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Friday, April 30, 2004

The consequences of importing socialism from overseas

[Anthony Gregory, "The Bankruptcy of Medicare," The Independent Institute, 27 April 2004.]

A little history lesson on the origins of Medicare provides some perspective on the situation we currently face:

At the end of last year George W. Bush signed the Medicare Modernization Act of 2003 into law in the name of “honoring the commitments of Medicare to all our seniors.” The bulk of the law provided prescription drug subsidies for the elderly, at an estimated cost of between $400 billion and more than $1 trillion over the next decade. Less than four months later, the Medicare’s Board of Trustees issued a report citing Bush’s subsidy as a major reason that the program would go bankrupt by 2019, seven years earlier than the board predicted last year.

As far as sound economics go, Medicare has really been bankrupt since it began in 1965. Since its inception, virtually every reform intended to fix it and keep it afloat has increased medical costs, decreased health care quality for the elderly, and created problems that politicians would use as excuses to pass new reforms.

Government health insurance for the elderly did not have its debut in America, but rather in Prussia in 1883 under the authoritarian regime of Otto von Bismarck. Bismarck invented mandatory health insurance and social security to keep his subjects subservient and dependent, to prevent the more leftist socialists from gaining popular support, and to help cover the costs of the Franco-Prussian War through payroll taxes masked as retirement savings accounts. His legacy had a huge impact worldwide at the turn of the century, as many countries began adopting similar programs.

In its first year, Medicare payments totaled $1 billion, but by 1971, the payments had already risen to $7.9 billion annually. Congress was surprised by the ballooning costs of health care services, and held hearings and established commissions to fix the problem, the first of several failed attempts.

Even with seven payroll tax hikes in twenty-one years, anti-“fraud” regulations, and other reforms, Medicare is still a disaster. Despite a $150 billion annual Medicare budget, today’s elderly now spend more than twice as much out of pocket than they did before Medicare was enacted, even after accounting for inflation. Seniors who try to circumvent the system by opting out of Medicare altogether must forego all Social Security benefits. Medicare has become morally, as well as fiscally, bankrupt.


Thursday, April 29, 2004

Book recommendation: The Coming Generational Storm

[George Will, "The third rail," Townhall, 4 March 2004.]

Anyone interested in or doubting the demographic shift that is on its way in this country and the impact it will have on federal and state health care programs should take a look at this recent release from MIT Press:

There is a mismatch between the Social Security and Medicare promises we have made to ourselves -- calls on the nation's future economic product -- and the ability of the economy to fund those promises when the 77 million baby boomers retire.

According to Laurence J. Kotlikoff of Boston University, the present value of the gap between promised outlays and projected revenues is $51 trillion -- more than four times the nation's annual GDP. Today the household wealth of Americans -- the value of their houses, 401(k)s, cars, refrigerators, toasters, socks, everything -- is about $42 trillion. In impeccable Greenspan-speak, the government's truth-teller said "significant structural adjustments'' will be necessary.

This much is widely understood: Raising the retirement age and some other benefit reductions (including taking the exaggeration of inflation out of cost-of-living computations) will be necessary because tax increases to fund current benefit schedules would cripple the economy.

It is axiomatic -- meaning, true outside of Washington -- that everyone is entitled to his own opinion but not his own facts. Here are some facts, many of them gleaned from a new book from the MIT press, "The Coming Generational Storm'' by Kotlikoff and Scott Burns of The Dallas Morning News.

By 2030, the boomers, who begin retiring in 2008, will have made America's population older than Florida's is today. America's population will have increased perhaps as much as 18 percent, its retirees 100 percent. Already the fastest rate of growth of any age cohort is of Americans over 85.

Today life expectancy at birth is 76, which is troublesome enough, but additional expectancy at 65 is 17 years -- and growing. For about 150 years the longest life expectancies have advanced about 2.5 years per decade. Most people start collecting Social Security at 62, so the year 2019 will be especially challenging because more American babies were born in 1957 -- 4.3 million in a population of 172 million -- than in any year in American history.

Today there are more than 100 million additional Americans, but there were fewer than 4 million newborns per year throughout the 1990s. In the 1950s the median age for women's first marriages was 20.3. By 2000 it was 25.1. This has meant a decline in fecundity, which affects the wager we have made on Social Security as an intergenerational compact -- children being able and willing to support the elderly.

On Jan. 31, 1940, a check, numbered 00-000-001, for $22.54 was issued to Ida May Fuller of Ludlow, Vt., making her the first recipient of recurring monthly Social Security payments. Then, in an act of dubious citizenship, she lived to 100, dying in January 1975, having received $22,000 in benefits. That did not matter because in 1940 there were 42 workers for every retiree. Today there are 3.2 to one. In 2030 there will be 2.2 to 1.


Wednesday, April 28, 2004

Emergency room screenings may add a healthy dose of rationality to health care

[Ceci Connolly, "Some Finding No Room at the ER," The Washington Post, 26 April 2004.]

According to this article, "ER care is both the most costly and least effective at treating the sort of chronic problems that claim the greatest number of lives each year." This is a growing problem as ER visits skyrocket across the country. In Denver, one hospital is actually has the audacity to turn away patients who do not need emergency care:

It's not the heart attacks or stabbings that alarm Norman Paradis. It's the minor maladies, the daily deluge of coughs, colds, toothaches and even hangnails that clog his emergency room.

As the provider of last resort, hospital emergency departments across America have for decades accepted thousands of truly non-urgent cases and swallowed the cost. For the most part, the patients have nowhere else to go, no insurance and no money.

That is starting to change. University of Colorado Hospital, where Paradis works, is leading the way on a controversial solution -- weeding out the people with bumps and scrapes so it can devote more time and resources to serious, life-threatening traumas and, also, to paying customers.

Officials here say its 15-month-old system of medical screening, or "triaging out," could go a long way in easing the financial strains that have forced hundreds of emergency departments to shut down in the last decade.


Unwelcome rehashing

[Thomas Sowell, "Hillary's back!," Townhall, 27 April 2004.]

Economist John Maynard Keynes once referred to the power of long-dead ideas over present day life:

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.

Apparently, the same is true of politicians in Washington. Thomas Sowell is hardly pleased to see that "HillaryCare" is making headlines again a decade after its original downfall:

A huge headline on the front of a recent issue of the New York Times Magazine said more than they intended: "Now Are We Ready to Talk About Health Care?" Inside was an article with the same title by Hillary Clinton.

The casual arrogance of that question is staggering. We talked endlessly about Hillary's proposed government-run medical system a decade ago and decided against it for many reasons. Now this re-run of the same issues proceeds as if the question is whether the rest of us are "ready" to talk about such things.

Senator Clinton parades the usual litany of reasons why the government should run the medical system, beginning with "soaring health costs and millions of uninsured." But, not only does she offer nothing that will actually reduce those costs, she declares that "our mental health delivery system is underfinanced."

"Universal health care" is a lovely phrase with political resonance in some quarters. But what does it mean concretely?

First of all, since people differ in what they want, nothing can be "universal" without being mandatory. In other words, we are talking about forcing people to belong to whatever program the politicians and bureaucrats come up with, regardless of what the people themselves might prefer.

What the lovely phrase "universal health care" boils down to is politicians and bureaucrats forcing people to get their medical treatment and pharmaceutical drugs the way the politicians and bureaucrats decide.

Somehow, the notion seems to be insinuated that the government can do it cheaper and better. But name three things that the government does cheaper and better than private individuals and organizations. It would be no trick at all to name dozens of things that the government does worse and at higher costs.

How many of those who gush about "universal health care" know that the countries which have it also have waiting times to get treated that are several times as long as people in America wait to see a specialist or get an operation? Waiting not only means longer suffering, it can also mean that a treatable disease can become untreatable -- or even fatal -- because of the delay.

But what are mere facts compared to a lovely phrase like "universal health care"?


Tuesday, April 27, 2004

NCPA releases DC briefing presentations

From their April 21st briefing in Washington, D.C., The National Center for Policy Analysis
has made available informative presentations from the event. These include:

Bill McInturff - Consumer Driven Health Plans

Dr. John Goodman - Health Care Accounts

Robert Hurley - The HSA Early Marketplace: Costs, Benefits and Demographics

Stuart Slutzky - Consumer-Driven Health Plans: Debunking the Myths

Friday, April 23, 2004

Drug reimportation momentum builds

[Mark Sherman, "More in Congress Back Canada Drug Imports," Associated Press, The Wichita Eagle, 21 April 2004.]

While support for allowing prescription drug importation grows, understanding of the consequences does not seem to be on the rise. While it remains up for debate whether importation is a good thing from a market-oriented perspective, one thing seems clear: Any savings from such a move would be short-lived as either drug companies begin to restrict supplies or the price controls of other countries begin to crumble.

Support for legalizing lower-cost prescription drugs from Canada is growing in Congress amid an election-year clamor from states, lawmakers and the elderly.

The White House and Republican congressional leaders remain opposed, saying there is no way to ensure safety. Nonetheless, proponents contend that public frustration with rising drug prices and growing defiance of a federal ban on prescription imports will force action before the November elections.

The latest legislation to allow Americans to fill their prescriptions in Canada was introduced Wednesday by a diverse group of Republican and Democratic senators. It would eventually allow drugs to be imported from 20 industrialized countries, mainly Europe.


Thursday, April 22, 2004

New England Journal of Medicine article advocates palliative care

[Sarah Treffinger, "Doctor urges palliative care for sick kids," The Cleveland Plain Dealer, 22 April 2004.]

Following on the heels of recent research showing the cost-savings from moving to palliative care, more physicians in the U.S. are beginning to tout its benefits:

The half-million children who cope with life- threatening conditions each year in the United States require care for more than just their physical needs.

Caregivers also must meet the social, psychological and spiritual needs of profoundly ill kids, according to an article in today's issue of
The New England Journal of Medicine.

Dr. Joanne Hilden of the Cleveland Clinic, one of the authors, said she wants to see palliative care become part of mainstream care for seriously ill and dying children. She believes it works best when it goes hand-in-hand with curative therapy, even when a patient's prognosis is uncertain.

"Kids are so strong," said Hilden, chairwoman of the Clinic's Department of Pediatric Hematology/ Oncology and director of Pediatric Palliative Care at its Children's Hospital. "You don't know who is going to make it through what, so you plan for both."

Dr. Diane Meier, director of the Center to Advance Palliative Care at Mount Sinai School of Medicine in New York, called the article "critically important."


[See the archived entry, "Palliative Care: Providing comfort to the dying," 22 March 2004.]

There is no free Medicaid lunch

[Brian Riedl, "So where is all our tax money going?," The Wichita Eagle, 16 April 2004.]

A popular view regarding federal Medicaid dollars is that the more states can get, the better. There are numerous holes in this argument, many of which have been discussed on this blog. One of the biggest concerns with this line of reasoning is the idea that "federal money is free money." Have you ever wondered who pays the bill for the money that comes from Washington? You do.

In this column, Heritage Foundation fellow Brian Riedl provides a breakdown of an average 1040:

Frustrated taxpayers who dutifully completed their 1040s this week likely asked themselves an understandable question: Where is all this money going? And they deserve an answer.

The federal government is projected to spend $21,671 per household in 2004 -- the most since World War II and $3,500 more than in 2001. Tax revenues will reach $16,981 per household through a combination of the income tax, payroll tax, gas tax, estate tax and assorted business taxes typically passed on through higher prices and smaller investment returns. The remaining $4,690 represents the deficit per household, which will be dumped in the laps of our children.


Of that $21,671, below are the health-related spending portions:

Social Security and Medicare -- $7,165. The 15.3 percent payroll tax, split evenly between the employer and employee, covers most of these costs. Although there were once 15 workers per retiree, the retirement of the baby boomers will leave only two workers to fund the benefits of each retiree. By 2030, the added costs of that burden are projected to reach what would be $5,200 per household in today's economy. In 2050, that additional tax would climb to $13,500 per household. The unpredictable costs of the new Medicare drug benefit could add thousands more to each household's tax bill.

Low-income programs -- $3,479. Nearly half of this spending subsidizes state Medicaid programs that provide health services to poor families. In line with economywide health care trends, Medicaid costs are rising 10 percent per year. Other low-income spending includes: Temporary Assistance for Needy Families, food stamps, housing subsidies, child care subsidies, Supplemental Security Income and low-income tax credits.

Health research and regulation -- $619. Health research spending has doubled since 1998, and nearly all of that spending growth has been concentrated in the National Institutes of Health. This category also includes the Food and Drug Administration and dozens of grant programs for health providers.


Taxpayers themselves will have to answer a final question: Are they getting their money's worth?

Monday, April 19, 2004

Rent-seekers for Hillarycare

[Daniel Gross, "Capitalists for Hillarycare," Slate, 16 April 2004.]

Major corporations who once scoffed at socialized medicine in the U.S. are all of a sudden cozying up to the idea. Far from social activism, the motivation behind this emerging corporate movement has more to do with trying to orchestrate a massive bailout:

In the early 1990s, big business largely opposed Hillary Clinton's ill-conceived effort to establish a government-run universal health insurance plan. But over the past several years—and especially in the past year—large corporations, and the trade groups that speak for them, have been subtly changing their tune.

The first hint of change was Big Business's embrace of the Medicare prescription drug benefit. At the time, Moneybox noted that the Big Three auto companies, with their large unionized workforces and huge numbers of retired employees, would be among the largest beneficiaries of a greater government role in providing health care.

That interest in more government health care is spreading from automakers to other manufacturers. In December, a study released by two business establishment trade groups, the Manufacturers Alliance and the National Association of Manufacturers, found that when it came to structural costs—environmental compliance, taxes, and employee benefits—American companies pay more compared to many foreign competitors. Structural costs add 22.4 percent to the price of doing business in the United States—more than in Canada, Britain, or South Korea. The largest single structural cost borne by the American private sector is health care. The clear implication: Unless society (read: the government) does something to relieve manufacturers of their health-care burden, the sector will suffer further.

The health-reform meme is now colonizing another group of Fortune 500 companies—major hospital chains. This week, HCA, the nation's largest hospital company, unexpectedly lowered earnings estimates for the year by about 10 percent. The main reason: It had to set aside extra cash to deal with swelling numbers of uninsured patients who can't pay their bills.

HCA CEO Jack Bovender came close to calling for a single-payer system, though he still couldn't utter the phrase "socialized medicine." "Hospitals have become the ultimate safety net for health care services for the vast majority of America's more than 44 million uninsured," he said. "It is time for all sectors of society, both public and private, health care and non-health care, to participate in solving this societal issue, by providing affordable health insurance for all Americans and more equitably sharing this growing cost to society."


This is an excellent example of rent-seeking, where companies that ought to be engaging in competitive behavior to earn consumer dollars are instead devoting resources to lobbying the government for special treatment. If this trend continues, and it may very well do so, the movement should be called out for what it is and the companies forced to defend such a huge transfer of wealth into their pockets.

Savings through E-prescriptions

["Electronic Prescriptions May Save Billions," NCPA Daily Policy Digest, 16 April 2004.]

Though the upfront costs are high, there are apparently big benefits to moving away from the written prescription deciphering routine that has been largely unchanged for decades:

A shift by physicians and pharmacies from handwritten to e-mail prescriptions could cut the nations health care costs by $29 billion, say experts.

There were 3.7 billion prescriptions written in 2003, of which about 8.8 million resulted in serious illness from drug errors.

-About 3 million of the prescription drug errors were preventable.

-About $2 billion in savings would come from reduced hospitals and doctor visits due to fewer prescribing errors.

-About $27 billion could be saved from medications errors because the system would curb duplications and would also immediately inform doctors of cheaper generics alternatives.


Friday, April 16, 2004

Kansas small businesses can benefit from HSAs

[Kenneth Daniel, "HSAs: New tool for small business health insurance," KSSmallBiz, 31 March 2004.]

Health savings accounts are gaining notoriety as an option for many, and the benefits for small businesses are highlighted in this column by Kenneth Daniel. The article also points out how state legislators are working to make the tool more readily available:

A new and valuable health insurance option for Kansas small businesses should be available within a few weeks. It will make health insurance affordable for many small businesses that don’t have it now, and will help employees afford their share of the costs.

The new Medicare bill signed into law in December by President Bush contained provisions for Health Savings Accounts (HSAs). At least one small business association, KansasFirst, is ready to start marketing policies through a group of Kansas agents. Others are likely to follow soon.


Thursday, April 15, 2004

Counterfeit drugs enter the market

["Fake Drugs," Daily Policy Digest, The National Center for Policy Analysis, 15 April 2004.]

As prescription drugs become more expensive, the temptation to take advantage of the market grows. Counterfeit medication is apparently a growing problem in the U.S., but still nothing compared to the troubles other countries are experiencing:

More than one billion pills are sold in this country every year. Although data is scarce, it is believed that about one percent of the drugs are counterfeit. Counterfeit drugs can enter the drug supply when if the seller conceals the drugs' origin and purchasers accept without questions the sellers' products.

In the United States counterfeiters tend to target high volume, high cost drugs. Often, counterfeiters commingle the fake drugs with the real drugs. The counterfeiters are often so well funded and sophisticated that investigators for the pharmaceutical companies often cannot tell the difference. As a result, Food and Drug Administration (FDA) investigations into counterfeit drugs have jumped four fold from the 1990s to 2000.


Wednesday, April 14, 2004

Medicaid funding tricks raise questions

["Medicaid policy faces scrutiny," Associated Press, The Wichita Eagle, 10 April 2004.]

States have long sought to "game" the Medicaid system in order to draw down as much federal funding as possible. Kansas is no exception. As budgets have grown tighter at the state level, these efforts have only increased. However, with budgets growing tighter at the federal level as well, a crackdown appears to be on its way:

Disputes with federal officials could cost Kansas $50 million to $75 million annually in federal Medicaid funds, Gov. Kathleen Sebelius said Friday.

Sebelius said the federal Centers for Medicare and Medicaid Services is questioning some of Kansas' policies on reimbursing doctors and hospitals who care for poor and disabled Kansans covered by Medicaid.

"Basically, there is a war between the Centers for Medicaid Services and states around the country. Practices, policies, procedures that have been long recognized, long in place, never questioned, are coming under question on all fronts."


The Centers for Medicaid Service has a different take on the matter:

Thomas Lenz, associate regional administrator for the centers, in Kansas City, Mo., said other governors have leveled similar criticisms as the agency examines "creative financing mechanisms" used by some states to attract more federal dollars.

"There has been a strengthening of the financial management oversight of Medicaid," Lenz said after Sebelius' news conference.

Lenz said the federal agency typically has two major issues in reviewing states' practices.

One, he said, is whether states pass some dollars through a public institution like the KU Medical Center and recapture them for use elsewhere in the budget, picking up extra federal funds along the way.

Another issue, Lenz said, is whether states are having Medicaid cover services not traditionally covered by that program -- such as foster care.


This dispute reveals some underlying problems with the funding of Medicaid. First, the 60-40 split creates a powerful incentive for states to spend more than they should in order to pull down more federal funding. Of course, taxpayers are paying for all of it, and they end up the ultimate loser in this situation. Now, as states are beginning to realizing that they are having trouble maintaining their ever larger 40 percent portion, panic is setting in.

The 60-40 split also creates an environment where the "creative financing" Mr. Lenz spoke of has become the common practice Governor Sebelius refers to. The fact that the federal government has largely ignored these practices up until now has fostered a belief that such behavior was tolerated, if not encouraged.

The larger issue, though, is that such disputes draw attention away from the fact that all the creative financing in the world will not transform Medicaid into a sustainable program. Unless reforms aimed at controlling escalating costs are put in place, Medicaid will bankrupt the state of Kansas.

[Matthew Hisrich, Staying the Course: Medicaid Reform in Kansas, The Flint Hills Center for Public Policy, February 2004.
Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," Submitted to Members of the Kansas State Legislature.]

Tuesday, April 13, 2004

Budget Living columnist recommends HSAs

["HSA hype is brewing," Clark Howard Show Notes, 24 February 2004.]

In the latest issue of Budget Living, columnist and radio show host Clark Howard provides some pointers on how health savings accounts work:

Anyone under 65 with a high-deductible insurance plan can open one as long as the plan's deductible is, at minimum $1000 for an individual and $2000 for a family. Each year you will be able to contribute - in pretax dollars - the amount of your deductible as long as it doesn't exceed $2000 for an individual or $5150 for a family. If along the way you rack up garden-variety health expenses (checkups, prescriptions, etc.), you may withdraw money from your HSA to pay for them. Other pluses: Since an HSA is a savings plan and not restrictive insurance, you can choose your physicians. And if you don't use the money you've deposited in one year, it rolls over to the next. If you have a large medical expense your insurance kicks in for expenses that exceed the deductible. The only downside is that HSAs aren't yet widely available, but are expected to be by June.

Howard advises the reader to check out Budget Living's website in June for a list of institutions that offer plans.

On his radio show, Howard also provided some perspective on why these accounts are necessary:

There are some people who don’t like HSAs, of course. They think all of the money is being funneled to the rich. But, it’s better than our current system. Of all the economic output in the United States, 15 cents on every dollar goes to health care. That’s about 50 percent higher than any developed country. So, we are basically sapping our nation’s economic growth with the enormous amount of money going to health care.

(Thanks to George Pearson for this story)

One-year evaluation of new FDA director shows progress needed

[Henry I. Miller, "Can Dr. McClellan Cure the FDA?," The Hoover Digest, No. 1, 2004.]

Hopes were placed on Mark McClellan’s appointment as head of the FDA that a new era of culture and regulatory reform would sweep through the extremely bureaucratic agency. After one year on the job not much has changed, but there might still be hope:

The FDA regulates products that account for about 25 cents of every consumer dollar, more than a trillion dollars worth annually, and excessive or ill-conceived regulation is detrimental both to innovation and to public health.

Drug development is particularly unwell.

The total time required to bring a single drug to market, from synthesis of the molecule to marketing approval, has more than doubled (from 6.5 to about 15 years) since 1964. In spite of more powerful and precise technologies for drug discovery, purification, and production, development costs have skyrocketed. According to the Tufts Center for the Study of Drug Development, between 1970 and 2003 a company’s average expenditure to develop a single new drug increased from $138 million to more than $800 million. And although between 1970 and 2000 research-based companies’ R&D outlays soared from about $2 billion to $30 billion, the number of new drug approvals barely budged.

An important reason is that the highly risk-averse FDA keeps raising the bar for approval, especially for innovative high-tech products. Human gene therapy and other treatments tailored to individual patients have been hit especially hard. Americans are, literally, dying for regulatory reform.

Even granting Dr. McClellan the benefit of the doubt—a year is, after all, not terribly long—his best efforts at reform ultimately may be frustrated by history. The FDA’s long-standing hostility and regulatory excesses toward drug companies have caused the number of submissions for marketing approval to decline steadily since 1995, so there is now relatively little in the pipeline awaiting approval. Not even the most highly motivated bureaucrats can approve applications that haven’t been submitted.

Thus, even if Dr. McClellan is able to make good on his promise to improve the agency’s efficiency, it is unlikely that in the near future we’ll see a marked increase in the number of drugs approved. But if he is able to begin in a serious way the process of reforming the infrastructure, internal performance standards, and attitudes at the FDA, Dr. McClellan will have left a valuable legacy.


Friday, April 09, 2004

Overweight crisis overstated

[Sandy Szwarc, "The Emperor's New Crisis," Tech Central Station, 8 April 2004.]

How does news about improving health among Americans get twisted into a new "health crisis" requiring swift government action? Powered by a desire to increase the budget of a bureaucracy and with a little number crunching, apparently just about anything's possible:

On Sept 12, 2002, Health and Human Services Secretary Tommy Thompson released the health statistics report from the Centers for Disease Control which revealed the average American's health "has changed dramatically for the better over the past 50 years." He announced: "In 2000, Americans enjoyed the longest life expectancy in U.S. history -- almost 77 years."

The report documents that gains haven't been merely in lowered infant mortalities; death rates among adults have dropped 50%, too. Despite aging significantly, the population is healthier than ever. The four leading causes of death continue to see noteworthy improvements: Actual death rates due to heart disease are down 70%, strokes down 80%, cancer and unintentional injury deaths have been dropping for decades. Even children and young adults have enjoyed sharp declines in deaths from heart disease and cancer.

In the HHS press release, Sec. Thompson said: "As we take better care of ourselves and medical treatments continue to improve, the illnesses and behaviors that once cost us the lives of our grandparents will become even less threatening to the lives of our grandchildren." CDC Director, Julie L. Gerberding, MD added: "Effective public health efforts, greater knowledge among Americans about healthier lifestyles and improved health care all have contributed to these steady gains in the nation's health.

The CDC's records of actual causes of deaths brought good news indeed. But two years later, those very same figures were given a completely different spin....

On March 9, 2004, Sec. Thompson cited "a dangerous increase in deaths" as he launched his new aggressive national advertising campaign and National Institutes of Health plan to combat what he called "an epidemic of obesity and overweight."

"Americans need to understand that overweight and obesity are literally killing us," he said. Between 1990 and 2000, "deaths due to poor diet and inactivity rose by 33%...and may soon overtake tobacco as the leading preventable cause of death." The situation "is both tragic and unacceptable," added Gerberding.

The creation of a new health crisis entailed brazen manipulations of numbers and revisions of the truth by the Department of HHS.

[Now], if you're a 6-foot man weighing 185 pounds or more, or an average 5-4 woman weighing 145 pounds -- the government says you're fat. Should you be hit by lightning while jogging, your death will become part of its "fat-kills" stats. And if you're fat you can never die of old age -- the government won't allow it.


In light of what Public Choice theory tells us about bureaucracy, such actions should not be all that surprising:

It is the behaviour of public sector bureaucrats which is at the heart of public choice theory. While they are supposed to work in the public interest, putting into practice the policies of government as efficiently and effectively as possible, public choice theorists see bureaucrats as self- interested utility-maximizers, motivated by such factors as: "salary, prerequisites of the office, public reputation, power, patronage...and the ease of managing the bureau."

Thursday, April 08, 2004

Cash-based health care gets more press

[Alexandra Marks, "Medical care paid for in cash - and cheaper," The Christian Science Monitor, 7 April 2004.]

The media has apparently just gotten wind of a mini-revolution in health care, and now everyone's talking about it:

The founders of SimpleCare believe it's "the future of health care." Its goal: to restore the "soul" of America's medical practice.

This loose network of doctors and patients believe they can do it by opting out of the expensive, complex, and bureaucratic world of insurance and managed care. Instead, they're trading in simple dollars and, they argue, common sense.

Unlike the Park Avenue cash-only doctors who cater to the rich, these providers serve moderate- and low-income people - those without insurance or with a high-deductible plan. The goal is to give the same quality of care, but with a discount by passing along the paperwork savings.

That's made visiting a doctor's office possible for thousands of people who otherwise couldn't afford it - people like Aleata Leete, a semiretired nurse on a fixed income. And it's given more than 1,500 doctors a new sense of freedom in their practice as they lower the cost of services. Some analysts believe that if the trend continues, allowing many of the 43 million uninsured Americans access to affordable healthcare, the overall cost of healthcare could come down.


Wednesday, April 07, 2004

Health industry moving to a cash basis?

[Rebecca Cook, "Fed up with insurance, some doctors want payment in cash - and their patients are happy," Associated Press, The San Francisco Gate, 4 April 2004.]

The third-party payer system is beginning to show some cracks as doctors and patients choose to opt out:

When Chuck O'Brien visits his doctor, they talk about his aches and pains, his heart problems and his diet, but never about his health insurance.

That's because his doctor only accepts cash.

Dr. Vern Cherewatenko is one of a small but growing number of physicians across the country who are dumping complicated insurance contracts in favor of simple cash payments.

When O'Brien leaves the exam room, he writes a check for $50 and he's done -- no forms, no ID numbers, no copayments.

"This is traditional medicine. This is what America was like 30 years ago," said O'Brien, 55 and self-employed, who believes he has saved thousands of dollars by dropping his expensive insurance policy and paying cash. "It's a whole world of difference."


Monday, April 05, 2004

America grows older

["America is Getting Older," Daily Policy Digest, National Center for Policy Analysis, 5 April 2004.]

The demographics in the U.S. are rapidly shifting, and the implications for tax burden and welfare programs are staggering:

The aging of America isn't a temporary event. We won't be getting older this year or this decade, and then turning back and getting younger.

- In 2000, there were 82 million people under the age of 20 in the United States. Their numbers dwarfed the 35.5 million seniors.

-By 2030, however, there will be 88.6 million young people and 69.4 million seniors, approaching parity.

-In 2080, only 50 years later, the number of seniors, 96.5 million, will finally exceed the number of young people, 95.8 million.


Locating the fundamental flaw in health care provision

[Rep. Bill Thomas, "Vision for Health Care," National Center for Policy Analysis Briefing, National Press Club, Washington, D.C., 12 February 2004.]

In this recent speech, Rep. Bill Thomas (R-CA) Chairman, House Ways and Means Committee, offers his explanation of where things went wrong with the health care system in the U.S., and why with Health Savings Accounts and other tools, the future could be better:

Join me briefly in going back to that period in history when somebody decided that instead of paying an employee a dollar in wages, we should create collusion between the government and the employer and provide “health care” or “fringe benefits” instead. That little separation between wages and fringe benefits has laid the groundwork, fundamentally and virtually completely, for the problems we face today.

(Thanks to George Pearson for this story.)

Friday, April 02, 2004

The many obstacles in the way of universal health coverage

[Joseph P. Newhouse and Robert D. Reischauer, "The Institute Of Medicine Committee’s Clarion Call For Universal Coverage," Health Affairs, 31 March 2004.]

As it turns out, transitioning to a universal health care system in the U.S. might be a tad more complicated, not to mention expensive, than its proponents suggest:

The Institute of Medicine (IOM) Committee on the Consequences of Being Uninsured is to be commended for its work, which recently culminated in the release of six volumes on the subject. The concluding volume presents a vision for universal coverage and describes four options for achieving it. The options include an incremental approach, employer and individual mandates, and a single-payer plan. We identify complications involving benefits and geographic variation in costs surrounding attempts to achieve universal coverage. The complications suggest that the committee’s cost estimates may be too low and that there may be sizable political barriers to the proposals.

Any universal insurance plan will increase the amount of redistribution from the healthy to the sick, from higher-income to lower-income households, across workers at different firms and possibly within a firm according to their current health benefits, and between owners of different businesses. Ultimately, of course, it is all redistribution across households.

With personal health care services constituting more than one-eighth of the economy, the scope of potential redistribution is large—larger than any non-wartime policy change we can think of, save Social Security. The U.S. political system tends to resist increased redistribution, particularly when it creates identifiable losers...


Thursday, April 01, 2004

Public understanding of health issues differs from reality

[Alan B. Krueger, "Economic Scene," The New York Times, 1 April 2004.]

Most Americans are turning to the television to inform them on issues of public policy, and it turns out that most are also confused about the true state of the country:

Almost half the public, and a quarter of those over age 55, thought Medicare already provided drug benefits for outpatients before legislation providing such coverage was enacted. More than half could not hazard a guess about the size of the budget deficit. The average person thinks 37 percent of Americans lack health insurance, more than twice the actual percentage.

From where do Americans learn about the economy? By far the most common source is television. Those who rely on television the most, however, tend to be among the least informed.


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