Contempo Magazine Blog

By Dr. Tony Magana

Changing how doctors get paid from a system of fee for services rendered within reasonably accepted quality standards to an annual salary based upon national quality and economic standards could have a major effect on the mechanics and outcome of end of life decisions made by physicians and families.

The traditional medical model of the doctor patient relationship believed that the best outcomes were obtained in the interests of patients when parties outside the relationship such as government or insurance companies did not have standing in the decision making process. Medical ethics have long documented that the creation of physicians with allegiances to parties outside the patient and his family lends itself to contamination of decision making by other sets of demands and obligations. Some classic examples are the “company” doctor who provides workman’s compensation care for injuries sustained while on the job, military physician’s evaluating combat stress in a combat theater or Veteran’s Administration doctors deciding on a chronic disability rating, and of course medical experts hired by the defense against patient’s claims of injury. The recognition that bias could be introduced into such situations is so widely accepted that almost universally patients have been given the right to challenge opinions and ask for independent evaluations from physicians who are not being directly paid or employed by an entity with an interest against the patient.

Lately there has been a significant volume of discussion raised about the issue of new initiatives that the federal government may take to pay doctors for giving end of life counseling to patients who presumably would be facing a medical condition without a “reasonable chance” for recovery. Up to now, the physician had no personal stake in the decision of the patient and his family as to whether, for example, they chose an all out expensive try everything approach to deal with this situation or contrarily, adopted a passive acceptance of minimal cost hospice type care.

However, imagine that in the future, doctors will be “graded” and paid on their costs per taking care of a certain volume of patients as well other measures such as complications, death rates, days of hospitalization, and other measures. For those patients that have conditions for which there is a likely but not certain death rate such as 50%, one can easily imagine that choosing aggressive care in a few patients with marginally improvement in survival will radically alter the cost/quality curve rather dramatically. On the other hand, non-aggressive treatment will only slight increase the overall mortality rate but could dramatically lower costs.

Physicians will come under enormous pressure to alter their thinking about treatment and their counseling to patients and their families because the higher goal now will not be the individual patient but how the statistics look within a given period of time. This type of cherry picking was seen to occur when the government began to monitor complication rates for cardiac bypass surgery, such that many centers were refusing to treat patients who were high risk for re-do coronary artery bypass surgery because the potential for complications or death could negatively effect the provider’s and hospital’s rating.

I can not help but be reminded of the 1973 science fiction movie, Soylent Green (MGM Production-based upon the novel, Make Room! Make Room! By Harry Harrison), in which a society running out of resources resorts to mercy killing of the elderly and ultimately uses them for a food source. In that society, participants were convinced there was a high value in undergoing a short lived wondrous death experience and a low value in living a life as an elderly disabled or in-firmed nonproductive citizen.

All of us and our families should have frank discussions about what might be appropriate in a circumstance where our quality of life or likely coming death are anticipated. Our most important counselor in that situation should be a physician who is not influenced by an obligation to a government agency to maintain statistics. Such a practitioner may no longer exist under some reform proposals. If the government develops narrow recipes for treatment in the official Washington cookbook of medical care then the discussion with physicians by vulnerable families in these times of crisis will be transformed away from frank discussions of options and into an explanation of government policy.

Thanks for reading Contempo Magazine blog which discusses issues for McAllen, the Rio Grande Valley, and America from a conservative Hispanic point of view. Tony Magaña grew up in McAllen Texas, attended Texas A&M University, served as an officer in Army Reserve, and holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years. He is a member of the National Association of Hispanic Journalists and also writes for the American Daily Review. Follow him on twitter http://twitter.com/contempomagazin

Copyright 2009, Dr. Tony Magana. Some rights reserved.
To reproduce or distribute, visit: drtonymagana.icopyright.com

By Dr. Tony Magana

Since 2005 Utah has been developing a novel consumer centered health insurance program which is different then the traditional employer health based insurance held by most American workers. A defined contribution plan like Utah’s could be the solution to finding a cost effective way of providing health insurance to the millions of Texans and Americans working for small businesses.

The deadline set by President Obama and the ruling Democratic party in Congress will likely come and go without the passage of the progressives’ nirvana, a government run single payer health plan. Up to now the liberal mass media has been so driven to support the Pelosi and her crew that the only discussion going on in the public venue has been that there were two options, the Dems way or the highway.

This week the chaos on Capital hill created by the predictable insurrection of moderate and conservative Democrats who mostly, it appears, want to be reelected in 2010 has finally been the vehicle to bring the discussion about reform out of the clouds and onto the ground.

So far most of the plans put forward as either government health care or insurance reform are based on a type of insurance that actuaries call defined benefit. Under this type of insurance, the employer buys insurance for a specific company and set of benefits for a specific premium. The cost of the premium is based upon the risk of payout. Anything over the defined benefits must be paid by the policy holder.

Since World War II, defined benefit plans have been the main type of employer based health insurance used in the United States. Organized labor often used health care benefits obtained by defined benefit plans as a bargaining chip in negotiating for better compensation for their employees. They have generally resisted the concept of defined contribution plans because they would be removing a source of contention in labor negotiations with employers.

Since 2005 the state of Utah has been working on a different paradigm called a defined contribution plan. Under this alternative approach the employer promises to make a specific contribution for the workers which will allow them to purchase a health plan of their personal choice. In a recent review of the Utah plan by Edmund F. Haislmaier , Senior Fellow in Health Policy Studies at the Heritage Foundation,  he remarked that there were three key elements:

1. Insurance market reforms to create a new “defined contribution” coverage option for businesses and their workers;

2. A board to design and manage a companion risk adjustment mechanism; and

3. A “virtual” health insurance exchange to coordinate the various administrative functions of a consumer-choice market.

Unlike the rushed government health care animus hastily thrown together by Congessional staffers that so far no Congressman has admitted reading (Yesterday Detroit Congressman John Conyers told the press he never reads bills) the Utah reform has been in progressing in development for three years.

Utah is very similar to Texas and many other states in that the majority of its residents work for small business at modest salaries. The defined contribution Utah plan was created to allow a consumer-centered health insurance market that specifically addresses the needs and concerns of small business and their employees but is also widely applicable for large employers, the self employed, and eventually Medicare or Medicaid enrollees.

The Utah plan gives employers the option to offer a traditional defined benefit plan or participate in the new defined contribution plan. Under this arrangement, the employer pays a defined contribution and the employee does as well (pre-tax under existing Federal tax law).

The system functions as a “virtual” insurance exchange. Transactions and consumer education will be facilitated by the internet rather then creating a costly bricks and mortar administration.

This month Aaron Mckethan and his group at the Engelberg Center for Health Reform at the Brookings Institute published a report looking a four state initiatives that were focused on helping small business and the self employed obtain insurance. They looked at the design features of the programs for Arkansas, Tennessee, Massachusetts, and Washington. Previous attempts at pooling traditionally uninsurable patients usually resulted in higher costs because higher risk pools landed in the programs and often the numbers enrolled was too small to make a competitive bid on the insurance market.

The Utah model would cut down on administrative costs and make for large pools of enrollees rather just the uninsurable. A board of the interested parties including citizens,providers, and insurers would oversee the process with a new and substantial transparency.

If the Brookings recommendation for creating Federal state partnerships is added to the Utah plan then one problem of creating enough economy of scale to draw competitive pricing from insurance companies could be accomplished. Rather then acting as a supervising authority, the Federal government could bring to bear resources to monitor effectiveness. Over time state health programs would be allowed to evolve in efficiency and cost containment by comparing what works and what does not in the various states.

This type of approach maintains patient choice and provides a scenario to encourage high quality with cost efficiency. Once a year enrollees could have the option to change their insurance. If they wish to change jobs, the plan they have will be portable.

Insurance would not be a one size fits all product. This type of plan allows for deferring levels of benefits as well as financial instruments like medical savings accounts.

Currently the state of Texas leads the nation in the number of uninsured adults and children affecting somewhere between 25 and 40 percent of the population. If enacted the current Democratic proposals before Congress promise to create severe burdens on the state budget by a massive increase in the Medicaid budget.

Our state and Federal lawmakers should take a closer look at the Utah plan because our fellow Westerners have a better idea than the Washington bureaucrats.

Thanks for reading Contempo Magazine blog which discusses issues for McAllen, the Rio Grande Valley, and America from a conservative Hispanic point of view. Tony Magaña grew up in McAllen Texas, attended Texas A&M University, served as an officer in Army Reserve, and holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years. He is a member of the National Association of Hispanic Journalists and also writes for the American Daily Review. Follow him on twitter http://twitter.com/contempomagazin

Copyright 2009, Dr. Tony Magana. Some rights reserved.
To reproduce or distribute, visit: drtonymagana.icopyright.com

 By Dr. Tony Magana

Recent reports of the inadequacy of the Treasury Department in assisting troubled homeowners serves once again as an example of how the care taker model of government cannot succeed. A review of this is timely at a time when many progressives are clamoring for a new government care taker health program. While Treasury struggled to help only 180,000 out of 4 million homeowners with troubled mortgages about 53 percent were able to find their own solutions without any government “assistance”.

The onset of the financial crisis last year in the months preceding the Presidential election lead to an impetuously contrived program schemed by Congress which debited billions of dollars of taxpayer’s future earnings for stimulus payments to financial institutions who had been the cause of the crisis by allowing the extension of credit to otherwise poor risk borrowers which subsequently artificially inflated the value of domestic residential real estate in many states.

An examination of recent General Accounting Office (GAO) reports on the management and success of the Treasury Departments program to assist home loan borrowers in distress is troubling. The GAO was asked by Congress to study the evolution and the current state of the home loan market.

Their focus was the time period which was the heyday for nonprime loans which are divided into Alternative-A and subprime divisions. Alt-A paper loans which were given to borrowers with lower credit scores, multiple existing properties already under loan, and/or the lack of documentation for things like proof of long term income that prevented qualification for a prime loan. The subprime loan was seen as a even greater credit risk with FICO scores usually less then 640. None of these loans would have ever been made had it not been for laws passed by Congress like the Community Reinvestment Act which mandated that banks and other lenders must offer loans to individuals who would otherwise not meet the standard criteria for a mortgage.

The nonprime mortgage market had its heyday from 2000 to 2007 with a peak in 2006. The total value of loans in this category went from $100 million to $600 billion. According to the GAO the percentage of home owners who held a mortgage of this type went from just 12 percent in 2000 to 34 percent in 2006 with 2/3 participating in a subprime loan that was adjustable. Between the years of 2000 and 2006 the number of subprime loans actually multiplied in number by a factor of five. These nonprime loans were usually used by borrowers to refinance their homes rather then to purchase a new home. Because borrowers often had multiple loans in force the number of loans is well in excess to the number of borrowers. Thus the government was encouraging people who had suitable housing already to use their home like a credit card discouraging personal responsibility and thrift.

During the period from 2000 to 2007 about 14.4 million of nonprime loans were made of which 80% were subprime. As of March 31, 2009 about 11 percent or 1.6 million of those loans that failed had completed foreclosure. There remains about 5.2 million subprime loans left in the United States of which 80 percent are subprime. Out of these loans still outstanding about 23 percent or 1.2 million are at risk for serious default. Almost 2.5 million nonprime loan holders are in default or in the foreclosure process.

The GAO said there were indications “ that hundreds of thousands of additional nonprime borrowers are at risk of losing their homes in the near future.”Very few mortgages made since the implementation of new credit guidelines was made in 2007 have failed as 93 percent of loans currently in foreclosures were originally made between 2004 and 2007.

The Congress created the Home Affordable Modification Program which received $50 billion from the Troubled Asset Relief Program to assist struggling homeowners who were “victims” of inappropriate nonprime loans. The HAMP was supposed to act in four ways to help homeowners including modifying first-lien mortgages for those in danger of foreclosure, encourage the modification of mortgages in areas suffering severe property value depreciation, reduce or pay-off second-lien mortgages, arrange the sales of properties where the debt was more than then the homes value as an alternative to foreclosure, and provide incentives for at risk borrowers to get refinancing.

The GAO published an assessment this week of the progress of the HAMP. The Treasure Department was found to not be “fully meeting its goals”. Estimates were that about 3 to 4 million borrowers would be in need of assistance but as of July 20, 2009 only about 180,000 have began the process of loan modification.

The main impression one gains from reading the report was that the Treasury was overwhelmed and apparently this is an opinion shared by the Congressional Oversight Panel and Federal banking regulators.

The good news in this report is that 53 percent of the homeowners without any help from the government were able to find a way to refinance their homes with a better loan or arrange an alteration of their loan with their private lender.

The bad news is that the government program to help those who could not help themselves or perhaps were induced to wait for government help rather than seek their own solution has only helped 180,000 out of 4 million.

The ugly is that this is what can be expected to happen when the American public becomes too dependent upon government. The current culture of the Obama administration that all problems will be solved by government is a false promise with a high price. The high price occurs because the government’s pledge of support stymies the individuals initiative to help himself .

Government programs need to encourage individual responsibility and individual initiative in dealing with the necessities of our lives. We too often forget the American spirit which separates our nation and culture from the rest of the world is greatly due to the contribution of rugged individualism and individual responsibility. Government needs to be about giving people options and opportunities to find ways to help themselves rather then making narrow mandates.

We should not hesitate to step in, support, and guide those who are unable to help themselves as our Christian values demand but simultaneously we should expect that each individual will bear responsibility for themselves as they are able.

Americans should see this failure of the Treasury as a warning about will happen if we let the government take over the health care system.

Thanks for reading Contempo Magazine blog which discusses issues for McAllen, the Rio Grande Valley, and America from a conservative Hispanic point of view. Tony Magaña grew up in McAllen Texas, attended Texas A&M University, served as an officer in Army Reserve, and holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years. He is a member of the National Association of Hispanic Journalists and also writes for the American Daily Review. Follow him on twitter http://twitter.com/contempomagazin

Copyright 2009, Dr. Tony Magana. Some rights reserved.
To reproduce or distribute, visit: drtonymagana.icopyright.com