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Health care update from the American Medical Association

October 18, 2007

Las Vegas Rotary Club
Las Vegas, Nevada

William G. Plested III, MD
Immediate Past President
American Medical Association

Today I’m going to talk to you about the most important thing in your life; your health and the health of your families and your loved ones.  So listen carefully, there’s going to be a test.

I want to start talking just a little bit about history.  I was born in Wichita, Kansas.  Now, the summertime in Wichita, Kansas is hot.  And it isn’t hot like in Las Vegas because on a good day the humidity only gets up to about 93 percent.  But in our town we had a huge municipal swimming pool, and it was an absolute favorite of kids of all ages in town.  And I even got to go a couple of times. 

But later, my mother wouldn’t allow me to go anymore.  That actually wasn’t punishment.  That was an act of fear and an act of love.  Because in those days we had a terrible disease, a horrible disease.  It was so bad that we were afraid to even say the name of it.  And we didn’t know how kids got it, but they got it, and maybe they got it by being together so much.  So that’s why I didn’t go.

But that disease affected anybody and not even the President was immune.  Of course, the disease was poliomyelitis.  When I was in medical school, it’s been several years ago, but I took care of a couple of kids in Drinker respirators.  For you that are not physicians, a Drinker respirator is also known as an iron lung.  Nothing is more striking than a child in an iron lung.

The reason that I point this out is to give you an idea of what things were like then. When we were sick and needed to see the doctor, we called our general practitioner.  He came to the house, and it was kind of magic because we knew that we would be better. 

And he’d come in and he’d put his hand on our forehead and listen and do whatever he did, and looking back now, what he did was come and be concerned.  And our care other than that, medical care was precious little. 

Just think back, we had sulfa medications.  I can remember getting cuts and having the doctor pour sulfa powder in the wound.  We had just got penicillin but then came World War II and the meager amounts that we got went to our fighting men overseas. 

There were no CT scans, PED scans, MRI’s, ultrasounds, dopplers, angiograms, cardiac heart lung machines, artificial vessels, valves, pacemakers, defibrillators, stents, total hips, total knees, no transplants, no fiber optics, no robotics, and of course I could go on and on and on through most of the day with this list.

The point again is, that health care in those days was precious little.  But with World War II, the President of the United States was afraid that the war effort would bankrupt the country.  And so he enacted wage and price controls on business because he knew that with the war effort the great manufacturing machine would be competing for workers.  And by putting in wage and price controls he could keep things in control.

But this then led to what today is known as our United States employer-based health care system.  But it’s not a health care system – it’s an accident that came about because the President was afraid of the country being bankrupt in a war effort. 

It was never thought out, it was never designed, it was never planned but that’s where we are today. 

Well, several years later -- at that time there was another interesting thing in the country because with the war effort, the working class, the wealth shifted to the working class, there were jobs everywhere, good paying jobs, and wealth shifted in this country, and the people who were left out were the people who had lived through the depression and were older. 

And since health care was given to the workers, the health care which was given by the employer at no tax – the employer to the worker – the workers had good health care, but the Congress and the country saw throughout all these years that the elderly were being forgotten.

And so, in 1965 we got Medicare. 

But remember what happened.  This was 25 years later. 

So what happened is that there was a shift in wealth and that the people who were coming to Medicare age were the people who had the wealth.  And this has continued to the present time where the wealth is now in the elderly and they have this phenomenal entitlement.  Whether you need it or not, you get your health care largely for free.

Well, the problem is that the common idea that our money that goes from our wages to Medicare is held in a, one politician said a few years ago, held in a lock box, not true.  Not true.  It’s the world’s biggest Ponzi Scheme.  It’s exactly what it is.  Today’s workers pay for the retirees and their money was long since spent by the government on other things.  And the only thing in that lock box is IOUs and those IOUs are going to go to future generations.

Well, today we hear cries and we read in the paper, everything, we’ve got a crisis in health care.  Well, we all know what a crisis is.  Something fails, goes terribly wrong, we’ve got to go and investigate, we send the brightest minds in, figure out what happened, fix it, and go on our way. 
Crisis in health care?  If this is a crisis, it’s a crisis like none other than in the history of the world.  What we have is a crisis of success.  We are able to do things that were unheard of 15 years ago.  What most doctors spend every day doing today wasn’t heard of 15 years ago.

This has caused us to increase our problem by people living longer, and not only do they live longer, but there is a huge difference in the mindset.  When we first got Medicare, people at 65 would retire, sit in a rocking chair, rock for a year or two and that was that.  Today, we get 65, you want a total hip and a total knee and two stents, and their cataracts fixed and then go skiing.  And that’s going to be more and more.  We’re going to see that more and more. 

What we are facing today is the effect of two tsunamis.  One of them is demography – our population is aging, people are living forever, and they’re getting all kinds of things done to make those years much more enjoyable.

The second tsunami is the thing that is making that more enjoyable and that is technology. 

We read about all kinds of different health care systems around the world.  No country in the world is immune to the problems of these two tsunamis.  Every country – and I’ve visited many of them in the last few years – every country is having the same problem.  Anyone tells you that some other country has the answer, don’t believe it.  It’s not true. 

Government gets involved and they handle this problem one way and one way only, but there is no way anybody can pay for all the health care that the people of the world want.  The only answer to that is ration and different countries ration different ways.

Well, today if we go back to this idea about a crisis in health care, the crisis is not health care, the crisis is who is going to pay.  And everybody has got the answer.  Well, this is now really on the national agenda. 

So there’s nothing like getting a little education.  And you will find that in this debate today, it is filled with sound bites and platitudes and oxymorons like “the best health care in the world at the lowest cost.”  Like “Medicare for all.”  A bankrupt program for everybody?  Like “health care for everyone at an affordable price.”  What’s “an affordable price”?

Well, the reason I’m going through all this is because what is going to happen in this country in health care is going to be decided in the next few years. 

This presidential election has put it on the national agenda and every candidate is going to have to talk about it.  They’re going to have to have a plan. 

What happens is going to affect everyone in this room – everyone in this country, and I have a single message to you today and that is this: 

You learn what needs to be done for you, and let your representatives know what that is. 

Do not sit back and wait to see what they dream up. 

How many of you know what FEHBP is?  FEHBP, write it down and go put it on Google tonight.  FEHBP.  It will blow your mind.  Federal Employee Health Benefit Plan. 

It is the widest choice of private insurance policies that cover more than any other plans.  It has the most reasonable prices, and guess who has that for themselves?  It is the people who are dreaming up Medicaid and Medicare, and we’ve got to at least be treated as well as they treat their own families.

So what are the problems we’re facing?  We’ve got to understand the problem.  First, we have the increasing cost of insurance.  We have an increasing shift of costs to patients by employers, by them stopping offering – and some of them stop all together – they put a defined contribution so they only give so much, almost every employer limits significantly what you are allowed to get by insurers who have stricter underwriting.

Think about pre-existing conditions.  If you’re alive, you’ve got a pre-existing condition so that means you pay more.  Increasing co-pays, limits, a lot of the coverage and treatment that you might need is experimental and not covered.  And of course they have unequal tax treatment because those who are employed with employer provided health care get a tax break and don’t survive on their different individual markets.  This results in spotty coverage.  Those who are insured – that’s the majority of people in this country – and those people are happy with their insurance; happy with their health care as in general.

But we all have one fear, don’t we, and that is that we might lose that coverage.  We belong to the most mobile society in the history of the world, but if you leave your employer, guess what?   You leave your health insurance.  You call that a health care system? 

We have increasing numbers of people who are uninsured.  This causes an overload of our ERs.  The uninsured don’t get routine and preventive care.  We get shifting of costs from the public to the private sector – all kinds of things.

Well, what do we at the AMA think needs to be done?  There are three basic pillars to what we have to talk about and these are what you need to understand. 

First is individual ownership.  Your employers should not decide what is the best plan for you and your family because that single plan that they offer is to their 55-year-old men and their 24-year-old women.  That’s nonsense. 

You must have individual ownership.  Whatever you do, you must own it.  Individual ownership so that policy stays with you wherever you go, for whatever reason.  People move all the time, they change jobs, they have a problem in the family, on and on and on, that insurance has to go with you.

There has to be equal tax treatment.  How many of you had a kid finish college?  You get a rude awakening, don’t you?  Those college times are great.  They get good health care coverage at low cost, and the minute they walk out of that door, you’re on the individual market. 

Boy, is that a rude awakening because the costs are astronomic and the coverage is miniscule.  We need to make sure that the tax treatment of these policies is the same whether you are in that individual market or whether you are self employed or whether you have an employer. 

Just because you buy it on the individual market should not mean that you don’t get a tax benefit. 

Now the AMA feels that we ought to use a tax credit rather than a tax deduction.  This is kind of getting down to the weeds but the reason for this simply that if you give somebody a tax credit and you give somebody a tax deduction and they don’t pay any taxes, you haven’t given them anything. 

But if you give them a tax credit that can be looked at like a voucher for low-income people who aren’t paying any taxes, and that can be spent only for health insurance, and that’s in the private sector, that’s the key.  Then they can buy their health insurance plan in the private sector, and we’ve given them something like FEHBP which gives them huge choices that will help.

The third thing is insurance reform.  Pooling – FEHBP is simply a huge pool and those of you who are insurance people know that if you get the pool big enough, you level out risk.  And so why would the government be able to pool like this for itself and not put all of us in the pool? And there isn’t a reason why we couldn’t assign people to the pool.  We could put some actuaries to work and assign people so that all pools have a uniform level of risk.  So we’ve got to have pooling.

We feel that we need modified community ratings.  We feel that you need guaranteed re-issue.  If you bought insurance you shouldn’t lose it and not be able to re-buy it.  We think that we need nationwide marketing.  We’ve got a huge problem because we don’t have any nationwide companies. You’ve got to be local to sell.  And then the other problem with other local stuff is that we’ve got all kinds of state government mandates that get pushed in which pays havoc with this.

In addition to this, we’ve got to solve the medical liability crisis in this country.  We’ve got to solve the medical liability crisis.  It is costing billions in our health care.  That’s no longer just something to argue about.  It is costing billions in our health care. It affects every single person in the country. 

Then there are some other issues that really aren’t medical, they’re societal.  Between 60 and 70 percent of all the health care expenditures in this country today are caused by what we call unhealthy lifestyles. 

If we get rid of tobacco, and alcohol and drugs, and sexually transmitted diseases, and lunches like this every day, we’ll do more for healthcare costs in this country than anything else.  But that is not a medical problem.  That’s a societal problem.

Well, as I said, this is only a national agenda.  This is not rocket science.  This affects you, you and your families.  And you could understand it if you take the time to understand what this is all about. 

And the test I talked about – the test is going to come when you vote for somebody, you listen to what they have to say.  Don’t listen to the platitudes, look at their big plan and see if it answers the important questions: 

Is there true individual ownership?  Is there true portability?  Is there true pooling? 

We can figure that out. 

Thank you very much for your time.