There has been some scary stories about the Canadian health system floating around. The idea is to make people think that Obama is trying to put in a single payer system and that it would be a disaster for America. This has made some Canadians upset as most of them think that their system is superior than ours. I will give my opinion on this subject today.

Statistically the Canadian system is better than ours. So are all the systems in the industrialized world. Canadians spend just a little over 50% of what we spend per capita on healthcare and their life expectancy and infant mortality rates are better than ours. There is no worry for any Canadian going bankrupt due to health problems. They go to the primary doctor of their choice and have very low copay. If they pay for their medicine, it is much cheaper than here. They do have trouble with access to doctors in rural areas but that is the case in this country as well. So it will not be a disaster for us to copy their system despite all the scary stories out there. They don't deny care to terminally ill people as some have suggested.

There are delays in nonemergency surgeries. A national health program is going to be tougher on specialists than generalists. The Canadian government pays the doctors according to a fee schedule. For primary doctors the discount compare with private pay in U.S. is acceptable because they have less paper work and less hassle of having to deal with only one insurance--that of the government. Specialists' pay will decrease more so there is less people going to various specialties and probably some who move to the U.S. to practice. I don't think that is necessary a bad thing. But for patients in the U.S. who are used to have their elective procedure paid for and scheduled quickly, this can be an annoyance. Of course if you don't have insurance, then it is not even possible to get elective treatments.

Two things that bother me about the Canadian system is that of low or no copay or deductibles. This drives up the cost as people will tend to use services more. It is human nature if say you can get anything you want at the grocery store and pay only $5, wouldn't you get more items? The other thing is that you can't buy private insurance unless it is for something your provincial government does not cover, such as optometry or dentistry. Why should a free country not allow people to purchase something they want? While it maybe true that if there are privately insured patients, some doctors would opt out of the public program and provide services to private pay patients only, that is not enough reason to deprive people of their freedom of choice.

Right now if someone does not want to wait to get nonemergency treatment in Canada, there is no private choice he can turn to. If he is rich enough, he can go to the U.S. and pay out of his own pocket. So it is not possible to have the same treatment for everyone regardless of income. In fact some of the government officials who support national healthcare, have bypass the system to come to the U.S. for treatment so they can be done faster. So why not allow for private insurance option so the middle class can bypass the public program if they wish? I am all for competition. So give us the public option in our reform. And give the Canadians the private option in their system.

Today's blog is a 2nd part installment on healthcare. Recently someone wrote in our local newspaper asking 2 questions. First is why drug companies charge much more in U.S. than in Canada. The second is why hospitals may charge $10,000 but will accept say $1500 from Medicare. What is the true value of the care they delivered?

The answer to the first question is easy: Because they can. Under Canada's national health, the government determines what a drug is worth and if the drug company won't sell it at that price, it loses the Canadian market. In the U.S. if a company has a patent on a drug, it can sell at any price because there is no competition from a generic. Of course, Medicaid and private insurances can negotiate for a better price, but patients who pay out of their own pocket will have to pay what the company wants to sell the drug for. So if you have no drug insrance coverage, you should buy your drugs from a reputable Canadian pharmacy. It is the same medicine.

The drug companies will argue that the prices are high because they have to pay for research and development costs. If prices are controlled in U.S. like Canada, then it will decrease research and thus decrease introduction of new drugs. Certainly if one develops a completely new drug, a patent of certain length is deserved so that a company will profit. But most of the basic scientific research that leads to creation of new drugs take place in universities, or labs under government funding. The drug companies turn the basic knowledge into making a new drug, get it tested and approved for use. So it is not just the private companies doing all the inventions. If the drug companies comes up with a completely new class of drug that changes the treatment of a disease, they will be richly rewarded under any system. But most of the time they come up with "me too" drugs which change 1 or 2 molecules of previous drugs. I would bet the R@D budget of some of the drugs on the market is less than their advertising budget. I don't advocate total price control but there should be a system where "me too" drugs should not cost $5 a pill.

Regarding the 2nd question we have to look at what is value. If you make a pair of sneakers and you price it at $150, probably nobody will buy it. Then you can lower the price or you can refuse to sell them at all. Obviously a pair of Air Jordans is really not 6 times better than a generic pair of sneakers. But Nike can set the price because people want to buy them. In healthcare hospitals can set their price if the market is really free. If you have a heart attack you are going to pay whatever the hospital charge or else you die. But hospitals can't charge you before you are treated. This is because the law forces hospitals to treat you whether you can pay or not. So if a drug addict who shot a cop comes in with gun shot wound the hospital and doctors there will have to treat him even though he will never pay after he gets out. So in order to make up for those people who have no insurance and have no money to collect from, hospitals have to charge everybody a lot more. But Medicare and Medicaid pay only what they want to pay. So $10,000 becomes $1500. Insurance companies who have a lot of patients can negotiate with hospitals and generally pay a little more than Medicare. So it is hard for hospitals to make up for the losses from the uninsured whom hospitals are forced to treat. Some insurance companies would not negotiate in good faith with hospitals and when their customers go to ER the insurance companies would pay much lower than the norm. Hospitals tried to bill the patients for the balance which upset patients. It appears that politicians are going against the hospitals on this because patients are voters. But unlike the sneaker seller, hospitals cannot hold back service. At least not until they are forced to close the ER.

So who gets screwed? The uninsured who have some money. If you are working and have a house and bank accont but no insurance, you will have that $10,000 debt. You can probably negotiate down the amount but not to anywhere near $1500. This is one of the reason why our system needs an overhaul. The working poor or middle class without insurance are the ones who can go bankrupt if they get a serious illness. If you are a drug addict or an alcoholic you get free medical care in ER which in turn causes someone who works hard for his money to lose everything he has. Is that fair?

It is time for me to weigh in on the healthcare reform debate. The topic is too complex and will take several blogs. That's why I have not tried to start it. But seeing how the debate seems to be going out of control with all these socalled town hall meetings. I will start by making some comments on what people are screaming about in the past week.

1. Debate is good and challenging the government is not only the right of Americans but a duty. But shouting down everybody else so that a civilize debate cannot take place is wrong. I wish those people who said they can't trust the government would have come out and say that when the government sent troops to Iraq for a war that should not have been fought. Whether healthcare reform bill that they eventually pass is better for the country or not, it can't be worse than the decision to spend $2 trillion and cause thousands of American lives and tens of thousands of Iraqis while taking us away from the our real enemies in Afghanistan.

2. Right now there are thouands of pages of possible reform but no final version so I won't say if it is worthwhile. But if there is no public option then you might as well forget it. If everybody is in and we subsidize those who can't afford insurance, the private insurance companies will become richer and our premiums will keep going up. A public option to compete is absolutely necessary or else forget the whole thing. When the prescription coverage for Medicare patients went into effect and is run by private companies, the cost is going up and coverage for elderly patients who had both Medicare and Medicaid went down.

3. The "Death Panel"? People who spread that rumor should be ashamed of themselves. That includes Sarah Palin who talked about the death panel. Totally false info to scare people is just plain evil. One doctor in our area stood up in public recently and said that under the Obama plan, "My 85 year old mother, if she gets breast cancer, wouldn't be treated in favor of some 40 year old illegal immigrant!" That is purely wrong and should not be said by someone who should have known better. There is no such proposal in any of the bills and the AARP's political clout is way greater than those of all immigrant advocacy groups combined. If there is one truth in politics, it is that politicians are most afraid of political clout.

4. Those seniors who say: "Don't let the government take over my Medicare coverage" should be examined for Alzheimers. They didn't know Medicare is by the government? When Medicare tried to cut cost by using private companies to run Medicare HMO, it was a disaster here in our county. After some insurance company couldn't cherry pick the healthy seniors after a few years, they left the program, leaving seniors scrambling to find new doctors.

5. Some people say: "Why change the best system in the world. If we are not the best, why do people from other countries come here for treatments?" We don't have the best system. We spend more per capita that all other industrialized countries on healthcare but have worse outcome than most in many of the health statistics. We do have the best health technology in the world and that's why rich people from all over the world come here if they need the most obscure and difficult treatments. But most people don't have obscure diseases. Given what we spend, we should have better preventive care, better prenatal care etc.

6. I think a reasonable argument against reform is cost. I am a fiscal conservative. I don't like taxes and deficits. Obama and the Democrats are not being honest to say that reform will bring in cost-savings so that deficits won't occur. If there is no deficit increase then there will be large tax hike. This is a legitimate reason to question the Democrats' plans.

7. While I don't like tax increases, I don't like premium increases either. My family health insurance has increased 60% in the past 3 years. We are all in good health, don't smoke or drink much and 2 of 4 kids have their own insurance now. But our premium is going way up each year. People say the government will keep increasing taxes or ration care if they run a deficit with the public plan. What do you think the insurance companies will do if they lose money? They will raise premium, deny care (which they do even when they are making a profit), or go out of business--at which point you are out of luck.

There are many other things I want to talk about but I am out of gas. I welcome any comments or questions on any topic.

Last week Bill Clinton went to North Korea to secure the release of journalists Euna Lee and Laura Ling. It was a nice human story and it was nice to see the women reunite with their family, particularly Lee with her little daughter. The nice thing was that officially it was an unofficial visit by Clinton with no official diplomatic effort. Well, everybody understands what I meant anyway. Some people actually said that we gave in to Kim. What is it exactly we gave him? A picture of him and Clinton sitting in chairs without a smile, that's about it. Kim would get some publicity in North Korea out of it, as he really needs publicity there. Elsewhere everybody understands that the U.S. had to do what it had to do and gave away nothing for the women's return.

Having said that, this was a distraction the government did not need. I know that journalists have to take risks but to me it was dumb to be inside of North Korea or close enough so that they can be caught. What can they possibly uncover in that area and tell the world about it? We already know Kim is a terrible dictator and the N. Koreans are living in hell. Why take such a stupid risk? Now there is news that 3 Americans hiking in Iraq wandered into Iran and were captured. What, they can't hike anywhere else in the world other than Iraq? You can't get close to nature at Yosemites? You don't know that Iran and Iraq share a border? I know we don't teach geography well in school, but this is ridiculous. All three were UC Berkeley graduates, which make me wonder what they teach in that famous school. Obviosly not common sense. After these people get home, they and the two women journalists should be sentenced to teach political geography to high school students. After they take a course themselves first, of course.

The economic news have been relatively good lately. The Dow increased by over 700 points in the last month. Housing prices went up by .5%. Not exactly great but better than keep going down. I think we have gone through the worst but I don't think we are out of the woods yet. Certainly the stock market is going to have sell offs in the near future. And unemployment has not peaked yet as companies that had cut jobs are not going to hire until they feel more confident.

The question is how is Obama's economic plan doing? I always thought that a president has much less control of the economy than the people believe. Who really knows if his stimulus plan has anything to do with what improvement there is so far. I like Obama not because I believe he has any great strategy with the economy even though it was the economy that got him elected. I like Obama for his foreign policies and his understanding of the world. I don't know if his economic policies are good or not.

I don't believe that he is killing the country with his policies as the conservatives are saying. They say things are still bad 6 months into his term and that his stimulus plans are going to cause inflation and enormous debts for the future. I think there is a parallel with Obama and Reagan, of all people. Reagan took over from Carter with runaway inflation. Reagan allowed Paul Volcker to raise interest rates to battle inflation. He also enacted tax cuts. But 2 years into his administration inflation and the economy were still horrible. I think it was around 1986 that things turned totally around. Frankly I think if you do nothing things would turn around in 6 years. I think without any stimulus, the economy would turn around for Obama in 6 years also. But the critics of today are complaining after 6 MONTHS. But neither Reagan nor Obama could have done nothing. Reagan had to try to get inflation under control and Obama had to get the economy moving again. If either one said let capitalism take its course, they would have been the next Hoover. I think with some luck Obama will get reelected in 4 years because the economy will have bounced back by then.

That doesn't mean Reagan and Obama were great economists. Obama will have to deal with inflation and deficits and may have to raise taxes. But he won't do it till his second term. Reagan' policy led to big deficits that eventually caused Bush I to raise taxes which led to his loss to Clinton. Obama may do all right during his stint in the White House but he may lead to the Democrats losing after him. Reagan is adored by Republicans today but he helped Clinton get elected. Obama may be fondly remembered by Democrats years from now but I think the next Republican president will be thanking him secretly.

So don't lose sleep over the economy. We will recover and march on. We just need the next Bill Gates, Steven Jobs and Andrew Grove to step up.