February 2004 – Shortwoman.com

Tort End of the Stick

I have said before that “Insurance makes things cost more,” and that “Tort reform is not the same thing as damage caps.” These facts are still true, and you are welcome to see my arguments in the archives. Today, I would like to focus on the Medical Malpractice Crisis. In short, yes there is a crisis, no simply capping non-economic damages will not make it go away.

There is definitely a crisis, make no mistake. Malpractice insurance rates are going up by double-digit percentages — as much as 82% in one case — in many places. Because insurance is regulated at the state level, the actual figures vary wildly from state to state. Doctors are not in a position to pass their added expense on to their patients. In some states, things are worse than in others. According to the AMA, about 19 states (almost 40% of all states) are in “crisis.” The AMA prescription for the crisis is caps on non-economic damages. Republicans agree. Mostly, anyway.

There is anecdotal evidence that doctors in some areas are closing practices, limiting the scope of their practice, leaving the state, retiring early, or making do without malpractice insurance at all. According to these tales, there is a particular problem with specialists, such as Obstetricians and Neurosurgeons. This evidence may or may not stand up to objective scrutiny.

One thing many people do not understand is that the malpractice insurance your doctor carries has limits, just like your auto, renters, or homeowners insurance does. In many places, the standard policy has limits of $1 Million per incident and $3 Million per year. In theory, anything over those limits awarded to a plaintiff must be paid out of the doctor’s pocket. In real life, this is not really the case. Perhaps more defendants (such as the doctor’s partners or a nice deep-pocketed hospital) have their insurance tapped. Or rather than spend years in appeals, a settlement is reached.

But back to the million dollars. Let’s imagine that a 40 year old man in killed through medical negligence. First, lets look at the real damages. He made $50,000 last year, and planned to work until he was 65 (yes, that’s ambitious planning these days). That means if he worked 25 years for $50,000 — never got another raise — there are real damages of $1.25 Million before we even calculate the cost of his funeral. The insurance company has already reached the limits of what they will pay, regardless of what might be awarded for “pain and suffering.” In fact, it turns out that “only a handful” of cases exceed $1 Million verdicts. According to the National Practitioners Data Bank, the average payout of a doctor to a patient was $135,000. This figure likely averages in out-of-court settlements, which account for 96% of all cases.

To say that mega-verdicts have anything to do with rising malpractice rates is disingenuous. To say that capping non-economic damages will fix malpractice rates is doubly so. Non-economic damages account for 24% of the money spent on malpractice; more than any other single category, but not by much.

Critics who say that damage caps work normally point to California as their poster child. The truth is that California’s MICRA statute is just one part of an elaborate insurance reform and cost control scheme. It is furthermore worth noting that “California’s medical malpractice disputes are settled 23 percent faster.”

Proponents of damage caps prefer that you not look at Nevada. In 2002, they passed damage caps. That year, 7 doctors came to Las Vegas to practice medicine, an area that sees 5000 new residents every month. Despite passing damage caps, malpractice rates have still risen double-digits for 2004. Further reforms of the reform propose limiting lawyers fees, telling the jury when insurance paid for treatment (that would be “most of the time”), allowing payment of verdicts over time, and some shuffling of percentage of liability. I am at a loss for how most of this stuff is supposed to help. It is ironic that Nevada’s Senator Harry Reid is co-sponsoring a bill to bring damage caps to the nation.

One of the problems with Nevada’s reforms is that it abolished a medical review panel. Before, many cases could be dismissed as frivolous by a panel of actual doctors — whom one must assume are competent and impartial. Not surprisingly, the number of malpractice suits has risen. Now, everybody is entitled to his day in court, and this is costing everyone a lot of money. It can cost tens of thousands of dollars just to get to the point where a judge can decide to dismiss a frivolous suit, or take a clearly uninvolved party out of a suit.

Oh, and those legal fees are usually paid by the malpractice insurance carrier. It might take only one frivolous and quickly dismissed case against a family practitioner to obliterate the premium he paid. For reference, in West Virginia 29% of malpractice cases were dismissed in the last decade. Nationally, 70% of cases are closed with no money changing hands — except of course among the lawyers.

As if that is not bad enough, it turns out that the majority of malpractice complaints are against 1-5% of doctors. The figure varies by state. Some of this may well be “personality issues,” but the fact remains that as much as 80% of malpractice claims could be eliminated by getting “Dr. Nick” the heck out of the hospital.

Getting the malpractice crisis in hand will really impact health care costs by less than 1% according to the Congressional Budget Office. Others say that reduced “defensive medicine” such as unnecessary tests will help bring costs down. However, it may very soon impact the availability of healthcare in general. That would be bad. Here are some options we might consider instead of liability caps:

Insurance reform. Insurance needs to be reformed in many ways, all across the nation. We can start with re-mutualizing insurance companies (so no money is funneled off as profits), or setting up state insurance pools for high-risk groups.

Medical malpractice review boards. These impartial medical/legal experts would be the equivalent of a grand jury, determining whether there is sufficient evidence for a malpractice case to make it to trial. If they see the same doctor over and over, they should have the authority to open an investigation into his competence. For that matter, if they dismiss cases by the same lawyer over and over, they should turn him over to the local Bar Association for review.

More arbitration, fewer trials. Utah is considering this approach. There are pros and cons, of course, but it will be interesting to see how it works out.

Remember, sometimes bad things happen. Not everything has to be somebody’s fault. Does it?

On the lighter side, I thought you would enjoy this image.

Will Work for Rice

Yesterday morning’s CNBC Squawk Box Poll asked very simply whether there should be government regulation of offshore outsourcing. To the great surprise of host Mark Haines, 53% of respondents favored such regulation, 47% against. That it should be statistically even among a viewer base that is largely business people brought the guest host to rhetorically ask what the percentages must be like for the Average Joe. Indeed, the subject has already come up in the political arena.

As I see it, there are several issues to be addressed when discussing overseas outsourcing: the impact on American businesses, the impact on foreign nations, the impact on American workers, and the impact on American consumers. Please note that “impact” can be positive or negative. Sometimes one point can be both.

So how does this impact American business? They believe it saves them money. Indeed, it’s the only way to remain competitive, they say. After all, wages are much lower in places like India and China than the United States. Depending on the area, offices and factories might well be cheaper too. But some might argue that the lower costs are offset by productivity losses: working around cross-cultural issues; language barriers; security issues; differing regulations and local politics; differing time zones. Ah, but although differing time zones may make it difficult to get ahold of responsible parties and resolve problems, it may be an advantage if your business demands 24/7 service. For example, if you have a call center.

What about foreign nations? Well, the incoming wages — low by American standards but often still generous by local standards — often boost the local economy. Just like here in the states, people earning paychecks have money to spend. It is a difficult siren song to resist. But the same factories and offices which bring money to ordinary people may also bring pollution, opportunists, unexpected migration, and crime. Furthermore, the same American corporations that bring jobs to the region bring American ways of doing things, eroding traditional customs and social structures, if not outright demanding that things be done the Corporate Way.

You may find it curious that I have broken out the concerns of American workers and American consumers. Although these may well be the same group of people, overseas outsourcing effects average Americans in two distinct ways, depending on whether they are a customer or an employee of the company in question. Let’s look at the employees first.

Employees stand to lose jobs. There, I have said what everyone knows to be true. When there are not constraints of time or space, an American employee has to be at least twice as productive as a low-wage foreign employee to be cost effective. And this is where the “invisible hand” theory of market economics breaks down: American workers are only semi-mobile; they can pick up and move across the state or maybe even across the country, but with few exceptions they can’t just move overseas to follow their outsourced jobs. The tired old rhetoric of “training for the jobs of the future” no longer works. Not only are there roadblocks along this path, not only is it nearly impossible to tell what will really be a necessary profession in 5 or 10 years (remember when web design was the next big thing?), but what is to say those jobs won’t be long since filled by the time workers can possibly be trained? Perhaps by foreign workers? Thankfully, some things can’t be done overseas. Other things simply shouldn’t be.

And thus, we come to the American consumer. Theoretically, we should reap the benefits of reduced cost by paying reduced prices. Just think how much a pair of Nikes would cost if they had to be made by workers making American wages. Oh wait, some of those cost savings actually go towards hefty executive salaries and beating Wall Street profit estimates. Of course it’s a good thing if some of those cost savings are passed on to the consumer, particularly if they are one of the people who has been impacted by jobs moving overseas in the first place.

There is one more important consumer concern regarding overseas outsourcing, one that has grown larger in the post-9/11 world. In short, one of the easiest things to send overseas is data: computer code, information that needs to be processed. Some of this information is sensitive, and sadly the same kinds of protection we would expect this data to have in the United States should not be assumed to exist overseas. Not only proprietary corporate data is at stake, but also personal information, such as financial and medical records. This should concern you. Data which you consider private may potentially be in the hands of people who are under no legal obligation to keep it private. Should it be released or used in a fraudulent manner, law enforcement in the United States has no jurisdiction. The “419” scammers will no longer need any information from you to drain your bank account. This is a national security problem in the making: the terrorist of the future may have the benefit of using your Social Security Number, knowing your medical history, having access to your financial information, even knowing where you went to college and that you dropped PolySci.

Calls to “regulate” overseas outsourcing are often met with the the obvious reply, “How?” Tax penalties for American corporations who engage in the practice? Prohibiting government contracts with such corporations? There are frankly limited legislative remedies for this problem. However, the one thing we should all be able to agree on is that the practice of sending personal data for processing overseas must stop immediately: anything that might normally have a Social Security Number attached to it; anything the average American would expect to be kept confidential; anything subject to privacy laws and policies. This would certainly include financial data, medical records, and educational records.

In conclusion, I bring you two views of Ralph Nader. One, several years old, by New York Times economics columnist Paul Krugman. My favorite passage: “Mr. Nader did not begin as an extremist. On the contrary: in the 1960’s, when he made his reputation, the striking thing about Mr. Nader was his relative moderation. Fashionable radicals were preaching revolution; he was demanding safer cars.” This particular article is reproduced in his book, The Great Unraveling, which is a good read but slow. No matter how interesting an economist is, you can only read so many pages at a time. The other item is a very interesting analysis of Nader’s 2004 Presidential campaign by Elisa Camahort.

Totally Sweet

Perhaps you remember about a month ago, when the World Health Organization came out with guidelines for tackling what is turning out to be a global obesity epidemic. They said nothing less radical than too much sugar is bad for humans. Representatives of the Bush Administration quickly objected to this (emphasis mine): “The Bush administration, which receives millions in funding from the sugar industry, argues there is little robust evidence to show that drinking sugary drinks or eating too much sugar is a direct cause of obesity. It particularly opposes a recommendation that just 10 per cent of people’s energy intake should come from added sugar. The US has a 25 per cent guideline. Thompson’s representative… will be Bill Steiger, godson of George Bush Sr. He will argue there is no evidence that selling junk food to children increases overweight. [sic]”

The sugar industry has become a political linebacker, set to tackle any politician or scientist that dares speak ill of it, let alone attempt to rein it in. This means they have a two-front war for profits to wage.

The dietary front is only half the story. I have said before that every weight loss diet that works involves drastically if not completely eliminating refined sugars from your life, in the context of reducing total calories. Other experts agree that too much sugar, including too much corn syrup, is not good for you. Even the most rabid of high-carb low-fat proponents must concede this point. However, to listen to this commentator, sugar is great for you: the article is long on out of context quotes such as “Yes, even our “children benefit from eating some sugar,” says Ellyn Satter, a childhood weight specialist and clinical therapist…” and not-cited research by unknown researchers who “have found that added sugars and sodas – like other high-calorie, low-nutrient dense foods – are unrelated to weight. Consumption is high among all kids. In fact, the skinniest teens actually drink the most sodas, and the fattest drink the most sugar-free ones.” Did you notice that even her cited expert said “some” sugar is beneficial? I smell an agenda.

The other battlefront for Big Sugar is world trade, where they are in the process of winning two big skirmishes. The Central American Free Trade Agreement (CAFTA) is only going to allow 110,000 additional tons of sugar to be imported tariff free into the United States in return for opening Central American markets to American rice. Doesn’t sound like much of a free trade agreement, does it?

The other Big Win for Big Sugar is in a trade pact with Australia. Now, please keep in mind that Australian sugar producers are not faring as well as their American cousins. Last month the Australians made it clear that if the Americans wanted a Free Trade deal, it would have to include sugar. American Big Sugar made it clear that it had better not. Alas, the article is premium content, but The Economist had this to say in their February 14, 2004 print issue:

The deal has once again underscored the clout of the American sugar lobby — scattered across America from the powerful interests of Florida, a key electoral state for Mr. Bush in November, to the beet growers of North Dakota. The industry and its executives are among the biggest donors to congressmen and to the president. The sugar quotas they favour mean Americans pay around three times the world-market price. The inclusion of tiny concessions to cane growers in five Central American countries, in the recently negotiated Central American Free Trade Agreement, is one reason why that pack is guaranteed a rocky ride through Congress.

Not only does Big Sugar effectively own enough congressmen to possibly scuttle an international trade deal, they are doing everything in their power to suck money out of your wallet.

Don’t Let The Moment Pass

But day after day
The show must go on,
And time slipped away
Before you could build any castles in Spain…
The chance had gone by.

With nothing to say
And no one to say it to,
Nothing has changed.
You still got it all to do,
Surely you know.
The chance has gone by…

Don’t let this happen to you. It’s one thing to wake up one morning and say “Well, I guess I will never be Queen of England and I will never be an Astronaut.” It’s another thing to wake up one morning and realize that all the things you wanted to do with your life just haven’t happened, and that you have nobody to blame but yourself.

Do yourself a favor. Take 5 minutes out of your busy day to write down some things you would like to do with your life. Don’t think too hard about it, don’t rationalize any of it, and don’t spend too much time on it. We both know you have other stuff you have to do today. Fold up the piece of paper and don’t think about it again until tomorrow.

Tomorrow, take another 5 minutes with that bit of paper. Sort the items into Short Term Goals (“Christmas in Florida” or “Give money to [name of charity]”), Medium Term Goals (“Earn Black Belt”), Long Term Goals (“Own chain of Pizza Parlors”), and Impossible Dreams (“Win Lottery”). Remember that one person’s perfectly reasonable Long Term Goal might be another person’s Impossible Dream. Just because I will never win an Oscar doesn’t mean you shouldn’t try to do so yourself. In an ideal world, there should be some goals for each of the areas of your life: professional goals, relationship goals, personal growth and spirituality goals, you get the picture.

Now, I will be honest. I had such a bit of paper. It sat in a side compartment in my purse for some years, forgotten. When I opened it and read it again, I realized I had accomplished much of what I had written down. By that time, most of the things I hadn’t accomplished didn’t matter to me anymore. Maybe the magic of writing such things down is that it forces you to admit what you really want in clear, concise words. Maybe it’s that writing it down is an automatic reminder.

If you really want to achieve, you will look at that list and figure out how to make those things happen. Break it down into manageable steps. Be realistic about what you can do, what you need help doing, and what you need to learn to do. Do you want to see the cherry blossoms in Japan? You’d better start by getting a passport, finding out when cherry blossom season is, and maybe learning a bit of Japanese. After that, all you need is time and money.

Don’t make excuses. This is what you want. You wrote it down. If there is something standing between you and your goal, find a way around it. Some obstacles will be insurmountable, most will not. Please, don’t let your life pass you by, one dreary routine laden day after another.

HIPAA Compliance

HIPAA, or the Health Insurance Portability and Accountability Act of 1996, is a law that among other things codifies patient privacy rules. It says when a doctor or hospital can release data, when they must release data, when they must not release data, what data they can give to whom, and under what circumstances. Compliance is a highly necessary very expensive legal nightmare — and your doctor probably did not attend law school. The 5 year cost of implementing it is estimated at $22.5 Billion. If you really want to know about HIPAA you might try looking here or here, but the short version is this: healthcare providers must try to keep your private data private; they can send information to your insurance company because you sign a form that says they can; they can send your information to an insurance claims clearinghouse for processing — and they have to keep your data private too — because they are a middleman between your doctor and the insurance company; some data must be reported to a state or local health department under state or local law (e.g., sexually transmitted diseases, signs of abuse); data which does not personally identify you can be used in academic medical studies (“total cases of flu reported” or “male patient presented with unusual symptoms”). There are even limits on what they can tell your immediate family without your direct permission.

Figuring out the rules and helping healthcare institutions follow them is big big business. There is physical security of keeping people who don’t belong out of the files. There is educating the staff so they don’t say things they shouldn’t in front of people who do not have a right to know. There is computer security, since most medical offices use electronic billing and some use electronic medical records. Double this concern if anyone uses the internet to obtain the most up-to-date medical data; triple it if anyone uses email to communicate with patients or other healthcare professionals. Beyond all this, theoretically medical offices must insure that other businesses they deal with are also compliant, from the insurance companies and clearing houses, to any outsourced billing, right down to the cleaning service that sweeps the file room.

These things being said, I offer three current news items with HIPAA concerns. The first happened in Denton, TX. Denton, less than an hour north of Dallas-Fort Worth is home to the University of North Texas. It is also home to a pharmacist who refused to fill a prescription for a “morning-after pill” presented by a rape victim. You may recall having seen this story last week. Today’s news is that the pharmacist in question and 2 coworkers have been fired. Yes, one of the issues was that he violated company policy: “Eckerd’s employment manual says pharmacists are not allowed to opt out of filling a prescription for religious, moral or ethical reasons.” Frankly problems could have been avoided with a proper new employee orientation meeting. The other reason he was fired is that he violated HIPAA, and admitted it on CNN: “I actually called my pastor … and asked him what he thought about it.”

Violating company policy is one thing. Violating Federal law is another.

Another news item with HIPAA compliance concerns is being whipped up by none other than Attorney General John Ashcroft. The Government wants 6 hospitals to hand over sensitive medical records for hundreds of women — to determine whether a medical procedure they may have had was medically necessary. Yes, the procedure is a type of abortion, this time. Maybe next time it will be Botox injections; after all, botulism is a dangerous germ that could be used by terrorists you know. The hospitals in question have correctly maintained that turning over the records would violate patient privacy. Legal wrangling before a series of Federal judges has ensued. From the article: “Citing federal case law, the department said in a brief that “there is no federal common law” protecting physician-patient privilege. In light of “modern medical practice” and the growth of third-party insurers, it said, “individuals no longer possess a reasonable expectation that their histories will remain completely confidential.”” Perhaps the Department of Justice should read the HIPAA rules.

Finally, I present what must at first seem tangential. This week Microsoft admitted there is a security flaw in Windows that “could allow hackers to break into personal computers and snoop on sensitive data.” Or three, including one that could “offer up complete control of the computer. From there, the sky’s the limit: a hacker could install new software (including, for instance, Trojan horses), wipe hard drives, hijack files, or any of a thousand other things.” One computer security firm claims there are 7 more to be reported. TechWeb’s Security Pipeline, in an article about the still circulating “MyDoom” virus, says “In other words, there will be vulnerable machines and those machines will become infected, no matter how heroic your efforts. It’s a reminder that even the leanest of enterprises faces security challenges of daunting complexity. Even the most rapidly responsive IT security team must deal with attacks that spread in minutes.”

Yes, they just said that no matter what you do, your Windows network will be attacked by viruses. And personal data on such a computer or network is not secure. Yes, including personal data on, say, the computers your doctor’s office uses for billing your insurance company. It is therefore my contention that Windows is inherently not HIPAA compliant.

Maybe Ashcroft would have better luck sending crackers after those medical files.

The Magic Job Machine

Wand? Check. Fairy dust? Check. Smoke and mirrors? Check.

Today, the White House predicted the creation of 2.6 million jobs in 2004. It is worth noting that last year’s White House prediction of creating 1.7 million jobs was not reached; job creation in 2003 fell short by almost 1.8 million.

It sounds like a lot of jobs: 2,600,000 jobs created in one year. Now, divide that by 12 months in a year. Feel free to use a calculator, but my figure is 216,666.67 jobs per month. In the interest of simplification, lets say between 216,000 and 217,000. This number is already optimistic. Remember when we found out there were only 1000 jobs created in December of 2003? That number was revised upwards to 16,000 (320 jobs per state). Just Friday we learned that although the economists figured there were 160,000 jobs created in January (still far short of 216,000), in reality only 112,000 jobs had been created (51% of 216,000). Oh, and please note that this ambitious level of projected job creation in 2004 still falls short of what was achieved in the Clinton Administration. People are starting to wonder how this jobless recovery thing works.

But wait, it gets worse. Remember, economists pretty much agree that just to keep the unemployment rate from rising, the economy must add something like 150,000 jobs each month. This is a consensus number, an average; some economists think the number is closer to 100,000, others believe it’s more like 200,000. So not only does the January number fall short of helping the unemployment rate, the unmet projection would barely have helped. Indeed, the whole 2.6 million jobs this year might be needed just for new additions to the workforce. And that’s before we go giving work permits to non-citizens.

But remember that 1.7 million jobs that was supposed to have been created last year? That would have only worked out to 141,666.67 jobs per month. Even if that modest goal had been achieved, we would still be looking at rising unemployment.

Oh wait, you say. I have forgotten that the job creation numbers are skewed by the self-employed and independent contractors, that legion of people who have created jobs for themselves. Tell it to this guy:

Even those who still count themselves among the employed in America are struggling to make ends meet. Self-employed computer programmer Thomas Mooney — who bills himself as the “president/janitor” of his Minneapolis company, TeleProc — said he cannot last much longer with so little work in an industry that was once booming. “I’m barely employed — no income yet this year,” Mooney said. “I have $7,000 in future prospect business and that is all I know about for the rest of the year.”

Yeah, being your own boss is great. It’s even better when you have an income.

Astute Commentary Day

If I had time to write a half dozen commentaries today, I might, because there are a lot of important things going on. Luckily, there are a number of very excellent things to read by other people. Allow me to point out a few particularly good must-read items.

The New York Times offers this particularly good commentary on why the exchange rate — the price of dollars — is important to you. The important bits begin in the third paragraph. Need a little perspective on this? Try these items.

Didn’t catch the President on “Meet the Press” this morning? Here’s the transcript. Here’s somebody ripping it apart point by point. It’s worth reading the whole thing. If you haven’t had enough, this one is by former Speaker of the House Jim Wright.

From the “But that isn’t the important thing” important, we have this brilliant skewering of Federal investigatory priorities. In short, “Investigate Janet Jackson’s nipple? Do we have our priorities straight?” Maybe you’ll like this commentary better.

From Iraq, there is this item: the Japanese have arrived.

And finally, perhaps these two items are related. Now don’t get me wrong, there is a time and place to discuss religion. Thirty-thousand feet straight up somewhere between LA and NYC trapped in a thin metal tube going 500 miles per hour is not the right place. Unless maybe it’s crashing.

Happy Birthday, Hello Kitty!

Or, Hello ShortWoman!

Today is the 30th Anniversary of the introduction of Hello Kitty, not to be confused with her actual birthday, which Sanrio insists is November 1. To commemorate the occasion, 30 lucky collectors will have the opportunity to purchase a 3 centimeter high platinum figure of the birthday kitty, adorned with 131 diamonds. The price is a mere 3 Million Yen.

Perhaps this sum is out of your budget. You can still purchase Hello Kitty trinkets ranging from $2 pens to toilet paper to sake sets to televisions. Or maybe you need a USB hub. Perhaps a $1000 Hello Kitty dress for the fashionable Hello Kitty fan in your life.

It is clear that Hello Kitty and Generation X have grown up together. What, you didn’t think this stuff was for little girls, did you? Indeed, you either love her or hate her but nobody can be ambivalent to that much cuteness.

This has helped Sanrio earn revenues of between a Half Billion and a Billion dollars annually, depending whose figures you like (and truth be told, exchange rates). She is a popular icon both in the United States and Japan, where there is even a theme park in her honor. Her rise is documented in the book, “Hello Kitty : The Remarkable Story of Sanrio and the Billion Dollar Feline Phenomenon.”

If you are looking for a more subdued way to honor Hello Kitty, preferably one that does not involve your purchase of something pink, you might check out the “Jump to Japan” exhibit at The Childrens Museum of Seattle. Press coverage here and here.