The Wall Street Journal on Saturday had an interview with Angela Braly who is the CEO and president of WellPoint. The article is a good read and I highly recommend it. She admits that “It’s just not clear where we go from here.”  She challenges Prsident Obama’s anti-insurance company complaint that ” I mean, to be fair, the status quo is working for the insurance industry, but it is not working for the American people.”  Mrs. Braley counters Mr. Obama’s demagoguery with some simple facts.

It’s hard to see how WellPoint could be to blame for surging health spending, Mrs. Braly says, when 85 cents out of every premium dollar or more “is paid out in the actual cost of care, doctors, hospitals, suppliers, drugs, devices.” Confiscating the 2009 profits of the entire insurance industry would pay for two days of U.S. health care.

She seems to find no problem with the idea of making people buy health insurance and doesn’t mention any possible constitutional problems.

Mrs. Braly still believes insurers “could make [this system] work from an affordability point of view,” but only if these rules are realistically designed and there is “a meaningful requirement that people join in the pool.” She argues that the bill Congress was on the brink of passing would merely have ensured higher insurance costs.

“People won’t buy insurance until they’re sick,” she explains. “If you can call on your way to the hospital and get coverage, it’s not really insurance at that point.” Thus “prices go up and the number of covered people goes down.”

Such destruction wouldn’t even qualify as an unintended consequence, considering that state governments have plenty of experience blowing up the insurance markets. “Look at New York,” Mrs. Braly says. “Look at Maine. Look at what’s going on in Massachusetts right now. Look at what happened in the ’90s in Kentucky.”

She reports some facts from the WellPoint data that shows how guaranteed issue and mandate creep raises the cost of health care.

Depending on the plan, WellPoint’s monthly premium for a 20-year-old in Indianapolis, where the company is based, ranges from $53 to $202. But the same young adult looking for similar coverage in Albany would face costs anywhere between $832 and $1,047. Obviously health costs vary across the country, Mrs. Braly says, but these disparities are almost entirely due to New York’s regulatory mandates. In a state with 19 million people, 88 New Yorkers between the ages of 18 and 24—88!—have bought WellPoint’s best-selling individual insurance product because insurance laws make it perfectly rational not to acquire costly coverage until people need it.

She then comes back to John McCain’s suggestion of insurance pools to deal with the problem of pre-existing conditions.  Clearly, forcing people to buy insurance at rates that are actuarially unfair is just a tax on the healthy.

Mrs. Braly concedes that some people with pre-existing conditions can find it difficult to find affordable coverage, especially if they lose their job, get divorced, move, etc. “It’s when people have no option that we’re really in trouble and need to find a solution,” she says. But a better alternative to central insurance planning is public-private partnerships to create insurance pools for those with high risks. “That was a great idea that got pushed aside, and I think we need to revisit that concept.”

With the election of Scott Brown in Massachusetts  it appears necessary for the democrats and the president to alter course in their drive for health care reform. There certainly are some things about our health care that could use some improvement, but a major overhaul for a system that provides most of us with the highest quality health care in the world is really not called for.

The things that are easy to do and would save large amounts of money are litigation reform and allowing people to buy insurance across state lines.  Only the lawyers and politicians oppose these measures.  One only has to watch cable television or look at the yellow pages to know that tort reform is needed.  The way to avoid the cost of mandate creep is to allow individuals and employers to buy insurance across state lines.  I imagine a bill could be written on less than 20 pages that would accomplish both of these money saving changes.

A third easy winner is to let doctors, particularly primary care doctors, balance bill.  I think this is actually something that doesn’t need an act of congress at all, but could be accomplished by HHS without legislative action.  Indeed if the government did this, they wouldn’t have to raise the doctor’s fees, but could let them charge what the traffic would bear. Access would be increased and costs would diminish.

The problem of paying for healthcare for people who have pre-existing conditions remains a challenge, but to glibly state that we will make insurance companies accept people who are already ill will have the unintended consequence of forcing the premiums higher and encourage people to wait until they are sick to buy health insurance.  If you can buy health insurance when you are sick, why would you buy it when you are well?  I believe that allowing these individuals to buy into Medicare may be the best solution.  This will allow payment of this medical welfare out of general revenue and not force a special tax on the healthy which is what happens when you won’t allow insurance companies to reasonably underwrite their policies.

Finally, there needs to be reform of the drug approval process to allow more  competition between drug companies for many drugs.  I think the FDA should be privatized like Underwriters Laboratories, but the bureaucrats at the FDA would howl and scream about that one.

On Bloomberg.com on December 31 there was a post that one of Mayo Clinic’s primary care clinics would stop taking Medicare patients entirely.

More than 3,000 patients eligible for Medicare, the government’s largest health-insurance program, will be forced to pay cash if they want to continue seeing their doctors at a Mayo family clinic in Glendale, northwest of Phoenix, said Michael Yardley, a Mayo spokesman. The decision, which Yardley called a two-year pilot project, won’t affect other Mayo facilities in Arizona, Florida and Minnesota.

Mayo’s hospital and four clinics in Arizona, including the Glendale facility, lost $120 million on Medicare patients last year, Yardley said. The program’s payments cover about 50 percent of the cost of treating elderly primary-care patients at the Glendale clinic, he said.

Mayo spokesman, Yardley, went on to say that “We firmly believe that Medicare needs to be reformed.”  This is just another alarm, albeit a loud one given President Obama’s prior praise for the institution.  There have however been other warning signs that this was coming.  The Urban Institute’s Robert A Berenson has written about the shortage of primary care doctors.

The clearest need is for more primary care physicians—and nurse practitioners and physician assistants—to provide first-line care for those newly insured, along with the current population of well-insured patients. In some metropolitan areas, even Medicare beneficiaries can’t find a new primary care doc.

First, we should recalibrate the Medicare fee schedule—which doubles as the payment model for private insurers—to better reward primary care services. That way, primary care would be more attractive to medical school graduates, many of whom have $200,000 of medical education debt. A reinvigorated loan-forgiveness program for physicians practicing primary care in underserved areas would help too. So far, health reform proposals have not directly confronted the primary care physician shortage issue.

It is important to remember that the whole point of the current RBRVS analysis on which Medicare payment is based was to increase payments to primary care physicians.  The problem with the RBRVS system is that it is a government created, price control system that doesn’t work.  This should come as no surprise to anyone that it doesn’t work because government mandated prices have never worked.  In large part, the collapse of the Soviet Union was caused by a similar system of government set prices.

What is the answer to this complex, “unsolvable” problem?  Actually it isn’t very hard or unsolvable at all.  Just let the doctors balance bill as they can in France.  Currently doctors can charge about ten percent more than “Medicare allowable” if they don’t accept Medicare assignment.  Just change that number to say fifty percent.  This would mean that doctors could charge what they believe to be a fair fee and patients can either come up with the additional money or go to someone who accepts Medicare as payment in full.  This would instantly make primary care more attractive and  encourage young doctors to go into primary care and allow them to see Medicare patients.  This would also allow that nefarious group of individuals called health care analysts to have some real market data about what primary care doctors are really worth instead of the loony calculations of the RBRVS.

It wouldn’t cost the government any additional money and actually would decrease Medicare costs as people who have to pay in part for their medical care will be more judicious in its use.

Will this happen?  Of course not.  It would take control away from the government and the government likes control.  Beware of “help” from the government.