Happy New Year!

Dear Readers,

I wish you all a very Happy and Healthy and Productive New Year!

A number of you have inquired about what you can do to support the effort to convert our health care financing system to a more effective, free market solution.

While there will be more "calls to action" forthcoming in later contributions, here are some things that YOU can do to Stand Up for a new and better system:

1) Send the link to the BLOG to everyone on your contact list, in order to raise awareness of Health Savings Accounts, and the opportunity to obtain one.


2) Speak to your employer and ask if a Health Savings Account option is available to you and your fellow workers. If not, ask, "Why not?", and refer him/her to the BLOG for information on the benefits to him/her.


3) If available to you, pursue obtaining a Health Savings Account for you and your family. (More information on this will be forthcoming, but you may start simply by entering a Google search for HSA.)


4) Contact your Congressman and Senators and tell them that you do not want a socialized health care system in America. Point out that there are already free market solutions available to americans of all income levels (specifically Health Savings Accounts), and a nationalized system will constrain availability, cost more in taxes, and remove individual discretion over who to see and when to be seen, what kind of care is rendered, and what medications are available.


This is how we can start to make a difference one person at a time!

Stand up America, and be counted!

How Did We Get Here?

In order to gain some insight into the present unworkable health care reimbursement environment, it is necessary to review the history of Federal Government intervention in the health care marketplace, and the consequent empowerment of insurance companies.

Before World War II, health care was substantially (in most cases) purchased by individuals on an as needed basis out of personal income or savings. During the War, the federal government applied wage and price freezes, in order to control inflation (and probably motivated by controlling the cost of war materiel, which might otherwise have been priced on a supply and demand basis).

By 1943, there existed significant competition among employers for the few available workers (with approximately 23,000,000 men in arms abroad). Employers were able to convince the government to permit them to buy health insurance for their workers as a perquisite of employment and without taxation to the worker or employer. This "permission" was codified in the Internal Revenue Code, and became the basis for the trend and persistence of employer provided health insurance. The result has been the steady growth of employer funded health insurance products, as well as the expectation of the same by employees.

In 1965, the Democrat controlled Congress and Democratic President Lyndon B. Johnson created Medicare and Medicaid as part of the "Great Society" program. At that time, Medicare was strictly for the elderly (over 65 years), and Medicaid was strictly for the "poor". Subsequent changes have occurred to blur some of those distinctions. Nevertheless, Medicare has remained a Federally funded program targeting the elderly, and Medicaid is a matching program with primary funding by each State.

As initially established and continuing until 1986, Medicare reimbursed providers on the basis of "usual and customary fees", letting the market determine workable fees for non-hospital providers (i.e. physicians and physician groups). Hospitals were reimbursed on a "cost plus" basis (as were many military suppliers at that time). This meant that hospitals simply computed their cost to provide a service and added a small margin for "profit", and those costs were reimbursed by the program.

Because these programs enabled two large subgroups of our population to have immediate access to sophisticated health care at virtually no cost to them, the demand for and the cost of health care services paid by the Federal Government rose rapidly between 1965 and 1985.

In 1986, in an effort to bring these costs under control, the regulations were changed to create a Medicare physician fee schedule (at that time the fees established were based on the existing "usual and customary fees", but were constrained in the future). At about the same time, a hospital fee schedule based on actual expenses by diagnosis (so-called Diagnosis Related Groups or DRG's) was developed to get away from "cost plus" payments (which contained no incentive to control costs).

Over the next decade, Medicare physician "reimbursement" steadily declined in relation to inflation and the real cost of providing services. During that time, other "third party payers" (insurance companies) realized that, if physicians were willing to work for the reduced fees paid by medicare, they would work for an insurance reimbursement only marginally higher. With most consumers covered by either Medicare or private insurance through their employer, the consumer experienced little out of pocket cost, and the insurance companies could repeatedly raise their premiums (paid by employers and not paid by the consumer) with no upper limit, while reducing payment to providers (not paid by the consumer) in parallel with Medicare reductions.

A collateral effect of the establishment of Medicare Fee Schedules was the necessary increase in scrutiny of every transaction occurring between a consumer and a provider, with coding of every diagnosis and every procedure or treatment or service rendered. Needless to say, this created a paperwork burden for every provider to justify every act and fee charged. Today, approximately 50% of every physicians operating cost goes to fulfilling this paperwork burden for the government and the insurance companies.

Clearly, this is a very brief history of the third party intervention in the provision and financing of America's health care services. However, it provides the foundation for my next post which will deal with the question:

"What are the current problems arising out of the historical events?"

Introduction and Purpose

There is something wrong with the American health care system!
That is not news, it is the current state of affairs. It does not, however, mean that it is time to throw away that system in favor of socialized systems which have proven themselves unsuccessful repeatedly in other countries. We have the solutions already built into our legal and tax structure, if only Americans would stand up and take the action necessary to remove control and manipulation from the powers on capital hill, the overpaid executives in health insurance company offices, the unions, and the media establishment, which suppresses access to information.

I have been in the practice of medicine for 40 years.

During that time we experienced the development of Medicare, Medicaid, the domination of medical decision making and financing by third parties (including insurance companies and the government--state and federal), the breakdown in the fiduciary relationship between physicians and hospitals and their patients, and the development of government programs to allow some costs born by consumers to be tax deferred (e.g. H.R.A.'s, M. S.A.'s, F.S.A.'s etc.).

We have also experienced the pain of patients being under served, frustrated and harmed by H.M.O.'s through their cost focused management; confronting the economic threat of ever increasing health insurance premiums, losing power and control in their dealings with their providers and the insurance companies.

More recently we seem to be experiencing an increasing number of consumers going without health insurance coverage because of the cost of the insurance to them or to their employer.

Soooo---What if we had a choice to create for ourselves a program which had all (not just some, but all) of the following benefits:

YOU receive:

· Choice of plan options.

· Choice of providers.

· Control of your routine and preventive care needs.

· Control of you own health care decisions.

· Control of medical costs.

· Quality provider service.

· A personal Health Savings Account-paid for with before tax dollars.

· A high deductible catastrophic health insurance policy, paid by before tax dollars.

Your Employer receives:

· The option of providing consumer-driven health care products to their employees.

· A defined level of contribution.

· A means to constrain costs thereby reducing annual double-digit benefit cost increases.

· A significant reduction in administrative costs.

· Relief from the costs and risks of health benefits management.

Your doctor and your Hospital receive:

· Instant payment for services through use of a debit (medical identification) card.

· Increased patient volume.

· Significant reduction in administrative paper flow and costs.

· Reduced malpractice exposure

· Elimination of collection costs and risks.

Your Government receives:
less program management cost
less people uninsured
less bureaucratic micromanagement of health care

This free market approach will stimulate competition, improve the quality of health care, restore the proper fiduciary relationship between the consumer and providers, and remove third parties from the micro-management of health care.

The free market approach to which I refer is the Health Savings Account or H.S.A.

Well, it sounds almost too good to be true, and it provokes the question:

Why, if this is already enabled by Congress and built into the Internal Revenue Code, is it not being universally utilized?

That is one of the questions I will pose for the audience of this blog, as we seek to answer some the questions never asked by the media, and to seek out solutions to the puzzle of solving Americas health care system problems.

If in your business or your personal life or in your imagination, you have pondered such a question, and would like to contribute to the discussion on this site, I welcome your contribution.

One of the goals is to engage people interested in solving the economic puzzle of
American medicine through individual empowerment, individual action, and collective strength and impact.

By way of disclaimer, I will point out that I have no vested interest in the sale or marketing of Health Savings Accounts (or any other insurance product). I do believe, however, that we can create a very large focus group, which can bring parties interested in the economic impact of H.S.A.'s together to address some of the communication shortfalls of the mass media, advance knowledge and interest throughout the country (and perhaps the world) and expand the utilization of H.S.A.'s for the benefit of all.

Sooo-I will ask the next question: Do you want to stand by and watch as the liberals recreate the failing systems of socialized countries, or do you want to STAND UP AND BE COUNTED among the millions who have chosen to take the responsibility for their health and their health care financing?