It was only a matter of time before the insurance giants showed their hand in the poker game we call nationalized healthcare.  This morning, the Wall Street Journal reported that officials from America’s Health Insurance Plans have proposed a universal healthcare program which will save us all. 

It doesn’t take a degree in economics to understand that the U.S. Government cannot operate a nationalized healthcare program on its own.  They will need the big insurance companies to provide the massive administrative machinery required to operate such a large program.  Big insurance companies have been contracting with the government for years in the senior HMO market.  Not surprisingly, these insurance middlemen make huge profits by “managing” the government dollars Medicare beneficiaries have paid into the system over a lifetime.  Now big insurance is offering to provide the same services for 300 million Americans, as opposed to a mere 30 million Americans on the Medicare and Medicaid programs.  In creating a nationalized healthcare program, the pot of money will potential increase 10 fold!  How very generous of the insurance industry to offer suggestions of how best to spend this unimaginable sum of money.

So how do big insurance companies manage to turn a profit while providing all of the care needed by sick patients on Medicare and Medicaid programs?  How do they pay doctors and hospitals a fair fee for their services, so that doctors don’t need to see huge numbers of patients just to pay for their overhead?  The answer:  They don’t.  They can’t!  Insurance companies cannot magically stretch the healthcare dollar anymore than you can magically stretch your own paycheck.  They can’t print money.  They simply RATION care to the sick and underpay doctors and hospitals, for the sole purpose of generating enough money for their own administrative fees, plus the not-so-small profits for themselves and their shareholders. 

Here is how the insurance industry stated they would make their plan work:  “The group called on Congress to establish a public-private advisory group to recommend action in three areas: reducing wasteful spending, changing how doctors and hospitals are paid, and reducing administrative costs.”

Let me translate this insurance double speak for you.  “Reducing wasteful spending” translates into rationing medical care to patients for profit.  “Changing how doctors and hospitals are paid” translates into paying them less.  Clearly, if doctors and hospitals were paid more or even paid at current rates, spending could not be reduced.  This fee reduction will result in doctors seeing even more patients than they see now, spending less time with each and further rationing healthcare.  Finally, “reducing administrative costs” translates into allowing the insurance companies to become the administrators for the program.  What this means is that much of the new healthcare dollar will flow through insurance company pipelines, which will be designed with leaks in strategic places. 

This is all a game of power and money is the language of power.  The name of the game played by the insurance companies is to control as much of the money as they possibly can.  It is no more complicated than this.  Welcome to our new nationalized healthcare program: HMO medicine for all.  The plan will be brought to you by the two most trusted groups in the country:  insurance companies and politicians.

When you combine the involvement of big insurance with a false sense of urgency being fostered by politicians like Tom Daschle and Ted Kennedy, we are in big trouble.  According to the Associated Press, the new Obama administration is working fervently to avoid some of the mistakes made by the Clinton administration during their attempt to implement a socialized medical program.  In Daschle’s words, “We need to be on the offense.  This time around, lawmakers cannot try to address every detail when it comes to legislation.  Details kill”, Daschle said.  It is clear that he does not want to discuss how the program will work, or how it will be paid for.  He simply wants to get a plan enacted into law, before any real discussion can take place regarding the ultimate costs.

This approach to nationalized healthcare sounds remarkably similar to the recent bailout legislation, which the majority of Americans opposed.  We were told that a massive 700-billion-dollar bailout was required immediately, lest we face another great depression.  Congress did not have time to explain the details of the bailout to the American people, nor will it apparently have time to explain how we will pay for a nationalized healthcare program. 

If you think 700-billion-dollars sounds like a lot of money, think about this:  “According to the Medicare trustees, the program’s excess costs over the next 75 years — that is, the difference between expected outlays and revenues — is more than $36 trillion, which even they acknowledge is several trillion too low given current trends. Even if Congress doubled all individual and corporate tax rates, it still wouldn’t raise enough revenue to pay for Medicare and Medicaid.” 

So even if we were to double all individual and corporate income tax rates today, we could not pay for our current Medicare obligations, much less a new, much larger nationalized healthcare program. 

Have we learned nothing from the current financial crisis?  Wasn’t this crisis due to Americans spending money that they did not have?  Who is going to take the shovel away from the Congress? 
 

The current
controversy over plans from both Presidential candidates to raise taxes on the
top 5 percent of earners won’t hurt just the average Joe; in my view, the damage will
spread to one of the most necessary of American small businesses: primary care
practitioners.

According to ABC
News, under Obama’s plan, individuals making more than $200,000 per year, or
couples making more than $250,000 per year, would pay higher taxes on income,
capital gains, and dividends. McCain’s campaign folds in a similar scenario,
but with a longer time span.

In a fiscal
environment already unfavorable to doctors — student loans, startup costs, and
deferred income during training — I wonder why any new doctor would choose
a career in primary care.

As I noted to national media this week: “In discussing
healthcare insurance,
the candidates are missing the boat. 
The Journal of the American Medical Association just announced that only 2 percent of this
year’s medical school class will be entering the field of internal medicine.
Now is not the time to penalize young doctors further with onerous taxes. Doctors defer any real income for 10 to 15 years due to their rigorous
training. Once they finally start
earning a living to pay back those loans, they are hamstrung by excessive
taxes.”

In an election
season filled with conversation about health care access, I am amused by
the final irony: Unless we do something to make conditions more favorable to
practicing primary care doctors, insurance is a moot point; there will soon be
no more doctors to access.

Last month, The Arizona Republic  published an article in which I was interviewed about concierge medicine. I thought it was a good article, one that would raise awareness of the benefits of concierge medicine and its potential for delivering better quality health care at an affordable price.

So imagine my delight this past Wednesday when I returned from lunch and my practice manager, Adela, said, “Dr. Knope, we just got a call from Blue Cross/Blue Shield. They read the Republic article.”

“Wonderful,” I said, ”I’m making waves!”  

“Not quite,” Adela said, looking down. “They informed me that they’re canceling your contract because practicing concierge medicine is a violation of your provider agreement. They’ll be sending you written notification of your termination from the plan.” 

Terminated!

Well, I guess if you’re a big insurance company and you want to intimidate doctors, and if you want to prevent them from escaping the confines of insurance company contracts, it’s best to make an example of a concierge physician. Even better, why not pick a guy who just wrote the first book on the subject?

Hang him by his stethoscope from the highest tree. Let all the other concierge doctors watch him squirm as he dies a slow financial death. Likewise, let’s show the public that insurance companies are nipping this concierge medicine thing in the bud. No point in patients signing up with concierge physicians. We’ll soon put these medical mavericks out-of-business.

The problem with the BC/BS strategy is that it backfired. It did not have the intended consequences. It did not intimidate. In fact, it had the opposite effect. This action only served to highlight one of the great benefits that come to doctors who practice concierge medicine.

Because concierge doctors do not work for third-party payers, because we contract directly with our patients for medical care, being dropped from an insurance plan does not affect us. It does not affect our patients. The real story is not that another insurance company behaved badly. The real story is that it didn’t matter!

This capricious termination by BC/BS, after a 15-year relationship with their company, did not damage me; financially or otherwise. It was an ineffective, chest beating display by an 800 pound gorilla. Remember:

• I have not billed BC/BS for my concierge patients since I opened my concierge practice eight years ago. Since my concierge patients pay me directly, I will not be affected financially by losing a contract with BC/BS. 

 • All of my concierge patients can continue to see me, so it does not affect them.

 • When I opened my concierge practice, I did not terminate those BC/BS patients who could not afford my concierge plan. I continued to see them at a financial loss, agreeing to accept BC/BS’s low rates, so that they would not have to find a new doctor. The poor reimbursement I’ve received from BC/BS did not even cover my overhead expenses. By no longer being a “provider” on their panel, my income will actually go up. The sad thing is that these non-concierge patients will now have to find a new “provider” under the BC/BS umbrella. 

So what can we say about BC/BS’s possible motivations? Over the past decade, I’ve literally saved this company thousands of dollars by not billing them for my concierge patients. I deliver a very high level of care to their “members” at a cost savings to them. I see these BC/BS members who cannot afford my concierge program at bargain-basement rates, thereby further increasing profits to BC/BS. My concierge patients are certainly not paying me under duress, so just what is it about concierge medicine that is detrimental to BC/BS? I believe it is this: The insurance companies want to control the flow of every healthcare dollar that moves through the system. The more money that goes through their pipeline, the easier it is to divert large sums of money to cover the costs of needless paperwork, inflated salaries for their CEOs and dividends they must pay to their Wall Street shareholders. It will be interesting to examine the spin that their PR department puts on this one; and yes, BC/BS does have a PR department!

By taking this action, BCBS has done doctors and the public a great service by illuminating the coming revolution in health care delivery:

• There are an increasing number of doctors who operate very successful practices like mine who are not vulnerable to the predatory attacks of insurance companies like BC/BS.

• In fact, BC/BS has no leverage; concierge doctors cannot be manipulated by the fear of a loss of income if their contract is canceled.

• Concierge doctors operate financially independent businesses, completely separate from insurance companies. BC/BS has no more influence over my practice than does Wal-Mart or McDonald’s. BC/BS is just another independent business entity, selling a different service, which has no impact on my business.  

I’m all for free-market medicine and competition. Concierge medicine is the first example of real competition to enter the medical marketplace in years. This interchange with BC/BS is an example of how the free-market sorts things out. Blue Cross has every right to refuse to do business with me. Likewise, I can decline to do business with them. I don’t need the government to protect me from “big business.” I can simply offer a different kind of medical care and allow the public to choose where they want to spend their healthcare dollar.

I’ve recently authored the first non-fiction book on concierge medicine, Concierge Medicine; A New System to Get the Best Healthcare (Greenwood/Praeger, May 2008.)   Interestingly, the very first book written on concierge medicine was a fictional thriller by Robin Cook, which describes the tale of a concierge doctor who became embroiled in a medical malpractice suit.  Are concierge doctors really at an increased risk of lawsuits? 

I am a board-certified internist with 15 years of clinical practice under my belt.  When I opened a traditional practice in Tucson, Arizona in 1993 my malpractice premium was only $8,000 per year.  Despite having no claims or judgments against me, my rates have slowly doubled over time.  I was forced to change my malpractice carriers twice because my first two insurance companies left the state.  The number of malpractice lawsuits in Arizona was just too high for the carriers to make a profit. 

Interestingly, as a concierge doctor, I was approached this year by a new insurance company, Applied Medico-Legal Solutions to ask if I’d like my malpractice premium cut by 55%.  Was this some kind of joke?  Why would an insurance company offer me lower malpractice rates now that I was a concierge physician?  Was this company just doing some kind of promotional stunt to get new business?  Insurance companies are not benevolent folk.  Underwriters are the most cold, calculating species on the planet.  So when AMS thought concierge doctors were a good risk, I wanted to know why.

Continued…

Recently I had the pleasure of talking with fellow physician and health advocate, Philippa Kennealy MD, MPH. As the director of The Entrepreneurial MD site, she is on the forefront of noting the health care revolutions wrung by physicians.
Take a look at her review — “I daresay the book will frustrate the critics of concierge medicine, but that is what is so great about freedom of ideas and speech. At least one MD in the USA is a happy practitioner!” — and then take a listen to our conversation.

Although the word concierge can bring to mind a four-star hotel, in medicine, concierge means close contact between patient and physician.
For patients with chronic diseases, the collaborative aspects of concierge medicine often extends that patient’s quality and length of life. For these patients, the word concierge never means frills.
Tessie Lucas, a resident in Jupiter, FL, hired a concierge doctor because her schedule is often too busy to accommodate day appointments. Lucas pays $1,500 per year for the access that includes housecalls, same day appointments and hospital supervision. The investment was precise for Lucas and her husband, both of whom have diabetes — and even more striking — carry no health insurance.
I predict as more patients with chronic diseases are rejected by insurers, and as more patients recognize the best care comes from patient-generated and monitored health care, the definition of concierge will include necessity.

A friend of mine recently hosted a cocktail party in New York in which a local, Harvard-trained internist was in attendance. My friend mentioned that he had just read my new book on the subject. The comment elicited an immediate visceral response from the doctor: “Concierge Medicine! You’ve got to be kidding. What a bunch of mercenary, elitist crap!”

Continued…