Disclaimer: I did not ask many questions about health care policy at large; for instance, the question of whether health care should be paid for through insurance companies at all seemed beside the point. Kingsdale et al are dealing with the very specific framework of MA’s Chapter 58, and trying to make it work. That said, lessons from the implementation plainly show the necessity of further reforms, especially in controlling costs.
As background: Significantly, Massachusetts is already a heavily regulated health insurance market — more so than many other states. Kingsdale notes that Chapter 58 builds on several pre-existing laws, outlawing practices that are typical in other states. For instance, Massachusetts has “guaranteed issue”: An insurer cannot refuse coverage for a pre-existing condition. (That means, for instance, that the woman in Michael Moore’s “Sicko” whose coverage was rescinded because she had previously had a yeast infection, would not have encountered such problems in MA.) In addition, Massachusetts has used “community rating”since 1996; that means that when you try to buy insurance on your own, your premiums are based not just on your own individual risk, but on your geography and age, for instance. That spreads out risk and makes plans more widely available, if more expensive across the board.
I asked Kingsdale how he thought things were going, very generally. “Reasonably well, although I fully expect to have some unpleasant surprises.” He is hopeful about the “political survivability” of the plan, since stakeholder groups seem to be staying on board; and so far the finances seem to be staying within the legislature’s means. There are 155,000 newly insured people in Massachusetts as a result of the new law; but only 15,000 of those have signed up for unsubsidized insurance plans (Commonwealth Choice) mandated under the law — that leaves between 220,000-375,000 still uncovered. Although the deadline for buying that coverage was supposedly July 1 (but not enforceable until December 31), Kingsdale professes to be pleased with that number for now; he hopes that in one or two years the uninsured rate will be down to 1 or 2% of the population.
“I don’t think we’ll get to 100%, and the legislative leaders have been fairly candid that they didn’t think we would either, that that wasn’t the intent. Part of it is directional: We’re sitting here in the early part of this century and looking at national trends, and they were all going to more uninsured. And we wanted to make sure Massachusetts didn’t go that direction.”
Kingsdale is acutely aware that he’s functioning within a fabulously expensive “medical-industrial complex”, as he calls it, and this accounts for the central struggles in implementing the law: Under the circumstances, it’s difficult to offer plans at prices that the people who are required to buy them — and who most need them — find affordable.
That’s the nub issue. This is all about money, it’s all about financing, so we’ve got to start out basic. Medical care is god-awful expensive … Just as a raw piece of our economy, this is one-sixth of our economy. This is huge business. This is bigger than agriculture, bigger than transportation. It dwarfs the military-industrial complex. I mean, this is bigger than Hollywood. OK? This is huge. And there’s no getting around it. We have, through pre-payment, built a medical-industrial complex that is humungous. So, no surprise. And so through various devices we’ve tried to hide the cost of that. So it’s employer-subsidized and tax-subsidized, and it’s Medicare and Medicaid, and there are all these ways so that you and I don’t feel that one-sixth of our income is going to purchase health care. And now we’re saying, wait a minute — to [that] relatively small part of the population that don’t have it … if you can’t get it from your employer and you can “afford it,” now you have to buy it: Well, that’s sticker shock. That’s huge. Who knew that a day in the hospital costs $2500? …
Now we’re saying we’ve got to finance it. You can do it all through the tax system, which has a lot of advantages to it. The problem with that is having built this thing to be so big, it’s a huge tax increase. You can put it all on employers’ back, which is great for consumers, because they don’t think they’re paying for it … [but they end up paying for it in lost wages anyway.]
… The sustainability of health reform in Massachusetts, I believe, depends on a huge effort to get the costs of health insurance and medical care — the trend, and the increase in costs — down, to get into the single digits annually. 85 to 90 percent of the premium dollar goes out the door as claims paid to drug companies and doctors and hospitals … That’s where the money is. [My emphasis.]
… There is no constituency for cost control in medicine. Nobody gets elected because they’ve got a great new plan to squeeze the costs of medical care. But we’re going to have to confront that, because it’s in everybody’s interests.
I pressed Kingsdale about the politics of cost: Didn’t Deval Patrick say he was going to get health care costs under control? Hasn’t Hillary Clinton put her cost-control ideas front-and-center? He calls Clinton’s plan for a health care best-practices institute which would evaluate the quality and effectiveness of various health care practices “a great proposal … it’s absolutely tragic that we don’t have that.” But he laments that a general political movement for containing costs seems to be non-existent — indeed, just the opposite:
We had legislation passed here ten or twelve years ago to demand — demand! — that insurance companies pay for bone marrow transplants for breast cancer. We still have the mandate on the books! It’s just that nobody uses it because it doesn’t work.
I think there’s a lot more emotional outrage about insurance companies denying care, and there’s very little emotional outrage about doctors and hospitals and drug companies wasting our dollars.
Kingsdale also criticizes the hidebound culture of hospitals in refusing to institute better practices: for instance, changing scheduling of elective surgeries to free up ER care. But beyond Boston Medical Center, not one hospital in Massachusetts has implemented these reforms. According to Kingsdale, that’s simply because of internal politics within the hospitals: They do not want to have a difficult conversation with their surgeons about scheduling.*
Getting back to the consumer’s standpoint, I mentioned a recent poll showing that most people don’t find the plans offered to the average uninsured to be fair. I noted the vast difference in the perception of “fairness” between the subsidized plans and the unsubidized, and asked about the difficulties in getting people to buy unsubsidized care under the mandate. Kingsdale seems to say that’s unavoidable in any system:
Whenever you have a progressive, graduated system, you have little cliffs. … So, we’ve got this progressive affordability schedule, which gets you out of the mandate — some people, not everyone — but doesn’t solve the problem of getting you insured. You point to a problem; it’s inherent in not having everybody covered under a tax-subsidized plan. The problem with a tax-subsidized plan is we’ve built up such a huge medical-industrial complex that to move the financing from the private sector to the tax rolls would be hugely disruptive. Maybe ultimately it’s the right thing to do, i
t has a lot of advantages; but in the here-and-now, it’s hard to do. And the alternative is that there’s going to be this series of steps, and there’s always going to be somebody who just misses the step.
When the private plans’ rates were unveiled in the spring, much was made of the Connector’s supposed ability to bargain for better prices. I asked: Does public opinion affect the Connector’s bargaining power with the insurance plans? Kingsdale suggests that there’s a misunderstanding about the Connector’s role:
With respect to the subsidized programs, Commonwealth Care [subsidized], and the four Medicaid MCOs, we are spending state and federal money; we negotiate. With respect to the unsubsidized plans, the rate regulation context here is whatever they price to us, they have to make available elsewhere outside the Connector, same price, etcetera. We don’t actually have the ability or leverage to negotiate. I mean, we can push, we can use the bully pulpit; I think the governor made some impact when he stepped in last spring. But ultimately, we’re kind of the tail on the dog, and I think it’s unreasonable to expect that we’re going to be able to dictate to private health plans, “Well, your claims may be projected here, but we’re only going to pay you that less 10%, because that’s what we say we’re going to do.” Well, they’re just not going to play ball, and no business would.
Kingsdale also explained the Connector’s role in making it easier to buy insurance as an individual. This has been a massive problem with health care — that it’s tied to employment. But theoretically, when you get all uninsured individuals together as a group, it becomes much easier and cheaper for everyone. Kingsdale claims that the quality and price of the plans has indeed improved since instituting the four market reforms for the unsubsidized plans:
- Merging of small group and individual markets;
- The personal mandate which makes the healthy as well as the sick buy;
- Competitive bidding by insurance companies for business;
- Having a variety of plans available in one place, “the consumer shopping experience”.
I agreed that the Connector website did represent an advance in the ability to compare plans. Kingsdale wants to improve it further, allowing consumers to enter “What if” scenarios for the type of care they think they’re most likely to need.
I asked about quality and cost information, since our health care system seems to be so opaque in these matters. The Quality and Cost Council has been tasked with collection of claims data from the health care plans, to be used to profile docs and hospitals. As Charlie Baker never
tires of pointing out, we really don’t know if we’re paying for good quality health care or not. And one of the upshots is that people tend to ignore the local hospitals to go to the academic hospitals — MGH, Brigham and Women’s, etc — for no particular reason. We don’t know if they’re actually better, or by how much:
We’ve got this huge drain, where people drive right by their community hospitals, which are minor teaching hospitals — they’re not 40-bed East Podunk cottage hospitals — they are minor teaching hospitals, and they’re very good quality, and they drive right by them to get downtown to the academic medical center to have a 27-year-old resident … practice on delivering you and they go right by the 40-year-old obstetrician who’s been doing in for 15 years.
Recently I put up one of the sloppiest, most factually-challenged posts that has graced this fair site — complaining about a lack of preventative care in one of the plans, when in fact such care was covered. So just to be clear, I asked, What’s the baseline of preventative care in the plans? Kingsdale walked through the landscape of benefits the Connector insists upon:
We insisted on a minimum number of primary care visits — and in fact, here’s a good example of where competition does work: What we got back from every plan but one, actually they would cover primary and specialty office visits, ER visits, and basic preventive lab work.
We’re now struggling with that question with respect to drugs, because we allow a maximum for an individual of a $250 separate deductible with regard to drugs. We talked to the board a couple of weeks ago about an alternative design that would make most drugs have no deductible apply … to push people towards generics, which value-per-dollar-spent, are huge compared to [that] for brand drugs. … It’s not perfect; obviously there would be a deductible in front of some drugs; but we’re trying for a combination of efficiency and improved shopping … to push the market towards efficiencies, and still cover most preventative stuff. …
The principle behind the board’s decision about Minimum Creditable Coverage — which remember, is just a minimum, it’s like minimum wage: Nobody thinks minimum wage is a good wage, it’s just a floor; you can always buy up — is that it should protect people of modest means from medical bankruptcy on one hand, and it should provide some degree of access to preventative care on the other hand. …
It’s arguably a pretty out-there kind of policy. No other state has a cap on deductibles, a cap on out-of-pocket matters, requires drug coverage, prohibits these, what I call smoke-and-mirror benefits, you know, where your benefit is $500 a day — who knew it costs $2500/day to be in the hospital?
It’s first in the country to do that. Maybe it’s not perfect … One of the advantages of choice in public policy, I firmly believe, is you don’t have to make everybody 100% happy with where you set the regulations. You can actually allow for some choices — which means you have to live with people making bad choices. There will be an individual who will buy something and then regret it, or buy it and not understand it. And if your standard is perfection, then you should have just told everybody, “Here’s the benefit, because it’s the perfect benefit. You all may not agree, but we know it’s the perfect benefit.” If your standard is not perfection, and you don’t think that’s realistic, then choice is pretty salient as a political solvent, if you will.
I asked about drugs, and the possibility that the Connector would use an Oregon-style drug effectiveness evaluation. The Connector is considering a plan with no deductible for generics and those drugs for which there are no generics, like HIV; but much steeper deductible for brand name drugs. Kingsdale outlined the strategy, which granted more flexibility than a simple yes or no on paying for certain drugs:
What’s really effective, let’s make that as cheap as possible. What’s really cost ineffective — it may be effective, but it’s very costly and there are alternatives — let’s make that really expensive. And it’s not quite the same things as saying we’re not going to pay for it.
I asked: What about the health care law’s effect on the rest of us who are insured? Should there be an effect on the overall rate of increase in health care costs next year, as a result of more people being in the insurance pool? Kingsdale says there should be: Those uninsured people’s costs get passed on to ratepayer. So instead of a drain or tax or additional financial burden on ratepayers, they’ll be self-supporting financially.
*To which I note: If BIDMC chief Paul Levy has so much trouble just getting medical staff to wash their hands, I can’t imagine the pushback one might get in messing with doctors’ schedules. But it ought to be obvious that the Hippocratic Oath ought to extend beyond what one actually does directly to a patient, even to how one’s work schedule helps or harms pa
tients.
Guaranteed issue and community rating ends up distorting health care pricing across the board. I ran a nationwide ERISA plan, and those two MA policy requirements make insurance here some of the most expensive in the nation (with NJ, NY.)
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Guaranteed issue and community rating also lessens the “moral hazard” of disregarding your own health … if it’s subsidized there’s less need to look after your own healthfulness. It’s exactly analogous to our auto insurance market … your poor driving record doesn’t matter too much, can’t have “unfair” premiums (or policy cancellations) for stupid, reckless drivers. Another Whopper, please!
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Forcing everyone into a plan at a subsidized rate isn’t going to reduce costs because it will increase utilization. You’re already starting to talk about cost control.
you have far more control over your driving ability than your health “ability”. Furthermore, driving is a choice; living is not [it’s even illegal to kill yourself!].
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Maybe I’m wrong. Maybe in aggregate bad drivers couldn’t possibly get much better, and unhealthy people could have been healthy “if only…”. But I doubt it.
Guaranteed issue and community rating ends up distorting health care pricing across the board.
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There are a lot more things that end up distorting health care pricing than guaranteed issue and community rating. Things like Medicare, Medicaid, outrageous pricing for pharmaceuticals, emergency rooms (the last refuge for the indigent), and so forth.
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Community rating is intended to do what insurance is supposed to do–spread the risk. In order to spread the risk, guaranteed issue is necessary. It is an incomplete solution, but, given the failure of sHillary Clinton’s health care task force in 1993-94, it is probably the only political solution that is available now.
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As an aside, if you don’t have community rating (which is likely to be too narrow in any event) and guaranteed issue, get ready for genetic testing. The testing to determine whether the particular insurance applicant has a genetic propensity for certain diseases, with, of course, pricing based on the genetic testing. That is coming, and it will be an ugly minefield in the USofA. What genetic testing will do is make each person a community of one. Spread the risk? Decidedly not.
a single rational explanation for choosing a name brand over a generic?
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I’m not saying that there isn’t one; I suspect that in [a small amount of] cases, there is a rational explanation. I just have no idea what it is.
… There’s no reason, when it’s really the same chemical. I imagine in some rare cases there might be quality considerations. But most of the time, when the doctor or pharmacist tells you you’re getting “Motrin”, eg., you get generic ibuprofen, as it should be.
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However, the tricky part is when there’s a fairly effective generic drug vs. a newer, more expensive and maybe-slightly-more-effective brand name drug. That’s where the tough calls lie, and the brand name pharma companies obviously try to make it as difficult as possible, by rolling out “new and improved” drugs that are often hardly any more effective than the old generics.
can you get a higher coverage from your insurance company for a name brand drug when the exact same generic exists?
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To use your Motrin example for convenience [and made up numbers!], is it ever the case that your insurance company will pay:
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$x per 100 ibuprofen
$y per 100 Motrin
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where both $y > $x and the two drugs are chemically identical?
I understand it’s far more complex when the drugs are slightly different. But, I’m curious about the very simple case. Also note I’m not asking about the patient’s deductible — I’m purely interested in what the insurance company is paying.
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Anyone?
I’ll speak from my personal experience, working for one of the big health care companies in Massachusetts.
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Our payments to the pharmacy are based on what they should be paying to acquire the drugs (the wholesale price), plus a fee for dispensing the drug.
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So if Motrin is more expensive that ibuprofen, we’ll pay more.
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HOWEVER, Massachusetts is a state with a “mandatory substitution” provision (it’s either a law or regulation), which requires the pharmacy to susbtitute a generic for the equivalent brand, unless the prescribing provider has written DAW (“dispense as written”) on the prescription.
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So if you get a script written for a brand drug, and there’s a generic equivalent, you’ll get the generic unless your doctor specifies otherwise. Now the pharmacist can dispense the brand if he or she wants, but will only get the reimbursement for the generic.
that if the doctor wants Motrin instead of ibuprofen, the doctor has to take affirmative action to specify that it must be Motrin. Then, the insurance company goes with it.
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This is an elegant compromise. It requires the doctor to really mean that it should be the name brand, and then the pharmacy doesn’t question the abilities of the doctor.
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I wonder though: in the cases of chemical equality, why would the insurance company even support this? I’m not talking about two different chemicals with the same effect; I’m talking about two instances of the exact same chemical. In those cases, why would the insurance company ever pay any more for the name brand than they would pay for the generic?
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Furthermore, it would seem that there’s little to be gained on this “attack” to lower health care costs. If people are getting name brands instead of generics, it’s because their doctor thinks there’s a specific reason to go with the more expensive drug — and in that case, you’ve got to go with it, right?
is with the pharmacists. The pharmacist can’t substitute without the prescriber’s orders, so the insurer’s contract with them is largely a matter of treating them the same regardless of which drug was prescribed.
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One thing my company does is include the percent generic as a measure in our incentive program for primary care physicians. So a doctor who has a higher percent of his or her scripts than the rest of the primary care population would be in line for incentive payments. That’s about all of the leverage the insurer has.
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So why would a doctor prescribe a brand when there’s an equivalent generic? I’ve heard of a couple of reasons. One is that the “inert ingredients,” the stuff that holds the medicine together in the pill, are not the same between different versions of the drug, and that some patients have difficulties with a particular version. Another is that patients can be very picky at times, and that a doctor will prescribe “the same pill you’ve always received, Mrs. Smith,” rather than have to explain why they’ve been changed from the brand to the generic.
But, I find your second and third paragraphs concerning.
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On the third paragraph, both ideas make sense. The first [inert] makes chemical sense, and the second [Mrs. Smith] makes psychological sense, given that Mrs. Smith isn’t about to understand the chemistry and her blood pressure and stress will impact her health.
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But, if it is true that inert ingredients sometimes have different results in the patients, is it ethically appropriate to bribe doctors to use generics, given that they do occasionally have different side effects?
Thank you, Charley, for doing the interview and setting it out so well.
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I think all of us knew that Kingsdale and his Board were handed a very difficult task. It is great to hear from him so directly how it is working and what problems remain.
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The issue about cost control is spot on. The law does not address it very much. Ultimately cost control only occurs if quality control and accountability is baked into the health care system, but we are a long way from that. Part of the way to achieve that is to provide the public with very clear, real-time metrics about the safety and quality of doctors’ procedures and hospital activities. This has been mightily resisted by many in the profession — usually by people saying that there are no statistically valid ways of presenting such data.
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We have tried to break through that by presenting data — both good and bad — about BIDMC. Beyond my blog entries, such as the one cited by Charley, we have created a website with lots of helpful information about quality and safety. Please check it out at http://bidmc.harvard…. We are looking for public comments as to whether what we have presented is clear and helpful.
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Yesterday, the Public Health Council made recommendations in this arena. That looks like a good start, but it has been a long and slow process, and we need to accelerate things.
So what’s BIDMC’s position on the Litvak study? Any plans to change the scheduling of elective surgeries? What’s the situation there?
While it is commendable to initiate quality initiatives and having a well known health care organization pushing for positive change is great. What I don’t understand is why we don’t have something more universal. It seems that there are a lot of different organizations doing different things.
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This past month CMS started their Physician Quality Reporting Initiative(PQRI) pilot program, which I thought was a good idea. The AMA has more details of tools and quality measures. While this is voluntary, physicians who participate get some extra $$. a lump sum payment of 1.5% of their patient charges. I figured not a bad motivation, there is over a billion dollars available to fund this project (passed with the Tax Relief and Health Care Act of 2006).
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I work with a significant number of hospitals in the acute setting, and a smaller number of physician practices. I’m only aware of a handful of hospitals that are working with their physicians and practices to be involved in the pilot. While I’m probably not the best barometer of interest, I do have a sense of what activity to expect with pilots and projects, this one is way below my expectations. Why the lack of interest?
of the latest study by Prof. Litvak, but I have seen his work over the years. Nobody wants backups in the emergency rooms, obviously. They are certainly not good for the public, and they serve no benefit to the hospital or the staff working here.
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There are a lot of causes for ED backups, and surgical scheduling can be one of them. We work with the surgeons to try to optimize scheduling of cases, but they also have other tasks in addition to actually operating on patients, e.g., running clinics and visiting post-op patients on the floors. You need to be attentive to those needs as well. In addition, they have a right to try to schedule their personal lives. Remember, too, they are not employees of the hospital and so cannot be directed to spend their days in a manner prescribed by an administrator. So, this is not a simple case of applying an optimization model, like you would in a factory.
may I suggest that you lose the comma in your last sentence. It’s true, it’s not like a factory, but that doesn’t mean you can’t apply an optimization model. It’s just a different model.
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Question: could a number of hospitals band together to “put the squeeze” on surgeons by all tightening up their standards at the same time, thereby giving the surgeons little choice but to play ball or leave town? Would it be legal? Would it be effective?
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I’m not advocating the strategy, merely asking the question.
Question: could a number of hospitals band together to “put the squeeze” on surgeons by all tightening up their standards at the same time
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But since more than a few hospitals are being managed by private companies (Paul Levy’s Beth-Isreal Deaconess is only one in the area–Lahey Clinic is another, and I am sure there are others) you might have an anti-trust problem with your suggestion.
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As a minor nit, I didn’t have a problem with may I suggest that you lose the comma in your last sentence. As far as I’m concerned Americans don’t use enough commas. Germans use too many, but, properly used, the commas make the text easier to parse.
but the comma in his sentence had a significant impact on the meaning of his sentence, and that comma made his sentence incorrect [in my somewhat “professional” opinion as an optimizer].
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The comma implied that you couldn’t apply a scheduling algorithm to the problem — but you can in a factory. In fact, you can apply a scheduling algorithm to the problem — just not the same type of algorithm as you would to a factory.
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The comma isn’t about readability. It’s about meaning. His comma created a false statement [im”p”o].
…if Levy’s comma had had the same effect as “eats, shoots and leaves” I’d agree with you.
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Do a google search. Loosely described, it’s a joke about a panda bear who goes into a bar and sits himself down and orders a sandwich. After consuming the sandwich, the panda bear starts shooting the place up. The proprietor of the establishment asks the panda bear just before the panda bear is leaving, why are you doing this. The panda bear gives the proprietor a nature guide that says that pandas “eats, shoots and leaves.”
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Now, that is a misplaced comma. BTW, that was also the name of a hillarious book published a few years ago.
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My own conclusion: What comes across from the sum total of BMG discussion on the healthcare crisis is that most of you folks are more interested in enjoying your intellectual masturbation on the topic than in doing something about the heart and soul of the issue – making comprehensive healthcare a right for everyone in Massachusetts and eventually for everyone in the U.S..
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Yeah, what a stretch that would be. Doing what every. single. other. industrialized. nation. has. done.
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And they’re doing it with A LOT LESS MONEY AND WITH BETTER HEALTH OUTCOMES. And they don’t need private insurance co. shills like Kingsdale getting paid >$225,000 on the public payroll, either, to be the chief “mechanic” for a fake health reform law. Gheesh.
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No wonder I’m so discouraged any time I check in on what BMG is discussing on the healthcare issue. Set the bar a bit higher, folks, will ya?
Should I have asked Kingsdale when he was going to provide us with single-payer health care? That would have been an awesome interview.
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You are so massively rude and officious, Ann, I am not in the least bit surprised that you have gotten exactly bupkis so far. Congratulations. Talk about intellectual masturbation.
It’s about the people who need healthcare and are not getting it, and are being maimed, permanenetly disable, and dying prematurely after suffering needlessly b/c of this pathetic sorry fact in the U.S.
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It’s also about the HUGE FINANCIAL RIP-OFF that all of us are tolerating, in addition to the human rights abuses
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Do no take it so personally, C on the MTA; it’s not all about you. It certainly is not about “Ann”, either. I don’t own this issue, for god’s sake!!
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So as you sling your petty
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Keep in mind whose noses you are rubbing in your self-rightous crap.
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Don’t call yourself “progressive, either, if you’re gonna slam the paramount issue of the need to take a stand for healthcare as a human right.
It’s not about me at all.
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So why attack me?