According to the headlines, 10 percent of Americans are unemployed. The truth is that closer to 17 percent of the population cannot find full-time work; this number includes workers who have become discouraged and have given up looking for work as well as those who have settled for part-time jobs because they cannot find the full-time employment that they need.
The situation is not going to change anytime soon. As Princeton economist Paul Krugman recently warned: “We are facing mass unemployment — unemployment that will blight the lives of millions of Americans for years to come.”
“Even if industrial production picks up, unemployment will continue to lag,” observed Goldman Sachs’ Abby Cohen, speaking at Barron’s Roundtable about a week ago. “The problem is far more than cyclical.” (You may remember Cohen as a bull during much of the ‘Nineties boom. By temperament, she is hardly a doomster, but when she looks at today’s economy, she is very concerned.)
Cohen is saying jobs are not going to suddenly appear with the next business cycle. Current levels of unemployment reflect deep structural problems that go back at least two decades.
- For the past 25 years economic policy in this country has encouraged consumption rather than savings or investment. Shop until you drop! Buy a home –more home than you can afford!. Take out a variable rate mortgage, Fed chairman Alan Greenspan urged Americans. Ignore the fact that interest rates are at historic lows and can only go in one direction.
- Instead of stimulating consumption, policy-makers should have focused on capital formation. And capital formation isn't just building factories, observes international money-manager Marc Faber, another member of the Barron’s panel. “ It means investing in infrastructure, research and development, and education.”
- When it comes to education, our workforce is no longer upwardly mobile. For the past 10 years, the level of education attainment hasn't risen. It is no more likely now than it was 10 years ago for an American adult to have a university education—and for men it is less likely. This is in large part because tuition has spiraled, even at state universities.
According to a 2005 report on college affordability: “Increases in tuition grew about three times faster than increases in the income of middle- and low-income households during the 1990s.” . For low-income households, the percentage of their income needed to pay tuition was 56 percent in 2001-2002, up from 32 percent in 1981-1982 and 46 percent in 1991-1992.
The burden for middle-class households rose from 8 percent of income in 1981-1982 to 11 percent in 1991-1992 and 13 percent in 2001-2002.
At the same time Congress has shifted government funding for financial aid from need-based scholarships to loans—regardless of family income. This has helped more affluent families, but left low-income and many middle-income families locked out of academe.
Unless we invest in education–and human beings—more jobs will shift overseas. At the Barron’s Roundtable, one analyst observed: “In the past six months, whenever I have talked to a company, I asked the chief executive or chief financial officer what it would take to bring jobs here. They said, ‘You know, the workforce isn't that good . . . I'm moving jobs out of the U.S.’” (Employers also complain about government regulation.)
Over the past ten years, the U.S. lost a third of its manufacturing jobs, and the losses continue. The technology world lost 20% of its jobs. Jobs continue to move to Asia because of the cost differential. China can produce good products for less.
Protectionism is not the answer; warns another Barron’s panelist, Fred Hickey the editor of the Hi-Tech Strategist: “I'm worried that the protectionist drums are getting louder here. The U.S. has imposed duties on Chinese steel and tires, and more than 50 antidumping actions are in process.” But China is not going to cave: “China spent $600 billion to build its manufacturing sector. It needs to continue to produce, and it needs an export market. So it is not so willing to give up its competitive advantage.”
Hickey is right: Like the U.S.—or any other country—China is going to do what is necessary to keep its own economy and society as stable as possible. China’s policy is to continue to be the world’s low-cost producer and keep its people employed. Beijing really doesn’t have much choice. In a country with such an enormous population, widespread unemployment could easily lead to anarchy.
- As bubbles collapse, jobs have dried up in areas that once provided employment for many: construction, automobile manufacturing, retailing and Wall Street finance. As they watch their budgets pancake, state and local governments are no longer hiring.
- Over the past 10 years, median household wages have barely kept up with inflation. Yet, Americans continued to borrow and buy—and now they’re up to their eyeballs in debt. One fourth of all homeowners with mortgages owe the bank more than their home is worth.
Many families are now trying to begin to pay off their debt. But this makes it more difficult for the economy to grow, explained another guest at Barron’s Roundtable, Felix Zulauf, owner of Zulauf Asset Management in Zug, Switzerland:“If the consumer saves 5% and invests it in stocks or bonds, the savings remain in circulation. However, if he pays down debt with that 5%, the money comes out of the economic system. That is what is happening, and it will be a drag on growth.
This structural setup could last another five years. The U.S. consumer has to lower his debt by at least $4 trillion.“The funny thing is, whenever the consumer wants to save and tries to do the right thing, the government and central bank come in and encourage spending,” by keeping a lid on interest rates, making it cheap to borrow.
- Even if households don’t try to pay off debt, if we continue losing jobs, Americans won't be able to consume as much as they have in the past and the rebound we are now enjoying in some sectors won't be sustained.
In an effort to fuel consumption the Fed will no doubt continue to keep interest rates low—at least as long as it can. But this is hardly a long-term solution to our economic woes. As Zulauf points: “printing money doesn't create a single job.”
(In theory, low interests rates might encourage employers to borrow and invest in their businesses by hiring more workers. But in the current economic climate, banks are wary of lending, and businesses are reluctant to borrow unless they know that there is an expanding market for their products and services.)
- At some point, everyone agrees, the Fed will have to raise interest rates. Otherwise, foreign investors will stop buying our Treasuries. Treasuries are government IOUs and we depend on those investors and central banks to buy and hold our debt. But as our deficit grows they have less faith in the value of the dollar—and less reason to see our Treasuries as a “safe haven” investment. Thus, we will have to raise rates. This will make it harder for Americans to pay off variable rate mortgages, and it will be more difficult for businesses to invest.
Even worse, higher interest rates will make it that much more difficult for the U.S. government to pay off the heap of debt that it has accumulated in recent years.
- Ultimately, “U.S. citizens will have to lower their expectations,” says Barron’s panelist Archie MacAllaster, Chairman of MacAllaster Pitfield MacKay. They will have to save more, as will the states and the federal government. Home prices are too high. General managers and coaches of football teams are paid $13 million, and there are other examples. Those figures will have to come down plenty. People are going to have to get used to it, and they will.” And MacAllaster is one of Barron’s most optimistic guests.
These are just some of the themes the Roundtable addressed. You will find Part 1 of the discussion which begins by focusing on the economy, here. (Later installments of the Roundtable concentrate on investment recommendations.)
I have been reading Barron’s annual Roundtables for more than twenty years, and I have never seen the panelists paint such a bleak picture of the U.S. economy. But as they say, this is a structural problem that has been building for years. Too much easy money. Too much borrowing. Too much speculation driving stock prices and then real estate prices ever higher. Too much shopping for things that we really don’t really need: consumer goods, gadgets, bigger homes, bigger cars. And too little investment in the real wealth of the nation: infrastructure, human capital (education) and the environment.
I would add that the Roundtable participants were focusing primarily on what the economy looks like for the middle-class and upper-middle class.
What about the rest of the country?
Nearly One-Third of Americans Mired in Poverty
A new study from the Brookings Institution reveals that from 2000 to 2008, the number of poor people in the U.S. grew by 5.2 million, reaching nearly 40 million. That represented an increase of 15.4 percent in the poor population, which was more than twice the increase in the population as a whole during that period.
New York Times columnist Bob Herbert adds: “The study does not include data from 2009, when so many millions of families were just hammered by the recession. So the reality is worse than the Brookings figures would indicate.”
By 2008 Herbert reports, a startling 91.6 million people — more than 30 percent of the entire U.S. population — "were living below 200 percent of the federal poverty line, which is a meager $21,834 for a family of four.”
Nearly one-third of Americans sunk in poverty. Seventeen percent of workers were unable to find a full-time job. This is the state of the nation. I hope the President will be frank about this tomorrow night. He should acknowledge that this is the crisis he inherited, and that it took years to bring us to this low point. The problems will not be solved in a year, or two or three.
But it is clear that the government must begin to create jobs. In this economy, the private sector is not going to be able to produce the employment that we need.
Does this mean that we cannot afford health care reform? No, it means that we must go forward with the legislation, as quickly as possible.
This is not because health care reform will create millions of jobs. It’s likely to bring us more nurses and other professionals needed to staff the community clinics that the Senate bill calls for, and the legislation offers scholarships and loan forgiveness that will bring us more primary care physicians.
But if we’re going to cut health care spending, some jobs will disappear. We don’t need more specialists. In some areas, we have too many. And assuming that Medicare follows through on cutting fees for Cat-scans and other diagnostic tests, we’re not going to need as many workers manufacturing pricey diagnostic equipment. Hospital construction will slow down. In most parts of the country, we don’t need more beds, and we definitely don’t need more atriums, marbled lobbies and waterfalls.
The Senate Bill Will Help Bring Down the Deficit
Nevertheless, as Obama campaign manager David Plouffe pointed out in Sunday’s Washington Post: “our nation’s long-term fiscal health depends on passing meaningful health insurance reform package without delay.”
In the past I have quoted White House budget director Peter Orszag explaining that spiraling health care spending poses the single greatest threat to the U.S. economy. Ultimately, that spending adds to the deficit while crowding out investment in other areas where we need to create jobs that would add to the wealth of the nation —infrastructure, education, alternative sources of energy, the environment. By contrast, sinking more dollars into unnecessary tests and over-priced medications is not going to help our economy grow.
If we continue to let the nation’s health care bill skyrocket, the rest of the world will question the soundness of our economy, and cast a cold eye on the dollar. Central banks already are buying gold because they are losing faith in paper currencies.
Plouffe acknowledges that when it comes to passing the health care legislation : “the short-term politics are bad. [The Senate bill] is a good plan that's become a demonized caricature.
But politically speaking, if we do not pass it, the GOP will continue attacking the plan as if we did anyway, and voters will have no ability to measure its upside. If we do pass it, dozens of protections and benefits take effect this year. Parents won't have to worry their children will be denied coverage just because they have a preexisting condition. Workers won't have to worry that their coverage will be dropped because they get sick. Seniors will feel relief from prescription costs. Only if the plan becomes law will the American people see that all the scary things Sarah Palin and others have predicted—such as the so-called death panels—were baseless. We own the bill and the health-care votes.”
I agree. The Senate bill offers a good plan that has been caricatured by people who in many cases, haven’t read it. The bill has fallen victim to media spin. A blizzard of disinformation has created great confusion. No wonder the public doesn’t know what’s in the legislation.
A recent Kaiser Family Foundation tracking poll reveals how conservatives have misled the public on the question of whether the legislation would control costs. The Congressional Budget Office (CBO) scoring suggests that both the House and Senate proposal would result in a reduction in the federal budget deficit—and, as I have written in the past, the CBO is notorious for under-estimating the savings that can come from health care reforms.
Yet Kaiser reports that “most Americans – including large majorities of Republicans and independents – believe that the proposed legislation would increase the deficit. This may reflect both a lack of widespread awareness of the official estimates and a reaction to the fact that opponents have publicly claimed the proposed legislation will increase the deficit.”
Thanks to deliberate lies spread within the media, 60 percent of those polled believed that the legislation provides federal money to cover care for illegal immigrants. Not True.
Nearly half didn’t realize that the bill limits payments to some Medicare providers. (Here the goal
is to remove waste and lift the quality of care. For example, going forward Medicare no longer plans to pay for an excessive number of hospital re-admissions which could have been prevented if the hospital made sure that discharged patients would be receiving the follow-up-care they need.)
In a recent comment, HealthBeat reader Fred Moolten, M.D., summed up some of the other ways that the bill reins in inflation: “the proposed reforms would begin to curtail rising healthcare costs outside of the federal arena as well—through primary care incentives, emphasis on appropriately chosen preventive medicine practices, comparative effectiveness research, controls on excess expenditures by hospitals and other providers, and exploration of alternatives to fee for service as a payment mechanism. These measures would serve only as a beginning and would need to be expanded, but they are an important beginning.” (Hat-tip to Fred who has had the time and stamina to pore over and analyze the bill.)
Finally, as I explain here, the Kaiser study also shows how little many voters know about the benefits the plan offers. A startling number were unaware, for example, that the legislation provides subsidies to those who cannot afford insurance. Fifty-two percent had no idea that the bill offers tax credits to small businesses that will help them hire and provide benefits to employees. Most didn’t know that, under the legislation, insurers cannot charge women more.
Read Kaiser’s tracking poll here —It offers a quick checklist of provisions in the bill that you, too, may not know about.
Kaiser reports that when voters are given information about what is actually in the plan, they like it. And that information is widely available on the blogosphere and elsewhere. No one is hiding anything. But the legislation is filled with details, and the benefits are packed into paragraphs that you can’t easily skim. The bill protects patients and their families in so many ways that you can’t spell out the savings in a sound-bite.
But you can make negative statements such as “Americans will never be able to afford it” or “There are no cost controls in the bill” in less than a second. And voters who don’t have time to read the legislation will believe you.
As a HealthBeat reader recently pointed out, lies tend to spread more quickly than the truth.That is because the truth is often quite complicated. Lies can be as simple as you want to make them.
Maggie, Thanks for looking so carefully at the Senate bill. I do have a question about the extent of the elimination of gender-rating.
The National Women’s Law Center points out that gender disparities in premiums could still be allowed for women working in larger companies (over 100 employees).
“While the House bill effectively eliminates gender rating, the Senate bill limits this important protection to the individual and small group markets . . . unless a state decides in 2017 to allow larger employers in
the new exchanges.
The Senate bill thus creates a loophole for insurance companies to continue this unfair practice.”
(See Reform matters http://action.nwlc.org )
What is the explanation? Is it because existing employer-based policies will be “grandmothered” in?
Unfortunately, it’s difficult to assess the actual cost savings of the proposed legislation. There doesn’t seem to be much, if any, concrete information available that can predict lower costs for the American health care consumer. I don’t think that it’s an over-statement to say that the average American feels that, at the end of the day, the final legislation will be skewed towards special interests – both in the health care industry and political arena. Lowering costs via reducing overuse, abuse and fraud isn’t difficult. It ain’t rocket science! The resources that would be allocated would be minuscule compared to the return. The other area that is essential – but appears to be hands-off – is tort reform. For example, why has someone in Florida – with a clean driving record – who has two cars with over 300,000 combined miles not seen a decrease in auto insurance premiums over the past ten years? Just CALL 1-800 Ask Lucifer.
As someone who’d like to see health reform enacted, it appears we’ve still got a big sell job to convince our fellow voters, as indicated by the new wsj/nbc poll:
According to a new Wall Street Journal/NBC poll, 51% of Americans believe Mr. Obama has paid “too little attention” to the economy. Forty-four percent think he has paid “too much attention” to his proposed overhaul of health care. A plurality continues to think that Mr. Obama’s health-care plan is a bad idea.
The big problem is the cost of doing business in the USA. Much of our industrial base has migrated out of the country because of the high cost for employment benefits; especially health insurance. Reducing worker demand for medical services would restore a competitive edge that has steadily eroded with the increase in obesity and chronic disease. How can chronic disease be brought under control? Improve the quality of the food supply and correct the mistakes in the federal government’s Dietary Guidelines for Americans.
The two biggest mistakes in the Guidelines are the failure to warn Americans about excessive omega-6 fat consumption (Google “Omega-6: the fat that ruins your health”) and the failure to acknowledge the benefits associated with high consumptive levels of saturated fat (Google “Controversial Saturated Fat”).
One of the premises of Health Beat is that we can win the “Trifecta” of Healthcare. The “Trifecta” is:
• Higher quality health care
• More extensive coverage (fewer people without health insurance)
• Lower costs
Perhaps in the best of all worlds we can have all three, but in the real world – I doubt it. Frankly, I would be happy with 2 of 3 and satisfied with 1 of 3.
I will admit that I have not read the entire bill (and of course I expect to be castigated by those who have – or claim to have – read it). But I suspect that there will be enough; changes to the bill, “wiggle room” in how the bill is interpreted and uncertainty about what the results ACTUALLY will be (as opposed to the CBO’s guesses) that reading the whole bill doesn’t mean you really understand it.
Perhaps the time has come to recognize:
• We should treat healthcare like we treat; food, education, housing and transportation. We (should) offer a basic level to everyone. We can have good basic healthcare for all our citizens, but we cannot afford to offer all the “bells and whistles” to everyone.
• Everyone dies – prolonging the life of a terminal patient on a respirator does the patient no favors and is not the best use of our resources. Perhaps we should consider that rebuilding a bridge over the Mississippi, improving education, spending more on renewable energy, etc. could offer more benefit to our society than care for terminal patients. “THE DELIVERY OF GOOD MEDICAL CARE IS TO DO AS MUCH NOTHING AS POSSIBLE.” – Rule 13 – “The Laws of the House of God” – (Samuel Shem. The House of God. 1979. ISBN 0-440-13368-8.)
• “THE PATIENT IS THE ONE WITH THE DISEASE” – Rule 4 – “The Laws of the House of God”. You can only do so much for patients. Obese, diabetic, hypertensive smokers don’t live as long as thin, normo-tensive, vegetarians. Get used to it – it’s not our fault.
Hariette,
Will you also support reform of gender based premiums for life insurance and auto insurance?
Or is this only a one way street?
But, but, but…. The Republicans now number 41. It’s over, HC reform is dead. Next case.
You know what!? I think David Brown may have hit the nail smack right on the head! All of our troubles may be because of excessive omega-6 fat consumption. Why wasn’t this ever brought up before? Just cut out our excessive use of omega-6 fat and we don’t need health care reform!
Reply to Legacy Flyer:
As someone who once drove up a one-way street in her Legacy, I’d have to look into the reasons for gender rating in other forms of insurance. Actuarial bias perhaps?
Hi Maggie:
A few words on China. I am not sure China investing or malinvesting in infrastructure will help them in the end. When I used to travel there, they already had plenty of empty buildings and streets. I would also offer this up: http://chovanec.wordpress.com/2010/01/26/scmp-chinas-wasteful-stimulus/ “China’s Wasteful Stimulation”
The $600 billion was not solely spent on manufacturing infrastructure and much of it went elsewhere. China already had tons of manufacturing capability. The stimulus was usd pri,arily to keep “Labor” busy and avoid the subsequent riots that would develop if not working. Maybe US Labor needs to learn a lesson from the Chinese?
The tax on China tires was brought on by the quality of “some” of the brand(s) arriving in the US. They lacked an adhesive that kept the tires layers from separating.It is interesting we will tolerate lead in paint, melanin(?) in powdered mild, and other things from China; but not so with tires.
Harriette,
The reason why premiums for life and auto insurance for men are higher than those for women is that it costs more to insure men than it does women.
Take life insurance – on average men live about 6-7 years less than women. That means that an insurance company needs higher premiums from a man than it does from a woman since it has fewer years to make its money.
Similarly with auto insurance, men tend to be worse drivers than women, particularly at a younger age. Hence, the insurance company needs to charge men more than women.
There is a valid, statistical basis for charging men more than women when it comes to auto and life insurance. This is not evidence of “discrimination” as it commonly meant today.
However, when the same logic (set premiums based on risk of payout) is applied to health insurance some people cry “no fair – discrimination”. In general, women use more healthcare than men (some of which is related to maternity). Therefore for an insurer to charge women more than men is not “unfair” or “discriminatory”, it is merely a logical response to estimated usage.
It may be that there are valid public policy reasons for charging women and men the same premiums for health care. If so, why do these reasons not apply to auto and life insurance? Charging women the same premium as men for health insurance (even though they use more healthcare) yet charging men more for life and auto insurance is the real discrimination.
Jim, Harriette Ken
What the poll says is literally what it says: people think Obama paid too much attention to healthcare. Not enough attention to jobs.
Most people have health insurance.
17% of us can’t find full time work. Each one of those people is probably connected to another acult who is affected by his situation ( spouse, parent, brother etc.)
So say 34% of the population is affected by unemployment. And a great many other people are worried that they will lose their job,haven’t had a raise in 3 years, etc.
Most people think jobs and the economy are more impt. than health care–the polls show that.
This doesn’t mean they dislike Obama’s plan– they just want him to pay less attention to hc, more attention to jobs.
Harriette,
Most large companies self-insure. This means they take all hte risk. An insurance company just does the administrative work.
Apparently if these large companies want to charge women more, that’s their choice– but this is NOT a loophole for insurnace companies.
Ken–
At the end of the day, reform is very clearly skewed in favor of two groups: low-income famlies and lower-middle income families (who get very good subisdies and caps on out of pocket payments) and people suffering from pre-existing conditions (who now can get insurance
and can’t be gouged.)
Sick children also beneift greatly– they can get coverage next year!
These are the “special intersets” who will benefit most. it’s hard to tell how much insureres will benefit– they get more customers, but some of those customers will be poor, sick and expensive to treat. (Wall Street is very uncertain as to how insurers will do.)
Phamar should benefit: as more people have insurance, more people can afford to buy their meds.
(For people who cannot now aford meds they need, this is very important.)
Wall Street expects more push-back on pharma pricing–I do too.
So it’s not clear how much pharma will benefit. I think that eventually Medicare will do what every other govt in the devleoped world does–negotiate for lower prices on drugs.
Primary care docs will benefit– they will get higher fees.
Lowering costs via reducing overuse is difficult.
For instannce, we know that mammograms do most women in their 40s who are at average risk more harm than good. But many women are very reluctant to give up mammograms–so we’ll probably cointnue to pay for them.
Legacy–
Women use more health care because they are able to reproduce.
All of their “extra” healthcare is ob/gyn or related to breasts, (breast cancer) which produce milk for babies.
If women didn’t reproduce, none of his would be here. And while being able to reproduce has its rewards, it is also extraordinarily painful.
I think we all should be grateful that women can reproduce and not penalizze them by charge them higher premiums.
On the other hand, I’m not particularly grateful to men for being reckless drivers when they are young. Nor am I grateful that they die younger (much of this is related to violent behavior as well as alcoholism etc.
So it makes sense that they pay more for auto insurance and life insurance.
They are doing society no favor by driving badly and dying sooner.
Women are doing society a favor by reproducing– and bearing much of the burden of caring for the children.
Maggie,
I was expecting some kind of convoluted justification for why it is OK to discriminate against men (who as we all know are violent alcoholics and bad drivers to boot).
I got it.
Everyone–
Usually HealthBeat readers are on topic –but in this case . . . A weird thread.
Much of this post is about the economy: 17% unemployment; 30% of the nation living in poverty . . .
And the comments are about the cost of car insurance in Florida?
Whether insurers should charge women more?
Whether we should settle for giving people “good enough” care?
Polling on health care reform?
No one is interested that 17% of Americans can’t find full-time jobs and that even people who are usually bullish on American are saying that these levels of unemployment will continue for a long, long time?
That’s you, your child, your spouse . . .
No one is surprised or concerned that nearly 1/3 of Americans are living in poverty–less than $23,000 joint income for a family of four???
run75411–
China is such a huge country; some parts of the country are flourishing, others are not.
China’s main concern has been keeping people employed– creating jobs in the cities so that people from rural areas can find work.
To a remarkable degree (given the size of the population, the poverty in rural areas, and the primitive manufacturing base that they started with in the 1980s) they have succeeded.
In citites on the coastline, they have a flourishing middle-class.
Some years ago, the government (which had owned the housing) let people buy their own apartments at a very low price.
Then those people began buying carpeting, dishwashers, etc.
Young women who have come from the countryside are managers in factories.
There is, of course, corruption and waste.
But China has done a much, much better job of trying to ferret out corruption–and invest resources for the good of the country–than Russia.
(I wrote extensively about both Chana and Russia when I was at Barrons.)
China has some enormous problems–the environment, pollution etc.
But I have to say that despite scandals surrounding some goods imported from China, many of their products (furniture, clothing etc.) are very well-made and reasonably priced.
When I was a child “Made in Japan” meant poorly made. Today “Made in China” doesn’t carry the same taint.
As for tires, and tainted food . . .we, of course, have had our own scandals.
Unfortunately, there is not much that U.S. labor cannot learn much from China.
The cost of living here is so much higher here that American workers just cannot produce many products at prices that would be competitive.
Hi Maggie:
I liked China and the Chinese. By the younger ones there, I was treated with respect and graciously. They went out of there way to treat me well, look after me, and used me to practice there English while they taught me Mandarin.
I have walked The Wall and seen the Ming Tombs around Beijing, walked around colonial Kowloon and Hong Kong islands and up Victoria peak. Typically, I would start in Beijing, go to Tianjin, south to Shantou, and rest in Hong Kong after a couple of weeks each year before heading off to the Philippines, Indonesia, and Thailand. Whirlwind 4 week tours in which I have seen a lot and not seen much of China.
I like the Chinese.
Re: health care. Health care is a hot button fear inducing topic wherever it crops up. May I mention the difference between American and Canadian anxiety regarding their health care systems?
In the Canadian system everyone is covered, and Canadians fiercely oppose limiting coverage because “if they limit care for patient X, they could limit care for me.” So the poorest of the poor sitting in our emergency rooms act as proof that no matter what else happens in our lives, that care will be there for us.
As far as I can tell, the American approach is more like “if they care for all the indigent patient Xs, they will increase my taxes to pay for it and soon I won’t have enough money left to pay for my own care.”
A worldview of generosity versus one of poverty, you might say. The sad thing is that doing it the “generous” way is half the cost. Sigh.
Maggie,
You say: “A weird thread. Much of this post is about the economy: 17% unemployment; 30% of the nation living in poverty . . . And the comments are about the cost of car insurance in Florida? Whether insurers should charge women more? Whether we should settle for giving people “good enough” care?”
Perhaps I can explain some of the connections to you so that the thread seems less “weird”. I agree with (one of) the premise (s) of your article – that the cost of health care in this country has had a negative effect on our economy and that cutting the cost of health care will have important benefits for our economy.
As you know, I am far less optimistic about what we can expect from the pending healthcare reform legislation than you are. You seem to think that the Democratic Bill on Health Care could give us the “Trifecta”; lower costs, greater access and better quality. I am much more skeptical about what this bill could have accomplished had it been passed and at this point in time, it seems unlikely to pass except in some very substantially modified form.
In recognition of the new reality – the existing bill will likely not pass except perhaps in highly modified form – I thought it might be useful to “step back” and think about what changes we should make to allow health care reform to go forward.
One of the problems we have in this country is the “specialness” of health care. We want to believe that everyone is entitled to the finest health care regardless of their social, economic or other status. Of course there is ample evidence that not everyone gets the finest health care in this country and that health care is in fact rationed – but rationed in a capricious and illogical way; liver transplants for alcoholics, but no prenatal care for some women. So when we say we will not tolerate anything less than the finest health care for everyone we are:
1) Ignoring what has happened in this country in the past
2) Ignoring what currently happens in this country
3) Ignoring what goes on in other countries like Canada and England – which in my opinion provide good basic health care minus some of the “bells and whistles” we want in the US
4) Ignoring the likely result of any HealthCare reform that could be passed
Perhaps the time has come to set more realistic goals that can actually be achieved rather than tilting at windmills.
As for the discussion about insurance premiums, that was really a side issue. It goes to basic issues of how insurance premiums should be determined and whether one method should be used for life, homeowner, and car insurance and another for health insurance. It also has to do with the issue of “cross subsidization” which you and I have touched on before and clearly don’t agree on.
I find it interesting that you feel it is appropriate to “punish” men for their “bad behavior” – “… they (men) die younger (much of this is related to violent behavior as well as alcoholism etc).” “So it makes sense that they pay more for auto insurance and life insurance.” Will you apply the same principle to obese diabetics, smokers, etc.? Or will you find a way to apply one method to a favored group and a different one to a less favored group?
Reply to LegacyFlyer:
Your point about men and insurance does not hold up simply because healthcare should be equally accessible to all whereas no one would argue that auto insurance is one size fits all. But of course in private health insurance, premiums are indeed set according to age and risk regardless of sex, but in universal public healthcare systems such as in the UK everyone is treated free at the point of care although there is extra help with the small standard drug prescription cost for children, pregnant women, and others.
There is of course debate about how you approach people with high risk and unhealthy lifestyles, but in a public system that tends to be about health promotion interventions rather than denying care or making them pay more tax/national insurance.
As for your comment about the US:
‘We want to believe that everyone is entitled to the finest health care regardless of their social, economic or other status.’
Change ‘is entitled to’ to ‘can buy’ and you have a point. The thought of entitlement in healthcare is what is sending your right-wing nuts into meltdown and is at the heart of the debate.
Noni, Legacy, Marc,
Noni– Yes, way too many Americans fear that if something else gets something, they will lose something. They just don’t realize that we would all benefit by living in a more equitable, more rational society.
Legacy– Other developed countries offer high quality care to everyone equivalent to the essential benefits that the Senate bill lists.
Throughout continental Europe, all patients get the same medically necessary care.
Those who can pay extra may get some amenities —but nothing that is medically important.
That is why the 40-something German oncologist who I met a year ago was on the government-run health plan rather than in the more expensive private-sector plan. (Many wealthy Germans pick he state-run plan even though they could afford the private plan.)
Marc–
As I have written in the past, I also don’t like the language of entitlement. But I also think that everyone has more than a right to “buy” health care. Some cannot afford it without help from others.
But rather than talking about “rights” and “entirelments” I prefer to say that any civilized society has a moral responsibility to make high quality health care available to all.
Without our health, we cannot pursue our other “inalienable rights”– life, liberty and the pursuit of happiness.
Of course many conservatives would violently disagree. They believe, as Margaret Thatcher put it: “There is no such thing as society. There are only individuals and their families.”
But her vision of a fragmented nation where everyone is focused only on themselves and their own families (every man for himself!) is a recipe for a social and economic breakdown. If we do not think collectively–in terms of “us” not “me”–, we will not survive.
Maggie,
You said: “Legacy– Other developed countries offer high quality care to everyone equivalent to the essential benefits that the Senate bill lists.
Throughout continental Europe, all patients get the same medically necessary care. Those who can pay extra may get some amenities —but nothing that is medically important.”
Your “high quality care” and my “good basic healthcare” are probably very similar. The difference between the two is probably more PR than anything else – like the difference between a “large” size detergent bottle from one manufacturer vs. a “super jumbo” size detergent bottle from another.
What would my good basic care include?
• Good primary care, referral to specialists only when primary care docs can’t handle it. I suspect you would agree.
• Use of generic drugs unless the non-generic is clearly superior. Again, I suspect you agree.
• Attempts to avoid surgery unless surgery is clearly beneficial. Again, I suspect you agree.
• Reduced use of expensive imaging tests. Again, I suspect you agree.
• More intelligent and more cost effective decisions about end of life treatment. Attempts to avoid prolonged ICU stays for terminal patients. Making sure that oncology patients understand what they are “signing up” for and truly understand the likely benefits that proposed treatments offers. Again, I would suspect you agree with this as well.
• Restrictions on self referral through Stark type legislation. Not sure where you stand.
• SERIOUS malpractice reform. I know you don’t agree with this.
I think many Americans would not consider what I am proposing “excellent” care because of: the limits to specialist referral, use of primarily generic drugs, restrictions (including waiting lists for non-emergent cases) on surgery, attempts to control costs of end of life treatment, etc. etc. These are factors that are built into most European plans and accepted by the population but would probably not be well liked in the US.
The difference between my philosophy and yours is that I would explicitly state what the policies and restrictions are and you would claim to be offering “excellent care” while having physicians “do the dirty work” for you.
Maggie:
‘But I also think that everyone has more than a right to “buy” health care. Some cannot afford it without help from others.’
Yes I agree – I was just making the point that probably the majority American view – and mistaken of course – is the right to command the very best healthcare for those who ‘earn it’ but not for those who fritter away their pursuit of the American Dream.
As a Brit I know only too well the impact of Thatcher’s legacy. We have a current debate here on inequality – it has actually widened under Blair and Brown – but the roots for a big increase in the gap were laid down in the Thatcher years, and I expect also by Reagan in the US.
Richard Wilkinson is the guru here on inequality, charting the toxic outcomes in societies with the greatest gaps such as Britain and the US – not least being the gaps in life expectancy. As he and his co-author of a good book, The Spirit Level: Why More Equal Societies Almost Always Do Better, wrote the other day:
‘What happened in the later 1980s may now seem merely water under the bridge. But broken Britain is Thatcher’s bitter legacy. Rather than having instantaneous effects, inequality gradually corrodes the social fabric. It takes a while for greater material differences to make the social hierarchy steeper, for status competition and consumerism to increase, for people to feel a greater sense of superiority or inferiority, for prejudices towards those lower on the social ladder to harden, for prisons to fill to overflowing under the impact of more punitive sentencing, and for people to seek solace in drugs.’
http://www.guardian.co.uk/commentisfree/2010/jan/29/social-mobility-inequality-conservative-thatcher
Health outcomes have been a key indicator in Wilkinson’s research – the Spirit Level links inequality with worse mental health. obesity, teengage births, general physical health and life expectancy.
Your counterpart – although they disagree on some things – is Robert Putnam of Bowling Alone fame.
Marc, Legacy
Marc, Thank you for the quote from Wilkinson.
I agree completely. Thatcher and Reagan were parallel figures; although Reagan seemed far more amiable, they both did a great deal of harm. Reagan taught Americans to despise the poor, and we still haven’t gotten over that legacy.
Inequality does corrode, weakening both the society and the econommy.
Legacy–
Yes, I think we do agree as to what high quality care is. It’s effective care. And I, too, agree about restrictions on self-referral.