Healthcare Reform Must Include:

1) Repeal of laws leading to inconsistent quality
2) Repeal of laws leading to insurance and pharmaceutical dominance
3) Enforcement of insurance obligations
4) Repeal of bipartisan laws that restrict patient choices
5) Ending the government practice of writing blank checks
6) Protection of your right to purchase any level or type of coverage on the market anywhere in the United States
7) Protection of your right to purchase any drug or treatment you and your doctor deem medically necessary
8) Demanding that the healthcare industry name and be transparent about pricing
9) Repeal of federal laws that put paperwork, drug companies, employers and HMOs between doctors and patients
10) A tax code that doesn't affect any healthcare decisions in any way


The fact that we spend 15% of our GDP for healthcare is unacceptable. Medical insurance no longer functions like insurance. Insurance is also not medical care. These interrelated fundamental disconnects have caused our problem.

You'd be hard pressed to find someone saying that our system is fine, that it doesn't need reform. We need reform. If you don't think we do, you live under a rock.

Other types of insurance are not allowed to decide an event is covered, then retroactively deny payment and take the money back. Medicare and insurance companies also don't pay for the entire event covered in question. For example, if an x-ray really costs $100, and an insurance only pays 50%, then $200 must be charged in hopes of getting full reimbursement as much as the insurer will tolerate. If it isn't tolerated, the provider has to charge everyone else more money.

If car insurance functioned like medical insurance, you would have to be in the same risk pool as someone with five DUIs, vehicular manslaughter on his driving record and a monster truck attached to a wrecking ball. On top of that, the guy with the monster truck would be guaranteed renewable, portable coverage. Because insurers must take such a risk, you the customer must share it and pay higher premiums.

Small and medium sized insurers especially get in trouble for breach of contract and fraud. Under our current system, the rights of some happen to be more unequal than others.

Other types of insurance are not forced to cover the most expensive and exotic treatments available. For example, if homeowner's insurance had to cover lawn ornaments, mowing the lawn and painting fences, it too would be unaffordable. Insurance is meant for catastrophic events.

Government involvement impacts the private sector more than most think. There are no grounds to call our healthcare system "free-market". The biggest transition of government into what was left of the free market came with Medicare under President Johnson, which at first paid reasonable prices. The second biggest transition came with the HMO Act of 1973 under President Nixon, which left in place the old flaws and effectively tied healthcare to employers. If you are self employed and have employees, you're aware of this. If you are self employed with no employees, you are not only aware of this, but you don't even get the tax breaks for an individual health insurance policy.

Government created problems in healthcare include:

1) Inconsistent quality (odds of you getting certain procedures vary by location)
2) Paperwork costs
3) Restriction of choices that doctors and patients can make
4) Dominance of insurance and pharmaceutical companies
5) Rationing
6) Price inflation
7) Interference with price discovery
8) Misallocation of resources
9) Actuarial malfunction
10) Artificial shortage of providers
11) Lack of competition
12) Reimbursement rates change depending on where you are
13) Prices change depending on who is reimbursing the provider
14) Artificially small pools/insurance tied to employers


Opponents of so called "healthcare reform" are misleading you when they say it will put bureaucrats between you and your doctor. The same is true of Democrats saying the opposite. Those bureaucrats are already there. The only difference between Obamacare and now is who pays for the bureaucrats.

To understand where we are and what to do about it, you need to understand how our healthcare crisis evolved. There are many things I can say about healthcare, many points of which the Physician"s Declaration of Independence sums up brilliantly.

These points are -

1) "The Tyranny began during the Second World War, when Companies, suffering under Wage and Price Controls, were forced to lure workers by offering Health Insurance Benefits. This benefit, in lieu of cash, received favorable tax treatment and was allowed to continue after the War, even with the removal of the Wage and Price Controls. This system created a strong incentive to use Medical Care and set the stage for massive Cost Inflation."

2) "Slowly, insurance changed into payment for all Medical Expenses, minus a small and shrinking Deductible, which led to further Inflation, and a call to control costs. The Government decreed that Employers must offer Employees the option of a Health Maintenance Organization. Thus were born the HMOs: Private Insurance Entities designed to ration Medical Care for their Members. These Organizations received Tax-favored treatment that allowed them to survive in spite of their horrendously flawed concept."

3) "The Government, in 1965, in its Infinite Wisdom and going far beyond its Powers as set out in the Constitution, decreed that the Poor and the Elderly should receive Health Benefits funded by the Taxpayer. Thus came into existence Medicaid and Medicare. Medicaid, from the Conception, paid Physicians such a lowly wage that few participated, thereby creating a Two-Tiered System. Medicare payments to Physicians were initially fair and reasonable, and many Physicians participated in Medicare. Both Systems flooded the Medical Marketplace with Money, which fueled Inflation even more."

4) "Alarmed by the Medical Cost Inflation that it had engendered, the Government set out to restrain costs, principally by limiting fees to Physicians. These Price Controls had the effect of increasing Medical Inflation, as Volume of Services went up, and Quality went down. With each new round of Controls, Regulations and Paperwork multiplied many fold. This caused Physicians great Anguish, and took more time away from the Patients, with attendant loss of Quality and increase in Medical Inflation."

5) "Government policies continued to favor the HMO, in the hope they would tame Inflation. These Organizations skimmed Money off the Premiums as Profit, but which they called "Savings." They spent less on Medical Care by denying or limiting access to Specialists, Procedures, Hospitals, and High Technology. Since this strategy mostly delayed care, it was ultimately more expensive. Thus did the Premiums again start to rise."

6) "The HMOs paid the Physician by Capitation; Physicians could stay profitable by having large numbers of Capitated Patients, which they would see rarely, if at all! There were other Financial Incentives to Physicians to limit their Patients' access to Tertiary Care. These incentives set Patient against Physician, thus destroying this Sacred Trust."

7) "Remuneration for Physician services by the Government and the HMOs has dwindled to the point of Unprofitability and has compelled the Bankruptcy of increasing numbers of Practices, and the search for Other Sources of Income by Physicians. No other Profession in the United States is denied the ability to raise fees to cover increasing costs of doing Business."

8) "The Government, becoming increasingly desperate that all its strategies to control costs had failed (because they themselves were the cause of Cost Inflation!) resorted to Criminal Prosecutions of Individual Physicians and Hospitals for alleged Fraud. The Regulations being so Arcane and Vague, a simple Billing Error could be interpreted as Fraud. Most of those so pursued, being financially unable to defend themselves, simply capitulated and paid Huge Sums to the Government. Some were imprisoned. The Government passed a Massive Bill called HIPAA, which forced Doctors and Hospitals to spend billions to comply, with absolutely no positive impact on Patient Care."

9) "The Government passed a law called SGR which automatically lowers Physician Payment when total spending and volume increase, virtually assuring a downward spiral in Payments."

10) "The Government and HMOs now conspire to limit fees to Physicians by a diabolical machine known as "Payment for Performance," based on "Practice Guidelines." In addition to insulting our Ethic, this system will close the circle between the Central Payment for Care and the Central Prescription of Care. Thus do we completely lose our Professional Autonomy."

One thing is clear, and it will happen by a voluntary act of Congress or a voluntary act of doctors and patients once we"re all bankrupt. The only way out of the healthcare crisis is to get special interests and the government they lobbied for out of the way.

Insurance schemes, HMOs, PPOs, government programs, single payer options, public options, universal healthcare, a national health service like Britain�s and health savings accounts are not fixes. They are all prepaid medical coverage however you slice them. The only differences are complexity, how they are prepaid medical coverage, who shoulders the greatest portion and what other portion is shifted in higher costs to patients or reduced care. That's the best Democrats and Republicans can come up with, nine separate paths to a broken system. Thatss why they've failed and will continue to fail at real reform.

Solutions must be implemented on the state and federal level according to constitutional restrictions. You'll see where laws are required in parentheses before each solution. Solutions must include -

(Federal law if transaction across state lines/State law) Pharmaceutical published price lists. If you buy a drug, you should know how much it costs in advance. That price should not magically change based on who insures you.

(State law) Provider published price lists. If you go to a doctor, you should know how much it costs. We can include hourly or per procedure rates. That price should not magically change based on who insures you. (1)

(State law) If a provider causes a disease or illness during treatment, the provider should eat the cost of treating it.(1)

(Federal law applying to interstate transactions) Extend Robinson-Patman to cover medical insurance and pharmaceuticals. It's time to separate employment from health insurance. We must end the existing conspiracy to charge different groups different prices for the same products to railroad more into insurance.(1)

(Federal law if transaction across state lines/State law) Once insurance decides to pay, that's it. You can't go to a garage, get your car repaired, then take some or all of your money back a year later.

(Federal law) Medicare and Medicaid will not pay for any drug unless its wholesale price is the same regardless of who is buying it and its price is published.

(Federal law) Sarbanes Oxley shall not apply to organizations providing healthcare. This law only serves as an additional cost ultimately paid by patients. Given the financial crisis, it clearly hasn't helped anyone.

(Federal law) If a patient and a doctor agree upon a course of treatment doesn't have FDA approval, a patient and a doctor shall not be barred from getting that drug if they agree that it would help.

(Federal law if transaction across state lines/State law) Allow consumers to buy solely catastrophic coverage. Due to mandates in our current law, you can't buy a policy specifically for catastrophic illness or injury. This is the primary reason to have insurance in the first place. Unlike the policies we're forced to buy, a policy that only provides catastrophic coverage is affordable.

(Federal law if transaction across state lines/State law) Allow policies to be written according to a consumer's wishes. Mandates force you to purchase coverage you don't necessarily need. For example, if you have no fertility problems or don't want to have children, state mandates force you to buy a policy with fertility treatments anyway.

(Federal law/State law) Repeal HIPPA and leave replacing this law up to the individual states. HIPPA is bankrupting providers, inhibiting medical research and increasing the amount of time spent on patients not related to actual care. A state version may not be perfect, but is more easily corrected according to the needs of patients and doctors interacting with their state legislators. Most can't simply get in their car and drive to Washington. Driving to your state capitol to discuss the issue and find a solution is much more practical, and changes can be implemented a lot sooner. State legislators are also far more receptive and accessible than members of Congress.

(Federal law) If there absolutely must be a tax incentive for healthcare, it must count equally whether it's for health insurance premiums, out of pocket expenses, copays, deductibles, medical devices and all things necessary for treatment. Anything short is a protection racket for HMOs and PPOs. I would prefer no income tax and no tax incentive or disincentive of any kind, but if we must have one, it must be equal. Until we get rid of the income tax, you should be able to save receipts for out of pocket expenses, copays, deductibles, medical devices and all things necessary for treatment, then have the total subtracted from your gross income.

Eventually, we should go to a system where Medicare, Social Security and income taxes are eliminated and replaced with a system done by population, where Washington sends each state a bill based on how many people it has, each state raises the money and then sends Washington a check. This way, we've effectively eliminated the $200 billion per year it costs to administer FICA taxes altogether, more savings toward healthcare.

1. Thanks to the Ticker Guy for inspiring solutions www.market-ticker.denninger.net.