Binding the Invisible Hand

By JAMES MARTIN   Saturday, March 16, 2013 - 9:54 a.m.

This past week I met with my speech therapist in anticipation of losing the ability to communicate. ALS will ultimately take away the agility to move my fingers for typing and the ability to speak. Thanks to modern technology, communication will still be possible utilizing eye movement to control a computer cursor. In essence, my eyes will control the mouse enabling me to type, surf the net and use a program to speak. That is the good news.

The bad news is that the invisible hand of capitalism, which promotes competition and drives prices down, is bound by third parties that promote price gouging by taking the consumer out of the cost equation. We, as tax payers and insurance purchasers, are being manipulated into paying outrageous prices because the incentive to be cost conscious is denied to patients.

We have seen the invisible hand of capitalist competition at work with lasik and cosmetic surgery which are not covered by Medicare or most insurance policies. These procedures have increased innovation and decreased cost due to competition that is absent when government and the heavily regulated insurance industry are involved. In my lone situation, the bloated cost of their involvement is staggering.

The "communication tool" is a tablet computer similar to an I-pad. The cost of my I-pad was about $400. The cost of the "communication tool" is $8,000. But just like on t.v., there's more. It does not come with the eye gaze camera for hand's free use. That USB add-on requires another approval and costs an additional $7,000. I found similar technology for $100. The total of the government approved device with attachment is $15,000.00. (Competitor products are similarly priced.) There's still more: if my breathing is too far gone the approval will be denied because the Medicare/insurance rules cannot justify paying so much for the device if I am too close to death. I guess I should brush up on my morse code so I can blink out words.

Medicare will pay 80% of the $15,000 cost of this tool. So taxpayers pay $12,000 for just one of these systems. Extrapolating this waste out to every Medicare/Medicaid patient it is no wonder that our Medicare/Medicaid entitlements are driving us to bankruptcy. Because the vast majority of the population is oblivious to this gouging, and without the ability and incentive to shop around, the gouging continues.

Now I am sure some of you naively believe Obamacare will fix this abuse. Such belief is understandable in Washington and Colorado where marijuana is legal, but all the sober people know better. Why would government Obamacare be any better than government Medicare? Keep in mind also, that under Obamacare, there is a new tax on medical device manufacturers of 2.3% on sales, not profits. That cost will obviously be passed on to the patients and when it is, Medicare will pay 80% of that additional cost. It just keeps getting better.

After my diagnosis I told a friend that it would be interesting to watch if my strong conservative ideology would falter as I entered the Medicare/Social Security entitlement world. I do not believe that it has because this unnecessary and outrageous gouging offends me. I am all for profit, but not for government manipulated profit at the expense of my children and their future due to government overpaying.

Though I do not stand well any longer, I am taking a stand. I refuse to exploit the taxpayers by allowing these companies to gorge on my disability at the government trough. I will not get these devices through Medicare at these unconscionable prices. I am working on a common sense (non government) alternative and will keep you posted.

Jim is am an attorney and graduate of Gonzaga University and Marquette Law School. He lives in Spring Prairie near Burlington. He has been in private practice for 17 years. He is in the process of closing his practice due to a diagnosis of Amyotrophic lateral sclerosis (ALS). He his married with 6 kids. Jim is a community blogger and is not a part of the Gazette staff. His opinion is not necessarily that of the Gazette staff or management.

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(24)
janesvillean
Mar 19, 2013 at 11:33 p.m.
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TCB, you do realize that Cuba is ranked almost identically with the US by the World Health Organization (US: 38th, Cuba: 40th), and that the other countries you mention are nearly all ranked higher, with lower expenditures per patient?
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Canada: 30th
UK: 18th
Australia: 32nd
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Iran is ranked 93rd, but of course that country faces severe international sanctions and has difficulty importing any technology, let alone iPads. Thus your examples show either ignorance, or confusion.
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It's also really not clear from what you say whether you believe that the US *should* allow outrageous profit margins in order to subsidize the world, or should *not* in order to save American taxpayers (in part, because they bear only a fraction of the costs of the US healthcare system) money.
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I do not dispute Martin's claim that these devices are "gouging" the system, as that's an opinion anyway, but I do ask what mechanism he wants in place to prevent it. As it stands, the GOP is making great efforts to prevent Medicare from having any oversight over costs, but he is claiming that Medicare ... has no oversight over costs. If you and he are proposing limiting Medicare reimbursements as a method of controlling costs, what is your response to the inevitable outcome where only wealthy ALS patients are able to afford communication devices? If as you and he suggest it is so easy to cobble together the technology for this market, why has not the "invisible hand" of the market already created a competitor offering off-the-shelf products for a greatly reduced cost?
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As for your desire for reduced costs, note that health insurers paid out $1.1 billion in rebates as of August 2012, and will have a higher target this year. I'm sorry if you weren't affected, but you are the ones endorsing different outcomes for different wealth classes.

TCB
Mar 19, 2013 at 2:44 p.m.
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Janesvillean,

Medicare/CMS is paying for the device. At 80%. Medicare pays for investigational products on a daily basis-with out without staffed technical or sales personnel-and the iPad-like device is not considered investigational-only expensive. Chapter 14 of the Medicare Benefit policy manual for more information.

cms.gov

Category A or B product are reimbursed. Jim issue is that he finds these similar products too expensive and he feels it is gouging the system. I agree with you that costs to service and compete in small disease state are disproportionately high, however, the alternative is no research-is this an ethical position to take? The govt (i.e. tax payers) help to fund research in orphan and rare disease states-which is 1 reason why the world beats a path to the USA-and not Cuba, Canada, UK, Iran, Australia, or anywhere else the business of medicine is socialized. It is the innovators dilemma to invest capitol in areas which may never bear fruit-which is why it costs nearly 2 billion to bring a compound through the various clinical trial phases to market. These costs are amortized by high prices when and if these products are approved.

Obamacare does NOTHING to control costs and it does nothing to incentivize innovation. Paying physicians less for services is not controlling costs-its shifting the cost. Jim is correct that there is a new tax on med devices of 2.3%. This is simply a pass through price increase which will be paid by customers in the form of much higher prices on med devices-instead of 15K in Jims case-think 6% more or 900 per unit. This way the manufacturer passes on the cost of the tax increase and can artificially raise prices to a third party-which then charges higher premiums to end users. JIm, like me is not likely to see the $2500 PROMISED by Obama and Biden returned to me in the form of lower healthcare premiums. rather-the cost of doing business are much higher-but dont expect a tax and spend community organizer to have event he slightest understanding of market forces and how they work.

janesvillean
Mar 19, 2013 at 5:10 a.m.
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What Martin is likely overlooking is the fact that Medicare cannot pay for these products unless they undergo certification as medical devices, and that the market for certified devices with fully staffed technical and sales support is very small (some 30,000 living ALS patients in the US). This is not conducive to the market leveling faced by the iPad (66 *million* sold last year) or USB devices (hundreds of millions). It's a bit unfortunate that medical (like educational) applications tend to have trouble keeping up with this year's technology for similar reasons. But this is not a problem that "Obamacare" created, by any means.
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Of course, Obamacare does have a mechanism for physician review of treatments and costs that would be able to notice outliers where waste and fraud may be occurring, called the Independent Payments Advisory Board, and it will have regulatory imposition powers beginning in 2014. Martin's conservative allies in Congress, however, have targeted this as one of their least favorite parts of the Affordable Care Act and repeal proposals already exist. Without a way for Medicare to review costs, I wonder how Martin expects outrageous care costs to be reviewed, and invite his suggestions on this matter.

TCB
Mar 18, 2013 at 10:01 p.m.
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baecub,

Jim is not seeking validation on his economic opinion and Hawking is not alive due to socialized medicine. That is a preposterous statement. If you've learned anything at all about ALS adn Jim's story - it is that this disease attacks its victims from different angles and at different rates. It does not attack caddies at higher rates than physicists or those who live in countries which employ socialized medicine. Your comment is another weak attempt to link correlation with causation.

Should you have the courage, I look forward to reading what economic position you specifically disagree with- and how ALS specifically contributes to distorting this position.

baegucb
Mar 18, 2013 at 7:58 p.m.
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Sorry, but the fact that someone has ALS does not validate his views on economics. Sad, but true. Dr. Hawking is alive due to socialized health care iirc.

truecitizen
Mar 18, 2013 at 12:58 p.m.
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....competition that is absent when government and the heavily regulated insurance industry....is exactly what true capitalist want to avoid and is also what Obama care will create more of. And yet we voted for that guy to produce more government involvement, which is what throws off all of the true incentive correlations. I am impressed with your courage but I disagree with the article's initial statements. I know two people with similar conundrums, and they see (real) capitalism as a solution. I agree with you about Obamacare. The country should not accept something so vague which affects us unwittingly anyway.

comet65
Mar 18, 2013 at 12:32 p.m.
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I can't say that I disagree poobah. You're right, I think the American public is lazy when it comes to medical services. The prevailing thought seems to be that as long as the insurance they purchase pays for a service, they don't really pay much attention to the cost. I believe that if you put the decision in the hands of the 'consumer' rather than the insurance company, there would be much more scrutiny of the charges. Example would be to watch senior citizens once they are living on their own retirement funds. They will argue over a .25 difference on their restaurant bill. I like the idea of Health Savings accounts because then the individual can decide how to spend their health dollars. I just don't want the government involved primarily because I generally believe they screw up everything they get involved in, ultimately costing (wasting) more money. No easy answer, but the less involvement from Madison or Washington the better.

poobah
Mar 18, 2013 at 11:28 a.m.
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Sorry, I meant to say, "if not the most cost effective path."

poobah
Mar 18, 2013 at 11:26 a.m.
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comet65, what's interesting is how soon people forget what insurance was like prior to regulation by state and federal governments; that is the creation of state insurance commissions for example. People paid premiums for years, only to be dropped or denied coverage when it was needed. Isn't it a bit disingenuous to expect protection from the government when you are wronged by an insurance company while you are bashing the same government for regulating the insurance industry?

Consumers have choices. Much like the choice James has made to not obtain an assistive technology device at the prices demanded. There are lower cost options and I'm happy James is exploring those options. The ability to choose to obtain the device, or to seek lower cost solutions, is indeed what fosters competition in the marketplace. Thankfully, James is not the lazy consumer that many Americans are and he is encouraging competition.

I suggest the problem is in large part the lazy American consumers who take the easiest, if not the least cost effective, path.

comet65
Mar 18, 2013 at 8:32 a.m.
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Mr. Martin is right on with his comments and I pray God will give him and his family strength and hope on his journey.

However, isn't it interesting how those can can see really are blind to the failures of intervening government run healthcare. It isn't the end all for everyone. Market forces have a way of controlling the market, without question, more so than some government bureaucrat who is making rules but has never worked in the private sector.

It's sad that this kind of stuff has to come into play when there are lives involved. We have a misguided sense of helping people in need, or is it just a quest for more power?

Jim, we are blessed by your words.

cruiser
Mar 18, 2013 at 8:03 a.m.
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I second the motion for James Martin for president.

innerfit
Mar 17, 2013 at 8:29 p.m.
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Thank you for your courage--not only to live with this horrid disease, but to stand up to your principles and what is right. Having attended the ALS Evening of Hope last weekend, where over 700 people listened raptly to keynote speaker Steve Gleason address us via this eye movement -computer-voice technology, I can only say that it is a Godsend to those who are very much alive mentally, but unable to speak. Yes, we need alternatives to fund this along with other life enhancing technologies! To those in the South Central part of WI, you can help by attending the Janesville Walk to Defeat ALS on May11 . Those in other places, find out where your local walk is.(www.walktodefeatals.org). Jim and family, do not give up, keep your spirit alive, and keep educating others about this disease that affects many more individuals than people realize. You are not alone!

garyprimer
Mar 17, 2013 at 5:14 p.m.
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Handicapped items have always been high, long before Obama was president.
The internet has helped us a lot for items that insurance will not pay,
but local suppliers charge double and triple for items covered by insurance.

JvlBorn
Mar 17, 2013 at 4:14 p.m.
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Kudos to you on your convictions, but I would urge you to reconsider. I have experienced life with a terminal parent who is unable to communicate, and it just adds more misery to the situation. I could not be more thrilled that you have this option, and am happy to pay my share for your convenience. Best wishes to you.

lovemycountry
Mar 17, 2013 at 9:53 a.m.
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No one could have said it better !

meemaw
Mar 17, 2013 at 7:17 a.m.
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I'm looking forward to hearing the rest of this story outcome. Thanks for the 'heads up' on health insurance. Praying for you & your family.

donnaw
Mar 17, 2013 at 5:41 a.m.
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Curlrock...amen!!!

Curlrock
Mar 17, 2013 at 1:24 a.m.
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And there you have in a nutshell one of the major problems with government run anything

patriotsal
Mar 16, 2013 at 11:06 p.m.
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Saying prayers for you. May God bless you and lead you to a solution

BostonBill
Mar 16, 2013 at 10:16 p.m.
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Keep on chooglin' Mr. Martin and I hope poobah's suggestions may be of some help.

poobah
Mar 16, 2013 at 12:45 p.m.
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Open source software to the rescue! There is a website that covers open source assistive technology software (OATS). [ http://www.oatsoft.org ].

One open source software program that people living with ALS may find helpful is called Enable Viacam. [ http://www.oatsoft.org/Software/enable-v... ]

There are other open source assistive technology programs that work on Macs, iPads and Android devices as well.

saxcat70
Mar 16, 2013 at 12:03 p.m.
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james martin for president!

brwe
Mar 16, 2013 at 11:51 a.m.
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James--I applaud your principled stand & agree with everything you said. I'm trusting your faith will sustain you in your struggles, as mine does me.

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