Monthly Archives: January 2007

What are we fighting for?  Retirement after 20 years, free health care and/or free health insurance for life, free dental care or dental insurance, a health care system developed for the employees and his/her family’s special needs, free or almost free housing, paid utilities,  food allowances, educational subsidies, limited access  food markets and superstores,  sponsored or subsidized recreational facilities, subsidized child development centers and reasonably competitive salaries*.  Our conservative friends will say that such a society is blasphemous, socialistic, and counterproductive.

Yet those are the benefits our military savor and indeed fight for.  It is a fact that the  military exists in an almost seamless government subsidized "socialized" system.

Don’t misunderstand me, I don’t have problems with the benefit structure, by their service our soldiers deserve all we can provide.  I do simply wonder whether some similar benefits should be available for those who pay the bills–and will pay today’s bills forever in the future?

* Competitive salaries  "Military pay is not really all that bad. Now, the bad news: It also ain’t all that great, either. What I mean by that is that for a brand new high school recruit, with little or not work experience, it would be hard to find a better starting wage. However, for an enlisted member with years of experience, trained in a critical technical specialty, it’s not all that great when compared to wages for a similar civilian job."

Leavitt’s self serving piece on Medicare doesn’t deal with the 200 million people who have no access to the Medicare benefit and are at the mercy of the Health Care Industrial Complex’s monopolistic practices.  In addition, the prices of medications in the plans are discounted not because of great negotiated prices by the insurer but because  the government is providing subsidies to the program.  As noted below negotiating prices will result in lower costs to the program.

This from Representative Stark’s website:    "REALITY: Prices under the private drug plans in Part D are 75 percent higher than those negotiated by the Veterans Administration. Prices are also 60 percent higher than in Canada, 5 percent higher than at Drugstore.com, and 2 percent higher than at Costco [New Medicare Drug Plans Fail to Provide Meaningful Drug Price Discounts in the San Francisco Bay Area, Committee on Government Reform, Minority Staff, 03/06/06]. They are even higher than the prices in the preceding drug discount card program [Medicare Drug Plan Prices Are Higher Than Medicare Drug Card Prices, Committee on Government Reform, Minority Staff, 02/21/06]. The Medicare Modernization Act prohibited the government from using the clout of more than 40 million beneficiaries to negotiate for lower prices. The MMA also divided the population into smaller groups, also undermining the ability of the private sector to negotiate. To the extent beneficiaries are saving money, they are doing so thanks to government subsidies, not good discounts."

Medicynic’s modest proposal is to negotiate and make prices public, hopefully shaming PHARMA into providing similar savings to everyone. 

Never was the point of the title of Gore’s film more clearly demonstrated than in this dispute in Federal Way Washington. The Flat Earth society is back!

Paul Krugman’s New Year’s article pointed out the need for a system of health care in our country. It’s good reading.

Similarly, I came across a syndicated financial column by Malcolm Berko. It points out the outrageous billing practices encountered in the current non-system of health care. His point is that there is no incentive for either the providers or the insurers to be more efficient. Prices and insurance rates go up in lock-step. The concept of value in health care doesn’t exist.

Berko notes:

“I’d like to know why you don’t “gritch” about a $30,444 hospital bill plus $3,882 in medical supplies for an appendectomy patient who had a five-day stay. And how fair is a $7,809 emergency room charge to X-ray and cast a fractured fibula? But I’d really like to know why Aetna and Blue Cross paid those outlandish charges without a peep (but nickel and dime every doctor) using our premium dollars.”

“Last year the Big Eight (ed note: health insurers) reported net profits of $19 billion plus free cash flow of $22 billion. Holy moly! That’s $41 billion – easily enough to pay the health care costs for all of those 41 million uninsured. The top five officers at each of the Big Eight health insurance companies received $237 million in compensation last year. That’s a shameful use of our premium dollars. Those Big Eight health insurers employ more than 300,000 people, each of whom is paid a salary with benefits averaging $40,000. Well, that number computes to $12 billion and not a penny of that is used for health care. Certainly a shameful use of our premium dollars.”

Consider also that these insurers have overheads estimated at over 20% compared with the published 2% of Medicare–critics say that this is understated and that the real overhead of Medicare is 5%, still not bad in comparison with the private providers.

Add that to the obvious culture of waste in the private insurers. In a cost plus system there is no particular incentive to hold the line on costs.

It is a fact that the salaries and option packages that health insurance executives enjoy are generated from your health insurance premiums. It’s also sadly obvious that health care is a business first and that the customers/patients have become cash cows that provide a revenue stream.  How else to explain the runaway costs at every level of service provided.  The major beneficiaries are the the corporations, their executives and stock holders. What’s wrong with that picture?

Highest compensation package, exclusive of unexercised stock options
NAME              TITLE         COMPANY           COMPENSATION
William W. McGuire  CEO    UnitedHealth Group     $54,129,501
Wilson H. Taylor Rtd, chair         Cigna                 $24,741,578
Ronald Williams Exec VP         WellPoint                $13,205,631
W, Donaldson Chair       Aetna/U.S. Healthcare    $12,650,393
Leonard Schaeffer Chair/CEO  WellPoint               $11,127,465
H. Edward Hanway Chair/CEO    Cigna                   $9,478,634
D. Mark Weinberg Exec VP      WellPoint                $8,957,410
Richard Huber Ex-chairCEO Aetna/US Hlthcare       $6,988,987
William Pastore President          Cigna                   $6,779,028
T. Jones Pres Retir/invest          Cigna                  $6,055,314
Source: http://www.managedcaremag.com/archives/0109/0109.compmon.html

Executives with the largest value of unexercised stock options
NAME                 TITLE       COMPANY           COMPENSATION
William W. McGuire   CEO      UnitedHealth Group    $357,865,646
Stephen J. Hemsley  Pres/CEO  UnitedHealth Group $144,928,886
Norman C. Payson  Chair/ CEO  Oxford                  $115,375,414
Wilson H. TaylorRetired chair     Cigna                    $66,141,372
Leonard Schaeffer Chair/CEO   WellPoint                 $64,610,759
H. Edward Hanway  Chair/CEO   Cigna                    $43,385,939
James G. Stewart Exec VP/CEO Cigna                    $41,049,922
Jeannine M. RivetExec VP/CEO, UnitedHealth           $39,450,395
R. Channing Wheeler   CEO     Uniprise United Hlth  $32,506,870
John W. Rowe  President & CEO Aetna                   $25,026,549
SOURCE: HEALTH PAY FOR HEALTH PLAN EXECUTIVES, JUNE 2001, FAMILIES USA, WASHINGTON

I know this will come as a shock. But there are conflicts of interests at every level of the medical establishment.

In our market driven culture we think transparency is essential, that is price and product information must be available to consumers in order to determine utility and value. But what if the system is set up to obfuscate and subtly deceive? In health care price is obscured; patients are often in crisis and unable objectively evaluate information; and information available about the medical product, procedure and outcome is biased. This article in the NY Times points out some of the problems with industry sponsored research.

This is from the Patented Medicine Review Board in Canada. It shows the current pricing of Avastin, a drug that prevents new blood vessel development in tumors. You will note that the tax for being a U.S. citizen and having a cancer diagnosis requiring Avastin is a price premium of 50%.

A course of treatment of Avastin, with other medication, for colon cancer lasts on average 10 months and may prolong the life of the patient 4-5 months (no cures). The cost for Avastin alone is $44,000 –it essentially doubles the cost of treating the disease.

The dosage of Avastin in breast and lung cancer is double that of colon cancer. For these patients, a course of treatment will approach $100,000 for the Avastin with another $30-$50,000 for other medicines and procedures. Such treatment offers no chance of cure and only a limited extension of life– 2 months for lung cancer, 6 months progression free survival improvement in breast cancer.

To paraphrase Everett Dirksen, $100,000 here $100,000 there, pretty soon we’ll be talking real money. It’s wonderful that there has been progress but can we afford it? Is it reasonable to pay $100,000, an amount that is more than double the median and average incomes in country for 2-6 month improvement in survival?

Genentech the manufacturer of Avastin has magnamiously offered to place a $55,000 ceiling on an individual’s expenditures for this drug if they have an income of less than $75,000/year. No one would accuse the pharmaceutical industry of generosity with such an offer.

In reality we could all save the 50% premium (see Canadian data paragraph 1) that we are being charged if we simply negotiated with the manufacturer.

Despite such logic and the immorality of price gouging in health care, there are cries of agony from PHARMA’s friends.

One hopes that the new Congress will look carefully at this issue and do the right thing.

This is one of the risks of a market driven health care system and is one side of the health care equation.  It mirrors the holistic crowd’s approach to staying “healthy” by taking pills, enemas, aromas, massages, adjustments and detoxification regimens. 

More “interventions” mean more treatment and more money into the system. 

The problem is that while some of this may feel good, they don’t produce a measurable health benefit beyond that of a placebo.  I used to tell my patients that if you do everything that is recommended you may not live any longer, but it will seem that way.