In the current push to fix the American health care system, Washington legislators are attempting to tackle these items:
1. Increase the number of covered Americans to about 98% of the population--in the process bringing about 47 million uninsured Americans and illegial aliens under coverage.
2. Control ever growing costs in a way that won't create further damage to the rapidly growing US public debt. Here is a projection of Medicare expenditures from the Office of Management and Budget (OMB).
It's a huge challenge. What seems to get lost in the debate are a number of constructive things which could help the situation.
For example, over-utilization of health services.
The current tax exclusion for employer-sponsored health care:
Benefits the rich and those who a have negotiated lucrative labor contracts,
Arbitrarily ties insurance to employment, and
Results in over-utilization because the exclusion rewards employees who opt for high cost plans with few incentives to discourage unnecessary or wasteful health care use.
Economists say this could be replaced with a refundable tax credit or standard deduction for the purchase of health insurance.
Things can be wrecked if costs get out of control--as they currently are with the Medicare & Medicaid programs.
The Congressional Budget Office (CBO) says Kennedy-Dodd bill will cost up to $1.5 trillion over 10 years. The cost over-run is similar for other proposed bills.
No government entitlement has saved money. Medicare and Medicaid both cost far more than originally anticipated. Once money starts flowing from Washington, special interests groups lobby hard to keep their fair share.
Here is an interesting example of a current national TV campaign to convince everyone to move ahead soon on the current health care bill in Congress. Please notice who paid for this ad--then recall my July 23 blog, 10 Questions About Health Care Overhaul, to see who stands to benefit significantly from new federal legislation (Q&A #7).
Instead of treating those 47 uninsured Americans as some great monolith, we could concentrate on those who need help the most. Only about 10-12 million can't afford to buy health insurance and don't qualify for public programs or work for businesses that don't offer health insurance.
We can eliminate waste and fraud in Medicare and Medicaid. Experts estimate that Medicare alone may lose $60 billion a year to fraud.
According the US Department of Health & Human Services, Most health care providers are doing the right thing and providing care with integrity. But sadly, due to the illegal actions of a small but active group of heath care fraud perpetrators, billions of dollars are stolen from taxpayers each year. Medicare fraud schemes have grown bolder and more elaborate, resulting in billions of dollars in false billings and fraud schemes which are robbing Medicare and Medicaid blind.
Canada is a wonderful country. Every year I head to Florida for a couple weeks of golf--and I always enjoy talking to our friends from the north...on the course or in the whirlpool at the close of the day.
Canadians like to visit the US for another reason: When they need health care and cannot afford to wait in line in their country: A consequence of their system of national health care and the undesired consequence of rationing.
Over 1/2 of the personal income taxes Canadians pay are required to cover the cost of health care. Given this expense, you might expect that Canadians would receive world-class health care. But no Canada.
Waiting for access to health care in Canada reached a new all-time high of 18.3 weeks (2007) from general practitioner referral to treatment by a specialist. Access is particularly poor for ophthalmology, obstetrics and gynecology, gastroenterology, plastic surgery and orthopedics.
The wait for radical cancer care is 46 days (nearly 7 weeks). The majority of these treatments exceeded the Canadian Association of Radiation Oncology benchmark for curative cancer treatment of 4 weeks. This is troublesome given the clear link between a delay in radiation therapy and a chance of cure.
Canadians are likely to wait six days or longer to see a doctor when ill.
The wait time for patients requiring a hospital bed is 19 hours. That's 3 times more than their 6 hour guideline. The longer wait is often due to the inability to find an available hospital inpatient bed.
Canadians are likely to experience waiting times of more than six months for elective surgery.
I hope we won't disappoint our Canadian friends who today opt for excellent, available US health care.
However, based on the current direction of health care bills in Congress these days, we are likely to inundate our system--creating long lines for US citizens...and turning away Canadian residents who seek help at Mayo and other hospitals throughout the US.
Now, I invite you to enjoy the beauty of Canada as you listen to their national anthem.
Janet Adamy, health care reporter for the Wall Street Journal, recently published an excellent article in a question & answer format about health care issues. Before we get into a summary of her Q&A piece, here is a brief video from her.
1. What is the problem with health care, anyway? Is it as bad as they say?
The problem boils down to two big areas: high costs and lack of coverage.
Even though the U.S. spends $2 trillion a year for health care, some 46 million people don't have health coverage. To be sure, that oft-cited number from the Census Bureau is somewhat misleading because it includes:
Illegal immigrants,
Healthy young adults who don't think they need insurance and
Poor people who are eligible for Medicaid.
2. Can Democrats and Republicans agree on anything?
Actually, yes.
There is broad support for changing the way hospitals and doctors are paid so that they are compensated for the quality of care they provide, not the quantity of procedures they do.
Democrats and Republicans also back the idea of creating online marketplaces where consumers and small businesses can comparison shop for plans.
Both parties want to bar insurance companies from denying coverage to people who are already sick.
3. Where are the main points of disagreement?
The sharpest divide: Whether to create a government-run insurance plan (otherwise known as a "public plan") that would go up against private plans in online marketplaces. President Barack Obama says a public plan will keep private insurers honest. Republicans say it would give the government too much control over health care.
The other main battle, which doesn't break down as easily along party lines, is how to pay for a plan expected to cost at least $1 trillion over a decade.
Congress also remains divided over whether to make employers (except really small ones) provide insurance. House Democrats propose that if companies don't offer insurance, they should contribute as much as 8% of their payroll spending toward helping workers buy insurance on their own. Republicans argue that companies will make up for it by cutting jobs and lowering wages.
4. What would a public plan look like?
The country already has a huge public plan -- Medicare, which covers the elderly and some other groups. It generally pays doctors and hospitals less than private insurers.
Liberal Democrats would like to replicate it in the new marketplaces. They want the government directly to set premiums and services under the plan, perhaps with basic and premium options.
Conservatives figure the government would quickly drive private insurers out of business by undercutting them on price.
Two other scenarios have emerged as compromises. One is to hold off on creating the plan and instead impose heavy regulations on insurance companies aimed at making coverage accessible and affordable. If that doesn't work, then the government insurance plan would kick in after several years.
The other idea is to create a batch of regional nonprofit insurance cooperatives to compete with private insurers.
5. Why is the total price of the overhaul so expensive, especially considering that it is designed to bring down costs?
The cost mostly comes from giving people subsidies to buy insurance, and from expanding Medicaid, the federal-state insurance program for the poor, to cover more low-income Americans.
6. What are the most likely ways to pay for the overhaul?
The White House has proposed about $950 billion in savings over 10 years to pay for the plan that include things like lower reimbursements to hospitals that treat Medicare patients.
The wealthy are a natural target. One proposal is limiting itemized tax deductions for families who earn more than $250,000 annually.
7. Which industries are most likely to lose, and which to gain, from any overhaul?
Pharmaceutical companies would sell more prescription drugs because more people would have coverage for drugs and access to doctors who prescribe them. Hospitals and doctors wouldn't have to provide as much free care as they do now.
Health insurers could be hurt if some kind of public option drives down their profit margins. Other losers would be retailers, restaurants and other businesses with low-income workers who provide little or no health insurance, since they would be forced to start paying for it.
8. I already have insurance through my job - what happens to me?
Not too much at first. A handful of tax-free perks for the insured could get axed. For instance, lawmakers want to end the practice of allowing people to put money into so-called flexible spending accounts.
Longer term, a lot could change. For instance, your employer could drop coverage, preferring to pay the penalty for doing so and deflecting employees to Uncle Sam's plan.
9. Politicians have tried for decades to push universal health insurance. Why did they always fail before?
These efforts stretch back to the 1930s, when President Franklin Roosevelt proposed creating a compulsory health-insurance system for all Americans, run by the states. Doctors, worried it would hurt their pay, helped kill the measure, buoyed by opposition from business and labor groups.
Another attempts by President Bill Clinton died because powerful interest groups feared their members would either earn less or have to pay more under the new system.
10. What happens if the effort once again fails?
Lawmakers would likely scale back their plans and try to at least pass a measure that partially expands insurance coverage or helps stall the increase in health costs.
Congress truly has its hands full as they deliberate about health insurance reform in the United States. Legislators & citizens are on both sides of this issue.
It is indeed complex as this flow chart depicts. (Click to enlarge) It reveals all the interconnections necessary to support the provisions of the current bill that were debated in the House recently.
This is not to say that the current, private system of coverage is simple!!
President Obama offered the following remarks about the importance of health care reform and the challenges it presents (February 24, 2009): I suffer no illusions that this will be an easy process. It will be hard. But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year.
We recently found that the House bill would fail to contain costs--one of the primary goals--and could actually worsen the problem of rapidly escalating medical spending.
We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount, says Douglas Elmendorf, director of the Congressional Budget Office. On the contrary, the legislation significantly expands the federal responsibility for health-care costs.
Upon hearing these remarks, leading lawmakers are expressing concern. Representative Mike Ross (Arkansas-D) said, We have to take steps to hold health-care costs to the rate of inflation, or we will never balance our federal budget again and health-insurance costs will continue to become less and less affordable for the American people.
From Utah we heard Representative Jim Matheson (D) opine, If we don't reform the system to get costs under control, then nothing else matters. We're just putting more people into a broken system.
When asked whether the bill moving through Congress would bring the health-care cost curve under control, the CBO director replied, The cost curve is being raised.
The House bill is estimated to cost $1 trillion to $1.5 trillion over 10 years. To pay for it, the White House has proposed raising taxes by $544 billion, almost all on the rich. That still leaves a massive shortfall. Where will it come from??
Our government proposes that it will be able to save that amount. But how will that happen? Most likely it would be through rationing of health care, ie, less medical care and perhaps lower quality. CBO director Elmendorf sees no savings from the health reform plans offered. He figures that current legislation would raise costs.
If savings doesn't work, then we either need to tax the middle class, or hope to borrow massive additional amounts--further bloating the US debt.
So what can we learn from Massachusetts? Three years ago they enacted a law that required every resident to have medical insurance. Commonwealth Care was created to subsidize those who couldn't afford to buy their own. This received bi-partisan support.
It didn't take long for the program to run into trouble. Costs soared from $158 million in the first year to $630 million in 2007, then doubled in 2009 to $1.3 billion.
Demand overwhelmed the system, just as demand has led to medical care rationing in Great Britain and Canada.
Now the state is dropping coverage for 30,000 people because not enough money is around to pay for everyone.
Recently a Massachusetts panel proposed that the state scrap traditional payments to doctors and hospitals for each office visit or procedure, and instead adopt a system where they receive a monthly or annual fee per patient. The proposal is an effort to control the state's health-care costs, which are among the highest in the nation.
The Massachusetts health care law has attained near-universal health insurance coverage. It has served as a model for national plans now being debated in Congress. But the Massachusetts plan has done little to control costs, which now are 33% higher than the U.S average and projected to grow faster than the rest of the country.
You now see some of the enormous complexity surrounding this issue; and the danger of getting this federal program wrong. It is indeed a monumental challenge.
In a recent article (The Other D Word) I wrote about the rapidly growing US debt. We are borrowing at a fanatic pace these days.
Similar to your own household budget, if you do not live within your means, you go into debt. For Americans, that debt may be on credit card, a second mortgage on your home or some other means of deferring the repayment to the future.
For the US government, we issue Treasury bonds and other securities to cover the shortfall. That shortfall is called the US deficit. This represents governmental expenditures that are not covered by taxes and other forms of income.
This year the deficit has be growing rapidly.
According to a recent article in MarketWatch, The latest New York Times/CBS News poll found that Americans are alarmed by the hundreds of billions of dollars spent by the government on rescues of banks and automobile companies, and a majority of respondents say that the government should focus instead on cutting the federal deficit.
Similarly, a Wall Street Journal/NBC News poll found that 58% of Americans want Obama and Congress to concentrate on keeping the budget deficit down. And 7 in 10 respondents said they had concerns about federal interventions in the economy, including Obama's decision to take an ownership stake in General Motors Corp. and the possibility of the government getting more involved in health care.
This year we've heard a lot about the "D" word--that the US may have to endure Depression II.
Well, there is another D word we should heed. It's a very big number--and the ultimate consequences could haunt our children and grand-children decades from now.
The United States debt now stands over $11 trillion. That's a number far too big for anyone to comprehend.
If every US citizen were sent a bill to fully pay off the existing debt, you would owe about $37,000! That's a number one can understand.
There is a web site where you can view the US national debt as it constantly grows. This is presented as a debt clock.
Often it is helpful to put economic data into context. Debt is often expressed as a percentage of Gross Domestic Product (GDP). Do you recall that GDP is the aggregate of all goods & services produced?
The US debt peaked in the 1940s as we borrowed to finance WWII. Fortunately, with growth & productivity following that great war, we were able to bring the debt as a percentage of GDP down to a manageable level.
Today, however, we are witnessing a very aggressive pattern of spending in Washington--far beyond what is needed to battle the current recession. That poses a grave danger to the US. Economists are now beginning to question whether we are heading into a New Normal--a future where we may experience structural changes in our society through:
Lower annual growth, ie, lower GDP
Higher unemployment
Uncomfortable level of inflation
The danger goes well beyond our economic well-being. It is also a matter of national security. About 30% of the US debt is now held in foreign countries. That debt is held in the form of US Treasury securities.
Who knows which country might wage economic war against the US? It would be easy to do. Such action could severely hamper GDP growth, cause unemployment to spike and increase our inflationary pressures.
Right now we spend about 9% of the federal budget to pay interest on this debt.
The Congressional Budget Office (CBO) reports that the federal government is facing a serious long-term financing challenge. This is because expenditures related to entitlement programs such as Social Security, Medicare, and Medicaid are growing considerably faster than the economy overall, as the population grows older.
The CBO has indicated that under current law, sometime between 2030 and 2040, mandatory spending (primarily Social Security, Medicare, Medicaid, and interest on the national debt) will exceed tax revenue.
In other words, all discretionary spending (e.g., defense, homeland security, law enforcement, education, etc.) will require borrowing and related deficit spending. Language such as unsustainable and trainwreck has been used to describe such a future.
Here we see a Government Accountability Office (GAO) projection of the risks of unbridled entitlement spending
2030 is not that far off!! Do you recall what you were doing in the early 1980s? Well, that's longer ago than the upcoming 2030 date!!
Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. We have all felt inflation, for example, in first class postal rates.
Deflation is a decrease in the general price level of goods and services. Deflation occurs when the annual inflation rate falls below zero percent, resulting in an increase in the real value of money.
You may think deflation is a good thing: It definitely isn't. The Federal Reserve has been concerned about deflation this year. If an economy goes into a deflationary spiral, a depression can arise. This is what happened in the 1930s.
Until the 1930s, it was commonly believed by economists that deflation would cure itself.
When this idea failed during the Great Depression, government tried to boost demand through increases in government spending.
With modern monetarist economics, we fight deflation by expanding consumer demand through a lowering of interest rates.
It should be clear to readers that the Fed had done this in recent months--and now the Federal funds rate is near 0%. Other actions have been taken by the Fed--and now the US economy is awash in money.
So, the concern now shifts to inflation!
Too much inflation is bad for the economy.
Uncertainty about future inflation may discourage investment and saving.
High inflation may lead to shortages of goods if consumers begin hoarding out of concern that prices will increase in the future.
Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. Thus, Fed Chairman Bernanke needs to take steps to reduce the monetary supply.
If he doesn't, many problems arise:
Savers who are paid a fixed rate of interest will lose purchasing power from their interest earnings, while their borrowers benefit.
Those with cash assets will experience a decline in the purchasing power of their holdings.
Payments to workers and pensioners often lag behind inflation, especially for those with fixed payments.
There will be inefficiencies in the market, and make it difficult for companies to budget or plan long-term.
Inflation can act as a drag on productivity as companies are forced to shift resources away from products and services in order to focus on profit and losses from currency inflation.
Uncertainty about the future purchasing power of money discourages investment and saving.
Inflation can impose hidden tax increases, as inflated earnings push taxpayers into higher income tax rates.
Let's take a look at an entertaining, and politically adoring, video from 1933 which provide another viewpoint on how interactions in the economy can have an impact on inflation.
I took my first time management course in the early 1970s--using material from a cantankerous presenter, William Oncken, Jr. He built his talk around monkeys--and reminiscent of a later movie, They Shoot Monkeys, Don't They? (paraphrased from horses!), Oncken spoke of monkeys as "initiatives" or projects that can take on a life of their own. Sometimes you need to kill the project, ie, "shoot the monkey."
If you, as a manager, are not careful, the work will jump right off the back of a subordinate and onto your back.
I believe my friend and former bridge partner, Steve, will remember our Oncken training.
I quickly learned that ideas & projects can take on a life of their own. These monkeys have "tails"--and those tails can eventually be time consuming, expensive, distracting and counter-productive.
I dedicate this article to my Rocket Scientist friend, Jason. I greatly appreciate his efforts over the past few weeks to coordinate a series of golf outings when he visits in mid-July.
Jason is having difficulty getting people to respond to his emails, and to commit to forming into foursomes. We'll have fun--but I know it can be frustrating.
By the way, Jason is doing his part to develop the new Ares rocket. Here is his piece of the action.
Whether you are a boss, or if you choose to take on a personal project, this monkey is going to present tails. It behooves you to make sure the project is worthwhile, or you re going to waste valuable time and resources.
Oncken presented five rules for the care and feeding of monkeys. If you violate any of these rules, you will forfeit your discretionary time.
Rule 1. Monkeys should be fed or shot. Otherwise, they will starve to death, and you will waste valuable time on postmortems or attempted resurrections.
Rule 2. The monkey population should be kept below the maximum number you have time to feed. Subordinates will find time to work as many monkeys as you find time to feed, but no more. It shouldn't take more than 5 to 15 minutes to feed a properly maintained monkey.
Rule 3. Monkeys should be fed by appointment only. You should not have to hunt down starving monkeys and feed them on a catch-as-catch-can basis.
Rule 4. Monkeys should be fed face-to-face or by telephone, but never by mail. (Remember--with mail, the next move will be yours.) Documentation may add to the feeding process, but it cannot take the place of feeding.
Rule 5. Every monkey should have an assigned next feeding time and degree of initiative. These may be revised at any time by mutual consent but never allowed to become vague or indefinite. Otherwise, the monkey will either starve to death or wind up on your back.
“Get control over the timing and content of what you do” is appropriate advice for managing your time. Your first order of business is to enlarge your discretionary time. You do this by eliminating subordinate-imposed time, or by eliminating personal projects that aren't worthwhile.
The result of all this is that you will increase your leverage, which will in turn enable you to multiply, without theoretical limit, the value of each hour that you spend.
Some people are amazed at how much I am able to accomplish. It's actually quite simple. You now know the secret. Feed or kill your monkeys!!
We were in a horrible recession in the early 1980s. Inflation was through the roof. Our ability to fight the serious recession was hampered--and we had a term for it, stagflation. In some ways it makes the current recession seem a bit tamer.
You can see from the graph below that the US was experiencing nearly 15% inflation. Mortgage rates were so high that it put the American dream of owning a home on hold for several years. And a higher percentage of people were out of a job than today (current unemployment rate is 9.5%).
The United States and the Union of Soviet Socialist Republics (USSR) were engaged in a Cold War. There was the constant threat of the annihilation of civilization through nuclear warfare. A Doomsday Clock would reveal how close to "midnight" the planet was to extinction.
The US endured the financial pain of Black Monday--a day when the stock market crashed: The Dow lost 22.6% of its value in one day.
President Ronald Reagan survived an assassination attempt. In the operating room, Reagan quipped, Please tell me you're all Republicans. Doctor Giordano, a liberal Democrat, replied, We're all Republicans today.
It was with this backdrop that our president could humor us--and at least for a moment get us to forget the worries of the day, as I hope you will enjoy by watching the following video.
Larry is an avid golf & racquetball player. He enjoys developing web sites. He is president of Fox Valley Huskers, a Nebraska football fan club. He enjoys topical studies in diverse areas as ancient history, energy, German language, macro-economics, psychology, religion and science.
