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This is the first in a series of articles on End-of-Life Care and Covert Rationing.  The second article can be found here.

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It is easy to have missed it, because it went by so quickly.

On January 1, the White House announced a new policy that would have paid doctors for discussing end-of-life planning during their Medicare patients’ annual “wellness visit.” Under this policy, physicians would be paid to encourage their patients to establish an advance directive, which would guide medical care if the patient became incapacitated from illness, and could no longer make medical decisions for him/herself.

But on January 5, the new policy was suddenly revoked. It was revoked, CMS lamely explained, because it had not been implemented using the correct process. But, as anyone would know who watched Congress make Obamacare the law of the land, this could not possibly have been the real reason.

The real reason, of course, has to do with the firestorm this new policy threatened to unleash, just as the House of Representatives was about to be taken over by the cretinous opposition party.

As regular readers will recall, the Obamacare bill originally included similar language on advance directives. Physicians were supposed to urge their patients, repeatedly if necessary, to establish advance directives, and their success in extracting advance directives from their patients was to be one of the “performance measures” by which doctors would be judged to be in good or bad standing with the Central Authority.

But then Sarah Palin said “death panels,” and a furor ensued. The provision on advance directives was quickly removed from the Obamacare legislation, as if Congress was admitting that Ms. Palin had been correct and they had been caught out.* Similarly, the effort last month to reinstate the provision failed to stick for fear of criticism at a bad time.

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*The original advance directive provision in Obamacare, of course, had nothing whatsoever to do with “death panels,” since there are no panels of any sort involved in establishing advance directives. Rather, the entities that some might call death panels, and which DrRich has chosen to call GOD panels (Government Operatives Deliberating) – that is, panels of distinguished experts that will determine, by means of “guidelines,” which patients will get what, when and how – remain fully operative within Obamacare.
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DrRich has nothing against advance directives, and indeed, thinks they are a good idea – in concept, at least. Advance directives allow patients to establish beforehand, usually by a written document, what kinds of medical treatment they would or would not want should they fall victim to a serious, life-threatening illness that leaves them unable to express their wishes. Advance directives are supposed to work by providing guidance to their physicians, who, in their fiduciary capacity, are charged with acting in the patient’s best interest.

A well-constructed advance directive allows patients to choose to spare themselves from demeaning, undignified, painful or otherwise undesirable medical procedures and treatments, should they become incapacitated at a later date. “Well-constructed” implies that the advance directives are clearly and concisely written, that they honor the ethical and legal norms approved by society, and that they provide the physician with clear guidance.

But it is more difficult to write a “well-constructed” advance directive than might at first meet the eye. The major problems are two-fold: Advance directives often express imperfect knowledge, and they are often imperfectly expressed. These limitations mean that in appropriately exercising an advance directive, often the physician cannot follow them to the letter, but must interpret them according to the circumstances at hand.

A healthy and relatively robust individual cannot always know how he or she will feel years into the future, when illness strikes and it is time to exercise an advance directive. Every doctor has seen critically ill patients who, despite having advance directives to the contrary, unhesitatingly choose to be attached to a ventilator when the time comes, for instance, rather than face certain imminent death. So experienced doctors know that advance directives do not always indicate what patients will actually choose to do when the time to make a choice is upon them.

They also know that, while conscious patients have the opportunity to repeal their advance directives, unconscious or incapacitated patients do not.** So, in exercising an advance directive, the conscientious physician interprets that directive in light of many other factors, such as, her personal knowledge of the patient, the opinions of family as to what the patient would want done, and the chances of a long-term recovery if the therapy being considered is used. Then she will negotiate with responsible family members an approach that appears to meet the patient’s presumed desires.

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**Conscious patients can repeal their advance directives in theory. DrRich has witnessed actual doctors, however, arguing vociferously against using a medical therapy that a sick patient now desperately wants, because years ago the patient signed an advance directive expressing aversion to that therapy.
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Therefore the advance directive in many cases is an important part of the decision-making process, but it is not the only part. The appropriate use of an advance directive requires the doctor to behave as a true patient advocate, to selflessly place the desires expressed in the directive in context with everything else that might affect the patient’s true and current wishes, and then make a recommendation that, to the best of his or her ability, honors those wishes.

Unfortunately, doctors can no longer act primarily as their individual patient’s advocate. Indeed, physicians are officially enjoined (by the New Ethics formally adopted by their own professional organizations) to give the needs of society at least equal consideration. And so, as has demonstrably happened with other “guidelines” in medicine, it is inevitable that advance directives will be reduced to a legal edict, which must be followed to the letter if the physician wishes to remain clear of the Department of Justice.

The likelihood that there will be no room for interpretation means that constructing just the right kind of advance directive for yourself – one that will be precisely suitable to any contingency that may occur – has become extremely difficult. If you get the details just a little bit wrong for the circumstances that actually arise, the price you pay may be very heavy. It would be better to have no advance directive at all than to have one that is misleading or ambiguous. Advance directives must be written with extreme care, and only after long, thoughtful consideration.

That is not how the government would have it, however. For many years now, the Feds, under the Patient Self-Determination Act, requires hospitals to inform patients about advance directives at the time of every hospital admission, and to invite them to sign one. To say this is a less than ideal time to implement an advance directive would be something of an understatement. Asking a patient to sign an advance directive at the time of hospital admission, often by including it in the pile of routine and mind-numbing legalistic documents which patients must sign if they want to receive medical care, and often with no more guidance than that provided by the admissions clerk (who might explain, “This tells the doctors you don’t want to be kept alive on a machine like a vegetable,”) tells us something about whether the true motive for advance directives is to protect the patient’s autonomy – or to reduce costs.

Having the discussion in a doctor’s office these days, sadly, might not be much better. The Central Authority knows that squeezing what really ought to be at least a 30-minute discussion into a 10-15 minute office visit already packed with Pay for Performance requirements (while providing the added threat of punishment if the physician fails to extract an advance directive from the patient), will yield, at best, a signature on a boiler-plate document.

But despite the slap-dash method by which such a document may be implemented, it is a document whose language – when the time comes – will be exercised with all the legalistic exactitude of a contract attorney by any doctor who knows what’s good for him.

DrRich thinks that Americans are right in being suspicious of the big push they are seeing to urge advance directives upon them. Invoking “death panels” in this regard is utterly inappropriate, but the end result will suffice. It is good that we have all been given pause.

Still, the concept of advance directives is a good one, and DrRich thinks most Americans might do well to have one. Despite the damage that is being done to them, DrRich thinks advance directives can be salvaged. To this end, DrRich suggests several steps we can all take in executing an advance directive that will actually do what we want it to do:

1) Don’t be pressured into implementing an advance directive by anybody whose career depends on keeping the Central Authority happy. Unfortunately, this likely includes your doctor if you are not paying your doctor yourself.

2) Don’t sign a boiler-plate document. These likely will have been drafted with the interests of the Central Authority in mind, with the help of very smart lawyers, and when these documents are called into use in all probability they will be interpreted for the convenience of the Central Authority.

3) Try to keep your advance directive from showing up in an electronic medical record. Write it yourself, and store it where your loved ones can find it when they need it. Give a copy to your spouse, your children, and perhaps (if you have a direct-pay doctor who works only for you) your physician. This way, since your advance directive will not be immediately available to hospital personnel if you are suddenly incapacitated, no unfortunate and irreversible decisions regarding the aggressiveness of your medical care can be made until your loved ones are notified.

4) Write your advance directive as a general guideline, with as few specifics regarding particular types of medical care as possible. You should assume that any type of treatment you mention in a negative light will be withheld under any and all circumstances, including circumstances you may not be aware of in which you would want that treatment.

5) You are not writing your advance directive for the doctors (it is most tragic that we can no longer trust doctors in this regard!); you are writing it to help your loved ones make the right decisions for you, perhaps despite the doctors. So your goal should be to clarify your general desires for your loved ones. Discuss your advance directive with your loved ones after you have written it, and ideally, before you have written it. Your written words will remind them of your wishes when the time is right.

Lest you think, Dear Reader, that  DrRich is merely being sarcastic  here (and why would anyone think so?), he is not. DrRich himself has an advanced directive that attempts to follow these rules. The document is stored at home with his important papers. Mrs. DrRich knows where to find it, and knows DrRich’s general feelings regarding these matters. With the guidance he has provided, DrRich trusts her and his children to make these important decisions for him. For anyone who is interested, DrRich’s advance directive is reproduced, in its entirety, at the end of this post. (The general language, which has been adapted and revised by DrRich for his own use, was originally suggested to him by a good friend who is a superb internal medicine practitioner.)

So. Advance directives are a very good idea, but unfortunately, have been identified by the Central Authority as a potentially powerful cost-cutting tool. Even before Obamacare, certain HMOs were refusing to reimburse hospitals or doctors that provided medical care that seemed to go against specific language contained in an advance directive. That, of course, was child’s play. Now that the Central Authority has gotten hold of them, advance directives will likely be treated the same way as other guidelines are now treated in medicine, that is, as edicts, and thus as vehicles for the criminal prosecution of medical personnel who deign to “interpret” them.

This means that if you wish to take advantage of the benefits which advance directives can provide, you will have to proceed very, very carefully.

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DrRich’s Advance Directive:

If I am able to communicate my wishes by any means whatsoever, then I wish to make my own decisions regarding my own healthcare. If, despite my ability to communicate, my condition makes it inconvenient to fully inform me of my situation and all my treatment options, then until such time as it becomes sufficiently convenient to do so, I want everything possible to be done to sustain my life and effect a recovery.

In the event of an incapacitating illness in which I cannot communicate, the basic guideline initially should be to do everything possible to sustain my life and effect a recovery.

After a reasonable period of time (in general, I would consider a week to be reasonable) if no progress has been made in the recovery of my mental function, and the likelihood of mental recovery is judged to be small, then withdrawal of life-sustaining care should be strongly considered. To help my wife and/or children with this decision, I would like to have an evaluation by a neurologist to help clarify the prognosis.

If improvement in my mental status has been made, then efforts to sustain my life and affect a recovery should be continued.

If at any point in my care there is a period of at least two weeks in which I am persistently unable to carry out meaningful communications sufficient to make my own wishes known (in the opinion of my family members and the neurologist), and the likelihood of mental recovery is judged to be small, then I would consider the withdrawal of life-sustaining care to be a blessing.

Podcast:

The fact that the health insurance industry supported Obamacare from the very beginning was entirely missed by the mainstream press. This is perhaps understandable, since a) the mainstream press does not understand the dynamics of the healthcare system, and b) during the Obamacare drama, the health insurance companies had been assigned, and had graciously accepted, their vital role as the Forces of Evil. To the famously credulous members of the mainstream press, it was easy to imagine that the insurers were actually among the opposition.

But the insurance industry supported Obamacare from the start – and even before the start. During the Presidential race of 2008, for instance, managed care companies donated far more money to both Barack Obama and Hillary Clinton than to any Republican candidate, even though both of these Democratic candidates publicly castigated the insurance companies for producing most of the problems in American healthcare, and promised to institute reforms that would drastically cramp their style and reduce their profits.

Why would the insurance industry support the very candidates whose chief healthcare strategy was to demonize them? Quite simply, it was because the insurance industry had nowhere else to go.

By the time Mr. Obama became president, the once proud, self-confident, and even arrogant American health insurance industry had been completely humbled. Like the old Soviet Union twenty years earlier, it still may have looked formidable from the outside, but it was really an empty shell.  The industry had run out its string; it was entirely bereft of ideas. Its business model was completely broken, and it desperately needed an exit strategy. And it was due to the need to find a serviceable exit strategy that the industry supported Obamacare.

To understand what landed the insurance industry in this sad state of affairs, it is necessary to review its recent history.

The Rise of the For-Profit HMOs

When the Clintons set out to reform the American healthcare system in 1993, the health insurance industry initially claimed to support them. The Clintons had promised them a vast new market – the millions of heretofore uninsured Americans whose premiums would be paid, presumably, by the government.

But the alliance fell apart the moment the insurance industry began reading the massive tome of regulations the Clintons finally produced, and found in it much they didn’t like. Chiefly, they they didn’t like the parts that ceded full control of their industry to the government. So Big Health Insurance immediately turned against the Clintons, and spent millions of dollars introducing us to Harry and Louise (a “typical” American husband and wife who were viewed in numerous TV commercials discovering various appalling provisions of the Clinton plan). In the end, when the Clinton’s reform plan went down to ignominious defeat, the powerful health insurance industry, appropriately, got most of the credit.

Most of us Americans were happy at the time that the Clintons’ plan had been defeated, but during the debate over healthcare reform we had become convinced that the old way of doing healthcare wasn’t any good either. The healthcare system, we all knew by now, was bankrupting us.  And something needed to be done about it. But with the Clinton plan off the table, what were our options?

In the ashes of the Clintons’ failed effort, the health insurers saw their golden opportunity.  And they presented the American people with a savior. The savior was, of course, them.

The insurance industry made its pitch in a new guise which we Americans had never seen before. For the big fee-for-service insurance companies had transformed themselves into HMOs, and had fully assimilated the language of managed care. These were not the touchy-feely, non-profit HMOs that had been puttering around in the healthcare system for a decade or so.  These were meat-and-potatoes, for-profit HMOs, run for the most part by hard-nosed business executives, and newly formulated for a new era of American healthcare.

And here is what they said: “Citizens! We all – employers, patients, physicians, hospitals, manufacturers and insurers – have just dodged a bullet. Thanks to us, the frightening socialist reforms of the Clintons have been soundly defeated. But where does this leave us? We stand now between Scylla and Charybdis, between the specter of nationalized healthcare on one hand, and the continued profligacy of traditional fee-for-service medicine on the other. And we cannot countenance either. But here,” they continued, “is a third way. A painless way, based on the sound principles of managed care, open markets, and free enterprise. Let healthcare become a business like any other business, and the market forces will find ways not only to cut costs but also to improve quality, and with no government intervention.”

The offer, in other words, was to turn healthcare over to the business professionals now running the New Model HMOs, who were cocky with the certainty that they could harness the efficiencies of the marketplace to control costs, make a big profit at the same time, and be feted as saviors to boot. Because we’re Americans and we know the benefits of capitalism, and because the other choices we faced looked even worse, we all said, “Go for it.”

This change led to the most rapid transformation the American healthcare system has ever seen, and within a few short years, the majority of Americans were enrolled in HMOs, or some other species of corporate managed care.

So HMO executives set out to control the cost of American healthcare, and to make a spectacular profit doing it. And for a few years, they seemed successful. Healthcare inflation slowed dramatically in the late 1990s, and HMO profits soared.

But it was all an illusion.

The Fall of the For-Profit HMOs

The initial impressive profitability of New Model HMOs was due to the one-time reduction in cost you always get when you implement efficiencies of scale (made possible by merging enterprises), and by instituting the new standardization techniques favored by managed care theory. These steps reduced the cost of healthcare for a while, but the underlying rate of healthcare inflation (which is mostly caused by new medical technologies and an aging population, neither of which are cured by managed care) was pretty much unchanged. So by the early 2000s, when these one-time cost reductions had been fully realized, healthcare inflation was right back on the same unsustainable trajectory it had been on before.

Unfortunately for the HMOs, the big profits they enjoyed throughout the 1990s could not last. Their rapidly expanding valuations were attributable not to their efficient management of healthcare, but instead, to the frenzy of mergers that rapidly ensued, and to the acquisition and privatization of not-for-profit public assets for a tiny fraction of their true value.

So not long after the turn of the century the for-profit managed care companies were getting very nervous. For the very first time in their history, HMOs were faced with the prospect of having to earn their profits, profits sufficient to satisfy their shareholders, by actually managing the healthcare of sick people. This is something they had never accomplished before, and, by the time the election of 2008 approached, they knew they never would.

By that time they had tried everything. Beginning in 1994, filled with confidence and enthusiasm and cheered on (initially, at least) by the public and by public officials alike, the health insurance companies had more than 15 years of more-or-less unfettered freedom to institute any efficiencies they wanted to. In the ensuing years insurance companies tried all kinds of legitimate ideas for reducing healthcare costs, such as managed care, gatekeepers, clinical pathways, disease management programs, pay for performance, wellness programs, medical homes, and even a ruthless consolidation of the industry to achieve “efficiencies of scale.”

They also tried every sneaky and underhanded idea they could think of for reducing costs, like cherry-picking the healthy patients, treating chronically ill patients like pariahs so they would go away, making access to specialty care as inconvenient as possible, forcing doctors to sign “gag clauses” to prevent them from telling their patients about certain treatment options, browbeating primary care physicians into zombie-like compliance with handed-down care directives, refusing to cover expensive-but-effective medical services, and canceling the policies of tens of thousands of patients after they get sick, based on trumped-up technicalities. Indeed, they tried everything short of dispatching teams of Ninjas in the dark of night to slaughter their most expensive subscribers in their beds.  And finally, when all else failed, they instituted huge and unsustainable annual increases in premiums, to the point of driving their customers out of the market. (This latter move, of course, was an open acknowledgment that the industry had entered its death spiral.)

All these efforts were to little avail. The cost of healthcare continued to skyrocket, entirely unabated. And by 2009, when President Obama began his push for healthcare reform, the insurance companies knew they had no prospect of long-term profitability. Their business model was no longer viable, and, while telling soothing stories to avoid shareholder panic, they were urgently casting about for an exit strategy.

A drowning man will cling to any piece of flotsam that comes his way.  What the insurance industry found floating by was Obamacare.

What Health Insurers  Get From Obamacare

In return for its support in the healthcare reform battle, President Obama offered the insurance industry the graceful exit strategy it so desperately needed.  Under Obamacare, for at least a few years the insurers hope to get One Last Windfall – namely, profits from the influx of previously-uninsured Americans whose premiums will be paid, or at least subsidized, by taxpayers.  Here, the insurers are relying on the likelihood that the inflow of new premiums will, for a year or two at least, greatly outweigh the outflow of money they will have to spend caring for these new subscribers. Obviously, they will use every trick in their well-worn book to stave off expenditures for these new subscribers for as long as they can, but if they actually knew how to avoid paying healthcare costs indefinitely, they wouldn’t be seeking a government bail-out today. In any case, an inflow of new subscribers will be a very temporary source of profit for insurers. Hence, at best it is One Last Windfall.

What happens to the insurers after they exhaust this last windfall is still up in the air. Obamacare may, of course, eventually transition to a single-payer system, an outcome which many conservatives desperately fear, and many liberals fervently desire. In this case, there may very well be some final compensatory buy-out (or a buy-off) for the insurance companies. But more likely, the insurance companies under Obamacare will continue to exist essentially as public utilities. That is, they will exist as companies chartered by the government, which administer healthcare under the direction of the government, with the products they may offer, the prices they may charge, the profits they may keep, and the losses they may incur, determined solely by the government.  It’s not glorious, but it’s a living.

And it’s much better than where they would have ended up without Obamacare. Which is why they supported it from the start.

Now that we know why the insurance industry supported Obamacare, in the next post we will explore how the industry, at no small cost to its own public image, supported the President when it counted most.

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Why Big Health Insurance Supported Obamacare

Part I – Another Reason He Should Have Kept the Bust

Part III – How the Health Insurance Industry Saved Obamacare

Part IV – What It Means That the Health Insurance Industry Saved Obamacare

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Now, read the whole story.

DrRich explains it all in, Fixing American Healthcare – Wonkonians, Gekkonians and the Grand Unification Theory of Healthcare.

Now on Kindle!

As DrRich promised, he has embarked on an exploration of how our new healthcare law will enable our government to attempt the difficult job of covertly rationing our healthcare, a job which Congress had previously designated by law to the insurance companies. (DrRich is not making this up. See Pegram et al. V. Herdrich (98-1949), 530 U.S. 211; 2000.*)

DrRich considers himself to be a reasonably sophisticated person, perhaps even more sophisticated than Ms. Palin, so he did not really expect that Congress would pass a new healthcare law that established actual “death panels.” However, DrRich also understands that the new law, which covers over 2400 pages, has actually been read from front to back by only a very few, very dedicated individuals – and, likely, by hardly any who voted for it – and so, in the interest of thoroughness, DrRich searched the document for the phrase “death panel.” He is pleased to report that there were no matches.

What he did find, however, in Section 3403, is something called the Independent Medicare Advisory Board. The purpose of the IMAB is to “reduce the per capita rate of growth in Medicare spending.” In his next post DrRich will examine the IMAB in more detail, to try to show exactly how this board will reduce healthcare spending. Suffice to say for now that the new law awards the IMAB sweeping powers, powers that will affect all American healthcare (and not just Medicare), and that hands the government some truly useful tools for covert rationing.

In the present post DrRich will simply make two striking observations about the IMAB which, he believes, ought to tell us something useful about the mindset of those who – in striving to fundamentally transform America – have now successfully remade our healthcare system.

First, as the IMAB carries out its assigned job of reducing the growth in healthcare spending, it is explicitly forbidden to ration healthcare. Specifically, the IMAB’s proposals “shall not include any recommendation to ration health care.” Since rationing is Job One, this directive necessarily limits the IMAB to engaging in covert rationing (since covert rationing is, by definition, deniable by the party who is doing it). Thus, covert rationing is now the law of the land.

And second, Section 3403, the section that creates the IMAB and spells out its functions, contains language that, DrRich suspects, has never been seen before in American legislative history:

“It shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, amendment, or conference report that would repeal or otherwise change this subsection.”

So, dear reader, the IMAB and all its legislated functions (including the requirement to do its rationing covertly) are in force for perpetuity. Our Congress has passed legislation that purports to bind all future Congresses from altering it in any way.

We can surmise from this fact that those who wrote this law must consider the IMAB to be very, very important. Indeed, it must necessarily be the most important feature of our new healthcare system. It may, in fact, be the most important legislative provision ever written (since no other provision has ever received such extraordinary protections from any future alterations whatsoever). For this reason, in future posts DrRich will attempt to examine in some detail the powers that have been granted – for all time – to the IMAB.

But for now DrRich asks his readers simply to bask in the utter audacity of our current crop of leaders, leaders who are so sure they know what’s best for us that they were willing to engage in all manner of legislative legerdemain to get their way, not only against the apparent expressed will of the people, but also (as it turns out) against the objections any future American Congress may have that is sent to Washington by those people.

Not even our Constitution itself – a document that attempted to establish a government for all time – was as audacious as this. For the Constitution, at least, provided a mechanism for its own alteration.

As DrRich racked his brain to think of the last time a law was promulgated with such audacity – not with the audacity of hope, but the audacity of perpetuity – he initially drew a blank. Even monarchs who purported to reign under Divine Right understood that future monarchs, who would also rule under the same God-given right, might justly alter any laws they made.

DrRich believes we need to go all the way back to Moses, coming down from Mt. Sinai with the Ten Commandments, to find a law or set of laws that, from the moment they were written, were decreed to remain in force for ever and ever.

Only God has ever tried this before.

*In its unanimous opinion on Pegram et al. V. Herdrich, the Supreme Court spelled out what Congress had in mind when it created HMOs. That ruling said, the “inducement to ration care is the very point of any HMO scheme, and rationing necessarily raises some risks while reducing others.”

Now that the great campaign to transform the American healthcare system has passed a critical milestone – the passage of President Obama’s healthcare reform legislation – many Americans find themselves confused about what it all means. What just happened here? What will happen to our healthcare insurance? How much will it cost, and who will pay for it? Why does the whole process seem so darned difficult and confusing?

The confusion is quite natural, since, in fact, nobody really understands what the new legislation says. It is common knowledge that only one or two of our legislators actually read the whole 2700 pages, and those who did only read it so they could make trouble for the President at his Bipartisan Healthcare Roundtable this past spring. (You know who you are, Paul Ryan.)

Remember when Nancy Pelosi said, “We have to pass the bill so we can all find out what’s in it,” and all the Republicans jumped all over her for making such a stupid remark? Well, DrRich is here to tell you that Nancy was displaying uncommon wisdom. Because DrRich now has read large parts of the legislation himself, and can say with confidence that the bill is not merely lengthy, convoluted, and difficult to understand. Rather, its meaning is fundamentally indeterminate.

The indeterminacy of the bill’s language was, of course, intentional. It was done so that, for instance, some legislators could be assured that the bill disallowed Federally funded abortions, and other legislators could be assured that the bill encouraged Federally funded abortions, while the actual language of the bill could be construed to bolster either assertion. Therefore, Speaker Pelosi’s silly-sounding statement was not only correct, but also was probably the most insightful commentary on the bill we’ve heard from any public official.

The bill is now being torn into bits by multitudes of officious bureaucrats, and translated into millions of pages of rules, regulations and guidelines, and then key aspects of those new rules, regulations, &c. will be fought over in courts of law. Once all that is finished, we can all find out what was in it. Just like Nancy said.

In the meantime, whatever the details of our new healthcare system turn out to be, there is a certain clear narrative to our ongoing healthcare saga that, once you understand it, will go a long way toward enlightening you about what’s really going on.

And so, as a public service, DrRich will now explain all this to you in a very simple way, so that – whatever jive you’re hearing from politicians or journalists – you will always get it. For, once you understand a few key concepts, this thing is really pretty easy to follow.

The Fundamental Problem

The fundamental problem with American healthcare is this: None of the pools of money we have created (or ever could create) to pay for our healthcare – whether those pools of money reside with the insurance companies or the government or both – can possibly buy all the healthcare that might benefit all Americans. This means we have to ration healthcare (i.e., intentionally withhold at least some beneficial healthcare from at least some of the people who would benefit from it). But because we’re Americans and Americans don’t ration, we (and in particular, our political leaders) are unable to address this need to ration openly and forthrightly. Therefore, the unavoidable rationing is being conducted covertly.

Until now, most of the covert rationing has been overseen by the health insurance industry. This, indeed, from the very beginning was the primary purpose of modern health insurance companies, as determined by Congress itself when it legislated the formation of HMOs. (See the ruling of the U.S. Supreme Court in Pegram et al. v. Herdrich (98-1949), 530 US 211, 2000.) So, when the health insurers engage in cherrypicking patients, denying medically necessary services, coercing doctors to ration at the bedside, retrospectively canceling the policies of patients after they get sick, and doing everything short of dispatching teams of Ninjas in the dark of night to slaughter some of their more expensive subscribers in their sleep, they are not really being evil. They are only carrying out the job that had been assigned to them by our society. Covert rationing is a dirty, thankless job, but somebody’s got to do it.

The major sin of the health insurers is that, despite their Herculean efforts to harness covert rationing to control costs – and despite the wondrous incentive of greater profits if they do so – they have utterly failed in their assignment. Healthcare costs continue to rise at 3 – 4 times the rise in the cost of living, and within the next couple of decades promises to bring our republic to its fiscal knees (even without all the other stuff that’s making our deficit explode).

This is the healthcare crisis, and it’s real. We simply cannot actually spend $40 trillion on Medicare patients over the next three or four decades (as we’ve explicitly promised the baby boomers). The only real question is whether we will avoid spending all that money thanks to societal disruption and revolution, or by some more civilized means. (The fiscal implosion of our society would of course finally fix our healthcare crisis. Healthcare, far from being an essential and indispensable human need, actually is a luxury, a recent artifact of our advanced, stable, and affluent culture. Runaway healthcare costs, by bringing down our societal stability, will eventually provide its own cure.) Our current “healthcare reform process,” such as it is, is our stab at a more civilized means of addressing our looming impossible fiscal obligations.

What Is Healthcare Reform Actually Going to Reform?

What we are witnessing today is merely a rather messy changing of the guard. The primary responsibility for covert healthcare rationing is going to shift from the health insurers to the government.

The health insurance industry has run out its string. They have had 15+ years of virtually unfettered opportunity to get healthcare costs under control, and they have utterly failed. Over those 15 years, their attitude has evolved from arrogance to concern to abject fear. They finally and starkly realize that they have no clue as to how to control costs. As DrRich has pointed out for three years, the insurance industry has not been looking to block healthcare reform, but rather, was partnering with the reformers in the hope of finding for themselves a graceful exit strategy. They hope to gain one last windfall in profits and stock prices (from mandates and insurance subsidies for the tens of millions of currently uninsured Americans), and once that happens, they hope to settle into the business of administering, and processing transactions for, government controlled healthcare. That is, the insurers hope to become public utilities, since that’s way better than collapsing into oblivion.

So the overriding aim of healthcare reform, with the complete support of the insurance industry, is to conduct an orderly transfer of the pools of money with which we pay for our healthcare – along with the responsibility of managing “risk” and controlling the cost of care (i.e., covert rationing) – away from private insurers and to the government.

Understanding the Players

Government control of healthcare, of course, is precisely what the Republicans accuse the Democrats of wanting, and what the Democrats angrily deny they want.

Understanding the Republicans. Republicans as a group cling to the quaint notion that competition among insurers is all that is needed to reduce healthcare costs; that given the right market incentives, the insurance industry – in its wisdom – will bring healthcare inflation under control. They utterly fail to hear what the insurance companies themselves have said (by their actions): “No mas!”

The Republicans’ arguments ring hollow. It is useless to protest that the Democrat plans will lead to rationing, when not only do we already have rationing, but covert rationing in fact has been the official cost-cutting “plan” assigned to HMOs for decades now. It is useless to protest that 85% of Americans like their current health insurance, when the fiscal reality is that health insurance will change drastically for all Americans over the next decade or so, whether we change it by design or not. It does not matter that a lot of Americans like the health insurance they have now. Keeping it over the long term is not an option.

To a very large extent (DrRich is sorry to say, what with his conservative leanings and all), with such arguments the Republicans have made themselves nearly irrelevant in the current discussion.

Understanding the Democrats. The Democrats were handed the opportunity of a generation. They had a major advantage that Democrats of the Clinton era did not have: the health insurance industry is finished, and the industry knows it. The insurance industry was not going to let this effort fail.

The chief difficulty remaining for the Democrats is that (for their own survival) they must pretend they are not engineering a government takeover of healthcare, when in fact they are. As we have seen, there is not really much choice here. They must take over healthcare even if they don’t want to (though many of them do), because the health insurance industry is finished. The pretense is necessary, however, because the notion of government-controlled healthcare is not something the people – or even many Democrats – want, or are willing to tolerate.

Like the odious job of rationing healthcare (which they have now inherited in entirety), the Democrats must attempt to keep the complete government takeover of the healthcare system as covert as possible.

Which brings us to the biggest problem of all for the Democrats. They now have to take control of covert healthcare rationing. Covert rationing will be much more difficult for a government-run system than it has been for insurance companies. A government healthcare system will not have the opportunity to incorporate the most effective rationing techniques that have been available to the insurance industry – cherrypicking patients, for instance, or canceling the policies of people who get sick. Nor will the government be able to get away with summarily denying patients needed medical services – a standard tactic of HMOs. This is especially true now that chief Republican intellectuals have called everyone’s attention to the possibility of death panels. The unwashed masses, having been duly alerted to the government’s intentions of withholding life-saving healthcare, will now be on the lookout for “unreasonable” denials of care. Any move by the government to refuse to pay for a particular medical service will have to be supported by extremely convincing clinical data (which itself will be very expensive to collect), and even then Americans may not quietly accept such denials. The “death panel watchdogs” will be alert for every move the government makes, and will be quick to howl an alarm.

So the Democrats have won a huge and historic victory. But they are just beginning to figure out what a tiger they have by the tail.

The Bottom Line

As long as we pretend we don’t have to ration our healthcare, any reforms we invent – whether we do it as Republicans or Democrats – will merely add to the confusion, inefficiency, waste, inequity, and ineffectiveness of our healthcare system. How anyone can think that a process so fundamentally grounded in obfuscation and deception as the one we’ve just witnessed will result in anything good is quite beyond DrRich’s comprehension.

Real reform would require us to:

A) Minimize the necessity of imposed rationing by having patients themselves make as many of the spending decisions as possible, using their own money. (Subsidies could be provided to people who don’t have enough of their own money to pay for routine healthcare.)

B) Provide everyone with a high-deductable, catastrophic insurance product to cover non-routine medical expenses. This is where the necessary rationing would take place, but the rationing would be open, transparent, and determined through a public process.

C) Create a private market for “extra” health insurance for those who choose to supplement the universal catastrophic plan with their own funds.

But of course, any plan that relies on both personal responsibility and open rationing is a non-starter. Which is why we are going to get what we are going to get.