Dennis Prager talks to John Goodman, president and CEO of the National Center for Policy Analysis and an expert on health care reform

Thursday, hour one of Prager’s radio show:

On Obama’s town hall on health care reform, a woman with metastizing breast cancer says she and her husband have $50,000 in medical-related debts even though they both have health insurance and are employed.

John Goodman: In a country like Britian, once cancer has metastasized, the government is reluctant to do anything for you. They would argue that anti-cancer drugs are very expensive and are only going to prolong your life a few months. That is the big argument in health care — whether people’s lives are worth the money that is going to be spent. If you want to survive cancer, if you want to live longer, the United States is the best place in the world to be.

Tom Daschle, the president’s lead thinker on this issue, pointed to Britain and pointed to other countries as examples of other countries that don’t wastefully spend money on people who are going to die anyway. The United States has the best survival rates for all kinds of cancer in the world and the kind of reform we are about to get could reverse that.

We’re careless in [spending our health dollars] because most of us have perverse incentives. Most of us have insurance so we’re not careful about what we buy.

When patients control the money, things are going well. On laser surgery and cosmetic surgery, prices are going down. Because there isn’t any insurance. When patients control the money, doctors compete on price and quality.

Over the last decade, there has been a huge increase in procedures done. We’ve had all kinds of technological change of the kind we’re told increases costs, but in this field, it reduces costs.

Medicare for seniors is a lousy plan compared to what the rest of America has. Most seniors have to buy two more plans to fill the gaps in Medicare.

When Medicare competes with the private sector, it has unfair advantages. It uses the force of law to push down doctor fees to below market levels. When it writes a contract, it makes it a matter of criminal law when it doesn’t like the way the doctor behaves. Everyone else has to go to civil courts. It is not fair to have a government plan with all the advantages of government competing against private companies.

Obama thinks the best system is a single-payer system where the government pays all the bills. He thinks the government is more efficient when we all know that the government is not more efficient. The Post Office is not more efficient than Federal Express. There isn’t anything that government does that is more efficient than the private sector.

Dennis: We’re told that Medicare’s operating costs are around 3-4% while the private insurance sector spends 30% on operating costs.

John: They count the cost of insurers collecting premiums and selling their policies while they do not count the cost of government collecting taxes. The social costs of taxation are high, about 25c on the dollar. They are also ignoring a lot of costs that Medicare pushes off on to doctors and hospitals. Doctors have to do an enormous amount of work to comply with Medicare’s rules.

Medicare costs more.

We’re way too restrictive [about who can practice medicine]. The medics who served in Iraq, when they come back to the United States, we won’t let them treat low-income people.

Let nurses and paramedics do more things. These clinics in shopping malls are run by nurses and they do a good job.

John Goodman testified to Congress:

To confront America’s health care crisis, we do not need more spending, more regulations or more bureaucracy. We do need people, however, including every doctor and every patient. Every American must be free to use their intelligence, their creativity and their innovative ability to make the changes needed to create access to low-cost, high-quality health care.
I. Free the Doctor
Doctors today are forced to practice medicine under an outmoded, wasteful payment system designed for a different century. They should instead be given access to payment systems available to other professionals.
Problem: Typically, doctors receive no financial reward for talking to patients by telephone, communicating by e-mail, teaching patients how to manage their own care or helping them be better consumers in the market for drugs. In fact, doctors who help patients in these ways will end up with less take-home pay. To make matters worse, as third-party payers suppress reimbursement fees, doctors are increasingly unable to perform any task that is not reimbursed.
Solution: Let Doctors Be Doctors. In Medicare and Medicaid, it should be as easy as possible for providers to get paid in better ways. We should be willing to reward doctors who raise quality and lower costs — including improving patient access to care, improving communication and teaching patients how to be better managers of their own care. What is needed is not pay-for-performance, but performance for pay — with ideas and proposals coming from the supply side of the market (which is more knowledgeable about potential improvements than the demand side).
Any doctor should be able to propose and obtain a different reimbursement arrangement, provided that (1) the total cost to government does not increase, (2) patient quality of care does not decrease and (3) the doctor proposes a method of measuring and assuring that (1) and (2) have been satisfied.
Example: The idea of a concierge doctor appears to have started in California, where wealthy patients paid high fees for special attention and services. Yet today, concierge, or direct-pay, doctors can be found all over the country providing services for very modest fees. Since these doctors have opted out of third-party insurance, they are free to package and price their services in different ways. Most of them talk to patients by telephone and e-mail. They typically maintain electronic medical records and prescribe electronically. They help their patients negotiate the rest of the health care system — securing low rates for tests and specialist services, for example. These doctors are typically paid a fixed monthly fee or they charge an hourly rate. Medicare could encourage this type of practice by paying its share of the fees. Since the doctors are almost
certainly lowering health care costs, even as they raise the quality of care, the taxpayers as well as the patients would be getting a bargain.
Example: In the Handbook on State Health Care Reform, for example, the NCPA proposed a radically different way to pay for chronic care, with the state paying a flat monthly fee to cover “fixed costs” (e.g., coordination of care, maintenance of electronic medical records) and patients paying, say, from Health Savings Accounts, for the “variable costs,” including paying doctors for their time (e.g., face-to-face, e-mail and telephone consultations). Practitioners will no doubt think of many variations and improvements on this idea.
Problem: All too often providers face perverse incentives. When they make changes that raise quality and lower costs, their income goes down, not up.
Example: Geisinger Health System in central Pennsylvania gives heart patients a “warranty” on their surgeries. Patients who have to be readmitted because of complications pay nothing for the second admission. Yet in providing higher quality and lowering patient costs, Geisinger loses money. That’s why other hospitals do not follow its example.
Example: Studies show that if every patient went to the Mayo Clinic for health care, we could lower the national health care bill by one-fourth — and quality would improve. If everyone went for care to the Intermountain Hospital System in Salt Lake City, we could lower our health care costs by one-third — while improving quality. Why don’t other hospitals copy these exemplars of low-cost, high-quality care? Because they would be severely penalized financially under the current system.
Solution: Let Hospitals Be Hospitals. Facilities that figure out how to lower patient costs, raise quality and offer warranties and other guaranties should be rewarded for doing so — just as they would in any other market. Accordingly, the same three reimbursement rules proposed for doctors above should also apply to hospitals.
Problem: Entrepreneurs are creating new products to meet needs not being met by traditional health insurance. For example, people can pay with their own money for telephone and e-mail consultations. They can purchase blood tests via the Internet and get results in 24 hours. They can get low-cost care with very little waiting at walk-in clinics in shopping malls. Yet all too often these services are hampered by outmoded, unnecessary government regulations. Amazingly, doctors are prohibited from owning and operating walk-in clinics that refer patients to their regular practices!
Solution: Let Entrepreneurs Be Entrepreneurs. We should welcome and encourage new ways of meeting patient needs, rather than stifle these efforts with unnecessary, outmoded laws and regulations. As with providers and facilities, promising innovations should be expedited and approved quickly. For example, walk-in clinics that charge half as much and match the quality of
traditional care, with electronic medical records and electronic prescriptions to boot, should be approved outright.
II. Free the Patient
Patients also suffer when payments to doctors and hospitals are based on outmoded formulas. Whereas suppliers compete to meet customer needs in almost every other market, this happens all too rarely in health care.
Problem: Many patients have difficulty seeing primary care physicians. All too often they turn to hospital emergency rooms where there may be long waits and where the cost of care is much higher. When they do see doctors, all too often patients get inadequate information. The problem is made worse by the inability to communicate by telephone or e-mail.
Solution: Patient Power. We need to explore new ways to empower patients — especially the chronically ill, allowing them to manage more of their own care and more of their own health care dollars. Also, patients should be able to purchase services that are not paid for by traditional health insurance, including telephone and e-mail consultations and patient education services.
Example: Studies show that diabetics, asthmatics and other chronic patients can manage their own care as well as or better than conventional physician care and at lower costs. Yet to do this patients need training, easier access to information and the ability to purchase and use in-house monitors.
Example: More than half the states have “Cash and Counsel” programs for homebound, disabled Medicaid patients — allowing them to manage their own health care dollars and hire and fire the people who provide them services, instead of having these decisions made by an impersonal bureaucracy. Patient satisfaction in these programs is almost 100 percent.
III. Free the Employee
Our health insurance system evolved at a time when many workers expected to work for the same employer for their entire work lives. Clearly, that assumption is no longer valid.
Problem: When employees switch jobs, they are usually forced to switch insurance plans. This often means a switch of doctors, which means no continuity of care. Also, their new insurance may not have the same benefits as the original. To make matters worse, many employees are trapped in jobs they cannot leave because they cannot afford to lose their health insurance.
Solution: Personal and Portable Health Insurance. We should move to a system in which employees can take their health insurance with them when they travel from job to job. Transition to a new system may take many years. A good place to start is with baby boomers who retire early.
Problem: People who do not get health insurance from an employer must pay for it with after-tax dollars, making insurance as much as 50 percent more expensive.
Solution: Tax Fairness. People who obtain health insurance should enjoy the same tax relief, regardless of how the insurance is purchased.
IV. Free the Employer
Employers are also trapped in a system designed for a different age.
Problem: In ways that are sometimes subtle and sometimes not so subtle, too many employers are trying to avoid hiring employees (and employee dependents) with high health care costs, much like a game of musical chairs.
Problem: By default, employers have been put in the position of having to manage their employees’ health care costs — an activity for which most have no experience or expertise. While some large employers do an adequate job, small employers are incapable of doing it well.
Solution: Personal and Portable Insurance. Portable insurance would be a boon to employers as well as employees. Employers could make a defined contribution to each employee’s health insurance; yet the insurance would be owned by the employees and travel with them on their journey through the labor market. In an ideal world, employers should be able to hire employees based solely on their ability to produce, irrespective of expected medical costs.
Example: The United Mine Workers, NFL football players and many other workers have better arrangements. Although employers pay all or most of the health insurance premiums, the health plan is largely independent of any particular employer and coverage is fully portable — traveling with employees whenever they switch jobs.
V. Free the Workplace
Most of our labor law, tax law and employee benefits law was enacted years ago and was based on the assumption that employees would be full-time workers, typically with a homemaker telecommuting. Today, one-third of the workforce consists of part-time workers and independent contractors. Many are telecommuting from their own homes. These changes are partly the result of the most important economic and sociological change of the past half-century: the movement of women into the labor market.
Problem: Two-earner couples are common in the labor market. They need employee benefits, including health insurance, but they don’t need duplicate benefits. An employee covered by a spouse’s health plan should be able to choose higher wages rather than an unnecessary second health plan. Yet today employers cannot give her that option.

About Luke Ford

I've written five books (see My work has been followed by the New York Times, the Los Angeles Times, and 60 Minutes. I teach Alexander Technique in Beverly Hills (
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