More on the "seen and the unseen" related to Obamacare

Bastiat's "seen and the unseen" and Thomas Sowell's "and then what" express the same basic notion. That notion is part of  what the economist Russ Robert calls the economic way of thinking.

See here for a commentary on one of the many "and then whats" of ACA.Part time workers are excluded from the employer mandate to provide insurance or face a fine.So the definition of Part time worker become important. The latest government edict on that stipulates than the cut point is 30 hours a week whereas previously the definition was less than 35 hours per week. So there is now a substantial financial incentive for employers to limit part time workers to less than 30 hours per week. The result is more part time employees will work less;more of the marvelous social justice that ACA is bringing to the middle class and those lower than that on the income spectrum and beating them over the head with it.

I quote from the above referenced article:

 "So there’s a balancing act: preserving jobs vs. providing insurance. The problem isn’t small. In September, 34 million workers, about a quarter of total workers, were part-time, reports the Bureau of Labor Statistics. But the bureau defines part time as less than 35 hours a week; Obamacare’s 30 hours a week was presumably adopted to expand insurance coverage. There are now 10 million workers averaging between 30 and 34 hours a week. To the bureau, they are part-time; under Obamacare, they’re full-time."

  There are advocates of ACA ,including some  in leadership role at major physician organizations, who seem unconcerned or at least silent about the unprecedented power given to federal bureaucrats (this time the IRS) to put words to paper and influence the lives of millions of people seeing only that we have moved further to universal coverage somehow believing the fairy tale than given millions more people Medicaid cards will translate into those people actually getting care.

Bastiat:

1.1

"In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them."

The corporate physician - he is not your father's doctor

Dr. Roy Poses has tirelessly written about the loss of professionalism in the medical profession.Here is the link for a recent commentary by Dr. Poses about the rise and likely consequences of the corporate physician.

There was a time when the AMA vigorously opposed the corporate practice of medicine and a number of states outlawed it.But now times have changed and few states have strong statutes limiting it.

Texas still has a residual- but significantly watered down- corporate practice of Medicine statute. See here for a history of the corporate practice of medicine idea with emphasis on the exceptions even in Texas which has one of the strongest prohibitions against the corporate practice.In Texas the most widely used exception is the situation in which a "non-profit health corporation"-so certified according to defined statutory criteria-can hire physicians.See here for a discussion of what is referred to as a 501(a) entity.The rational of the original opposition to corporate practice was simply that the business entity would control the doctor's practice and profit-not the patients best interest would be controlling.There is much to suggest that the same objection is valid today but few voices are heard in that regard.It should be noted that the "non-profit health corporations" included the "not for profit hospitals". As is obvious Non-profit as well as successful for profit hospitals annually have revenue greater than cost;otherwise they would not be able to keep expanding with more and more branch offices and purchasing physician practices let alone keep operating.

Recently,  I attended a seminar sponsored by the local medical society  labelled as eligible for CME credit under the ethics category of required annual CME credit in Texas.The topic was how to promote your medical practice and , of course, advertizing was one way recommended.

There are at least two negative consequences of physician being employed by hospitals or large medical aggregations ( that includes the latest incarnation, the highly touted ACO):

1)Increased costs to the patient

2)decreased quality of care

Poses give illustrative examples of how the same procedure can cost more when ordered by or performed by a physician working for the hospital   versus a free standing doctor not compensated by the hospital. Read Dr. Poses's posting referenced above for details about these negative consequences.

People respond to incentives.Physicians employed by health care corporation inevitably will face the situation in which the incentives generated by corporate goals and targets with which the docs will be tasked  will conflict with  the primary directive ( or what used to be the prime directive ) of a physician namely doing what is right for the individual patient.I am afraid that the physician's role as a patient advocate  in the corporate health care organization may go the way of the AMA's prohibition against physicians advertizing,a quaint historical artifact.Once the physician accepts the new ethics position that they are responsible for the health of the collective ( the ACO may be the collective ),then the greater good for the greatest number will just happen to coincide with the financial health of the organization.

Will ACA turn full time jobs into part time jobs?

See here for comments from economist Garrett Jones.

If Obamacare increases the cost of hiring full time employees versus part time workers it would seem that a as  shift to part timers would make sense for some employers.This may well apply to the hotel and restaurant sectors and at at least one large restaurant company is going that way.See here for what Red Lobster is planning. Who would have thought that people respond to incentives?

If something costs more ( like having full time employees ) people will do less of the something.Again Milton Friedman's two principles of economics are on target. To review: there is no free lunch and demand curves slope downward. Thomas Sowell said a good economist always asks "and then what" which is a similar thought to Bastiat's "seen and unseen". With Obamacare, the "and then whats" just keep on coming.

The locus of medical decisions will shift evenmore with Obamacare

Thomas Sowell said the following as a good summary of the second half of his book Knowledge and Decisions:

Even within democratic nations,the locus of decision making has drifted away from the individual,the family, and voluntary associations of various sorts and toward government.And within government, it has moved away from elected officials subject to voter feed-back, and toward more insulated governmental institutions, such as bureaucracies and the appointed judiciary.

Think about the role of IPAB, the binding pronouncements of USPSTF, and the astounding power of the Secretary of HHS under ACA.All of these and other aspects of Obamacare point to the observation that there has never been a larger shift in the locus of medical decision making in U.S. history.
 and in the absence of its repeal the likelihood of a shift back approaches zero.

If you give up Medicare Part A you loose your social security benefits-WTF

The headline is correct .See here for background on this agency ruling that makes the headline true.
See here for my earlier posting of what a federal judge considered a "mandatory entitlement".
 
The absurdity of this situation has been challenged in court and lost in the trial court and in the appeal but now efforts are underway to put the issue to the Supreme Court.

I have blogged about this before and thought the issue was settled but thanks to folks at Cato the fight goes on.

Electronic Health Records-follow the money

Promoted as a means of not only improving health care quality but saving money ( the often quoted $ 77.8  Billion that computers would save in medical care costs) the mandate and subsidy to physicians to adopt electronic health records (EHRs) did not randomly appear in the 787 pages of the 2009 stimulus bill also known as American Recovery and Reinvestment Act (ARRA)

 Application  of the  "follow the money rule" is interesting this regard.

See here for an article from the Washington Post that gives some interesting back story to the HITECH Act which had been waiting in the legislative wings for some time without much congressional support until the 2007-2008 recession and then its insertion into ARRA. Nothing like a good crisis to get stuff done. See here for another important commentary by InformaticsMD (aka Dr. Scot M. Silverstein) who writes regularly at the blog "Health Care Renewal " and writes tirelessly about the major problems with medical IT as it is being sold ( and mandated) to the medical profession.The  initial $36.5 billion for computerization of medical records is just the first of a gift that keeps  on giving to the IT industry. There will be a income stream as software will need updating as will hardware and system malfunctions will need continuing maintenance and a headache stream for the docs who bought in to this Trojan Horse.

HITECH provided subsidies and a very firm nudge to physicians to acquire computer systems  to make operational EHRs in their practices.Further a number of hoops have to be jumped through to receive further monetary rewards and as time goes on to avoid penalties.The term "meaningful use" refers to some of the hoops which in part obligate physicians to report on certain metrics that are allegedly measures of the quality of the care they provide to their patients but really are techniques to force savings.

fee for service in primary health care-what you get when you mess with prices

 In regard to consumer goods markets most economists accept the superiority of the market versus central planning.Almost all believe the invisible hand works to channel private interest into broad cooperation with gains from trade and from innovation.. (OK, Joe Stiglitz and Paul Krugman might not) and that the price mechanism can coordinate production and consumption and provide the feedback of profit and loss. In most of the consumer markets there is a fee for service or fee for a product arrangement (FFS). Paying the plumber,furnace repair man,car mechanic or barber on a per encounter fee are all routine transactions the propriety or desirability of which are seldom the subject of serious commentary. I realize that there also service contracts in some instances so that every encounter may not generate a separate charge.

  Yet the fee for service arrangement is the target for criticism in regard to health care ( mainly in regard to primary care) and often depicted as one of the reasons for escalating health care costs and decreasing quality.

Some argue that FFA cannot work in health care  because of the marked information asymmetry between physician and patient. But that cannot be a sufficient reason to wish to do away with FFS in medical care as there are many situations in a modern western economy where large information gaps exist. That became an issue probably as soon as property rights and trade allowed for the division of labor.  Getting advice regarding estate planning and tax avoidance is just one. Your furnace repairman tells you the something or other needs replacement and in doing so she knows a lot more about furnace anatomy and physiology than the home owner.

 It has been argued that since the physician is paid on a episode or encounter  based FFS that he will tend to do more than is necessary for good health outcomes because of his incentive to make more money. Certainly that is the direction that the cost vector points just as in a capitulated system the physician has an incentive to limit care to avoid financial loss. Is one method categorically better than the other?And the incentives for more financial gain argument would seem to apply  equally well to many other instances of market transactions.The incentive argument and the information asymmetry argument do not clearly distinguish medical care from other economic transactions based on FFS about which we hear no hue and cry or concerted campaigns for its abolition.

But wait, don't we see primary care docs rushing through a 12 minute patient counter to cram 5 patients into a hour?, Is not FFS in primary patient care rotten or worse and a major reason for deteriorating quality and increasing costs? Is it really FFS or is it a pretense of FFS or a poorly function remnant of a FFS system that once existed and worked pretty well.To be clear,the objection seems to be aimed at primary care FSF.

 Is there something different about FFS  in health care?Yes, FFS in health care and other consumer products or services FFS are as alike as a warm puppy and a hot dog.They sorta sound alike but there are not.

There are at least two reasons why the nominal fee for service (FFS) payment method in health care differs from FFS in most other  retail transactions regarding goods and services

  1) Much of the payment for health care services is with some one else's money2) There are price controls on the fees in the FFS in Medicare and Medicaid.

Much of health care expenditures is paid for by third party payers, either CMS which includes Medicare and Medicaid or health care insurers.In this circumstance patients are buying things with either someone's else's money or the perception that they are paying with someone else's money.

Milton Freedman explains how things are different when one is spending his own money than when he is spending with other people's money. This is such a obvious common sense observation that most of us have verified that nugget of conventional wisdom by observing multiple instances of that circumstance so that a formal econometric study would not be necessary.Just think of eating out on an expense account.See here for Freeman describing how this works.

 But such a formal study was done by MIT economist Amy Finkelstein who demonstrated that health care expenditures increased markedly after senior citizens in the US were enrolled in the Medicare program which in effect made the price the paid for their health care  much lower.When things are cheaper people buy more. Milton Freedman said that one of the two major principles of economics was that demand curves slope downward,an economist's way of saying that people tend to buy more stuff when it is cheaper..See here for my earlier comments on the Finkelstein paper.

This verification of the obvious was incredibly heralded by fellow economists as a major change in thinking about health care spending.Apparently previously no one had noticed that the elderly were spending more on health care now that they had to pay less nor that such a finding would be expected.The American Enterprise Institute economist,Joseph Antos said of the Finkelstein paper that it was path breaking.MIT's Johnathan Gruber,one of the architects of Romney care, said that the report changed the landscape of health care economics.

CMS's price controls came about as the number of medical goods and services that  increased over the last twenty or so  years ( more diagnostic tests,more medications,etc) met up with the increasing demand brought about mainly by the other people's money factor and reaching some tipping point in which the government moved into an effort to control costs.

 Economics 101 texts tell us that price ceilings create shortages,degradation of quality,wasted time and cost of waiting in lines and  mis-allocations of resources.

Advocates of a single payer and central planning in medical care sometimes conflate FFS and the market economy. One cannot deny that the current FFS situation in primary care medicine has much to be desired but it is because the market has been distorted by price controls and the fact that for a large segment of the patient population folks are paying for care with other people's money. Neither of those factors is likely to go away in this country any time soon..Actually both will likely increase.

But there can be a workaround.

Fortunately, at least for now, people can still operate to some degree outside of this system and contract with physicians for primary care with a retainer payment arrangement.Here there is no price control and the patient is not spending other people's money.

The fee for service in primary care medicine is not your father's or grandfather's fee for service.It is not the case that fee for service cannot work with medical care even now. Cases in point are cosmetic surgery and refractive eye surgery and more recently the growing market for retainer medicine.are example of FFSs in regard to medical care working out  reasonably well.

If price controls were placed on retainer medicine retainer fees we would see the same negatives that we see now with primary care with price controls. It's the price controls, stupid.

The economist Russ Roberts of the Hoover Institute said the following in his novel, The Price of Everything.A parable of  Possibility and Prosperity :

"Know that there is no free lunch. Play with prices and you will bring disorder.You will loose the benefits of the flow of knowledge and resources that  prices choreograph without a choreographer."

When you urge coercion by the government,don't be shocked if you get coerced as well

The following quote explains the title.See here for further details

All people have the moral obligation to care for those who are less fortunate. But replacing morality with legality is the first step in replacing church, religion and conscience with government, politics and majority vote. Coercing people to feed the poor simply substitutes moral poverty for material poverty.
The bishops dance with the devil when they invite government to use its coercive power on their behalf, and there’s no clearer example than the Affordable Care Act. They happily joined their moral authority to the government’s legal authority by supporting mandatory health insurance. They should not have been surprised when the government used its reinforced power to require Catholic institutions to pay for insurance plans that cover abortions and birth control.

Dancing with the devil is dangerous business.

Quality adjusted life years (QALY)-More to life than counting the dead

Counting deaths is much easier than assessing quality of life.Drs Pamela Hartzband and Jerome Groopman discuss the vagaries and uncertainly of clinical decision analysis and in quantifying the impact of disease on a person's life in the September 13,2012 issue of NEJM in a perspective piece entitled There is More to Life than Death.

The authors point out in regard to the recent USPTF pronouncement regarding PSA testing that while the data are conflicting and the study (the PLCO trial) that largely controlled the panel's decision against PSA testing has serious defects the chairperson spoke as if the call was a slam dunk or in her words "a no brainer". The authors of the NEJM article were polite in their criticism. but I cannot talk about the panel's actions and comments without using the word hubris. Reasonable, well trained statisticians have differed in their analysis of the set of data on PSA testing. Actually hubris is not strong enough a descriptor.

The Harvard husband and wife team asks " Is it possible to put numbers on the "utility"or impact of these conditions on a man's life?

 Is the concept of aggregating utility valid? I have argued before that it is not. See here.

Hartzband and Groopman discuss methods to attempt to quantify utility. One such method is call the "time trade off". Here a person is simply asked how many years of life she would be willing to give up to reverse a medical condition and return to health. On the face of it this is a absurd counter factual. One is asked to imagine having for example a cancer and what number of years of life they would give up to not have the cancer? A similar absurdity is the "standard gamble" which asks which odds you would take to risk sudden death to reverse some condition.

H and G :

"People cannot anticipate the global impact of a specific future change in their lives".

Of course they cannot.The quality adjusted life years concept is built on a dual fallacy.The fallacy of determining of some one else"s quality of life-based on a hypothetical and the absurdity of adding those determinations to conjure up; some aggregate utility. Yet organizations such as ACP seems to proceed on making cost effectiveness "determinations" that likely will be used to limit a person's access to some element of medical care.Are they aware that the father of utilitarianism expressed the folly of adding up happiness (or the modern equivalent - utility)?

At least the authors of an Annals of Internal Medicine article hyping the cost effectiveness analysis did not claim their analysis were no brainers but rather assured the reader that those type decisions were complex and needed to be made by highly trained professionals.This meant training more advanced that the 7-10 years of post college education that a physician accumulates.The tone of the article made it clear than the Annals article authors were just the folks for that type of very difficult analysis.No hubris there.This is typical of what I call the medical progressive elite whose mantra is that medical decisions are too complicated and complex to be left in the hands of a patient and her physician.

Rule of law,property rights erode and USA economic freedom index drops to 18 th in world

Not too long ago the United States was one of the most economically free countries..Not so now, as measured by the Frazier Institute in Canada. See here for economist Lynn Kiesling's. comments on the latest ranking of the various countries on the economic freedom scale.

See here for the Executive Summary of the "Economic Freedom of the World.2012 Annual Report."

Forty-two variables are used  in this ranking exercise that cover five areas:

1.Size of government
2.Legal system and property rights
3.Sound money
4.Freedom to trade internationally
5.Regulation

So why did the US drop further in the rankings?

"During the past decade, the U.S. rating fell nearly a full point on our 0-to-10 point scale, from 8.65 in 2000 to 7.70 in 2010. While it is difficult to pinpoint all the reasons for this decline, the increased use of eminent domain, the ramifications of the wars on terrorism and drugs, and the violation of the property rights of bondholders in the bailout of automobile companies have all clearly weakened private property and the rule of law tradition of the United States."

 It is getting worse.From 1980 to 2000 the US trails only Hong Kong and Singapore,by 2005 US fell to
 8th and now 18th.

Although I could find no analysis of the role of the Affordable Care Act in their publication, clearly the ACA did not enhance freedom economic or other wise. The regulations ( many of which are still being written) will limit the freedom of all elements of the health care system. The ACA which in this respect has been validated by the Supreme Count,forces individual to purchase a certain product ( health insurance). If  that is not the opposite of economic freedom, I don't know what is. If that were factored into the analysis (maybe it was),US would be even lower than 18th.

"Global" health care spending caps-the push ramps up

The clumsy, global health care spending caps enacted in Massachusetts is a harbinger of what the medical planning elites are pushing for the whole country. Global should be in scare quotes because it does not mean the entire world- just the US in regard to both pubic and private health care spending.

Let that sink in, the elite class wants to control how much everyone can spend on health care. This is central economic planning much more restrictive and coercive than what ACA has in store for roughly 1/6 of the US economy. I use the adjective clumsy because the Mass Plan does not have real teeth to enforce spending caps on the total amount spent on health care . A federal plan even it is nominally executed via numerous individual state plans will not make that mistake.

Dr Paul Hsieh talks about an article in the September 6,2012 issue of NEJM written by an all star team of proponents of central control. See here for his commentary. Here is one quote from the NEJM article :


"We recommend that an independent council composed
providers,payers,businesses,consumers and economists set and enforce the spending targets."

Folks associated with the Center for American Progress are well represented in the article's 23 authors (the Center sponsored the gathering of "health-policy experts) as are folks who have worked with the Obama and Clinton administrations. Peter Orszag,now with Citigroup, and Ezekiel Emanuel both played roles in the health planning of the Obama administration. The former president of the SEIU contributed as well as did Tom Daschle

Uwe Reinhardt was also a contributor and his affiliation on the print version of the article listed Princeton as an employer but his roles on the boards of Boston Scientific and Amerigroup Corp and as a trustee of Q Capital Management were not. However, those positions were designated on the ICMJE form which can be accessed via the online version of the article.There we learned that Dr. Reinhardt received stock and stock options from those organizations. I mention Reinhardt particularly because this is not the first time his paid associations with health care related companies does not appear on the print version of articles and commentaries to which he has contributed. Dr Roy Poses has been tireless in his efforts to point out various conflicts of interests in those who hold themselves out to be health care experts.See here for one of Poses's posting regarding COI s and Dr. Reinhardt.

Left unsaid was how the spending targets would be enforced.

Government ignores Goodhart's law again

Goodhart's law expresses one of those insights to human behavior that we see play out again and again and increasing so in medical care as the farce of P4P expands in spite of all evidence indicating its negative effects. According to Charles Goodhart - When a measure become a target it looses its value as a measure.

History is replete with examples of Goodhart's law.The targets of various Soviet industrial centrally planned programs,the cash for clunkers program and high school teachers teaching to the test are just some of the many.The economist,David Henderson, wrote this excellent essay on Goodhart's law and the GDP .

See here for this Forbes article by Dr. Paul Hsieh for how we will see that story again with tragic results with the new Medicare rule about re-admission to hospital within 3o days for patients with certain medical conditions.The debacle of the four hour pneumonia rule seemingly taught the Medicare hierarchy absolutely nothing.See here. Similarly targeting wait times in British NHS hospital had deleterious results predictable from Goodhart' s law.See here for my earlier comments

So many factors outside of the hospital's control and the treating physician's control influence likelihood of a patient's condition exacerbating and necessitating readmission that considering readmission rate as a quality measure at all is absurd on its face.But whether the proposed measure is a valid measure or not does not matter, there will be unintended consequences.

People respond to incentives which can be positive or negative. If someone is penalized economically for not reaching a target or rewarded economically for reaching one, either way the person 'Teaches to the test".

R.I.P, Thomas Szasz -Define or be defined

Dr. Thomas Szasz died 9/08/2012 at age 92. I have read and admired his work for the past 30 years.A real champion of liberty is lost.

(Part of the following is from an earlier commentary with slight editorial tweaks and some additions.)

Thomas Szasz wrote brilliantly about the power of language.

"The struggle for definition is veritably the struggle for life itself. In the typical Western two men fight desperately for the possession of a gun that has been thrown to the ground: whoever reaches the weapon first shoots and lives; his adversary is shot and dies. In ordinary life, the struggle is not for guns but for words; whoever first defines the situation is the victor; his adversary, the victim. For example, in the family, husband and wife, mother and child do not get along; who defines whom as troublesome or mentally sick?...[the one] who first seizes the word imposes reality on the other; [the one] who defines thus dominates and lives; and [the one] who is defined is subjugated and may be killed."

In short, define or be defined. In the very recent past,within my medical professional life time , physicians in many ways defined their role.Their role was to act as a fiduciary to their patients,to do no harm and act in the interest of their patient.Now their role is being redefined as stewards of the collective medical resources.Yes, it has been members of the medical profession,largely a small group of internists, who have spear headed this effort to redefine medical ethics and have been able to implant those views in the medical schools and in post graduate curriculum and their new professionalism has at least been given lip service in over one hundred medical organizations.. While I would not impugn the motives and sincerity of those physicians who have promoted that view and value system,I cannot resist applying the often useful Mafia Rule. Follow the money.Who gains from transforming physicians into health care providers and resource stewards and tasking them with saving money for the health care collectives? Is it "society" or various medical collectives (HMOs,ACOs), who have hoodwinked us into accepting the colossal lie that their bottom line corresponds to some greater societal good.

Dr. Szasz : "In the animal kingdom, the rule is, eat or be eaten; in the human kingdom, define or be defined. "

In the last 25 years physicians have allowed themselves to be redefined in such a way that they have lost their independence, integrity and have sacrificed their prime directive of a fiduciary
duty to the patient to a nebulous,elastic vision of serving the community.

Maintenance of Licensure- another tool to ensure social justice?

Most physicians probably have never heard of the Federation of State Medical Boards (FSMB) though all are aware of their own state board and its requirements for licensure and the requirements for continuing medical education (CME).

In the June 26, 2012 issue of the Annals of Internal Medicine readers learn their latest plans. Let me focus on the third of three components of their current work in progress for their Maintenance of Licensure ( MOL) project. Writing about the third component which involves "How am I doing" the article says:

"...or over time submission of practice activities adhering to regional or national performance improvement benchmarks"

The authors continue to mention the adoption of electronic medical records would enable "easier volunteer sharing of practice performance records with state board "

"Volunteer sharing" indeed. More likely share and conform if you want your license renewed when the final plans are put into place.

A perfect storm is brewing for control of physicians' practices which is the holy grail of third party payers.

Let's see some of what is in place or in preparation.

1) changing medical ethics is well under way. The Physician Charter is now 10 years old (see here for comments regarding its anniversary) .This established social justice as one of the three ethical precepts of the practicing physician. Over a hundred medical professional organizations have signed on to this, the American College of Physicians have included social justice in its latest version of medical ethics and the catechism is being taught to medical students and house officers. When the Charter was first published some may have wondered just how practicing physicians were to bring about the "just distribution of finite resources"; many thought their days were adequately filled with trying to do what was right for individual patients. That problem has been solved. A just distribution will be achieved when physician comply with guidelines that are formulated by cost effectiveness methods. Doing what is good for the collective will be what is good for the patient even though,for example, the treatment he forgoes in the interest of collective good may have benefited him.

2)The Maintenance of Licensure activities of the FSMB will eventually include the mandatory reporting of the degree to which the physician complies with the social justice compatible, cost effective, parsimonious guidelines.

3) For those physicians who continue to treat Medicare and Medicaid patients their reimbursements will depend in part on reporting selected guideline compliance data.
(Do not rule out the possibility of one day there being a MOL requirement for physicians to see their fair share of the Medicaid patients).


4) ACGME has done its share in changing the mindset of physicians in training in part by disabusing them of the archaic notion that a physician should stay on duty in the hospital when her patient is in a critical, dynamic situation which requires a physician to be physically in attendance.Simply hand off those patients to the next "team". Now there are teams in charge not an individual physician in charge.

The title of this commentary could as easily be Maintenance of Certification-another tool to control medical costs .

Wise Massachusetts Solons realize value of central planning of health care

The Massachusetts legislature and governor realizing the incredible success of central economic planning from their study of the history of the 2oth century have acted decisively to control the amount of medical expenditures for the state and as a bonus to increase the quality of medicine.

See here for a news item on the new Mass. Plan to control all health care costs and here for my earlier comments.

The lessons of the Soviet collectivizing the farms and controlling the economy were not lost to the folks in Boston . The value of central planning could not have been more clear as they studied the success of the communist Chinese implementing collective farming . They could see from the iconic night time view of North and South Korea the success of a rationally controlled economy. The legislators were able to discern the real reason for the Berlin Wall was to exclude the west Germans from sharing in the economic miracle of East Germany.

They followed in the foot steps of fellow Massachusetts residents such as Paul Samuelson whose text book as late as the 1960s lauded the superiority of the soviet economic planning over the less efficient, plodding relatively free marker economy of the US and of John Kenneth Galbraith who advised a struggling Indian economy to adopt the successful five year type planning of USSR. Probably they had studied basic economics and learned that there was no way better than wage and price controls to abolish shortages and increase quality of goods and services.

As much praise as they they deserve for their historical and economic scholarship perhaps they should only receive a grade of B+ for they missed one important lesson that the Soviet leaders soon learned in their efforts to turn a sleepy backward agrarian nation into an industrial behemoth. That lesson put poetically is you have to crack eggs to make an omelet or more crudely you may have to starve a few million citizens to nudge them to get with the program.

The legislator failed to put any real teeth in the program.Without penalties for failure to meet the growth guidelines (ie not grow too much) the program mostly consisted of a suggestion to not spend too much on health care. Of course, that oversight can easily be corrected at the next session of the legislature should the citizens of the state fail to prudently act in the interest of the collective.

Satire and sarcasm aside, three hundred plus pages of dense,self referential prose do not get written solely on the basis of economic ignorance and historical illiteracy. ( OK sometimes they seem to) . Public policy theory suggests that things happen for a reason and that self interest of groups often initiate and devise legislation. Who profits from this bill? I don't know but the laudatory comments of the Massachusetts Hospital Association and Blue Cross regarding the legislation makes me think of a place to start in the inquiry.

ACP celebrates 10th anniversary of A Physician Charter -but all physicians may not agree

In the August 21,2012 issue of the Annals of Internal Medicine Drs.Christine K. Cassel,Virginia Hood and Werner Bauer have offered the readers a largely celebratory , somewhat self congratulatory and slightly cautious piece recognizing the 10th year anniversary of the Charter. They are referring to A Physician Charter.


In 2002, a group of internists from the American College of Physicians and the European Federation of Internal Medicine jointly authored a commentary that was designed to "supply a concise foundation that would shape how physicians viewed the practice of medicine."In this they not only emphasized how physicians would behave in regard to their patients but " toward society". It was this relationship to society which the authors said distinguished their work from previous professional codes. and there is no doubt about that.

The Charter spoke of a professionalism that consisted of three fundamental principles:patient welfare,patient autonomy and social justice. It was the term social justice that the charter authors used to designate this new emphasis on the relationship of physicians to society.

The term social justice has a long history but in general use in western democratic societies refers to a trend of thought that favors a greater degree of equality in regard to income and wealth and access to various institutional opportunities and equality of outcome in instances in which equality of opportunity does not achieve some notion of appropriate outcome. Redistribution to correct or mitigate various inequalities is considered part of its conceptual package.Social justice also emphasizes equality in general and human rights and human dignity.
The term social justice has a long history in religious thought, both Christian and Jewish and aspects of it play a prominent role in parties of the political left and is prominent in the expressed political philosophy of the the European social democracies.

Unfortunately for purposes of clarity of meaning the term social justice is often controverted and assumes variable meanings. Of course, from a tactical point of view those characteristics may have an advantage in a debate as opponents may find a elusive target.

The authors of the recent Annals article note that 130 organizations have endorsed the Charter and medical schools have embraced the professionalism that the charter defines.

However,as much progress as they claim has been made to make the idea of the medical profession as depicted in the Charter a reality, more needs to be done.There are gaps,according to the authors.

In regard to one such gap,I was surprised but pleased that the authors actually recognized that there remains some controversy.They admit that some object to the notion that physicians bear an obligation to serve the needs of society and to work to ensure a just distribution of health care resources. Of course that is where the controversy lies, there is no serious opposition of the ides of patient welfare and patient autonomy.

There was no scarcity of audacity in the charter when it a relatively small group of internists declared that to be ethical professionals one had to necessarily accept and work towards a political philosophy whose acceptance in United States was far from universal.

It is another chapter in the ancient tension between the individual and the collective. Physicians' ethics has traditionally been that of a fiduciary duty to the patient with a co-duty to some collective only being gratuitously added to discussion of medical ethics in the last twenty or so years,most famously in the Physicians Charter .

There are several-not necessarily mutually exclusive-lines of argument that disagree with the inclusion of a quest for social justice as a key element of medical ethics and which may well resonate with some physicians.

Here is a small sampling of some of those arguments:

1)Some may accept that social justice is a valid concept and one worth pursuing but see no reason to have social justice as one of the three fundamental precepts of medical ethics having heard no convincing argument for its inclusion. From my reading, a convincing argument for its inclusion was not found in the text of the Charter but seemed to be a gratuitous assertion.

2)Others believe that the concept of social justice itself is bogus,bereft of useful,meaningful intellectual content and operational details.Advocates of this position find support from the writings of Nobel laureate FA Hayek and economists Thomas Sowell and Anthony de Jasay and others.

Quoting Jasay.

...one of the pathetic infirmities of social justice, namely that it has no rules by which a socially just state of affairs could ever be identified.

What rules do they advocate that would bring about an equitable distribution of health care resources.? Who decides what is equitable?

De Jasay speaks of justice as a property of an act and that an unjust state of affairs results from unjust acts. Who has committed the acts that lead to the unjust conditions that the social justice advocate yearn to rectify? (from The Collected Papers of Anthony de Jasay.Political Economy Concisely.)

Are the better-off obligated to help the worse-off even if their condition is no fault of theirs. What perversion of justice is it that places the " obligation of redressing an injustice on those who have not committed it."?

Social justice is when you blame someone for an inequality that they did not bring about and then make them pay to correct it.

By this line of argument social justice is not justice at all but a rhetorical tool to justify any and all plans for redistribution to rectify inequality in regard to any number of characteristics.

What is the argument for the claim that this egalitarian view with corrective redistribution must be a part of a physician's ethical package ? Would not one's choice in this regard be a matter for political philosophy and not professional ethics?

DeSay's arguments echo Hayek's ideas. To speak of notions of justice regarding the relative holding across an entire society is confused thinking in Hayek's view. Quoting Hayek:

Social justice does not belong to the category of error but to that of nonsense,like the term 'a moral stone'.

3) Others believe that the insertion of social justice into the medical ethical framework may or may not be unjustified intellectually and may or may not have meaningful operational content but more importantly it is harmful and has the potential to destroy medical ethics as it has been known and practiced for hundreds of years.

Dr Richard Fogoros on his blog The Covert Rationing Blog explains how the Charter and the New Ethics of the ACP differs from and conflicts with the old time medical ethics and warns of its harms.

The New Ethics takes classical medical ethics (which obligates doctors to always place the welfare of their individual patients first) and adds on to it a new ethical obligation, called Social Justice, which obligates doctors to work toward “the fair distribution of healthcare resources.” This new obligation (which is to society) will inherently conflict, at least some of the time, with the physician’s traditional obligation to the individual patient. So, under the New Ethics, the doctor’s loyalty is now officially divided. DrRich asserts that this divided loyalty (which is now declared to be entirely ethical) leaves the patient in a dangerous position, and breaks the profession of medicine.

You will not find "fiduciary duty" discussed in the new ethics.New ethics advocates hope that if the word is not used that the obligation will go down the memory hole.Plaintiff attorneys may think otherwise.

Maybe the Mafia Rule (Cui Bono) does not always lead one to a useful insight but it often does. Who might benefit from this transformation of medical ethics ? The third party payers benefit because physician's ethics now include the precept to act for the good of the collective (third party payers and the ACOs will play the role of the collective) and if cost benefit analysis concludes that a given treatment is not cost effective then the ethical doc (by the Charter definition) will do what it right for the good of the collective. The medical elite might gain because they will be the ones who play a major role in writing the rules (guidelines) that will direct the ethical physician to act in the cost effective manner than will in the end benefit the group if not the individual patient and conserve society's resources. Are we looking at the old story of the baptist and bootleggers here?

Minor editorial changes made on 9/4/2012

What does Massachusetts do when Romneycare costs too Much

The quick answer is blame the physicians and pass draconian,liberty crushing,contract abrogating, legislation to control medical care costs and physicians ' practices. See here for details from the WSJ regarding a bill passed by the legislature in Massachusetts awaiting the governor's signature.

Here is what the WSJ says regarding the physicians' control commission (my term for it):

An 11-member board known as the Health Policy Commission will use the data[ ED: data that the bill forces physicians to submit] to set and enforce rules to ensure that total Massachusetts health spending, public and private, grows no more than projected gross state product through 2017, and 0.5 percentage points lower thereafter. (And Paul Ryan's Medicare projections are unrealistic?)

No registered provider is allowed to make "any material change to its operations or governance structure," the bill says, without the commission's approval. The commission can also rewrite the terms of provider contracts with insurers and payment levels and methods if they are "deemed to be excessive."

Apparently for physicians to be "allowed " to practice they must submit the required economic data to the commission .

So a physician is not allowed to change the operation structure of his practice (whatever that means) without the approval of this board and so much for the sanctity of contract as this group can "rewrite" the physicians' contracts. This outrage would have a good fit in the descriptions of various frightening government actions found in Atlas Shrugged.

If this does not encourage docs reaching close to retirement age to retire early what would? At least physicians there can move to another state and seek refuge at least for a while until Obamacare costs reaches some levels when something like that is imposed nation wide.

We already have in the wings, awaiting its operational birth according to the ACA timetable,an organization that either already has or is ready to assume the power to control not only Medicare and Medicaid expenditure but all medical expenditures according to some nonsensical projections of what medical costs "should be" versus some fairy dust projection of GDP growth. Well why not, after all central economic planning worked out really well in the 20th century. This panel of Platonic Guardians is known as IPAB. See here for more on that.

Does anyone think we will hear howls of outrageous protests from such organizations as AMA and ACP? Another question- what does his legislative act do to retainer practices?


Addendum and update 8/21/2012 The governor has now signed the bill- so it is law.The tireless Dr. Douglas Peredia has read through the 349 page document and has extracted the key provisions (39 pages).See here.

Basis of Quality Adjusted life years is a fiction Ask Jeremy Bentham

There was a time a few years ago when there was sincere honest thoughtful criticism of he concept of quality adjusted life years (QALY) , not so much now.In 1990 (JAMA 199:263(21):2917-2921), John LaPuma and Edward Lawlor published thoughtful critique of QALY. They said that the QALY concept was :

founded on six ethical assumptions: quality of life can be accurately measured and used, utilitarianism is acceptable, equity and efficiency are compatible, projections of community preferences can substitute for individual preferences, the old have less "capacity to benefit" than the young, and physicians will not use quality-adjusted life-years as clinical maxims.

In their article they offer valid critiques of each of those assumptions.

But the dogs bark and the caravan moves on. Pick up almost any issue of JAMA and the Annals of Internal Medicine and you will find articles on the cost effectiveness of some or other medical procedure or treatment.

Now it seems that the notion of QALY is well ensconced in the practice of " determining" the cost effectiveness of medical procedures and treatments. Why is the word determining placed in scare quotes? Because my argument is that the idea of determining QALY is, in the words of the founder of utilitarianism, a fiction.

Jeremy Bentham did not discuss QALYs since the term was not invented in his day but he did consider the idea of adding up individuals happiness or utility as it was essential to his philosophy.

Bentham's famous principle is "the greatest happiness of the greatest number is the foundation of morals and legislation". To him happiness was the balance of pleasure over pain and this would be summed up somehow for everyone affected by the policy proposal and was known as the principle of utility and is the essence of utilitarianism.

Those who favor a utilitarian approach to public policy issue will not be pleased to learn than Bentham himself admitted that summing happiness or utilities or some measure of quality of life did not make sense. Bentham wrote:

"Tis vain to talk of adding quantities which after the addition will continue distinct as they were before,one man's happiness will never be another man's happiness:a gain to one man is no gain to another;you might as well pretend to add 20 apples to 20 pears,which after you had done that could not be 40 of any one thing but 20 of each as there were before. This addibility of the happiness of different subjects , however, when considered rigorously it may appear fictitious, is a postulatum without the allowance of which all political reasoning is at a stand.."
So Bentham realized that adding up everyone's happiness did not make sense (when considered rigorously) but we need to do it to make policy.

The economist, Anthony de Jasay ,said that scientifically speaking aggregating the utilities of different persons, e.g. to subtract from the gains of some the losses of others,is just as nonsensical as taking four apples out of seven oranges.So nonsense that is "useful" for some analysis is still nonsense.

Cost effectiveness analysis as applied to medical procedures does not exactly sum happiness over many individuals but sums instead quality adjusted life years. The QALY ( or the simpler concept of life years) is foundational in the current efforts to determine cost effectiveness.


John Rawls' A Theory of Justice proposes a redistribution scheme different from utilitarianism about which he said "[it]does not take seriously the distinction between persons".Thomas Nagel,a critic of utilitarianism said of it that it treats the needs and satisfactions of multiple individual beings as if they were the features of some hypothetical mass person.

Nonsense or not it is a handy tool for the elites who would make their value judgments determinative of what the rest of us are allowed to have in terms of medical care.

note: minor editorial changes made 8/16/2012 in the final paragraph to clarify meaning.

USPSTF-Thanks goodness they have"no emotional,ideological or financial conflicts of interests"

Dr. Otis W. Brawley,of the American Cancer Society, characterized the USPSTF as ideally suited to provide an objective,unbiased assessment of the state of the science (medical science in this context as it applies to screening for disease) because:

"The Task Force Members have no emotional,ideological or financial confidants of interests."

This quote can be found in the Annals of Internal Medicine,Prostate Cancer Screening: what we know,don't know and believe" (Annals Int Med. 22May 2012.)

Somehow the appointment process utilized by the AHRQ (Agency for Healthcare Research and Quality) which,as best I can tell, appoints the members to the Task Force, is able to cull out potential appointees who have ideological and emotional conflicts of interest as well as the more easily determined financial conflicts.

The techniques employed by AHRQ should be made public as appointing individuals without any biases would be incredibly important in regard to the judiciary (particularly the Supreme Court) .Such a determination would be invaluable for voters in selecting a candidate.AHRQ has an ethical obligation to make this marvelous selection process public.Their vetting process seems to have discovered a new group (sub-species?) of humans who are except from the cognitive flaws that psychologists such as Daniel Kahneman and Amos Tversky, have described. Other authors such Drs Jerome Koopman and Pamela Hartzband have commented on the subjective elements in what passes for objective analysis of medical data;the public is fortunate to have decisions made for them by a panel who can be objective all the way down.

Quoting Koopman and Hartzband:


For patients and experts alike, there is a subjective core to every medical decision. The truth is,despite many advances, much of medicine still exists in a gray zone where there is not one right answer"

Panels designated as expert have at their disposal sophisticated statistical methods and standard epidemiological concepts, but at the end of the process some one or some group has to make a value judgment. Some one has to say the risks are or are not worth the benefit.


The financial conflicts , or course, are the easiest to discern. Ideological biases is a little more difficult to exclude. As far as "emotional biases" I have no clue as to what a litmus test of that would be,but apparently Dr. Brawley does as does the AHRQ.


The majority of Task Force members come from medical academia. If it were the case that medical academicians as a group are of a certain mind set or world view it would be specially important to weed out those whose priors might include a certain default view about screening for what ever reason.

It is commonly held the academics in general are more likely for example to vote democratic than republican and are more likely to be characterized as progressive rather than conservative or libertarian and tend to vote than way. Fortunately there is nothing in the progressive world view ( which posits that elites should make the really important decisions rather than the individual) that would lessen their ability to make an unbiased assessment.

Many of the task force members have MPH degrees or more advanced degrees in Public Health. Could it be the case than special training in public health might lead one to adopt (or seek such a degree because one has already adopted ) a world view in which the inevitable tension between the good of individual versus the good of the collective is more than a little slanted towards the later. Perhaps, but presumably AHRQ vetting procedure has been able to select candidates who have no prediction for either position.

Rather than declare than the task force is composed of creatures marvelously bereft of any and all biases and thus describing creatures not previously known to exist on earth I suggest the following description is more realistic:

Highly trained,well educated conscientious, fallible people trying hard to make the best decision they can dealing with difficult information supplied with less than complete information and using mathematical tools that offer approximate answers rather than categorical eternal truths.

Does a person's priors (past experiences,education,world view) inform the way they read the data in regard to a certain issue.? Common sense , general experience and a great deal of generally accepted psychological research all suggest the answer is yes.

Paragraphs of over done, self serving sarcasm may give some personal satisfaction but my first reaction to Dr. Brawley's statement was the phrase made famous by John McEnroe referring to a shot by his opponent that everyone in the stadium but the umpire saw that the ball was out is really all the claim deserves. "You've got to be kidding me."

There is no "i" in team,Dr Wes on the Penn State Mentality in Physicians

Quote for the day:

Dare we ask what we are creating as we move to make doctors shift-workers, business minded. algorithm-driven, group-think, productivity-incentivized cogs in our new heavily-funded health care wheel. Paying doctors for performance standards based on computer-driven check-boxes, guideline adherence and proscribed health care is of more importance than the individual. Health care, then, devolves to nothing more than a nine-to-five series of clicks.

The above is from the typically insightful blog of Dr. Wes. In this commentary Dr. Wes makes a thought provoking analogy to the Penn. State tragic horror show. Go here for the full story.