Is Meaningful Health Care (Or Any Other Kind Of) Reform Possible?

Those who wait, ever hopefully, for real health reform might want to take a deep breath and take stock of a few realities.First, think about the fact that when the Democrats retook Congress, they tweaked but did not fundamentally change the lobbying rules that trade money for influence over policy. In fact, most contributors have now adjusted their contributions to favor the current, rather than the past, majority party. As it turns out, Democrats, like Republicans, are only too eager to allow special interests to trump the common interest, so long as the transactions fetch a good price.

Take a long hard look at the chart below, taken from an April 15th report published by OpenSecrets,
which tracks the impacts money has on politics and policy, put
together by the Center for Responsive Politics. In 2007, the health
care industry spent $445 million lobbying Congress, providing 16
percent of the total $2.8 billion spent to sway Congressional actions,
more than any other economic sector for two years running.


million, or 51% of that $445 million, came from the drug, device and
medical products sector. General Electric alone spent almost $24
million courting our Senators and Representatives. PhRMA, the drug
industry association, contributed another $22.1 million. The AMA also
spent $22.1 million.

These dollars are spent to obtain specific
results. David Beier, Amgen’s head lobbyist and, formerly, Vice
President Al Gore’s chief domestic policy advisor, explained his
company’s 2007 $16.3 million lobbying expense very nicely in a Washington Post article last April. "We face a lot of legislative and regulatory issues. We resourced our advocacy to match our challenges."

Anyone watching the lobbying frenzy leading up to last week’s vote, the President’s veto, and Congress’ rejection of that veto, pitting funding for Medicare Advantage plans against funding for physician reimbursement – the blow-by-blow was eloquently described by Bob Laszewski – could only marvel at the resources that can be brought to bear when money or other perceived interests are on the line.

course, there’s nothing new here. For decades, the health care industry
has leveraged its money and influence, shaping policy to its own ends.
Last December I recounted that, upon hearing that the US Department of
Health and Human Services had appealed a court ruling calling for CMS to release Medicare physician data,
American Medical News quoted the AMA’s Board Chair Ed Langston MD, "The
Association is pleased that HHS is taking its advice." (This quote has
since been expunged from the online version of the article.)

Or remember when the Employers’ Coalition on Medicare,
a powerful business interest group, teamed with PhRMA and the
Republican Congress to pass Medicare D? The resulting legislation
provided for a significant portion of the largess to be allocated to
large firms (in the form of retiree prescription subsidies) in exchange
for their support for the program. Retirees and taxpayers, of course, didn’t fare quite as well in the deal.

Then there is the longstanding sole-advisor relationship between CMS and the AMA on the issue of physician reimbursement,
in which the specialist-heavy society has continually called for, and
CMS has continually delivered, increased reimbursements to specialists
at the expense of America’s primary care physicians, who are now in
deep crisis as a result.

There are endless examples, all of which beg a couple important questions. Let’s take the health care question first:

a policy-making environment that is so clearly and openly influenced by
money, how likely is it that Congress will pass be able to achieve
health care reforms that are in the public interest?

is broad expert consensus that one-third to one-half of all health care
expenditure is waste. Talk privately with most health care
professionals – physicians, hospital execs, health plan administrators,
benefits managers, supply chain execs – and there is reasonable
agreement on critical principles that are necessary to re-establish the
system’s stability and sustainability: some form of universal coverage
for at least basic health services; a comprehensive and compatible IT
infrastructure; a transition from fee-for-service to some form of
performance-based reimbursement; pricing and performance transparency;
and much more.

Such changes could drive tremendous savings for
individual, corporate and governmental purchasers, but at significant
cost to health care firms and professionals. Revenues and profitability
would plummet. As the struggles over health care resources intensify,
the efforts to protect and enhance each interest’s position through policy will intensify as well.

isn’t as as though there aren’t credible and influential people
sounding the alarm. Take this comment from Peter Orszag, Director of
the Congressional Budget Office, while testifying to the US Senate
Finance Committee in June 2007.“If [Medicare and Medicaid’s]
costs continue growing at the same rate over the next four decades [as
they have over the last four decades, at 2.5%/year higher than per
capita GDP], federal spending on those two programs alone would rise
from 4.5% of GDP today to about 20% by 2050. That amount would
represent roughly the same share of the economy as the entire federal
budget does today.”

Alarming? Sure. But that kind of "let’s
not burn the house down" warning tends to get lost against arguments
for more dollars, backed by the nearly half-billion dollars the
industry spent last year – an average of about $832,000 for each
Senator and Representative!

Pass real reforms? I’d be surprised. Delighted! But surprised.

But that brings us to the biggest question.America
has a slew of important problems that cry out to be
addressed: the obesity epidemic, energy, education, the environment, poverty,
infrastructure replacement. What will it take for Congress to mount
serious, public interest efforts that focus on these issues?
a one, these problems are structurally identical to those we face in
health care. Congress’ current lobbying system means that
money-for-influence relationships with lawmakers continually spin
policy to favor special interests rather than the common interest.

the obesity epidemic. Here’s a wonderful graphic I show in all my
presentations. It shows that 31% of adult Americans are obese, with a
body mass index of greater than 30. We’re the leaders among developing
countries on this problem. Mexico and England are a distant 2nd and
3rd, at 24% and 23%. The ridiculously industrious Japanese and Koreans
are at 3%. I have two arguments here.


First, we have the worst
obesity of any country because agribusiness and the fast, prepared and junk food
industries have convinced Congress to provide
concessions, ranging from corn subsidies to open-field running with
advertising techniques that seduce our children. Sure, individual
choices by parents factor into this, but whatever your philosophical
position on that point, it is important to acknowledge that the current
approach isn’t working and we’re losing the battle. And nationally, we
HAVEN’T drawn a line in the sand as, for example, the Japanese recently did
in deciding to mount an effort that measures waistlines. From their
perspective, that effort is undoubtedly an investment in their national

Second, since weight is important to fitness, fitness is
important to overall health, health is an important component of
productivity, and productivity drives competitiveness, the US’ future
prospects are already lousy and headed south. In terms of our health AND
our competitiveness, we’re committing slow suicide.

And we
can’t seem to mount approaches like the Japanese seemingly did so
easily. We’re stymied due to policies that thwart the common interest
in favor of the special interest. We wouldn’t want to reduce choice for
our consumers or our vendors, or be forced to reinvest in exercise
programming, or compromise the profitability of agribusiness or the
prepared food sectors.

And so we are paralyzed in our ability to problem-solve in virtually every area of
societal endeavor.

As far as I can tell, there are two – and only two – solutions here. Both are highly improbable.

is for America’s largest corporations, the organizations that drive
national policy through lobbying now, to galvanize to preserve the
common interest. This is tough. Currently, most organizations focus
their lobbying within their own core competency areas. Microsoft
lobbies on IT, but not health. Marriott lobbies on hospitality policy,
but not education.

What’s needed is a national business
coalition that collaboratively focuses on what’s good public policy for
the country – what’s in our common short- and long-term interest. It
could both support democratic institutions and, equally important,
place sanctions on rogue organizations, like Enron, that
would hurt the system through excesses or very poor performance at
public expense. (By the way, I’m not advocating for government run by
corporations – the formal definition of fascism. I’m simply explaining
how things appear to already work, and how they might be redirected.)

might do this because they realize that, if the components of the
fabric that has made America strong – a focus on education and an
informed populace, fairness and social justice, creativity, financial
independence, productivity – are lost, then it will be more and more
difficult to successfully pursue the special interest, at least from here.

The other
solution would require a new Congress, under new leadership, to resolve
to rid itself of its lobbying cancer, and to do so in a way that is
highly visible and publicized. There would be ferocious opposition from
industry. Hence the need for visible, articulate leadership from key
political and business leaders.

Like I said, both are improbable. But they’re also key our ability to turn the nation around.

In the meantime, we’re all health care people. Go to the New York Times Health Page, and you’ll see five sub-sections. The center one is "Money and Policy." Think that’s clever, or simply precise?

27 replies »

  1. Healthcare is broken because YOU are not in charge of how your money is spent.
    You are forced into a “plan” (read: rationing system) that controls doctors and hospitals by denial of services or by arbitrarily reducing “claims” payments AFTER services have been rendered.
    Because you get forced to participate in plans centralized by around an employer, you don’t actually influence what that plan offers. You either take it, or leave it. Worse, the insurers are beyond the law! They can relentlessly raise premiums, without justification, and slash payouts of your premium dollars. The government is no better, with a bureaucrat making up the rationing system based on competing lobbying efforts immune to reason.
    The way to “fix” things is to eliminate medical decision-making at the level of these middlemen, and give it back to you! YOU need to decide how your “benefit dollar” should be spent, whether it be rhinoplasty or caronary bypass surgery. In fact, I feel the middleman should handle the money only, just like car insurance. A premium should be calculated based on the risk of taking you on (your own personal health choices and your chronic diseases) and then YOU get to control what claims you submit.
    I think government involvement should be universal, and help supplement payments of premiums. The old and the chronically ill, and the poor should be allowed to apply for “premium support vouchers” through which they could buy privately offered indemnity insurance. The government then could set up lists of those who are allowed subsidy for being too sick to afford private insurance. That keeps them out of the insane game of managing claims, and eliminates the monstrous claims/anti-fraud bureaucracy they currently maintain. They can also decide how poor you have to be to get what level of support (they have your tax return anyway).
    Having said all that, I think there should be a certain amount of out-of-pocket expenses for any outpatient, elective visit that YOU decide is necessary. I don’t care if you link the level of this payment to income level, but it should be enough to deter you from wasting money over a runny nose. Conversely, I think that visits generated at the request of your doctor should not have this deterrent.
    I also believe strongly in price transparency. Hospitals and doctors should post the average charges per several routine admissions/procedures relative to their areas of expertise. If you want to get more fancy, you could have third parties benchmark comprehensive costs and make up a set of factors that are comparable across a region. This would help people understand what is expensive and what is cheap, and then THEY could decide whether it is still worth it to elect treatment.
    Another point in my plan would be to have emergency services be outside the reach of a lawsuit, but also be heavily subsidized by a universal government national voucher for emergencies. Emergency room ASSESSMENT would come off your usual insurance, at a fairly expensive rate– however, emergency admission, surgery, or administration of special drugs, would allow you access to the higher level of universal national voucher support. To ensure hospitals don’t abuse the subsidy, a population-based claims analysis would detect gaming the system, and fines could be imposed.
    Finally, one of the most destructive activities of the insurance industry and the government has been restrictive contracting, or “provider networks”. This is a total scam, where nasty contracting limits choice. You should be free to go to anybody you deem best (and why not– you are spending your money every time you go). This would allow unlimited competition among hospitals and physicians to compete for your money– like in a real market.
    Do you people know that there is a medical sector that has, every year, seen the total cost of service delivery go down? It’s called Plastic Surgery. The reason is that people take money that they have, choose a place to get a service, and have no third party meddling to mess up the relationship. Competition did the rest.
    Get rid of somebody else controlling your money, and allow competition, and you’ll have a self-regulating market back.

  2. Strategically, whether the government implements some type of health relief. The overall health care system needs to be overhauled in a way that barely be imagined. Since government dollars are due to run critically short for Medicare by 2015-2019, waiting for the government is like picking your seat on the Titanic. This unprecedented crisis is going to have to be approached with unprecedented action. In a Democratic Country with a capitalistic economy we can probably do better. By the way when I say health crisis, I mean U.S. crisis since other countries are outperforming the US by considerable margins and are indeed thriving and improving.
    My answer is that primary doctor’s are placed in an environment where muddling is a way of life. The US has the capacity to provide more timely, accurate and properly presented information to decision makers to the point where there is considerable likelihood of reducing hospital days, unnecessary testing while improving quality of care. Do a time motion study on any actively practicing doctor and you’ll se what I mean.
    The Vista A progeny from the VA, is not ideal but it does allow the doctors, physicians assistants and nurse practitioners to have more information availible with less work. I’ve seen the VA system work and it is impressive in its performance. There are many more functions that can be added to Vist A that stand to increase margins significantly.

  3. Just follow the money…..aka, the “trickle down” version as it relates to US healthcare a la “economics 2.0”.
    I am not buying the “impossible do do” agenda, and admonitions to not over-reach pessimism.
    As if there isn’t enough $$ cash in the beast already! A re-engineering of the “non” system’s thirst that merely focused on downsizing that portion of premium/AAPCC/other top line provider revenue stream, which goes to admin vs. direct patient care, will free up enormous sums which can be redirected to the key drivers or reform: “effective medical homes, bundled payments and accountable organizations” (as so eloquently outlined in Medpac’s 06/08 “must read” report).
    By way of example, lets just do a simple deduction from the $1 dollar of premium (or its governmental equivalent derivative) that enters the providers’ domain whether hospital, physician, or ancillary, etc.
    First take the 20% to 30% that’s retained by the health plan/fiscal intermediary or other ASO/MSO, then apply whatever overhead factor that can reasonably be apportioned based on the practice model or delivery system in place to accommodate an insurance/billing based platform, then add the liability piece, and other defensive or over incent-ed medicine nuances, and voila. Perhaps, .40 to .50 cents on the dollar is channeled to things other than “appropriate direct patient care”.
    So why not focus on the inherent inefficiency the current nonsensical administrative quagmire imposes on direct providers’ of service?
    Lets stop feeding the beast and start serving ourselves. We really don’t have to look too hard to find models that work.
    Why not “un-complicate” the avoidable drama. As Einstein has said, “…you can not solve the problem from the same level of consciousness that created it” (I am paraphrasing of course).

  4. Historically, we have not been very good at tackling issues in this country that are seen as significant problems in the long term but are not a crisis in the short term. To a politician, if the problem is not about to blow up on his watch, it is hard to get him to vote for tough choices that many of his constituents may not like. However, we’ve found ways to deal with tough issues before. The Greenspan Commission in 1982 provided the framework for Social Security reform that passed the Congress the following year. After a couple of years of debate, we got substantive tax reform passed in 1986. When the military needed to be significantly downsized during the Clinton Administration, the Base Realignment and Closure Commission (BRAC) was established to get the job done. Congress had to vote up or down on the whole package. While some may not like the final product, a prescription drug benefit was added to Medicare starting in 2006.
    I think any substantive reform, especially in the case of healthcare, needs to be bipartisan. I don’t think a Democratic President and a Democratic Congress could just ram something through. I was struck by the description by Paul Starr in his book, “The Social Transformation of American Medicine” of what happened in 1974 when the Congress was very close to passing national health insurance reform. A compromise between democrats and republicans was within reach, but organized labor killed the deal because it anticipated a landslide Democratic victory in the 1974 elections (post Watergate) after which it thought it could push through a single payer system over President Nixon’s veto. Instead, Nixon resigned in August, 1974, a severe recession set in that year, and by election time, there was no money available for new entitlement programs. Organized labor, democrats, and Americans wound up with nothing. Thirty-four years later, we still don’t have universal coverage. My advice to democrats and liberals / progressives is: don’t overreach.

  5. As a lifelong business owner I agree with your summation and call to action. We do need to change our Executive and Congressional leadership and direction COMBINED with the business community, both large and small business sectors stepping up and playing an engaged and constructive role in finding a solution to our broken health care system.
    In 2020 when we hit 20% of GDP for US health care expenditures, China will surpass the US in GDP and become the largest economy in the world.
    Are we content to let the unsustainable trends continue?

  6. I am skeptical that very much will come from the new (very likely Democratic administration) in the term of health reform. overall I believ the system should be most easily tweaked than completely revamped. a simple solution ( however not easy to push through the Congress) is to unify Medicare and Medicaid and then let people who are willing to do so to sign up for this program. signing premium could be for example the annual spending per capita and this could be annually updated.
    then the Medicare administration should decide what services it can afford to cover for all its subscribers( estimated probably more than 150mil) without running a big deficit. the elderly and indigent can get discounts to make it more affordable. this Medicare-transformed-into-national-heath-plan should also cover basic medication plan ( mostly generic drugs and only the most proven as cost-effective brand medication). all who wants the newest and unproven meds should be free to get into a supplemental insurance or buy it on their own. I believe than when people will have to pay from their pocket 100+ $ a month for a PPI or statin they would be a lot more interested in finding out what is the cost benefit ratio of Lipitor vs. generic simvastatin.
    and the private insurances to be allowed to set up their own private pool of subscribers ( however they should not be allowed to turn down anybody based on prior medical history). obviously the private pool can run higher rates and offer better coverage for services for the upper part of the market. they also may be let to run supplemental insurance for the Medicare subscribers.
    this way the insurance companies will be free to prove that they offer more value for the money than the government. as long as they will not be allowed to continue to cherry pick and dump the sickest patients onto the public scheme, all should be nice and dandy. they can be profitable if they will pool the risk together. in very likeliness as they subscribers will be mostly the more well-off and educated this population will have anyhow healthier lifestyles and be more health conscious.
    ex. all the private insurance patients cost can be summed up quarterly and the plans who covered the sickest group receive a risk-compensation payment from the plans that had the highest profits; some method of calculation of this compensation can be figured out).

  7. This is the standard entrenched interest/rent-seeking barrier combined with the collective action problem, that I often think is underestimated.
    There are plenty of countries with decent healthcare systems, so I don’t think, in the end, that the problem is insurmountable from a purely operational aspect, it is one of succeeding in implementation. The ideal way would be something similar to what is required in other reformation tasks (like development which often requires land reform or other ways to shake up the entrenched powers)- dissolution of the system entirely. So, I don’t think reform will happen until the system collapses spectacularly.

  8. Right on target! If we stop looking through the keyhole and get on the other side of the door, we will realize the complexity of the issue and know we need to attack segments to solve issues and not lump them all together. Pharmacy alone would make a huge difference if transparency were required – those entities, PBMs, who began as a friend to corporate medical programs, now find themselves with criminal profits at the expense of employers, employees and pharmacies without any research, manufacturing, warehousing or distributing a product. Executive salaries rivel those of the oil companies. One look at the lobbying dollars of that segment alone and another at the environment will tell even the most uninformed there is too much money for meaningful reform to come from within!! On the other hand, the corporate community seems to continue to stand there like a “deer in the headlights”, paralyzed by ever-increasing medical costs accompanied by the “wisdom” of their carriers and consultants, with any action coming from but a hand full.

  9. On point with original REFORM theme though, at least we can credit to the Bush crowd, perhaps due to the law of unintended consequences, since I doubt any benefit advancing health care reform or an alternative fuels based economy agenda could have been a conscious intention of this corrupt and inept bunch; is we are likely approaching a “flash point” where the sheer weight of 47 million uninsured, another 50 or so under-insured due to rapid re-writes (as in reductions) of corporate benefit plans, etc., has created a “tsunami like” force of will that can influence a political agenda – special interests notwithstanding.
    I am actually hopeful at this point that hubris and incompetence can actually serve and create a public benefit, albeit unintentional.
    We should look a little closer at health care finance/delivery systems in Japan, Germany and other developed democratic nations who have actually made real progress in the public/private partnerships needed to make a difference. For those who haven’t seen,check out http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/.

  10. Peter–
    I agree that the real estate industry has brought this on itself. But many people will suffer who weren’t involved in the hype (construction workers who had jobs building new homes, for example.)
    I also agree that the Bush admnistration is lying to us–this is partially due to incomeptence (very, very few people in the administration understand int’l finance or global economics) plus the fact that these people are arrogant enough that they feel they have a right lie to us. This makes it hard to know just how bad things are, but I’m afraid the next administration is in for a shock.
    Who do I believe? Warren Buffet (and many other professionals who have been around a long time, and have seen the market’s cycles.) Buffet is saying that this recession is going to be “longer and deeper” than people expect.
    Others compare it to the 70s–and possibly to 1929.
    No two recessions/depressions are alike, so it’s impossible to predict the short run. It’s easier to
    predict the long run.
    When it comes to the dollar, Paul Volcker predicts that over time, the world will move to a global currency. At that point, the U.S. will no longer be the greatest financial power in the world. (Which could be all to the good.)
    If we redistribute income. The problem is that today great wealth is concentrated in very, very few hands.Once Reagan slashed marginal income tax rates, that wealth began to compound. A small group of famlies control much of the wealth of the nation and have been funding the conservative program for decades When wealth is that concentrated, it is very hard to break it up. It takes something like the Great Crash, and I doubt that this wealthy is exposed) in the way that it was in 1929.

  11. I think tcoyote has a point about how bad we should think things are. This country has a huge amount of wealth, but it is distributed unevenly and I guess if we do get to a point of turning things around what income levels are going to do the paying, and who’s going to benefit the most and suffer the most. If as tcoyote says, it’s not as bad as we think, and Bush says the financial system is sound, then why is the government bailing out financial companies (and their shareholders) that got into bad situations because of their own greed, fraud and mismanagement? Aren’t markets supposed to work that out?
    Frankly Maggie, “a recession for everyone who works in the real estate industry” is a good thing. That industry benefited the most from unsustained house values and bad loans to unqualified buyers. That industry fed buyers and sellers unrealistic expectations and helped to fuel prices talking up values and the, “it’s always a good time to buy, it’s always a good time to sell” marketing. I would add that the dirty little secret in real estate is how appraisers work with agents to get the price, and it’s common practice for appraisers to ask, ” what comps do you want?” I for one am against any bailout for buyers and lenders, but it seems at election time baskets of money is the grease voters want – not truthful leadership. The American Dream has turned from opportunity from hard work, to get rich quick, and we’re seeing the results. This will make solutions in health delivery very difficult along with our other pressing needs.
    I don’t know how bad it really is, but I know the Bush administration won’t tell the truth. I also know taxpayers are footing the bill for private failures and lack of government oversight and regulation (looting). One yard stick that says it’s really bad is apparently the brothel business is down 25% along the nation’s highways – now that’s bad! :>D

  12. I might add that we already had a drug distribution system in place. It’s called drug stores. All they had to do is allow Medicare patients to take their prescriptions to the druggist and have him send the bill to the Medicare administrator, just as the doctor does. But that would have negated the need for yet another insurance industry, which incidentally, can give campaign contributions.

  13. >>> “as well as institute the Medicare prescription drug benefit decades worth of Democratic Congresses and a lot of liberal hot air specialists could not give us.”
    Uh, hey, tcoyote, the Dems wouldn’t give us that because it was a $780 billion giveaway to the pharmaceutical industry that funded the campaigns of the Republicans. No wonder Bush signed it into law so quickly! He could hardly contain himself.

  14. Wow. Yeah, our farm economy is booming because the cost of corn and food has gone through the roof, and export manufacturing is up because the dollar has tanked. And yes, Wal-mart sales are up because people are getting desperate. And jobs? Yeah, more people working at Wal-mart. GM closing plants, and maybe even the start of something bigger. Here’s a piece you may have interest in called “It’s the Jobs, Stupid

  15. Fear mongering merits a rude response, particularly if it’s coming from someone who ought to know better. It isn’t helpful and it’s time to chill out.
    Not a Bush fan, and most of the stuff you said happened under his watch happened. But he also managed to double funding for federally qualified community health centers and the VA health system during his term in office, as well as institute the Medicare prescription drug benefit decades worth of Democratic Congresses and a lot of liberal hot air specialists could not give us.
    Low growth is not a recession, let alone a “gutted economy”. Perhaps you need to get out of New York a little bit more. Our farm economy is booming, as is export manufacturing (which is why we’re probably not going to have a real recession), oil and mining. Wal-Mart’s sales, a reliable proxy for consumer spending, are increasing, after sagging back a little last year. A recession to me is 8-10% unemployment, and we haven’t had a recession like that since 1981. This isn’t 1981, let alone 1929.
    Perhaps a new regime in Washington will help us curb our appetites, and talk straight with us for a change, instead of pandering to our fears, envy and desire for scapegoats. It wouldn’t hurt to increase taxes a little, if it helps close the deficit, but the last thing we need is another quantum leap into a state controlled economy.

  16. I am an ardent ‘free market’ supporter. But I can say for sure, being in the industry for long, ‘free market’ will NOT work in healthcare. Corporate greed has taken full control of the industry where ‘profit’ is the only motive for business whereas healthcare is a basic need for individuals survival and thereby country’s GDP.
    If corporate profit is not the only motive, why the heck the industry is spending $445 milllion a year for lobbying.

  17. tcoyote–
    Your tone continues to be rude.
    Since our host has asked us to be civil, I’ll ignore that, and move straight on to the argument.
    Our consumer-driven economy has, to a large extent, been driven by the consumer’s belief that his home is appreciating (the “wealth effect.”). We have now entered the beginning of a real estate recession. Real estate cycles move slowly–I don’t know how long it will take to bottom. The recession has barely begun in Manhattan.
    It’s not just a matter of “cleaning up our act.” We are now going to pay the price for ignoring risk.
    As consumers feel poorer (because their home is worth less) they will spend less. This will be bad for business. In addition, a real estate recession will ultimatley mean lower revenues in property taxes, and a recession for everyone who works in the real estate industry.
    I don’t know how low the stock market will go, but I don’t expect a recovery anytime soon.
    Under the Bush administration, the country’s social needs were ignored. The poor got poorer. State university tuition went through the ceiling. The programs that we need to help those addicted to drugs (rather than making war on them) were cut. Affordable child care became harder and harder to find. Inner city public schools went without books, without maintenance, while class size swelled. All of these programs will have to be funded.
    And if we want universal coverage, we’ll have to pay for it. The cost of providing care for uninsured and underinsured people who have delayed health care for years will be high. Most reformers also agree that we need health IT and most small doctors’ practices cannot afford to pay for it. Also, most reformers agree that doctors who care for Medicaid patients should be paid at least as much as they are paid to care for Medicare patients. And SCHIP needs expansion.
    We are facing serious hikes in taxes–both at the federal level and at the state level. I’m not talking about repealing Bush’s tax cuts (that money is already spoken for). I’m talking about tax increases–on capital gains, inheritance taxes, and income taxes –or maybe a VAT. A Democratic president and Congress will be ready to do it.
    Finally, the one thing you don’t mention is the war in Iraq. (I can see why you don’t). Do you know how much it is costing us–and how much it will cost, even once we get out, to help reconstruct the country?
    Try to calculate the cost of providing health care for the veterans who have been seriously injured both physically and mentally.
    Finally, in part because we have alienated most of the world, we can expect no mercy when it comes to oil prices, other countries helping to prop up the dollar, friendly trade agreements, etc.
    Our attempts to bully China will come back to haunt us.
    Ultimately, we will have to raise interest rates so that foreign investors don’t sell our Treasuries en masse. Higher rates will boost inflaton as fuel, food and other prices rise. This is baked into the cake: the developing world will continue to develop and world-wide demand for resources will grow.
    Total result: stagflation. Low growth, high inflation.
    The good news, as I’ve said: “We’ll be ready for a new New Deal.”

  18. A statement like “The economy has been gutted” is, as the British say, a load of codswallop. We’ve been spending more than we’ve been taking in, both as households and as a society. There is an end to that, which is what we’re seeing now. We have been behaving as investors and homeowners as if there were no risk, and our financial system helped us make that risk disappear. There’s an end to that too. It’s time to clean up our act.
    Hoping things REALLY crash so we can let our federal government save us from ourselves just makes me want to throw up. Our press mavens have been screaming “THE TORNADO IS COMING” for long enough that we ought to actually be having a tornado. Is 5.5% unemployment a tornado? Is five banks failing, vs. many hundreds during the S+L crisis a tornado? Is $300 billion in shaky home loans in an economy with $100 trillion in assets a tornado? If you spent enough time on the West Coast, after a while you got tired of waiting for the “Big One”.
    Get over it and get back to work.

  19. $445 million is the annual fee for ‘LOOTING PERMIT’ for a year. Unless this looting permit is totally stopped, even god can not help save US Healthcare. Period.

  20. Brian–
    After documeting how corporate interests bribe Congress to protect their special interests you write:
    “What’s needed is a national business coalition that collaboratively focuses on what’s good public policy for the country – what’s in our common short- and long-term interest. It could both support democratic institutions and, equally important, place sanctions on rogue organizations, like Enron, that would hurt the system through excesses or very poor performance at public expense. (By the way, I’m not advocating for government run by corporations – the formal definition of fascism. I’m simply explaining how things appear to already work, and how they might be redirected.)
    “They might do this because they realize that, if the components of the fabric that has made America strong – a focus on education and an informed populace, fairness and social justice, creativity, financial independence, productivity ”
    You are suggesting that the very corporations who have corrupted our Congress get together to focus on what they think is “good public policy for the country” and to police “rogue corporations like Enron.”
    First, most business leaders have a poor understanding of “good public policy for the country.” Poll business leaders about universal coverage, and you will find that they think it is a low priority (as do most Republicans and the majority of independents.) They are mainly intersted in the high cost of care–and worried they might have to pay more in taxes to cover everyone.
    Secondly, Enron was not such a “rogue” organization. As Arthur Levitt pointed out, virtually everything Enron did was perfectly legal (until the cover-up) thanks to
    de-regulation supported by the “business leaders” of thiscountry.
    If we’re going to talk about “the social good” the greatest problem in this country is povery. (See Dr. Steve Schroeder’s Shattuck lecture on this.) You talk about obesity as if it were caused by junk food.
    True besity is most prevalent among poor people who eat high-carb high-fat food because it is cheap and filling. Go into a ghetto grocery store — you won’t find many fresh fruits and vegetables. If you do, they will be exorbitantly expensive.
    Go into a public school in the Bronx. Look at what is served for a shcool lunch. Look for a playground or a gymnasium. If “business leaders” understood the public good, they would long ago have contributed the money needed to build playgrounds and gymns in our inner-city
    schools so that children could get exercise.
    Finally, you say that business leaders will do this becaues “They might do this because they realize that, if the components of the fabric that has made America strong – a focus on education and an informed populace, fairness and social justice, . . . are lost, then it will be more and more difficult to successfully pursue the special interest, at least from here.”
    You must be kidding.
    A focus on education? Compare the U.S. to other countries and you will find that our spending on education k-12 as a percent of GDP falls far short.
    Compared to teachers in other countires, school teachers in the U.S are underpaid and receive no respect. Americans, who pay lower taxes than the citizens of any other developed country, are not willing to fund education.
    Even in our affluent suburbs most schools provide an inadequate education. When my daughter attended a university in Canada she was surprised by how well-prepared her Canadian peers were. (And she had gone to Stuyvesant, one of the best high schools in the U.S.)
    But her peers were much better-read, were good writers and good thinkers. My son, who has taught at Cornell, was equally impressed by his Canadian students.
    And Canda is just one example.
    Our focus on an “informed populace”?? Try asking the man on the street a basic question about American history, or who the Senate Majority leader is.
    Fairness and Social Justice? Consider our prison systeme. Consider the percent of our population that we have incaracerated (compared ot other countries we are an outlier. This is our way of dealing with poverty).
    Consider the number of people wrongly accused and jailed for years. (Talk to Barry Scheck of the “Innocence Project” about this.)
    Consider the number of people raped, on a regular basis, in our prisons.
    Consider the number of wealthy white people who are found innocent when accused. Consider the number of poor black people found guilty when accused.
    Watch all episodes of “The Wire”– written by a former cop and a former reporter. (You’ll also learn a lot about public education if you watch “The Wire.”)
    Finally, despite your seeming faith in Ameica, your cynicism about any hope of change is distressing.
    After 28 years of conservative rule, we are at a point where real change is possible. It won’t happen in one year. But over the next four years I expect to see signficiant turnover in Congress. Honest, intelligent public servants may once again see an opportunity to do something in Congress. People who left the Clinton administration, disappointed as it moved to the center, may come back to Washington. African-Americans who understand that poverty is our greatest problem may become a real force in our government.
    We may begin to raise taxes–in a serious way– to fund social programs. Ezekeil Emanuel (brother of Rahm and director of bio-ethics at NIH) has made a very good proposal to insistuate a 10% VAT tax dedicated to fundign heatlh care. Because it would be dedicated to heatlh care it would not be regressive. A median-income household earning $50,000 might pay $5,000 in VAT taxes. In return, they would get $13,000 worth of health care–free. (See Zeke’s book, “HealthCAre, Guaranteed.”)
    Meanwhile, the economy is going down the tubes. (Tcyote, I think you should resign yourself to the fact that the dollar is no longer a currency the world trusts. It is only a matter of time before couries begin (gradually, one hopes) to dump dollars. And I very much doubt oil will be priced in dollars four or five years from now.)
    Are we heading into a depression? I don’t now. . What’s certain is that the eocnomy has been gutted.
    The good news is that this creates the conditions necessary for a “new” New Deal. And if enough like-minded people work hard, that is what we will get.
    And no, I don’t want a new deal crafted by this countries CEOs. On CEOs, see my book Bull!: A History of the Boom, 1982-1999. As a friend who was chief economist at Scudder in the 1990s puts it: “I’ve know a lot of CEO’s, up close, and most are dumb as dirt.”

  21. tcoyote, who gets to pay it down (will you?), can they afford it, and will they go quietly? There’s also an individual savings deficit (not for me), so who do you tap? As Brian says, and as I have also posted, this is a time when we don’t just have one expensive problem to solve because we have been putting off solutions ($$) with each successive government change.
    My state of NC operates the same way – it steals from Peter to pay Paul in an effort to shore up dwindling revenues, while pandering to the “Don’t tax me” crowd (usually wealthy) in a revenue, find-the-bean game. The state has consistantly robbed the highway trust fund to fill gaps in the general budget – we can’t find enough money to fix roads but we can find money to build roads for developers so their land banks will return on investment. The state now wants to build toll roads because a small measure to raise the gas tax failed due to a Republican anti-tax media campaign that was as short sighted as those in DC. But ask voters if they want their road to be toll and they say no, just the other guy’s.
    Just last week the legislature found out a projected $40 million surplus in the state employee health plan is actually a $65 million deficit. Filling that gap will erode ++ the mediocre pay raises proposed this year if the boys in Raleigh look to employees for the money. But my county commissioners can find $1 million cash in an incentive to Sanvik Corporation (the usual corp threat tactics) as an “enticement” to expand, yet the county had trouble finding $250K to upgrade our 911 communication system. Priorities are all screwed up.
    I would be happy if the anti-government crowd talked the talk and walked the walk, but they consistantly rob taxpayers to ensure (insure) investments/profits, even when, as is the case with the housing bust, IT’S THEIR OWN DAMN FAULT. But there’s always corporate money for golden parachutes for incompetent CEOs.

  22. Seems to me you want to take away ALL the responsibility from individuals and REQUIRE the “government” to MAKE us change. In addition, it seems your prospect for the future does not take into consideration these situations: 1) the population of people needing health care will increase as baby boomers age. 2)The next generation, quite a bit smaller, will require less total dollars in health care. 3)The baby boomers again are most responsible for the fast food industry birth and explosion. 4)The youngsters of today are more aware of exercise, healthy food (a lot brought on by peer influence)and less “recreational” drugs.
    As we see in the automobile industry, the medical/government/industry won’t change until the population changes its requirements for the “standard”.
    Although perhaps not same meaning as originally thought, the saying/song “teach your children well” must be the beginning of better and wiser use of our medical and other health care concerns. Do NOT wait for someone else to do it. Those who are “reformed baby boomers” need to teach, influence and be an educated example to our grandchildren! Be healthy, be safe and make wise decisions! Take responsibility and “own” it!

  23. The real money problem is the huge federal budget deficit. The time to “reform” healthcare is at the top of the economic cycle, which, to put it mildly, isn’t where we’re at right now. If we don’t get the budget deficit down, our dollar will no longer be hard currency. (It has even depreciated against the zloty, for Christ’s sake). Expect a lot of mumbling about health reform in 2009.

  24. Even if a new strong leader(s) could grab both politicians and industry by the ears and “turn the nation around”, there may not be enough money left after the looting.

  25. Excellent, if somewhat depressing, commentary. You could have substituted “big oil” for “healthcare” and summed up our current state of affairs regarding the country’s energy policy. It will take strong leadership from our Congress and some of our largest corporations to turn the ship around; strange how the largest employers haven’t figured out that pharma and insurance companies are costing THEM a lot of money…