Letter: HEALTHCARE IS A MESS

(Forewarning: Healthcare is a complex issue so this submission is lengthy. Bear with me and I'll try to make it as painless as possible.)

Our healthcare system is one of the largest and most profitable industries in the nation yet the quality of its service stands up very poorly compared to all other developed nations. It is in dire need of fixing. The two greatest problem are its huge cost and its immense fraud and waste. In fact were we to fix just these two areas, the system, while still not being what it should be, would be sustainable. But the way things are, if we don't get our system of health care fixed this time around, the chances are that in spite of everything we have going for us, it could bankrupt us. It's already bankrupting a lot of families.

COSTS OF HEALTHCARE IN AMERICA

The National Coalition on Health Care points out that our current healthcare system costs $2.4 trillion annually and that cost is rising at twice (6.9%) the normal rate of inflation. Health insurance premiums are also rising (5%) at more than the normal rate of inflation. Experts agree our healthcare system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, inappropriate care and a lot of waste and fraud.

Healthcare costs us more than quadruple what national defense costs us. Insurance premiums are costing small businesses even more and many are either going out of business because of the cost or refusing to offer healthcare insurance. It is time to decouple healthcare insurance from our employment. Healthcare premiums are increasing four times faster than wages for both employer and employee.

Rising health costs are the primary reason so many are without healthcare (which has now been further exacerbated by the economic crisis). Half of all bankruptcies are at least partly due to medical costs, and healthcare is six times more costly here than in any European peer nation, and our excessive spending is reported to be more than $480 billion a year.

WHO (World Health Organization) estimates that global spending on healthcare is 10% of global GDP while the U.S. tops the healthcare spending list of most nations at 16% of GDP. The U.S. accounts for half of global healthcare spending. Japan, which has the longest lived population of the developed world, spends half as much as we do on healthcare and their people are healthier. Germany and UK also spend about half what we do, as does Canada, and their citizens are also far healthier than we are.

There are positives to our healthcare system. We have a more responsive and dynamic system than other countries as our higher prices have enabled the system to cater to patients excessive desires for convenience and innovation. The United States also excels in treatment of some specific diseases, such as breast and prostrate cancer

However, the negatives outweigh the positives. American healthcare wastes more money than any other developed country and is less effective with some kinds of care, such as transplants. The United States is 30th of 192 countries in infant mortality and we have a major failure in insuring between 40 million and 46 million people. There are also flagrant failures in our healthcare system in preventative medicine affecting such things as high obesity rates, high diabetes rates, high heart attack rates, high coronary failure rates, frequent road accidents, high HIV incidence rates and other problems that insurers, doctors, nurses, hospitals, and pharmacists must address but can't prevent for numerous reasons not the least of which is healthcare insurance.

Another problem is that along with healthcare premiums doubling in the last ten years, there are much higher deductibles, far less coverage and a great deal more denial of coverage through dropping insured and denying those with pre-existing conditions. The United States has the largest privatized healthcare system in the world and at the same time we have the highest cost in the world which is a complete turn-around from half a century ago. In 1959 healthcare costs in this country were low but so was the quality of healthcare. In 2009 the quality of our healthcare is good though still at the bottom of the developed nations, and our healthcare costs are astronomical and unsustainable.

Here is the view from a Kingman resident in the Daily Miner. On Sunday, August 23, 2009, Betsy Senn wrote:

"To those of you who are against the healthcare reform, you must have very good healthcare benefits! But I don't! I currently must pay almost $300 a month with a whopping $5,000 deductible - and my pre-existing condition is not covered - that's fair? That's rotten! And I'm not alone. There needs to be a change.

Each day, 14,000 people in the U.S. lose their healthcare coverage; each day, 280 people in Arizona lose their healthcare coverage. And without reform, those who still have insurance will see their yearly premiums go up by $9,000 in the next decade to a staggering $22,770. A real public health insurance option is crucial to lowering costs by spurring competition.

Reform with a real public option is keen to expanding coverage. Under current legislation, which includes a strong public healthcare option, 988,000 people in Arizona - and 37 million Americans nationwide - will gain coverage by 2019. If you're against Obama's healthcare reform, then how about coming up with another good idea instead of just complaining and presenting false facts and taken-out-of-context arguments!"

While I can't vouch 100% for your statistics, Betsy, I think they are in the ballpark. Thank you.

The Health In Health Care

A major cost of healthcare is the our national health condition. We sit here on our well-padded rumps, the wealthiest most productive nation on the planet and our national health condition is the poorest among developed nations. Public health is pathetic and part of that problem lies with our healthcare industry which virtually ignores preventative medicine and behavior. One might even suspect the industry promotes our indelicate appetites to increase profits.

Yet the cost of this blissful ignorance and overindulgence runs into the hundreds of billions of dollars every year in diminished health, greater disability and shorter life spans to say nothing of the collateral economic costs. The New American estimates that our economy loses as much as $200 billion a year as a result of our pathetic health condition.

Our life expectancy and infant mortality rates are among the worst in the developed world. Too many people who need health insurance don't have it and too many who have it can't get proper coverage or affordable deductibles and co-pays. The toll taken here is far to great to be ignored. We're talking more than just dollars, we're talking about the quality of our lives. The cure is not going to be easy and it's going to involve almost every one of us.

The Other Human Element - Greed and Corruption

Greed and corruption are the second largest cost to the current system and both are rampant throughout. Fraud consumes a hefty portion - estimated between 10% and 40% - of it's total cost. Overarching that is the reality that the entire system is rife with fraud and corruption. From the insurance and hospital corporations to the individuals who are the end users, fraud and abuse infects every level of the system.

The Centers for Medicare and Medicaid Services (CMS) claims that in 2007 public healthcare spending reached $1.06 trillion and predicted that it would reach $2.23 trillion by 2018. A CNN report from PriceWaterhouse Cooper says that more than half of annual spending is wasted on too many tests, inefficient claims processing and other abuses of the system.

The Government Accounting Office (GAO) uses a longstanding though understated estimate of the cost of fraud and abuse at 10% of spending. Even using the GAO's numbers, that's $106 billion a year which is about the same as the cost of the health care proposal on the Congressional table now. Newt Gingrich appearing on This Week with George Stephanopolous recently said that Medicare fraud ranged between $70 billion and $120 billion a year

While 100% elimination of fraud would be impossible I'd consider 75% to be an achievable number and that would be a healthy reduction of the annual cost of a good health care program which would make almost everyone happy. Even if we could only reach 50% recovery in fraud and waste both, that would still give substantial reduction through in recovered revenues

The National Health Care Anti-Fraud Association estimates that more than half of the fraud represents improper reimbursements to providers, medical suppliers and other Medicare and Medicaid vendors. The New England Journal of Medicine holds Congress responsible for failing to fund antifraud measures. While it's true that antifraud measures are always being discussed and debated in Congress and from time to time even enacted into law, nothing changes. At least until now. It's up to us to make this change.

I don't understand why government is so lax in the areas of fraud and abuse but you can be certain private insurers have far more sophisticated antifraud measures actively in place. We could copy them or even work with them, but all it really would take to chase down fraud would be for the White House to encourage the Justice Department to go after insurance fraud more aggressively.

It also wouldn't hurt to be more aggressive in chasing tax fraud against the IRS which estimates fraud and tax evasion losses at $345 billion a year. That's $345 billion a year in taxes the rest of us have to make up. On the up side, it's encouraging that the President has managed to reach an agreement with Swiss banks to release the names of those U.S. citizens who have secret accounts.

Insurance fraud includes such activities as kickbacks, self-referrals, fraudulent claims, misrepresenting facts, inflating claims, misrepresenting an incident or facts, double billing and many other underhanded methods.

Insurance fraud criminals are purely creative if nothing else but also the field is fertile and ripe for picking so it's a two-headed hydra. The Coalition Against Insurance Fraud says that one in five U.S. adults feel it's acceptable to defraud insurance companies under certain circumstances and 25% feel its generally okay to defraud insurers. People's overall attitudes toward insurance companies have declined substantially which accounts for the growth in lax attitudes toward insurance fraud. Investments in anti-fraud measures are generally held to recover eight times their cost making fighting fraud a very lucrative investment.

As for waste due to bureaucratic mediocrity, I'm not too sure. Waste generally includes fraud but I distinguish the cost of a bureaucracy from fraud. The cost of a bureaucracy is measured in mediocrity which could easily be the very definition of civil service. If we could eliminate fraud, abuse and mediocrity in government it might likely lower the cost to where even the most conservative would consider it reasonable.

The only cure for that condition would be to run the government bureaucracy on a merit basis with the freedom to fire those who don't perform. Working for the government should be a privilege and an honor not a lifetime lease on a job where your performance can be mediocre.

Then there's the waste and cost produced by medical providers playing to appease the healthcare insurance companies, the professional malpractice insurance companies and of course to make up for the slashing of their fees by the insurance companies by ordering an estimated $200 billion a year in additional and unnecessary testing.

The Coalition Against Insurance Fraud has conducted continual research and investigations which show that Medicare, Medicaid and private medical insurance fraud is the greatest of all forms of fraud by a factor of more than two to one while uncharacteristically consumer tolerance of insurance fraud remains high and contradictory.

Contradictory statistics indicate that four out of five people (80%) think insurance fraud is unethical yet 25% think it's okay to defraud an insurance company. Slightly more than 80% of insureds have misrepresented facts on an insurance application, filed claims for damages occurring prior to insurance coverage, inflated a claim to cover the deductible, and misrepresented an incident to ensure coverage.

Generally the U.S. spends more than $2 trillion on healthcare annually of which at least 3 percent or $68 billion is lost to fraud each year. Yet for every $2 million invested in fighting health-care fraud approximately $17.3 million in these fraudulently acquired funds is recovered, yet private industry manages to outstrip the government in uncovering, tracking down and prosecuting fraud committed against Medicare and Medicaid.

According to Prescription For Peril, a December 2007 report by the Coalition Against Insurance Fraud Insurance, fraud is a major financier of our nation's epidemic addiction to prescription drugs such as OxyContin, Vicoden and others including such dangerous drugs as Propofol, which is currently holding its own in the press. Prescription drug diversion for illicit purposes (i.e., profit, high or addiction) costs health insurers up to $72.5 billion a year in bogus claims involving opiate abuse alone and is mainly affecting our youth.

Medicare's annual anti-fraud budget is a mere $465 million in spite of that agency making an estimated $23.7 billion in fraudulent and improper payments in 2007. That's less than 1% of the amount of fraud that our government spends combating it. Medicare and Medicaid lose an estimated $60 billion or more annually to those who deliberately defraud those government agencies because it's so easy.

Every $1 spent on Medicare fraud prevention would stop at least $10 in fraud yet Medicare spends less than 0.2 cents of every $1 of its $456 billion annual budget combating fraud, waste and abuse. Among this larcenous attack on our healthcare system, Medicare paid dead physicians 478,500 claims totaling up to $92 million between 2000 and 2007. These claims were instituted by criminals representing themselves to be more than 16,000 deceased physicians using their credentials.

Nearly one of three claims Medicare paid for durable medical equipment was erroneous or fraudulent in 2006. And when it comes to waste (as opposed to pure fraud) Medicare and private health insurers combined pay up to $16 billion a year for needless testing ordered by doctors for many reasons among which playing CYA for their insurance and to recover reduced payments on procedures submitted for payment.

Nearly one of three physicians admits that it's necessary to game the health care system to keep their clinics and practices open and provide high quality medical care. Thirty-three percent of physicians say patients have asked them to insurers to help the patients obtain coverage for medical services in the last year. One of 10 physicians have reported medical signs or symptoms a patient didn't have in order to help the patient secure coverage for needed treatment or services in the last year.

Seniors and other taxpayers pay up to $1 billion a year in inflated drug prices due to potential fraud and loopholes in Medicare, yet in spite of these numbers 80% of healthcare fraud is by medical providers (doctors, clinics, hospitals, durable goods providers, etc.) and 20% by consumers and other sources.

The Miami Herald conducted an investigation showing that Congress is very tight-fisted with Medicare anti-fraud funds. Since 2006, Medicare administrators have asked Congress for an additional $300 million to fight fraud, but Congress has refused to fund such programs. Why? Distrust of the agencies that runs the federal health insurance program for the elderly and disabled and political indifference to the Medicare fraud crisis itself. Then there are the influential lobbyists and campaign donors who dislike government meddling in the huge healthcare industry because it might interfere with their profits.

The Miami Herald in a series on this subject underscored the failure by the Centers for Medicare and Medicaid Services to root out fraudulent claims which lead to the annual loss of at least $2.5 billion in South Florida alone and an estimated $60 billion or more nationwide.

But not only Medicare is to blame. Congress keeps a tight cap on Medicare's administrative overhead, leaving the perennial 'high-risk' entitlement program with an infinitesimal fraction of its current $465 billion budget to combat fraud. Indeed, Congress has a history of running Medicare -- whose healthcare programs are funded by U.S. taxpayers -- on the cheap while allowing these massive frauds. I've no doubt a lot of this lack of attention to the can be traced back to lobbyists and campaign support.

Sen. Grassley said that he along with current Finance Committee chairman, Sen. Max Baucus, and other members of Congress found fault with how Medicare implemented the competitive-bidding program. It did harm to small-business people where 65% of their bids were thrown out because of mere technicalities.'

The economic reality underlying such tactics is that medical equipment suppliers and pharmaceutical companies would stand to make less money if a competitive-bidding program takes effect -- and Medicare could save billions in the future. For decades, Medicare has set generous rates of reimbursement for renting or buying medical equipment. For example, the program pays $4,023 for a powered wheelchair that can be purchased online for half that.

Conservatively healthcare fraud, waste and abuse cost the American healthcare system more than $54 billion annually. No health payer organization regardless it's size and strength can afford to write off this much money. Left unchecked, the enormous cost of healthcare fraud, waste and abuse continually threatens and has severely damaged both the quality of healthcare and access to care for millions for Americans. By 2010, the U.S. Department of Health and Human Services/Centers for Medicare and Medicaid Services (CMS) projects that the total cost of healthcare fraud, waste and abuse in the U.S. could reach $260 billion.

Insurance - The Elephant In The Waiting Room

Insurance plays a tripartite and not very nice role in the healthcare mess. Insurance companies game healthcare professional by cutting their billing fees by enormous percentages. This forces some professionals to re-game the system by ordering unnecessary procedures, double-billing, and other practices which at times amount to blatant fraud while the majority of professionals just bite the bullet and do what they can without committing fraud.

Insurance then games the people who are insured by raising premiums, increasing deductibles, raising co-pays, eliminating diseases and conditions from coverage and denying coverage for pre-existing and other conditions.

Thirdly the general public feels it's quite acceptable to defraud the insurance companies, likely because they perceive that the insurance companies are defrauding them or at best, manipulating benefits and coverage at the expense of the entire industry and especially the insured.

Consumer tolerance of insurance fraud remains relatively high as public-opinion polls have consistently shown in recent years. The Coalition Against Insurance Fraud conducted a study recently into what people think about this insurance fraud. It shows one of five U.S. adults -- about 45 million people -- consider it acceptable to defraud insurance companies under certain circumstances yet contradictorily four of five adults think insurance fraud is unethical.

Nearly one of four Americans says it's ok to defraud insurers (8 percent say it's "quite acceptable" to bilk insurers, and 16 percent say it's "somewhat acceptable. One in 10 agree it's ok to submit claims for personal injuries that didn't occur. Two of five people are "not very likely" or "not likely at all" to report someone who defrauded an insurer.

The study further reveals that consumer tolerance of fraudulent insurance schemes has increased over the last 10 years and there is a substantial decline in the number of Americans who think it's unethical to misrepresent facts on an insurance application to lower their premiums (82 percent today, down from 91 percent in 1997), file a claim for damage that occurred before the damage was covered (85 percent, down from 91 percent), inflate a claim to cover the deductible (84 percent, down from 91 percent) and misrepresent an incident in order to be paid for an uncovered loss (84 percent, down from 92 percent).

Consumer attitudes toward insurance providers also have declined over the last 10 years. Sixty-two percent of people have a positive attitude about insurance companies (down from 72 percent in 1997) and fewer than two of five adults feel positively about the insurance industry as a whole (down from slightly more than 50 percent).

According to the National Health Care Anti-Fraud Association, the U.S. spends more than $2 trillion on healthcare annually of which a minimum of three percent -- or $68 billion -- is lost to fraud each year.

Private health insurance does a bit better than the government on fighting this fraud. Every $2 million invested in by private industry fighting health-care fraud returns $17.3 million in recoveries. The average health insurer's anti-fraud investigative unit has an annual budget of slightly more than $1.9 million and 19 fulltime employees. Compare this to Medicare's annual anti-fraud budget of $465 billion and consider that every dollar spent Medicare on insurance fraud only recovers $10. Private health insurers are clearly well ahead of the government when it comes to preventing, prosecuting and recovering fraudulently acquired monies.

According to Prescription for Peril insurance fraud is also a major financier of America's epidemic diversion of addictive prescription drugs such as pain relievers, tranquilizers, stimulants and sedatives. Many adults but mostly teenagers will steal and defraud to get prescription drugs to get high or oblivious. They estimate that drug diversion costs health insurers up to $72.5 billion a year in bogus claims.

According to the Miami Herald, Medicare's annual budget is $465 billion yet Medicare and Medicaid lose an estimated $60 billion or more annually to fraud, including $2.5 billion in South Florida alone. Medicare spends less than 2¢ cents of every $1 of its multi-billion dollar annual budget combating fraud, waste and abuse.

For instance, Medicare paid dead physicians 478,500 claims totaling up to $92 million from 2000 to 2007. These claims included 16,548 to 18,240 deceased physicians. (U.S. Senate Permanent Committee on Investigations, 2008). Twenty-nine percent of all claims Medicare paid for durable medical equipment was erroneous in FY 2006 and according to the American College of Radiology, Medicare and private health insurers pay up to $16 billion a year for needless imaging tests ordered by doctors.

The Journal of the American Medical Association notes that nearly one of three physicians profess a necessity to game the health care system to cover their costs and provide quality medical care. The same number of physicians say patients have asked them to deceive third-party payers to help them obtain coverage for medical services.

One of 10 physicians has reported medical signs or symptoms a patient didn't have in order to help the patient secure coverage for needed treatment or services in the last year.

Meanwhile fraud is increasing at an alarming rate. According to the U.S. Department of Health and Human Services, Federal convictions for health fraud, waste and abuse rose 57 percent between 1999 and 2008 in spite of the fact that more than 95% of all health insurers have anti-fraud training for employees, and nearly 56% have fraud hotlines. (Health Insurance Association of America) Yet the FBI only secured 560 convictions for healthcare fraud in 2001 and produced only 741 indictments in 2000.

Fraud amounts to more than 10 percent of U.S. healthcare expenditures according to the GAO (Government Accounting Office) and the National Health Care Anti-Fraud Association and those numbers are rising as we read. The GAO also notes that seniors and other taxpayers pay more than $1 billion a year in inflated drug prices due to potential fraud and loopholes in Medicare and that these overpayments represented 20% or more of Medicare spending.

The final shock, according to the Health Insurance Association of America, is that 80 percent of healthcare fraud is by perpetrated by medical providers and the remaining 20% by consumers and others.

Another cost problem area in healthcare insurance is the annual compensation of the executives - the CEOs, presidents and chairmen -- of the top 20 companies account for more than $312 million a year exclusive of bonuses which do not appear to be public information. Though this is private industry, these men and women are charged with safeguarding the health of the nation as much as our government and health care professionals.

A recent article in the Los Angeles Times points out that the healthcare industry, now threatened with more government regulation, has galvanized its lobbying and grass-roots resources so well that the early stages of the healthcare reform deliberations were "poised to reap a financial windfall."

Among this windfall was a proposal requiring all citizens to have health insurance, which would guarantee tens of millions of new customers for the insurance companies. "A bonanza" said Robert Laszewski, president of the consulting firm Health Policy and Strategy Associates Inc.

The insurers' success so far in either preventing and disrupting debate, obfuscating the issues and causing dissention is due to the enormous lobbying efforts they are making across the nation. Not only are they lobbying in the nation's capital and the districts of key lawmakers but the larger corporations such as United Health Care, Blue Cross Blue Shield and Aetna as well as many other smaller companies are engaging their employees around the country to fight health care in town halls, public meetings and "advocacy hotlines."

These insurance giants are also spending enormous sums on television and print ads in local and national media to either stop healthcare reform or ensure it is in their favor. It seems clear they see the handwriting on the wall and they are expending every effort to make sure and reform spells out new profits and benefits for the industry.

The Times article goes on to note that in the first half of 2009, the health service and HMO sector spent nearly $35 million lobbying the government. AFL-CIO representative Gerald Shea flat out said that the insurance and healthcare industry had "beaten us six ways to Sunday".

Just as shocking are the huge numbers who are denied health care for various 'legal' reasons by the insurance companies (pre-existing conditions, exclusions, repressive deductibles, outrageous co-pays, etc.) to say nothing of the fact that the people making these decisions are generally not medical professionals but rather number-crunchers who are trying to keep costs for the insurance company as low as possible. The whipped cream and cherry for these companies is that premiums, deductibles and co-pays are rising at phenomenal rates

Big Pharma -- The Other Elephant In The Waiting Room

The $80 billion that the pharmaceutical industry (pharma) initially and very publicly laid on the table to help with healthcare reform may at first blush seem huge but further investigation reveals it to be hardly more than a cheap ploy (compared to potential profits) to get public and political sympathy on their side.

First in the array of indictments is pharma's misdirection. BMJ, a respected peer-reviewed medical journal, notes that "because a lot of money can be made from healthy people who believe they are sick many pharmaceutical companies sponsor diseases and promote them to prescribers and consumers." Opponents call this "disease mongering" and includes such practices as "widening the boundaries of treatable illness to expand markets, vaguely defining diseases so as to cast a wider net and promoting them to patients and providers to gain a wider market and greater revenues," the latter being the bottom line.

According to Fortune magazine, in 2007 the top ten pharma corporations accounted for more than $39 billion in profits on $250 billion in revenues. These top ten in order of revenues and profits are Johnson & Johnson, Pfizer, Abbot Labs, Merck, Wyeth, Brisol-Myers Squibb, Eli Lilly, Amgen, Schering-Plough and Gilead Sciences.

The Kaiser Foundation Daily Health Policy Report notes that for the past 25 years pharmaceutical corporations have been focused on creating blockbuster medicines by spending as much as a billion dollars to promote them in order to ensure that the revenues from those "mega-brand" drugs will each exceed at least $1 billion annually from then on. If the patent and exclusivity lasts the regular 18 years they sell $18 billion of that drug, minimum. Fortunately a lot of the patents and FDA exclusivity that have produced record profits for pharma over the last two decades are expiring which means that a lot of very inexpensive generics will be on the market in the next few years. That in and of itself will likely save consumers a few billion dollars a year.

Prescription medications in the U.S. are among the highest priced in the world which is why those living near the our northern and southern borders make regular trips to Canada and Mexico to purchase their drugs for as much as a 50% to 75% savings. Internet purchases are also on the rise but requires careful attention as there are a lot of phony medications being sold that way. Best care is to only buy from online firms that have some longevity and reputation built up.

For example, drugs such as Lipitor by Pfizer, 90 tabs, cost $230 in the US and only $42 Canada. Claritin, 100 tabs, costs $180 in US and $67 in Mexico. 180 tabs of Nolvadex is $240 in US and $34 in Canada. Prilosec, 90 20mg tabs, costs $360 in US and $170 in Canada. To check for reputable online pharmacies, go to Google and enter "top rated online pharmacies" in the search bar. There are a fair selection.

Pharma Times, the private news site of the drug industry, is calling Obama's health care plan "radical" while Kathleen Jaeger, president of the Generic Pharmaceutical Association, said Obama's plan promises to "substantially reduce health care costs by increasing access to quality care and generic drugs at affordable prices."

The reason big pharma is not happy is because Obama's plan is committed to limiting exclusive rights to new medicine to 5 years (rather than 18) and to existing drugs for three years (rather than 14). Obama's plan changes billions of pharma profits into billions of consumer savings. This plan, together with reducing fraud and corruption, could easily make the whole 1.2 trillion dollar health plan affordable.

Billy Tauzin, former Lousianiana congressman and now president of the Pharmaceutical Research and Manufacturers of America, promised in so many words to conduct a lobbying blitz to halt the spread of generic drugs. Included in this blitz are Pfizer ($13.9 million in lobbying and political contributions in 2008), AmGen ($11.5 million) and GlaxoSmithKline ($8.1 million). Allowing these companies to lobby should be permissible but no money should be spent in the process. Absolutely none.

A well-researched article in Mother Jones (The Truth About Drug Companies) explains how pharma companies argue and complain that high prices are necessary to support and pay for the heavy research and development cost of new drugs. MJ points out that while it is true that R&D carries a heavy cost in time and money, the profits made on new drugs makes R&D costs seem insignificant as a result of the aforementioned patents and FDA exclusivities.

Pharma also spends more on marketing than they do on R&D giving them the lie on that complaint. Pharma's numbers on R&D generally appear to be very high due to the fact they choose a tiny handful of their most expensive drugs to hold up as examples, when the majority of their drugs have a much lower R&D cost. Add to this the terrible fact that drugs which could help and even save people with rare diseases are ignored simply because there is no profit in them.

Pharma publicly espouses a free-market system yet in reality are on the welfare rolls in a big way. In spite of their R&D costs, most of the big pharma R&D is funded by taxpayers via funding of research at universities and colleges and making grants to small firms that do the initial research. Big pharma then licenses their discoveries for next to nothing and sell the drugs for billions.

In addition to the free panoply of research available to them, pharma also thrives on government-granted monopoly rights via patents and FDA conferred exclusivity on many drugs. Speaking of the FDA, it would also help if this agency were funded solely by taxpayer funds rather than by the industry it purports to regulate. That's too much fox in the henhouse.

Ralph Nader continually challenges drug companies to explain and change their high prices to U.S. consumers when it sells the same drugs to Australia, Canada, France, Italy, New Zealand and other foreign markets for substantially less, all the while receiving billions in US tax credits for R&D, orphan drug tax credits, tax credits for manufacturing products in Puerto Rico, subsidized loans from the US Import-Export bank, pediatric R&D patent extensions, and a variety of R&D non-patent exclusivity rights.

Pharma also benefits from massive R&D funding through the National Institutes of Health (NIH) and other federal agencies. Yet the US government is not compensated for these subsidies nor does it seek high royalties for licenses of government owned patents. For example, the National Cancer Institute received no royalties from the commercialization of Taxol, an anti-cancer drug it developed that has generated billions in dollars in revenues for Bristol Myers-Squibb.

The 2003 Medicare Modernization Act (Medicare Part D) was a huge giveaway to drug and insurance company with the major prize being the removal of the government's ability to negotiate prices of or request bids for drugs. Medicare has to pay whatever the drug companies decide to charge, no ifs, ands or buts. There were other prizes too, such as an expansion of the FDA's power to grant drug companies exclusivity. Not surprisingly the bill's sponsor, after he left Congress, became the lavishly paid president of PhRMA, the pharmaceutical industry lobby.

Another trick pharma is fond of consists of making what are referred to as "me-too" drugs. These are drugs which are very similar in nature and treat the same problems as the original but are sufficiently different to enable a new patent to be granted. That me-to drug is then marketed as the newer and more potent version of the old and they get to keep a substantial portion of their primary market hooked on the higher priced me-to version than the now distributed much cheaper generic version.

So not only do we pay through the nose via taxes which are then donated to big pharma in a thousand different ways, we then pay through the nose again when we purchase those drugs to stay alive and relatively healthy. These subsidies need to end. Who knows how much revenue would come pouring into the government coffers if we collected even reasonable royalties on the patents we own and help discover.

I don't mind being but one out of the masses which collectively through consumption and spending support business and government -- that's everyone's burden and responsibility -- but there comes a time when one has to say enough is enough to certain aspects of it. Big pharma, like big everything else, treats us as a disposable resource, which according to strict definition we are, but accord a little dignity and respect in the process, please.

Vested Interests In Healthcare

Insurance companies, pharmaceutical companies, hospitals, doctors, pharmacists, therapists, nurses, technicians, medical products companies and support staff for all of the above have a very real interest in the health of this nation and while one's first thought is that's a good thing, a second thought hard on its heels is that each and every one of the above only make money if you become sick or need medical care. It's how they earn their living. It's what they went to school to accomplish. So it's actually more of an interest in our sicknesses than our health. This needs to be turned around so each and every one of the above have a vested interest in keeping us health from the beginning.

I seriously doubt if your personal doctor or his nurse actually wishes you ill but there is an inverse and proportion relationship between a person's health and the demand for medical services and products. The healthier we become the less need for costly medical services. Of course the proclaimed goal, to make people healthy, is healthcare's professed mantra but it has to be balanced with the reality that there must be a certain level of sickness in the nation in order to maintain a medical and health infrastructure. Currently the healthcare professions represent more than one sixth (16%) of our gross domestic product. The healthier we become as a nation the smaller that percentage will get.

Just to name a few of the consequences of good health, less capital will be spent on equipment, fewer technicians and support staff will be needed, and clinics and hospitals that operate on thin margins will have to close. So there is some incentive to maintain at least a minimum level of illness in order to ensure the healthcare infrastructure is there when it's needed. But I'd still like to see the entire healthcare industry as well as the media and the government get behind a 'No fried foods' blitz. That alone would improve our health tremendously while proportionally reduce healthcare costs.

Of course getting healthier would have the same effect of reducing demand and therefore profits for big pharma and the healthcare insurance industry though. Unfortunately, there is no equivalent of the Hippocratic oath for drug and insurance executives.

But then again maybe we all don't want better health, a conclusion easily reached in looking at the general health of the majority of our country. Here again we have competing interests in the state of our health. The food industry, with special focus on fast foods, produces, markets and sells us products, some of which have never come close to being anything natural and are guaranteed to kill us over time in the name of profit.

While it may be against the law to holler fire in a crowded theatre, being the freedom loving capitalistic people we are we cannot force the food industry to provide only healthy foods. There seem only two answers: one is to tax the deadly companies into compliance, which is not a good idea just on general principles, and the other is education and motivation for the people to put those industries out of business on their own by not buying and eating their products. After all, the ultimate responsibility does lie with each and every individual and perhaps if more of us demanded healthy foods, the industry just might come around and provide them for us.

Another complex faced of the healthcare and insurance industries is the fee and payment structures which seem to defy reason and requires substantial investigation and reform. I will only summarize the problem here. I'm on Medicare and when I receive my regular statement from CMS, Medicare's billing agency, it shows that my medical provider, pharmacy or other medical service billed Medicare a certain amount for their service or produce of which Medicare approved about half and then reduced even more that they actually paid. I wish I had that kind of control with my own bills. I'd love to tell the power company that I'm only going to pay them 22% this month. But as a result of this slashing of billings, which also occurs in private insurance, medical providers are forced to play some nasty and at times illegal games in order to collect enough money to keep their practices functioning.

We The Jury

Four hundred years ago Shakespeare said in one of his plays, "The first thing we do, let's kill all the lawyers". (Henry VI, Act IV, Scene II) A noble sounding sentiment, even today, but pragmatically foolish and absurd on the face. Without lawyers we'd have no law, no courts of adjudication, no government, no politicians. We'd be living in a state of chaos where only the well-armed and the strong-bodied survive. Fortunately we have allowed lawyers to live, but from time to time they need to be restrained because theirs is a profession that easily tempts toward duplicity.

The area of law bearing hardest on the healthcare profession is torts (not the bakery sort) and more specifically tort reform when it comes to malpractice awards. Many believe, and I agree, there needs be a cap on these awards.

I do not mean to take any means of remedy away from those who have suffered needlessly at the hands of an incompetent doctor, physicians assistant, nurse or hospital. Of course they should be recompensed to the fullest extent of their injuries. However, the punitive damage awards which can sometimes be three times the cost of the person's real injuries, appear out of control.

Punitive damages may be awarded in any case where the judge or jury wishes to punish the wrongdoer and make an example of them so as to prevent further such misdeeds. Left to a judge, which is rare, punitive damages can be rational and balanced. For instance, the court deemed fit to award punitive damages in the asbestos cases because the discovery process uncovered the fact that the asbestos companies knew as far back as 1889 that asbestos killed people and they deliberately covered that fact up and went on killing people right up till they got caught. That's a good use of punitive damages.

Another good use of punitive damages comes into play regarding all insurance companies but especially healthcare insurance. There used to be in-house rules that insurance companies should try to deny every claim possible under the belief that it would drive away a lot of claimants - which it did. Then attorneys started suing for breach of the covenant of good faith, which is a common law covenant in virtually all consumer business transactions - that the companies would deal with their customers in good faith and not try to rip them off.

But a lot of companies were flaunting that covenant and in some cases it was even including in their policy manuals that the adjusters should deny claims without even examining them. Thus tort law began to recognize a breach of good faith as a compensable damage and allowed punitive damages in an effort to bring a halt to the practice. It worked. To this day insurance companies shiver at the thought of a bad faith lawsuit because it usually entails enormous punitive damages.

On any lawsuit involving causes of action which entail the possibility of punitive damages the companies are generally very willing to settle out of court because if it goes to a jury trial, juries are notorious for siding with the plaintiff against deep-pocket defendants and awarding multi-million dollar verdicts.

However, medical malpractice punitive damages cost the healthcare industry enormous sums of money in the form of awards which result in significant increases in malpractice insurance and a lot of the CYA medicine that is practiced. It is also highly unlikely that punitive damages are going to accomplish much in the way of a preventative device since most malpractice is not deliberate but merely the result of incompetence or inadvertent mistake. It is the conclusion of most of the healthcare industry that a cap be put on medical malpractice punitive damages or that they be eliminated entirely.

In the meantime as a palliative doctors practice CYA medicine by ordering far more tests and procedures than are necessary, insurance companies reduce payments for these charges to the medical professionals, medical professionals resort to underhanded means to receive sufficient funds from the insurers to cover their costs and continue to offer quality health care, and the cost is borne in the end result by the people being served, the patients, in the way of higher premiums, higher deductibles, higher co-pays, more tests and procedures and general abuse of the system.

Doctor, Doctor ...

Then there's the medical profession itself which, for most of us over the age of fifty, has lost a lot of the lustre and allure of the more personal intimate care we remember from our youth. I grew up in Brooklyn in the 1940s and can recall childhood house calls to my bedside and doctors who held office in their old brownstone homes.

But these are not today's doctors who see twenty or more patients a day and find it all but impossible to keep up with advances in the science and technology of their field. The huge demand for medical care today (due in large part to the general health of the country) has created a shortage in all medical fields and especially doctors. We're importing nurses, technicians, doctors and administrators from around the world because our educational system is not up to par.

With the financial pressure and legal pressure put on medical providers by the private health insurance companies and Medicare cutting their bills to shreds, only paying pre-determined amounts for each procedure or service, denying payment for diagnostic procedures which prove negative, attorneys suing them for millions, and the professional malpractice insurance companies charging outrageous premiums, medical providers have been known to resort to fraudulent claims, double billing, and stressing the patient with more tests and procedures that are necessary to cover this load.

But the biggest problem with the medical profession has its source in the educational system. Our colleges and universities are simply not producing enough doctors and nurses to meet the needs of today's society and the ones that they do produce leave school with a debt that would bankrupt most families.

But I Have No Insurance

The record breaking numbers of people turning out for the free medical care fairs being held around the nation are a living testimony to the need for greater access to health care. Most of these people are not on welfare but are rather the working poor across the face of our nation.

It is estimated that between 40 and 46 million people are uninsured across the nation. These numbers are far too many for the wealthiest nation on the globe. Forty million people who cannot access health care when needed is shocking and expensive. Only between 9 and 12 million of them are illegal immigrants and there are no provisions in any of the new health plans that allow them access to health care.

In fact, Section 242 is the only part of the HR3200 healthcare bill that even mentions immigrants. That section defines an "affordable credit eligible individual" as an individual who is lawfully present in the United States pursuant to the provisions of the Immigration and Nationality Act, which excludes illegal immigrants.

However, I'm not certain this is entirely wise or even feasible. Of those 9 to 12 million illegal immigrants who are present in the U.S. and who obviously are so well insinuated into American society that we have so far been unable to root them out and deport them, a substantial number are going to get sick, fall victim to flu viruses and contract other communicable diseases. If these people do not receive medical care, regardless their illegal status, they are going to spread those illnesses and diseases among legal and innocent members of our society.

Then there are the illegal immigrants who seek health care with false ID and insurance cards at emergency rooms and private clinics across the country which adds tremendously to the cost of healthcare and takes accessibility away from legal residents and citizens who need it. The added cost of denying illegal immigrants medical care - even if only for emergencies - is to costly because it is measured in American lives as well as dollars.

Decide for yourself but in my opinion there should be a provision in the healthcare bill to at least provide emergency medical access to illegal immigrants who have contagious diseases. We might also add in those who are pregnant and in labor for in denying them medial aid we are denying future sons and daughters of this nation aid. Remember, anyone born on American soil, even the American embassy in places as remote as Christchurch, New Zealand or Harare, Zimbabwe, is a U.S. citizen with all the rights and privileges that attend that status.

Employers Hate It, Employees Should Too

Examples of health insurance stretch back more than 200 years but most of our nation did not have health coverage until after WWII ended. The demand for more workers during that war combined with the wage freeze led to a greater interest in employer-sponsored health insurance as a worker recruitment and retention tool. As a result of vigorous lobbying by business and industry legislation and court rulings establishing generous tax exemptions for supplying fringe benefits and extensive support from the unions latching onto another bargaining tool it wasn't long before employer supplied health insurance became a pervasive employment benefit.

Employees began shopping for jobs that offered the best benefits rather than large salaries though the latter was in close pursuit. Benefits and wages dominated the labor market by the mid-1950s. However, by the mid-1960s employers were beginning to feel the pinch of supplying insurance to workers and started demanding that the employees and their dependants also carry pay part of the premium. Currently most employers still pay the larger amount -- nearly two-thirds of the cost -- but those costs continue to rise.

While it is true that larger employers are able to negotiate very good terms with insurance companies because they offered a larger pool of insureds the cost of health insurance kept rising, this left small business -- the backbone of the American economy -- in the lurch. Their profits weren't large enough to carry a competing cost for employee insurance. So they either didn't offer insurance, offered cheap poor quality insurance, or offered good insurance with the employee picking up the larger share of premiums.

Then employers have to protect against employees who game the system by taking coverage only when they plan on using it for something specific such as a pregnancy or upcoming surgery and dropping coverage when they no longer needed it.

The larger downside of employment based health insurance is numerous. First there is the lack of portability. When a worker is fired, quits, or moves to part-time status the insurance ends. One aspect of that was eventually fixed by COBRA but only to a small degree since the full weight of the premiums was very heavy for someone unemployed.

Also the smaller the employer the harder the negotiations for employee healthcare insurance leading to either no insurance at all or a cheap poor quality insurance that carries high deductibles, lack of coverage and high co-pays for the employees.

But mostly taking healthcare insurance out of the hands of our employers seems like an excellent idea to me. The subject is complicated enough without giving a substantial amount of control over your own personal health insurance to your employer.

All of this is good reason for reform to seriously consider disconnecting healthcare insurance from employment. From this writer's perspective the disconnect would be beneficial. Employers would no longer have to spend expensive assets to maintain that coverage and they could give workers a substantial raise in place of the insurance which under the new plan would free workers to select their own coverage, which also is a valid reason to have a public option for coverage.

Individuals could band together in large groups or co-ops for the sole purpose of negotiating with insurance companies for coverage. A classic example of this is sort of groups is the AARP. With a membership of 35 million plus strong, they can negotiate very well with insurers which is why they are able to get such excellent rates on all sort of policies

Another side of employer provided healthcare is that small businesses can't afford to offer health insurance and get penalized for it in the labor market because larger companies and corporations can provide better insurance cheaper.

There are both good and poor reasons for removing healthcare from the workplace and balancing them can be tricky because there is no one solution that fits all problems, which in and of itself is a good reason for disconnecting the two.

The reality that in the end, it's us - you and me - the end user who pays the cost of any or all of the above and giving a substantial amount of control over our own healthcare insurance to our employers does not seem the best of all possible worlds. All costs are passed on more often than not with a profit it tacked on each step of the way.

Yet Matt Miller of the Financial Times notes that the so-called bipartisan "gang of six" in the Senate wants to fine employers whose workers choose U.S. public healthcare system rather than more costly insurance from their company and they want to impose an 8% payroll tax on all but the tiniest companies that do not offer healthcare. Personally I see no benefit for the people in either choice unless viable and inexpensive insurance becomes available for everyone.

Our employer-based healthcare system may have made sense 50 years ago when healthcare was cheap and business faced little global competition but in today's world circumstances are radically different. The costs of healthcare are strangling businesses and eating revenue that could otherwise be at least partially directed to higher wages and better working conditions. I am in favor of people choosing their own healthcare system rather than being forced into whatever your employer has. In fact, the connection between healthcare and employment is the reason more than 8 million Americans are currently uninsured.

But the goal of disconnecting healthcare and employment was taken off the table early on because the President and Congressional Democrats feared that proposing a disconnect would be leave them too vulnerable to being attacked as "socialists" and businesses feared being nailed to the wall by unions for "shirking responsibilities." The rhetoric of the radicals is a two-edged sword.

A better solution would be some sort of "grand bargain" wherein business shifts healthcare costs off it's books and onto government in exchange for supporting a broader revenue base that government would need to accommodate the change. Similar systems have made the change will little disruption to business, healthcare or the individual. Such systems exist in Switzerland and Holland where there is universal healthcare coverage without becoming a single-payer system.

If nothing else, a proposed insurance exchange would be a great way to make sure that the working poor will have a way to buy group insurance outside of employment. Since the core of the American economy is it's small businesses this approach seems to make the most sense.

Summation

Within the healthcare industrial complex I tend to place primary blame for the mess on the insurance companies including Medicare, with secondary blame laying squarely in the lap of the pharmaceutical giants and medical equipment manufacturers, and to a lesser degree the educational institutions which are producing far fewer medical practitioners at a higher and higher cost so that when doctors finally finish their education and begin to practice they are saddled with an outrageous personal debt to repay.

Medical care providers and their patients are the insurance companies primary and dual line of profits in the merry-go-round but not being satisfied with that, these companies expanded their panoply of revenue streams to include denying claims, raising premiums, cutting payments to medical providers, increasing deductibles, denying coverage (cherry picking), choosing what procedures and medications the patient is given and failing to pay for preventative care because these necessary features would cut into their future profits by making us healthier. Sadly virtually the whole industry is aimed at and geared for maintaining a national level of national sickness.

Insurance did not start out as big business. It started out in the 1600s when a guy named Lloyd organized a group of sea merchants to pool their resources to reimburse any of their members who lost their ship, crew and cargo at sea. Today Lloyd's of London is the world's largest reinsurer. This gave the concept of insurance legs and it caught on at the end of WWII when the American economy really took off. People acquired good paying jobs and sundry possessions and insurance seemed the right thing to do.

The problem is, it isn't. Aside from the obscene profits insurance companies make (by hook or by crook it seems - remember Katrina where they didn't pay off because it was a hurricane wind and not flooding that drowned everything) insurance is a wrong-way bet. The insurance companies are betting in your favor and you're betting against yourself. A winning bet for sure but the psychology of it leaves me cold. It has created a broad lack of responsibility in society which is exemplified in a phrase I hear far too often: "Don't worry, it's insured."

Employer provided insurance also causes the employer extra time, labor and money since the employer usually pays 65% to 75% of the premium. This adds to the overhead causing the employer to raise his prices to cover that cost, of course adding in a small bit of profit to reimburse for the trouble. Then the employer gets to negotiate with the various insurance companies for the best bargain which naturally is going to benefit himself first before the employee. I sure don't want any employer I've ever had choosing my health insurance for me.

Whereas if health care insurance were not tied to employment, the employer would be relieved of a troublesome burden and could increase the employee's wages a portion of the money saved so they could buy their own, further necessitating reform in the choices and prices offered to us. On other side employees would not lose their health care if they lost or changed jobs, they would not be at the mercy of whatever insurance plan the employer chose for them, and they would have a wider choice of health insurance if a public option or a cooperative exchange were initiated.

Of course this would require a complete remaking of the health care insurance industry including such radical changes as premium, deductible and co-pay modification so as to make it affordable to the middle-class, transparent and streamlined claims processing procedures, fair and timely payment for medical services and equipment, substantial support of preventative health care and reviews of requests for services and equipment by medical professionals (if such review is even deemed necessary).

For example, it's obvious that a lot of medical providers cheat or stretch the truth somewhat when submitting claims to the insurance companies for payment. A few even commit fraud with criminal intent at self-enrichment.

When they submit a claim for payment to an insurance company the first thing happens to that claim is a decision on how much of it they will pay. For instance, my cardiologist charged $1,618 for a triple heart catheterization. Medicare approved payment of only $944 and actually paid him $755. That's more than a 50% reduction in fees which causes many doctors and hospitals to double-bill, charge for procedures not performed, and other questionable practices just to meet expenses and continue providing quality medical care. My doctor charges $75 for an office visit, Medicare approves $36 and pays $29. No wonder it's so hard to get in to see the man. He has to see twenty or more patients a day to support his staff and clinic.

Then there is the natural bureaucracy of large corporations and government both of which are rife with bureaucratic incompetence and people covering their behinds. This bureaucratic mess causes a great deal of waste, poor treatment of claims and poor quality service, which in turn increase insurance company costs thus raising premiums higher and initiating even more cost saving measures such as an increase in denied claims, deductibles and co-pays.

This then brings the legal profession into play when people have to sue doctors and insurance companies for anything related to health care, such as malpractice and bad faith claims processing. Attorneys particularly like bad faith claims because they incur punitive damages which can be triple the hard damages or as large as a generous and sympathetic jury is inclined to punish the insurance company. This leads to the vast majority of suits settling because a cost analysis shows it less expensive to negotiate a settlement rather than risk a jury trial and a sympathetic and generous jury.

The medical profession then follows suit by practicing defensive medicine which includes excessive testing procedures, covering up mistakes and paying increasingly higher professional insurance rates. On top of this our hospitals and clinics are ground zero for deadly infections. Tens of thousands of people die every year as a needless result of from hospital-vectored causes, yet from personal experience I've found that hospital staff take it as a personal insult for a patient to demand a copy of the patient's bill of rights, or that a nurse or attendant sterilize their hands before touching them, or to be shown a medication before it being given.

I've been put on a gurney and left in chilly hallways for hours as a result of such demands which are not without reasonable cause. I've twice discovered incorrect medications being administered, once an incorrect procedure planned, and one time upon admission for pneumonia found the underside of the bed rails covered in dried blood not my own. Consequently hospital staff generally don't like to see me coming in the door and are very happy when I'm discharged.

There are many problems with the health care industry that I have not covered in this short investigative essay. It would have taken a book to do so. But I've managed to get some depth on the primary problems with the system and present my discoveries, thoughts and ideas herewith for your criticism.

A good way to begin reform would be to repeal the 2003 Medicare Modernization Act, a deeply irresponsible bill enacted under the previous administration that included huge giveaways to drug and insurance companies and took away the governments ability to ask for bids and negotiate for the best prices for drugs and health care.

Generally, there is nothing wrong with lobbying. The existence of lobbyists is guaranteed by the Constitution's right to petition the government. However, I think it would be in the best interests of the people and the government if lobbyists were prevented and prohibited from donating in any manner, shape or form to the campaign or private coffers of any elected official. We might even bring back tarring and feathering. Public officials should be prevented from entering into the employ or position of a lobbyist or lobbying industry until ten years have passed from relinquishing his or her office. However, all public officials shall be required to give equal time and attention to all such petitioners to the government and any such discussions should be transparent and made public.

But in the end it is only up to us. It is our responsibility to elect competent and honest leaders and representatives, to keep them competent and honest by becoming informed on all aspects of the issue, holding public debates and staying on top of our elected officials to keep them informed on what we, the people, want for our nation. In this regard I am reminded of my favorite and time-worn quote from Mark Twain. People get the form of government they deserve.