Healthcare Reform Debacle


We need to get away from employment-based health care.

Martin Mushkin, Esq

403 Stanwich Rd.

Greenwich CT 06830

An Open Letter

Senator Chris Dodd

448 Russell Building

Washington D.C., 20510

Sen. Joseph Lieberman

706 Hart Office Building

Washington, DC 20510

The Honorable Jim Himes

United States House of Representatives

214 Cannon House Office Building

Washington, D.C. 20515-0704


We Have Learned That Employment Based Health Care Can’t Be Counted On.

We need to get away from employment-based health care. As a small business owner I know that I can get better employees by offering them a health care plan. Most prospective employees will ask about a prospective health insurance plan. But employees know they are a pink slip away from losing their health insurance plan. If you lose your job, you will lose your health insurance unless you pay for it out of your own money or are lucky enough to get anther job quickly. Health insurance tied to employment limits employee mobility, something a flexible economy really needs. Getting away from employment-based health insurance will increase employee mobility. That’s a kind of liquidity any economic system needs.

Health Care Is Rationed At Present And That Is Immoral

Now comes the rationing. What if you or your loved ones need medical care after you lose your job or don’t have health insurance for some other reason? Unless you are really poor and covered by Medicaid, a very minimal program, it becomes “your money or your life”. Sign here please they will say at the hospital. Well, how much will it cost? Nobody asks that question, and no hospital gives a person in an emergency situation an up-front estimate of costs or a fixed fee arrangement. And anyway, no one is going to negotiate under these conditions. Who wouldn’t sign when faced with serious illness or even death? Today, impossible medical bills cause more than half of individual bankruptcies. Lose everything you own, but at least you and your loved ones are alive and well.


We Need A National Health Care Market In Which All Insurers Compete On A Level Playing Field

There is a way to avoid all this. It’s a national health care market. Each state now sets its own rules for health insurance companies. What works in one state may not work in its neighboring state, and even it if does, it may be priced differently. Health insurers spend lots of money complying with the rules of 50 different states and making their voices heard—that’s lobbying–in all those jurisdictions. If the federal government was the governing body setting the rules, there would be a single market of 300 million people. Insurers could compete on a level playing field and everyone knows that competition brings innovation and forces the competitors to provide a better product at a better price.

A National Health Care Market Will Make America More Competitive

In this shrinking world, the US needs to be more competitive. Coolidge said “the business of America is business.” A national health system based on employment is bad for business. It loads employers with a cost that ought to be borne by the entire nation. A healthy country produces more and is not held back by those who are under-insured, or not insured. Their health care is paid for one way or another by all of us, through economic loss, subsidizing public hospitals, Medicaid, or similar programs. A national health system would relieve all business, big or small of having to search out health insurance policies and load our pricing with the cost. No more having to jack up the cost of an American built car by $1,500 to pay for a really good union health plan.


Health Insurance Companies Are In The Business of Making Profits; Not Curing People.

Medical professionals frequently have to refuse service because some ill-qualified or ill-informed technocrat decides that the policy does not cover or the insurer simply pays so poorly that the health care provider exercises his entrepreneurial right and refuses to deal with it. If you have insurance you might discover that your so-called insurer says you are not covered even though the doctor says you need the medical care.

Medical insurance policies are opaque. They are not like automobile policies that, because of a mature robust competitive market, are all essentially the same. When you buy an auto policy a few words tells you what choices you have and rarely do you discover that getting into an accident, say with a red car, is not covered. Unfortunately for the health insurance industry, their approach to health care seems to have that kind of absurd hidden exceptions. -And by the way, having auto insurance is compulsory. Nobody seems to think that’s a bad thing.


How Would Such A Plan Be Paid For?

We pay for our own health insurance by writing checks and we pay for the health care of others through our taxes. Hospitals are not allowed to turn away those in critical condition. We pay for those who cannot pay one way or another.

Whoever would think that a well recognized city hospital would not be “in network”? With a national market, all accredited hospitals would be “in network”. No more announcements, “sorry we do that kind of treatment, but your insurance company won’t pay or won’t pay enough; we’re out of network”. With competitively standardized policies, as we have in the automobile area, the accrediting and licensing authorities would decide where treatments are given and all hospitals would be “in network” for the procedures they are accredited to give. Medical providers are the experts in health care, not insurance companies.

I think health care providers are entitled to make a very good living. But a national system would be able to broadly control costs through competitive mechanisms.


A Well Run National Market Needs A National Public Option.

Without a national insurance option, a national health care system becomes a subsidy for a dysfunctional insurance industry. Like all insurance companies, health care insurance companies operate in a market where they are semi-public utilities. It is in the national interest for its citizenry to be healthy. The health of the nation is not the place to squeeze the last buck out of the public to satisfy stockholders.

The Health Insurance Medical Industrial Complex Is Akin To A Public Utility And Ought To Be Treated Accordingly.

Like the need for fuel, food, and electricity, the demand for basic health care facilities in any given city, county or state is predictable enough to plan on it. Of course there will be variations, but that is true of any business. Except for the rare instance of epidemic, or the equivalent, the delivery of health care is not a highly volatile market. Its most volatile budget item is the ever-increasing need to raise capital for equipment and personnel to compete in the very profitable acute care market. The medical facility itself is essentially a public utility. There is plenty of cost savings that can be had if the market for services and facilities is national. For instance, the great medical-industrial “arms” race in capital-intensive highly profitable acute care facilities is not reported to increase the overall health of the country. Indeed it seems to have no meaningful affect in that area at all. Treatment of chronic and preventable disease is short changed. These areas need serious reappraisal.

Such a system would control costs but sensibly limiting what providers are paid. I believe health care providers are entitled to a very good living, but in a properly regulated health care market they would continue to be assured a good living. But, through market forces, demand and supply would moderate what the market (meaning the payers) would bear.

So far the assumption is that everybody can get insurance. We know that is not so. Just as the national government is the source of social security, and we have a national system of unemployment insurance we need a really a good national health plan. It has to be open to everybody and everybody has to pay for it. No more having to play games with whether you are covered today and not covered tomorrow, as is the case when coverage is based on employment. No more making believe we are not paying for our neighbor’s health care when they get expensive acute care anyway and discover they don’t have coverage or just can’t afford it. A robust universal public health insurance option is a necessity. Not only do we owe it to our fellow citizens but it will increase overall productivity on a national scale.


Real Entrepreneurs Will Welcome The Chance to Compete.

Can’t compete? Private schools have thrived even with government providing education for every kid in the country. FEDEX, UPS and a host of others compete with the post office by innovating and delivering what their market niche sees as a better quality product. Real entrepreneurs are not simply technocrats who think they are entitled to a profit because they administer part of semi-public utility industry. Undoubtedly, with a national health care system those who can afford it will buy a health care supplement, something like the supplements available to basic Medicare. There would be plenty of room for real entrepreneurs.

Yes, It’s The Money That Counts.

The national health care option ought to be accounted for as though it were a private business. It ought to be established to pay for itself, taking into account that everybody must contribute to it one way or the other — just as is the case with social security, unemployment insurance and other safety net programs. It ought to be priced accordingly. Undoubtedly, those who can pay will end up paying for those who cannot. But we do that anyway. Accounted for on a true revenue and cost basis will result in an economically transparent system. Real entrepreneurs will come up with a better product they can sell to their targeted markets. Undoubtedly they will squeeze out much of the 20%-30% overhead associated with many health insurance carriers. The transition might be painful but I think the hurly-burly of capitalism will produce a good result. I have little sympathy for those who think their business is an entitlement to a profit while not recognizing its semi-public utility nature.

Those who oppose the plans now going through Congress say it’s the money that counts. If they really believed that, they would push for a national plan; one that stops the rationing of medical care based on employment; puts the decisions as to what care is medically appropriate back in the hands of the doctors; own up to the real cost of health care; cuts the waste out of the system; control costs through regulated supply and demand market rules, awards the innovators; makes the nation healthier; relieves the system of this dysfunctional economic stress; and make us better able to sell American products to Americans. That’s the real American way. It’s the money that counts.

Very Truly Yours,

Martin Mushkin, JD (Stamford, CT.)*

* An attorney whose practice emphasizes corporate finance

From: Dr. Jeff Kaplan []Sent: Wednesday, October 07, 2009 5:18 PM
To: mmushkin

Only a cursory read, but good letter - We disagree only in that we have such different perspectives - I'm for quality control and competing on the basis of outcomes (i.e., benefit) - Cutting what doctors earn without continuous quality improvement, case-mix adjustment and understanding the vicissitudes of life is just plain wrong and no other industry is expected to 'cut off their nose to spite their face,' frankly. If you read my posts, It's "Measurement and Management." See and "Reforming Healthcare & Managed Care." or look at

On Oct 7, 2009, at 8:42 PM, mmushkin wrote:

Please note that in my article I said that I thought that health care providers should earn “a very good living”. I agree that trying the cut the bottom line for doctors will not work. On the other hand, a properly regulated market will govern that and not cut pay. Note that doctors are, in effect, guaranteed a good living by working in their fields. Of course this is after around 10-12 years post secondary education, internship and residency, the payment of arduous dues. On the other hand, I wonder about a $1 million take home. What justifies that? In most industries that kind of pay comes from managing people, organizations, or from great innovation as in patents. In law, it does not come from practicing law but from bringing in the business, managing mega cases or arguing cases involving extraordinary sums and high risks. On a statistical basis that kind of case is rare. There is no higher risk I suppose than certain surgeries, but most of those high-risk surgeries are the statistical rarity — Am I right or wrong?

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