Posted tagged ‘health care costs’

The Toughest Choices

July 2, 2013

In Philadelphia, an heroic, but almost certain tragedy is playing out.  A 10 year old, born with Cystic Fibrosis is barely clinging to life following two lung transplants.  Compassion and admiration for the child’s parents is all around.  Better patient advocates, one could not ask for.

Unfortunately, new lungs won’t cure Cystic Fibrosis.

The complicated part of this story is that there are costs that go with this heroic surgery.  There are real dollars and cents costs which would bankrupt any normal person.  Who’s paying is not clear.  (And, to say the hospital is not charging the parents is only to say the hospital is charging everyone else a little more.    The hospital simply smears these unpaid for costs over all other hospital budget areas).   Hmmm.

There is also the missed opportunity cost.  The two lungs could have gone to someone else had they not been given to the 10 year old.  Would the prognosis for those sick individuals been better?

And there is the question of whether getting on the adult transplant list was a cost or an investment?  Children under 12 have previously been restricted to a child’s list and could get a transplant only when another child donated the lungs.  Apparently this is much rarer than the availability of adult lungs.

The child’s parents went to the media and ultimately to a friendly court and got the Hospital protocol lifted so that the child could be put on an adult transplant list.  The question is was this ethically correct to tamper with a protocol already developed by medical ethicists?

I do not know the answer and don’t mean to imply it was or it wasn’t ethical.  Rather, I want to call attention to where our overall health care delivery system is headed.

Currently the US spends twice as much on health care as other modern countries.  The US health outcomes are mediocre in comparison, and not all residents are covered.  Logically there seems no other future than to fix the amount of medical resources and force residents to make better use of this limited resource.  There will have to be methods of choosing who gets what treatments, where, and when.  Hmmm.

Every time universal health care is mentioned there is a howl about “socialized medicine” ruining American health care.  You are lead to believe hospitals and doctors would be trying to make life difficult for everyone.  And the unstated comment is what happens if nothing changes and each of us has to pay for health care when the current system goes bust?  I suspect each of us will make a lot of medical unsound decision about what procedures to elect and which ones to pass over.  Hmmm.

We are often told this new world is the free market world.  Each of us are free to compete for medical care.  Hmmm.

I wonder in that new world how we would allocate new lungs?   When the operations is simply beyond ones means, I guess like in the free market, the new lungs go to the person with the most money?


April 30, 2013

The GOP seems to be incapable at times of getting out of its own way.  Every day some Republican Congress member will speak out and create another embarrassment for the GOP.  At this frequency, one would expect Democrats to be solidly in line for regaining both the Senate and the House leadership.  Yet, that is not the case.  Why?

The Washington response is “gerrymandering”.  It is certainly true that a lot of Republicans enjoy safety representing what are called “safe districts”.  These districts are a testimony to voter indifference and apathy.  Most gerrymandered districts make no sense and one end of the district has almost nothing in common with the opposite end other than being likely to vote Republican.  (States where Democrats control the State House follow the same practices if necessary.)

“Gerrymandering” is not why Democrats are not cleaning the floor with the GOP.

Voters hear the GOP chorus singing less government, more individual freedom, and lower taxes.

Hmmm, doesn’t that sound good?

When Democrats point out that “less government” means less Medicare for the elderly, less Medicaid for the poor, and less Social Security for the disabled and retired, for a moment voters get it.  The GOP is about more freedom for the wealthy and less service for the rest.  So, this should be a slam dunk, out with the GOP, in with Democrats.

Not so quick.

Voters also read about the VA, about relief for Hurricane Sandy, and about delays in the Affordable Care Act (Obamacare) roll out.  How can any sane person think well of government (especially one with a Democrat chief executive) when it takes over one year for a veterin to find out if their disability claim will be considered?  Why is it a full six months after the devastating storm has promised relief not arrived?  And, why is the Affordable Care Act tittering on the edge of financial collapse (or gigantic rate increases)?  Why can’t government deliver promised services?

I would suggest that our elected officials, Republican or Democrat, have little if any interest in seeing that existing government services operate as advertised.  Congress members ironically prefer to intervene for one of their constituents rather than try to fix the service for the benefit of everyone.  Being a hero and rescuing someone is more beneficial than working to prevent problems and helping others who do not live in ones voting district.

The bottom line is that voters have little faith that Democrats will do any better if given the keys to Congress again.  For voters, it is Tweedledee, or Tweedledum.

Voters must send a different message to their representatives.  The message is “focus on making current government services “world class” in cost, quality, and service.  We send soldiers off to war, it is intolerable that their claim for Veterans benefits should be ignored.  Aid to victims of national disasters is not a one time event.  There is no excuse for not having agencies perform due diligence (like insurance companies) and release relief funding in a 60 day period.  And, the biggest and most obvious, is why should the US settle for per capital health care costs which are twice that of most all other modern industrial countries, not insure everyone, and deliver mediocre outcomes for the rest?

Until voters send this message, our country will continue to drift into mediocrity.


What Can We Learn From The Federal Budget Impass?

April 9, 2013

President Obama will soon make known his proposed 2014 budget.  Aides are busily leaking key provisions as if they were passing out candy.  We are being told the President will speak to the need of balancing the budget but not to its urgency.  He will speak to changes in “entitlements” and the need for increased taxes (on the wealthiest).  And we can count on “government investments” in areas the President feels worthy.

Americans can count upon the loyal opposition to rebuke the President’s proposals.  It cuts too much here and does not go far enough there.  Taxes are off the table.   He’s weak on defense and wasteful on social programs. The President is not the leader we need!

Progressives will find the President’s cuts to entitlements cruel and unnecessary.  They will point to more taxes and deeper cuts to defense.  They will see a different man as commander in chief than the one who ran for office in 2008.

When one boils all this down, the prospect of a long term deficit cutting budget seems remote.  Prospects around positioning the economy to grow faster seem just as remote.  Hmmm.

Historians tell us that nations, even wealthy ones like the US, cannot run deficits indefinitely.  Economists tell us that sooner or later lenders will jam up the interest rate on the borrowed money and grind our economy to a halt just trying to cover interest expense.

Some political leaders have taken these views to heart.  These leaders propose deep spending cuts normally to programs their constituents do not support.  Other leaders do just the opposite.  Let’s even increase spending in order to get the economy humming again.

Spend or cut, what should it be?

If the US were a business, most every business person knows there should be large opportunities for efficiency improvements.  All organizations, given time, become full of redundant positions and often with workers who have become less productive due to age, illnesses, or simply complacency.  The Federal Government is no different in this respect.

Oh, and remember that the Government is often “the employer of last resort”.  A good politicians almost always takes advantage of government spending when it brings jobs and revenue to his/her district.   So, we can pretty much forget about deficit reduction programs built around trimming the government work force.

Just as disingenuous is the political rhetoric calling for more jobs.  While higher employment would seem in the right direction, the world is no longer a place where “blue collar” jobs are good jobs.  Globalization has changed everything and manufacturing jobs which were once prized pay the wage of the lowest wage country anyplace in the world.  So how is a family to survive on less that the minimum wage (say $15,000 or less)?

There are still decent jobs in America.  More and more these jobs are going to graduates from colleges and universities who have themselves amassed six figures in debt just to pay for their education.

And those at the top of the income pyramid, earning millions each year, their prize is a tax rate below the middle class.

So what can we really learn from the Federal Budget?

  • First, the budget process is broken.  Congress cannot decide rationally how much to spend and how much to tax.
  • Second, there is no national consensus on how to create “good paying jobs”, how to provide skilled and motivated workers for these jobs, and how to manage quality of life services such as education and healthcare so that they are effective and affordable.  These are critical building blocks.
  • Third, there is no ownership of the current situation.  Americans lacking skills are not owning up and doing something for themselves.  Health care costs are obscenely high and continue to rise.  Most Americans, however, are insulated by employer provided insurance or Medicare so they just look the other way.  And, Americans seem content to reelect Congress members who have proven ineffective and silently watch these public officials increase their own personal wealth while letting America drift.

There is a school of thought that says the best Government action is no Government action.  While there are countless examples where that adage has been shown wise, is that enough now?

Like it or not, government sets the broad rules with which we play.  The current rules are not working and worse are trending even more negative.  What ever the next set of rules might be, these new rules must call for shared sacrifice.  The argument over extending the Bush Tax Cuts was always the wrong argument.  Tax rates should have gone up for everyone.  How else will enough people realize that they are in a pot of water where the fire is surely going to bring it to a boil.


No One Saw It Coming?

March 16, 2013


It was easy, oh so much easier, for politicians years ago.  The general economy was growing. The future looked bright.   It was easy to encourage or at least acquiesce to the formation of public worker unions.  It seemed just as easy to grant public service workers, generous wages and contracts.  And these benefits were not wild and crazy, they were competitive with private industry.  And the best part, politicians received the admiration of potential voters as well as the peace of mind that they had acted fairly.  And indeed they had.

Fast forward and look at what is happening today.  Would anyone, even a skilled politician sign up with public sector unions and grant wages and benefits that they could no longer afford?  The world has changed and what was promised in the past can no longer be promised for the future.

Let’s be clear that on the issue of past promises, public sector employees and their Unions are not the problem.  Federal, State, and Local authorities made promises in good faith.  From an ethical and moral perspective, every effort should be made to not walk away from these promises.  It is, however, when we look forward that we see a collision between  public service workers, their unions, politicians (elected officials), and the tax paying public.  There is not enough money to keep things as they have been.

So what has changed?

So much.  The US is not growing like it used to.  In addition, the world has become so much more competitive.   The cost to produce goods and many services have dropped considerably in foreign countries.  This has driven down the wages of American workers through simple economics.

On the other side, all costs have sky rocketed.  Health care costs are out of control.  The health care delivery system seems to have morphed (as has the banking industry) into a sector primarily concerned with profit generation.

Pensions benefits are another rising cost.  Gone are the days of assured defined benefits.  The population is aging and investment opportunities are no longer returning the amounts they used to.  The consequence is that municipalities must increase their contributions in order to meet the defined benefit schedule.

And don’t forget, the tax paying non-public service citizens have not escaped.  With less relative income, the prospect of having to pay higher taxes raises red flags.

So let’s see.  Tax payers do not want to pay more in taxes.  Public service workers do not want any wage and benefit reductions, or want to contribute more to the cost of these benefits.  Benefit costs are rising and pension investments are not returning as much as they did once.  Hmmm.

So why, as in Philadelphia this week, are unions and their members demanding the Mayor and City Counsel raise taxes in order to meet their contract demands.  It seems the unions and members do not want to receive less in wages and benefits.   Are some people living in a parallel universe?

There are obvious reasons.  Unions are actually politicians and only know how to promise things, most of which they have no ability to deliver.  Public Service workers are regular people too and their cost of living is climbing.  So why shouldn’t they object to reductions?   Hmmm.

But these are not the main reasons.

The real issue, I think, is fairness.

Public Service workers can look around and see that life does not seem as dire for politicians.  They can see that Cities are spending money on all sorts of other projects and even if those projects seem worthwhile, there is a long line of collateral beneficiaries, such as law firms, contractors, and suppliers.  There are plenty of antidotes about how some portion of these government expenditures finds its way back to the politicians who voted for the work in the first place.  Hmmm.

The way out of this mess is not clear.

What is clear is that sacrifices have too be made by everyone.  We need to heed promises made in the past and move away from them carefully.  While the US is still hosting the best world economy, at the present time it can’t support the type of promises made in the past.

Capitalism’s strength is the silent hand that reallocates resources for output that is wanted.  There is realistic hope that the US future could remain strong

Elected officials, however, must pause and put aside their political ways if they are to make wise investments.  It is time for them to become “public servants”.  In the same vein, workers, especially public sector ones, must adapt to realities and not necessarily what was promised.

I am not holding my breath.  The Washington DC model is hardly an example to impart optimism.  None the less, the overall problem seems straight forward.    Patience, commonsense, and fairness should guide us.  It is time for us to tell “politicians” what the answer looks like.

The Big Gulp

March 12, 2013

It is difficult to see the New York Appeals Court decision to strike down Mayor Bloomberg’s sugar drink size limit as much more than a victory for the Sugar lobbying group.  As a point of law, maybe the fact that the City’s health department had no authority to regulate 7/11’s played a role.   As a result, the ban applied only to restaurants (beverage  servings greater than 16 ounces).  The Court said the law was “arbitrary and capricious”.

The law’s intent was to make it more difficult for New Yorkers to consume large quantities of sugar containing drinks.  This was an indirect attack on obesity and a direct effort to decrease health care costs.  Hmmm.

Restricting these “big gulp” beverages was a symbolic gesture.  It did nothing to put common sense into the caloric content of many other foods and drinks widely available in New York City.  It did nothing to control what consenting adults (and children) do within their own homes.  And, of course, it did nothing to save New Yorkers from obesity when they traveled outside the city.

So with all those limitations, who cares that the Court said “no”.

Most nutritionists tell us that weight control is a balance of energy expended with food ingested.  If one eats more, then one must exercise more.  Very simple.

In the real world, however, this message seems to be drowned out with other messages.  Just walk down any street in New York City, or in any Walmart, or any public gathering across the country.  Weight control and obesity are not characteristics Americans manage well.

So this is not a New York City problem?

Obesity is an American health problem.  If simply being fat was a fact and not a health problem this entire discussion would be unnecessary.  What people eat or drink is their own business.  Government intrusion is unwanted and a very dangerous precedent.

There is, however, wide evidence that high sugar and high calorie drinks and foods are correlated with increased body weight and obesity.  High body weight and obesity are associated with health issues.  US health care costs are the highest in the world and getting higher each year.  In part, all Americans are paying more for their health care insurance coverage because so many fellow Americans have weight related diseases.


The Big Gulp may in the end be nothing more than a shot across the bow.  It is, however, powerful statement about what citizens ought to do themselves, without any government requirement.  Mayor Bloomberg has demonstrated the guts and intelligence rarely found in public officials.  Three cheers for the Mayor.

Whose Economic Policy?

February 25, 2013

The media is having a field day.   Will there or won’t there be a sequestration?  I wonder who is in charge of White House economic policy.

News report after news report tells us of impending disaster at airports, in food prices, and military preparedness.  Yet compared to the size of the deficit and total government expenditures, the cuts are de minimis.  Why has the White House fed this frenzy through carefully orchestrated news conferences and interviews?

The President is said to be seeking more tax increases with any additional cuts.  The “Buffet Rule” tax (at least 30% rate on those earning $1 million or more) is thought to be his goal.  Unfortunately, President Obama wants to offset any reduction in  cuts with new revenue.  Sensible policy would more look like “in addition to” cuts.

The nature of the sequestration law is foolish.  It mandates across the board cuts rather than cuts where department heads decide the specific programs.   What is not foolish is beginning the long road to fiscal sensibility.

The tragic comedy being played out almost seems as if there are competing interests within the White House, all the while playing in a land of Republican wolves.  Where are the adults?

First the Administration must acknowledge that the country faces two problems, (1) national health care costs and (2) non-healthcare government spending that exceeds tax revenues.  Until these problems are separated, all government actions will be set up for failure.  Further, we live in a real world.  Any steps to deal with the two problems will encounter potential adverse impact upon the economy, or vested interests who support the current forms of Medicare and Medicaid.

Instead we are hearing a rhetorical melody about the poor middle class and the need for strong national defense.  In the background are chords of pure “gotcha” politics.  Maybe we need a different type of change, finally one we can believe in.

Ironically, simply cutting entitlements will shine a bright light upon Congressional members who would continue to enjoy a very rich and costly healthcare plan.  Hmmm, where would the shared sacrifice be?

The silver lining seems to be that the 24/7 news media has something to write and talk about.  They will again look out of touch when the immediate consequences turn out to be not severe.

The longer term implications, however, such as misidentifying the real issues and the need for all Americans to participate in its solution will be avoided once more.  What type of economic policy is that?

Governing By Polls

February 20, 2013

Former President Bill Clinton perfected “triangulation”, a process of launching a policy idea as a trial balloon, polling to determine its public’s acceptance, and then adjusting the trial ballon, and repeating the process until public acceptance reaches a desired level.  Then, and only then, Bill Clinton took a public position.  Democrats and Republicans both seem to be attempting to play that cleaver but gutless game with sequestration.

The sequestration measures rapidly approaching would chop about $100 billion off the budget ($1 trillion over 10 years).  Democrats are now bemoaning the law and seeking to change it to make it less onerous.  Less onerous to Democrats means less spending cuts and more taxes.  Republicans want to see no new taxes and no cuts to defense spending.  In the best of circumstances, spending cuts, for Republicans, would be all in entitlements.  The current sequestration law gives neither Democrats or Republicans what they want.

This is white knuckles time.

Each side is sure they have the public’s preference on their side.  How do they know that?  Bingo, the polls.

There is little evidence that Democrats or Republicans see a greater picture.  Cutting a trillion dollars from the budget (the size of our yearly deficit) could have major consequences.  It has to mean increased unemployment (at least temporarily).  Unemployment could compound itself into a recession and only time would tell for how long.

While cuts to general spending as well as defense spending are almost certainly a good idea, how much and over what time period is not clear.   Raising some new tax revenues is also wise, but how much and from whom is unclear.   Ignoring entitlements, however, overlooks the main driver of the deficit.  And within entitlements, it is health care that must be tackled.  Do the math.

The interesting things about polls is that their answers depend on what questions you ask and who you ask.  Long term solutions for our chronic deficit problem do not seem to be among the question being asked.

Even more to the point, I wonder whether the younger generations who must pay for the debt are in the polling population?