Uwe Reinhardt: “The U.S. is Not a Democracy; it’s an Aristocracy”: Part 2

The Implications for HealthCare Reform– Part 2

We live in a tiered society. And the steps on our five-step economic ladder are both steep and sharp-edged.  Fall even one step, and you will bleed. At one time—in the 1950s and 1960s—white America was largely middle-class.  That is no longer the case.

As I explained in part 1 of this post, income inequality is greater in the U.S. than in any other developed country in the world. And this, says Princeton healthcare economist Uwe Reinhardt, is a major reason why we are the only wealthy nation that does not have national health insurance.  The distance between the lower-middle class, the middle class, the upper-middle class, and the truly rich (a group Reinhardt refers to as “our corporate aristocracy”) has grown so wide that we no longer recognize or identify with each other as fellow Americans.  As Reinhardt  puts it, we lack “social solidarity.”

For this reason, he fears that the  health care “reform” that so many of us are counting on will simply replicate the status quo, creating a tiered health care system where care is rationed according to ability to pay,  just as it is  today.  Everyone will have some form of health insurance, but only the wealthiest will receive high quality health care.

This would be a tragedy because the current system has led to medical apartheid,   and the results are deadly.  How long you live depends, to a very large degree, on how wealthy you are. As the distance between the haves and the have not’s has grown, so has the gap in life expectancy. In 1980, life expectancy at birth was 2.8 years more for the highest socioeconomic group than for the lowest. By 2000, that difference had widened to 4.5 years. 

This is the price we pay for accepting extremes of poverty that are not tolerated, on such a broad scale, in other wealthy nations.

The Wealthiest Drive Consumption and Investment—Pushing Prices Skyward

At the beginning of this century, New York City epitomized the income disparities that can be found throughout the U.S.  At that point, the 2000 census revealed that  the top fifth of all earners in Manhattan were making 52 times what the lowest fifth make -- $365,826 compared with $7,047 – “which is roughly comparable to the income disparity in  Namibia,” the New York Times reported.

Jared Bernstein, who was then senior economist at the Economic Policy Institute, (and is now chief economic adviser to Vice-president Joe Biden), suggested that the income gap might endure indefinitely. ''The elites, the top sliver of the income scale, can drive consumption and investment forward,” he commented, “while the bottom half slogs along.”

Bernstein was right, but it wasn’t just the “bottom half” that was failing to make progress. Despite several periods of healthy growth between 1973 and 2005, the average incomes of all but the wealthiest 10 percent—nine out of ten American families—fell by 11 percent, after adjusting for inflation.  

Meanwhile, the wealthiest 20% of the nation—a group that  owns 85 percent  of total wealth, and takes in 50% of aggregate income—was  driving investment and consumption, as the most affluent leveraged their wealth, pushing both housing and stock prices heavenward.  With so much money consolidated at the top, too many dollars were chasing too few goods, and prices soared far beyond fundamental values.

Hooked on growth, we poured money into technology—including advanced medical technologies-- without asking “how useful is it?” Thus, “top-drawer” medical care became prohibitively expensive:   $100,000  for a cancer drug that might give the patient an extra two months of poor quality life.  . .  $450 for 15-minutes with a specialist who orders $400 worth of tests that don’t lead to a diagnosis . . .  $595 for a full body scan, “just to make sure” that you’re as healthy as you feel . . .   

Then came the melt-down.

 

In A Lop-Sided Economy, 80 percent of Americans Cannot Afford Care

Today, the stratospheric cost of U.S. healthcare threatens the security of all but the most affluent. Without generous support from an employer, a middle-class household perched on the third step of a five-step economic ladder (and earning an average of $50,000, before taxes) would  not be able afford a family insurance plan that now fetches close to $14,000—plus co-pays and deductibles.  Even the statistical “upper middle-class” –--those households teetering on the fourth step of that ladder, where they gross an average of $79,000-- can barely afford to pay for their own health care. 

In this recession almost anyone might, at any time, lose his or her job.  And the typical middle-class family just doesn’t have the savings needed to cover the cost of lost wages plus health insurance. How could they?  For the past thirty-two years, their wages have not kept up with inflation. Even if you add in the benefits that employers and government provide (from health care benefits to government entitlements), from 1973 to 2005, the average middle-class worker gained only 1 percent a year.

Of course, as we have already seen, bankers also can lose their jobs. But those on the top rung of the ladder are more likely to receive severance pay, and their greater wealth makes it much easier for them to continue their health care through Cobra.  Granted, the wealthy, like the middle-class, have been hard hit by the housing meltdown—while also taking  painful losses in the stock market. But as I reported in part 1 of this post, those who could least afford it lost a greater share of their wealth. Just one example from a recent report by the Center for Economic  and Policy Research: 

Among “older” households (where the person answering the survey was 55 to  64) the wealthiest 20 percent have lost just 22 percent of their net worth, winding up with an average of $2.57 million. By contrast, those on the third step of a five-step economic ladder saw their net worth cut nearly in half (down 49%) leaving them with a home and savings worth $147,196.

 

What Needs To Be Done Now

It seems clear to many progressive reformers that we must restructure our health care system to make it both more equitable and less costly, by steering patients and doctors toward the most effective care. We should raise co-pays and lower fees for the many tests and treatments that medical research shows offer little or no benefit for certain patients.  By the same logic, we should lower co-pays, and raise reimbursements  for services that provide the greatest benefit to patients.

We don’t spend enough on preventive care, while investing too much in care that provides neither comfort nor cure. We should redistribute health care dollars, paying more for primary care, disease management and public health measures that will help many of our poorer citizens, while reining in health care inflation driven by “advanced,” over-priced,  and often unproven  medical technologies that expose patients to risk without benefit.

But even then, probably somewhere between 40 percent and 60 percent of all Americans would not be able to afford health care without some help from the government or an employer. As in other developed countries, we will have to subsidize health care—which means that more affluent taxpayers help those who cannot afford the best, evidence-based care.

Alternatively, health care reformers could settle for a health-care system that is just as tiered as the society that we live in.  This is what Princeton health care economist Uwe Reinhardt believes will happen “unless we, the more affluent, step forward to tax ourselves.”

Reinhardt is right. As virtually everyone acknowledges, health  care reform will require a huge amount of seed money to provide catch-up care for the uninsured and under insured;  fund health care IT; measure the comparative clinical value of competing products and services;  and provide financial incentives for doctors and hospitals to collaborate in providing safer, more effective and more efficient care.  Granted, over the long term some reforms will pay for themselves.  And by making our health care system more efficient, health care reform should be able to bring health care inflation down to a manageable 2 percent or 3 percent a year—roughly in line with GDP growth.  This is the key to a sustainable, high quality system..  In the future, we shouldn’t need to raise taxes to keep pace with the rising cost of health care.

But the initial overhaul of a $2.6 trillion industry will not be cheap. In other developed countries, taxpayers help subsidize healthcare to a far greater degree than we do, paying for everything from medical education to electronic medical records and hospital expansions .

In countries that are largely middle-class almost everyone helps support the  healthcare system. But in the U.S. where 20 percent of all households earn an average of only $11,500, and another 20 percent average joint income of just $29,000, 40 percent of the population is not a position to make a significant contribution to health care reform. Even households on the middle step of the ladder--averaging $50,000—are, in many cases, merely scraping by. During a recession, it is not likely that Congress would want to raise their taxes. 

This  means that in a society where income and wealth are distributed in such a lopsided fashion, the burden will fall, in an equally lop-sided fashion,  on the wealthiest 40%, with  the bulk of needed revenues probably coming from the top 15 percent (households earning over $168,000) a year.

It must seem, to many, very unfair that the wealthy should have to shoulder the burden when they already pay a disproportionate share of all taxes.  But over a period of roughly 30 years economic policy in this country has created an unstable economy where a small group of households owns a disproportionate share of the wealth.  When corporate earnings climbed, workers watched their wages stagnate while shareholders and executives divided the profits. Meanwhile, Congress slashed taxes on capital gains, boosting the net worth of the wealthiest 10 percent, who own 90 percent of all corporate shares.

We know that when too much wealth is consolidated at the top, this fuels speculation and asset inflation.  In part 1 of this post, I quoted John Williams, of Shadow Government Statistics : “The more extreme” income inequality becomes, “the worse the economy and the financial markets eventually will become. Looking at two simplified markets with one man making $100,000,000 per year or 1,000 men making $100,000 per year, there will tend to be more speculative financial markets in the first case, but more automobiles will be sold in the second case.”

Why More Affluent Americans May Be Less Enthusiastic about Reform

In other developed countries, taxpayers recognize that, when it comes to healthcare, they are all in the same boat. No one knows when they, or a family member, might fall ill. Thus it makes sense it pool tax dollars to build a health care system that will cover everyone.

 

In the U.S., by contrast, we are not all in one boat.

The most recent Consumer Expenditure Survey reveals that the wealthiest 20 percent of all American households spends an average of only 4.4  percent of their income on health care. These households, which earn more than $91,000  spend more on entertainment—6.1 percent of income. On that  top rung, the average age is 47.3. On the second rung where the average age is 46.5, and joint income falls somewhere between $58,000 and $91,000, households lay out  5.7 percent of their income for medical expenses.

By contrast, on the bottom rung, households earning less than $19,300 shell out an average of 7.2  percent of their gross income for health care, while paying out only 4.5 percent for entertainment. One rung up, households earning between $19,300 and roughly $36,000 spend 7.9 percent of income on health care—and 4.8 percent on entertainment.  (One might assume that many of these low-income households are made up of young singles—but in fact, the average age is 52 on the bottom rung, and 51 one rung up from the bottom.)  On the middle rung, where households take in somewhere between $36,000 and $58,000 the average age is 47.2 and households spend 6.7 of income on health  care.

Why do those on the bottom of the ladder spend more? They are, after all, only a few years older than the wealthier households.  The answer is that lower-income workers are less likely to work for an employer who can afford to offer health benefits. As a result some families have no insurance, and pay for any care that they receive, out-of-pocket.  Others buy their own insurance—usually  a less expensive plan, often one with a high deductible,  adding to out of pocket costs. 

Why do wealthier households pay so little for health care? Not only are they more likely to have generous employer-based insurance, the wealthier you are, the more likely it is that your employer covers all, or most, of your premium.

According to a 2007 report from the Employee Benefit Research Institute (EBRI),  a surprising 16 percent of all “higher-wage full-time workers” who participate in an employer-based plan are not required to make any contribution to their premiums. That’s right—their employer pays 100 percent of the cost. By contrast, only 8 percent of “lower-wage workers” who are covered by an employer-based plan get a free ride. (EBRI defines “higher-wage” workers as those earning over $60,000 a year in a household where two adults are working full-time.)

Of course most employers ask workers to contribute, but once again the more you make, the less you are asked to kick in. On average, EBRI reports, a higher-paid worker chips in only 27 percent of the premium for a family plan. Lower-paid workers are expected to cover 34 percent of their premiums

And that’s if the lower-paid worker can afford the 34 percent—plus a deductible and co-pays. Only 67 percent of lower-paid workers who have access to an employer-sponsored plan participate. EBRI explains why: "Data released by the Consumer Expenditure Survey indicate that lower wage workers spend an average of $16,452 on food, housing, and transportation, roughly 68 percent of their annual  discretionary expenses, such as health insurance."

No wonder enthusiasm for health care reform tends to split, not only along party lines, but by income:  Last spring a Kaiser poll showed that 40 percent of households earning less than $49,999 listed health care as one of their top concerns while only 27 percent of those living in households grossing over $75,000 rated health care as one of the two most important issues in the upcoming election. 

Moreover, as I noted in part 1 of this post, the most recent Kaiser poll shows that 62% of Republicans believe the nation “cannot afford to take on health reform now while   (77%) of Democrats think that, given the state of the economy, health reform “is more important than ever.”  This too is a sign that wealthier Americans are not as worried about healthcare. For, as Andrew Gelman points out in Red State, Blue State , Rich State, Poor State :State, “While Democrats win the rich states, rich people vote Republican,  just as they have for decades.” 

 If we had universal coverage, it is likely that wealthier families would have to pay more to help fund the system. Without question, the 15 percent who receive free insurance from their employer would have to pay more than zero-- and many would have to pay more than the 27% of their premium that they pay now.

Here is one way that they might be asked to contribute: the  most recent Congressional Budget Office report suggests that we might begin taxing the health benefits that employees receive from their employers. “The employer’s costs for providing that coverage are excluded from the employees’ taxable income,” the CBO explains .” In addition, most employees are also able to exclude the portion of the premium that they pay. For a typical worker, that favorable tax treatment provides a subsidy from the government that reduces the net cost of employment-based health insurance by about 30 percent. . . . . The value of the exclusion from taxation is generally somewhat larger for workers with higher income,” the CBO notes, “because they face higher income tax rates” and because their employers cover a larger share of their premiums.  Others have suggested taxing the value of employer-based insurance above a certain cap, sparing lower-income workers, while taxing those with the most generous insurance.

Will Conservatives Defeat Equal Care for All?

Traditionally, wealthier Americans have had more influence in Congress than their fellow citizens.  Certainly, more conservative politicians are likely to listen to them—just as they listened when it came to the fiscal stimulus package.

Yet, we may be ready for change, President Obama won this election with an average campaign contribution of just $86. Does this mean that lower-middle-income and middle-income voters may have power than in the past? Certainly liberals in Congress watched how Obama amassed a war-chest and hope to follow his example the next time they run for office.

I can only hope that this means that progressive politicians will insist that any health reform plan offers equal coverage for all. This is a point where they cannot compromise.  If this economy is going to get back on track, we are going to have to make a greater investment in human capital—which means investing in healthcare, education and public health with an eye to narrowing the gaps between classes that are undermining both are economy and our society. 

 I also hope that this recession will bring people together, including the luckiest among us. The election of President Obama by a cross-section of Americans shows a willingness to unite, a desire to bury some of the prejudices that have made us a nation of strangers.

 Finally, Reinhardt is entirely right: We cannot continue to ration care according to ability to pay.  Reformers, in particular, must be wary of a tiered system.  I fear that many are so focused on insurance for all that they may not stop to ask: What kind of insurance? What will it cover? How much will it pay providers?  Are we talking about “Medicaid for the Middle-Class?”  Beware of reformers who talk about “choice” as in: Americans will be “free to choose” the plan they can afford. What this really means that they will be forced to choose the plan that fits their pocketbook.  

 

Comments

[Maggie Mahar]

Barry--

Alcoholism is a major problem in Sweden. A 2008 Swedish govt report showed that over the previous 4 years, alcoholism among women had risen by 40%.

In Sweden, 25% of deaths among people under 50 are attributed to alcohol.http://alcalc.oxfordjournals.org/cgi/content/full/35/6/601

As far as I know alcoholism is not a particular problem in Minnesota, compared to, say, New Jersey.

Despite the drinking problem, Sweden has better outcomes--and Swedes live longer-- because it has bettter healthcare and less poverty than the U.S.

And Minnesotans have better outcomes than most Americans becuase they have better healthcare--and much less overtreatment. (They also have less poverty. As a state, Minnesota has a much more generous social safety net. See what I have written in the past about how they treat immigrants who don't speak English== finding jobs for them, support groups, etc.

[Barry Carol]

Maggie,

I would like to make a comment about healthcare in Sweden.

You and others have pointed out in the past that the health status of any given person is driven 40% by personal behavior and lifestyle choices, 30% by genetics, 20% by environmental factors including socioeconomic status and only 10% by the quality of healthcare that one has access to.

In the U.S., the state that is closest to Sweden is Minnesota which also ranks very high (often #1) within the U.S. on numerous health related metrics. I would be curious about how, say, the life expectancy of middle class Swedes in Minnesota compares to that of middle class Swedes in Sweden. By focusing on the middle class we would eliminate socioeconomic status as a factor and by limiting the comparison to Swedes, we would eliminate genetics as well. That would leave just lifestyle and personal behavior choices and the quality of healthcare. To the extent that Swedes in Sweden still fair better, we would have to look at the impact of different lifestyle choices attributable to differences in culture between the two countries. I suspect, at the end of the day, there isn’t much difference in outcomes that can be attributable to the quality of the healthcare system. Ours, however, is more expensive for a variety of reasons from higher physician compensation to defensive medicine to more aggressive end of life care to the general expectations of our citizens.

Separately, according to a recent article in Health Affairs, about 34% of the American population is obese but only 8% of Asian Americans are. This suggests that culture has a significant influence on diet and other personal behavior choices which, I think, we tend to underestimate.

[Maggie Mahar]

Don, Sheldon, Zagreus, Chris Camilleri, , Robert, Benjamin

Thanks for your comments.

Don-- I didn't mean to imply that Congress did anything illegal--just that it did something foolish

Bottom line: a bad Supreme Court ruling.

Sheldon-- thanks very much for the link to the CHSC study. They do very good work.

It would absolutely make sense for private insurers to provide financial incentives for physicians to work in groups--though I would add, the incentives should be to join groups that have a history of producing good outcomes at a lower cost with , high patient satisfaction etc.

The Dartmouth research would gives them a place to start, at the value (outcomes divided by costs) at some of the very best large groups could serve as a benchmark to use when looking at others. .

We also need to change the way we train doctors. Right now, we're training them for the old competitive system. We need to change medical education to begin training them for a new, more collaborative world.

I hope to write more about this soon.

Zagreus--

You write: "In the socialized democracies of the West, excesses are common, just in the opposite direction of the excesses in the US. Income distribution that is too flat can be a problem, as hard work and the accumulation of capital is penalized rather than rewarded. There has to be a difference between the wealthy and the poor or there is no personal incentive."

Here is my problem with that statement.

First, in Nordic counttires (among the most socialized democracies) much more equal distribution of income does not seem to have undermined hard work--or innovation.

Although they are two small countries, Finland and Sweden are among the giants with respect to advanced communications technology.
Also, when it comes to figuring out how to deliver healthcare—i.e. systems management-- they are in the forefront.

When I was at a int’l healthcare conference for executives and physicians in Berlin last year, virtually everyone (Germans, British, French) agreed that Sweden has done the best job of figuring it out. . .

Sweden has managed to keep the cost of health care as a %age of GDP flat for a number of years--even though its population is aging--and overall health and outcomes are better than in the U.S.

Also, from personal experience, I know that there does not have to be a "difference between the wealthy and the poor to create personal incentive."

I have been quite well paid, and not-so-well paid over the course of my career, working in non-profit and for-profit worlds. This doesn't seem to have any effect on how hard I work.

I've always been very lucky in that I have generally been doing work that I love. Once I'm immersed, that's it. How much they are paying me really doesn't figure in.

Of course, it would be nice if someone decided to pay me more. But that wouldn't make me work harder--it just wouldn't be humanly possible.

And I can say, with certainty, that this is true of quite a few people that I know--academics, doctors, artists, teachers, not-for-profit people, very, very good and honest money managers and short-sellers, a social worker, a patient advocate, a magazine editor, a bilingual translator who takes Latino children in foster care to meet with their birth parent , an engineer/architect, several film-makers –and at least one lawyer I know (he mainly does pro-bono work). That’s a pretty complete list of the people I know who are immersed in their work— to them, it really isn’t “work” ;it’s what they do.

I realize that how much you are paid is a major incentive for people in many jobs. And that's okay--though I would like to see us design work in a way that more people could take great pleasure in their work, and so not be as concerned about their pay as long as they are making enough to pay their bills (I hate to have to worry about money.

Chris C—

I agree absolutely—the professional societies should be involved in the discussion about most effective treatments. And some have been good about setting guidelines.

Moreover, some vocal individuals have spoken out about waste and unnecessary treatment. (See an earlier post on HealthBeat titled: “A Very Open Letter From an Oncologist”

But as he discovered, professional associations in his field did not want to discuss the subject. Some doctors feel that they don’t want to be involved in setting guidelines which might affect colleagues’ revenues. Physicians have had a long history of seeing themselves as autonomous players who do things their own way. This, of course, is not always best for patients. No doctor is perfect—and 25% of all doctors graduated in the bottom 25% of their medical school class.

This doesn’t mean that those who graduated in the bottom quarter are bad doctors or negligent Many may be among the kindest physicians you have ever met: considerate of their patients, truly concerned about their welfare, etc. But in many cases they probably are not as research-oriented as some of their peers who did better in med school. And they may not be as assiduous about keeping up with current medical research. . . So they could use help from peers who are deeply interested in medical research—if that help came in the form of guidelines, with the information and supporting research well-organized in an easy-to-access and read website, that would be enormously helpful.

Of course, the people who put the info together in every specialty would have to be free of bias—they couldn’t have any financial interest in the services or products they were writing about. It might be simplest if the doctors were drawn from the pool of doctors who work on salary and so have no reason to favor services that are most lucrative when doctors are paid fee-for-service.

These days, more and more younger doctors are happy to work on salary—and the majority are committed to evidence-based medicine. The days of the doctor as “Lone Ranger” (“I know what I know and this is the way I do it” ) are fading. . So in the future, I hope it will be easier to get professional societies involved in looking at comparative effectiveness research and compiling guidelines . .

Robert—Thanks for the link. And yes, you’re right about SS.

Benjamin—I’m sorry, I don’t have a quick answer to your question—though I’ll be writing more about the healthcare portions of the fiscal stimulus package myself. Does anyone else have a reference?

[Sheldon Weisgrau]

Maggie,
Your comment several posts back about medicine being a team sport comes at a timely moment. The Center for Studying Health System Change just released a study on the difficulties of care coordination: http://www.hschange.org/CONTENT/1043/.

In short, the study highlights the tremendous fragmentation in the delivery of care - e.g., a typical primary care physician who treats elderly Medicare patients must coordinate care with 229 other physicians working in 117 different practices.

If care coordination and disease management are important (and most, I believe, would agree that they are), it seems clear that greater delivery system integration is essential. With few exceptions, it doesn't seem to be happening on its own (or perhaps more correctly, is moving forward at a glacial pace).

So, where are the payers? Which of them are stepping up and using financial incentives to drive delivery system change? Making changes in Medicare will have the greatest impact but are politically difficult (impossible?). What about the private payers?

[Don Levit]

Maggie:
I agree with much of what you wrote about the design of the Social Security and Medicare trust funds.
Probably as they were originally designed, the funds were to act as reserves, similar to a private insurer.
It would be foolish for a private insurer to leverage the premiums and interest by extending loans for non insurance purposes.

However, the U.S. Supreme Court in Helvering v. Davis, 301 U.S. 619 (1937)suggests that Congress does indeed have the authority to use the payroll taxes for other general expenses. "The proceeds of both taxes are to be paid into the Treasury like internal revenue taxes generally, and are not ear marked in any way. Section 807(a), 42 U.S.C.A. 1007(a)."
"The first section of this title creates an account in the U.S. Treasury to be known as the Old-Age Reserve Account. No present appropriation, however, is made to that account. All that the statute does is to authorize appropriations annually. Not a dollar goes into the account by force of the challenged act alone."
"Whether wisdom or unwisdom resides in the scheme of benefits set forth in Title 2, it is not for us to say. The answer to such inquiries must come from Congress, not the courts. Our concern here is with power, not with wisdom."
Don Levit

[Maggie Mahar]

Zagreus, Chris Camilleri, Don, Dr. Rick, Benjamin,

I'll be back to respond ot your commens tomorrow

[Maggie Mahar]

Barry & Don

On Social Security:

Barry, you write:
Everyone agrees, however, that the issue (of Social Security) pale in comparison to Medicare’s huge unfunded long term liabilities which are clearly unsustainable without substantive reforms."

That, I think is the bottom line, At a time when we are entering a deep recession, and need to worry about Medicare,helping people who become unemployed, Iraq, the dollar, the deficit-- worrying about Social Secuity being underfunded at some point down the road is just borrowing trouble.

There is every reason to believe that this problem can be addressed-- by raising the amount of income that we tax for Social Secruity above $102,000.

But I would not do that now. Too many pressing prioriies.

And at some point in the future, I might be inclined to leave income from $102,000 to, say $140,000 untaxed--and then extend the tax to income between $140,000 and $155,000 (These numbers are hypothetical, but you get the idea: tax everone on teh first $102,000 and then, rather than add to the tax burdern for thoe who earn $102,000 to $115,000, jump over those earnigns, and extend the tax on those who are considerably more affluent-- earning $140,000 to $155,000.

Don-- The important thing to understand is that Social Secruit would have the money if politicians hadn't decided to dip into its trust fund for other purposes.

From an article on Alternet:
percent, split between employees and employers. As a result, the Social Security system has accumulated a vast surplus--now around $2.5 trillion and growing. This is the money pot the establishment wants to grab, claiming the government can no longer afford to keep the promise it made to workers twenty-five years ago.

Actually, the government has already spent their money. Every year the Treasury has borrowed the surplus revenue collected by Social Security and spent the money on other purposes--whatever presidents and Congress decide, including more tax cuts for monied interests. The Social Security surplus thus makes the federal deficits seem smaller than they are--around $200 billion a year smaller. Each time the government dipped into the Social Security trust fund this way, it issued a legal obligation to pay back the money with interest whenever Social Security needed it to pay benefits.

That moment of reckoning is approaching. Uncle Sam owes these trillions to Social Security retirees and has to pay it back or look like just another deadbeat. That risk is the only "crisis" facing Social Security. It is the real reason powerful interests are so anxious to cut benefits. Social Security is not broke--not even close. It can sustain its obligations for roughly forty years, according to the Congressional Budget Office, even if nothing is changed. Even reports by the system's conservative trustees say it has no problem until 2041 (that report is signed by former Treasury Secretary Henry Paulson, the guy who bailed out the bankers. . .

Follow the bouncing ball: Washington first cuts taxes on the well-to-do, then offsets the revenue loss by raising taxes on the working class and tells folks it is saving their money for future retirement. But Washington spends the money on other stuff, so when workers need it for their retirement, they are told, Sorry, we can't afford it.. .

Federal budget analysts try to brush aside these facts by claiming the government is merely "borrowing from itself" when it dips into Social Security. But that is a substantive falsehood. Government doesn't own this money. It essentially acts as the fiduciary, holding this wealth in trust for the "beneficial owners," the people who paid the taxes. This is the bait and switch the establishment intends to execute . . ."

He notes that, as Barry says, Treasury may have to sell bonds to pay Social Secruity back.
But it is not that the Social Security system in some way "failed" to finance itself. The FICA
taxes we pay are adequate to do the job. It's just that politicans dipped into the fund for other purposes-- sometimes unworthy purposes. . .

(Note the Alternet piece was written by William Greider, from The Nation, who is definitely a left/liberal. But he
intelligent, and doesn't dodge facts.

[Lisa Lindell]

Don, there's plenty of healthcare reformers on Facebook.

[Barry Carol]

Don,

I originally found that link on a Goggle search. It is easier to just go to www.ssa.gov, then to their search box and enter “Trustees Report.” You can access either the entire report or just certain segments as you wish.

As I indicated in my last comment, the trust fund “assets” are not assets in the same sense that Treasury bonds in our personal portfolios or corporate or state and local pension portfolios are assets. Those bonds can be sold to other investors without increasing the amount of Treasury debt outstanding that is held by the public. For the trust funds to make good on their promises to pay benefits once income from current year taxes is not sufficient to pay current year benefits, the Treasury will have to sell new bonds, notes or bills to public investors in order to redeem the special purpose bonds in the trust funds which are basically accounting IOU’s. As you say, during all the years that FICA taxes well exceeded what was needed to pay current year benefits, those surpluses were “borrowed” to fund other federal priorities and the trust funds were credited with special purpose government bonds plus an appropriate interest rate. Assuming the Treasury is able to sell enough new bonds to redeem the special purpose bonds as needed as well as finance its other priorities, assuming those costs exceed current year tax revenues, once the trust fund balance reaches zero, the Social Security Administration, by law, will not be able to pay benefits beyond what it can finance with then current year tax revenue. The trustees estimate the trust fund will reach zero in 2041 or 2042 and then current year taxes will only be sufficient to finance 78% of promised benefits under current law.

People differ on how significant a problem it will be to make the ultimate adjustments to Social Security that will probably be necessary. Everyone agrees, however, that the issue pales in comparison to Medicare’s huge unfunded long term liabilities which are clearly unsustainable without substantive reforms.

[Don Levit]

Barry:
Could you provide the link again?
I tried several times, and was unable to access the report from the SSA.
You seem to agree with me that the trust fund balances are merely credits, accounting entries, rather than hard dollars.
So, when the SSA writes about balances running out in several years, they are referring to these accounting entries becoming zero.
In other words, instead of an actual fund running out of money, we have merely a mathematical balance that becomes zero.

I will provide a few excerpts from the GAO Fiscal Year 2008 Financial Report of the U.S. Government.
This can be found at:
http://www.gao.gov/financial/fy2008financialreport.html.
Page 33 - "If the collection from taxes and other sources exceed the payments to the beneficiaries, the excess revenue is invested in Treasury securities or 'loaned' to the Treasury's General Fund. Therefore, Trust Fund balances do not represent cash."
Page 96 - "In the federal budget, the term 'trust fund' means only that the law requires that a particular fund be accounted separately, used only for a specified purpose, and designated as a trust fund. The activity of earmarked funds (Social Security and Medicare)differs from fiduciary activities in that earmarked fund assets are government-owned.
The Government does not set aside assets to pay future benefits or other expenses associated with earmarked funds (Social Security and Medicare). The cash receipts collected from the public for an earmarked fund are deposited in the U.S. Treasury, which uses the cash for general Government purposes.
Treasury securities are an asset to the federal agencies and a liability to the U.S. Treasury, and therefore, they do not represent an asset or liability." (huh)?
Don Levit

[Zagreus Ammon]

Maggie,

This post gives me a lot to think about in terms of our social structure. In the socialized democracies of the West, excesses are common, just in the opposite direction of the excesses in the US. Income distribution that is too flat can be a problem, as hard work and the accumulation of capital is penalized rather than rewarded. There has to be a difference between the wealthy and the poor or there is no personal incentive.

Granted, the concentration of wealth in such few hands is unhealthy and it would be wise for the successful to acknowledge the role of providence in giving them better choices to make. However, the goal is to find the point of maximum impact, which I suspect lies somewhere between the Scandinavian countries on one hand and the US and some emerging markets on the other.

Not all physicians nor all parts of the medical industry fall in the category of disproportionate profit without the social impact. I like the idea of subsidizing medical education, but perhaps it should be subject to pay-back period of five years in primary care.

The problem with paying only for EBM-proven medical is that the evidence from large population studies always lags the information from basic science research. You risk stifling innovation that way. New technologies sometimes work and sometimes they don't, but the wealthy are always willing to pay more for the allure of getting something cutting-edge.

So on one hand, we have primary care and new technologies that have been around long enough to prove their salt in population-based studies and on the other hand we have new, but as yet unproven technologies that only the wealthy can afford.

Maybe that is the gradient we need, so that the middle and lower socioeconomic groups can get what they need at reasonable cost, but the wealthy get something more? Something they believe is better, but may not be cost-effective enough to justify subsidizing for the entire population.

[Chris Camilleri]

I think the goal of holding health care cost increases to the general level of wage and GDP increase, and inflation (about 2-3%), instead of the current 7-9% average annual increase in health care costs, is the ideal to aim for. The resistance of medical specialists, hospitals, device makers and pharmaceutical companies to this proposal provides an opportunity. I propose that we ask medical specialty and hospital associations, if they are willing to deliver care and be reimbursed based upon the best clinical and research evidence that their specialties and the medical profession have published.
I would like to hear their response. They may indicate that their is no agreed upon evidence base at this time. We could provide evidence that is generally agreed upon by most specialists in a field (eg. over 90-95%), and ask their opinion about using that as the reimbursable evidence base, and that to vary from that treatment could be reimbursed if an acceptable rational was provided (pt with intolerable side effects of recommended tx, ...). If a treatment was recommended with less certain evidence or is possibly harmful, it would be reimbursed at a much lower rate. Lets get the specialists to participate in this discussion, asking them how we should use the evidence to reimburse treatments that are not effective, and possibly harmful according to evidence, vs. reimbursing treatments that are safe and effective according to evidence.

Christopher Camilleri, MD

[robertdfeinman]

The most comprehensive blog discussion of SS that I know of is run by Bruce Webb.

If you start at his site and follow the links on the right you will be led to dozens of postings on the topic. His specialty is dissecting the projections as to when funding will "run out".

http://bruceweb.blogspot.com/

For those who like to read the last page first, SS is not in any danger of running out of money or failing to pay promised funds.

[Benjamin Keveson]

Would anybody be so kind as to direct me to a link w/ a comprehensive review of the stimulus's impact on our health care?

I did purvey that $75 million was added to the Health Corps budget through 2011 which lifted my spirits. . .

[Dr.Rick Lippin]

Thank you for an excellent post and subsequent dialogue. I put the link onto FACEBOOK but I'm not so sure this is a useful venue for those interested in health care reform ?

Dr. Rick Lippin
Southampton,Pa

Rick Lippin

[Barry Carol]

Maggie and Don,

I’ll offer a few comments on the long term outlook for Social Security.

First, I’ll preface my remarks by stating that I’m a strong supporter of Social Security and I opposed President Bush’s effort to privatize a portion of SS, which was and remains a distinct minority view in the industry I work in. Indeed, I’m counting on Social Security to provide a meaningful percentage of my own eventual retirement income.

The most recent Trustees Report summary can be found at www.ssa.gov/OACT/TRSUM/trssummary.html. According to the trustees, benefits will start to exceed current year income from FICA taxes in 2017 with the long term (75 year) shortfall pegged at 1.7% of payroll.

The current and past surpluses that have been credited to the OASI and DI trust funds are in the form of special purpose bonds with an appropriate interest rate credited as well. The key point, however, is that this is an accounting mechanism. The Treasury does not have to use tax money or sell regular issue bonds to public investors in order to make deposits into the trust funds. When annual benefit payments begin to exceed current year FICA tax revenues, however, the Treasury will have to use current year general tax revenue, sell bonds, notes or bills to public investors (a significant portion of whom are foreign investors) or reduce other spending in order to finance the redemption of the bonds and credited interest held by the trust funds. Assuming regular bonds, notes and bills are sold to public investors to accomplish this, the federal debt held by public investors will increase, perhaps significantly, as might the annual federal deficit depending on what is happening elsewhere in federal finance.

By law, the Social Security Administration is only authorized to pay benefits to the extent that there are balances in the trust funds. With the trust funds currently projected to run dry by 2041, the SSA would only be able to pay approximately 78% of promised benefits from then current year FICA taxes. It would be bad public policy, in my view, to wait until then to address the issue. People need and deserve time to adjust and plan if there are going to be changes that could include reduced benefits. We should deal with this issue sooner rather than later to ensure that adjustments will be manageable. It’s probable that some combination of tax increases and benefit cuts will have to be implemented. I don’t think it is correct to suggest that the current benefit structure is easily sustainable for the next several decades before we need to consider changes.

[Don Levit]

Maggie:
Can you provide a link to the CBO report regarding Social Security?
As you probably know, the trust fund actually has no hard dollars in it.
Rather, once the payroll taxes get to the Treasury, the actual dollars are spent on general governmental expenses, other than Social Security and Medicare. Instead of payroll taxes going into the trust fund, an accounting entry is made such that non-marketable Treasury bonds are placed in the fund. In other words, debt is being placed into the trust fund, rather than hard dollars, such as the payroll taxes. Social Security is not even, technically, pay-as-you-go, for the money never makes it into the trust fund.
I learned in Sunday school that only God can create something out of nothing.
Now, I have "learned" that the federal government is an exception: it can create assets out of debt.
Don Levit

[Maggie Mahar]

Keith & Barry-

Thanks for your comments

Keith--

I agree that it would be a very good idea to subsidize med school and pays doctors more upfront, and less later in their careers. In total, we would pay less, but doctors would be spared much economic anxiety and would have the money they need when trying to buy a home, start a family, etc.

On group practice: in Germany, while many "officie physicians" work sol, many physicians work for hospitals, on salary. Others work for large ambulatory clnics, on salary (This is a new development and the number of clnics is growing rapidly, as is the number of doctors working in groups).
There is mandatory quality reporting and most patients get their care through a public-sector insurance plan. Doctors are expected to follow "guidelines" for care.

In the U.S., while everyone has different anecdotal experiences, very good research done at Dartmouth and other research published in peer-reviewed journals demonstrates that, IN GENERAL, doctors who collaborate in large group practices provide higher quality, lower cost care with higher patient and doctor satisfaction.

Medicine has become "a team sport." There is just too much to know for any one doctor to know everything he needs to know--and these days as patients live longer, so many suffer from four or five chronic conditions.

Doctors need to be consulting with each other all of the time. This happens more easily and naturally when they work together, in the same place, sharing the same
electronic records.
Also, all of the evidence demonstates that, in general, fee-for-service leads to higher costs without better outcomes.
The VA is a good example. As Dr. Atul Gawande wrote in the New Yorker recently, we know that the VA produces better outcomes than fee-for-service Medicare (most of it delivered by solo practioners or those in small practices) and costs about 30 percent less.
Finally, here in NYC--and in other places where many doctors work solo or in small practices-- we have a real problem with doctors who don't keep up with ongoing reserach and are still doing things the way they did them 20 years ago. Sometimes these doctors are quite defensive; patients are afraid of going for a second opinion (or letting the doctor know they went for a second opinion) because he would be angry,
This is not a good sign.
No one really knows whether these doctors are adhering to "best practice" . .
What we do know is that when doctors take "recertification tests" (or whatever they are called ) the American Board of INternal Medicine
has found that docctors who practice in very large groups score higher on these tests than other doctors..
As Christine Cassel (president of ABIM and a member of our Working Group on Medicare Reform) explains it: "If you're working in a large group, someone is likely to say 'Hey did you see that paper . . ?'
Also, if you are in a large group, everyone is lookng at your notes on a patients' chart. If a doctor does something strange, a colleage will say "John I was wondering why you prescribed . . .for Mr. Johnson . ."

Barry-

Again I agree with most of what you said. There is just one thing that isn't true: Social Security is NOT IN ANY TROUBLE.

Again, this is a pure and simple lie that has been spread by Cato, the Heritage Foundation and other ultra-conservative groups becuase they have
always been against Social Security (back to the days of FDR) and would like to destroy it.

I'm sorry to sound dogmatic, here are the facts from the CBO-- a Sept. 2008 report: "Last Friday, the Congressional Budget Office (CBO) released a report stating that Social Security is in good financial shape and will continue to be so for decades to come . ..
The trust fund will cushion the large baby boom retirement, as it was designed to do, but most benefits will continue to be funded by direct transfers from workers to retirees, as they are now.
the Economic Policy Institute (EPI) think tank noted the report’s finding that "future Social Security beneficiaries will receive larger benefits in retirement...than current beneficiaries do, even after adjustments have been made for inflation."

According to the CBO projections, Social Security is in decent shape, because - without any changes at all - the projected long-term Social Security shortfall equals a mere 1% of taxable payroll. EPI further states that the biggest problem facing Social Security is not the boomer retirement, but growing income inequality, which increases the share of untaxed earnings above the taxable earnings cap (currently set at $102,000)."

At most, we may wantto raise the amount of earnigns that are taxed for social security to, say $112,000 or $115,000.
But we don't need to do that now--and I think it would be a bad idea in the middle of a recession when we will, as you say, need to raise other taxes at the high end.

Ultra-Conservatives would like to persuade Congress to means-tests SS. Then wealthy people who didn't qualify would turn against it.
Alternatively, conservatives would love to privatize it, and let the government--or individuals-- invest SS savings in the stock market.
Big Pay Day for Wall Street. Much Risk for People Who Cannot Afford to Lose Their Social Security.
.
Medicare is in trouble--but as you know that's a separate fund.
And Medicare suffers from the same problems as the larger health care system.
All of the reforms that
talk about here --redistributing dollars, reining in inflation from 6% or 7% to 2% will solve the problem. Reform will require seed money, but otherwise we're only talking about cutting spending by 4% to 5% (brining inflation down from 7% to 2%. This is completely doable, though there will be much resistance ..

[Keith Sarpolis]

Maggie,

In your reply, you mention doctors working in larger groups on salary as one of the solutions to decreasing cost. My question is do European countries all work on such a model? I belienve that countries like Germany do not require such a model in that there are many small or solo practitioners. I would worry about the cookie cutter approach of big organizations that do not allow practitioners to function in a manner in the best interests of their patients. My experience with big group practice situations is that they may actually encourage overutililization of certain high profit treatments since the current fee for service model drives delivery of more product. You simply shift the incentives from the pactitioner/doctor to the administrator/MBA/CEO.

Maybe a better way to handle the expense of doctors is for their education to be more heavily subsidized and for longer residencies to be paid more at physician market rates in exchange for reduced long term costs. These are the most common excuses used by specialists to explain their large paychecks. Would it not make more sense to provide up front subsidies in exchange for much lower rates of payment for said servics? For instance, if the goverment pays a training orthopedic surgeon 250,000 during his training years and leaves him debt free from medical school, I figure it would cost about 1 million dollars in subsidies, but if orthopedic surgeons then have their payments reduced by 300-500 thousand per year, you could quickly rcoup your investment. This is essentially what European countries do to hold down the costs of specialty care which reduces the wide chasm between specialist and primary care physician income and why they have a more favorable ratio of primay care to specialty care physicians.

[Barry Carol]

Maggie,

If the health insurance tax preference were eliminated for everyone, I think there are numerous options available to eliminate or at least mitigate its effect for lower and middle income people. Such options include: (1) increase the Earned Income Tax Credit (EITC) for the working poor, (2) raise the standard deduction, or (3) reduce the lower income tax brackets to name just three. If we were starting with a clean sheet of paper, we would not single out health insurance for a tax preference, and I think we would be better off if we could eliminate it entirely.

At the end of the day, however, I agree with you that taxes overall will probably have to increase, especially for the top 20% of the income distribution, not just to finance healthcare reform but to deal with entitlement reform (Social Security and Medicare) as well. Much higher taxes on carbon and probably a VAT will likely be part of that mix. As for the income tax, I can envision the day when it only applies to people who make more than $100K or so, and the rest of the population pays payroll and consumption taxes while we use the EITC to offset all or at least most of those taxes for people with less than a poverty level income.

[Maggie Mahar]

Barry--

Thaks very much for your last commet.

As is often the case, I agree with most of what you say.

And I particularly appreciate the fact that you keep bringing up the idea that those thoe who want healthcare reform should be willing to come forward and say what they would be willing to give up in order to have universal coverage.

Your idea (which you have expresed a number of times in the past) that you would be willing to pay taxes on the value of your employer-based coverage is a very good one.

I don't think that lower paid workers (say thsoe earning under $50,000) could afford to do this, But I do think that it is something that better-paid workers could do, perhaps on a slidng scale (with those earnign $60,000 paying taxes on only a
part of what their employers pay for premiums, and those earnng, say $200,000, paying taxes on the full amoutn that their employers pay for their healthcare.

Fnally, I totally agree that, when it comes to healthcare reform there "is no silver bullet but lots of silver pebblles ."

Eactly. There is no magic solution, but we can cut costs and lift quality in many, many ways.

[Barry Carol]

Maggie,

Fair enough. I think what frustrates me most in the healthcare reform debate is, as you have also said in the past, none of the stakeholder groups seem willing to give anything up. They all want to solve the problem at someone else’s expense. At least I’ve suggested that I would be willing to give up something substantial, namely, the tax preference currently afforded to employer provided health insurance.

I’ve observed numerous labor negotiations in recent years in both the public and private sectors. Often, the most contentious issue relates to the cost of health insurance. Management usually wants employees to contribute more toward the premium to help control costs while employees resist strongly even if it means accepting smaller wage increases or sometimes none at all. In New York State, the Service Employees International Union (SEIU) is currently running a TV ad campaign at a cost of $1 million per week opposing Governor Patterson’s effort to reduce spending on healthcare to help close a large state budget deficit. The union offers no constructive suggestions as an alternative to the governor’s proposals.

Doctors and hospitals are probably in the best position to provide leadership in achieving a more sensible and comprehensive healthcare system and one that does a much better job of delivering value for money than what we have now. Yet, the stiffest resistance often comes from them.

There is plenty of room for improvement in how insurers do business. There are much better ways to resolve medical disputes than the current tort system. There is meaningful money to be saved in our dealings with drug and device manufacturers. There is no silver bullet but lots of silver pebbles. I think we need to challenge every stakeholder group to present ideas to reduce costs and improve value that will cost them money or power in the short term. Episodes of care that include a hospitalization account for a disproportionate share of our healthcare costs while doctors, through their decisions, drive the bulk of medical spending. This is where most of the costs are, and this is where the leadership needs to come from, in my judgment, if we are ever going to bend the medical cost growth curve down to a level that we can afford and sustain.

Separately, as an aside, my late father worked in the public sector as did my brother-in-law and sister-in-law before they retired. A niece and a nephew work in the public sector now, and my son worked for the federal government for almost six years before deciding to go back to school and change careers. They did/do good and meaningful work, and I’m proud of all of them.

[Maggie Mahar]

Barry & Robert--

I agree with part of what each of you say:

Barry--

I'm afraid that you are spreading misinformation on many ponts.

First, NYC policeman have a completely different wage & benefit deal from any other public secctor employees in NYC.

I covered the NYC budget for Barron's for many years.
Policemen have entirely different pension, retirmeent. and heatlh benefits.

As I recall , policment also got 3 days a year of vacation each year to o "shop for uniforms.""

The early retirement and benefit package that policemen receive is extraordinary.

Let me add that I think this makes sense for policemen who risk their lives on the streets. But a great many spend most or all of their careers in desk jobs.

Did you know that NYC's police dept. has a huge PR dept . made up of policemen who, like all other police, get very early and lucrative early retirement?

Finally,I am afraid that you are simply wrong when you say that wage & benfit disparities are not about rich and poor, public sector vs. private sector.

When it comes to health benefits, there is a huge difference between the bnefits that better paid wokers (earnign over $70,000) receive in the private sector and what workes earming ss than $70,000 and those in the public sector receive. .

Robert * Barry--

Robert, I think you are unfair in suggesting that Barry views lower-income people as "shiftless" . .etc.)

He has never said that on this blog--and believe me, there have been people who made comments that really were offensive. I don't tolerate that sort of prejudice. And they don't comment here anymore.

As Barry says, I have referred to him as "fair-minded."
I alai have assumed he is a conservative (based on the fact that he referred to going to a Heritage Foundation event, and many of the views he has expresed)

But he has always been respectful of my clearly liberal point of view, and argues without making disparaging troll-like remarks ("Get real!" " Earth to Maggie" :, etc.

And, I think it's good for the blog to have people who argue another point of view in a very rational way--without personal attacks-- while offering arguments with some evidence.

Barry -- I have to say that, at ame times, you use certain ready-made and very familiar conservative phrases, like "gold-plasted benefits" that do suggest that speeches you hear from conservatives are
affecting your thinking --without letting you think. These phrases are bumper stickers that are intended to block thought.

Such phrases undrmine your arguments and suggest that ideology is prejudciing your thinking. Why not just call then "very good bnefits" -- rather than "gold-plated"?

"Gold-plsted" suggests that some sort of corruption is involved. . .

Let's just try to talk to each other using evidence, without letting the arguments become personal -

Best, Maggie

[Maggie Mahar]

David--

Thanks for your ocmment.

First, I agree that oil is going to $140 a barrel. And there is a good chance that, somehwere down the road, it will be priced in Euros, not dollars. That will make it that much more expensive for Americans.

But we're not going to fund universal health care with a tax on fossil fuels.
The problem is that, in many parts of the this country, we have little or no public transportation, and people need to use gasoline to get to work (often long distances).

Most people cannot afford to go out and buy an electric care.

In many regions people have to use fossil fuels to heat their homes during long winters. Going forward we'll use more solar, but the technology still has to be developed and made affordable.

The society as a whole is going to have to fund more reserach into renewable energy--and eventually, build more public transportatoin. Long term, it will save money--and be much betterfor the environment. Short-term, this R&D will cost money.

Energy is a Huge, difficult problem. HealthCare is a Huge difficult problem. I wouldn't even think of trying to solve them in one fell swoop.

Also, with an eye to keeping comments to a length so that people will actually read them, we probably shouldn't stray into trying to solve world problems other than heatlhcare . . (Of course, I realize I should be the last person to talk about keeping things to a manageable length . . . but the comments really shouldn't be as long as the posts . . )

On the cost of healthcare: yes, in theory, we should be able to cover everyone with good comprehensive care for less than $2.3 trillion.

But only if we could go back and erase the last 40 years or so of U.S. medical history--which we can't.

As Dr. Atul Gawande says (see my recent post here http://www.healthbeatblog.com/2009/01/dr-atual-gawande-on-realitybased-reform-why-dont-we-open-the-va-to-the-uninsured-.html)
we have to work with the history we have.

As Dr. Chris Johnson said on another recent thread, we let "the serpent" (of money) into the garden of U.S. Medicine in the 1960s . . now driving him out is not so simple. (I'm paraphrasing Chris.)

In order to bring the U.S. healthcare bill down to something equivalent to that of a European country (say 60 pecent of what we now spend, per capita)

we would have to:
-- cap all physician's salaries at, say $200,000--$250,000.
This will not happen. Most U.S. doctors are accustomed to making consdierably more than doctors in other coutries (after adjusting for diffeerences in cost of living). We can shave waht we pay for some servicese at the top, but we cannot suddenly slash salaries.

--close many hospitals so that an excess capacity of hospital beds would no longer drive over-use of those hospitals. This would mean throwing hundreds of thousands of people out of work, and in cities like Boston and New York, it would mean closing some very good hospitals (there are just too many very good hospitals in each city , which is why compeition is so fierce. And that competition raises the cost of hospital care.) ;

-- junking about 3/4 of the MRI units and CT scanners that we now have in use (maybe send them to developing countries?), again so that excess capacity won't drive over-use . .

--telling Medicare patients in regions like NYC, Boston, N.J., Florida, S. Californa etc that because they receive more aggressive treatment than people in Iowa, Nebraska and Vermont, from now on they are going to have to pay co-pays and deductibles that are roughly 50% higher than what they pay now.

Moreover, workers in those high-spending regions are going to have to start paying Medicare taxes (out of their pay-checks) that are about 20% higher. There is no reason for workers in Iowa to pay for overtreatment in Manhattan or Miami.

--changing our philosophy about end-of-life care, and telling families that "doing everything possible" is no longer an option.

--rationing care by age-- no transplants for people over a certain age

-- cut what we pay for drugs and devices by 30% and simply refuse to cover drugs and devices that cost over a certain amount. No more $100,000 cancer drugs. Cancer patients will simply have to accept the fact that they probably are going to die.

--Tell doctors that as of Jan. 1 2010, they can no longer work solo or in small groups. They are all going to have to join very large groups, or clnics, where they all work on salary and the group enjoys economies of scale.

Clearly, none of this is going to happen. We are not suddenly going to become Denmark or Germany.

We are stuck with the infrastrucure of a very expensive health care system--and the expectations--on the part of physicians and patients--that have grown over the last 40 years.

What we can do, as I keep saying, is squeeze out the hazardous waste, compare treatments and charge very high co-pays for those that are less effective and ultiamtely, refuse to pay for less effective tretments. We need to redistirbute those dollars and invest them in public health, preventive care . .

We can also, over time, build a more collaborative less fragmented and more efficient system where many,many more doctors work in large groups and are paid for the quality, not the quantity of their work.

In this way, we can STOP HEALTH CARE INFLATION THAT IS AVERAGING 6% to 7% a year and bring it down to, say 2%.

This means that 10 years from now we won't be paying $4.6 trillion for care. We'll be paying $2.3 trillion, plus 2% inflation--in an economy that grows by an average of 2% a year, that means we won't be paying anymore than we are today. And we'll be covering everyone.

Paying as much as we paying today, while covering everyone, and giving everyone all of the care that medical evidence says is effective would be a great accomplishment And it would be sustainable.

Healthcare would remain about 16% of GDP--a larger percent than in many other countires, but manageable, espeically if we are actually gettin value for hte money-- everyone included and a much healhtier population.

On class warfare: I'm not trying to incite class warfare, but I've had enough traninig in economics to realize that it is bad for whole economy (including those on the top) when too much wealth is consolidated at the top. It leads to speculation--too much many chasing too few things-- and Bubbles.

IF we narrow he income gaps, we can have a much more stable economoy (as we did in the 50s and 60s). And by taxing some of the wealth at the top, we can all live in a society where we have clean public spaces (think Germany and Switzerland,
public gardens, public schools, bridges and roads that are attractive and in good repair; cleaner air;
higher quality healthcare;
better public education, and as a result, a better-trained workforce; much less poverty and crime . . .

This might sound Utopian, but when I travel I'm always amazed how at how much we could borrow from other societies, putting it together with the best of our own successes. . .
Public spaces are so much Cleaner in countires like
Germany. (I wouldn't mind eating my lunch while sitting on a platform waiting for a train. I can't say that about Penn Station.)

In Canada, most students who go to public schools are much better prepared when they enter college. (My daughter was astounded by how well prepared her Canadian classmates were at McGill in Montreal. And she had gone to one of the best, most demanding public high schools in the U.S.--Stuyvesant, in NYC.

But the Canadian kids knew how to write-- and they had read much more. history, literature . . .

I could go on. But I won't.

[robertdfeinman]

Sorry Barry, I don't buy it. Your insistence on claiming that state workers get "gold plated" benefits gives you away.

Be as offended as you like, but your own words show your true attitude.

If you don't like being called a libertarian then fine, but the combination of class resentment, tax resentment and a feeling that many people don't deserve help fits this viewpoint better than other labels.

It is the lack of empathy and the lack of understanding that we are all in this together which makes your attitude so socially destructive.

Setting one group of workers against another is not the way to achieve social justice and a functional democracy.