Archive for July 2009

Big Business – Free Lunches

July 31, 2009

The paradox surrounding health care reform is less the idea of extending coverage to the almost 50 million Americans without coverage, then it is more about how to reign in the current year over year escalation of health care costs. We hear from health care industry experts that this can not be done without heavy risk to the quality of care Americans expect (that is those insured). But make no mistake, health care is a big business and there is no free lunch.

Some suggest that Medicare is the problem and that it pays doctors too much for too many tests. Others suggest that private insurers are carving out too much profit for their services. And still others say that Hospitals, especially community ones, are inefficient and waste money. What is inescapable, however, is that what ever measures are used to reduce total health care costs, it will translate into job losses for direct health care providers and all the suppliers to these companies. It is simply the math of it.

So, if you follow this logic, then the right next step for lobbyists is too obfuscate, spin, and distort the reform debate so that there will be a “no change, change” and things will go on as usual.

This outcome will comply with the “no free lunch” theorem. The status quo will ensure two things. First, the jobs and profits will continue. Second, the whole health care maze will come tumbling down as it bankrupts the American economy in the near future.

It seems strange that we have just experienced a melt down of the financial services sector where a disproportionate amount of profits flowed into a sector in comparison to the value it was creating. It is not that banks, investment firms, and insurance companies were not important or valuable, it was that their incomes were simply too much relative to this value. The overall health care industry is different, of course, but in a strange way similar.

The financial sector forgot that their role was about managing risk and instead thought it was about making profits, the more the better. The health care industry seems to have forgotten that their job is to provide health care for everyone and to do it in a way that its costs are in fact covered. It does no one any good for hospitals to be a money losing proposition nor for drug companies to go bankrupt.

Why should drugs made in America be cheaper in Canada and Americans not allowed to import them? Why should someone be insured through their employer and if terminated or departs on their own will, lose coverage, and if that person tries to get insurance again will most likely pay much more and could possibly be denied any coverage? Why should someone go to a doctor or a hospital, be asked to undergo several diagnostic tests and then be asked to pay for them at a different cost than his neighbor simply because he has a different insurance plan or no plan at all?

There is a huge opportunity in front of us to reform health care and include all Americans in coverage, and at the same time, ring out inefficiencies, excess profits, and provide stable good paying jobs to many people.

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Morality and Common Sense

July 30, 2009

Stupidity is a word we have heard recently from the President Obama. Stupidity seems appropriate to describe the current health care debate too, but but maybe in both cases, the word common sense would be more appropriate. We have a health care delivery system that is increasing in cost 2-3 times the national rate of inflation and we still have 40-50 million people without coverage! On top of that, the other 250-260 million insured people can look forward to a life expectancy just slightly better than Cuba and about 28th in a world comparison, and hold on to your hat, even with these lack luster results, the US pays more than twice per capita than other countries. Now I would think that is stupid, or at least displaying a shortage of common sense.

If we assume there are 300 million Americans, and according to estimates, 45 million receive Medicare benefits, than that leaves 255 million needing coverage by private insurers. If the number of uninsured is about 50 million, than one out of every 5 Americans is without coverage that the rest enjoy. Does not that sound immoral for a country as wealthy as ours and who citizens tot as many bibles as they do? Why are we so comfortable to be allowing so many to go with third world health options?

But wait there’s more. If you are a fortunate one who has health care insurance through your employer, it is not forever. If you have been let go or quit, your insurance coverage stops and you are on your own to get more. What do you think your chances are if you have diabetes or your wife is pregnant?

Our present delivery system is going down the toilet financially. You do not need to carry a bible to know it is wrong to deny coverage, or to price it too high for many people to afford. It is time to speak up and tell your Congressman that health care is important, not just for some, but for everyone. If you have courage, tell them basic health care needs to be paid for, by everyone. And while you are at it, tell them that the health care coverage members of Congress receives would be good enough for you too.

Employer Mandate?

July 29, 2009

News reports indicate that at this stage of Senate health care reform negotiations, both the “public option” and “employer mandates” are not included in the Senate health care reform bill. What are they thinking? We have already 40-50 million uninsured Americans and if the employers of those with health care coverage suddenly decide company profits are more important and stop offering coverage, what do you think is going to happen?

I can understand why employer provided coverage can be viewed as unfair. Some plans are simply better than others, coverage is temporary lasting only as long as employment, and in a global economy, providing health care place some uncompetitive burden on the employers. But that is a strong argument for a single payer system, and that most politicians are against.

The “public option” is, according to polls, very attractive to most Americans. I do not think politicians are listening close enough yet. Senators Fluster and Bluster argue that the government does not know how to run anything and the cost of this new option would quickly be out of control. These are reasonable concerns but also fly in the face of the facts that Medicare works quite well and further that Medicare costs have risen far less than private insurance costs.

As you argue health care reform, certain principles keep popping up.

  • Everyone needs to be in the game and contributing to the cost of their health care.
  • “Opting out” is an American right, but must be accompanied with huge penalties to re-enter at a later date.
  • The model for basic care should be that which Congress receives, it should be portable, and it should have no pre-existing condition exclusions.
  • The method of funding is open for discussion. Employer provided coverage is simply a tax by another name. Tax credits, public option, straight income tax, and/or employer provision are all options to be weighed and evaluated.

What will Senators Fluster and Bluster decide?

What Does It Take To Be A Republican?

July 28, 2009

In the past, a Republican was someone who favored the farmer, a strong defense, and fiscal responsibility. In short, Republicans were for America and both military and financial security for its citizens.  This was easy to understand.  So, just as a car owner might buy a Chevy for their first automobile and then as they became wealthier, they might move up to a Pontiac or Buick or Olds, and if they really made it, a Cadillac, many voters started adult life as a Democrat or Independent, and as they grew wealthier, they grew more conservative and more naturally aligned with the Republicans. But that is no longer the picture of America.

The new Republican flower came into full bloom with George W Bush. It was a flower of value-less pandering whose only goal was to retain power on government spending and to milk the public troth as much as possible. To gain the electoral support, Republicans needed to literally make deals with the devil. We have, as a result, no action on global warming, the Iraq invasion and occupation, Abu Ghraib, Guantanamo Detention Facility, Terri Schaivo, a doubling of the national debt, the collapse of our financial services sector, and a whopping $ 1.2 trillion deficit left for the Obama Administration.  After a thorough rejection by American voters, we now have the rump of a national Republican Party that believes it must continue to rely upon divisive, hateful, and plain unworkable policies in order to appeal to what’s left of its loyal base.

There is no free lunch so when Republicans vote against the nomination of Sonia Sotomayor for Justice of the Supreme Court, they will be telling Hispanics and other minorities what they think about their qualifications for government positions. When Republicans bluster and fluster about the cost of health care reform and do not at the same time tell people that the current system is broken, unfair, and will soon go bust, they are acting worse than hypocritically. Republicans have now become the party of “no”.

It would be easy to simply say “let them have at it” and await the ultimate Republican Party demise. The problem is that left unchallenged, Democrats will jump off the tracks and produce other undesirable outcomes. The field is wide open for moderation and pragmatic solutions to tough domestic and global issues. Until the Republican Party returns to a sensible and practical list of platform values, and alters its pandering rhetoric, America continues to lose.

Health Puzzle

July 27, 2009

Try talking with anyone (and especially anyone you do not know well), and ask them what they think about health care reform. You will be surprised with the wide range of answers you receive. You will immediately get the sensation of the blind man describing an elephant by touch.  Health care reform must cap doctors fees, health care reform must eliminate pre-existing condition restrictions, health care reform must lead to reasonable insurance premiums, and so on.

Like all complex problems, one must start by dividing the big problem into pieces, each smaller than the original problem and  a bit easier to understand (although it is quite possible that one must again break that smaller problem down further to get pieces that can be fixed). Health care reform is exactly this type of problem. Here are three pieces that would be helpful in considering reform.

The current healthcare system is going broke. This begs the questions of whether we are paying enough for health care service we receive, or whether the cost of the health care services we receive are out of control, or both. Unless we can specify changes to the current system that stabilizes costs and cost over runs, we should expect any reforms to end up bankrupting us. This is step one and a thorough understanding of where our current dollars are spent (and why) is essential.

The current health care system does not provide coverage for everyone. There is an estimated 40-50 million people who are under insured, denied coverage, or are priced out of the market due to prohibitively high premiums. This group without coverage also includes “gamers” who are gambling that they will not get sick or injured, and consequently these people figure they can save money by not buying health insurance. The paradox of the gamers is a question our country must face up to. Should we have a national debate and decide whether to allow citizens to opt out, and if so, what amount of a penalty should be attached should the person ever want to take insurance or receive subsidized medical care in the future. It is easy to see that if we have not stabilized health care costs and then we add 40+ million more people, we will just bankrupt the system sooner.

What level of health care, if any, do Americans have a “right” to expect, and even more importantly, what outcomes should Americans expect? These are fundamental questions to any reform movement. From a public viewpoint, it would seem that the health care coverage which members of Congress receive would be a reasonable target. If any other lower level was chosen, then Congress would need to meet it for themselves. In all likelihood, Congress’s level of health care is richer than what most Americans receive. Moving to this higher level will cost more. With respect to outcomes, why would we not expect our health care system to lead to life expectancies in the top five countries of the world (if not number one)? Interestingly there is a reasonable chance that reforms to health care could reduce the cost and increase life expectancy if Americans assumed a bit more responsibility.

The chorus of detractors for President Obama’s health care reform are speaking from many different directions. Their concerns, however, when put in an economic frame, are not unreasonable given the level of explanation the President has shared. If we can’t stabilize the current system, we have no chance at any reform. If we do not try to reform the system, the current one will go bankrupt in time. Just like the world of bankers, the world of health care providers are motivated by greed and will fleece the golden goose until the eggs are gone, unless limits are imposed.

Racial Profiling Stupidity

July 25, 2009

President Obama made an unfortunate comment in answer to a question at his last news conference. The subject was the arrest of Harvard Professor Skip Gates on charges of disorderly conduct in his own home. President Obama called the arrest “stupid” and then pointed out the similarity this event has to what has happened to many other blacks, namely being stop by police due to racial profiling.  President Obama’s words seem to have inflamed the situation and may not be totally true.

Professor Gates had just returned from a 12 hour flight from China and was undoubtably tired. He was in his own home when a police officer, answering a 911 house burglary call, came to his door. What actually happened (who said what to whom and when) is pretty much irrelevant but when Gates finally step onto his front porch, the police officer arrested him.

This incident struck a familiar cord with most black men and certainly most all black men who “have made it”. There but for Professor Gates could have been any one of them. Black men are stopped disproportionately more than white men and are suspected of crimes almost immediately upon simple traffic stops. Why?

The answer generally given is racial profiling. Excuse the pun but that is a skin deep answer. A much better answer is faulty common sense. Police have learned over time that men in three piece suits do not commit petty day light house break ins. They have found that unemployed black men do. The problem arises when we admit that crimes can be committed by men in suits and that not all black men are criminals.

We all use common sense in guiding our decision processes. And in this situation, there had to have been an overwhelming amount of information readily available to have established that the house was in fact Professor Gates’ (photographs on tables, driver licenses, utility bills, etc). Even if the Professor had used profanity or loudly accused the officer of racial profiling, the house was Professor Gates, he had done nothing wrong, and the officer was intruding. Whose responsibility was it to manage this situation sensibly?

It seems to me that the primary responsibility lay with the police officer (especially a sergeant), and that the arrest was totally unnecessary. It would have taken no time at all to summon the Harvard Police who could have verified the Professors identity. Never the less, Professor Gates, like all other black men who “have made it”, must recognize too, that despite their exemplary lives, there are a lot of black men (most living in poverty or hocked on drugs) who are committing a lot of crimes. It is only common sense that leads police officers to suspect a black man. It is high time that the blacks, especially those who have made it, use their energies and means to give back and to help break the cycle of poverty that grips so many of their brothers.

For non-black Americans, there is a huge warning signal here. Police have a difficult and dangerous job to be sure, but they have no right to arrest people on trivial charges nor to enter citizens’ homes without sufficient reason or authority. Our laws are supposed to prevent these actions for all citizens not just for certain races. If we do not insist that the law apply to all races, then it will morph into empty words and protect no one’s rights.

Free Lunch Wishes

July 22, 2009

All the discussions going on about how much the various health care reform proposals might cost and how would they be paid for begs a much bigger question. The simple and obvious answer is that the reforms being discussed will cost a lot more compared to where we are now, but so what? Common sense confirms the need for increased tax revenues if we are to add 40-50 million uninsured individuals living in America to the rolls. The real question is how much of a tax increase.

The uncertainty is tied to what type of medical coverage would be extended to those uninsured, whether that level of coverage would call for increases in levels of those considered “under insured”, and most importantly what efficiencies can be rung out of the current health care delivery system. With our current health care system costing more than any other industrialized country and the outcomes (life expectancy) way down the list, and the yearly increase in all aspects of health care cost rising between 2 and 3 times the rate of inflation, it should be clear that the current system is badly in need of a fix too.

Unfortunately politicians of both political stripes seem only too ready to pander to voters about no tax increases and if necessary little or no reform. These are the same politicians who are content to see the federal budget projected to be unbalanced for the foreseeable future. It is time that all of us wake up and demand some straight talk.

The Clinton era tax levels and distribution rich to poor worked very well. The country had growth and prosperity and generated budget surpluses. This is a sensible first step towards driving home the notion of pay as you go. Recognizing that breaking the country’s reliance on fossil fuels would help diplomatically as well as environmentally, introducing a significant tax on gasoline could help reduce consumption and help fund infrastructure projects. Lastly, the country needs to embrace the concept that if anyone receives government healthcare support (like the current tax holiday for company provided healthcare benefits), then everyone deserves to receive healthcare, and if everyone receives healthcare, then everyone must pay some proportion of the cost.

The many ideas tied to free lunches are astounding.  We can have guns and butter, we can have financial services CEOs earning 10’s of millions who bankrupt their companies and are not accountable, we can run our national budget continually in red ink and not worry about the consequences, but in a land as rich as ours, we are content that one out of six people do not have health care insurance.  Wishing for another free lunch will not work.  It is time to start paying.