Unfair Competition

Say you owned a business selling hot dogs on the street corner. Hot dogs are easy to prepare, affordable for most and in high demand (especially at lunch time).

You have run this business for some time, have established clientele for repeat business and even pick up new clients from time to time. Even though there are restaurants nearby, you really have a niche market with almost no competition.

Life is good.

But say a new hot dog vendor shows up one day and parks their cart next to yours. Your hot dogs sell for $2.50. Add a little more for cheese or chili.

The new guy is selling the same hot dog for $1.25 with all the works.

How long will you stay in business?

More importantly, how long will your competitor stick around when his dogs are half the price of yours?

If your competitor has an unfair advantage, such as the ability to draw unlimited cash to fund his business and never have to worry about paying it back then don't expect the competition to go away any time soon.

Now, instead of hot dogs, let's say you sell another high demand product like health insurance. Your product is priced to cover your costs and leave a little left over to provide you with some income.

But now a competitor comes along that doesn't have to play by the same rules. They have the ability to dictate what services are covered, who is entitled to those services, and how much they will pay medical providers for there services. But they have another advantage that you don't. They don't have to play by the same rules as you. They can borrow money at any time and never have to worry about paying it back. Nor do they have to "qualify" for the loan.

How long before your clients stop buying your product when they can get the same thing for half price?

If the new regime in Washington get's their way this might happen. Obama-care will work something like this.

Democrats this year want to institute a "public option" -- an insurance program financed by taxpayers, managed by government and open to everyone, much like Medicare.

Financed by taxpayers. In other words, you will be forced to pay for it whether you want it or not.

This public option will supposedly "compete" with private alternatives. As President Obama likes to put it, those who are happy with the insurance they have now can keep it -- and if they happen to prefer the government offering, well, gee whiz, that's the free market at work.

No one is forcing you to buy the new plan. You have a choice.

When Massachusetts mandated health insurance for everyone and offered a choice of a "free market" plan or a tax subsidized plan, guess what happened?

A couple of things.

Many who had health insurance before dropped it in favor of the free or subsidized plan. After all, why pay for something when you can get it for free?

The other was a squeeze play on primary care. Suddenly, it was easier to get tickets to game 7 of the World Series than to get an appointment with a primary care doctor.

A public program won't compete in a way that any normal business would recognize. As an entitlement, Congress's creation will enjoy potentially unlimited access to the Treasury, without incurring the risks or hedging against losses that private carriers do. As people gravitate to "free" or heavily subsidized care, the inevitably explosive costs will be covered in part with increased outlays to keep premiums artificially low or even offer extra benefits. Lacking such taxpayer cash, private insurance rates will escalate.

Unlimited access to cash without incurring risk.

Sounds great, right?

Except eventually, everyone pays.

Kind of like the mortgage crisis. All of us are now paying for the abuses of a few which were subsidized to a great extent by Fannie & Freddie . . . those quasi-government entities backed by the full faith and credit of the taxpayer.

Much like Medicare, overall spending in the public option will be controlled over time by paying less for medical services, drugs and technology. With its monopsony purchasing power, below-market fees will be dictated on a take-it-or-leave-it basis -- an offer hospitals and physicians won't be able to refuse. Medicare's current reimbursement policies pay hospitals only 71% of private rates, and doctors 81%, according to the Lewin Group.

Right now, hospitals and doctors are not required to accept Medicare patients unless they also receive taxpayer funds. Sound familiar? But there is talk about imposing severe payroll tax penalties on medical providers who do not accept Medicare patients. In other words, government sanctioned extortion.

In a recent analysis, Lewin estimates that enrollment in the public option will reach 131 million people if it is open to everyone and pays Medicare rates. Fully 119 million people will shift out of -- or lose -- private coverage.

If you think Medicare is currently working well, then you don't know Medicare.

About 170 million people currently have private insurance, which is already pressured by the price controls of Medicare and Medicaid. A significant share of government underpayments are simply transferred to the private sector, adding tens of billions of dollars every year to consumer health bills.

That is referred to as cost shifting.

What the government doesn't pay is made up by the rest of us.

We pay more so those on the taxpayer funded government health insurance plan can have their free care. Sweet deal, huh?

But wait.

We, as taxpayers, pay for it any way.

Our taxes fund Medicare and then we pay again because Medicare short changes the medical providers.

What a country.

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Pesach and Pascha

Hank celebrates Pesach, or Passover.

We celebrate Pascha, or Easter.

But where do these words come from?

According to some, you can blame it on William Tyndale, the publisher of the first English translation of the Bible. The Tyndale Bible is also known as the King James Bible.

King James I of England ordered the translation of the Bible which was to become the "official" Bible of the Church of England. English translations existed prior to the Tyndale Bible but King James wanted one that would be officially accepted by the Church of England.

The Old Testament was originally translated from Hebrew while the New Testament from Greek. Old Testament documents referred to Pesach which Tyndale translated into a word he coined . . . Passover. Prior to that time the word Passover did not exist.

When Tyndale encountered Pascha in the New Testament Greek, he sought to make a distinction in the traditional Jewish celebration of Pesach (now known as Passover) and the Christian celebration of Pascha. Supposedly he coined the word Easter as a transliteration of a pagan celebration of Ishtar which was held about the same time of the year as Pesach.

Ishtar was a celebration of the new birth of spring, or a new beginning. Similarly, the celebration of Easter is also a new beginning in the Christian faith.

So whether you celebrate Pesach or Pascha, we wish you well.

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Mass Revisited

[Welcome Kaiser Network readers!]

It has been a while since we looked at the Massachusetts experiment to provide universal health care, so we decided to take a closer look. We were prompted, at least in part, by the fact that the folks in Washington who think money grows on trees seem to be eyeing the Mass plan as a model of efficiency and something that should spread to the other 49 states.

While the plan may not have driven off the Chappaquiddick bridge . . . yet . . . it is certainly in need of some retooling.

According to Cato (no, not the O.J. house guest):

Massachusetts has significantly reduced the number of people in the state who lack health insurance. However, it has not achieved, nor does it expect to reach, universal coverage. (The best estimates suggest that more than 200,000 state residents remain uninsured). And, significantly, roughly 60 percent of newly insured state residents are receiving subsidized coverage, suggesting that the increase in insurance coverage has more to do with increased subsidies (the state now provides subsidies for those earning up to 300 percent of the poverty level or $66,150 for a family of four) than with the mandate.

The cost of those subsidies in the face of predictably rising health care costs has led to program costs far higher than originally predicted. Spending for the Commonwealth Care subsidized program has doubled, from $630 million in 2007 to an estimated $1.3 billion for 2009.

I have no idea about the standard of living in MA, but $66,150 for a family of four is probably not at poverty levels. The Kaiser Foundation reports the median income for 2005 - 2007 for Mass was $58,286 vs. $49.901 for the country. So you can earn 14% above the state median income and still qualify for taxpayer assisted health insurance.

And let's not overlook the doubling in spending for this program in two years time. Can you say government bailout?

Now the state is turning to a variety of gimmicks to try to hold down costs, including possibly cutting payments to physicians and hospitals by 3-5 percent. However, the (NY) Times quotes health reform experts who have studied the Massachusetts system as warning “the state and federal governments may need to place actual limits on health spending, which could lead to rationing of care.”

Gimmicks.

Good word.

Rationing of health care.

Not a good word.

But what about that NYT reference?

They report the bill to offer universal health care was passed "with Paul Revere speed" and that then Governor Mitt Romney "made an expedient choice, deferring until another day any serious effort to control the state’s runaway health costs."

Deferring issues on cost until another day.

Somehow this sounds very familiar.

The day of reckoning has arrived. Threatened first by rapid early enrollment in its new subsidized insurance program and now by a withering economy, the state’s pioneering overhaul has entered a second, more challenging phase.

Thanks to new taxes and fees imposed last year, the health plan’s jittery finances have stabilized for the moment. But government and industry officials agree that the plan will not be sustainable over the next 5 to 10 years if they do not take significant steps to arrest the growth of health spending.

The plan will not be sustainable.

Then what?

Once entitlements are put in place no politician wants to take them back. When is the last time you heard of government cutting out an entitlement program?

Mass has this great idea for controlling health care costs. They want to change the way docs & hospitals are comped.

They want a new payment method that rewards prevention and the effective control of chronic disease, instead of the current system, which pays according to the quantity of care provided.

Who determines what is "effective control"? Most chronic illness is preventable with lifestyle changes, so why penalize the medical provider for a lack of self discipline on the part of the patient?

Massachusetts has more doctors per capita than any state, Boston is home to some of the country’s most expensive academic medical centers, and a new state law requires comprehensive benefits like prescription drug and mental health coverage.

Mental health parity.

So in the midst of expanding services and a health care budget that doubles every two years they opt to increase benefits.

Mass not only requires all residents to have health insurance or pay a fine ($1,068) but also requires insurance carriers to accept anyone regardless of health.

Think of it like you would a bank that will issue a mortgage to anyone, regardless of credit or their ability to pay back the loan.

In its first full year of operation, Commonwealth Care drew higher enrollment than anticipated, and the state found itself facing an inaugural budget gap. Mr. Patrick and the legislature filled it by assessing insurers and hospitals, raising the penalty on noncompliant businesses, increasing premiums and co-payments for consumers, and raising the state tobacco tax.

Oops!

There was another issue as well, as we reported before. The Big Squeeze means more patients for the doctors.

That's the good news.

The bad news is, longer waits to see the doc.

Let's see. Free or almost free health care. Increased demand. More difficult to see a doc.

Can't figure out why no one saw that coming.

Blue Cross and Blue Shield of Massachusetts, the state’s largest insurer, recently devised an innovative model that pays doctors a flat fee per patient, with adjustments for age, gender and health status, and then adds bonus payments for high standards of care.

Novel. Has some promise. Tracks the HMO model where providers are paid a capitated fee rather than fee for service.

Some health policy experts argue that changes in payment practices will not be enough to slow the growth in spending, even when combined with other cost-cutting strategies. To truly change course, they say, the state and federal governments may need to place actual limits on health spending, which could lead to rationing of care.

“Really controlling costs requires just stopping spending,” said Stuart H. Altman, a professor of health policy at Brandeis University.

Stop spending.

Yeah, that works too.

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Health tips from YouTube

Many of my friends often scoff at YouTube as being full of pointless videos of teenagers partaking in ridiculous activities. It has taken a great deal of coercion to bring them round to the fact that YouTube actually features some very useful healthy living videos. Therefore, in a further effort to reach out to them, i thought that it would be a valuable exercise to post a few examples of health videos that i have come accross on YouTube. There are thousands of videos covering a diverse range of health-related topics: food and nutrition, excerise and fitness, private health insurance and everything in-between - these are just indications of what is out there.

100 Life Saving Health Food Tips - some great advice on this little video, there may be something that surprises you!



"Health Food" vs. Healthy Food -- How to read labels



Health and Exercise Tips - This is one in a large series of videos with some excellent fitness tips.





Hope you found something of interest - if there are any health videos that i may have missed out please get in touch and i can update the post.

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M*A*S*H Meets Mac

Every once in a while, we're asked to review a product or service. We've reviewed a book, for example, and a ground-breaking excercise in transparency. Recently, I received an email from a company called Healthagen touting a new iPhone app called iTriage.

[ed: I actually own an iPod Touch, which is essentially an iPhone sans camera, microphone and, well, phone.]

I decided to give the app a whirl, and downloaded it from the iTunes store (paying, I might add, full retail; no swag for me!). The purpose of iTriage is to act as a sort of, well, triage unit for helping one decide the nature and severity of one's symptoms, and to help one decide if and where to go for help. The iPhone's built-in GPS and phone capability enable the program to, for example, dial 9-1-1 if appropriate, or find the nearest ER or pharmacy.

To "enable" the software, one must create an account, supplying an email address and zip code, as well as one's insurer. The first two I understand, but why the insurer? And how is this program a "step-up" from, say, WebMD?

Those questions, and a few others, prompted me to seek an interview with one of the program's developers. What I got, though, was perhaps even better: Healthagen's Chief Medical Officer, Dr Wayne Guerra. Dr Guerra, and his business partner Peter Hudson, are both emergency medicine physicians and collectively have taken care of over 50,000 patients. Having watched their patients struggle to make difficult medical decisions with only limited information, and they were motivated to develop iTriage to empower their patients. The point is to narrow the information gap that currently exists by giving patients medical information, transparency around price and quality, and access to healthcare facilities at the point of care [ed: all major themes here at IB]. Users need this information when they are having, for example, abdominal pain, or when they have just injured their ankle. The most useful method of providing this information was with a mobile device. Dr Guerra says that implementing all the features of iTriage was not possible until the iPhone 2.0 OS was released.

For our readers who may not be familiar with the app, I asked how iTriage differs from something like WebMD? After all, many folks have 'net access on their phones, or have other portable computing devices available to access such resources. so what sets iTriage apart?

Dr Guerra replied that "iTriage starts where other content sites like WebMD stop," by providing “actionable data”. This is information that calls for a decision to be made, perhaps whether more information is needed, to ask for advice, or assist in finding a medical facility at which one may obtain medical care.

By way of example, Dr Guerra gave a rather common symptom: abdominal pain: "Let’s say you have lower abdominal pain. You search this symptom and iTriage produces the possible causes. You select appendicitis and read the description, common symptoms, standard work-up and expected treatment. After this information you can decide to use the search the web for more information including images and videos, get advice from a nurse or a doctor, or decide to find an appropriate treatment facility. If you choose to obtain medical care iTriage will only list appropriate healthcare facilities from its proprietary lists of over 6,000 emergency departments, 5,000 urgent care facilities and 1,000 retail clinics. Only an emergency department can treat appendicitis and iTriage will geo-locate the phone and list the closest emergency departments enabling the user to call or get a map to the facility. iTriage helps users select a facility by enabling them to buy a HealthGrades quality report through the phone and by learning about the hospital’s specialty services through text or videos." It even helps with the financial aspect by connecting with the bill negotiation services of Coalition America.

Before one can begin using iTriage, one must create an account. This involves supplying an email address and zip code, and also the name of one's insurer (if applicable). There's no personally identifiable info (save for, perhaps, the email). I was puzzled as to why the app wanted to know the name of my carrier.

According to Dr Guerra, the current version of iTriage "uses the medical insurance information to provide users with the appropriate nurse advice number. In the future, iTriage will be able to recommend treatment facilities based on network data; this will enable users to obtain the most cost effective healthcare solutions."

Finally, I asked what's in store for the future. Cuurently, Dr Guerra, et al are "developing a web based and .mobi version of iTriage, and expect to launch these functions in May of 2009. This implementation will greatly expand the reach of iTriage and enable those without an iPhone to use the services. iTriage has established partnerships with TelaDoc, HealthGrades and Coalition America. Healthagen, the parent company of iTriage is pursuing other partnerships to bring our users more granularity around pricing, and other features that will help them make better medical decisions."

That's certainly something to look forward to.

A warm InsureBlog Thank You to Dr Guerra for his time and participation, and to Alicia Verity for alerting us to the product and helping to arrange the interview with Dr Guerra.

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Chag Sameach Pesach!

This evening we begin the weeklong holiday of Passover, one of Judaism's most important Festivals. More than anything else, it represents the value and importance of liberation and freedom.

Not to mention lots of fruit in one's diet.

A Joyous Passover to all of our readers!

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