with a trained nurse.  
3. If they appear sick, dispatch a trained and protected team to their home.  Take blood sample, drop off gowns and some MREs.  Insist they stay in place.  Wait for test results.
4. If test is positive, bring them to a central health facility properly setup to deal with Ebola.  
5. Bring in care workers from Africa that already have had Ebola/carry the anti-body

ObamaCare is a Great Success, The White House is Getting Exactly What it Wants

Frankly, the White House could care less about about the Obamacare website and the cost to individual buyers.  While middle class “I didn’t vote for Obama” self employed families are losing their insurance, 9M “Obama Voters” are going on Medicaid without a glitch.  HHS has flawlessly implemented a voting registration system for each new Medicaid subscriber, just in time for the 2014 election, while leaving the individually insured stuck with fear and doubt.

With a broken website, the President rushed to Dallas, seemingly to promote health care.  Why Dallas? Because the Democrats hope to turn Texas blue.  Given the level of entitlements in the nation, you really only need about 5M-10M more people moved into the entitlement class to win the White House forever.  Who needs to fund raise when you have a signature health care bill that gives the President another $200B/year to spread around in a "Get Out the Vote" campaign.

The President would like to have the House change to Democrats in 2014, but its not critical.  Its more fun to have the feckless Republicans as a punching bag.  As a needless distraction, the Republicans and Democrats regularly attack the powerless Tea Party for somehow immobilizing the nation while ignoring actual damage done by the White House's unwillingness to implement laws they oppose.  With the vote sealed up for elections to come, the rest of his agenda can come in time through the myriad of big government liberals that assemble in Washington in future years.  Between a Federal Reserve that keeps growth at a stand still and Obamacare, a central line into the entitlement state, why would any of the entitlement class vote the Democrats out of office?

The President’s indifference to the truth or falsehoods of “You can Keep Your Doctor” is of no surprise.  The only group he cares about is lining up the voters to vote democrat for ever.  Expect nothing more.  He is after all a community organizer.

Affordable Care Act Doesn't Make Economic Sense To Me

I remember how excited I was when I created my first website in 1994. I had one of those little widgets at the bottom of the page to list number of visits.  How could someone be more proud than to have a web site hit.  The President must be so thrilled to have so many unique visitors to his web site.  All his community organizing finally paying off…..

We are now in Day 3 of the the new Affordable Care Act.  ACA is so terrific, the only positive thing the press reports is how the website crashing is a measure of success.  Its more likely that when you fundamentally change one filth of the US economy and kick self employed people off their insurance, you are likely to get a few million people trying to buy insurance.  While the press skims over the eye candy of web hits, I have a more fundamental question: will the Affordable Care Act work?

I have worked on some very complex engineering projects.  While designing a fighter aircraft in the early 90’s we had more than 25k engineers working simultaneously across more than 100 suppliers.  Our chief engineer could always translate an irreconcilable complex situation back to first principle.  A bunch of engineers would be twisted in a knot about a finite element model determining landing gear loads of an aircraft hitting the carrier deck.  The chief engineer would pull out F=MA and quickly dissect the error in their calculation.  The aircraft worked flawlessly on launch, the product of thoughtful engineering. 

When dealing with complex systems its always good to go back to first principle.  On the basis of first principle analysis, the Affordable Care Act does not make sense to me.  I have a few reasons why:

Dear John Letter: I am Losing My Healthcare

Effective Dec 31, 2013 I lose my healthcare.  ACA supporters tell me I am wrong, but the fact remains, I lose my insurance because it is not compliant with ACA.  I have paid for my own insurance since 2004.  Like 42M other people in the United States, I am self employed.  We all have the same problem getting healthcare.  My current plan is an HSA.  It cost me about $580/month, has a $2,500 deductible and no co-pay.  Through the savings mechanism, I have accrued about 10K that I can use for any uncovered health expense.  I go to any doctor I want.

Though I have tried to get into the exchange, I have yet to find out what plans are now available.  Putting together various news reports from people in my state, it appears the nearest available plan is a Silver PPO.  That plan is $560/month, has a 20% co-pay, and a $2,000 to $4,000 deductible (still unclear).  It does not cover my current doctor or hospital system, but it offers a good hospital system. Though I save $20/month I have to pay 20% of all expenses.  To me, this is by no means a savings.  So even though I currently have insurance and a doctor I like, as of Dec 31st, like many others, it is gone.

• Obama lied, my health plan died – You may think Malkin is a tea party hack, but the fact remains she lost her insurance, as have others
• Example Anthem Dear John Letter – many examples of people losing insurance
• Health insurers to customers: If you like your plan, you can keep … nah, you’re screwed
• Ten states where Obamacare wipes out existing health care plans
• Man with incurable leukemia dropped from health insurance because of new regulations
  

7 Million Will Sign Up, or They Won’t

Sibelius expects that 7 Million will sign up for ACA in this enrollment period.  I bet you think these 7 million are the desperate uninsured.  They are not.  The administration is giving us a low number on purpose, so later it can say “Look we got 20M signed up.  What a success”.   In fact, a large fraction of the people hitting the exchange are the 19M of the 42M self employed people who buy insurance from the Individual Market.  Many of them lose their insurance under ACA.  Anecdotally, it appears about 1/3 of the Individual market may be losing insurance.  My guess is we will not know for a very long time how many people coming to the exchange lost their insurance because of ACA and how many bought insurance because they never had it.  Surveys suggest 1/3 or more of the uninsured will not purchase insurance.  With no limit on pre-existing conditions, why would they bother buying insurance they already can not afford?  Forcing people from the individual market to now buy ACA is great way to be sure the exchange gets subscribers if pricing falls short of the uninsured’s expectations.

• Individual Market Health Insurance

• Two-Thirds of Americans Don't Know If They Will Insure Under Obamacare

• CBO: Uninsured Under Obamacare Never Falls Below 30 Million

  
  

Web Site Performance: Every New System Has Problems, Just Look at Google When It Started

How many startups have a multi billion dollar budget and 3 years before launch to get it right?  Senator Reid noted that the founders of Google said their website crashed all the time in the beginning because they had too much demand.  California spent 313M to setup their online exchange.  God knows how much the Federal Government spent.  500M?  $1B?  Google was likely bootstrapped with $1M.  There is no comparison.   The Federal Government spent 3 years planning the online exchange.

With no “Pre Existing Condition” rule, what does the insurance company need to know to price the insurance policy?  Basically all the system needs to know is our age, number of people covered, plan choice (Gold, Silver, etc), and income (for subsidy).  Frankly, none of this sounds difficult. 

From a technology perspective its no surprise it is failing.  You can only find out about plan information by completing the entire registration process.  Forget the price, you can’t even find the name of the providers or scope of services.  So everyone, lurkers and all, need to go through the whole process of registration, verification of your identify, details on your family, and then a list of possible plans. Imagine you wanted to buy a car, but before you could look at the car/options, or even the model, you needed to register your name with the federal government to browse the GM website.  You would think someone would have created an exchange for health insurance already, and they have: www.ehealthinsurance.com – without logging in I got a quote in about 3 seconds.  My guess is they did not spend $318M creating this site.  Now that I think of it, its irritating the government is wasting money to poorly replicate an existing system.

Something like 1% of people that are on the federal exchange get to even see the plans.  Fewer actually buy a plan.  Here is a hint to the people who wrote the software.  Let the 99.5% of viewers just look at the breadth of available plans for their state.  That takes all the load off the registration/verification/profile system to calculate plan options, subsidy, etc.

Frankly the design is so odd, it makes me think HHS is more interested in locking you into the system so you don’t realize the plans suck and you don’t want to buy.

• Here’s why getting the Obamacare exchanges to work was so difficult
• IT experts question architecture of Obamacare website
• Experts Suggest Software Problems, Not Just Demand, May Be Behind Marketplace Glitches
• Healthcare.gov is a complete fiasco this morning
• Are Obamacare’s Federal Exchanges Practically Empty?
• Obamacare Spam Surface Even Before Enrolment Starts

• Minnesota Obamacare Exchange Leaks Private Information for 2,400 People

ACA’s Economics of “Premiums” Don’t Work

ACA prohibits the highest price and the lowest price of insurance from being greater than 3x difference (Age Rating).  This means an insurance company can not charge a 55 year old more than 3 times the premium of a 27 year old.  But the cost of care for a 55 year old is about 7 times as high as for a 27 year old.  For the actuarial system to balance, ACA needs to sign up 2.3 – 3.0 as many young people as old people.  Demographically there are more 55 year olds than 27 year olds.

55 year olds worry about price, but have resources to adapt.  27 year olds are very price sensitive.  A 27 year old can buy a catastrophic policy for about $40-$50/month.  Perhaps they might be persuaded to pay as much as $150, or even $200 for a more comprehensive plan, but no more.  So the 55 year olds plan can not be more than $450-$600/month.  Of prices are too high, no young people will sign up and the system falls apart, and the rate for the old people is linked to the price sensitivities of the young people.

So what happens? Well the insurance company, not able to price the 55 year old’s policy at the correct yet higher price ,is forced to use price control to let the actuarial system balance.  They achieve price control by limiting a patient’s hospital network to the lower cost often lower quality network systems.

We do not know how many young people will sign up.  Since they can buy a policy when they are really sick, there is no compelling reason to buy now.  If young people do not signup, the insurance companies will be forced to raise rates in 2015.  Raising rates will cause more young people to bail.

• Comprehensive Assessment of ACA Factors That Will Affect Individual Market Premiums in 2014
• The Affordable Care Act Negatively Impacts the Supply of Labor

• Obamacare's Steep Levies on Young People

• Obamacare Increases Premiums for Most People

• Tennessee: Obamacare will triple men's premiums, double women's

• Obamacare Will Increase Avg. Individual-Market Insurance Premiums By 99% For Men, 62% For Women

• Obamacare delays out of pocket cost limits

Cost of Services are Unlikely to Go Down

ACA supporters believe the introduction of new patients with insurance drives operating costs down.  If your in a freshman seminar, I guess you might believe as quantity goes up, price goes down.  Well its not really that easy.  Healthcare is a people driven service delivered by nurses, technicians and doctors.  More patients also means more overhead.  Though demand is going up offering uncertain pressure on price, supply is going down at a faster rate.  Doctors are retiring faster than new supply.  Medical infrastructure is slow to expand.  Increased demand with limited supply drives cost of services up not down.

The other way to drive down cost is innovation.  Innovation, like an EMR, might let a doctor see twice as many patients in the same period (it doesn’t really).  A drug company developing a satin might reduce the number of invasive heart procedures.  Technology and Innovation drive down cost.  But ACA set a new tax on innovation, under the premise that ACA provides more patients to drug and device companies, so ACA should get a cut of profits from those companies.  Unfortunately those profits are the motive for an entrepreneur to operate.  Before we attack the entrepreneur’s greed, that profit is a fraction of the benefit their drug offers society by cutting invasive procedures. 

• The U.S. Health Care System Doesn’t Need Price Controls. It Needs Price Signals.
• Merck to Fire 8,500 in Strategy Overhaul That Shifts R&D

Your Auto Insurance Doesn’t Cover Oil Changes

Insurance is about covering unexpected costs.  Of 1,000 people a fraction might have a “break the bank” catastrophic illness that costs 100k or 200k.  A larger fraction might have 50k in care.  Most will never use their full insurance benefit.  ACA attempts to reduce lifetime insurance costs through preventive services, as if a doctor telling us we need to lose weight is by magic gong to change our self destructive ways.  Its clear, health improves greatly if people know and treat high blood pressure or diabetes.  These preventative measures work better when your rates are altered as a nudge to good behavior.  ACA prohibits setting insurance premium based on care compliance. 

But none of this matters in the context of preventive care costs.  We each pay for the care no matter if its covered by insurance or we pay it directly.  Since more than 90% of the patients will have appointments with their doctor and need to pay for these treatments, the insurance company will pass 100% of those costs back to the patient in form of premium.  The insurance company must charge for the overhead of paying for these services.  Doctors charge for the 90-180 days it takes to receive reimbursement.  Frankly between services, payment delays/overhead, and insurance costs, it costs the patient less overall to pay the doctor directly out of pocket. 

The bigger irony is if you take care of high blood pressure, and live longer, you create a bigger social welfare burden because you live to 70, receive social security/Medicare, and die after having $100k in cancer treatment.

• Want to Save Health Care Costs? Then Subsidize Smoking
• Study Finds Medicaid Has No Effect on Measured Health Outcomes

Conclusion

On a mid term and long term basis, the regulation of price and cost in a narrow service offering on a federal regulated exchange ultimately slows innovation, curtails supply, and drives entrepreneurs out of the healthcare field.  The economic incentives are out of sync with the forces that have driven down the cost of computers, cars, phones, etc while improving quality and availability.  Once the near term euphoria of web site hits wears off, we will find the new insurance plans were bought by people with existing insurance, the young invincibles undersubscribed, and health care costs are higher.

• A Libertarian Economics Student on the Arizona Obamacare Mess and AZ Medicaid Expansion
• The Only Ones Who Misunderstand ObamaCare More than Its Detractors Are Its Supporters

Affordable Care Act and Utillilties

Hurricane Sandy destroyed much of the North East power infrastructure.  Customers wonder "Why weren't the utilities ready". Angry customers want all infrastructure underground. Governors want answers. Why are the utilities so bad? And how does this relate to the affordable care act?

Utilities develop investment plans looking at a range of issues from carbon emission, growth, efficiency, and resilience. Utility infrastructure is capital intensive. It often takes 30-40 years to pay back on their capital investment in generation, distribution, and other infrastructure. In most businesses, a company would look at profit/loss, access to capital, and customer needs to determine the best course of investment. Utilities however take this plan to a government run Rate Commission. The Rate Commission has its own opinion on what a utility could charge a customer for energy. That Rate is of course how utilities pay the capital cost of their infrastructure investment. The Rate Commission often is concerned about the near term rates of voters. So, it works hard to push rates as low as possible, forcing the utility to reduce investment in long term plans like outage management system, distribution and generation. 

Rate commissions are political in nature. After the 2008 economic down turn, many municipalities pushed for a Green Energy agenda. The Department of Energy created several large incentives/stimulus programs designed to shift utility focus on wind/solar power, energy efficiency, and smart meters. Rate commissions collaborated with the department of energy to drive utility investment in the direction of these Green strategies. Rate Commissions, through a complex political process, in the end control the strategy for infrastructure investment. These strategies often bias towards the near term.

Ironically, once a big storm like Sandy hits, Governors, Senators, Congressman, Commissioners, etc. all point their fingers at utility executives and set blame on the utilities. In fact if you review rate case materials you will likely find extensive documentation explaining the need for new infrastructure, over turned and rejected by the Rate Commissions. But rate payers and the news rarely look at these filings. Its easier to demigod the utility.

Post Sandy power failures, and the inability to quickly recover, are a window into a potential future of healthcare. The Affordable Care Act is less a takeover of health care, and more a takeover of the systems processes and rules. Some might consider that the same, but its actually worse. In many ways, the best analogy for ACA is how we regulate utilities across several dimensions including the price, the means of delivery, the investment by providers, etc. In a "Utility" model, there is a disincentive to invest in innovation. Price of the service is often driven below is real long term cost, which may or may not increase availability, but certainly constrains quality. With low investment, regulatory constraints and restrictions on profits, innovators will seek other markets. 

Like utility customers harmed by Sandy, when health care starts to fail us the source of failure will be elusive. Politicians will use hearings and their media pulpits to vilify the providers. Some will suggest single payer or some other sort of further regulatory action. As is true with Sandy utility customers, and other regulated markets like mortgages, few will turn back the clock and recall a time when other better options existed.

Some believe the expansion of services to those without health care outweighs the loss of innovation.  Its sad that they think that is the only trade-off.  Companies like Whole Foods provide low cost high quality care using means like heath savings accounts.  There are strategies that lower cost, drive innovation and expand availability.  Utility models are a century old solution to monopolies.  After more than 100 years of this old business model, we know that competition beats out monopolies.  If we truly wanted to provide universal health care, the competitive market will be the incubator of that plan.

• A Layman's Plan for Healthcare
• Obamacare: Competition just like Expedia.com....
• Evil rich guy who does not care, apparently.....
• Perpetual Majority Hidden as Health Care
• A Doctors View: Government healthcare already rations
• How Health Care is Killing Us
• How American Health Care Killed My Father - The Atlantic (September 2009)
• WSJ oped article from Whole Foods CEO
• Safeway - WSJ article
• What is more important personal freedom or universal care?  
• Do you know your cost of Health Care? A reality test for congress

Freedom of Religion with a Loop Hole

Americans have a deep respect for the freedom of religion and separation of church and state.  It is disappointing that we had to wait until now to get the left to see the evil of Obamacare.  Its easy to see why the President's team was caught off guard, they figured they had already tricked the American people into a utopian vision of health care, why should people care about further state intervention?

So, faced with an uproar from religious leaders and 2012 voters, the President made another non-pivot in his evolving health care executive order (Aren't these things supposed to be put in law by Congress):

“Women will have free preventive care that includes contraceptive services no matter where she works. The policy also ensures that if a woman works for religious employers with objections to providing contraceptive services as part of its health plan, the religious employer will not be required to provide contraception coverage, but her insurance company will be required to offer contraceptive care free of charge.”

Beyond the apparent bias of thinking only women are responsible or contraception, the President offers a morally ambiguous solution.  Either way the result is the same, through the act of employment with the religious institution women will receive services that are in conflict with the religious organization's moral values.  You can imagine politicians and advocates starting their arguments with "Well technically.....".  

Morality declines slowly.  Little rules and exceptions become routine over time, ultimately acceptable.  The left continues in its quest to make pregnancy a diseases.  PS: A condom costs $1.  

 

 

 

 

 

Its time to file for your Own ObamaCare Waiver

Health and Human Services has made it very easy for companies to file for their own waiver to certain aspects of Obama Care.  Given the personal mandate and challenges in getting health care insurance, perhaps each of us should be filling for a Waiver.  The process is very easy:

• Fill out an excel spreadsheet
• Follow some instructions

Its unclear that we will get the waiver.  And, I am sure there are a whole bunch of things the Obama administration has done to make it difficult, but at least we should let HHS review a waiver from each of the 300M americans.

The general website for waivers is: http://www.hhs.gov/ociio/regulations/annual_limit_waivers.html

Approval
To actually get your waiver approved, you need to donate to the DNC: http://www.democrats.org/ or http://www.barackobama.com (Or anyone of a dozen unions). But if you want to eliminate the need for a waiver then you should probably donate to the RNC: http://www.gop.com/

Additional Help
Of course, personal attention is always helpful, so you might consider a detailed note to the program administrators at [email protected] I am sure they would love to get a lot of emails asking for their help in filling out the paperwork, given the nice pension they have and all.....

Getting the message out
Please pass this post onto other people so they can get the needed information and file for their waiver. If you post on twitter please use the hash tag: #waiver 

Abortion, Indiana and the Power of Markets

Mitch Daniels decision to defund abortion clinics in Indiana is an interesting step.  The Left talks about the broad scope of services offered by Planned Parenthood and the need to continue to expand these services to aid the care of women.  Perhaps a simple answer to their request is for Anti-Abortion forces to develop a pool of matching funds that augment health clinic budgets if those clinics stop offering abortion services.  At that point, the left would be stuck with defending just the abortion services argument, which is a loser with independents and the right.

Interesting Planned Parenthood Statistics

Planed Parenthood:

• Performed 332,278 abortions in 2009, while serving 7,021 prenatal clients and referring 977 parents to adoption services. 1 Adoption per 340 abortions.
• Conducted 25% of the abortions in the US
• Conducted 2% of US Paps Smears (Recall that if you have an abortion, you need to have a paps smear)
• 80% of clinics are in minority neighborhoods
• Since Roe v. Wade there have been 53M abortions in the US since
• Black women are 12.3% of population, but 37% of abortions in US.
• Hispanic women are 12.5% population and 22% abortions.
• In US 3,315 are aborted each day: 729 Hispanic, 1,127 White, and 1,227 Black.
• 1,577 died in New Orleans Katrina
• Figuring a "Normal" abortion rate in the black population, there would be 2.6M more black voters today, and 216K more each year
• 11M people were killed in Nazi genocide.
• Sanger's Planed Parenthood beats Hitler 50M to 11M. (The power of being a community organizer over a lunatic despot)
• Since the legalization of abortion, unwed motherhood has grown 3x
• 2009 Federal dollars received $96M
• 2009 Profit: $63M
• 2009 Cash on Hand: $440M

Based on these statistics it appears Planed Parenthood is:

• Very efficient at abortions, but not that great at selling Paps Smears or adoptions
• Increasing unwed motherhood and the associated economic burden
• More effective at disenfranchising minorities than the most evil of evil in the United States

ObamaCare Unconstitutional

If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.

http://www.constitution.org/fed/federa51.htm 
Cited by Federal Judge Roger Vinson in his Decision

Obamacare: Competition just like Expedia.com....

I really don't understand that much in the world.  Most of my experience relates to innovation and creating businesses.  I have a good sense of politics, but don't understand how politicians can shift their opinions so readily.  I operate on a principle of facts.  When facts are limited, I operate on principles that have worked in other situations.  When faced with new options or ideas, I try to understand comparable situations.  I guess my lesson in life so far is that new ideas are a lot harder to implement than first imagined, so its worthy to understand the risks and design a system that avoids those risks.

As a human, I like the idea of everyone being able to see a doctor.  I believe everyone in this debate feels the same.  I also believe everyone should be allowed to eat, but I don't see taxing the rich to feed the poor.  So, on the issue of caring for my fellow man, can we say we are all on the same team?

If I were a racist.....
So, the question becomes how do we improve the environment so that more people can access health care if they choose?  I had a liberal MIT professor who studied housing projects in the late 60s.  He concluded that housing projects were a bad thing.  He was called to congress to get a whipping from Tip O'Neil.  After giving his testimony on his conclusions, the congressmen accused him of being a racist.  Perhaps an ivory tower academic who did not care for the less fortunate.  The Professor responded "Dear Mr. O'Neil, if I were a racist I would be for public housing!" 

You see, his conclusion was public housing concentrated together the part of the population having the hardest time operating in the economy.  It brought together the most challenged into a single crucible of despair.  Rather than intermixing these folks with mentors and more successful people, it placed unwed mothers along side of criminals, in which children looking for father figures sought out the worst models in society.

Just like Expedia.com......
I was watching Meet the Press on Sunday.  Steny Hoyer, was the guest.  After he wrongly asserted that polling showed the American people widely support health care, he said that health care reform was about creating open markets and competition.  I looked up his resume on his congressional site.  It had no information about his private sector experience, just a long list of accolades for political accomplishments (legislation not results).  I went to Wikipedia to get more details.  There I found his entire career has been in politics.  He got a law degree and then went into the state legislature.  Hmmm.....  Wonder where he got his experience understanding competition.  I don't know much about politics, but I do know a lot about competition and innovation in business, because its been my vocation for 20+ years.

This idea of an exchange seems to be the magic bullet to competition, at least that what Mr. Hoyer thinks.  I have heard him mention many times, "You can go on line and shop for health care just like getting a ticket on Expedia.  So, health care will be competitive".  He might want to think about this some more.  If putting up a web site was all it took there would be hundreds of Expedia like sites serving the public.  And maybe there are hundreds.  But to be successful, it takes skills beyond just putting up a web site, like unique access to plane tickets, long term contracts, proprietary deals, unique insight into customer behavior, presentation of customized solutions, etc.  Expedia needs to offer something unique to keep customers coming to it.  Expedia sells a fungible item, an airplane ticket from A to B.  You can sell a ticket on line because there is little debate about its quality and value.  The customer understands what is at A and B.  The customer knows why it is worth traveling there.  They understand essentially what kinds of planes there are.  They understand a great deal about the product, so buying airplane tickets on line works.

Last I checked, health care is a complex product.  Different people have widely different needs.  Insurance is a shared risk pool, so people offering health care have different offerings and criteria.  If Hoyer was right that an "Exchange" is the magic bullet to competition, why hasn't someone put up a "Health Care" exchange already?  Hmmm......

It is a system.....
The Health Care market is a system, change an incentive in one area and the rest of the system will adapt to the needs of the market.  Congress is stepping in with their list of constraints to control the system.  Congress seeks to offer health care to everyone, or most everyone, through various rules, regulations and taxes.  As they seek to expand care, they actually are constraining it.  At a macro level, there is a lot of innovation to come which will improve health care.  There is a lot of unfinished science.  So, as a system health care is not done innovating.  In markets where innovation is essentially complete, regulation helps.  In markets where innovation is incomplete, regulation disrupts and slows innovation.  And here are some reasons why.....

• Increased taxes on unearned income will cause investors to seek out tax free assets like Muni Bonds to shield wealth.  This will reduce the amount of money in high risk ventures.  This reduces taxable income and expected resources from the rich to cover health care costs, so the CBO forecast will be wrong.
• Taxes on innovation, like devices and drugs, reduces investment in drug companies and device companies.  Investors will go after other markets.  Reduction of next generation drugs and devices, which reduce health care labor content, will create pressure for more doctors, nurses and health care facilities.
• Constraint on Medicare/Medicaid fees for services will force health care operations to pass unpaid cost of care to the private care market.  This will increase costs for insurance companies, driving up premiums.
• Doctors, who's profit is constrained, will retire.  Fewer people will want to enter the health care profession because constraints on innovation and revenue constrain profit, which constrains salaries.  
• Higher demand for health care, which should drive health care salaries up, will meet price cap regulations, resulting in labor shortages and market based rationing
• The forced inclusion of young people may increase private insurance revenue, thought it is unclear against other reductions in innovation if this extra revenue outweighs new costs.  Ultimately SCOTUS will rule mandate unconstitutional.
• Requirements to accept pre-existing conditions, elimination of life time caps, etc will increase premiums
• Caps on insurance premiums with increased costs will constrain supply. Insurance companies will stop taking patients.
• With higher insurance premiums and restraint in supply of private insurance companies, businesses will elect to eliminate employer care and pay the fine
• Entrepreneurs looking for markets will avoid the constraints of the health care market, seeking riches elsewhere.  Health care innovation will decline

This is still a market in search of innovation.  The government is stepping in to regulate cost and delivery.  Government operates on 30-50 year regulatory cycles, very slow to change.  Innovators operate on 5-10 year cycles.  With increase control by government, innovators will look elsewhere for rational markets.  Taxes will drive down incentives for health care investment in R&D, driving demand for more labor.  Reduced salaries and other market constraints will cause the best and the brightest to go into other markets, much how the "Quants" moved from aerospace to Wall Street after the fall of Russia.

Hurting those you love the most......
Congress is seeking to expand care to help those without.  A good cause.  But, given how the market works the Health Care legislation will reduce the supply of doctors and technology, reducing quality of care overall.  More people will have insurance so to speak, but with declining quality.  Everyone will have an insurance card, but not everyone will be able to access health care because the constraints on talent, devices, and drugs a defacto form of rationing will occur (death panel or not).  The well off will seek care through private means.  The not well off will be stuck in the system, just like the "Housing Projects" stuck people in despair.  So in the end, we are trading one system for another system of care, but patients will be no better off. 

As defacto rationing ensues, the 30M with no insurance but some access to doctors will become 30M with insurance, but no access to doctors.  I wonder, in the end who is the one without passion for those without health care?

Evil rich guy who does not care, apparently.....

I am one of those evil successful people who needs to give his "Fair Share".  I have been listening to the health care debate.  I have read the giant bills congress has created, which seems like 2000+ pages to essentially say "We will force 240M Americans to pay for the insurance of 30M other Americans".  The more the press, politicians, etc talk about the Affordable Care Act, the more I feel like I am a bad guy in some way or manner.

Occasionally I have been at a dinner or some other social event when someone says, "Jim what do you do to contribute to society".  That's easy, "I create jobs".  To which they say, "No, what do you do for  for society? The poor and the indigent".  I thought I answered them the first time.

I do one thing very well and that is, help innovative ideas turn into full scale businesses that employee a lot of people, creates a lot of opportunity and pay a lot of taxes.  I have a specific talent for innovation and business creation.  I really don't do anything else well.  Occasionally I have thought I might become a rescue dog person, you know the kind that goes to earthquakes and helps find people with their German Shepard.  But, I really want to do that because I love training German shepherds.  I am not sure that counts for the "contribute to society" question.

I work very hard and do not take care of myself.  I pay all my taxes.  I don't try to play the “edge” on my taxes as I have a right to do.  I probably will drop dead of a heart attack at some point, so I doubt I will burden the health care system much.  I don't use my power to get to the front of the line.  I travel on commercial airplanes rather than private jets.  When people need help around me I find them jobs, give them money, or help in anyway that is appropriate.  But, President Obama, Speaker Pelosi, Leader Reid, and others say I need to do more to help others.  I need to give them more money so they can offer health care to others.

When I do give money to a cause, I normally find that there is some form of acknowledgment by the institution (Did the IRS ever send you a “Platinum Card” thank you note?).  I am often asked to join the board to help the cause do more and expand its success.  I am asked for financial and intellectual contributions, respecting that my success in business might help the success in the cause.  I am not sure that is always correct, but it is what it is.....

So, our dear government, as you reach into my pocket let me give you the benefit of my 20+ years of business success creating 20K jobs, generating billions in revenue, collecting 3M+ frequent flyer miles, starting 30+ businesses, and paying millions in taxes.....

Its a "False Choice" to suggest health care is broken and this plan is the only fair way to provide health care to 30M.  My biggest lesson from business is to look for solutions that mitigate risk, not create them.  Given a choice of an Ivory Tower perfect plan vs. a mundane partial solution derived from market feedback, I take the mundane.  If the government wanted to deliver health care to more people, they should do what has worked in our economy (not Europe), like Health Savings Accounts.

Wal-Mart has done more to help society, by driving down food cost, than any government program.  The United States is unique in its ability to innovate.  Ironically, It appears that government doesn’t really care about the 30M uninsured.  Because if they really did, they would choose a low risk proven solutions (like HSAs) rather than unproven, innovation constraining, government intervention.  If government really cared about delivering affordable care to more people it would choose innovation over Government intervention.  There is no way for the CBO to properly score what will happen under the Affordable Care Act, because markets will not follow the Government doctrine:

• Entrepreneurs will pursue business elsewhere because innovators don't like a game that is fixed.  With less innovation, costs will go up. 
• The wealthy, responsible for paying for increased costs, will work less thus reducing the revenue (Tax receivables) forecast
• More free Helath Care will increase moral hazard, thus increasing cost
• Pre-existing condition requirements will increase insurance cost, directing anger towards health insurance companies, and driving for more government regulation, ultimately leading to government take over
• Government will never move at the speed of the market, as new technologies are developed or patient needs change it will take years for government to alter polices to allow health providers to provide better solutions.

I don't know what the motives are of those pushing for this health care bill, but I doubt it really has anything to do with better care.  It likely intends to increase government resources and congressional powers.  But as the person paying for it, I vote no.  And interestingly, I have the choice not to participate by not working.  I am not sure what the President will do next if I don't work.  Maybe he will require all successful people to gather at a work camp to deliver our services to the nation.  Unlikely.  All I can offer as an evil rich guy is: I am tired of others reaching into my pocket and telling me how I should behave, given that I have done everything possible to contribute to society by creating jobs and opportunity.  Congress has no moral high ground in this argument, but the do have the power.  Its a sad day.

Perpetual Majority Hidden as Health Care

By the time I was 30, I started to realize that when someone articulates an opposing view its best to assume they are right and I am wrong.  Introspection informs one argument.  So, I have been carefully listening to the Health care debate trying to understand how to cover more people, deal with pre-existing conditions, address rising costs, and assure Medicare does not go bankrupt.  I listened with the hope of addressing these issues while expanding innovation.

Despite the various erroneous statistics claiming deficiency in quality of care in our current system, the United States is the center of world wide health innovation.  Our market has created the new technologies that socialized program around the world use to deliver high quality care.  Our innovation  gives other nations a free ride. 

I hoped in the present debate over health care that we could fashion improvements in our system while protecting the innovation that has made it great.  I hoped that we could preserve our rights of choice, while expanding coverage.  I hoped that we could go beyond any other countries' success with a model that expands rather than constrains.  I listened between the noise of Right and Left to find real answers that could achieve wholehearted support across all demographics and political persuasions.

But alas, my deductive reasoning is taking over.  Having read many insightful articles on how to fix the health care problem and having read the bills before congress, I see no correlation.  For example:

• Health Savings Accounts (HSA) have reduced health care cost by 5%-15%, but they are essentially banned by the bill
• The core source of health care issues in the United States is poor preventive care, but there are few motivating provision for preventive care in the bill
• Innovation is a significant component of care to date but the bill increases taxes on companies that develop new technologies thus discouraging innovation
• Different people need different care but the bill implements new authorities that will regulate the scope of health care to limit variations
• The free market has rapidly reduced cost of elective procedures like lasix, but the bill attempts to reduce cost through unproven means like cost controls
• The bill says it will reduce costs but can only be afforded by increasing taxes on the rich by 5.4%

So, I am wondering how experts in the field of health care have views that differ so significantly from the bill in congress.  My conclusion is this is not a bill about health care. This is a bill about controlling 16% of the economy. 

It is interesting to note that the legislative branch was Republican dominated from 1861-1933.  Under the new Deal, and passage of Social Security (amongst other programs), Democrats laid ground work that gave them legislative power, reinforced with medicare and welfare under LBJ, through 1981.  Through a strong believe in the free market and freedom, Reagan laid the foundation to open markets and empower innovation.  Since then we have seen Republican legislative leadership for the almost the last 30 years, reformation of welfare and a range of other empowering steps that accelerated economic growth.

It appears that social programs help Democrats keep legislative control.  Overtime, as people get tired of government, eliminating social programs helps Republicans take legislative control.  So, if Pelosi is writing a health care bill that  does not fix health care, could She really be writing a bill to perpetuate a Democrat legislative majority?  What are the signs? 

• Increasing taxes on the rich who rarely vote democrat anyway
• Let young people remain covered under their parents
• Don't tax high value union health insurance programs
• Accept a narrow vote on a monumental piece of legislation

To add to my cynical view, add the notion of offering citizenship to illegal aliens.  If the Democrats can successfully pass the health care bill and then allow a large fraction of illegal aliens to become citizens, they lay the foundation for a democrat majority for the next 50-60 years.

I am reminded of some key passages of the Gettysburg address:

...our fathers brought forth on this continent a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.....The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government: of the people, by the people, for the people, shall not perish from the earth.

Gettysburg reminds me that the United States has achieved greatness through freedom and individual exceptionalism.  As Andrew Jackson said, "One man with courage makes a majority".  I interpret Lincoln to say that we need to respect the mission of individual excellence and to be "...dedicated here to the unfinished work..." of others, dedicating ourselves to "The great tasks remaining before us".

Lincoln professed that freedom and equality are a function of the individual's ability to rise above all else and contribute in exceptional ways.  Lincoln did not mean "All men are created equal" so take from the rich and give to the poor, or have government displace personal freedom.  Freedom is equally challenged by wiretaps as by government driven social programs.

The fundamental reality is there are more than enough ways to streamline health care without a giant government program (See "Layman's guide to Health Care").  The more important message is that Pelosi and gang are attacking the notion of our democracy by driving the health care bill.  They say they are well meaning, but their failure to incorporate market proven solutions like Health Savings Accounts tell otherwise.

If its the case that the underlying purpose of the bill is to perfect the Democratic majority,  it is beyond disgraceful.  Government intervention to save money does not work.  Government intervention to protect a majority does work.  As citizens we need to dig in deeper to understand what is really going on with this bill, demanding real reform that reduces cost and expands care using the free market.  If the bill just protects the majority, it is immoral and cynical.

FACT CHECK: Health insurers' profits 35th of 53

The Chicago rules say to pick on folks to win your points; (Alansky's Rules for Radicals)

RULE 12: Pick the target, freeze it, personalize it, and polarize it." Cut off the support network and isolate the target from sympathy. Go after people and not institutions; people hurt faster than institutions. (This is cruel, but very effective. Direct, personalized criticism and ridicule works.)

It seems, as highlighted by a recent article in AP, that the administration should have followed the "...not institutions..." part of the Alansky rule set.  Institutions have fact's that in the end come out.  Institutions at some point fight back.  The AP article goes on.....

In the health care debate, Democrats and their allies have gone after insurance companies as rapacious profiteers making "immoral" and "obscene" returns while "the bodies pile up."  But in pillorying insurers over profits, the critics are on shaky ground. Ledgers tell a different reality.  More.....

2.2B on vaccine that will arrive too late, an imperfect plan? Smart power?

We have known about the H1N1 (Swine Flu), risk for many months now.  We knew that last spring's outbreak would turn into a more virulent strain by this fall.  That is all basic science.  Concerned for our citizens, the government recognized the need to produce substantial volumes of vaccine.  We have spent more than $2.2B for H1N1 Swine flu.  To date, only a minor amount of this vaccine has been delivered, but concern seems muted.  Despite new vaccine manufacturing technologies, we persist in using outdated methods and to spend huge sums of money in a wasteful manner.  Why? 

Here is a bit of background....

• Clinton (HRC) pushed the Vaccines for Children policy in 1993, which caused most manufactures to exit the industry
• In early part of Bush administration R&D in vaccine research was dramatically increased
• 2004 season: a combination of fewer manufactures and accusations of Bush incompetence resulted in ~40M dose short fall vs. plan of 100M doses for season flu
• Fear of Bird flu and other emerging pandemics led Democrats to accuse Bush administration of multiple failings.  Budgets for pandemic research and preparedness were increased substantially (more than $4B over 2005-2007 time frame) 
• Additional $1.5B was authorized in Spring of 2009 to produce H1N1 vaccine.  Total spend for H1N1 Vaccine of approximately $2.2B 
• By Fall of 2009, only 11.3M doses of a planned 250M doses have been delivered.  HHS claims there have been minor "glitches", DHS claims all is per plan
• Critical study shows vaccine will arrive too late for impact on H1N1
• 1,000  3,900 people have died so far in US (if you recall 1,494 died in Katrina apparently because of Bush's failing and global warming, which is also Bush's fault)
• Main Stream Media is mum on whole issue, Fox (non) News is not

My frustration comes from a few issues.  The historic process of making vaccines in egg shells is arcane and subject to numerous production risks that can result in last minute issues like contamination (cause of 40M dose shortage in 2004).  Liability clauses discourage drug manufactures from manufacturing vaccine, and Government is unwilling to wave terms.  Companies like Novavax (www.novavax.com) have had a novel technique, using virus like particles to make large volumes of vaccine, for many years, but government continues to buy from companies using old egg technique.  Per the time line below, Democrats have put huge amount of effort and money into realigning national efforts for pandemic response (and ridicule of the past administration for its failures) but seem to deliver worse results.

So, we are spending dramatically more money.  We have all the best minds focused on the subject.  Every resources of government is focused on success.  Obama has every resource he has requested.  We have been spending the last 4 years realigning efforts for pandemic. And, we are 210M doses short of plan for H1N1.  When the vaccine does become available, the pandemic will likely have run its course killing more people than died in the (supposed) last government lead disaster (Katrina).  Is this smart government?

Frankly, had government instead focused less than a $1 billion on new production techniques like those of innovative companies (Novavax, etc), we would have all the vaccine we would ever need.  Where are the hearings?  Where is the outrage?  Where is our money?  Is this how stimulus is being spent?  Does anyone in Congress actually think about a problem, look at the fundamentals, and perhaps question why we are still building vaccine the way we did in 1940?  Great innovation guys, where are our coffins?  

Timeline

1993

HRC (Clinton) implements Vaccines for Children program gutting profitability in the vaccine industry and imposing government control over a large share of revenue.  Major players exit industry in response.

2001-2004

Bush administration raises vaccine funding from $39 million in 2001 to a proposed budget of $283 million in fiscal year 2005. The National Institutes of Health has increased its spending on new ways to make vaccines to $60 million from $20 million. (NY Times) 

2004

January:Senators Bayh, Landrieu and Durbin introduced the Flu Protection Act (S. 2038) to strengthen the nation’s vaccine supply and establish a plan to prevent, prepare for, and respond to an influenza pandemic.

October:Vaccine production for 2004 season falls short ~40M of a planned 100M doses.  Bush was accused of incompetence and insensitivity.  The 40M  dose shortage was associated with a contaminant found late in the manufacturing process.  Senator Kennedy requested from Acting Commissioner of Food and Drugs Lester Crawford a complete record of all contact between FDA and Chiron Corporation, a major supplier of influenza vaccine to the United States.  While Chiron had announced problems with vaccine production back in August 2004, FDA claimed to be surprised by the early October announcement that Chiron’s Liverpool facility had lost its license to produce vaccine.  Kennedy expressed the great importance of a stable, effective vaccine supply to protect Americans from seasonal flu, which is also necessary to respond to a pandemic influenza outbreak.

2005

March 2005: Senator Obama successfully amended the Foreign Relations Committee Authorization Act to authorize $25 million for international efforts to combat avian influenza and called on then-President Bush to create an inter-agency task force composed of representatives of the Department of State, Department of Health and Human Services, Department of Agriculture, and other appropriate agencies.   

April: then-Senator Obama introduced the AVIAN Act (S. 969), the first comprehensive bill addressing the threat of pandemic influenza.

May: Senate Democrats secured $58 million in the Supplemental Appropriations bill (P.L. 109-13)to purchase more antiviral medication for the Strategic National Stockpile to better prepare for pandemic influenza.  This law also directed $25 million to USAID for programs to control the global spread of the avian flu. 

August:1,464 people die in Hurricane Katrina

September:Senator Reid took to the Senate floor urging immediate action to prepare for the threat of pandemic influenza and expressing the importance of immediately committing the resources necessary to protect Americans.  Senator Reid stated that the nation could not wait any longer for the Bush Administration to finalize its pandemic influenza preparedness plan and announced that Democrats would offer a pandemic preparedness amendment to the Department of Defense Appropriations bill.  Senate Democrats, led by Senators Harkin, Obama, Reid, Durbin, Bayh, and Dodd, successfully amended the Fiscal Year (FY) 2006 defense and emergency supplemental appropriations bill (P.L. 109-141) $3.9 billion to the Centers for Disease Control and Prevention to fund pandemic flu preparedness.

October:the Senate approved an amendment by Senator Harkin to the Labor-HHS-Education appropriations bill adding $8 billion to prepare for and protect against the threat of an avian flu pandemic. 

November: President Bush released a final pandemic influenza preparedness plan and requested $7.1 billion in emergency supplemental funding for pandemic flu preparedness, almost a billion dollars less than what Senate Democrats had successfully included in the Labor-HHS-Education appropriations bill.

December: the Republican-controlled Congress approved only $3.8 billion to prepare for a flu pandemic in the emergency supplemental appropriations bill (P.L. 109-148) – less than half of the $8 billion the Senate had passed through the Harkin amendment.

2006

February:Democrats fought to include $2.3 billion in additional funding for HHS in a second emergency supplemental appropriations bill passed during FY2006 (P.L. 109-234).  32 Senate Democrats sent a letter to President Bush, calling on him to make pandemic flu preparedness a priority in his Fiscal Year 2007 budget.  President Bush released his budget proposal for Fiscal Year 2007, including a $2.3 billion allowance for pandemic influenza activities.  The President did not include the $2.3 billion in pandemic flu funding in his emergency supplemental budget request to Congress.  Fortunately, during the Appropriations Committee markup of the supplemental in early April, an amendment offered by Senator Harkin to add $2.3 billion in pandemic flu funding was approved by voice vote, and the funding was included in the version of the supplemental signed into law on June 15, 2006 (P.L. 109-234).

May: Senator Kennedy released a report entitled, “Too Little Too Late: The Bush Administration’s Record of Failure in Preparing for Pandemic Flu.”  The report detailed failures of the Bush Administration and Republican-led Congress to adequately prepare the United States for pandemic influenza, due to limited appropriations, lack of coordination among government entities, and an overly narrow focus on only a few of the actions necessary to prepare the nation for pandemic influenza.

2007

May: President Bush vetoed legislation passed by the Democratic-led Congress which would have provided $625 million for pandemic flu preparedness at HHS (H.R. 1591). 

November: President Bush vetoed the FY2008 Labor, Health and Human Services, and Education Appropriations bill (H.R. 3043).  This legislation would have provided $870 million to prepare for and respond to an influenza pandemic, including funds for vaccines, antiviral medications, medical supplies, diagnostics and surveillance tools.  In order to pass a bill the President would sign, pandemic flu funding was reduced to $302 million in P.L. 110-161.

December: Senator Clinton introduced the Influenza Vaccine Security Act (S. 2456) to improve and secure our nation’s supply of influenza vaccine, improve vaccine distribution, and improve stockpiling of supplies to prevent and treat pandemic influenza.

2009

January: the Senate Appropriations Committee approved the American Recovery and Reinvestment Act, which included $870 million for pandemic flu preparedness activities.  Unfortunately, this funding was removed as a condition for final passage and, therefore, was not included in the final version of the legislation signed into law by President Obama (P.L. 111-5).

Spring:Major outbreak of H1N1 Swine flu suggests pandemic will emerge, stronger in Fall 2009

March: the Senate approved the Fiscal Year 2009 Omnibus Appropriations bill.  Led by Democrats, this legislation (P.L. 111-8) included $818 million for pandemic flu preparedness.

April:President Obama requested $1.5 billion in emergency appropriations to respond to the H1N1 influenza virus, and Senate Democrats, including Majority Leader Reid and Labor-HHS-Education Appropriations Subcommittee Chairman Harkin, indicated the Senate was poised to comply with the President’s request.

May: President Obama’s Fiscal Year 2010 Budget Request included $584 million for pandemic flu preparedness.  This funding is in addition to the $1.5 billion requested in April as part of the emergency supplemental appropriations. The Senate Appropriations Committee approved the Fiscal Year 2009 Supplemental Appropriationsbill, including $1.5 billion to prepare for and respond to a global disease pandemic, including the H1N1 influenza virus.

Orders for Bulk Supply of H1N1 Influenza Vaccine Antigen and Adjuvant: May 22, 2009

Manufacturer	Bulk Vaccine Antigen	Oil-In-Water Bulk Adjuvant
Novartis	$150 million	$139 million
GlaxoSmithKline	$ 38 million	$144 million
Sanofi Pasteur	$191 million
CSL Biotherapies	$180 million
MedImmune	$ 90 million
Total	$649 million	$283 million

Orders for Bulk Supply of H1N1 Influenza Vaccine Antigen and Adjuvant: July 9, 2009

Manufacturer	Bulk Vaccine Antigen	Bulk Virus Concentrate/FFF	Oil-In-Water Bulk Adjuvant
Sanofi Pasteur	$61,425,000	0	0
GSK	$0	0	$71,400,000
Novartis	$346,334,450	0	$343,810,470
CSL	$0	0	0
MedImmune	$0	$61,008,000	0
Total	$407,759,450	$61,008,000	$415,210,470

September: With vaccine shortage becoming apparent, Government releases study showing less vaccine is required than orginally expected.  This changes dosing requirment from 2 shots to 1 shot.  Essentially doubling the expected capacity and eliminating major forecasted shortfall.

HHS orders an additional 56 million doses of vaccine: September 21, 2009

Manufacturer	Total Cost
MedImmune	$295,660,000
Sanofi Pasteur	$143,483,025
Total	$438,143,025

October: CDC Defends Reliance on "Antiquated" H1N1 Vaccine Production Despite Shortage.  Government's original modified order of 251M doses, expected to receive 40M by this point actually has yield only 11.3 M doses.  1000 have died and 20K hospitalized so far due to H1N1 (and presumably lack of vaccine).

Siebeus "Blamed the vaccine shortage on lower than predicted yields from vaccine manufacturers and on some manufacturing 'glitches' that have occurred since May. ....the yields are now more in line with original predictions and that any glitches have been corrected." 

Napolitano said "federal officials had assumed there would be a lag in vaccine availability and a spike in the flu, so officials are not surprised that H1N1 has spiked at a time when there is not enough vaccine available."

Study shows vaccine will be too late to have impact on H1N1

Lieberman holds hearing on Vaccine shortage, but only Fox News reports  MSM ignores (WH Embargo?)

> 1000 people in US have died due to H1N1

A Layman's plan for Health Care

I am not a health care expert, congressman or a brilliant inspirational president.  I really have no political credentials.  I graduated from MIT with expertise in engineering, innovation and economics.  I worked in the defense industry researching, designing and building extraordinarily complex systems.  I invest in technology companies.  I have led several successful technology businesses.  My primary lesson in dealing with systems, people and technology in complex environments is that nothing ever goes as planned.  The best solution is normally not the one some expert divined.  The most affordable solution is often the highest quality solution.  The right solution results from market feedback rapidly inserted into a product or service.  But really, what could I understand if I have not been on the cover of Time or Newsweek? 

To fix Healthcare perhaps we should concentrate on some fundamental principles:

• Discourage bad behavior (pre-existing, tort, free rider, overweight)
• Encourage good behavior (wellness, cost innovation, direct pay, savings)
• Implement national strategies derived from successful state strategies (Beta test)
• If a third party is paying, doctors won't innovate to meet needs of the patient
• Innovation is the only way to truly reduce cost of care
• If people don't take care of themselves, it raises the cumulative cost of health care

There are many ideas and issues within the overall health care discussion, many misdirected:

Catastrophic Limit: We are all going to die. Some of us younger than others.  Everyone, except those that die suddenly like my father, impose some level of high and predictable cost at the end of life.  But no one who is young fears this cost.  The power of compounding interest is the answer.  If each of us puts a little money each year (say $100) into a common pool, over many years, there would be enough money to cover the few of us whose healthcare exceeds 100k.  Setup as a mandatory investment vehicle, it would cover any cost of individual healthcare that exceeded 100K.  Purchased as a 401k/IRA/HAS, insurance companies would manage it like they do an annuity, leveraging the stock market and other instruments to grow value.  We could each chose to pay additional premium to lower the catastrophic limit to 50k, 20k, 10k or whatever.

Low Cost Transactions (HSA): All low cost high volume transactions (wellness visit) should be direct pay.   Most doctors offices operate with 180-240 days of aging for receivables.  That means there is a bunch of profit wasted in the payables process (i.e. interest on 500K of average receivables).  Though direct pay seems like a burden (out of pocket), it eliminates the cost of oversight and receivables management.  A transparent process at the front end (i.e. I know what my doctor visit costs) imposes proper price dynamic, currently perverted by third party pay.

High Cost of Healthcare: That we pay more for healthcare is irrelevant.  We pay more for media content should we regulate revenue in that market?  The U.S. market prefers to pay more than other countries for care because we like to eat at McDonalds.  If you are over weight, have high blood pressure, etc. the insurance company should be able to charge more.

Pre Existing Condition: If someone goes off insurance or never has it, they should take responsibility for their pre-existing condition.  The catastrophic insurance (govt plan) should impose no limitation on pre-existing condition, but it will only cover costs above say 50k-100K.  Practically I think the market will overtime accept pre-existing conditions, it already has on some policies – basic concept is a business will offer a service (insurance) until marginal revenue = marginal cost, so why not collect on pre-existing conditions especially if patient has catastrophic care.  Alternately there could again be a form of government re-insurance in which a portion of Medicare fee is put into a pre-existing condition re-insurance pool.  Any insurance plan that eliminates a pre-existing condition test would have access to that pool.  Fundamentally though, we need to use the market to motivate free riders to join a plan.  Some plans offer retroactive discounts for wellness behavior – so if you have high blood pressure  and reduce it, you get paid back the premium delta for the last couple of years from a normal vs. high risk plan.  For more serious pre-existing conditions the reinsurance pool is a logical way to cover people without making one insurance company over the other carry the cost.

Health Savings Accounts: There should be a tax code preference offered to forms of HSA, in which consumers pay in pre tax to a savings account (IRA like) to help eliminate front end costs.  A Health Savings account could be used for wellness efforts and all healthcare co-pays below deductible cap.  HSAs savings could pay the premium while unemployed, eliminating coverage loss.

Universal coverage: I am not a lawyer, but it seems that if Federal Law mandates universal coverage, that the Constitution then requires universal application/availability to all persons (not just citizens).  That means anyone in the United States, legal or not, is afforded health care.  This creates a range of weird incentives that opens a Pandora’s box driving costs out of control.  Other countries with universal coverage do not have the concept that citizens and non-citizens are equally protected under the Constitution.

DNR: Just like someone can sign a Do Not Resuscitate order, they could sign a “Do Not Save” order.  The opt out would basically say, “I understand I will not get care unless I can prove I have means to pay”.  People could self insure and certify ahead of time, perhaps validated through some credit worthiness service.  If you no longer are credit worthy then perhaps you fall under a mandate penalty provision given your imposed burden on society.

Tort: I don’t love the lawsuits, but it seems freedom of speech trumps tort reform. In an effort to reduce the cost of one's policy, a patient should be allowed to opt out of tort, or allow form of arbitration, sort of like how workman’s comp limit claims.  As you get a discount on homeowners insurance if you have a burglar alarm, you will get a premium discount if you accept a tort limitation clause.

Taxes: Do not introduce new special taxes on those that innovate (Drug companies, device manufactures, etc).  We need the innovation to improve quality/cost of care.  Either Eliminate deductibility of corporate plans, or permit deductibility of all health care plans (i.e. self employed).  Maybe only allow tax deductibility for elements of a basic plan for plan costs associated with wellness, insurance for first 100K, retroactively pays back portion of premium for reducing weight, or motivates direct pay (i.e. the portion of an insurance plan that allows third party pay for initial costs below $5000 would be taxable).

Poor: For people that cannot afford healthcare, they should be put on a HSA.  The deductible portion should be paid in via welfare with some form of lifetime cap on govt. funded portion of savings account (i.e. 50K).  Participants should be means tested, and their portion of payment related to their salary.  Perhaps work this a bit like the micro loans in India/Africa in which a portion of the money paid into the savings account is used to pay premiums.

Corporations: I liked getting insurance when I was in a big company.  It would be nice if they could take care of my car and house insurance.  But really corporations don’t add a lot of value to the whole health care system.  Its not their “Core” mission.  If your primary source of health care is the corporation, then you are also more locked in to the corporation.  If you want to take that cool job in a startup, corporate healthcare tugs at you and holds you in their clutches.  Government insurance rules like “More than 50 employee” creates odd incentives for business that have nothing to do with making product.  Frankly, we each should take care of our own health care.  As we switch jobs, we don’t need to switch health care providers.  If corporations get a deduction buying health care for us, individuals should be allowed to deduct the cost.  If the system were allowed to change, corporations could easily gross up our salary by the current amount they pay, or offer to pay your insurance while you work for them.  When you leave, an HSA should permit use of your “Savings Account” to pay the premium if you are laid off or in transition.  Eliminating corporate involvement removes a bunch of transaction costs and keeps your employer out of your personal affairs.  I would not ban corporate programs, just remove the incentives.

Innovation: Innovation occurs when there is a market for early adopters.  The best innovations (balance of technology and price) are always best incubated through market pressures.  The public is well served by Judge Green’s decision (Telco ruling in 1980).  Universal coverage forces universal solutions (equal to all).  The American Care Act substantially constrains the right of end-users to buy what they want.  Oddly that constraint is a bit like antitrust.  If Government wants to apply the commerce clause, it seems government needs to stay in the regulator role rather than “I am also in the services” role.  It also seems government should not take action that inhibits federalism (in as much as federalism is a principle of differential approaches to governance).

 

Conclusion: In Summary….

• Everything above $100K is covered by a universal mandated Catastrophic/Re-insurance plan administered or authorized by government. Private plans could be made compliant under the government plan, to act as agent on governments behalf.
• Private insurance plans for everything below $100K
• Government pays for premium (COOP, Private or Govt) if person is on Public assistance
• Do Not Save – DNS: anyone who opts out of private must sign a DNS order or pay a penalty

For innovation to thrive, government needs to be on the sideline.  We cant have innovation if changes to care require congressional approval.  Scaling the current bad system will locks in costs, opening up innovation reduces cost and expands availability in a fashion that meets each of our unique needs.