35 thoughts on “Uwe Reinhardt: “The U.S. is Not a Democracy; it’s an Aristocracy”: Part 2”

1. I’ve said several times that taxing employer provided health insurance benefits as income would be fine with me even though it would probably cost my family another $3,000-$4,000 per year in taxes. However, I think it will be one heck of a challenge to get organized labor to sign onto such a concept. Public sector union workers as well as those from many of the old line industrial unions have some of the most gold plated coverage in the country and employer attempts to scale back benefits or get workers to contribute more (sometimes more than zero) toward the cost of their health insurance results in strike threats unless employers back off.
   Regarding scope of coverage, if we were to decide to, for example, not cover the $100,000 cancer treatment because it only gets the patient an extra couple of months of low quality life and is not worth its cost, the wealthy will still be able to self-pay while most of the rest of us won’t. Is that rationing by ability to pay? We can’t stop people from spending their own money, nor should we. If we ever expect to bend the medical cost growth curve, CMS is going to have to learn how to say NO a lot more often than it does now. There are simply not enough higher income people to extract higher taxes from to bring the uninsured and underinsured into the system without scaling back the scope of coverage that we currently pay for. If the broad middle class, including organized labor, doesn’t like it, I have three words of advice: Get over it!

2. Barry–
   Labor unions currently have littel power in this country.
   So their opposition would not be likely to torpedo taxing employer based benefis.
   Moreover, workers in unionized industries no longer enjoy “gold-plated” wages and benefits. That’s a very old argument referring to a time that is long gone.
   Finally if insurance no longer cover over-priced, largely ineffective treatments (and insurers would follow Medicare) then these products would no longer be available for the very wealthy to buy. Drug-makers are not going to continue to make something for a tiny market.
   In Europe. many of the wildly over-priced marginally effective proucts and services that you find here just don’t exist.
   But if they did, and very foolish wealthy pepole bought them, I wouldn’t care.
   The point is that we don’t want to ration EFFECTIVE treatments according to ability to pay.

3. “Moreover, workers in unionized industries no longer enjoy “gold-plated” wages and benefits. That’s a very old argument referring to a time that is long gone.”
   They’re still pretty gold plated for teachers, police officers, transit workers, firemen, sanitation workers, etc. in states where public sector unions are strong. Also, while employment has shrunk, active employees and union retirees from the auto, steel, aerospace, railroad, and several other industries still enjoy very generous health benefits at low cost to the member. Efforts to scale those benefits back routinely meet with fierce opposition to put it mildly.

4. Barry–
   You wrote: “They’re still pretty gold plated for teachers, police officers, transit workers, firemen, sanitation workers, etc. in states where public sector unions are strong”
   Barry, I’m sure you realie that pay for teachers, transit workers, sanitation workers and firemen in most locations is far below the intelligence, labor and coaurge required to do these jobs.
   Public-sector workers have good benefits becuase they still have unions. But workers in the jobs you described–with the exception of police officers in certain cities –are underpaid.
   As for retirees in the unionized for-profit sector, they are dying as we speak. Again,you are talking about an era that no longer exists.

5. Maggie,
   I wasn’t trying to speak to whether the total compensation of public sector (or private sector) unionized workers is high or low relative to other fields or relative to the skill and courage required to do the job. The fact is that their health benefits are, for the most part, gold plated relative to most employer plans and vastly better than what people without employer provided health insurance can access or afford in the individual and small group market.
   As for public sector and many private sector union retirees, yes they are gradually dying off. However, current active workers still qualify for generous employer provided health insurance in retirement even after they age into Medicare. In NJ, for example, teachers with 25 years in the school system get health benefits for life when they retire and police officers can retire with as little as 20 years of service with health benefits. Try asking any of the active workers in these unions if they would prefer to have their salaries raised by the current value of their health insurance, pay the income and payroll taxes due on the raise and pay a hefty dedicated payroll tax in exchange for a health insurance voucher that they can use for a health insurance benefits package that is considerably less generous than what they have now. I don’t think we will find many takers, and I predict we will encounter fierce opposition if we try to force it on them.

6. What I believe is a major cause of this dangerous economic tier development, with its health and other social consequences, is the total failure of the US Senate to represent people instead of trees or special interest in mostly tree or grass filled states without many people. How many people in Alaska and Wyoming compared to California. What, maybe 100 times as many in CA. Yet these people-empty states have the same political power in the Senate as CA, and add to that the neat little notion that it is in the Senate that you need 60% to get things done! Dah, now who and why is that.
   I believe some constitutional structural change is badly needed to get this country to represent people again and not special interests, trees, and grass!

7. Now we get to the nub of the issue. Health care insufficiencies are not a basic problem, they are a symptom of a larger issue, the rise of a new oligarch class in America.
   The odd aspect of this change in social structure is that there has been so little complaint by the bulk of the population. In fact the libertarian view as represented here by Barry Carol (and seen frequently elsewhere) is a contempt for those at the bottom (lazy, stupid and/or shiftless) and resentment of those who have managed to organize enough to preserve some semblance of a middle class lifestyle.
   How else do you explain resentment of the salaries and perks of police and firefighters who risk their lives when a starting law associate in NYC can easily make five times their salary?
   I’ve had to deal with this attitude so often recently that I’ve turned my response into an essay which is posted here:
   http://www.eurotrib.com/?op=displaystory;sid=2009/2/14/114616/733
   The gist is that the rise of wealth inequality is not the cause of the loss of class mobility, but is a result of the excessive power of an oligarch class.
   Health reform will not succeed until the basic political/wealth power dynamic is changed. So far we see little public understanding of this, and each social fault is treated as a separate issue, rather than as an instance of the underlying social failure.

8. Barry & NG —
   Thanks for your comments.
   NG– I’ve never lived out West so I don’t know a great deal about the politics of environmentalism vs. other priorities (education, healthcare).
   But it is my impression that a great many people who live in places like Alaska & Wyoming are very anxious to preserve the grass and trees. They wouold prefer that their tax dollars be spent in that way, and don’t want the enironment spoiled by indsutry, develpment, etc.
   Do they have too much influence in Congress and is this bad for people who live in California? I don’t know enough about the subject to venture an opinion. . .
   Barry:
   You write: in the public sector “health benefits are, for the most part, gold plated relative to most employer plans and vastly better than what people without employer provided health insurance can access or afford in the individual and small group market”
   Clearly,you have never worked in the public sector.
   I’m afraid you get your info about “gold-plated” benefits in the public sector from Cato, the Heritage Foundation or other conservative groups that tend to disparage civli servants. (This disparagement and the suggestion that civil servants don’t work hard and are have great benefits is part of the conservative meme that argues that government can never do anything as well as the private sector.)
   Both of my parents worked in the public sector most of their lives. Back then, they were poorly paid and the benefits were not great.
   Today my daughter works –for the NYC school system one of the better urban school systems in the country in terms of pay, with a strong union.
   But are her health benefits gold-plasted?
   NO.
   Her insurance pays doctors and hospitals so poorly that it is very, very hard to find anyone who will take the city’s teachers.
   (She is not able to use any of the doctors I use –who are all part of the Aetna network. Aetna probably doesn’t pay fabulously, but it’s not hard to find a doctor.)
   My daughter finds doctors by talking to other teachers. This means that they all go to the same handful of doctors.
   As a result, these doctors are way overbooked. When my daughter went to her ObGyn recently for a 3:30 appointment a few weeks ago.the doctor saw her at 7:15. And she likes her ObGyn and will continue going to her, despite the terrible service.
   When my daughter had a 103 fever and a bad respiratory infection recently, she wound up going to a free neigborhood clinic–no way to get an appointment with a regular doctor with her insurance.
   The insurance that I had at Yale, at Dow Jones, and that I now have at the non-profit Century Foundation, as well as the insurance that I bought for myself while writing my books (at roughly $6,000 a year, just to cover me) were all Vastly Better than what my daughter has.
   And I have to say that the $6,000 policy I had was worth it–$10 and $15 co-pays for doctors and most medications, no deductible if I stayed in network, $2,000 if I went out of network, no lifetime cap, no annual cap–and this is in New Yorks State where we have the equivalent of community rating and guaranteed issue– everyone can get insurance at the same price, but there are no low-priced policies.
   $6,000 may seem a lot for insurance for one person, but I think we need to realize that in Switzerland, everyone pays 10% of their income for healthcare before becoming eligible for government subsidies; under Massachusetts’ new plan,
   everyone is expected to pay 8% of their income before receiving a govt. subsidy. . . So someone earning $60,000 to $72,000 should expect to spend $6,000.
   The people who truly have “gold-plated” insurance in this country are the “better-paid workers” (over $70,000) who work in the Private Sector, where their employoers pay an average of 75% of their premiums–and in 15% of all cases, they pay 100%.
   These are the people who basically expect their heatltchare ahould cost them no more than a couple thousand dollars or or so (for an individual) a year.
   They’re appalled when told that under national health insurance, you must spend 8% of your income in Mass and 10% in Switzerland before someone else starts helping you out.
   Moreover, as you know, “better-paid” workers in the private sector pay no taxes on the rich benefit many receive.
   The rest of us subsidize them–including people who cannot afford insurance for their own families.
   This is another example of how the economy in this coutnry has been skewed so that the wealthy enjoy their privileges on the backs of the have- nots.
   Sorry to go on at such length, but these are simply the facts.
   Did you ever wonder why Cato doesn’t allow comments in its blog?
   Because it has no facts to defend many of its positions. So it simply makes statements that are blatantly untrue– without allowng anyone to raise qustions.

9. Maggie brings up important issues about financing health care reform. Let me give my perspective on them.
   Re: “Reinhardt is right. As virtually everyone acknowledges, health care reform will require a huge amount of seed money to provide catch-up care for the uninsured and under insured; fund health care IT; measure the comparative clinical value of competing products and services; and provide financial incentives for doctors and hospitals to collaborate in providing safer, more effective and more efficient care. Granted, over the long term some reforms will pay for themselves.”
   Health care reform that requires additional spending is health care reform in name only. True health care reform involves restructuring the system so that, for no more that we now spend ($2.7 trillion in 2010), it provides
   • all needed sickness care
   • greatly increased prevention programs
   • long term care
   • Computerized medical records
   • Funding for social determinants of health (decentralized anti-poverty strategies, social support networks, early childhood development assistance, etc.)
   Re: Where should money for health care reform come from?
   I’m kind of a numbers guy, but my head was swimming with the all the figures relating to the income disparities and strategies for reforming health care by increasing income taxes on the rich. It appears to be another battle in the class war. Full disclosure: I reside in the lowest income quintile, and health care insurance consumes 37% of my meager pension. Since I am quite healthy and seldom use medical services, I would drop my Blue Cross insurance except that my pension pays 75% of whatever medical insurance plan I choose. If I decline medical coverage and take Medicaid, I would lose over $6k from my pension.
   Given that our linkage of private health care insurance with employment is rapidly unraveling, consider abandoning employer-paid and privately paid health care insurance. Private health care insurance and workers’ compensation are projected to cost about $1030 billion in 2010. The cost to federal, state, and local governments to insure 10% of workers who are covered by private insurance coverage will be roughly $100 billion in 2010. Additionally, much of the $150 billion in the federal stimulus package going to health care will relate to shifting from private to public funding for insurance.
   If a government-funded single-payer national health program were created that required modest premiums from everyone (e.g., adults = $100 per month children = $5 per month with hardship exceptions, or about $250 billion total in 2010) the government would only need to have about $550 – $600 billion of additional revenue (call it a “health care fee” rather than a “tax”) to shift all private insurance to public in 2010.
   As an alternative to taxing income of the rich for this National Health Service required revenue and stoking the class wars, consider a health services fee on nonrenewable energy. Actually, this still taxes the rich preferentially, since cheap energy contributes to marked income disparities by substituting fossil fuel driven technology for human labor. Arguably, the greatest health threat to all people on the planet is global warming from nonrenewable energy consumption. We are clearly all in this together.
   Per capita energy consumption in the USA is over 6 times that of people in the rest of the world. Maintaining low energy prices—despite environmental, military, medical, and social costs—has been perceived as an essential component of American economic prosperity for a century. However, now our dependence upon oil is a national security problem and an economic security problem. As last year’s oil price spike demonstrated, our enemies may have no more potent weapon against the American way of life than the potential to exploit our dependence on imported energy.
   When we recover from the recession/depression, oil prices will inevitably spike again to $140+ per barrel unless we act now. In the highly unlikely scenario that imported oil will remain at only $40 per barrel, we will still spend over $200 billion on foreign oil in 2010. At $140 per barrel, that goes to over $700 billion. The U.S. Department of Energy estimates that each $1 billion of trade deficit costs the U.S. 27,000 jobs, so this translates to 5 million – 19 million energy sector jobs. Additionally, the ongoing loss of U.S. jobs in manufacturing and other sectors is due in part to cheap fossil fuel to transport goods worldwide. Our huge trade deficit also accounts for trillions of dollars in depressed wages of U.S. workers.
   Considering our precarious energy supply situation, unsustainable trade deficit, and health care crisis; consider instituting a health care fee of $0.008 per 1,000 BTU (i.e., $1 per gallon of gasoline and a comparable fee for other nonrenewable energy sources, including nuclear power). In the spirit of mutual sacrifice to pull through a common crisis, ask President Obama to call on all Americans to reduce nonrenewable energy use by 30%. Based on a projected 30% decrease in energy consumption, this health care fee would raise the required $600 billion to relieve businesses of employer-mandated medical insurance and the medical component of workers’ compensation responsibilities for employees. Abandoning tax-exempt employer medical insurance would also increase federal, state and local government tax revenues in 2010 by at least $250 billion.
   At the current cost of fossil fuel energy (about $2 per gallon of gas in February 2009), reducing nonrenewable energy consumption by 30% (35 quadrillion BTU per year, i.e., from 115 to 80 quadrillion BTU) would save individuals, businesses, and governments over $500 billion per year. If oil remains at $40 per barrel, the energy component of the trade deficit would be reduced by $240 billion in 2010. The decreased world demand for energy (about 7% less overall since the U.S. consumes about 24% of the world’s energy [i.e., 0.24 x 0.30 = 0.072]) would also stabilize prices of fossil fuels on international markets, protecting us long term from crippling energy price increases. If Americans do not reduce non-renewable energy consumption by 30% despite the $1 per gallon fee on gasoline, the fee could be raised and the additional funds used to offset government spending on health care from other sources (e.g., income tax and / or payroll tax). This kind of fee on carbon and nonrenewable energy would boost jobs in the renewable energy sector much more that the current strategy of the government borrowing money to “invest” in renewable energy research and demonstration projects.
   Consider this strategy to simultaneously address our crises in health care, employment, climate change, environmental pollution, and national security. With some modification of my “Doctor Managed Care” proposal (Chapter 24) for universal coverage, we could create a consumer-directed, single tier albeit not one-size-fits-all health care system.
   References to the sources of my economic estimates above can be found at http://doctormanagedcare.com/ChaptersMDM.pdf (Chapter 24)

10. “In fact the libertarian view as represented here by Barry Carol (and seen frequently elsewhere) is a contempt for those at the bottom (lazy, stupid and/or shiftless) and resentment of those who have managed to organize enough to preserve some semblance of a middle class lifestyle.”
    Robert – Your characterization of my viewpoint is grossly inaccurate and I frankly resent it. You’re entitled to your opinion and your liberal viewpoint and you can advocate for it all you want. Maggie’s characterization of me in a prior comment as “fair minded” is accurate as anyone who knows me will attest. For the record, I consider myself fiscally conservative and socially liberal. I’m certainly not a libertarian. Your comment about me was uncalled for and unworthy of this blog.
    Maggie – My former next door neighbor was a NYC police officer who suffered a stroke at age 40 and was in a coma for six weeks. He had major surgery afterward followed by other significant healthcare costs later. Everything was covered. His wife told me they never even saw a bill. Teachers around here rave about their health insurance coverage as do police officers. If public sector (or private sector) unionized workers choose to receive a disproportionate share of their compensation in the form of health insurance, that’s their prerogative. My problem with benefits in the public sector is not with the workers or their union, it’s with the management in not fully understanding the long term costs, especially of retiree health and pension benefits, that they agree to in collective bargaining which taxpayers are then responsible for paying. That’s why the states had an aggregate combined unfunded liability for retiree pension and health benefits approaching $2 trillion even before the stock market crash. At least in private sector collective bargaining agreements, managements generally have a better handle on the long term costs, and companies are subject to stricter funding requirements, at least for the pension benefits. On the other hand, changing market conditions can drive companies out of business. Governments are not subject to that risk.
    The context of this whole discussion is healthcare reform. People who currently have good health insurance whether they’re in the public or private sector, union or non-union are going to resist reform if they think they personally will wind up paying more for less coverage than they have now. It is not a rich vs. poor or union vs. non-union or public sector vs. private sector argument.

11. Sorry Barry, I don’t buy it. Your insistence on claiming that state workers get “gold plated” benefits gives you away.
    Be as offended as you like, but your own words show your true attitude.
    If you don’t like being called a libertarian then fine, but the combination of class resentment, tax resentment and a feeling that many people don’t deserve help fits this viewpoint better than other labels.
    It is the lack of empathy and the lack of understanding that we are all in this together which makes your attitude so socially destructive.
    Setting one group of workers against another is not the way to achieve social justice and a functional democracy.

12. David–
    Thanks for your ocmment.
    First, I agree that oil is going to $140 a barrel. And there is a good chance that, somehwere down the road, it will be priced in Euros, not dollars. That will make it that much more expensive for Americans.
    But we’re not going to fund universal health care with a tax on fossil fuels.
    The problem is that, in many parts of the this country, we have little or no public transportation, and people need to use gasoline to get to work (often long distances).
    Most people cannot afford to go out and buy an electric care.
    In many regions people have to use fossil fuels to heat their homes during long winters. Going forward we’ll use more solar, but the technology still has to be developed and made affordable.
    The society as a whole is going to have to fund more reserach into renewable energy–and eventually, build more public transportatoin. Long term, it will save money–and be much betterfor the environment. Short-term, this R&D will cost money.
    Energy is a Huge, difficult problem. HealthCare is a Huge difficult problem. I wouldn’t even think of trying to solve them in one fell swoop.
    Also, with an eye to keeping comments to a length so that people will actually read them, we probably shouldn’t stray into trying to solve world problems other than heatlhcare . . (Of course, I realize I should be the last person to talk about keeping things to a manageable length . . . but the comments really shouldn’t be as long as the posts . . )
    On the cost of healthcare: yes, in theory, we should be able to cover everyone with good comprehensive care for less than $2.3 trillion.
    But only if we could go back and erase the last 40 years or so of U.S. medical history–which we can’t.
    As Dr. Atul Gawande says (see my recent post here https://healthbeatblog.com/2009/01/dr-atual-gawande-on-realitybased-reform-why-dont-we-open-the-va-to-the-uninsured-.html)
    we have to work with the history we have.
    As Dr. Chris Johnson said on another recent thread, we let “the serpent” (of money) into the garden of U.S. Medicine in the 1960s . . now driving him out is not so simple. (I’m paraphrasing Chris.)
    In order to bring the U.S. healthcare bill down to something equivalent to that of a European country (say 60 pecent of what we now spend, per capita)
    we would have to:
    — cap all physician’s salaries at, say $200,000–$250,000.
    This will not happen. Most U.S. doctors are accustomed to making consdierably more than doctors in other coutries (after adjusting for diffeerences in cost of living). We can shave waht we pay for some servicese at the top, but we cannot suddenly slash salaries.
    –close many hospitals so that an excess capacity of hospital beds would no longer drive over-use of those hospitals. This would mean throwing hundreds of thousands of people out of work, and in cities like Boston and New York, it would mean closing some very good hospitals (there are just too many very good hospitals in each city , which is why compeition is so fierce. And that competition raises the cost of hospital care.) ;
    — junking about 3/4 of the MRI units and CT scanners that we now have in use (maybe send them to developing countries?), again so that excess capacity won’t drive over-use . .
    –telling Medicare patients in regions like NYC, Boston, N.J., Florida, S. Californa etc that because they receive more aggressive treatment than people in Iowa, Nebraska and Vermont, from now on they are going to have to pay co-pays and deductibles that are roughly 50% higher than what they pay now.
    Moreover, workers in those high-spending regions are going to have to start paying Medicare taxes (out of their pay-checks) that are about 20% higher. There is no reason for workers in Iowa to pay for overtreatment in Manhattan or Miami.
    –changing our philosophy about end-of-life care, and telling families that “doing everything possible” is no longer an option.
    –rationing care by age– no transplants for people over a certain age
    — cut what we pay for drugs and devices by 30% and simply refuse to cover drugs and devices that cost over a certain amount. No more $100,000 cancer drugs. Cancer patients will simply have to accept the fact that they probably are going to die.
    –Tell doctors that as of Jan. 1 2010, they can no longer work solo or in small groups. They are all going to have to join very large groups, or clnics, where they all work on salary and the group enjoys economies of scale.
    Clearly, none of this is going to happen. We are not suddenly going to become Denmark or Germany.
    We are stuck with the infrastrucure of a very expensive health care system–and the expectations–on the part of physicians and patients–that have grown over the last 40 years.
    What we can do, as I keep saying, is squeeze out the hazardous waste, compare treatments and charge very high co-pays for those that are less effective and ultiamtely, refuse to pay for less effective tretments. We need to redistirbute those dollars and invest them in public health, preventive care . .
    We can also, over time, build a more collaborative less fragmented and more efficient system where many,many more doctors work in large groups and are paid for the quality, not the quantity of their work.
    In this way, we can STOP HEALTH CARE INFLATION THAT IS AVERAGING 6% to 7% a year and bring it down to, say 2%.
    This means that 10 years from now we won’t be paying $4.6 trillion for care. We’ll be paying $2.3 trillion, plus 2% inflation–in an economy that grows by an average of 2% a year, that means we won’t be paying anymore than we are today. And we’ll be covering everyone.
    Paying as much as we paying today, while covering everyone, and giving everyone all of the care that medical evidence says is effective would be a great accomplishment And it would be sustainable.
    Healthcare would remain about 16% of GDP–a larger percent than in many other countires, but manageable, espeically if we are actually gettin value for hte money– everyone included and a much healhtier population.
    On class warfare: I’m not trying to incite class warfare, but I’ve had enough traninig in economics to realize that it is bad for whole economy (including those on the top) when too much wealth is consolidated at the top. It leads to speculation–too much many chasing too few things– and Bubbles.
    IF we narrow he income gaps, we can have a much more stable economoy (as we did in the 50s and 60s). And by taxing some of the wealth at the top, we can all live in a society where we have clean public spaces (think Germany and Switzerland,
    public gardens, public schools, bridges and roads that are attractive and in good repair; cleaner air;
    higher quality healthcare;
    better public education, and as a result, a better-trained workforce; much less poverty and crime . . .
    This might sound Utopian, but when I travel I’m always amazed how at how much we could borrow from other societies, putting it together with the best of our own successes. . .
    Public spaces are so much Cleaner in countires like
    Germany. (I wouldn’t mind eating my lunch while sitting on a platform waiting for a train. I can’t say that about Penn Station.)
    In Canada, most students who go to public schools are much better prepared when they enter college. (My daughter was astounded by how well prepared her Canadian classmates were at McGill in Montreal. And she had gone to one of the best, most demanding public high schools in the U.S.–Stuyvesant, in NYC.
    But the Canadian kids knew how to write– and they had read much more. history, literature . . .
    I could go on. But I won’t.

13. Barry & Robert–
    I agree with part of what each of you say:
    Barry–
    I’m afraid that you are spreading misinformation on many ponts.
    First, NYC policeman have a completely different wage & benefit deal from any other public secctor employees in NYC.
    I covered the NYC budget for Barron’s for many years.
    Policemen have entirely different pension, retirmeent. and heatlh benefits.
    As I recall , policment also got 3 days a year of vacation each year to o “shop for uniforms.””
    The early retirement and benefit package that policemen receive is extraordinary.
    Let me add that I think this makes sense for policemen who risk their lives on the streets. But a great many spend most or all of their careers in desk jobs.
    Did you know that NYC’s police dept. has a huge PR dept . made up of policemen who, like all other police, get very early and lucrative early retirement?
    Finally,I am afraid that you are simply wrong when you say that wage & benfit disparities are not about rich and poor, public sector vs. private sector.
    When it comes to health benefits, there is a huge difference between the bnefits that better paid wokers (earnign over $70,000) receive in the private sector and what workes earming ss than $70,000 and those in the public sector receive. .
    Robert * Barry–
    Robert, I think you are unfair in suggesting that Barry views lower-income people as “shiftless” . .etc.)
    He has never said that on this blog–and believe me, there have been people who made comments that really were offensive. I don’t tolerate that sort of prejudice. And they don’t comment here anymore.
    As Barry says, I have referred to him as “fair-minded.”
    I alai have assumed he is a conservative (based on the fact that he referred to going to a Heritage Foundation event, and many of the views he has expresed)
    But he has always been respectful of my clearly liberal point of view, and argues without making disparaging troll-like remarks (“Get real!” ” Earth to Maggie” :, etc.
    And, I think it’s good for the blog to have people who argue another point of view in a very rational way–without personal attacks– while offering arguments with some evidence.
    Barry — I have to say that, at ame times, you use certain ready-made and very familiar conservative phrases, like “gold-plasted benefits” that do suggest that speeches you hear from conservatives are
    affecting your thinking –without letting you think. These phrases are bumper stickers that are intended to block thought.
    Such phrases undrmine your arguments and suggest that ideology is prejudciing your thinking. Why not just call then “very good bnefits” — rather than “gold-plated”?
    “Gold-plsted” suggests that some sort of corruption is involved. . .
    Let’s just try to talk to each other using evidence, without letting the arguments become personal –
    Best, Maggie

14. Maggie,
    Fair enough. I think what frustrates me most in the healthcare reform debate is, as you have also said in the past, none of the stakeholder groups seem willing to give anything up. They all want to solve the problem at someone else’s expense. At least I’ve suggested that I would be willing to give up something substantial, namely, the tax preference currently afforded to employer provided health insurance.
    I’ve observed numerous labor negotiations in recent years in both the public and private sectors. Often, the most contentious issue relates to the cost of health insurance. Management usually wants employees to contribute more toward the premium to help control costs while employees resist strongly even if it means accepting smaller wage increases or sometimes none at all. In New York State, the Service Employees International Union (SEIU) is currently running a TV ad campaign at a cost of $1 million per week opposing Governor Patterson’s effort to reduce spending on healthcare to help close a large state budget deficit. The union offers no constructive suggestions as an alternative to the governor’s proposals.
    Doctors and hospitals are probably in the best position to provide leadership in achieving a more sensible and comprehensive healthcare system and one that does a much better job of delivering value for money than what we have now. Yet, the stiffest resistance often comes from them.
    There is plenty of room for improvement in how insurers do business. There are much better ways to resolve medical disputes than the current tort system. There is meaningful money to be saved in our dealings with drug and device manufacturers. There is no silver bullet but lots of silver pebbles. I think we need to challenge every stakeholder group to present ideas to reduce costs and improve value that will cost them money or power in the short term. Episodes of care that include a hospitalization account for a disproportionate share of our healthcare costs while doctors, through their decisions, drive the bulk of medical spending. This is where most of the costs are, and this is where the leadership needs to come from, in my judgment, if we are ever going to bend the medical cost growth curve down to a level that we can afford and sustain.
    Separately, as an aside, my late father worked in the public sector as did my brother-in-law and sister-in-law before they retired. A niece and a nephew work in the public sector now, and my son worked for the federal government for almost six years before deciding to go back to school and change careers. They did/do good and meaningful work, and I’m proud of all of them.

15. Barry–
    Thaks very much for your last commet.
    As is often the case, I agree with most of what you say.
    And I particularly appreciate the fact that you keep bringing up the idea that those thoe who want healthcare reform should be willing to come forward and say what they would be willing to give up in order to have universal coverage.
    Your idea (which you have expresed a number of times in the past) that you would be willing to pay taxes on the value of your employer-based coverage is a very good one.
    I don’t think that lower paid workers (say thsoe earning under $50,000) could afford to do this, But I do think that it is something that better-paid workers could do, perhaps on a slidng scale (with those earnign $60,000 paying taxes on only a
    part of what their employers pay for premiums, and those earnng, say $200,000, paying taxes on the full amoutn that their employers pay for their healthcare.
    Fnally, I totally agree that, when it comes to healthcare reform there “is no silver bullet but lots of silver pebblles .”
    Eactly. There is no magic solution, but we can cut costs and lift quality in many, many ways.

16. Maggie,
    If the health insurance tax preference were eliminated for everyone, I think there are numerous options available to eliminate or at least mitigate its effect for lower and middle income people. Such options include: (1) increase the Earned Income Tax Credit (EITC) for the working poor, (2) raise the standard deduction, or (3) reduce the lower income tax brackets to name just three. If we were starting with a clean sheet of paper, we would not single out health insurance for a tax preference, and I think we would be better off if we could eliminate it entirely.
    At the end of the day, however, I agree with you that taxes overall will probably have to increase, especially for the top 20% of the income distribution, not just to finance healthcare reform but to deal with entitlement reform (Social Security and Medicare) as well. Much higher taxes on carbon and probably a VAT will likely be part of that mix. As for the income tax, I can envision the day when it only applies to people who make more than $100K or so, and the rest of the population pays payroll and consumption taxes while we use the EITC to offset all or at least most of those taxes for people with less than a poverty level income.

17. Maggie,
    In your reply, you mention doctors working in larger groups on salary as one of the solutions to decreasing cost. My question is do European countries all work on such a model? I belienve that countries like Germany do not require such a model in that there are many small or solo practitioners. I would worry about the cookie cutter approach of big organizations that do not allow practitioners to function in a manner in the best interests of their patients. My experience with big group practice situations is that they may actually encourage overutililization of certain high profit treatments since the current fee for service model drives delivery of more product. You simply shift the incentives from the pactitioner/doctor to the administrator/MBA/CEO.
    Maybe a better way to handle the expense of doctors is for their education to be more heavily subsidized and for longer residencies to be paid more at physician market rates in exchange for reduced long term costs. These are the most common excuses used by specialists to explain their large paychecks. Would it not make more sense to provide up front subsidies in exchange for much lower rates of payment for said servics? For instance, if the goverment pays a training orthopedic surgeon 250,000 during his training years and leaves him debt free from medical school, I figure it would cost about 1 million dollars in subsidies, but if orthopedic surgeons then have their payments reduced by 300-500 thousand per year, you could quickly rcoup your investment. This is essentially what European countries do to hold down the costs of specialty care which reduces the wide chasm between specialist and primary care physician income and why they have a more favorable ratio of primay care to specialty care physicians.

18. Keith & Barry-
    Thanks for your comments
    Keith–
    I agree that it would be a very good idea to subsidize med school and pays doctors more upfront, and less later in their careers. In total, we would pay less, but doctors would be spared much economic anxiety and would have the money they need when trying to buy a home, start a family, etc.
    On group practice: in Germany, while many “officie physicians” work sol, many physicians work for hospitals, on salary. Others work for large ambulatory clnics, on salary (This is a new development and the number of clnics is growing rapidly, as is the number of doctors working in groups).
    There is mandatory quality reporting and most patients get their care through a public-sector insurance plan. Doctors are expected to follow “guidelines” for care.
    In the U.S., while everyone has different anecdotal experiences, very good research done at Dartmouth and other research published in peer-reviewed journals demonstrates that, IN GENERAL, doctors who collaborate in large group practices provide higher quality, lower cost care with higher patient and doctor satisfaction.
    Medicine has become “a team sport.” There is just too much to know for any one doctor to know everything he needs to know–and these days as patients live longer, so many suffer from four or five chronic conditions.
    Doctors need to be consulting with each other all of the time. This happens more easily and naturally when they work together, in the same place, sharing the same
    electronic records.
    Also, all of the evidence demonstates that, in general, fee-for-service leads to higher costs without better outcomes.
    The VA is a good example. As Dr. Atul Gawande wrote in the New Yorker recently, we know that the VA produces better outcomes than fee-for-service Medicare (most of it delivered by solo practioners or those in small practices) and costs about 30 percent less.
    Finally, here in NYC–and in other places where many doctors work solo or in small practices– we have a real problem with doctors who don’t keep up with ongoing reserach and are still doing things the way they did them 20 years ago. Sometimes these doctors are quite defensive; patients are afraid of going for a second opinion (or letting the doctor know they went for a second opinion) because he would be angry,
    This is not a good sign.
    No one really knows whether these doctors are adhering to “best practice” . .
    What we do know is that when doctors take “recertification tests” (or whatever they are called ) the American Board of INternal Medicine
    has found that docctors who practice in very large groups score higher on these tests than other doctors..
    As Christine Cassel (president of ABIM and a member of our Working Group on Medicare Reform) explains it: “If you’re working in a large group, someone is likely to say ‘Hey did you see that paper . . ?’
    Also, if you are in a large group, everyone is lookng at your notes on a patients’ chart. If a doctor does something strange, a colleage will say “John I was wondering why you prescribed . . .for Mr. Johnson . .”
    Barry-
    Again I agree with most of what you said. There is just one thing that isn’t true: Social Security is NOT IN ANY TROUBLE.
    Again, this is a pure and simple lie that has been spread by Cato, the Heritage Foundation and other ultra-conservative groups becuase they have
    always been against Social Security (back to the days of FDR) and would like to destroy it.
    I’m sorry to sound dogmatic, here are the facts from the CBO– a Sept. 2008 report: “Last Friday, the Congressional Budget Office (CBO) released a report stating that Social Security is in good financial shape and will continue to be so for decades to come . ..
    The trust fund will cushion the large baby boom retirement, as it was designed to do, but most benefits will continue to be funded by direct transfers from workers to retirees, as they are now.
    the Economic Policy Institute (EPI) think tank noted the report’s finding that “future Social Security beneficiaries will receive larger benefits in retirement…than current beneficiaries do, even after adjustments have been made for inflation.”
    According to the CBO projections, Social Security is in decent shape, because – without any changes at all – the projected long-term Social Security shortfall equals a mere 1% of taxable payroll. EPI further states that the biggest problem facing Social Security is not the boomer retirement, but growing income inequality, which increases the share of untaxed earnings above the taxable earnings cap (currently set at $102,000).”
    At most, we may wantto raise the amount of earnigns that are taxed for social security to, say $112,000 or $115,000.
    But we don’t need to do that now–and I think it would be a bad idea in the middle of a recession when we will, as you say, need to raise other taxes at the high end.
    Ultra-Conservatives would like to persuade Congress to means-tests SS. Then wealthy people who didn’t qualify would turn against it.
    Alternatively, conservatives would love to privatize it, and let the government–or individuals– invest SS savings in the stock market.
    Big Pay Day for Wall Street. Much Risk for People Who Cannot Afford to Lose Their Social Security.
    .
    Medicare is in trouble–but as you know that’s a separate fund.
    And Medicare suffers from the same problems as the larger health care system.
    All of the reforms that
    talk about here –redistributing dollars, reining in inflation from 6% or 7% to 2% will solve the problem. Reform will require seed money, but otherwise we’re only talking about cutting spending by 4% to 5% (brining inflation down from 7% to 2%. This is completely doable, though there will be much resistance ..

19. Maggie:
    Can you provide a link to the CBO report regarding Social Security?
    As you probably know, the trust fund actually has no hard dollars in it.
    Rather, once the payroll taxes get to the Treasury, the actual dollars are spent on general governmental expenses, other than Social Security and Medicare. Instead of payroll taxes going into the trust fund, an accounting entry is made such that non-marketable Treasury bonds are placed in the fund. In other words, debt is being placed into the trust fund, rather than hard dollars, such as the payroll taxes. Social Security is not even, technically, pay-as-you-go, for the money never makes it into the trust fund.
    I learned in Sunday school that only God can create something out of nothing.
    Now, I have “learned” that the federal government is an exception: it can create assets out of debt.
    Don Levit

20. Maggie and Don,
    I’ll offer a few comments on the long term outlook for Social Security.
    First, I’ll preface my remarks by stating that I’m a strong supporter of Social Security and I opposed President Bush’s effort to privatize a portion of SS, which was and remains a distinct minority view in the industry I work in. Indeed, I’m counting on Social Security to provide a meaningful percentage of my own eventual retirement income.
    The most recent Trustees Report summary can be found at http://www.ssa.gov/OACT/TRSUM/trssummary.html. According to the trustees, benefits will start to exceed current year income from FICA taxes in 2017 with the long term (75 year) shortfall pegged at 1.7% of payroll.
    The current and past surpluses that have been credited to the OASI and DI trust funds are in the form of special purpose bonds with an appropriate interest rate credited as well. The key point, however, is that this is an accounting mechanism. The Treasury does not have to use tax money or sell regular issue bonds to public investors in order to make deposits into the trust funds. When annual benefit payments begin to exceed current year FICA tax revenues, however, the Treasury will have to use current year general tax revenue, sell bonds, notes or bills to public investors (a significant portion of whom are foreign investors) or reduce other spending in order to finance the redemption of the bonds and credited interest held by the trust funds. Assuming regular bonds, notes and bills are sold to public investors to accomplish this, the federal debt held by public investors will increase, perhaps significantly, as might the annual federal deficit depending on what is happening elsewhere in federal finance.
    By law, the Social Security Administration is only authorized to pay benefits to the extent that there are balances in the trust funds. With the trust funds currently projected to run dry by 2041, the SSA would only be able to pay approximately 78% of promised benefits from then current year FICA taxes. It would be bad public policy, in my view, to wait until then to address the issue. People need and deserve time to adjust and plan if there are going to be changes that could include reduced benefits. We should deal with this issue sooner rather than later to ensure that adjustments will be manageable. It’s probable that some combination of tax increases and benefit cuts will have to be implemented. I don’t think it is correct to suggest that the current benefit structure is easily sustainable for the next several decades before we need to consider changes.

21. Thank you for an excellent post and subsequent dialogue. I put the link onto FACEBOOK but I’m not so sure this is a useful venue for those interested in health care reform ?
    Dr. Rick Lippin
    Southampton,Pa
    Rick Lippin

22. Would anybody be so kind as to direct me to a link w/ a comprehensive review of the stimulus’s impact on our health care?
    I did purvey that $75 million was added to the Health Corps budget through 2011 which lifted my spirits. . .

23. The most comprehensive blog discussion of SS that I know of is run by Bruce Webb.
    If you start at his site and follow the links on the right you will be led to dozens of postings on the topic. His specialty is dissecting the projections as to when funding will “run out”.
    http://bruceweb.blogspot.com/
    For those who like to read the last page first, SS is not in any danger of running out of money or failing to pay promised funds.

24. I think the goal of holding health care cost increases to the general level of wage and GDP increase, and inflation (about 2-3%), instead of the current 7-9% average annual increase in health care costs, is the ideal to aim for. The resistance of medical specialists, hospitals, device makers and pharmaceutical companies to this proposal provides an opportunity. I propose that we ask medical specialty and hospital associations, if they are willing to deliver care and be reimbursed based upon the best clinical and research evidence that their specialties and the medical profession have published.
    I would like to hear their response. They may indicate that their is no agreed upon evidence base at this time. We could provide evidence that is generally agreed upon by most specialists in a field (eg. over 90-95%), and ask their opinion about using that as the reimbursable evidence base, and that to vary from that treatment could be reimbursed if an acceptable rational was provided (pt with intolerable side effects of recommended tx, …). If a treatment was recommended with less certain evidence or is possibly harmful, it would be reimbursed at a much lower rate. Lets get the specialists to participate in this discussion, asking them how we should use the evidence to reimburse treatments that are not effective, and possibly harmful according to evidence, vs. reimbursing treatments that are safe and effective according to evidence.
    Christopher Camilleri, MD

25. Maggie,
    This post gives me a lot to think about in terms of our social structure. In the socialized democracies of the West, excesses are common, just in the opposite direction of the excesses in the US. Income distribution that is too flat can be a problem, as hard work and the accumulation of capital is penalized rather than rewarded. There has to be a difference between the wealthy and the poor or there is no personal incentive.
    Granted, the concentration of wealth in such few hands is unhealthy and it would be wise for the successful to acknowledge the role of providence in giving them better choices to make. However, the goal is to find the point of maximum impact, which I suspect lies somewhere between the Scandinavian countries on one hand and the US and some emerging markets on the other.
    Not all physicians nor all parts of the medical industry fall in the category of disproportionate profit without the social impact. I like the idea of subsidizing medical education, but perhaps it should be subject to pay-back period of five years in primary care.
    The problem with paying only for EBM-proven medical is that the evidence from large population studies always lags the information from basic science research. You risk stifling innovation that way. New technologies sometimes work and sometimes they don’t, but the wealthy are always willing to pay more for the allure of getting something cutting-edge.
    So on one hand, we have primary care and new technologies that have been around long enough to prove their salt in population-based studies and on the other hand we have new, but as yet unproven technologies that only the wealthy can afford.
    Maybe that is the gradient we need, so that the middle and lower socioeconomic groups can get what they need at reasonable cost, but the wealthy get something more? Something they believe is better, but may not be cost-effective enough to justify subsidizing for the entire population.

26. Barry:
    Could you provide the link again?
    I tried several times, and was unable to access the report from the SSA.
    You seem to agree with me that the trust fund balances are merely credits, accounting entries, rather than hard dollars.
    So, when the SSA writes about balances running out in several years, they are referring to these accounting entries becoming zero.
    In other words, instead of an actual fund running out of money, we have merely a mathematical balance that becomes zero.
    I will provide a few excerpts from the GAO Fiscal Year 2008 Financial Report of the U.S. Government.
    This can be found at:
    http://www.gao.gov/financial/fy2008financialreport.html.
    Page 33 – “If the collection from taxes and other sources exceed the payments to the beneficiaries, the excess revenue is invested in Treasury securities or ‘loaned’ to the Treasury’s General Fund. Therefore, Trust Fund balances do not represent cash.”
    Page 96 – “In the federal budget, the term ‘trust fund’ means only that the law requires that a particular fund be accounted separately, used only for a specified purpose, and designated as a trust fund. The activity of earmarked funds (Social Security and Medicare)differs from fiduciary activities in that earmarked fund assets are government-owned.
    The Government does not set aside assets to pay future benefits or other expenses associated with earmarked funds (Social Security and Medicare). The cash receipts collected from the public for an earmarked fund are deposited in the U.S. Treasury, which uses the cash for general Government purposes.
    Treasury securities are an asset to the federal agencies and a liability to the U.S. Treasury, and therefore, they do not represent an asset or liability.” (huh)?
    Don Levit

27. Don,
    I originally found that link on a Goggle search. It is easier to just go to http://www.ssa.gov, then to their search box and enter “Trustees Report.” You can access either the entire report or just certain segments as you wish.
    As I indicated in my last comment, the trust fund “assets” are not assets in the same sense that Treasury bonds in our personal portfolios or corporate or state and local pension portfolios are assets. Those bonds can be sold to other investors without increasing the amount of Treasury debt outstanding that is held by the public. For the trust funds to make good on their promises to pay benefits once income from current year taxes is not sufficient to pay current year benefits, the Treasury will have to sell new bonds, notes or bills to public investors in order to redeem the special purpose bonds in the trust funds which are basically accounting IOU’s. As you say, during all the years that FICA taxes well exceeded what was needed to pay current year benefits, those surpluses were “borrowed” to fund other federal priorities and the trust funds were credited with special purpose government bonds plus an appropriate interest rate. Assuming the Treasury is able to sell enough new bonds to redeem the special purpose bonds as needed as well as finance its other priorities, assuming those costs exceed current year tax revenues, once the trust fund balance reaches zero, the Social Security Administration, by law, will not be able to pay benefits beyond what it can finance with then current year tax revenue. The trustees estimate the trust fund will reach zero in 2041 or 2042 and then current year taxes will only be sufficient to finance 78% of promised benefits under current law.
    People differ on how significant a problem it will be to make the ultimate adjustments to Social Security that will probably be necessary. Everyone agrees, however, that the issue pales in comparison to Medicare’s huge unfunded long term liabilities which are clearly unsustainable without substantive reforms.

28. Don, there’s plenty of healthcare reformers on Facebook.

29. Barry & Don
    On Social Security:
    Barry, you write:
    Everyone agrees, however, that the issue (of Social Security) pale in comparison to Medicare’s huge unfunded long term liabilities which are clearly unsustainable without substantive reforms.”
    That, I think is the bottom line, At a time when we are entering a deep recession, and need to worry about Medicare,helping people who become unemployed, Iraq, the dollar, the deficit– worrying about Social Secuity being underfunded at some point down the road is just borrowing trouble.
    There is every reason to believe that this problem can be addressed– by raising the amount of income that we tax for Social Secruity above $102,000.
    But I would not do that now. Too many pressing prioriies.
    And at some point in the future, I might be inclined to leave income from $102,000 to, say $140,000 untaxed–and then extend the tax to income between $140,000 and $155,000 (These numbers are hypothetical, but you get the idea: tax everone on teh first $102,000 and then, rather than add to the tax burdern for thoe who earn $102,000 to $115,000, jump over those earnigns, and extend the tax on those who are considerably more affluent– earning $140,000 to $155,000.
    Don– The important thing to understand is that Social Secruit would have the money if politicians hadn’t decided to dip into its trust fund for other purposes.
    From an article on Alternet:
    percent, split between employees and employers. As a result, the Social Security system has accumulated a vast surplus–now around $2.5 trillion and growing. This is the money pot the establishment wants to grab, claiming the government can no longer afford to keep the promise it made to workers twenty-five years ago.
    Actually, the government has already spent their money. Every year the Treasury has borrowed the surplus revenue collected by Social Security and spent the money on other purposes–whatever presidents and Congress decide, including more tax cuts for monied interests. The Social Security surplus thus makes the federal deficits seem smaller than they are–around $200 billion a year smaller. Each time the government dipped into the Social Security trust fund this way, it issued a legal obligation to pay back the money with interest whenever Social Security needed it to pay benefits.
    That moment of reckoning is approaching. Uncle Sam owes these trillions to Social Security retirees and has to pay it back or look like just another deadbeat. That risk is the only “crisis” facing Social Security. It is the real reason powerful interests are so anxious to cut benefits. Social Security is not broke–not even close. It can sustain its obligations for roughly forty years, according to the Congressional Budget Office, even if nothing is changed. Even reports by the system’s conservative trustees say it has no problem until 2041 (that report is signed by former Treasury Secretary Henry Paulson, the guy who bailed out the bankers. . .
    Follow the bouncing ball: Washington first cuts taxes on the well-to-do, then offsets the revenue loss by raising taxes on the working class and tells folks it is saving their money for future retirement. But Washington spends the money on other stuff, so when workers need it for their retirement, they are told, Sorry, we can’t afford it.. .
    Federal budget analysts try to brush aside these facts by claiming the government is merely “borrowing from itself” when it dips into Social Security. But that is a substantive falsehood. Government doesn’t own this money. It essentially acts as the fiduciary, holding this wealth in trust for the “beneficial owners,” the people who paid the taxes. This is the bait and switch the establishment intends to execute . . .”
    He notes that, as Barry says, Treasury may have to sell bonds to pay Social Secruity back.
    But it is not that the Social Security system in some way “failed” to finance itself. The FICA
    taxes we pay are adequate to do the job. It’s just that politicans dipped into the fund for other purposes– sometimes unworthy purposes. . .
    (Note the Alternet piece was written by William Greider, from The Nation, who is definitely a left/liberal. But he
    intelligent, and doesn’t dodge facts.

30. Zagreus, Chris Camilleri, Don, Dr. Rick, Benjamin,
    I’ll be back to respond ot your commens tomorrow

31. Maggie:
    I agree with much of what you wrote about the design of the Social Security and Medicare trust funds.
    Probably as they were originally designed, the funds were to act as reserves, similar to a private insurer.
    It would be foolish for a private insurer to leverage the premiums and interest by extending loans for non insurance purposes.
    However, the U.S. Supreme Court in Helvering v. Davis, 301 U.S. 619 (1937)suggests that Congress does indeed have the authority to use the payroll taxes for other general expenses. “The proceeds of both taxes are to be paid into the Treasury like internal revenue taxes generally, and are not ear marked in any way. Section 807(a), 42 U.S.C.A. 1007(a).”
    “The first section of this title creates an account in the U.S. Treasury to be known as the Old-Age Reserve Account. No present appropriation, however, is made to that account. All that the statute does is to authorize appropriations annually. Not a dollar goes into the account by force of the challenged act alone.”
    “Whether wisdom or unwisdom resides in the scheme of benefits set forth in Title 2, it is not for us to say. The answer to such inquiries must come from Congress, not the courts. Our concern here is with power, not with wisdom.”
    Don Levit

32. Maggie,
    Your comment several posts back about medicine being a team sport comes at a timely moment. The Center for Studying Health System Change just released a study on the difficulties of care coordination: http://www.hschange.org/CONTENT/1043/.
    In short, the study highlights the tremendous fragmentation in the delivery of care – e.g., a typical primary care physician who treats elderly Medicare patients must coordinate care with 229 other physicians working in 117 different practices.
    If care coordination and disease management are important (and most, I believe, would agree that they are), it seems clear that greater delivery system integration is essential. With few exceptions, it doesn’t seem to be happening on its own (or perhaps more correctly, is moving forward at a glacial pace).
    So, where are the payers? Which of them are stepping up and using financial incentives to drive delivery system change? Making changes in Medicare will have the greatest impact but are politically difficult (impossible?). What about the private payers?

33. Don, Sheldon, Zagreus, Chris Camilleri, , Robert, Benjamin
    Thanks for your comments.
    Don– I didn’t mean to imply that Congress did anything illegal–just that it did something foolish
    Bottom line: a bad Supreme Court ruling.
    Sheldon– thanks very much for the link to the CHSC study. They do very good work.
    It would absolutely make sense for private insurers to provide financial incentives for physicians to work in groups–though I would add, the incentives should be to join groups that have a history of producing good outcomes at a lower cost with , high patient satisfaction etc.
    The Dartmouth research would gives them a place to start, at the value (outcomes divided by costs) at some of the very best large groups could serve as a benchmark to use when looking at others. .
    We also need to change the way we train doctors. Right now, we’re training them for the old competitive system. We need to change medical education to begin training them for a new, more collaborative world.
    I hope to write more about this soon.
    Zagreus–
    You write: “In the socialized democracies of the West, excesses are common, just in the opposite direction of the excesses in the US. Income distribution that is too flat can be a problem, as hard work and the accumulation of capital is penalized rather than rewarded. There has to be a difference between the wealthy and the poor or there is no personal incentive.”
    Here is my problem with that statement.
    First, in Nordic counttires (among the most socialized democracies) much more equal distribution of income does not seem to have undermined hard work–or innovation.
    Although they are two small countries, Finland and Sweden are among the giants with respect to advanced communications technology.
    Also, when it comes to figuring out how to deliver healthcare—i.e. systems management– they are in the forefront.
    When I was at a int’l healthcare conference for executives and physicians in Berlin last year, virtually everyone (Germans, British, French) agreed that Sweden has done the best job of figuring it out. . .
    Sweden has managed to keep the cost of health care as a %age of GDP flat for a number of years–even though its population is aging–and overall health and outcomes are better than in the U.S.
    Also, from personal experience, I know that there does not have to be a “difference between the wealthy and the poor to create personal incentive.”
    I have been quite well paid, and not-so-well paid over the course of my career, working in non-profit and for-profit worlds. This doesn’t seem to have any effect on how hard I work.
    I’ve always been very lucky in that I have generally been doing work that I love. Once I’m immersed, that’s it. How much they are paying me really doesn’t figure in.
    Of course, it would be nice if someone decided to pay me more. But that wouldn’t make me work harder–it just wouldn’t be humanly possible.
    And I can say, with certainty, that this is true of quite a few people that I know–academics, doctors, artists, teachers, not-for-profit people, very, very good and honest money managers and short-sellers, a social worker, a patient advocate, a magazine editor, a bilingual translator who takes Latino children in foster care to meet with their birth parent , an engineer/architect, several film-makers –and at least one lawyer I know (he mainly does pro-bono work). That’s a pretty complete list of the people I know who are immersed in their work— to them, it really isn’t “work” ;it’s what they do.
    I realize that how much you are paid is a major incentive for people in many jobs. And that’s okay–though I would like to see us design work in a way that more people could take great pleasure in their work, and so not be as concerned about their pay as long as they are making enough to pay their bills (I hate to have to worry about money.
    Chris C—
    I agree absolutely—the professional societies should be involved in the discussion about most effective treatments. And some have been good about setting guidelines.
    Moreover, some vocal individuals have spoken out about waste and unnecessary treatment. (See an earlier post on HealthBeat titled: “A Very Open Letter From an Oncologist”
    But as he discovered, professional associations in his field did not want to discuss the subject. Some doctors feel that they don’t want to be involved in setting guidelines which might affect colleagues’ revenues. Physicians have had a long history of seeing themselves as autonomous players who do things their own way. This, of course, is not always best for patients. No doctor is perfect—and 25% of all doctors graduated in the bottom 25% of their medical school class.
    This doesn’t mean that those who graduated in the bottom quarter are bad doctors or negligent Many may be among the kindest physicians you have ever met: considerate of their patients, truly concerned about their welfare, etc. But in many cases they probably are not as research-oriented as some of their peers who did better in med school. And they may not be as assiduous about keeping up with current medical research. . . So they could use help from peers who are deeply interested in medical research—if that help came in the form of guidelines, with the information and supporting research well-organized in an easy-to-access and read website, that would be enormously helpful.
    Of course, the people who put the info together in every specialty would have to be free of bias—they couldn’t have any financial interest in the services or products they were writing about. It might be simplest if the doctors were drawn from the pool of doctors who work on salary and so have no reason to favor services that are most lucrative when doctors are paid fee-for-service.
    These days, more and more younger doctors are happy to work on salary—and the majority are committed to evidence-based medicine. The days of the doctor as “Lone Ranger” (“I know what I know and this is the way I do it” ) are fading. . So in the future, I hope it will be easier to get professional societies involved in looking at comparative effectiveness research and compiling guidelines . .
    Robert—Thanks for the link. And yes, you’re right about SS.
    Benjamin—I’m sorry, I don’t have a quick answer to your question—though I’ll be writing more about the healthcare portions of the fiscal stimulus package myself. Does anyone else have a reference?

34. Maggie,
    I would like to make a comment about healthcare in Sweden.
    You and others have pointed out in the past that the health status of any given person is driven 40% by personal behavior and lifestyle choices, 30% by genetics, 20% by environmental factors including socioeconomic status and only 10% by the quality of healthcare that one has access to.
    In the U.S., the state that is closest to Sweden is Minnesota which also ranks very high (often #1) within the U.S. on numerous health related metrics. I would be curious about how, say, the life expectancy of middle class Swedes in Minnesota compares to that of middle class Swedes in Sweden. By focusing on the middle class we would eliminate socioeconomic status as a factor and by limiting the comparison to Swedes, we would eliminate genetics as well. That would leave just lifestyle and personal behavior choices and the quality of healthcare. To the extent that Swedes in Sweden still fair better, we would have to look at the impact of different lifestyle choices attributable to differences in culture between the two countries. I suspect, at the end of the day, there isn’t much difference in outcomes that can be attributable to the quality of the healthcare system. Ours, however, is more expensive for a variety of reasons from higher physician compensation to defensive medicine to more aggressive end of life care to the general expectations of our citizens.
    Separately, according to a recent article in Health Affairs, about 34% of the American population is obese but only 8% of Asian Americans are. This suggests that culture has a significant influence on diet and other personal behavior choices which, I think, we tend to underestimate.

35. Barry–
    Alcoholism is a major problem in Sweden. A 2008 Swedish govt report showed that over the previous 4 years, alcoholism among women had risen by 40%.
    In Sweden, 25% of deaths among people under 50 are attributed to alcohol.http://alcalc.oxfordjournals.org/cgi/content/full/35/6/601
    As far as I know alcoholism is not a particular problem in Minnesota, compared to, say, New Jersey.
    Despite the drinking problem, Sweden has better outcomes–and Swedes live longer– because it has bettter healthcare and less poverty than the U.S.
    And Minnesotans have better outcomes than most Americans becuase they have better healthcare–and much less overtreatment. (They also have less poverty. As a state, Minnesota has a much more generous social safety net. See what I have written in the past about how they treat immigrants who don’t speak English== finding jobs for them, support groups, etc.

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