Harvard professor and author Louis Menand wrote a very insightful article in the March 1, 2010, issue of The New Yorker entitled “Head Case: Can Psychiatry be a Science?” In it, he describes the complexity of defining, diagnosing, and treating psychiatric disorders.  He quotes many experts in the field of mental and behavioral health disorders who, as he put it, in referring to the work done Professors Jerome Wakefield and Allan Horwitz

“…the increase in the number of people who are given a diagnosis of depression suggests that what has changed is not the number of people who are clinically depressed but the definition of depression, which has been defined in a way that includes normal sadness.”

He later points out that the traditional disease model with which we diagnose physiological disorders is of no help.  In cases in which we present a fever to a doctor, the doctor can conduct a test to determine whether the condition is a bacterial infection treatable with antibiotics, or a virus, which is not treatable.  With psychiatric disorders, particularly a mild case of depression, there are many false positives, because no one has found a test that, with any degree of confidence, demonstrates that someone has a biologically treated case of clinical depression.

Why is this important?  It is an example of why the traditional insurance model does not work for health care, and why giving everyone access to affordable “insurance” is doomed to failure. Insurance covers known or definable risks that do not increase through being radically being redefined over time.  If they do, premiums go way up.  For example, life insurance policies are typically not issued to people living in a war zone in which the risk of death has exponentially increased and shows no signs of being predictable or controllable.  Insurance companies can feel comfortable insuring against death, injuries, or property damage to cars and homes because these risks do not jump out of control in a short period of time.

Health insurance has become more like life insurance in war zones, with one big difference.  In the war zone example, an external set of circumstances, the beginning of a war, has increased the risk.  In the case of health insurance, not only can external circumstances raise the risk and cost, but both the consumer and the providers of treatments can redefine the risks and increase the costs.

Think about a life insurance policy.  The risk against which to be insured is “death.”  Imagine if a life insurance policy were suddenly converted into a policy that insured against “death,” being diagnosed with a terminal disease, and losing one’s home.  None of us would expect the insurance company to pay for these other events, because the policy has a well-defined risk it covers.

However, the definition of “health” keeps changing, sometimes through patient behavior, sometimes through physician behavior, sometimes through the marketing done by pharmaceutical companies, and sometimes by operation of laws and regulations.  In the last 20 years, we have seen the expansion of “mental health” coverage to include mild depression that was not deemed worthy of insurance coverage.  While we expanded mental health coverage at Pitney Bowes because we believe treatment for mental conditions like clinical depression is foundational for getting people able to adhere to treatment plans for diabetes, heart disease, and hypertension, we also were able to put in controls that prevented runaway health care cost increases.

Similarly, drug companies have defined erectile dysfunction as a medical condition requiring treatment by a physician and a drug treatment like Viagra.  I have no problem with this process of creating new medical conditions that lend themselves to drug treatments, but we should not be surprised that health care costs keep going up.  Similarly, 20 years ago we felt sad for people who could not have children and glad for them if they were able to access fertility treatments to be able to fulfill their dreams of being parents.  However, to require that multiple-egg fertility treatments be included in every insurance policy issued in a state, as is the case in Connecticut, drives up health care costs for everyone.

There are many other examples of marginally effective or even ineffective treatments that patients and physicians, and eventually lawmakers, believe they have to make a requirement in every health care insurance policy, so the cost keeps going up.  The notion that, by having government control everything, we will see cost reductions over time, is not credible: government mandates which drive up costs have been part of the problem in the first place.  If anything, government control of health care will accelerate the process of adding more “requirements” to health care.

There are three cost drivers in health insurance:

• What gets covered and paid for;
• What is paid for each transaction in which there is a diagnosis consistent with a covered item; and
• The frequency with which transactions occur.

Government can be very effective in mandating what gets paid per transaction, and, indeed, through Medicare and Medicaid, for very low administrative costs and with high reliability, government, through its contracted third-party administrator relationships, does a very good job paying doctors, hospitals, drug companies, labs, and other care centers for services rendered.  In fact, although it is not clear whether a majority of physicians feel this way, a significant number of physicians would prefer the simplicity and predictability of payment of a single-payer system operated on behalf of the government over the confusing, complex, and resource-consuming challenges of submitting and defending private insurance claims.

What government does poorly is keeping control of what gets covered and paid for, and, because of its low administrative overhead and its payment on a transaction-by-transaction basis in what we call a “fee-for-service” system, controlling the frequency of transactions.  If I have a chronic disease like coronary artery disease, no payer can monitor whether it is appropriate for a cardiologist to see me 3 versus 5 times a year.  That decision has to be left to the physician, and I am certain that an attempt by government to regulate it would be met with extreme anger and resistance by patients.  Yet, a 20% reduction in payments to the cardiologists could be easily offset by increasing the frequency with which cardiologists see patients.

What would also happen is that physicians would spend less time with each patient, which would reduce the effectiveness of each visit, and the treatment paths would more often be more tests and more drugs, which will add cost to the system.  I remember having a problem with staph infections on my face in the late 1980’s and early 1990’s.  The private practice physicians whom I consulted had 5-10 minute visits, which only gave them the ability to diagnose the problem and prescribe a medication.  Dr. Jack Mahoney, the Pitney Bowes Medical Director, whom I first consulted in 1996 and who had the luxury of a 20-minute visit, determined that I needed to change how I shaved, and was able to give me advice that not only eliminated the problem at the time, but prevented it from ever coming back.  He was not rewarded for having encounters with me, but for making me healthy.

l comfortable insuring against death, injuries, or property damage to cars and homes because these risks do not jump out of control in a short period of time.

Health insurance has become more like life insurance in war zones, with one big difference.  In the war zone example, an external set of circumstances, the beginning of a war, has increased the risk.  In the case of health insurance, not only can external circumstances raise the risk and cost, but both the consumer and the providers of treatments can redefine the risks and increase the costs.

Think about a life insurance policy.  The risk against which to be insured is “death.”  Imagine if a life insurance policy were suddenly converted into a policy that insured against “death,” being diagnosed with a terminal disease, and losing one’s home.  None of us would expect the insurance company to pay for these other events, because the policy has a well-defined risk it covers.

However, the definition of “health” keeps changing, sometimes through patient behavior, sometimes through physician behavior, sometimes through the marketing done by pharmaceutical companies, and sometimes by operation of laws and regulations.  In the last 20 years, we have seen the expansion of “mental health” coverage to include mild depression that was not deemed worthy of insurance coverage.  While we expanded mental health coverage at Pitney Bowes because we believe treatment for mental conditions like clinical depression is foundational for getting people able to adhere to treatment plans for diabetes, heart disease, and hypertension, we also were able to put in controls that prevented runaway health care cost increases.

Similarly, drug companies have defined erectile dysfunction as a medical condition requiring treatment by a physician and a drug treatment like Viagra.  I have no problem with this process of creating new medical conditions that lend themselves to drug treatments, but we should not be surprised that health care costs keep going up.  Similarly, 20 years ago we felt sad for people who could not have children and glad for them if they were able to access fertility treatments to be able to fulfill their dreams of being parents.  However, to require that multiple-egg fertility treatments be included in every insurance policy issued in a state, as is the case in Connecticut, drives up health care costs for everyone.

There are many other examples of marginally effective or even ineffective treatments that patients and physicians, and eventually lawmakers, believe they have to make a requirement in every health care insurance policy, so the cost keeps going up.  The notion that, by having government control everything, we will see cost reductions over time, is not credible: government mandates which drive up costs have been part of the problem in the first place.  If anything, government control of health care will accelerate the process of adding more “requirements” to health care.

This is why the Obama Administration focus on health insurance access is deeply flawed.

On Friday, February 26, 2010, Gerald F. Seib, the Wall Street Journal reporter for the Capital Journal column, wrote an insightful column entitled “Parties’ Differences Are Clear – and That’s a Start.”  In his column, he explained clearly the philosophical differences between Republicans and Democrats on health insurance reform.

He stated that there were three fundamental differences:

• Democrats favor comprehensive reform and transformation; Republicans favor a more incremental approach.
• Democrats believe that access is the priority, rather than cost reduction; Republicans believe that if health care costs are reduced, the access problem will get solved.
• Democrats believe strongly that the government needs to set standards for health insurance and health care; Republicans believe that the market, particularly consumers, need to decide what they want for health insurance and health care.

Where do I stand?

• I am somewhere between the two parties on the comprehensiveness issue, although I tend to believe that comprehensive reform opportunities come along infrequently and we should take advantage of this one.  On this issue, I would agree with the Democratic philosophy.
• On the other hand, I do not believe we can tackle the insurance access issue without understanding why access has been a problem in the past. Runaway health care costs cannot be deferred until later.  Business and global competitiveness depend on addressing cost before access.
• Relative to health care needs, I believe the government should create a safety net for those unable to get coverage from private insurance, although I do not believe that safety net should include either guaranteed issue or elimination of pre-existing condition requirements for private insurance policies.  The burden for the least healthy members of our society, and them alone, should be borne by all citizens, not in a way that burdens every private insurance policy.  Government is totally ill equipped to decide on minimum coverage for everyone else.  Over the years, elected officials have repeatedly added coverage mandates to all insurance policies because of the power of special interest groups, whether or not the mandates represented good medicine.  Think back to the excessive expansion of bone marrow transplants combined with high-dose chemotherapy in the early 1990’s because cancer advocacy groups mistakenly believed it could save lives.  In fact, after a Congressional mandate was also adopted in many states, the treatment was found to be worse, on average, than doing nothing.  It shortened lives.

Some very smart people have said to me: “Why don’t we solve the insurance problem now, since we can, and we’ll get to cost reduction later?”

Aside from the competitiveness issues to which I referred above, there are two other problems with expanding coverage and not dealing with upstream prevention and health care system issues:

• Giving someone access to health insurance is not only not the same as giving them access to health care, it often results in lower quality care for everyone because of increased demand, and, eventually, decisions by doctors to stop treating Medicaid patients because they get reimbursed less than they do through commercial insurance.  Having an insurance card, but no doctor to use it with, is useless. Massachusetts has had universal health insurance since 2006, but both the access to care and the quality of that care have suffered.  More non-elderly adults report difficulty in getting access to physicians in 2009 than they did in 2007.
• To the degree that there is universal insurance, but inadequate access to doctor care, there is even more strain on our emergency departments. Many studies have pointed out that a majority of the people who access the emergency department for non-urgent care, that is, inappropriately, have insurance coverage, but either do not have timely access to care or are too impatient to wait until they can get access.  The system gets stressed at its weakest point, emergency care.

I am most disappointed that the Democratic majority in Congress and the very capable White House staff could not establish a prevention and wellness agenda, and begin to take on the badly broken fee-for-service health care payment system.

People who argue the practical politics of tackling the insurance issue always point out to me that politicians are swayed by hard-luck stories, individuals who died or went bankrupt because they could not afford sufficient health insurance to cover catastrophic health problems like cancer, heart disease, or a serious injury.  Unfortunately, no health insurance system can eliminate these tragic stories.  Moreover, increasing demands on the health care system without increasing the supply of physicians and nurses creates other kinds of tragedies.

Politicians are very moved when an individual tells a story about being unable to afford a “life-saving” cancer treatment because of no or inadequate health insurance. What puzzles me about these stories is whether the patient has attempted to get relief directly from the pharmaceutical manufacturer.  Every pharmaceutical company has programs to provide life-saving drugs for individuals who cannot afford them, and they provide relief for many patients every year.

However, the tragedy of someone who had no primary care physician because doctors in his or her community did not accept Medicaid patients, and, who, as a result, has an undiagnosed heart or diabetic condition, is a harder one to portray on the evening news.  The patient generally does not understand that, but for a stingy government program, he or she might have had access to a doctor who could have diagnosed and treated the condition earlier.  A public health official from India described the explosive growth of undiagnosed chronic disease cases as a “health tragedy in slow motion”

Implementing universal and affordable health insurance without addressing the imbalance between supply and demand in the underlying system will simply swap one kind of tragedy for another, at a much higher cost to the taxpayer and to businesses that can create jobs to bring many more people out of poverty.  The Democratic majority seems hell-bent to do something, even if it is the wrong something, relative to health insurance.  That’s too bad, and we will all pay dearly for the mistake.

Not surprisingly, since this is the first anniversary of President Obama’s inauguration, and the special U.S. Senate election in Massachusetts has produced a result that seemed inconceivable six weeks ago, a Republican victory, many people have asked my opinion of President Obama’s performance.

I met the President four different times before he was elected, three of those times at National Urban League events. President Obama struck me as a person with virtually unlimited growth potential and tremendous intelligence and character, and I still believe he has those qualities.

At the same time, I remind myself that he had no executive experience of any significance before he secured his first executive job, being President of the United States.  I expected him to make some rookie mistakes because of his inexperience as a chief executive, and he has.

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Although I usually post a blog on a public policy issue, this end-of-the-year blog will be a combination of personal, public policy, and business observations. The one thing I can say with certainty is that 2009 evolved in a very different way from what I expected when I stepped down from the Executive Chairman position at Pitney Bowes a year ago.

The only thing that happened as I anticipated was that I would disengage emotionally from Pitney Bowes very rapidly, because that is who I am.  Once I leave an organization, I leave with fond memories, great friendships, and insights of lifelong value, but I leave the organizational responsibilities completely behind.  I am not a person who is nostalgic about what I once had or did, and this was no exception.  Other than that, everything that happened was either a surprise or a disappointment.

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Recently, the U.S. Preventive Services Task Force was the subject of a great deal of criticism for issuing revised guidelines that recommended that, except for women who have specific elevated risk factors, such as a family history of breast cancer, women not receive regular mammograms until age 50. These revised guidelines were roundly attacked.  As Blogger Helen Searles wrote in a December 1 posting:

“Within hours of announcing its findings, the Task Force faced a barrage of attacks from women, doctors, journalists and politicians across the U.S. The onslaught was swift, harsh, and emotionally charged.”

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During the course of determining whether I should invest in a documentary film about dogs, I gained some quite interesting insights into the potentially new role dogs can play in our health care system.  Because dogs have a sense of smell that is 40 times as acute and discriminating as that residing in humans, some researchers have explored whether dogs can detect diseases as accurately and reliability as much more expensive technologies, with no need for invasive and time-consuming diagnostic processes.

Two organizations, the Pine Street Foundation in California and the Sensory Research Institute at Florida State University, have each done reported studies which have concluded that dogs can reliably detect various kinds of cancers, such as prostate, breast and skin cancers, because tumor cells give off different odors from regular cells.  It will be quite interesting to determine whether their reliable detection is such that they can detect the presence of these diseases even earlier than more high-tech alternatives like 64-slice CT scans or MRI’s or nuclear magnetic resonance systems.  Dogs apparently have demonstrated as well that they can detect the imminence of an epileptic seizure minutes before the individual subject to the seizure has any symptoms.

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At the risk of weighing in on a highly controversial and emotional issue, I want to comment on the insurance industry report that the Senate Finance Committee proposal would add $4,000 in insurance policy costs per insurance policy holder per year by 2019.  Not surprisingly, many elected officials are extremely angry about what appears to be a last minute attempt to undermine support for the Committee proposal, which will be the subject of a vote on Tuesday, October 13.

One could question why the insurance industry waited until the eve of the vote to release these findings.  Their motivation appears to be solely that of defeating health reform legislation.  However, I have gone beyond the politics of their position, and have concluded that, based on what they said, their argument is a legitimate one, and elected officials will have to confront the problem they are presenting if the legislation gets enacted in its current form.

How could coverage expansion partially financed by an individual mandate result in higher costs?  If I were an elected official, I would find it hard to understand how it is possible that adding many policyholders into the system could increase costs, especially since the Joint Committee on Taxation has found otherwise.

The answer is actually relatively simple.  Imagine two populations that are currently uninsured, one of which is young and healthy and spends almost nothing each year on health-related costs, and  the other of which is older and less healthy and, with proper health care, would spend $5,000 per year per person.  If the insurance coverage specified in the proposed legislation costs $2,500 per year per person, the older person will want it, and the younger person will not.

If the legislation proposes an individual mandate, which is a requirement that the individual buy the $2,500 per year insurance or pay a penalty, the level of the penalty has to be very close to, or preferably, the same as the cost of the insurance policy, which would make it economically advantageous for a healthy young person to buy the insurance.  Under most calculations, adding most of the healthy young population, along with other taxes and fees, achieves the President’s stated goal of making health care reform cost-neutral for the federal budget.  I understand that the insurance industry did not look at all elements of the Senate Finance Committee proposal, and that the Committee attempted to address the problem in other ways, but I do believe that there is a significant risk of having more sick people enter the insurance system, and fewer young, healthy people.

The problem with the individual mandate is the penalty has been reduced from being very close in dollars to the cost of the insurance policy to a much lower number.  The Committee leaders reduced the mandate because of objections from Republicans, who criticized it as a disguised tax on the middle class, and from Democrats, who felt that it created real economic hardship for the middle class.  By reducing the penalty to a much lower number, the Committee almost guaranteed that most healthy and currently uninsured young people will opt for the penalty rather than the insurance.

On the contrary, the less healthy older uninsured people will always opt for the insurance, but they will cost the insurance plan far more than the premiums they pay.  Unfortunately, because of the low penalty, their incremental costs to the insurance plan will not be offset by premiums paid by healthy young people, because the young people will pay the penalty, which will be inadequate to offset the cost of the older people.

So what does the insurance company do?  Very simply, it has two options: first, raise the cost of the insurance plan for everyone currently participating in it; and second, try to reduce what it pays to health care providers.  The cost of insurance is likely to rise for everyone.  The burden of lower provider payments is most likely to fall unevenly on the provider universe.  Major academic medical centers, like Yale-New Haven in Southern Connecticut, have sufficient bargaining power, so insurance payments to them will not decline.  Specialists who have unique skills and market power will not see declines.

On the other hand, primary care providers and financially fragile community hospitals and outpatient centers will get squeezed, because insurance companies will have the power to do that.  By the way, the situation does not improve because government is the payer, because governments have annual budget challenges that have caused them to reduce Medicaid payments whenever they get into a financial crunch.

This legislation is a deeply flawed product, but I can empathize with elected officials who feel a need to expand coverage to people who do not have it today.  I can debate whether the uninsured are driving up health care costs, but elected officials hear a lot of horror stories from voters who are either uninsured or underinsured, and feel like they have to do something.

Why do I make these points when the Committee is very likely to pass the bill, and some form of legislation is increasingly likely to be enacted into law?  Very simply, I do so because, once the legislation passes, we will need to figure out how to contain the damage it has the potential of doing.  This legislation is the beginning of a long process of transforming our health care system, not the end of it.  Although President Obama would like to be the last President to have to address health care, I do not believe his goal will be achieved.  This is too complex a set of problems to be addressed with a single piece of legislation.

Many people sought my reaction to President Obama’s health care speech.  I had a mixed reaction.  It was reassuring to see him take a decisive position in staking out the case for reform, his priorities, and the common-sense proposals on which there appears already to be agreement.  I also think that he was more eloquent than I have ever seen him on any issue, and I felt inspired by his leadership skills, and his obviously sincere and deep moral values that drive his passion on health care.

While I believe that we should attack the health crisis first, then the health care delivery crisis, and then attack health insurance, rather than his obvious prioritization of health insurance, his decisiveness and strong leadership has value independent of how he prioritized the issues.

There are two fundamental problems with his plan:

• The proposed public option is a flawed solution to the problems he outlines; and
• The proposed methods for paying for expanding care to tens of millions of additional Americans are highly unlikely to yield the revenues he has projected for them.

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One of the most complex medical challenges policymakers face is when and how much to pay for treatments and screenings for cancers.  Screenings and treatments are extremely expensive, and, while they allow for earlier detection and potential treatment of cancers, they are also very costly and have a high degree of unreliability.

As non-medical professionals, we tend to believe that diagnostic tests like mammograms and biopsies are clear and definitive.  The reality is much complex:

• Biopsies indicate the presence or absence of cancer cells in the tissue samples taken.  Whether there are cancer cells in tissues not subject to sampling is unknowable unless there are other ways to detect their presence.  Moreover, biopsies only indicate that cancer cells are present, and like a snapshot taken at a point in time.  They do not indicate whether the cancer is growing.
• Mammograms also have reliability issues.  To some degree, radiologists miss indicators of cancer cells, and also, sometimes,  have the problem of “false positives,” that is, a mistake is made in diagnosing someone with cancer when they have no cancer cells present.  Similar to biopsies, mammograms can only tell doctors and patients whether cancer cells, not whether those cells will grow over time.

In a newsletter entitled “Medicine for People” published by the Monroe Street Medical Clinic, the authors correctly point out that there are many non-aggressive breast cancers with which women can live for decades.  As they point out, “the most common form of cancer detected by mammography is ductal carcinoma in situ (DCIS). This is a cancer confined within a milk duct within the breast.”

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