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Universal Healthcare-^ A Clear Path to Disaster Here's why this plan won't work for the physician, patient, and the country.

By Jon Purdy, DPM

Editor's Note: Thi.'i iirticlc was written in response tu a column lulvo- cating imiversat healthcare which ap- peared in the lanuary i.sstie of this nmsiizine. The author's opinions are his own anil do not necessarily reflect those ofPM. Dr. iioidsmith's response can be read at: http://www.podia- trym.com/pmarticle.cpn?id= 117

Auniversal single-payerhealthcare system would bea mistake of known propor- tion, as witnessed in other simitar models; It is the opposite of every- thing that has driven this country's prosperity, making us economically the stronjjest nation in the world today. The debate necessarily en- compasses political and humanistic ideologies as well as consideration of economic impact.

In the study of an issue, there are various tools one should use to formulate an opinion. It is impor- tant to look at the ideologies of the proposition, current similar models of what is l)eing proposed, as well as historic events and trends. Our learned colleague Harry Goldsmith, nPM recently wrote an article out- lining his argument for a single- payer universal healthcare system (A Proposal for National Health- care—A "Medicare for All" plan could fix our present flawed sys- tem). He hegins by backing Bill HR 676 and aligning himself with one of its drafters, democrat and former p r e s i d e n t i a l c o n t e n d e r D e n n i s Kucinich.

I he basic tenets of those sub- scribing to governmental interven- tion through entitlement programs

is that you, the individual, are not smart enough to know what is in your best interest, and do not pos- sess the skills or drive needed to live your life successfully. Furthermore, given opportunity and free choice, you likely will not do what we, the government, know is in your best interest. Therefore, we will have to take care of you through all your failures. So, why not just mandate now what we know is best for you and your future?

universal single payer healthcare

system would be aj mistake ofknown^

proportion, as witnessed in oth

similar models.

The New Deal In 1935, as part of the "New

Deal", FDR introduced Social Securi- ty and Unemployment. This legisla- tion was introduced during the de- pression to provide income to per- sons unable to find jobs. At the same time, it prodded individuals to retire, thereby freeing up jobs for others. As with almost every government pro- gram, it was never abolished after the country emerged from the de- pression and u n e m p l o y m e n t re- turned to a nominal rate.

In 1965, LBJ introduce Medicare as part of his "Great Society" vi-

sion. Since this time, dozens of en- titlement programs have been inte- grated into our society. Kither part- ly or wholly funded by the federal g o v e r n m e n t , p r o g r a m s such as Medicaid, M e d i g a p , D i s a b i l i t y , SCHIP (State Children's Health In- surance Plan) and Supplemental Se- curity Income (introduced by Presi- dent Carter in 1975), exist to theo- retically assist individuals through almost any adversity that one can i m a g i n e . Now on t h e table, we have universal healthcare.

How to Pay for It Before considering what is in-

volved in the implementation of a single-payer universal healthcare system, we have to figure out how to pay for it. Let's look at what we have currently and how we pay for that. The United States Social Secu- rity Act created the largest govern- ment program in the world, today costing taxpayers over $625 billion annually. It is funded through an- other act called the Federal Insur- ance Contribution Act (FICA), also known as payroll taxes. Combined, these taxes total 15.3% of the pay- roll. Fifty percent is paid by the em- ployer and S0% by the employee.

Even if you are not a proponent of the Robin Hood concept of gov- ernmental function, on the surface t h i s scheme m i g h t make sense. However, looking deeper, one finds that it's not this straightforward. First, this program almost went bankrupt in the 198()'s. Also, con- sider that the benefits you pay in as an employer or employee are not necessarily a guaranteed future ben- efit, nor is it an advantageous in-

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Universal Healthcare... vestment of your hard-earned dol- lars.

In the 198O's, a group of work- ers in Galveston, Texas studied the performance of invested funds over a period of time and compared pri- vate investing to the returned in- vestment of the Social Security program. A work- er paying into the system and mak- ing an average of $35,000 would re- ceive a Social Se- curity benefit of $1,036 per

month. Had the same individual invested the same amount of money over the same period of time in a private retirement plan, on average, he or she would receive $4,915 per month.

Loopholes and Broken Promises

Ihere are also loopholes and broken promises in this system that most are not aware of. Social Secu- rity was presented to the American populace as never to exceed a total of 6"Mi taxation. It is currently 12.4'̂ ). Most worrisome is the fact that regardless of what an individu- al pays into the system over a life- time, the government retains the power to cut all benefits at any time. As such, it would seem ex- tremely difficult for someone to argue that our government pro- vides a personal security greater than that found in the private sec- tor. If this were not enough. Presi- dent Clinton during his term in of- fice raised the taxable portion of Social Security to 85%. Why? In large part, to support the very gov- ernment program that can't sup- port itself.

This begs the question of where the money goes once it is put into the system. There are laws against governmental investments in the private sector, and in the case of Social Security, all excesses not paid out are placed into government Treasury Bonds. These bonds are

The Vmted States Social Security Act created the largest

government program in the world, today

costing taxpayers over $625 billion annually.

non-marketable and backed by the U.S. Government. In other words, the government is writing itself an lOU. Simply stated, as the govern- ment promises more entitlements, it must tax more to bring in rev- enue to pay for it. Since these pro-

grams have a his- tory and project- ed future of being u n s u s t a i n a b l e , they look no dif- ferent than a c o m p u l s o r y Ponzi scheme. Currently, at our rate of taxation, the government is struggling to pay for what it has implement- ed, yet the pro- posal of universal healthcare vastly increases govern-

ment entitlLUiLiits paid for through even more taxation. I hope the pat- terns are becoming clear.

Is Healthcare a Right? Dr. Goldsmith leads his argu-

ment with a statement that health- care should be a "right." I will hold off on the debate of what is and is not a right and simply state, even as a physician, I do not believe in the smallest sense of the term that healthcare is a right. He then presents us with a huge leap into governmentally controlled health- care through sin- gle-payer (Medi- care) universal coverage. Within his outline are many promises depicting a perfect world of healthcare with absolutely no defined drawbacks.

1 would venture to say that most physicians don't love public insurance programs as they are, and making this the only payer would be a disaster. As it stands. Medicare fees follow what is known as the SKG (Sustainable Growth Rate). By this schedule. Medicare reimburse- ments are slated to be cut 25% to 35% over the next several years.

/ do not helievi in the smallest ense of the term that healthcare

is a right.

More unfortunate are the contin- ued broken promises from our gov- ernment. Forty years ago. Congress made a promise to "...never estab- lish a physician's fee schedule or in- terfere with doctor-patient relation- ships." Then, in 1992 a Medicare fee schedule was established. Physi- cian fees tbrough Medicare have subsequently been cut 50% to date in adjusted dollars. With the slated future cuts coupled with the rate of inflation, by 2012 physicians will be receiving 25% of the original fee schedule. Are you ready to trust the government yet?

If our working populace can't pay for the public care our govern- ment has extended today, the addi- tion of universal coverage would see tax hikes like we've never seen before. Even worse, both patients and physicians will be at the mercy of the system which has already proven to be wasteful, dishonest, and subject to fraud. These items outlined are in addition to the mul- tiple policy changes made yearly, and rarely are they in the favor of the patient or provider.

On the patient's side, we can look at models such as Germany, France, Canada, and England. In these systems, there are waiting lists on which patients die waiting

for their turn at proper care. In Canada, a study found that 1.2 million people cannot locate a primary doctor due to physician shortage. Another 4.5 million have just not bothered to locate a doctor even though their care is free. The study further

found that the wait time to get treatment at a clinic or emergency room are double that of the U.S. As an example, it takes on average three weeks to get a potentially cancerous breast lump biopsied, and six months to have a routine hip replacement. In these current systems, one cannot advance in line if willing to pay out of pocket. The most unimaginable law in exis- tence, and backed by Dr. Gold-

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Universal Healthcare... smith, is the law forbidding private insurances to cover anything already covered under the universal plan. Can you imagine living in the United States and not being able to pay for a policy that treats you better than the government program? Cur- rently in Canada, this system is being challenged as unconstitutional.

Is Government Insurance an Efficient Payer?

I'm not sure that I understand Dr. Goldsmith's argument that pub- lic insurance is an efficient payer with simplistic reimbursement. Medicare, on average, makes up 30% of a physician's payer pool. In a ma- jority of offices, it is a top 10 insur- ance and is also one of the lower f paying plans. And, unfortunately for * the new practitioner with nothing but debt, it typi- cally takes six months to become a provider. Recent practitioners have seen Medicare change from a UPIN to an NPI number, transition from paper to mandato- ry electronic filing, propose large annual cuts in reim- bursement, place holds on DME applications, and now considers taking DME dispensing away from doctors.

The Medicaid rograrn, arguably the lowest of all payers,

is the harrier to podiatrists being

defined as physicians^.

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The Medicaid program, arguably the lowest of all payers, is the barrier to podiatrists being defined as physicians. These public payers have multiple layers of oversight and review that commonly burden the prac- titioner with denied claims, pre-pay audits, chart re- views, and full blown audits far beyond that of the pri-

vate payer. Imagine if this were to be- come your only payer. Is more gov- ernment intervention looking promising yet?

Dr. Goldsmith speaks of how he is impressed with the low overhead of our public-administered insurance. I believe he may have failed to take into account that these funds are being filtered through our govern- ment, which is borrowing money to the tune of 480 billion dollars annu- ally in paid interests. On top of that. Medicare spending is growing at a rate of 7% a year, far ahead of infla-

tion, to an annual cost in 2006 of $408 billion. In a CMS report. Medicare expenditure per enrollee in 1970 was $.̂ 68, and in 2006 it was over $3,000, If adjusted for inflation, today it should be only $662.

In the case of private payers, as reported in 2004, average employee salaries were $61,409. Since 2001, family coverage premiums increased 7S%. Statistics such as these reflect dominance in a non-competitive market. It is quite obvious to see that there is much room for normalization of premiums if competition were allowed to drive free market balance. It may also be of interest to note that in 1997 Medicare part C came into existence creating Medicare Advantage Plans. In essence, this is a melting of public and pri- vate insurance with Medicare paying capitated amounts to private payers. Unfortunately, public-fund- ed insurance continues to meddle In the free market, causing price inequality.

Government Regulation Another area aside from delivery that should be the

subject of debate is government regulation. One of the regulatory bodies overseeing these government pro- grams is the Joint Commission. It is a private non-prof- it company founded in 1954, and oversees the compli- ance of hospitals participating under Medicare. The company has been under recent scrutiny because of its monopolistic powers which are received through statu- tory protection from our government. Other entities, most recently in 2006, have been denied competitive opportunity. With annual revenues totaling $113 mil- lion, and without required public disclosure, it is diffi- cult to assess its financials. Again, we see our govern- ment disrupting the free market.

Within the proposal of universal healthcare, the question is asked "How do we pay for it?" Dr. Gold- smith answers, "Simple." His simple answer is to take more of what you earn, filter it through governmental bureaucracy, and give it to those who don't earn or didn't invest in their futures: in other words—tax, tax, and more tax.

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Universal Healthcare... More Taxes

The most preposterous of his tax hikes occur with an increase in the gasoline tax. He justifies this not only as a usage tax but as a type of sin tax. In his mind, the more you use gas, the more of a lia- bility you are to the healthcare system through increased acci- dents, disability, and respiratory problems, to Eiame a few. So, part of his propos- al is to fund an e n t i t l e m e n t through increased taxes on alcohol, tobacco and gas. What sense does it make to bolster a program with c o n s u m p t i o n taxes on the very items our nation is aggressively try- ing to eliminate the use of? That's quite a flaw as I see it. In the case of petrochemicals, which literally run t)ur lives and economy, any in- crease in cost is passed on to the consumer. As fuel prices rise, so do the prices of almost every product and service that Americans use.

Part of the physician incentive that Dr. Goldsmith touts is an in- crease in payroll tax, increase in state and local taxes, and a decrease in tax deductions for "high-end earners," of which the definition is conveniently left out. He also pro- jjoses the elimination of for-profit insurers, and elimination of pay- ments to the Workers Compensa- tion Fund. From a physician's standpoint, my highest payer. Workers Compensation, and my second highest private insurance payers are eliminated. However, I am guaranteed to make less and pay more taxes. So far I'm not get- ting it. Also, consider in the pro- posal that physicians would be pe- nalized and booted from the system for poor performance but there

nother way our own government

destabilizes market conipetitUm in th

area of healthcare is with passage of taws

prohibiting the building of many

efficient, low verhead, diagnostic

and surgical facilities that compete with wasteful hospital

systems.

would be no reward for efficient or excellent care.

Why So Many Uninsured? So why don't people have insur-

ance now? Statistics show that 85% of Americans do have health in- surance. Does that leave 15% of Americans who just can't afford health insurance? Not necessarily. Included within the 15% figure are 11.4 million non-citizens. Of households earn- ing over $50,000, 37% do not pur- chase insurance. Estimates reveal overall, that 20% could afford in- surance but don't get it, and 25% are eligible for as- sisted coverage yet don't seek it. Using these fig- ures, one is left with 5.9% of our p o p u l a t i o n falling into medi-

cal insurance limbo. Of course, there is always the emergency room open door policy in which any in- dividual can find same-day care without regard to payment. With average wages outpacing inflation, and our "poor" being the richest poor in any country, this figure should be even smaller. Nonetbe- less, healthcare coverage costs must stabilize before extremely low wage earners can afford quality coverage.

Another way our own govern- ment destabilizes market competi- tion in the area of healthcare is with passage of laws prohibiting the building of many efficient, low over- head, diagnostic and surgical facili- ties that compete with wasteful hos- pital systems. Let's look at what else contributes to skyrocketing health- care costs in the United States. We can compare ourselves with our neighbors to the North. Canada's healthcare, per capita, including medication costs, are much less than ours. Why is this? For starters, our medical malpractice awards have in-

creased 43% since 1999. The cost of litigation has increased 12'Mi annual- ly since 1975, and compared to Canada, the U.S. files 350% more malpractice suits per year.

Illegal Immigrants Another consideration is the

drain that some 11.4 million illegal immigrants place on the system. Il- legal immigrants impact our healthcare system by utilizing the emergency, labor and delivery rooms, contributing to motor vehi- cle accidents, perpetrating crime, and the introduction of diseases, the worst of which is tuberculosis. Canada does not have to contend with these numbers. Unless some- thing is done, these costs will in- crease in addition to the increasing costs of current or proposed univer- sal healthcare.

In Dr, Goldsmith's world, the government will do a 180 and all the issues that we can't solve today will be miraculously solved when more governmental intrusion is placed upon our society. For exam- ple, he speaks of combining all healthcare administration to reduce overhead. We already have Medi- care and Medicaid, which are feder- ally funded programs with regional and state distribution, yet they function completely independent- ly. He speaks of the quality of care that will be monitored through the creation of another national over- sight board. In light of the Walter Reed Army Hospital scandal, I think the government is struggling to oversee what it administers now. Somehow, the quality of medical care is going to increase with his proposal to flood the system with pseudo-physicians such as nurse anesthetists, physician assistants, and the like. Ail this will presum- ably be accomplished as the baby boomers retire at a rate greater than those entering the work force. Also, within this bubble of retirement class are the retiring physicians. The math just doesn't work.

Where Does One Stop? I his begs the question of exactly

where does one stop? What abt)ut pa- tients who don't adhere to the doc- tor's orders, miss scheduled appoint- ments, don't fill prescriptions, or use

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Universal Healthcare... illegal substances? Should these pa- tients be responsible for their entire medical bill? Could we base their per- cent co-pay on their glucose level, blood pressure, or body fat percent- age? Of course not; personal respon- sibility is never a consideration in en- titlement programs. So, what about Individuals who exercise, eat right, follow their doctors' orders, are high wage earners paying a disproportion- ate amount into the system, and use only a fraction of the health system the average citizen uses? Do these in- dividuals get rewarded? Of course not; entitlement programs by defini- tion reward those who use them and penalize those who don't.

The issues that we face today are the high cost of healthcare, a social welfare system that can't sustain it- self, and politicians facilitating peo- ple to live their lives without the burden of individual responsibility or self-preservation. Once the flood gates of opportunity and paths to in- dependence are as open as they are today, the government needs to step out of the way and let individuals decide for themselves. Facilitation through educating people to consid- er their futures will always be a pub- lic service worth promoting. Ask yourself this question. Is it better for a government to create a system so encumbered, as we see in France, Canada, and England, that people die waiting for its assistance? Or, would it be better to allow individu- als to face the financial conse- quences of their own dysfunctional behavior? It's a tough question to ask but is nonetheless a reality.

Does it not make sense that as an economy blossoms, less govern- ment intervention would be sought? With our current attain- ments of an unemployment rate at an ali time low, wages outpacing inflation, and median incomes per household of $48,201, shouldn't we be observing more self-reliance and independence? So far, the exact opposite is happening.

The question some might ask is, "Where does one turn when in need if the government has not strung out a safety net?" Many politicians like to sell their programs by painting a picture of people spilling out of their government subsidized housing to

die in the street as their entitlements are taken away. In actuality, there is simply a shift from the public to the private sector. Families actually have to help each other and neighbors help neighbors. People can turn to private charities, churches, and com- panies that play a large part in com- munity assistance. The most impor- tant help is not the hand out, but the lesson. Without a constant stream of charitable reliance, people will actually have to plan for their futures, invest wisely, and live with- in their means, which benefits us all.

If our government returned to its rightful owners more of what we earned, individuals would have more money to invest for their fu- ture retirement, disability insur-

The proposal of

jtniversal healthcare^

in essence^ will

equate to lower

reimbursements for

physicians, less net

income for all, and

higher costs of goods

and services.

ance, health insurance, and other personal investments. We would re- ceive a greater return on invest- ment and overall have more dispos- able income to voluntarily give to charities or individuals in need. If the government would stop its meddling in the private sector, free market competition would see healthcare prices marginalize.

Health Saving Accounts People could more afford pri-

vate Health Saving Accounts (HSA), which provide a tax shelter, a pri- vate funded return on investment, and an incentive for individuals to stay healthy. The HSA works in concert with high deductible pri- vate insurance plans. It allows a person to place tax-deferred money, only to be used for their healthcare, into an account that

works like an IRA with immediate fund availability and without penalty. The money can then be used like a retirement account after age 65. A study found that ^5% of these types of plans paid lOO'Ki for preventive healthcare without an imposed deductible.

Because we lack universal cov- erage, are we falling far behind In healthcare delivery and overall health? We're not in first place within that category but are cer- tainly at the top. We are also a na- tion with obesity of epidemic pro- portion which appears to coincide with our affluence. However, we are in the lead when it comes to advances in modern medicine. The United States sees a large in- flux of patients coming from other countries to become providers or to get the medical care that their countries aren't providing them. One does not see many U.S. citizens going to other countries for modern medical care. Alone, 1 think these facts are a pretty strong commentary.

Lower Reimbursement to Physicians

So, the proposal of universal healthcare, in essence, will equate to lower reimbursements for physi- cians, less net income for all, and higher costs of goods and services. But, should you need healthcare, it will be taken care of; as long as you pay your 20% co-pay, wait your turn in line, your procedure is deemed medically necessary by our govern- ment, and your doctor of choice is accepting Medicare at that time. Al- though Dr. Goldsmith advocates tort reform, there is utterly no indication of this happening any time in the fu- ture, rii tell you what. Dr. Gold- smith, you first show me tort and immigration reform, and then let's revisit this debate. •

Dr. Purdy is an associate mem- ber of tlie Amer- ican Academy of Podiatric Prac- tice Manage- ment and serves on the New Practitioner Ad- visory Board and Iiducation leam. He practices in New Iberia, LA.

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