Over at TPM Café (www.tpmcafe.com) I’ve posted a review of James Galbraith’s witty, insightful book, The Predator State, which some readers may find of interest.

What is delightful about James Galbraith’s The Predator State is that he says things that are, at once, outrageous– and completely true. Because he shows so little concern for what one "can" and one "cannot" say in a polite capitalist society, one might call him an idealist. But Galbraith is not tilting at windmills; he is simply toppling the conventional wisdom of the past 28 years.

Begin with "the market." When you come down to it, Galbraith explains, "the market" is a fiction. In theory, "it is the broker, the means of detached and dispassionate interaction between parties with opposed interests…Buyers want a low price, sellers wants a high price. The market works out the price that exactly balances these desires, a price that is fair because it is the market price." Even liberals believe in this mythical "market"–a higher intelligence that hovers over transactions ensuring that, as long as you let "the market" work its magic, everything will work out for the best…

To read the whole review, click here.

Are there intrinsic differences between how surgeons and physicians who are not surgeons see the medical world?  A pediatrician who reads this blog thinks so, and he e-mailed me to suggest that “The distinction matters because the dichotomy between doctors who perform procedures and those who practice ‘cognitive medicine’ [listening to and talking to the patient] is a major culprit in driving up the cost of American medicine.”

His grandfather was a physician and his father was a surgeon, which puts him in a unique position to muse over “the cultural divide between surgeons and non-surgeons.” I’ll call him Dr. Y

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In 1970,  a Fortune magazine cover story warned the nation: “Much of U.S. medical care, particularly the everyday business of  preventing and treating routine illnesses , is inferior in quality, wastefully dispensed, and inequitably financed.” That year, a Fortune editorial declared: “The time has come for radical change…The management of medical care is too important to leave to doctors who are, after all, not managers to begin with.”

This was the beginning of the revolution Paul Starr described in his Pulitzer-prize -winning 1982 book,  The Social Transformation of American Medicine.  In his final chapter, “The Coming of the Corporation,” Starr expressed his concern that “those who talked about ‘health care planning’ in the 1970s now talk about ‘health care marketing. Everywhere one sees the growth of a kind of marketing mentality in health care. And, indeed, business school graduates are displacing graduates of public health schools, hospital administrators and even doctors in the top echelons of medical care organizations.

“The organizational culture of medicine used to be dominated by the ideals of professionalism and voluntarism which softened the underlying acquisitive activity,” Starr wrote. “The restraints exercised by those ideals now grows weaker. The ‘health center’ of one era is the  ‘profit center’ of the next.”
In this brave new world of the 1980s, corporate executives would become both the  wealthiest and the most powerful actors on the new cultural stage.  Hospital CEOs would haul home salaries that made neurosurgeons look like pikers.  In health care, as in other industries, CEOs, not physicians, make the decisions, and their goal, Starr suggested, would no longer be better health, but rather, “the rate of return on investments.”

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The Kaiser Daily Health Policy Report below announces that the Chairs of the Senate Finance and Senate Budget Committees have introduced a bill to create a Comparative Effectiveness Institute.

The question: Would its decisions guide Medicare’s decisions about what it covers?  Clearly Congressional Budget Office Director Peter Orszag thinks the Institute would have some real power: He estimates it “could save up to $700 billion annually in health care spending by identifying treatments that do not produce the best medical outcomes.”

That’s the $1 out of $3 health care dollars that we now waste on unnecessary, unproven, ineffective and often over-priced treatments.

Of course, we wouldn’t save anything close to that amount at the beginning. It will take years to wring the waste out of the system. But putting U.S. healthcare on an evidence-based footing would be a giant step toward the national health reform we need.

I am also encouraged by the fact that the 18 members of the Institute’s panel would be appointed by the Comptroller General. The Comptroller General appoints the members of the Medicare Payment Advisory Commission (MedPac), and they have been producing extremely intelligent reports. They are also widely perceived as apolitical.

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Over at Kevin M.D.’s excellent website, The Happy Hospitalist recently posted a “Reader’s Take” on Medicare that sparked  a fierce debate.

The Happy Hospitalist began by pointing out, rightly, that Medicare is approaching a financial crisis:  “On March 25, 2008 the Boards of Trustees released their Annual Report of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. In this 43rd edition, the Trustees note [Medicare is] a government program covering just over 44 million people at an expense of $425 billion dollars during 2007. That equates to approximately $10,000 per beneficiary.

“Ten thousand bucks. A cost accelerating at an unsustainable rate”

This is entirely true.  If we continue in our profligate ways, Medicare will break the bank. But then Happy Hospitalist explained his solution:

“The appropriate course of action should be a radically new approach to the Medicare entitlement program…A restructuring of the program towards a transparent means based qualification system is necessary. Having Uncle Sam pay for an elective cataract surgery so grandma can go on an African safari is inexcusable in a time of financial collapse.”

Often I agree with The Happy Hospitalist. But on this point, I cannot.

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In a post originally published on The Health Care Blog  and reprinted on Bob Laszewski’s Health Care Policy and Marketplace Review, health care analyst Brian Klepper asks: “Is Meaningful Health Care (Or Any Other Kind Of) Reform Possible?”

His answer: “I’d be surprised. Delighted! But surprised.”

I decided to answer him.

Klepper believes that the lobbyists are just too strong. Always incisive, he pulls no punches: “In a policy-making environment that is so clearly and openly influenced by money,” it’s just not likely that “Congress will be able to achieve health care reforms that are in the public interest.”

I disagree. I believe economic pressures are pushing us toward a political turning point. (If you want to understand what is happening in history or in politics, follow the money.) The Bush administration has been thoroughly discredited. Americans are ready for change. Healthcare reform will not happen tomorrow; it will require a bare-knuckled political fight. But it will happen, and this is why: Although lobbyists are powerful, so are voters. And they realize that we are approaching a flashpoint.

You’ll find the rest of the post here.

To comment, come back here.

Reel back to 1965, the year Medicare and Medicaid legislation was passed. That year Congress gave the “Joint Commission,” a professional accreditation organization established in 1951, the unique authority to inspect hospitals and determine whether they meet the patient health and safety standards required to treat Medicare patients.

And who do you suppose pays the Joint Commission?

The hospitals that are being inspected. “Today, the Joint Commission collects $113 million in annual revenue, mainly from the fees it charges hospitals for telling them whether they comply with federal regulations,” observes Lisa Venn, J.D. M.A., writing on Advocate Alliance. 

Venn, who is the Manager of Compliance at a large teaching hospital, explains that “Deeming authority means that if Joint Commission gives its seal of approval to a hospital, CMS is satisfied that the hospital is following federal regulations. In other words, hospitals enrolling in the accreditation program only have to please one master. And that master is really nice, accrediting 99% of all hospitals it surveys.”

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Did you know that Japan has found an ingenious way to “create” money that can be used to care for the elderly?  Bernard Lietaer, author of Access to Human Wealth: Money beyond Greed and Scarcity (Access Books, 2003) describes the system in this interview with Ravi Dykema, publisher and editor of Nexus, a leading Holistic journal.

Lietaer begins with the basics, by explaining what money is: “I define money, or currency, as an agreement within a community to use something as a medium of exchange. It’s therefore not a thing, it’s only an agreement – like a marriage, like a business deal…And most of the time, it’s done unconsciously. Nobody’s polled about whether you want to use dollars. We’re living in this money world like fish in water, taking it completely for granted.”

Lietaer, who co-designed and implemented the convergence mechanism to the single European currency system (the Euro), and served as president of the Electronic Payment System in his native Belgium, doesn’t take currencies for granted. He knows that a dollar is simply a piece of paper (which is no longer backed by gold).  It has value because we have agreed that it has value.

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I am delighted to announce that The Century Foundation has created a working group to look at Medicare Reform.  I’ll be directing it. We’re going to do the work online, communicating with each other on a closed list-serve. In this way, we’ll be able to get a lot done without wasting time traveling to meetings. In the end, we’ll issue a report, and then we’ll get together and host a conference with keynote speakers and panels. (See our Press Release below for more information). 

We’ll be looking at many of the issues I have been discussing on this blog: how physicians are paid; the secretive panel, dominated by specialists, that sets fees; the need to reward providers for quality, not volume; over-paying for Medicare Advantage; overpaying for drugs; unwarranted regional variations in how much Medicare spends in different parts of the country; the need to squeeze the hazardous waste out of the system; the need for a comparative effectiveness institute that is truly insulated from Congress and lobbyists; the need to co-ordinate care; and the need for health IT.

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Thanks the unbridled rise in healthcare prices, Medicare is going broke. As I mentioned in a recent post, four years ago the Medicare trust fund that pays for hospital stays started to run out of money.  In 2004 the fund began paying out more than it takes in through payroll taxes.

Since then, the balance in the fund, combined with interest income on that balance, has kept the fund solvent. But in just 11 years, it will be exhausted,” the Medicare Payment Commission reported in its March. “Revenues from payroll taxes collected in that year will cover only 79 percent of projected benefit expenditures.” And each year after 2019, the shortfall will grow larger.

Make no mistake: this is not an example of an inefficient government program spending hand-over-fist without caring whether it is getting a bang for the taxpayer’s buck.  As I discussed in that earlier post, health care prices have been climbing—without a concomitant improvement in patient outcomes or patient satisfaction—in the private sector as well.

Medicare Reform Could Pave the Way for National Reform

Before trying to roll out national health insurance, the next administration needs to address the structural problems that undermine the laissez-faire chaos that we euphemistically refer to as our health care “system.” Otherwise, we run the risk of winding up with a larger version of the dysfunctional, unsustainable system that we have today. Ideally, the administration should make Medicare reform a demonstration project for high quality, affordable universal coverage.

Let me be clear: Medicare reform does not preclude national health reform. To the contrary, by starting with Medicare, and showing what can be done, reformers enhance their chances of winning the larger war.

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