File: c:/ddc/Angel/BestIntentions/Healthcare.html
Date: Mon Jan 14 19:41:08 2008
      Fri Jun 06 21:50:09 2008
      Sun Jan 10 15:43:29 2010
      Thu Aug 23 14:10:11 2012
      Mon Jul 21 20:37:12 2014
      Tue Aug 19 22:20:25 2014
      Fri Oct 31 18:09:42 2014
(C) OntoOO/ Dennis de Champeaux

Healthcare

Soft physicians create stinking wounds.
(Old Dutch proverb)

It is probable that we could either halve or double the money now being spent on health without significantly affecting our longevity.
(W.H. Forbes, New England Journal of Medicine 277:71 (1967))

If you think health care is expensive now, wait until you see what it costs when it's free!
(Anonymous)

This chapter was started before Obamacare was enacted. Little has changed, in a sense, at a high level. Except what was called "benefits" provide by companies became yet another tax on them. In addition, the price-tag of healthcare, in terms of percentage of GDP, increased further to around 18% versus around 10% in comparable nations. We added (2014) the Appendix The US Healthcare Price-Tag Conundrum to capture why (we think) the price-tag is out of control.

Healthcare is a necessity that must be dealt with at all levels. Individuals are concerned with personal worries. The society at large struggles with optimum care for acceptable costs compatible with high ethical standards. All stakeholders in all nations are faced with continuous changes because no system has been found that satisfies all parties, while medical advances for newer practices keep introducing newer problems due their hefty price tags and/or with ethical conundrums.

The medical 'machine' is a large system, discussed all the time, by many experts and we can only touch on a few topics. Our topics fall into two categories:
- Issues with the supply side of healthcare, and
- Topics with the demand side ranging from individuals to the society

Before diving into the fray, we must mention the amazing progress made in the previous century. Longevity is on the rise worldwide from less than 30 in 1900 to around 65 in 2000. Diagnosis has been enhanced by sophisticated bloodtest and by numerous imaging modalities. Infection diseases, a major killer, has been pushed back with better hygienic practices and by the availability of antibiotics, which we hope will be used more prudently to preserve its magic. Surgery with none or minimal blood loss has become routine due to increasing professionalism. Patient-type customized drugs are in the works. Medical knowledge has increased explosively and we understand the bio-chemical mechanics of the body way better. More and more diseases can be traced back to gene complexes. We see the glimpses of the potential of stem cells. Surgeons have developed minimal and even non-invasive techniques. Remote controlled robots allow more precise interventions. The manipulation of genes - with their pros and cons - open up possibilities that will go way beyond we can consider at this junction.

Lets return to the current realities, more US specific than the other chapters.

Who is who?

We include at the demand side those that pay for the services. Employers have been offering benefits since the Second World War, supported by tax incentives. The public sector participates also at the demand side with the federal government paying for services through Medicare, Medicaid and the Veterans benefits and local governments through subsidized community hospitals, and programs like Medi-Cal.

The public sector participating at both sides is a warning flag. Bureaucracies need continuous trimming to fight bloat. Trimming a large regulatory and administrative organization for healthcare has failed thusfar because 'unlimited' amounts of tax monies are feeding it.

Supply side of healthcare

Information

A physician needs, obviously, good people skills, which entails more and more treating patients as competent adults. People skills were in the past likely the most important requirement for a good physician. Now physician must be also an expert, abstract information problem solver. Information technology has penetrated the society in the previous decades and has transformed virtually every segment: except in the medical realm where eRecords are still under utilized. That does not mean that people skills are less important. People skills are in need more than ever, because nowadays the patient is more informed and has undergone a change of attitude that the physician has to deal with.

The term 'hypochondria' was introduced around 1600. It stands for being overly concerned about one's health condition, a specific version of paranoia. The medical profession has now coined the term 'cyberchondria', which is hypochondria facilitated by web searches. This condescending term is a sad defense against the public becoming more self-responsible due to unfortunate experiences with physicians making wrong decisions (4-10% wrong diagnosis - personal communication). We do not have yet the term 'cyberphobicdoc' and hopefully the medical community will soon 'partner up' with information power tools to improve the quality of their services.

Information technology to support diagnosis is just one functionality that is lacking. Electronic patient records, eRecords, have been under discussion since the 70-ies. They are still not standard practice. Concerns about privacy are a pleasant, unreal, excuse for their absence. They would eliminate misunderstandings between the different experts dealing with a patient.

Drug interaction conflicts are another problem that would disappear with the availability of eRecords. A physician prescribing a drug for a patient using a smart device would obtain instantaneous feedback in case of a conflict (which could be overruled if warranted). A pharmacist is at this junction typically the watchdog for drug interaction conflicts. Their decisions are vulnerable due to the absence of eRecords. Credit card size info units (carried by patients) were discussed already decades ago. Such a card would contain the total health history of the patient. Memory sticks with a few encrypted gigabytes would be a fine alternative.

The universal availability of eRecords is long overdue. What is the answer of the medical establishment if it is accused of gross negligence that is costing substantial damages, including loss of life, due to preventable mistakes? Transparency is increased by eRecords. Physicians providing quality work need to agree that lousy colleagues, currently able to hide, must be flushed out.

Electronic messaging has been around for 40+ years. It has only recently become possible for a patient to contact the own primary care physician. Counter forces can still hamper technical progress. The Netherlands blocked effectively patient-physician messaging by prohibiting a physician to be reimbursed for tele-advice when the patient reports a new concern. The permitted charge for acceptable tele-advice is just half of the charge for an office visit. Physicians are obviously not keen to provide messaging at all given what the iron fist of the Dutch government has ruled. Whether or not lobbying by physicians themselves has produced this situation is anyone's guess. This ruling resembles what happened from North Africa to Afghanistan in the time of the Romans. Maintained roads supported transportation by oxcarts. Transportation shifted around AD 500 to the use of camels and roads were not maintained any longer. It took thousand years before roads and wheeled transportation was introduced again. Why? A tax ruling in Palmyra Syria to favor camel drivers made usage of oxcarts non-competitive. Lets hope that The Netherlands changes its mind sooner.

Medical profession

The license of a pilot expires if refresher courses are not taken. Good idea for physicians too. Surgeons need even more rigorous periodic re-evaluations.

How does one select a new primary physician, dentist or a surgeon for a needed intervention? One can ask one's friends, but so what? Some must be better than others. Shopping around does not work. They do not advertise their prices. There is no public database that describes the experiences of patients for a physician.

Seidman, in [Seidman], proposes that a patient fills in a postcard after each encounter that will be processed by an independent organization that maintains a public database. However, we must be careful here. Remember the problem with "failing schools"? Schools recruit their children from regions with different native cognitive skills. Hence a school's results must be calibrated against its input. Same story for the responses to a physician performance. Patients may be 'enlightened' or may be resentful, they may be relatively healthy or they may have multiple chronic conditions, they may be relative young or they may be seniors. Thus a physician's (and organization's) 'report card' must be calibrated against a comparable basket of clients and should be accompanied with a characterization of the clientele.

Still, why are there no price tags? This topic goes both ways. Superior physicians cannot be reimbursed for their superior service. The public cannot select value for price. The latter is 'sensitive' - as we will elaborate below.

Diseases are not fairly distributed over the population. As a rule of thumb we have that 20% of the people account for 80% of the need for care. To make matters worse, those patients can have more than one condition that requires attention. Lawrence wrote a whole book [Lawrence] advocating a team approach to take care of those type of patients. These teams are different from traditional teams. They need to be assembled, temporarily, for a specific patient. Thus a physician may have to participate in multiple, patient-centered teams. Physicians are traditionally not team players, they were hero soloists, adored by patients who's lives were saved. The education of physicians in The Netherlands has started the incorporation of working in teams. However, for such a team to function properly there is a missing component: the patient's eRecord accessible by all members on a patient's team, so that all members are 'on the same page'.

The quality of medical staff has decreased in the previous decades as described by Seidman, [Seidman]. Experiences of his wife in 2004 as an outpatient at Kaiser Permanente are described in detail. She dealt with nine of their physicians (all named) who failed to diagnose her correctly, prescribed 'absurd' medication and even declared her to be depressed. A physician outside of Kaiser solved her problem. This has a happy ending. Not so for those (also named) who recently died in Kaiser hospitals due to errors, for which Kaiser was "sorry". The details are very worrisome.

The Dutch press reported in 2007 November that over 40% of the nursing staff has a deficiency to do calculations. Thirty percent of those interviewed admitted having made calculation mistakes for giving medications. Fifty percent knows colleagues making mistakes as well. Here we encounter cognitive decline in action, as we alluded to in the chapter on Public Education.

The medical profession is quite closed. After gaining trust, one can get inside stories. We do not want to breach the trust by providing details. It suffices to say that negligence and arrogance in this profession leads to the equivalent of manslaughter, hidden from the public. A Dutch 2007 report estimated 1500 yearly deaths due to mistakes. [The population size is 16M. The discussion in the press about traffic fatalities (811 in 2006) is going on for decades. There is no discussion about the medical fatalities.]

Feedback to society

In short, there is a 35-year time lag between the first known publication about the relationship between smoking and lung cancer and the recommendation to stop smoking. What did the medical community do in the intervening period? Earning money by treating patients. What have they done since 1964? Earning more money. We have been suing cigarette producing companies now for decades. Why have we never held the medical community accountable for their lack of professional responsibility to urge prohibiting a lethal drug that costs the society dearly in lost lives and in expensive treatments?

Demographic case:

In short, physicians have been earning money by delivering babies at ever increasing rates. No professional organization of physicians has participated in the sustainability discourse regarding the world's demographics. Welfare state entitlement side effects causing the deterioration of their gene pools has been ignored by them as well [Dawkins].

An extreme case is Octo Mom, a woman without a partner, who was "obsessed with having children since she was a teenager", and which had six children through in vitro fertilization. One of the six children is autistic. This woman wanted to have more children and she delivered an octuplet, also through in vitro fertilization. Bypassing the question why this woman's peculiar ego caused her decisions, the questions remain why her requests were honored by the medical professionals involved, and why does the society allow this scenario to unfold in the first place? Why should these extravagant behaviors, which are detrimental to the society, be funded by the taxpayer?

Sin tax addiction:
Societies raise special taxes on alcohol, tobacco, gambling. The proclaimed idea is to dissuade the population to consume alcohol and tobacco end to avoid gambling. Instead, the tax is sufficiently low so that it becomes a valuable source of revenue for delivering targeted social services, such as education. The society is thereby locked into these vices which are detrimental to the physical and mental health of the population. The medical profession stays out of the discourse on these topics.

Administrative overhead

The introduction of Medicare in the sixties entailed determining for each state what procedures were common and the proper reimbursement level for these procedures. It turned out that medical practices varied widely, which could only be explained by systemic local fraud. The HMO/PPO layer was created to keep on eye on the billing stream. The medical community has complained since then about having to justify planned procedures, which proves that the oversight function works; but not enough, see the Appendix The US Healthcare Price-Tag Conundrum.

The states and the federal government jointly fund Medicaid, a program nearly as large as Medicare. It reimburses hospitals and physicians for providing care to qualified people who cannot finance their own medical expenses. Seidman calculates in [Seidman] that the administrative overhead, including outsourcing, of the Medicaid program in 2003 was $63B, being 29% of the total expenditures.

Consumer side of healthcare

Price tags

We need to add that the uninsured paid out of pocket $733; the balance is being paid from other sources. Diminishing the plight of the uninsured is not our goal here, but we do want to suggest that the non-stop drumbeat by politicians about the uninsured has deflected attention away from the out of control US price tag that is twice as much (as percentage of GDP) than, for example, Japan, which, moreover, delivers better quality to its population. The situation has become worse since 2004; see again the appendix.

That being squared away, we must focus on those who are insured: 235M people out of a population of 280M (currently above 300M indeed). While employers demand increased contributions from employees, the employees are still subsidized and have favorable group rates. The 65+ segment is heavily subsidized as well by Federal programs. In addition, consumers have been herded in large programs in which virtually anonymous healthcare suppliers are hardwired as well. In other words, consumers cannot use their spending money in a transparent market where suppliers compete for eager clients.

Lack of consumer-supplier market forces explains to a great extend the problems we encountered at the supply side: there are no forces in place for suppliers to innovate, to advertise a superior track record, to go the last mile - in marketing lingo.

However, this is not the full story: Why have nations created arrangements where these market forces are absent?

Ethical dilemmas

Societies are still struggling with the consequences of both sources of unfairness. Insurance is the standard solution for obtaining protection against 'acts of gods'. A simple solution would be that an insurance company would not be allowed to distinguish applicants regarding age, gender, claim history, etc. This solution is actually not simple. We have still the following fundamental problems:
-P1- What is to be done for those who cannot afford premiums?
-P2- What is to be done for those who do not sign up, who need services anyway and cannot pay?
-P3- Too many people have imprudent lifestyles. How do we deal with the consequences for society of these choices?

The first two problems are well known and are discussed all the time. The third problem is a composite of two distinctly different topics, which are typically too sensitive for public discourse. We need to disentangle them here anyway, and we label them P3A and P3B.

The P3A problem consists of imprudent lifestyle choices that have direct impact only on the person that makes these choices. Typical examples are: smoking, drinking, gluttony, risky sports, reckless driving, dangerous sexual practices, etc.

An increasing segment of the population in welfare states are overweight. A medical intervention was denied to a patient in the UK due to being overweight. Should we broaden denials to other imprudent lifestyle choices?

A patient received a $200K heart bypass surgery and was smoking again while still recovering. Should insurance companies exclude payments for these type of patients?

The P3B problem consists of putting children in the world that cannot be sustained without support from the society. This problem is way more controversial and intractable than all the other ones combined. This topic is elaborated in the chapter: Income Distribution Deterioration.

Organizations in different nations

The Netherlands went in 2006 through a reorganization. Everyone has mandatory insurance. Financial assistance is available for those who cannot pay premiums. Employer contributions to premiums remain mandatory. Waiting lines have been increasing. Those in the 20-30 age bracket have the highest rate of failing to pay the mandatory premiums.

The US has a mixed system with (nearly free) care for the 65+ population and voluntary, actually now (2014) mandatory, contribution to premiums by large and midsize companies. Companies are shifting the costs gradually to the employees due to exorbitant premium increases in the previous decade. This is causing an increase of the number of people without insurance. Politicians try to 'fix' the situation with legislation, which basically introduces another tax for companies, which was actually done (2014). These maneuvers lead to extensive discussions and a never-ending stream of opinions in the media, but, as mentioned above, it deflects attention away from the 'crazy' price tag of US healthcare (16% of GDP, 2008; 18% in 2012). Really sad is that the nation's gigantic yearly expenditure of $2.8T (2012) not yielding superior results. The title of Seidman's (a retired neurosurgeon) [Seidman] is a horrendous summary: "Inevitable Incompetence, Soaring Medical Costs, Dangerous Medical Care". See again the Appendix for a deeper, root cause analysis.

Innovation blocked

The situation is the same at the demand side. Employers cannot offer those services to their employees due to conflict of interest. The public sector does not worry about cost control because they are at both sides of the equation and the money is produced by taxation anyway. The public pays nothing beyond token co-payments and hence is also not motivated to pay for a self-help service.

Politicians are good in creating new entitlements but cost saving is not their department.

Mini history

The Great Depression justified the introduction of social security, which helped the poor to have a decent income after retirement. Social security not being a pension system allowed the premiums to be artificially low for decades until the population explosion subsided, thereby causing the sudden panic that the system will go bankrupt - a scenario conveniently ignored for half a century.

The Second World War required to keep wages low and justified an employer paid healthcare system for the employees and their families. The omission of a sunset clause for this arrangement has been crucial for subsequent developments.

The elderly had trouble in the 50-ties paying for health insurance (which was only 5% of GDP in 1950). Social security benefits were insufficient, [Medicare1964]:

A 1964 Senate study estimated that only 50 percent of the policies issued to retirees provided comprehensive coverage (75 percent or more of the average hospital bill), meaning only 1 in 4 older Americans had adequate hospital insurance protection.

Senators and administration officials alike understood that they were "legislating in perpetuity" and would face strong pressures to expand the program (U.S. Senate Hearings 1965: 134). They also knew that Medicare would create a vast new public dependence on the federal government for financial security in old age, continuing the pattern set by Social Security in 1935. Senator Mundt (R., S.D.) described it as "another step toward destroying the independence and self-reliance in America which is the last best hope of individual freedom for all mankind" (U.S. Cong. Rec.-Senate 9 July 1965: 16122).

Fixes

Quality of the healthcare services

Rigorous process improvement processes - widely applied in other disciplines - have not yet been discovered in the healthcare field.

Standardization, computerization and process improvement are huge opportunities to improve quality and reduce costs.

Who is responsible for a care event?

Maximum and minimum care

Finding the 'sweet-spot' between these two extremes is yet another huge opportunity. It is quite unlikely that a system can be invented once and for all that realizes the sweet-spot because there are multiple stakeholders and the surrounding society is never stable. Large corporations deal with this phenomenon by frequent reorganizations using - in essence - process improvement processes. Nations must do the same to avoid, for example, the fate of the out of control situation in the US with its 18% of GDP (2012) devoted to healthcare.

Giving control back to the US public?

These decisions have the side effect that market forces driven by the public disappeared. Some believe that this is the cause for the out of control US expenditures and they propose to give control back to the consumer. Brook recommends in [Brook]:

The solution to this ongoing crisis is to recognize that the very idea of a "right" to health care is a perversion. There can be no such thing as a "right" to products or services created by the effort of others, and this most definitely includes medical products and services. Rights, as our founding fathers conceived them, are not claims to economic goods, but freedoms of action.

You are free to see a doctor and pay him for his services -- no one may forcibly prevent you from doing so. But you do not have a "right" to force the doctor to treat you without charge or to force others to pay for your treatment. The rights of some cannot require the coercion and sacrifice of others.

By contrast, the rejection of the entitlement mentality in favor of a proper conception of rights would provide the moral basis for real and lasting solutions to our health care problems--for breaking the regulatory chains stifling the medical industry; for lifting the government incentives that created our dysfunctional, employer-based insurance system; for inaugurating a gradual phase-out of all government health care programs, especially Medicare and Medicaid; and for restoring a true free market in medical care.

Such sweeping reforms would unleash the power of capitalism in the medical industry. They would provide the freedom for entrepreneurs motivated by profit to compete with each other to offer the best quality medical services at the lowest prices, driving innovation and bringing affordable medical care, once again, into the reach of all Americans.

Addressing yet another anomaly in the US healthcare system

Private sector companies are forced to always scrutinize overhead expenditures. Hence it is no surprise that employers confronted with double digit premium increases slowly dismantled the free/ subsidized medical benefits offered to their employees. The Government responded by changing the voluntary benefits into mandatory taxes. Multi-nationals have reduced repatriation of foreign made profits to the US in order to reduce their taxes. Some companies have gone one step futher by moving their HQs outside the US.

The public sector is not subject to the financial discipline of the private sector. Confronted with increased billings and bureaucratic bloat it has relied for a long time on increasing the taxes on companies and on a shrinking minority of the public.

This still does not explain the difference between the US's 18% fraction of its GDP and what other welfare nations devote to healthcare. At this point, we can only conjecture that the US is, or was, more affluent than other welfare nations so that it could afford giving 6% of the workforce 'meaningful' work in 'medical administration'. Whether this conjecture holds water or not, reducing administrative overhead is yet another major opportunity to fix US healthcare.

To consider

However, half a century later we witness the consequences of unconditional entitlements: the need for assistance has increased to a majority of the population due to the implicit 'right' to procreate at the expense of the society.

The longer we postpone addressing these side effects, the more difficult it will be dealing with the consequences.

The Hippocratic Oath

References

[Dawkins] Dawkins, R., The Selfish Gene, Oxford University Press, 1976 & 1989 & 2005.

[Gore] Gore, A., An Inconvenient Truth, Rodale, 2006.

[Heritage] Lips, D., Heritage Foundation, 2006 http://www.heritage.org/Research/Education/EdNotes42.cfm

[HippocraticOath] http://en.wikipedia.org/wiki/Hippocratic_Oath

[Lawrence] Lawrence, D.G., From Chaos to Care: The Promise of Team-Based Medicine, ISBN 0-7382-0859-0, 2002.

[Meadows] Meadows, D, The Limits to Growth, Universe Books, NY, 1972.

[Meadows2] Meadows, D., J. Randers & D. Meadows, Limits to Growth, The 30-Year Update, Chelsea Green Publishing Company, 2004.

[Medi-Cal] http://www.chcf.org/documents/policy/MediCalFactsAndFigures2007.pdf

[Medicare1964] http://www.medicarerights.org/maincontenthistory.html

[Medicare1965] http://www.cato.org/pubs/journal/cj16n3-3.html

[NIHCM] http://www.nihcm.org/pdf/DataBrief3%20Final.pdf

[Seidman] Seidman, S.W., Inevitable Incompetence, Soaring Medical Costs, Dangerous Medical Care, Universal Publishers, 2007.

[SSAB] http://www.ssab.gov/documents/TheUnsustainableCostofHealthCare_508.pdf

[Witschi] Witschi, H., A Short History of Lung Cancer, http://toxsci.oxfordjournals.org/cgi/content/full/64/1/4

Appendix The US Healthcare Price-Tag Conundrum

There are at least three reasons why a reduction of the percentage would make sense. First, healthcare shares with education the characteristic that it is a necessary but unfortunate segment that must be financed in essence by taxation on other 'productive' segments. It would actually be great if the 'repair-function' of both of these segments could be obtained with higher yields and with fewer costs. The opposite happened with US healthcare: its efficiency decreased (while unfortunately US healthcare also scores poorly in international comparison). Hence a reduction of the percentage would make discretionary resources available for other useful activities - for example increasing investments in green energy sources.

Second, the trend of the percentage increase suggests an enduring, half century long 'dark force':

Third, the GDP percentage increase entails an increase of the healthcare cost per capita and from there a steady increase of the insurance premiums. Most people are not impacted by those premium increases because they are hidden in payroll taxes or hidden in the 'free' Medicare and Medicaid programs. However, those people exposed to these escalating premiums would benefit greatly from the apparently out of control increases. The business segment responsible for medical premiums for its employees would benefit as well.

The 'dark force' yielding a percentage increase over a factor of three since 1960 is actually quite mysterious. Productivity increases have been relentless throughout the economy and were boosted during the preceding decades by information technology. Why did the reverse happen in healthcare? If we see the percentage of GDP as a proxy of the percentage of the workforce involved in healthcare, why are there three times as many people involved taking care of the same three events: birth, sickness and death? Our analysis below using different angles is aimed at dealing with this mystery and suggests a counter 'offensive'.

Before diving in, we need to consider counter arguments. An effort to bend the cost curve will encounter heavy resistance from the oversized segment in the workforce whose livelihood depend on the huge budget that the society has allocated to healthcare. Hence even when watertight arguments would support a fundamental shift, it would take decades of dogged struggles against entrenched stakeholders to actually reach parity with other nations. Is it plausible that subsequent administrations are willing to stay the course? There is even the argument that the US is affluent enough to afford a 'Cadillac' healthcare system. Suppose that the hidden consensus is that the healthcare sector should absorb the workforce expelled by automation in other sectors, then what?

We leave these counter arguments behind, unresolved indeed, and proceed with the assumption that reducing the healthcare GDP percentage is a worthwhile, actually necessary goal.

The sponsors

This simple table reveals an abundance of trouble, provided one is willing to question decisions made many decades ago in order to deeply change US healthcare status. For starters: why is business two fold involved in the private matter of the healthcare of citizens:
-- Contributing to the Medicare premium of an employee for a service that likely start decades after the employee has moved out of the company
-- Providing the healthcare premiums for an employee and his/her family

We are used to this arrangement now for so long that it is difficult to recognize the disadvantages of these arrangements. Citizens themselves managing their insurance allow unleashing market forces, possibly enhanced by proper restriction imposed by the government. This option was lost during WW2 when benefits were introduced with the compensating advantage that they were tax deductible for the corporations. Little that the corporations knew that double digit premium increases were common decades later. They could not escape and hardball negotiations with insurance companies were in conflict of interests with their employees. This still begs the question why there were decade's long double digit premium increases. The Medicare payroll tax provides yet another money stream where neither employers nor employees (the Household sponsor) have impact on how the funds are used by the sizeable number of recipient parties.

The public sector parties (Federal, States and local entities) generate together a funding stream of 44%. Again, why are they involved in the private matter of the healthcare of citizens? This has an unfortunate answer: the income distribution has become more skewed since 1980 to the point where the bottom 50% of the society earns not enough to even pay income tax. Hence the clear need to provide a way (Medicaid) to channel healthcare services to those who cannot pay the skyrocketing insurance premiums. Still, again, why have they been skyrocketing in the first place? The public sector as a paying party can be seen as a reverse monopoly. Could that be the root cause?

The payers

The entries with question marks have been obtained by reading in between the lines of the reports that omit the costs of the administration overhead of the public programs.

Quite noticeable is the four times occurrence of the Federal government, and the three times occurrence of the States, where the latter represents up to 50 different bureaucracies. The Byzantine complexity of the total funding stream is a, or the, plausible cause of the healthcare expenditures explosion during the last decades.

The recipients

Worrisome is that the Federal Government and the States appears in the list of payers as well as in the list of recipients; this amounts to a systemic conflict of interests. In general, one can question how we (is who?) can ascertain that we (is all of us) get value for the collective budget. Since we started with the observation that the US allocates way more than the peer nations on healthcare we must conclude that we overpay these parties due to insufficient what? And we are back at the question what the 'dark force' is. There is actually still some monitoring going on. The insurance companies keep an eye on expensive physician's orders mandating that approvals must be obtained first. Many parties have, however, observed that inappropriate orders due to financial interests, defensive practices, lack of coordination when multiple physicians deal with a patient, etc. are reimbursed anyway. Reimbursements for an intervention that has zero or a negative outcome are typically not rolled back.

The citizens

One is advised not to jump to the conclusion that the super seniors make up the top 1% group. Here the different age groups with their fractions: 0-18: 7.6%, 19-34: 5.9%, 35-44: 7.3%, 45-54: 13.2%, 55-64: 26.1%, 65-74: 15.1%, 75+: 24.8%.

The publication with the reference given above lists a quite limited number of conditions (16) of the top 5% consumers.

We encounter here a 2nd reason why the nation's healthcare expenditure is an opaque topic for the general public. The skewedness of the personal consumption distribution defies common sense. At the same time this skewedness is an opportunity if we decide to address the nation being financially 'hostage' of the healthcare segment.

Proposals for tackling the 'dark force'

The report addresses a key issue in the 5 page section: Why Health Care Costs Are High and Growing Rapidly. The following topics are discussed: Technology, Insurance, Aging & Demographics, Health Status of the Population, Income, Administrative Costs, Changes in Health Care Prices (?), Medical Malpractice Liability. None of them explains why the healthcare expenditures had become high and why they expected them to grow further. The 'dark force' remains unchallenged by their analysis.

The section "What can be done about health care costs" talks about two main recommendations:
-- Improving the efficiency of the delivery system by internal changes, and
-- How externally financial incentives can be used to nudge the delivery system to improve itself.

There are indeed many opportunities to boost efficiencies internally. The report starts with process improvement, which is well established in other sectors of the economy. A key requirement is performance tracking by defining metrics, collecting data, evaluate the results and adjust well defined processes. The medical profession has still a long way to go. Consider ordering candidate diseases for a differential diagnosis. This could be done with a simple metric that captures how often disease X occurs for, say, males of age Y in a million diagnoses. This metric is not available. They mention better coordination of care for patients with multiple chronic conditions. A crucial omission is the universal availability of portable electronic health records. They would certainly help coordination of care. They would help avoiding over medication, medication conflicts, duplicate testing, etc. They would help improving best practices, and could even yield new medical knowledge. They could be integrated as a front end to a billing system, thereby reducing admin overhead and reducing billing errors. They could also be used for assessing the performance of medical staff. This last functionality is plausibly why the use of electronic records has been stagnated for decades. The Netherlands has found that the number of deaths due to medical errors exceeds the yearly traffic fatalities, which the nation cannot stop discussing while the medical fatalities are off limits.

The report describes the anomaly that boosting efficiencies and even improving the quality of patient care can be financially detrimental for providers because the current system reimburses services independent of their outcome and whether they make medical sense or not. Web based telemedicine service has not been embraced because prevented unnecessary visits would prevent 'necessary' billable events. Hence they propose a shift from volume to values and they report on local experiments: pay for outcomes, making customers aware of costs, increasing copayments, penalizing hospitals for readmissions, creating 'warranty' reimbursement schemas, etc.

Relying on customer smarts may not work since they report: "Patients with high levels of cost sharing seem just as likely to cut back on essential services as on services with little or no value."

Dealing with the 'dark force'

Back to the healthcare system: Physicians have also the lofty goal captured by the Hippocratic Oath: "First do no harm". They violate this oath even when a useless intervention does not harm a patient, by harming the financial interest of the society. The society has trusted the medical establishment to do the right thing like they trusted the educational establishment. The report mentioned above gives a simple example illustrating that this trust is unwarranted: "... back surgery is 2.2 times greater in Palo Alto than in San Francisco, both homes to major university teaching hospitals." The medical profession has produced an impressive classification system of diseases, ICD10, but diagnosis error deaths are estimated in the range of 40,000-80,000. The wideness of this range is by itself an embarrassment. And, likely more important, the profession has failed to obtain consensus on the best practice of disease treatments, as illustrated by the quote.

We believe that the 'dark force' responsible for this sorry state of outrageously overprized affairs is the inability of the society to specify what is to be achieved for the provided $2800B funding. More specifically, we blame the Medicare bureaucracy of the Government (due to its reverse monopoly status) for forking out without questions asked always increasing tax monies and for not articulating what is to be delivered.

Here the beginnings of a fix:
-- Reduce the total expenditures at the rate of 10% year
-- Define performance metrics on hospitals (correcting for the health status of their clientele) and reimburse them accordingly
-- Penalize medical institutions that do not use state of the art electronic health records
-- Demand that the consumption volume of the top 5% shrinks with 10%/year for all medical institutions with associated penalties
-- Demand that the medical profession obtains consensus about the treatments of the 16 diseases afflicting the top 5% consumers and subsequently of the top hundred causes of death. Mandate that insurance companies monitor adherence to the agreed best practices and monitor the insurance companies
-- Implement increased copayments for diseases caused by life style choices as part of making the public more aware of civil obligations as the natural complement of civil rights

The Government must take its own medicine. While the 2012 per capita spending was $8915, the per veteran spending was $19700.

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