This is Atul Gawande, writing about The Cheesecake Factory in The New Yorker:
You may know the chain: a hundred and sixty restaurants with a catalogue-like menu that, when I did a count, listed three hundred and eight dinner items (including the forty-nine on the “Skinnylicious” menu), plus a hundred and twenty-four choices of beverage.
How many different dinners — say with two food items and one beverage — can you draw from 308 food choices and 124 beverages? I used to know how to do this. It must be in the millions. So how do you make that work? Timing is everything:
Computer monitors positioned head-high every few feet flashed the orders for a given station. Luz showed me the touch-screen tabs for the recipe for each order and a photo showing the proper presentation. The recipe has the ingredients on the left part of the screen and the steps on the right. A timer counts down to a target time for completion. The background turns from green to yellow as the order nears the target time and to red when it has exceeded it.
The restaurant doesn’t just get plates on the table, however. It aims for perfection:
Say “employee benefits” and pensions and health care will jump to most people’s minds. Maybe life and disability insurance will pop up as well. But employers in Silicon Valley are going way beyond that. They’re providing housekeeping, cooking, babysitting and a host of other services as perks for their employees. According to The New York Times, here is what some California companies are doing:
At Evernote, a software company, 250 employees — every full-time worker, from receptionist to top executive — have their homes cleaned twice a month, free.
Stanford School of Medicine is piloting a project to provide doctors with housecleaning and in-home dinner delivery.
Genentech offers take-home dinners and helps employees find last-minute babysitters when a child is too sick to go to school.
To hear the employer representatives tell it, companies are providing their workers with services that make it easier to balance home and family life in an age when there are few stay-at-home spouses and work is stressful.
But a more likely explanation is economics.
Suppose I throw a rock through a store owner’s window. You admonish me for this act of vandalism. But I reply that I have actually done a good deed.
The store owner will now have to employ someone to haul the broken glass away and someone else, perhaps, to clean up afterward. Then, the order of a new glass pane will create work and wages for the glassmaker. Plus, someone will have to install it. In short, my act of vandalism created jobs and income for others.
The French economist, Frédéric Bastiat called this type of reasoning the “fallacy of the broken window.” All the resources employed to remove the broken glass and install a new pane, he said, could have been employed to produce something else. Now they will not be. So society is not better off from my act of vandalism. It is worse off — by one pane of glass.
But there is a new type of Keynesian (to be distinguished from Keynes himself) that rejects the economist’s answer. Wasteful spending can actually be good, they argue. If so, they will love what happens in health care.
By some estimates one of every three dollars spent on health care is unnecessary and therefore wasteful. ObamaCare’s “wellness exams” for Medicare enrollees — so touted during the last election — is an example. Millions of taxpayer dollars will be spent on this service, yet there is no known medical benefit. Similarly, ObamaCare is encouraging all manner of preventive care — by requiring no deductibles or copayments — which is not cost effective.
Did you notice that in the standoff over the fiscal cliff, all the discussion was about the Bush tax cuts? Which ones would be made permanent? And for whom? There was no discussion about the ObamaCare tax increases. I think that was a huge tactical mistake on the part of the Republicans.
Over and over again, President Obama claimed he was trying to protect the middle class from higher taxes. It was a claim that went unchallenged ― by the Republicans and by the mainstream media.
Yet five of the tax increases Americans are facing this month are new taxes created under the Affordable Care Act (ObamaCare). Three of the five will hit people who are solidly middle class.
Next year, things will get worse. The new tax on health insurance is about as regressive as a tax can be. It will total $100 billion over the next 10 years and very little of that amount will be paid by anyone who can be called “rich.”
- The health insurance tax will fall on private sector Medicaid plans, which have about 70% of all Medicaid enrollees.
- The tax will fall on Medicare Advantage plans whose enrollees have below average incomes and are disproportionately minority.
- The tax will hit every small business and every individual who buys insurance in the commercial market place.
- The tax will not fall on self-insured plans whose enrollees include the highest paid workers and the highest paid CEOs.
In the aftermath of the recent election, virtually all commentators were quick to conclude that ObamaCare has been saved. The health reform law can now go forward and Republicans are powerless to stop it.
The trouble is: ObamaCare is a deeply flawed piece of legislation. Its defects are so huge that Democrats are going to want to perform major surgery on it in the near future, even if the Republicans stand by and twiddle their thumbs.
That raises this question: What changes need to be made in the legislation to turn it into a health reform that solves existing problems without creating even more serious new problems? Here are six essential short term fixes:
Subsidize all insurance the same way. The way the government subsidizes health insurance under the current system is arbitrary and unfair. Employees with employer-provided insurance get that benefit tax free — a subsidy that is worth almost half the cost of the insurance for middle-income families. However, there is almost no subsidy available for people who must purchase insurance on their own. They must pay taxes on their income and then buy the insurance with what’s left over.
Under ObamaCare the subsidies become even more arbitrary. Although the new law creates generous tax credits for low and moderate income families who must buy their own insurance in newly created health insurance exchanges, the subsidy in an exchange can be as much as $12,000 higher than the same family will get if the same insurance is obtained through an employer!
The morning after Tuesday’s vote, there is one thing every commentator agreed on. The election of Barack Obama guaranteed that his signature piece of legislation — health reform — can now go forward. Republicans are powerless to stop it.
Yet there is something all these commentators are overlooking. There are six major flaws in ObamaCare. They are so serious that the Democrats are going to have to perform major surgery on the legislation in the next few years, even if all the Republicans do is stand by and twiddle their thumbs.
Here is a brief overview.
ObamaCare is not paid for. At least it’s not paid for in any politically realistic way. As is by now well known, the legislation will lower Medicare spending over the next 10 years by $716 billion in order to fund health insurance for young people. This reduction will primarily consist of lower payments to physicians, hospitals and other providers — reductions that are so severe that they will seriously impair access to care for senior citizens.
In a recent Health Alert I evaluated Paul Krugman’s claim that ObamaCare is going to save “tens of thousands of lives” and the repeal of ObamaCare will lead to the death of “tens of thousands” of uninsured people.
Krugman’s bottom line: Mitt Romney wants to let people die. The economics profession on this same subject: Krugman’s claims are hogwash.
But there is something that does cause people to die: socialism. More precisely, the suppression of free markets (the kinds of interventions Krugman routinely apologizes for) lowers life expectancy and does so substantially.
Economists associated with the Fraser Institute and the Cato Institute have found a way to measure “economic freedom” and they have investigated what difference it makes in 141 countries around the world. This work has been in progress for several decades now and the evidence is stark. Economies that rely on private property, free markets and free trade, and avoid high taxes, regulation and inflation, grow more rapidly than those with less economic freedom. Higher growth leads to higher incomes. Among the nations in the top fifth of the economic freedom index in 2011, average income was almost 7 times as great as for those countries in the bottom 20 percent (per capita gross domestic product of $31,501versus $4,545).
What difference does this make for health? Virtually, every study of the subject finds that wealthier is healthier. People with higher incomes live longer. The Fraser/Cato economists arrive at the same conclusion. Comparing the bottom fifth to the top fifth, more economic freedom adds about 20 years to life expectancy and lowers infant mortality to just over one-tenth of its level in the least free countries.
Previously, I wrote about some wondrous developments that are taking place in medical science. Implantable or attachable devices already exist — or soon will exist — that can monitor the conditions of diabetics, asthmatics, heart patients and patients with numerous other chronic conditions. These devices will allow patients and doctors to modify therapeutic regimes and tailor treatments to individual needs and responses. Genetic testing is reaching the point where patients can be directed to take certain drugs or avoid other drugs, based solely on the patient’s own genes.
Almost all HIV treatment these days involves therapy cocktails tailored for each individual patient. The FDA has approved a breast cancer drug only for women with a particular genetic makeup. Patients are being advised to steer clear of an ADHD drug and certain blood thinners if they have particular genetic variations.
We are entering the age of personalized medicine, where the therapy that’s best for you will be based on your physiology and genetic makeup — and may not be right for any other patient.
Yet standing in the way of this boundless potential is an Obama administration whose entire approach to health reform revolves around the idea that patients are not unique and that bureaucrats can develop standardized treatments that will apply to almost everybody with a given condition. When former White House health adviser Ezekiel Emanuel told CNN recently that “personalized medicine is a myth,” he was fully reflecting the worldview of the authors of health reform.
Personalized medicine is the future. It is where the science is going. It is where the technology is going. It is where doctors and patients will want to go. Yet unfortunately for many of us, this is not where the Obama administration wants to go.
First, the good news. Biosensors that can be worn on clothing or jewelry, or held against the skin by a Band-Aid-like patch, or inserted beneath the skin are capable of monitoring a whole host of chronic diseases. Among the technologies that have been, or soon will be, developed are devices that can continuously monitor the blood glucose levels in diabetics; the rate of breathing, blood oxygen saturation, etc., of asthmatics; and the heart rate and other parameters of patients with heart disease. There are even heart attack and stroke attack detectors. In some cases, personalized devices can activate therapies. A wearable, automatic insulin pump can be coupled with a blood glucose measuring device to create a virtual artificial pancreas. (See this fascinating summary.)
The science of genetics is also about to explode. There are as many as 1,300 genetic tests currently available that relate to about 2,500 medical conditions. Gene tests can predict your probability of getting particular types of cancer, whether you will respond to routine chemotherapy or whether there is a special therapy that only works on people with your particular physiology. The days when experts argued over whether men should get a prostate cancer test could be long gone. A simple test can tell if you have a high probability of contracting the disease, or a low one.
After entering the clinic a thought occurred to me: why do we need doctors? Then a second thought: why do we need nurses?
Ah, but I’m getting ahead of myself.
About a decade before the Obama administration started touting electronic medical records and evidence-based protocols there was MinuteClinic. The entity came into existence primarily to cater to patients paying out of pocket.
There was no need for a law requiring price transparency. In every market where the dominant buyers are patients spending their own money, prices are always transparent. MinuteClinic posts its prices on a computer screen and on readily available pamphlets. Clearly, the organization is competing on price. Entities that compete for patients based on price usually compete on quality as well. One study found that MinuteClinic nurses following computerized protocols follow best practice medicine more consistently than conventional primary care physicians. They also do a pretty good job of knowing what kind of medical problems they are competent to handle and which problems need referral to a physician.
Wherever you find price competition you usually also find that providers are respectful of your time. As the name “MinuteClinic” implies, this is an organization that knows you value your time as well as your pocketbook. I couldn’t help but wonder if the entire health care system might be this user friendly, if only the third-party payers weren’t around.
For the first 15 minutes of my 20 minute visit, the nurse barely looked at me. She was sitting in front of a computer screen typing in my answers to her questions, as she went through the required decision tree. I didn’t mind. Mine was a minor problem and I did not want to pay for more sophisticated service.