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26 July 2016


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The way we do prehospital care has GOT to be fixed.

Repealing that ridiculous dictat from Reagan that everyone who shows up to an ER must be seen is a good start.


I heard this morning that the GOP wants to privatize the VA. How does Trump view this?
I used to work in a VA and believe this is a mistake. We gave superb care.


Health Care is currently in the same place automobile repair was in 1960. There are no rates posted. There is no estimate of costs ahead of time. There are no recordds kept of success rates. Thus, providers may charge whatever they choose, after the fact. There is no transparent competition.

Binary buyer/seller markets are balanced and therefore stable.

However, the patient/doctor/insurance market is a trinary system. Everyone is spending OPM (Other People's Money). ("Moral Hazard".) Doctors hide prices and charge whatever they feel like after the fact, screwing the patient. Patients ask for expensive treatments they don't need and don't pay for, screwing the insurance companies. Some patients also gratuitously sue doctors, causing rates to soar for everyone else. And then insurance companies hike their rates, screwing the patients and the doctors. Everyone is screwing someone else.

A trinary system is largely unstable. When people expect to get something for nothing, spending OPM, the forces are not balanced. They are amplified. The force arrows go round and round in a circle, instead of pointing at each other. There is no reason for prices to drop. So they keep on rising, without limit. This is what we have been seeing in the health care industry.

This is systemic. It follows from the basic design.

So there will be no changes until the system changes.

Force balance depends upon perception, and not actuality. When people do not perceive adverse market consequences, it doesn't matter if they're there or not.

The man to see on all this is Michael Porter of Harvard, who has thought much on this basic theory.



I agree with the "suberb care." I don't use VA medical facilities but a friend's wife is a VA doctor and if she works there it must be pretty good. My only suggestion about VA medical care is that a "credit card" feature that lets veterans use civilian facilities when VA is not available is a good idea. pl

Eric Newhill

Tyler, Abuse of the ER has long been a costly issue. We run analysis trending inappropriate ER visits. These are visits that should have been to a primary care physician or a clinic.

It seems to be an issue very resisted to amelioration. All sorts of solutions have been tried with marginal success at best. ER abuse is largely cultural, is largely urban and is a feature of low income, low education populations.

For the employed/insured, the most effective solution has been to simply raise the copay/deductible associated with ER visits to a level that is painful and influences a reasonable microeconomic decision. If it turns out the ER visit was for a medically appropriate reason, the patient's financial responsibility (copay/deductible) can be reduced.

However, the unemployed patient on Medicaid or ACA is not impacted and their behavior continues.

We're talking about millions of unnecessary ER visits each year at an avg cost of $1,200 versus $80 - $100 for an office visit or maybe $120 for an afterhours clinic.


In a strange sort of way, ObamaCare parallels that of ZIRP/QE. ZIRP/QE has made the financial economy very wealthy with very little of that wealth making its way down to the real economy. Similarly, ObamaCare has made the back-office economy very wealth with very little of that wealth making its way down to the front-line economy. Even though the financial economy isn't exactly like the back-office economy and the real economy isn't exactly like the front-line economy, there are enough parallels between the two to make the case that the ObamaCare is profoundly bad for the real economy, the place where the front-line economy is found.

Perhaps if the critics of ObamaCare would focus their criticism on the fact that ObamaCare enriches the back-office economy at the expense to the front-line economy, they would make better progress towards discrediting ObamaCare. After all, it's not very hard to make the case that the back-office bureaucrats have little to nothing to do with delivering patient care, much less improving patient care, and the more money is thrown at these bureaucrats, the less money there is to delivery care on the front lines, causing the quality of care to erode even further.

The Twisted Genius

Cee and pl,

I have to agree that the VA system is pretty damned good. My experience with the evaluation system couldn't have gone better. What helped was the Virginia Veterans Affairs Office. They assisted with the paperwork and advocated for me to get everything done in a timely fashion. The VA kept me informed better than anything I've experienced. All evaluations in VA hospitals and contract facilities were on par or better than in any civilian facility. Not everybody has this experience, but I ended up with 70% disability while doing my best to prove that I was still in damned good shape.

I haven't used a VA hospital or clinic yet, but my next door neighbor has gotten excellent care. He's a retired Sergeant Major and has received several life saving treatments over the years. His wife was medically retired after the first Gulf War and has also gotten great care. That's what they tell me. One of these years, I'll go get a physical at the Fredericksburg clinic and let you know how that goes.

I like the idea of a "credit card" feature that lets veterans use civilian facilities when VA is not available. The reality is that it's also tough getting an appointment with civilian doctors. A month long waiting list is not unusual.

The Twisted Genius


This is Trump's plan for the VA. It's not bad at all, but it will be expensive. He does not call for privatizing the system.


Mark Gaughan

I’d like a single payer healthcare insurance system. Medicare for all? The idea behind the PPACA (Obamacare is a misnomer.), was to have that single payer system. But it didn’t end up that way. My question is: how do we go from where we are, to that? Healthcare employs very many people, and earns numerous businesses profits. If we were to switch to a single payer government system, what would happen to all those jobs, and profits? I don’t see how it can happen.



I'm right there with you. I've seen so much nonsense from people calling for knee pain, claiming 10 out of 10 back pain with a BP of 108/66 and a pulse of 75, someone gets into an argument with her boyfriend and says she "can't breath" in between screaming at him.

Its absolutely ridiculous, but people think if they go to the ER via rescue they're going to get their faster and get pretty upset when they get triaged to the waiting room.



That is what Trump wants to do.

Personally, I find that VA care is a matter of where you're at.

Eric Newhill

Reimbursement rates that providers can charge are negotiated by insurance companies and put in written contracts. The rates are based on massive amounts of analysis involving everything from trends in medical technology development, to demographics, to network issues, to inflationary forces, to (especially) prior years utilization and cost trends. There is nothing arbitrary about it.

There is some truth to you statement re; OPM - at the point of purchase. However, the bigger issue is the principal/agent dilemma. The provider (agent) is the one with the knowledge and is incentivized to tell the patient (principal) that what is needed is more expensive treatment of the modality that is easiest for the provider to provide. Resolving this dilemma is one of the services the insurance companies try to resolve by using their huge databases to understand what treatment is appropriate and what it should cost and denying that which is inappropriate and/or not cost effective. Of course the insurance companies have an incentive in the opposite direction of the providers, but we hope that somewhere in the middle is where things sift out.

Technology is biggest driver of cost. The ability to increase treatment on both the intensive and extensive margins means that more people are receiving treatment for a wider range of conditions. However, the bang for buck just isn't there much of the time. New technology often comes in with a huge cost increase, but only a marginal benefit increase. The socialized systems are much better at simply issuing a government directive that either the marginal cost = the marginal benefit, or the new thing won't be approved. In the US politics, lawyers and insatiable consumers spending OPM interfere with insurance companies' ability to limit benefits to cost effective treatments (e.g. the poor widow and mother of six is dying because the evil insurance company won't approve what her doctor says is a miracle cure...call the press! call a lawyer! call Michael Moore!).

Insurance companies provide a lot of value; managing members'care, organizing and contracting provider networks to ensure full access for members, detecting fraud and abuse, negotiating reimbursements at a % of what the providers bill and attempting to only approve appropriate and cost effective care. The savings incurred by these and other activities to the members far outweighs the % net profit that the companies keep.

Even so, despite all those efforts, cost inexorably increase because of ceaseless introduction of new technologies. If cost is to be curbed, some hard choices will have to be made concerning what treatments will be approved and for whom. Not everyone can get everything. The nation isn't ready to have that conversation and continues to be distracted by magical shiny things.

I repeat, socialized govt run single payer, private enterprise...doesn't matter. Access and utilization must be rationed. Otherwise, any savings realized will be a one off and the trend will resume itself toward increased % of GDP spent on healthcare.


Twisted Genius,

Thank you. If we stop starting more wars and building weapons that nobody wants there should be enough cash to do this.

Eric Newhill

Cynthia, I may be missing something, but from my office (in insurance) I don't see anyone making money off the ACA. Quite the opposite, actually. The government is printing money to keep the carcass of the ACA from totally rotting.

Insurance companies are losing money on the ACA even with the govt reimbursements for reinsurance and risk adjustment. Providers are trying their best to not accept the members due to low reimbursement rates, low income/low information patients that physician can't stand and getting stuck with bills (insurance gets stuck for the first month or so when a member doesn't pay the premium, but incurs medical claims, per ACA rules - after that, the providers suck up the loss and there's a lot of that kind of behavior from ACA applicants).

The only people benefitting are the insured people taking advantage of the no pre-existing condition exclusion rule and the premium subsidies. There is abuse here too. Members sign up when they know they have expensive treatment coming, pay the premium for a month or two or three and, when the expensive treatment is complete, they drop out. That is not how insurance works and we all lose because premiums have to go up for everyone to cover that kind of abuse.


There are several reasons why ERs are being overused, Tyler. Profit motive is the number one reason. Insurers reimburse ER visits at a much higher rate than they do primary care visits. Which explains why hospitals are expanded their ER services to include freestanding ERs. In the past three years, for instance, the hospitals in my town alone have build three freestanding ERs.

Insurers can put a stop to this very expensive way to deliver care by simply cutting reimbursement for ER visits that are obviously not an emergency -- things like a sore throat or a bellyache. But they have yet to do that. The only thing they have done to discourage people from using the ER as a primary care clinic is up the deductible for ER visits. I have private health insurance through my employer and my deductible for ER visits has increased from $50 to $150, while my deductible for a primary care visit has remained the same at $20. But people with a so-called " Cadillac plan" still have a very low deductible for ER visits, and people on Medicaid or Medicare pay next to nothing to be seen in the ER. Neither of them have the incentive to stay out of the ER. And I don't see that changing anytime soon. People with " Cadillac plans" and people on Medicaid and Medicare are are too politically connected to see their ER deductibles increases to, say, $150.

But it doesn't do much good to cut ER services when there are not enough primary care physicians to pick up the slack. Then again, even if we had an adequate supply of primary physicians, many of them won't see patients after hours, holidays and weekends. What attracts doctors to go into primary care is not the money, it's the hours. If that "perk" is taken away from them, they will demand more pay.

Which leads me back to what I regard as the best way to solve the ER overuse problem. It is not to reduce their use, but to reduce their costs. And the best way to do that is for insurers to reduce reimbursement for ER visits that are clearly not an emergency.


Col. Lang,

Agreed. My husband is a Vietnam veteran and he would like the same rather than paying out of pocket when he is treated elsewhere because of the wait time to be seen.

different clue

Mark Gaughan,

The idea behind PPACAbamacare was never to have a single payer system. The idea behind PPACAbamacare was to short-circuit the drive towards a single payer system and to preVENT a single payer system from EVER emerging.
Obamacare was designed, right from the start, as a bailout program for Big Insura, which saw itself losing money on the shrinking value of all the toxic assets in its investment portfolios.

SAC Brat

There was an argument a few years ago when the VA was in the hotseat that the reason to vilify the VA was that the data that was coming from watching it work was making private health care look bad. The care results and administrative costs were a threat to private hospitals and insurance models.

Similar to the campaign to paint Social Security as needing saving by private groups. What is real and what is a determined and persistent marketing effort?

Eric Newhill

different clue - I think you have no clue.

Big insurance, as you call it, has in no way been bailed out by the ACA (as if it needed bailing out). We were highly suspicious of O care from its inception and our worse fears have been realized. It's a big $ loser for us.

You really don't know what you're talking about. if you think you do, then I'd like to hear it.

I'm sure it will have to do with profits, which you probably oppose ideologically. Big insurance saves more money for members than it keeps in profits (see what I wrote up thread). If you prefer unfettered access with providers getting paid whatever they want, then prepare for 25% - 30% of DPP going to healthcare. If you think the government can do it better, then you have to explain why the govt handed management of Medicaid, Medicare and O-Care to the private payers. Answer; Govt cannot do it better in the US.

Stephen Calhoun

Eric, "Members sign up when they know they have expensive treatment coming, pay the premium for a month or two or three and, when the expensive treatment is complete, they drop out." I'd like to see actual data that backs this up, and, have the opportunity to analyze the data as against more normative uses of health insurance (ACA.)

The fundamental dichotomy is between single payer, and, "too bad you're irresponsibly poor."


what ever happened to the simple idea of examining the ways the rest of the developed world does healthcare and picking out the best bits? Healthcare GDP numbers suggest your system is broken.

I am writing this from a hotel room. We are in town five days a week for Five weeks while my partner has radiotherapy each day as a precaution following her mastectomy. We could have been put up for free in an apartment but we like this place.

Australian Private health insurance costs us about 400 US$ per month. The out of pocket expenses so far for 16 weeks of chemotherapy, monthly MRI's, bone scans, CT scans, ultrasounds, blood tests, oncologists visits plus five hours of surgery and three weeks in a private room in a private hospital is about $4000 - and all of it could have been provided for free under the public system with perhaps a few rougher edges and the same outcome, which is, fingers crossed, that she is going to be fine.

What p***** me off is that the big drug and medical companies are doing their level best to destroy our system and replace it with yours - where the healthcare industry takes many peoples last dollar as they take their last breath.

To put that another way bankruptcy through medical expenses is an obscenity in our view.


Whoa! This would be really expensive. How will he get this through Congress? They have been cutting funding for rural clinics, so having enough of those to make a difference in travel time for vets will be tough. Would probably make more sense to go back to funding the rural places we have now and make it easier for vets to use them.



I wrote this in response to a similar post you made, so will post as is. Will make sense if you remember what you wrote. This is written from the POV of an in the hospital doc, having worked ER, ICU and OR. Have run the business side for years.

Being one of those providers, I have a more nuanced view of HICs. I think you are correct about some of these and wrong, or exaggerating a bit on others. Or maybe our companies in PA just don't do some of this.

1) In PA, the big companies don't negotiate, they dictate, except for a few, very large, important academic places. Also, there is a nice curve well known to health care economists that shows when you have too many insurers, costs are high (they have little leverage with providers), but also that costs are higher when there are very few insurers, which is what we really have in most states. More power leads to higher prices for consumers at some point.

2) I agree with most of this.

3) Mostly BS. The constant credentialing costs me lots of money and time. I have a full time person devoted to just credentialing. What really happens is that the crappy docs get kicked out of the big hospitals. They go to the little ones in the sticks. You guys still pay them. Sometimes you pay them more than the good ones. (Have been on our credentials committee for a while.)

4) Not primary care, so maybe you do this. Don't see any of this in the hospital.

5) It may save you money. It costs me money. I don't know if it saves money for the consumer. More estimated physician billing and insurance related costs at about $80,000 per year. In Canada, they pay about $20,000 year of those costs. Comparing that to Medicare in the US, we find that we could save about $350 billion year. Maybe you save the consumer, I just don't know, but I know it costs physicians a lot. A lot of time also. Medicare is straightforward and billing problems rare. All of our big problems have occurred with private insurers.

6) Mixed. At least on the inpatient side this is all driven by Medicare and physicians. The next private health insurance driven initiative I see will be the (almost) first. I agree you try to hold off on expensive, unproven procedures.

Overall, I don't think you guys are leaches. You just provide health insurance at, usually, decent prices. I think some places try to do the things you describe, but most just sell the insurance and administer the plan, which is still a needed product. I think you guys are faced with real problems trying to cut costs. We all know, for example, that knee arthroscopies seldom do much good, but you guys pay for them. The public outcry if you didn't would kill market share.

Finally, I think technology is a huge part of the problem. I agree with a lot of that. We docs are certainly culpable there. The profit motive runs strong for docs too. Also, you guys pay us a lot more so you give us incentives to use the new stuff. You are right about Obesity. Best paper I have seen on that just came out. Explodes the myth that obesity is protective. Anyway, providers (including hospitals and docs) are not blameless either, just responding on what i have seen over the years and, again, this may be a local and specialty related thing.



The VA when I trained, in the 80s, was pretty awful with just a few bright spots. Our SICU nurses were awesome. The MICU nurses didn't know if a patient was dead unless you told them. Floor nurses were worse. Half the docs good and half awful. However, overall, the VA has undergone remarkable change. Its outcomes for the system as a whole rival the very good private hospitals. Individual places still have issues.

They got hit for wait times, but then up until recently few private facilities openly monitored wait times at all. There just wasn't much public data on the topic. Once places like the Commonwealth group started looking at this they found that wait times in the US really aren't as good as we had assumed.

What is missed, and will always be missed if you never worked at one or been a patient at one is the culture of a VA. Hard to describe. A lot of patients really like it.



Not really. It was accepted from the start that single payer was not politically acceptable. The decision was made to try to work within the current market system, i.e. the insurers. If you will recall, if old enough, it was the insurers sponsoring the ads that helped torpedo an attempt at health care reform by the Clintons. So this was designed to be inclusive with the insurers. They really modeled it on Romneycare and older GOP plans hoping to get support from across the aisle, and hoping to avoid heavily financed opposition from the insurers. Partly why we got such a mixed plan.


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