PNHP

The Deficit Hawks' Attack on Our Entitlements

The Deficit Hawks' Attack on Our Entitlements

By Robert Kuttner
The Washington Post
Monday, February 23, 2009

With the enactment of a large economic stimulus package, fiscal conservatives are using the temporary deficit increase to attack a perennial target — Social Security and Medicare. The private-equity investor Peter G. Peterson, who launched a billion-dollar foundation last year to warn that America faces $56.4 trillion in “unfunded liabilities,” is a case in point. Supposedly, these costs will depress economic growth and crowd out other needed outlays, such as investments in the young. The remedy: big cuts in programs for the elderly.

The Peterson Foundation is joined by leading “blue dog” (anti-deficit) Democrats such as House Budget Committee Chairman John Spratt of South Carolina and his counterpart in the Senate, Kent Conrad of North Dakota. The deficit hawks are promoting a “grand bargain” in which a bipartisan commission enacts spending caps on social insurance as the offset for current deficits.

President Obama’s economic advisers devised today’s White House fiscal responsibility summit to signal that the president takes the deficit seriously and to lay the groundwork for such a bipartisan deal. Originally, Peterson was slated to be a featured speaker.

But Capitol Hill sources say that Democratic congressional leaders were skeptical of the strategy. The summit has been reduced to a lower-profile, half-day event; Peterson will attend but no longer has top billing, and Obama reportedly is lukewarm about the idea of a commission.

Obama should indeed be wary of such a plan, and official briefings on his first budget suggest that he will drastically reduce the deficit by 2013, but without going after social insurance.

What’s wrong with the story of entitlements wrecking the economy? Plenty.

For starters, the $56 trillion “unfunded liability” figure relies on creative accounting. Only about $6.36 trillion is the actual public debt, according to the U.S. Treasury. Most of the number Peterson cites is a combination of the 75-year worst-case projections for Social Security, Medicare and Medicaid.

These three programs face very different challenges and remedies. Social Security’s accounts are actually near long-term balance. The Congressional Budget Office puts the 75-year shortfall at only about one-third of 1 percent of projected gross domestic product.

Social Security is financed by taxes on wages — and since the mid-1970s, wage growth has stagnated. If median wages rose with productivity growth, as they did during the first three decades after World War II, Social Security would enjoy a big surplus. Even without a raise for working America, Social Security needs only minor adjustments.

Medicare really does face big deficits. But that’s because Medicare is part of a hugely inefficient, fragmented health insurance system. It makes no sense to “reform” Medicare in isolation.

If we just cap Medicare, needy seniors would get bare-bones care while more affluent people could supplement their insurance out of pocket. The decent cure for Medicare’s cost inflation lies in comprehensive universal health insurance so that the entire system is more efficient and less prone to inflation. You don’t hear many budget hawks supporting that brand of reform.

The deficit hawks’ story also contends that we are sacrificing our children’s future by too much (deficit) spending on the elderly. In fact, today’s young adults are already falling out of the middle class because of the high costs of the investments we don’t adequately finance socially — child care, college tuition and health insurance. But fiscal conservatives seldom call for increased investment in the young. Today’s young, of course, will be tomorrow’s retirees, and they will need social insurance, too.

The overall bottom line? The economy we bequeath to our children has everything to do with getting growth back on track and almost nothing to do with imagined future deficits.

History provides a parallel. At the end of World War II, the public debt was about 120 percent of GDP — about three times today’s ratio. Yet the heavily indebted wartime economy stimulated a quarter-century postwar boom — because all that debt went to recapitalize American industry, advance science and technology, retrain our unemployed and put them to work.

We need to increase public spending and debt now to restore economic growth and then gradually reduce the debt ratio once recovery comes. Social Security has little to do with this challenge. Nor does Medicare, if we reform our overall health system.

Since the early 1980s, Peter G. Peterson has been warning that future entitlement deficits would crash the economy. Yet when the crash came, the cause was not deficits but wild speculation on Wall Street.

Now, with 401(k) plans swooning and health benefits being cut, Social Security and Medicare are the two bedrock programs that keep tens of millions of elderly Americans from destitution. Why perversely cut these programs to pay for the sins of Wall Street? The attack on social insurance is really an ideological assault, dressed up as fiscal high-mindedness.

Robert Kuttner, co-editor of the American Prospect and a senior fellow at the New York public policy group Demos, is most recently the author of “Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency.”

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/22/AR2009022202003.html

The Deficit Hawks’ Attack on Our Entitlements

By Robert Kuttner
The Washington Post
Monday, February 23, 2009

With the enactment of a large economic stimulus package, fiscal conservatives are using the temporary deficit increase to attack a perennial target — Social Security and Medicare. The private-equity investor Peter G. Peterson, who launched a billion-dollar foundation last year to warn that America faces $56.4 trillion in “unfunded liabilities,” is a case in point. Supposedly, these costs will depress economic growth and crowd out other needed outlays, such as investments in the young. The remedy: big cuts in programs for the elderly.

The Peterson Foundation is joined by leading “blue dog” (anti-deficit) Democrats such as House Budget Committee Chairman John Spratt of South Carolina and his counterpart in the Senate, Kent Conrad of North Dakota. The deficit hawks are promoting a “grand bargain” in which a bipartisan commission enacts spending caps on social insurance as the offset for current deficits.

President Obama’s economic advisers devised today’s White House fiscal responsibility summit to signal that the president takes the deficit seriously and to lay the groundwork for such a bipartisan deal. Originally, Peterson was slated to be a featured speaker.

But Capitol Hill sources say that Democratic congressional leaders were skeptical of the strategy. The summit has been reduced to a lower-profile, half-day event; Peterson will attend but no longer has top billing, and Obama reportedly is lukewarm about the idea of a commission.

Obama should indeed be wary of such a plan, and official briefings on his first budget suggest that he will drastically reduce the deficit by 2013, but without going after social insurance.

What’s wrong with the story of entitlements wrecking the economy? Plenty.

For starters, the $56 trillion “unfunded liability” figure relies on creative accounting. Only about $6.36 trillion is the actual public debt, according to the U.S. Treasury. Most of the number Peterson cites is a combination of the 75-year worst-case projections for Social Security, Medicare and Medicaid.

These three programs face very different challenges and remedies. Social Security’s accounts are actually near long-term balance. The Congressional Budget Office puts the 75-year shortfall at only about one-third of 1 percent of projected gross domestic product.

Social Security is financed by taxes on wages — and since the mid-1970s, wage growth has stagnated. If median wages rose with productivity growth, as they did during the first three decades after World War II, Social Security would enjoy a big surplus. Even without a raise for working America, Social Security needs only minor adjustments.

Medicare really does face big deficits. But that’s because Medicare is part of a hugely inefficient, fragmented health insurance system. It makes no sense to “reform” Medicare in isolation.

If we just cap Medicare, needy seniors would get bare-bones care while more affluent people could supplement their insurance out of pocket. The decent cure for Medicare’s cost inflation lies in comprehensive universal health insurance so that the entire system is more efficient and less prone to inflation. You don’t hear many budget hawks supporting that brand of reform.

The deficit hawks’ story also contends that we are sacrificing our children’s future by too much (deficit) spending on the elderly. In fact, today’s young adults are already falling out of the middle class because of the high costs of the investments we don’t adequately finance socially — child care, college tuition and health insurance. But fiscal conservatives seldom call for increased investment in the young. Today’s young, of course, will be tomorrow’s retirees, and they will need social insurance, too.

The overall bottom line? The economy we bequeath to our children has everything to do with getting growth back on track and almost nothing to do with imagined future deficits.

History provides a parallel. At the end of World War II, the public debt was about 120 percent of GDP — about three times today’s ratio. Yet the heavily indebted wartime economy stimulated a quarter-century postwar boom — because all that debt went to recapitalize American industry, advance science and technology, retrain our unemployed and put them to work.

We need to increase public spending and debt now to restore economic growth and then gradually reduce the debt ratio once recovery comes. Social Security has little to do with this challenge. Nor does Medicare, if we reform our overall health system.

Since the early 1980s, Peter G. Peterson has been warning that future entitlement deficits would crash the economy. Yet when the crash came, the cause was not deficits but wild speculation on Wall Street.

Now, with 401(k) plans swooning and health benefits being cut, Social Security and Medicare are the two bedrock programs that keep tens of millions of elderly Americans from destitution. Why perversely cut these programs to pay for the sins of Wall Street? The attack on social insurance is really an ideological assault, dressed up as fiscal high-mindedness.

Robert Kuttner, co-editor of the American Prospect and a senior fellow at the New York public policy group Demos, is most recently the author of “Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency.”

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/22/AR2009022202003.html

Special Book Salon Today (preview)- The Pact: Bill Clinton, Newt Gingrich, and the Rivalry That Defined a Generation

The Pact: Bill Clinton, Newt Gingrich, and the Rivalry That Defined a Generation

By Elliott
FireDogLake
Tuesday May 18, 2010

Chat with Steven Gillon on this Special Salon about Bill Clinton and Newt Gingrich – The Pact: Bill Clinton, Newt Gingrich, and the Rivalry That Defined a Generation . Hosted by Jane Hamsher.

Most Americans saw President Bill Clinton and Speaker Newt Gingrich as staunch foes–”the polar extremes of Pennsylvania Avenue.” But as Steven Gillon reveals in The Pact, these powerful adversaries formed a secret alliance in 1997, a pact that would have rocked the political landscape, had it not foundered in the wake of the Lewinsky scandal.

A fascinating look at politics American-style, The Pact offers a riveting account of two of America’s most charismatic and influential leaders, detailing both their differences and their striking similarities, and highlighting the profound and lasting impact the tumultuous 1960s had on both their personal and political lives. With the cooperation of both President Clinton and Speaker Gingrich, interviews with key players who have never before spoken about their experiences, along with unprecedented access to Gingrich’s private papers, Gillon not only offers a behind-the-scenes look at the budget impasse and the government shutdown in 1995–the famous face-off between Clinton and Gingrich–but he also reveals how the two moved closer together after 1996–closer than anyone knew. In particular, the book illuminates their secret efforts to abandon the liberal and conservative wings of their own parties and strike a bi-partisan deal to reform the “third rail of American politics”–Social Security and Medicare. That potentially groundbreaking effort was swept away by the highly charged reaction to the Lewinsky affair, ending an initiative that might have transformed millions of American lives.

Packed with compelling new revelations about two of the most powerful and intriguing figures of our time, this book will be must reading foreveryone interested in politics or current events.

Steven M. Gillon is the Resident Historian of the History Channel and Professor of History at the University of Oklahoma. He is the host of the network’s flagship public affairs program, HistoryCenter, as well as Our Generation. He is an award-winning teacher and the author of a number of critically acclaimed books about modern American politics and culture. (Barnes and Noble)

http://seminal.firedoglake.com/diary/48875

Revolt of the Wonks: Former Obama Advisors Want to Know What’s Happening on His Deficit Commission

There’s a very important an article in the Neiman Watchdog this morning (Harvard’s journalism review, Deputy Editor Dan Froomkin). It’s written by Nancy Altman and Eric Kingson, entitled “Has Obama created a Social Security ‘death panel’?

Headlines like that are normally the reserve of DFH bloggers, so it’s notable that the academic world is talking about Obama’s Deficit Commission in that way. Even more notable are the article’s authors: Altman and Kingson both served on the Obama Campaign’s Retirement Security Advisory Committee, and then on the Advisory Committee to the Social Security Administration Transition Team.

Altman was on the faculty of Harvard University’s Kennedy School of Government, has taught at the Harvard Law School, and was Alan Greenspan’s assistant when he chaired the commission that developed the 1983 Social Security amendments. She also served as a legislative assistant on Social Security issues to John Danforth, whose Danforth-Kerrey Commission was the predecessor to Obama’s commission. Kingson was also a staffer on the Greenspan Commission, and was Social Security Advisor to the Kerrey-Danfoth Commission.

Alex Lawson has been livestreaming the closed door of the Catfood Commission on FDL.  They have refused to conduct their deliberations in public, but the committee is stacked with enough votes to cut benefits.  It takes 14 out of 18 votes to pass any recommendation on the committee, and there appear to be a sufficient number of votes to do so based on the past positions of individual members.  So Altman and Kingson raise important questions, but to my mind, none more important than these:

Q. Why is the Commission apparently working so closely with billionaire Peter G. Peterson, who served in the Nixon administration and who has a clear ideological agenda?

Q. Mr. Peterson has been on a decades-long crusade against Social Security. The day after the first meeting of the commission, which focused heavily on the need to cut Social Security, the co-chairs and two other members of the commission participated in a Peterson event that reinforced the same message. A Peterson-funded foundation is supplying commission staff. And Peterson’s foundation is funding America Speaks to develop a series of high-profile town halls across the country to host “a national discussion to find common ground on tough choices about our federal budget.” (For more background about Mr. Peterson, see William Greider in the Nation on Looting Social Security — Part 2.)

Note the buried lede:  Pete Peterson is supplying commission staff.

One important lesson I learned from the health care fight:  the health care industry had been laying the groundwork for this for years, and that should have been an early focus.   It wasn’t until the Gruber incident that I learned how the medical industrial complex had been working through foundations like Kaiser for over a decade to basically buy the academic underpinnings of their plan (and probably longer if you count the GOP/Heritage response to HillaryCare as its roots).  They ran a  nice back-and-forth between Congress, the White House, the CBO and Gruber to make it look he was supplying independent confirmation of the health care bill, when in fact it was all part of the same carefully orchestrated plan.  It bought them a lot of credibility that they otherwise would not have had in the academic world.

Pete Peterson has been serving the same function on Social Security that Kaiser and others did on health care. From the Concord Commission to the Peterson Foundation, cutting Social Security benefits and diverting as much money as possible into Wall Street’s coffers has been Peterson’s holy grail.  He himself was on the Danforth-Kerrey Commission, and was set to be the key note speaker at Obama’s first fiscal responsibility summit shortly after the inauguration.  After we reported it, the White House canceled him then denied he had been scheduled to speak, but Robert Kuttner subsequently confirmed it in the Washington Post.

The current budget deficit will be used to justify cuts to Social Security benefits, just as the surplus was used to justify cuts during the Clinton era.  As Steven Gillon said the other day when he was here talking about his book on the secret Clinton-Gingrich deal negotiated by Bowles to cut Social Security in the 90s, Bowles is running the same play.

Peterson plays a huge role in the world that shapes the thinking that drives the commission. Bill Clinton simply gushed about him at Peterson’s own recent fiscal summit.  As long as Peterson is allowed to hide in the shadows and pull the strings, the choices that the Commission will make will come from a very small menu.  Defense cuts will not be a factor.  They won’t be talking about the trillion dollars they could save over the next decade simply by expanding Medicare to cover businesses. They’re only going to ask the questions that drive them to the same answer:  cut Social Security.

It’s going to be important to tell the tale of Peterson’s inexorable march and diffuse the notion that the Commission is simply responding to temporal economic factors.  This is class war, pure and simple.  The rich against the poor. Hedge fund billionaires and defense contractors against senior citizens struggling to get by. Altman and Kingson have done us all a tremendous favor by opening up the discourse and asking important questions that need to be answered before the Commission makes its report on December.  That’s just in time to jam it through a lame duck Congress before the Christmas break, something both John Conyers and John Boehner have warned about — a repeat of what Bowles planned to do in the 90s.

http://fdlaction.firedoglake.com/2010/05/21/revolt-of-the-wonks-former-obama-advisors-want-to-know-whats-happening-on-his-deficit-commission/

Obama Packs Debt Commission With Social Security Privatization & Benefit Cut Supporters

By Jane Hamsher
FireDogLake
Monday May 10, 2010

President Obama has packed the Debt Commission (also known as the cat food commission) with members who have an overwhelming history of support for both benefit cuts and privatization of Social Security.

The “National Commission on Fiscal Responsibility and Reform” is operating in secret over the objections of both parties. John Boehner and John Conyers have both raised concerns that the commission will make recommendations in December that could be passed by a lame duck Congress that doesn’t have to worry about being reelected. They requested that the commission report its findings prior to the election so that the public can have a chance to factor in the recommendations into their voting decisions in the election. The commission denied the request.

As we are seeing with Audit the Fed, it is falling to Judd Gregg — who doesn’t have to worry about being reelected — to raise concerns about “populist pandering,” and he is likely to be the one to refuse unanimous consent and force a cloture vote that will impose a 60 vote hurdle. (The transpartisan support for Audit the Fed we’ve built over the year makes it difficult for anyone with re-election worries to play the Joe Lieberman role, even Joe Lieberman.) Though they have different agendas with regard to the outcome, the concerns of both Boehner and Conyers and the commission’s lack of transparency are well founded.

As we reported at the time, the Obama White House has been interested in cutting Social Security right out of the gate. David Brooks reported that three administration officials called him to say Obama “is extremely committed to entitlement reform and is plotting politically feasible ways to reduce Social Security as well as health spending” in March of 2009. The neoliberal TNR/JournoList set who cheered on the Iraq war and the corporate-friendly health care bill are already lending their support: Privatizing Social Security, No, Cutting Social Security, Si! says Jon Chait.

Chait conflates and confuses two separate statements. Obama has dismantled liberal opposition to many of George Bush’s policies, and whatever he wants to do with Social Security will be accepted by many just because they like him. Matt Yglesias had this to say about Elena Kagan’s nomination to the Supreme Court: “Clinton & Obama like and trust [Kagan], and most liberals (myself included) like and trust Clinton & Obama.” To which Glenn Greenwald rightly responds, “In other words, according to Chemerinksy and Yglesias, progressives will view Obama’s choice as a good one by virtue of the fact that it’s Obama choice. Isn’t that a pure embodiment of mindless tribalism and authoritarianism? ”

What Wall Street wants is to wind up with a good chunk of the Social Security trust fund in its own coffers. Where that intersects with the objectives of the commission remains to be seen, but the fact is that Obama has packed it with people who have a strong history of supporting both reducing benefits and privatization. Even the token “liberals” like Jan Schakowsky have a history of abandoning their strongest principles when the President asks it of them, and Dick Durbin is now telling “bleeding heart liberals” to be open to benefit cuts for the sake of the fiscal responsibility.

Brad DeLong indicates liberal objections may well be overcome by the government guaranteeing any Wall Street losses, but that will irk the libertarians.

http://fdlaction.firedoglake.com/2010/05/10/obama-packs-debt-committee-with-supportes-of-social-security-benefit-cuts-and-privatization/

Obama Packs Debt Commission With Social Security Privatization & Benefit Cut Supporters

By Jane Hamsher
FireDogLake
Monday May 10, 2010

President Obama has packed the Debt Commission (also known as the cat food commission) with members who have an overwhelming history of support for both benefit cuts and privatization of Social Security.

The “National Commission on Fiscal Responsibility and Reform” is operating in secret over the objections of both parties. John Boehner and John Conyers have both raised concerns that the commission will make recommendations in December that could be passed by a lame duck Congress that doesn’t have to worry about being reelected. They requested that the commission report its findings prior to the election so that the public can have a chance to factor in the recommendations into their voting decisions in the election. The commission denied the request.

As we are seeing with Audit the Fed, it is falling to Judd Gregg — who doesn’t have to worry about being reelected — to raise concerns about “populist pandering,” and he is likely to be the one to refuse unanimous consent and force a cloture vote that will impose a 60 vote hurdle. (The transpartisan support for Audit the Fed we’ve built over the year makes it difficult for anyone with re-election worries to play the Joe Lieberman role, even Joe Lieberman.) Though they have different agendas with regard to the outcome, the concerns of both Boehner and Conyers and the commission’s lack of transparency are well founded.

As we reported at the time, the Obama White House has been interested in cutting Social Security right out of the gate. David Brooks reported that three administration officials called him to say Obama “is extremely committed to entitlement reform and is plotting politically feasible ways to reduce Social Security as well as health spending” in March of 2009. The neoliberal TNR/JournoList set who cheered on the Iraq war and the corporate-friendly health care bill are already lending their support: Privatizing Social Security, No, Cutting Social Security, Si! says Jon Chait.

Chait conflates and confuses two separate statements. Obama has dismantled liberal opposition to many of George Bush’s policies, and whatever he wants to do with Social Security will be accepted by many just because they like him. Matt Yglesias had this to say about Elena Kagan’s nomination to the Supreme Court: “Clinton & Obama like and trust [Kagan], and most liberals (myself included) like and trust Clinton & Obama.” To which Glenn Greenwald rightly responds, “In other words, according to Chemerinksy and Yglesias, progressives will view Obama’s choice as a good one by virtue of the fact that it’s Obama choice. Isn’t that a pure embodiment of mindless tribalism and authoritarianism? ”

What Wall Street wants is to wind up with a good chunk of the Social Security trust fund in its own coffers. Where that intersects with the objectives of the commission remains to be seen, but the fact is that Obama has packed it with people who have a strong history of supporting both reducing benefits and privatization. Even the token “liberals” like Jan Schakowsky have a history of abandoning their strongest principles when the President asks it of them, and Dick Durbin is now telling “bleeding heart liberals” to be open to benefit cuts for the sake of the fiscal responsibility.

Brad DeLong indicates liberal objections may well be overcome by the government guaranteeing any Wall Street losses, but that will irk the libertarians.

http://fdlaction.firedoglake.com/2010/05/10/obama-packs-debt-committee-with-supportes-of-social-security-benefit-cuts-and-privatization/

A conversation with Howard Dean

By André Picard
Toronto Globe and Mail
Published on Friday, Jun. 04, 2010

On Monday, a group of prominent American and Canadian physicians will debate, in Toronto, the question: “Be it resolved that I would rather get sick in the U.S. than in Canada.” One of the panelists is Howard Dean, the former governor of Vermont, chairman of the Democratic Party and a one-time presidential candidate. He is also author of the new book Howard Dean’s Prescription for Real Health Care. During the health-care reform debate, Dr. Dean was one of the most outspoken proponents of the “public option” – offering state-financed insurance similar to what exists in Canada. He spoke to The Globe and Mail about the views he will be putting forward in the debate.

You were a strong proponent of the public health-care option in the U.S. Why?

A public plan allows people more choices. The truth is we have a social system for veterans, we have a single-payer system like Canada’s for people over 65 and we have a private enterprise system. I think the best way to get reform [is] to give people more choices and let them do the reform.

But one of the principal criticisms of a public system, a single-payer system like Canada’s, is that it robs consumers of choice.

Well, the U.S. system is not the same as Canada’s. What I was proposing is a choice: a socialist system, a single-payer system or a private enterprise system.

Would a Canadian-style system work in the U.S.?

It would certainly work in terms of delivering good health care for less money – because that’s what Canada does now. But from a political point of view, it would be very difficult to implement a single-payer system.

People tend to forget that you already have some socialized medicine in the U.S., as well as a large single-payer system.

Medicare is not socialized, not in the U.S. and not in Canada. It’s a single-payer system. Despite what is often said, your system is not socialized, it’s a single-payer insurance system. The Veterans Health Administration, however, which has 25 million people in it, is a truly socialized system – it’s government-owned and government-operated and it’s worked very well. In fact, the VHA is the No. 1 rated system in the country, according to patients.

What are Americans afraid of – why are they reluctant to expand those models?

I think they have been told a number of things that were not so, a number of very alarming things, and the Democrats were slow on the uptake in counteracting those lies.

Health-care reform dominated the headlines for a long time. Was it successful?

We didn’t pass reform. All we did pass was putting more money into what we already have. It’s successful in a sense that 1) we got a major bill passed, which is something for a new administration; 2) we created a system that’s going to force reform because of the financial realities; 3) a great many more people are going to have coverage. But this system is still not nearly as effective and efficient as the Canadian system.

The big knock against the Canadian system is wait times. Is that a deal breaker?

Wait times is an issue that is greatly exaggerated by American politicians. The truth is that there are wait times in the Canadian system, but with emergencies and urgent situations, the wait times disappear and that’s as it should be.

Can you have a universal system without undue wait times?

It depends on your definition of undue waits. From a medical point of view, the answer is absolutely yes, of course you can. But most things we do in the medical system are not required at all, let alone required immediately. From a political point of view, people want what they want right away. Consumers are difficult: They want everything, they want it right away, but they don’t want to pay for it. There’s a trade-off.

You’re a physician. There is an assumption physicians don’t like a universal system because, with less competition, they come out losers.

I know a lot of American physicians who would much rather practise under a Canadian model. There is less malpractice, more actual health care, and a lot less bureaucracy like insurance forms to fill out. I think it depends on why you went into medicine. If you want to make a lot of money, the Canadian system is not for you; if you really like to take care of patients, the Canadian system is well suited.

What’s the single most important lesson that Americans can take from the Canadian system?

It covers everybody with a relative lack of bureaucracy. I know Canadians think there is bureaucracy, but you haven’t seen anything until you work in a system with several hundred insurance companies that all do something different. American hospitals have a whole floor occupied by a billing office. You don’t have that in Canada.

Conversely, what’s the most important lesson Canadians can take from the U.S. health-care system?

I’m afraid I’m not sure there is one. There is more cutting-edge innovative technology, but the cost of that is to pay 70 per cent more than Canadians do for health insurance. Canadians will have to decide if that’s a lesson they want to learn.

Bottom line, which system is better for the patient?

I’ve spent a lot of time in both countries and there is no doubt that you’re better off getting sick in Canada.

But don’t you have the best health care in the world? We hear that mantra constantly.

We have the best health care in the world for people who can afford it. But Canada has very, very good health care for everybody.

Howard Dean and others debate Canadian versus U.S. health care

A conversation with Howard Dean

By André Picard
The Globe and Mail
June 7, 2010
On Monday (June 7), a group of prominent American and Canadian physicians (debated), in Toronto, the question: “Be it resolved that I would rather get sick in the U.S. than in Canada.” One of the panelists is Howard Dean.
Q. Health-care reform dominated the headlines for a long time. Was it successful?
We didn’t pass reform. All we did pass was putting more money into what we already have. It’s successful in a sense that 1) we got a major bill passed, which is something for a new administration; 2) we created a system that’s going to force reform because of the financial realities; 3) a great many more people are going to have coverage. But this system is still not nearly as effective and efficient as the Canadian system.
Q. What’s the single most important lesson that Americans can take from the Canadian system?
It covers everybody with a relative lack of bureaucracy. I know Canadians think there is bureaucracy, but you haven’t seen anything until you work in a system with several hundred insurance companies that all do something different. American hospitals have a whole floor occupied by a billing office. You don’t have that in Canada.
Q. Conversely, what’s the most important lesson Canadians can take from the U.S. health-care system?
I’m afraid I’m not sure there is one. There is more cutting-edge innovative technology, but the cost of that is to pay 70 per cent more than Canadians do for health insurance. Canadians will have to decide if that’s a lesson they want to learn.
Q. Bottom line, which system is better for the patient?
I’ve spent a lot of time in both countries and there is no doubt that you’re better off getting sick in Canada.
Q. But don’t you have the best health care in the world? We hear that mantra constantly.
We have the best health care in the world for people who can afford it. But Canada has very, very good health care for everybody.
http://www.theglobeandmail.com/news/opinions/where-would-you-rather-get-sick-us-or-canada/article1592943/
Toronto Debate (almost 2 hours):
“Be it resolved that I would rather get sick in the United States than Canada.”
Pro team: William Frist and David Gratzer
Con team: Howard Dean and Robert Bell
http://www.munkdebates.com/debates/Healthcare (Click on “Watch the Debate” for video)
Debate results:
Pro: 27%
Con: 73%

As Howard Dean states, “We didn’t pass reform. All we did pass was putting more money into what we already have.” This is precisely why a debate on the Canadian versus the U.S. health care systems is more timely than ever.
If you don’t have two hours to watch the full debate, you may want to watch the opening statements, and then slide the time bar forward to catch the closing statements (though I watched the full debate live-streamed, and it was well worth my time).
The importance of this message is that this is a crucial debate that has not gone away in spite of the enactment of PPACA. We should all do our part to see that everyone in the United States becomes fully informed on the true facts.

Johnathon Ross explains why health care financing foundation must be rebuilt

Build foundation for health care on Medicare: Johnathon Ross, M.D.

By Johnathon Ross, M.D.
The Plain Dealer (Cleveland)
May 30, 2010

Mrs. Brown (not her real name) was recently in to check on her blood pressure. She knows I’ve worked decades for a national health plan that would benefit individuals and businesses alike.

“So what do you think of the reform bill, Doc?” she asked, hoping I’d be pleased.

I replied with a question of my own: “Would you add a third floor to a house that has a crumbling foundation?” Because that is what Congress just did.

The crumbling foundation is our private, for-profit, insurance-based system of financing health care. As nonprofit, community-service organizations, health insurers were once a boon to millions of workers and thousands of companies. Now, they are a very bad bargain, indeed.

Private insurers make money by denying claims. They cause us to waste enormous amounts of money on excess paperwork and bureaucracy — their own paperwork and the paperwork they inflict on hospitals, patients and doctors like me. An estimated 31 cents of every health care dollar goes toward administration in U.S. health care, at least half of it unnecessary.

The problem is getting worse. The number of administrative personnel in health care jumped more than 3,000 percent over the past three decades, while the number of doctors, nurses and other caregivers has grown by less than 200 percent.

In effect, health care has been overtaken by an army of bureaucrats whose “generals” — the CEOs — get astronomical salaries. Money-changers and paper-pushers thrive chasing the money to pay for care — not deliver it. In our complex, multipayer system, chasing money is expensive work.

Does the new law remedy this? No. “Insurance exchanges” will add yet another layer of private bureaucrats and IRS agents to determine eligibility for subsidies and enforce fines for those who fail to purchase insurance.

Private insurers in the new exchanges will continue to advertise and market their products, bill for premiums, determine eligibility for coverage, coordinate benefits, manage a multitude of yearly contracts with brokers, businesses, individuals, doctors, hospitals and other providers and, lastly, pay stockholders a high rate of return.

Each hospital and doctor will continue to track myriad contracts, discount arrangements, benefit packages, drug formularies, limited referral networks and insurance rules designed to reduce utilization of our medical resources and to increase insurance company profits.

The new law perpetuates this wasteful overhead and guarantees insurers more profits as we spend $447 billion over 10 years to subsidize the mandatory purchase of shoddy private insurance by 16 million uninsured Americans.

The exchanges are supposed to bring down prices by promoting “market competition” among various insurers. But Massachusetts and several other states have had plenty of experience with such exchanges, and the verdict is clear: They don’t control costs. In fact, Massachusetts now has the highest health care costs in the world.

As a rule, “market competition” doesn’t work well in health care. Health care is not an ordinary product that people want. Rather, it is a necessity that they must have. The most expensive care is most often not optional, predictable or negotiable.

Businesses are groaning under the burden of the rising costs of employee and retiree health care benefits. They, too, need to get out from under the heel of the private health insurance industry and the skyrocketing, volatile prices that come with it.

So what’s the alternative? It’s building on the solid foundation of our tax-financed, low-overhead Medicare system, and extending it to cover everyone without exception. The administrative savings from such a streamlined system would amount to $400 billion per year, enough to provide comprehensive coverage to all with no significant out-of-pocket expenses and with complete choice of doctor and hospital.

A single-payer system would also have the clout to negotiate drug prices and provider fees, and to allocate resources efficiently and wisely. It would possess powerful tools for improving quality and controlling costs.

Conventional wisdom suggests we have to “wait and see” how the administration’s new law plays out. But we can’t afford that: With about 50 million uninsured this year, some 50,000 people will die because they lack coverage, a recent study estimates. By 2019, those figures will only be halved, experts say.

It’s not too late to do the right thing. The sooner we adopt an expanded and improved Medicare-for-all, the better off our patients and our economy will be.

Johnathon Ross is past president of Physicians for a National Health Program (pnhp.org) and a leader of the Single Payer Action Network in Ohio (spanohio.org).

http://www.cleveland.com/opinion/index.ssf/2010/05/build_foundation_for_health_ca.html

Also posted on the PNHP website:
https://pnhp.org/news/2010/june/build-foundation-for-health-care-on-medicare

Comment: 

By Don McCanne, MD

Because of the complexity of the Patient Protection and Affordable Care Act (PPACA) and the intense attention that has been diverted to the details of the act, almost no consideration is being given to correcting the fundamental flaws in the health care financing structure of PPACA. The prevailing attitude is that the legislative task is finished, except for a few tweaks, and so this is the law that we are going to have to live with indefinitely.

Today’s qotd included Johnathon Ross’s piece in its entirety because it explains so well, in a single, easily read article, why we need to dismiss this idea that the legislative task has been completed, and why we must revise the financing system by getting rid of the private insurers and Medicaid, and replace the entire financing system with an expanded and improved Medicare for all.

The article can be downloaded to be used in your advocacy work by distributing it electronically or by printing it out to be distributed as handouts.

We must reopen the national dialogue on comprehensive reform, and this article can be used to initiate the requisite conversation. Failure to do so will result in more suffering, hardship, and even death. As a civilized society, we simply can no longer allow that.

Build foundation for health care on Medicare

By Johnathon Ross, M.D.
Cleveland Plain Dealer, May 30, 2010

Mrs. Brown (not her real name) was recently in to check on her blood pressure. She knows I’ve worked decades for a national health plan that would benefit individuals and businesses alike.

“So what do you think of the reform bill, Doc?” she asked, hoping I’d be pleased.

I replied with a question of my own: “Would you add a third floor to a house that has a crumbling foundation?” Because that is what Congress just did.

The crumbling foundation is our private, for-profit, insurance-based system of financing health care. As nonprofit, community-service organizations, health insurers were once a boon to millions of workers and thousands of companies. Now, they are a very bad bargain, indeed.

Private insurers make money by denying claims. They cause us to waste enormous amounts of money on excess paperwork and bureaucracy — their own paperwork and the paperwork they inflict on hospitals, patients and doctors like me. An estimated 31 cents of every health care dollar goes toward administration in U.S. health care, at least half of it unnecessary.

The problem is getting worse. The number of administrative personnel in health care jumped more than 3,000 percent over the past three decades, while the number of doctors, nurses and other caregivers has grown by less than 200 percent.

In effect, health care has been overtaken by an army of bureaucrats whose “generals” — the CEOs — get astronomical salaries. Money-changers and paper-pushers thrive chasing the money to pay for care — not deliver it. In our complex, multipayer system, chasing money is expensive work.

Does the new law remedy this? No. “Insurance exchanges” will add yet another layer of private bureaucrats and IRS agents to determine eligibility for subsidies and enforce fines for those who fail to purchase insurance.

Private insurers in the new exchanges will continue to advertise and market their products, bill for premiums, determine eligibility for coverage, coordinate benefits, manage a multitude of yearly contracts with brokers, businesses, individuals, doctors, hospitals and other providers and, lastly, pay stockholders a high rate of return.

Each hospital and doctor will continue to track myriad contracts, discount arrangements, benefit packages, drug formularies, limited referral networks and insurance rules designed to reduce utilization of our medical resources and to increase insurance company profits.

The new law perpetuates this wasteful overhead and guarantees insurers more profits as we spend $447 billion over 10 years to subsidize the mandatory purchase of shoddy private insurance by 16 million uninsured Americans.

The exchanges are supposed to bring down prices by promoting “market competition” among various insurers. But Massachusetts and several other states have had plenty of experience with such exchanges, and the verdict is clear: They don’t control costs. In fact, Massachusetts now has the highest health care costs in the world.

As a rule, “market competition” doesn’t work well in health care. Health care is not an ordinary product that people want. Rather, it is a necessity that they must have. The most expensive care is most often not optional, predictable or negotiable.

Businesses are groaning under the burden of the rising costs of employee and retiree health care benefits. They, too, need to get out from under the heel of the private health insurance industry and the skyrocketing, volatile prices that come with it.

So what’s the alternative? It’s building on the solid foundation of our tax-financed, low-overhead Medicare system, and extending it to cover everyone without exception. The administrative savings from such a streamlined system would amount to $400 billion per year, enough to provide comprehensive coverage to all with no significant out-of-pocket expenses and with complete choice of doctor and hospital.

A single-payer system would also have the clout to negotiate drug prices and provider fees, and to allocate resources efficiently and wisely. It would possess powerful tools for improving quality and controlling costs.

Conventional wisdom suggests we have to “wait and see” how the administration’s new law plays out. But we can’t afford that: With about 50 million uninsured this year, some 50,000 people will die because they lack coverage, a recent study estimates. By 2019, those figures will only be halved, experts say.

It’s not too late to do the right thing. The sooner we adopt an expanded and improved Medicare-for-all, the better off our patients and our economy will be.

Ross is past president of Physicians for a National Health Program (pnhp.org) and a leader of the Single Payer Action Network in Ohio (spanohio.org).

http://www.cleveland.com/opinion/index.ssf/2010/05/build_foundation_for_health_ca.html

Johnathon Ross explains why health care financing foundation must be rebuilt

Build foundation for health care on Medicare: Johnathon Ross, M.D.

By Johnathon Ross, M.D.
The Plain Dealer (Cleveland)
May 30, 2010
Mrs. Brown (not her real name) was recently in to check on her blood pressure. She knows I’ve worked decades for a national health plan that would benefit individuals and businesses alike.
“So what do you think of the reform bill, Doc?” she asked, hoping I’d be pleased.
I replied with a question of my own: “Would you add a third floor to a house that has a crumbling foundation?” Because that is what Congress just did.
The crumbling foundation is our private, for-profit, insurance-based system of financing health care. As nonprofit, community-service organizations, health insurers were once a boon to millions of workers and thousands of companies. Now, they are a very bad bargain, indeed.
Private insurers make money by denying claims. They cause us to waste enormous amounts of money on excess paperwork and bureaucracy — their own paperwork and the paperwork they inflict on hospitals, patients and doctors like me. An estimated 31 cents of every health care dollar goes toward administration in U.S. health care, at least half of it unnecessary.
The problem is getting worse. The number of administrative personnel in health care jumped more than 3,000 percent over the past three decades, while the number of doctors, nurses and other caregivers has grown by less than 200 percent.
In effect, health care has been overtaken by an army of bureaucrats whose “generals” — the CEOs — get astronomical salaries. Money-changers and paper-pushers thrive chasing the money to pay for care — not deliver it. In our complex, multipayer system, chasing money is expensive work.
Does the new law remedy this? No. “Insurance exchanges” will add yet another layer of private bureaucrats and IRS agents to determine eligibility for subsidies and enforce fines for those who fail to purchase insurance.
Private insurers in the new exchanges will continue to advertise and market their products, bill for premiums, determine eligibility for coverage, coordinate benefits, manage a multitude of yearly contracts with brokers, businesses, individuals, doctors, hospitals and other providers and, lastly, pay stockholders a high rate of return.
Each hospital and doctor will continue to track myriad contracts, discount arrangements, benefit packages, drug formularies, limited referral networks and insurance rules designed to reduce utilization of our medical resources and to increase insurance company profits.
The new law perpetuates this wasteful overhead and guarantees insurers more profits as we spend $447 billion over 10 years to subsidize the mandatory purchase of shoddy private insurance by 16 million uninsured Americans.
The exchanges are supposed to bring down prices by promoting “market competition” among various insurers. But Massachusetts and several other states have had plenty of experience with such exchanges, and the verdict is clear: They don’t control costs. In fact, Massachusetts now has the highest health care costs in the world.
As a rule, “market competition” doesn’t work well in health care. Health care is not an ordinary product that people want. Rather, it is a necessity that they must have. The most expensive care is most often not optional, predictable or negotiable.
Businesses are groaning under the burden of the rising costs of employee and retiree health care benefits. They, too, need to get out from under the heel of the private health insurance industry and the skyrocketing, volatile prices that come with it.
So what’s the alternative? It’s building on the solid foundation of our tax-financed, low-overhead Medicare system, and extending it to cover everyone without exception. The administrative savings from such a streamlined system would amount to $400 billion per year, enough to provide comprehensive coverage to all with no significant out-of-pocket expenses and with complete choice of doctor and hospital.
A single-payer system would also have the clout to negotiate drug prices and provider fees, and to allocate resources efficiently and wisely. It would possess powerful tools for improving quality and controlling costs.
Conventional wisdom suggests we have to “wait and see” how the administration’s new law plays out. But we can’t afford that: With about 50 million uninsured this year, some 50,000 people will die because they lack coverage, a recent study estimates. By 2019, those figures will only be halved, experts say.
It’s not too late to do the right thing. The sooner we adopt an expanded and improved Medicare-for-all, the better off our patients and our economy will be.
Johnathon Ross is past president of Physicians for a National Health Program (pnhp.org) and a leader of the Single Payer Action Network in Ohio (spanohio.org).
http://www.cleveland.com/opinion/index.ssf/2010/05/build_foundation_for_health_ca.html
Also posted on the PNHP website:
https://pnhp.org/news/2010/june/build-foundation-for-health-care-on-medicare

Because of the complexity of the Patient Protection and Affordable Care Act (PPACA) and the intense attention that has been diverted to the details of the act, almost no consideration is being given to correcting the fundamental flaws in the health care financing structure of PPACA. The prevailing attitude is that the legislative task is finished, except for a few tweaks, and so this is the law that we are going to have to live with indefinitely.
Today’s qotd included Johnathon Ross’s piece in its entirety because it explains so well, in a single, easily read article, why we need to dismiss this idea that the legislative task has been completed, and why we must revise the financing system by getting rid of the private insurers and Medicaid, and replace the entire financing system with an expanded and improved Medicare for all.
The article can be downloaded to be used in your advocacy work by distributing it electronically or by printing it out to be distributed as handouts.
We must reopen the national dialogue on comprehensive reform, and this article can be used to initiate the requisite conversation. Failure to do so will result in more suffering, hardship, and even death. As a civilized society, we simply can no longer allow that.

Will financial incentives work?

Financial Incentives for Health Care Providers and Consumers

By Jill Bernstein, Deborah Chollet, and Stephanie Peterson
Mathematica Policy Research, Inc.
May 2010

Health reform will emphasize financial incentives for providers and consumers to promote the use of effective health services and discourage the use of marginally effective or inappropriate services. This brief looks at evidence on the impacts of financial incentives and draws lessons for policymakers.

Consumer Incentives Affect Their Choices

Most private and public insurance plans use financial incentives to constrain consumer demand for care. This strategy is premised on the idea that consumers will make better decisions about seeking care and using cost-effective services when they bear responsibility for a portion of the cost. So-called “consumer-directed” health plans attempt to extend this model, coupling high cost sharing with consumer information about treatment alternatives.

Indeed, research shows that cost sharing — including deductibles, coinsurance, and copayments — does affect health care use and expenditures. However, cost sharing can have important negative effects on health, and high cost sharing may ultimately have little impact on total costs.

When people respond to greater cost sharing by reducing their use of health services, they may forgo services that are necessary and effective as well as those that are more discretionary or ineffective. Forgoing care in response to higher cost sharing may not have significant health consequences for people with good overall health status and average income. But people with health problems and those with lower income and education enrolled in high-deductible health plans may suffer worse outcomes when they forgo or delay care. Vulnerable populations are especially likely to experience negative health outcomes related to cost sharing.

In addition, financial incentives may not significantly change the overall costs of care. Consumers with serious health problems account for most health care costs. Even if strong incentives induce these consumers to use care judiciously, most of their care is nondiscretionary, and costs that exceed their cap on out-of-pocket spending may account for most of the total cost of their care.

Value-Based Purchasing

A growing number of private and public payers (including Medicare) use financial incentives targeted to providers, consumers, or both, and linked to measures of health care quality and efficiency. These strategies have come to be known generally as value-based purchasing.

Value-based purchasing efforts that focus on providers typically use evidence-based measures of quality, effectiveness, and efficiency to classify or select providers, and to determine how much they are paid. These payment strategies, generally known as “pay for performance” (P4P), may also take into account measures of consumer experience or satisfaction. Most commercial P4P systems use hybrid approaches that combine fee-for-service payment with payment bonuses or withholds that reflect provider performance on specific measures of quality or patient satisfaction.

Value-based systems have encountered various problems related to consumer education and continuity of care that have affected their ability to meet program goals. For example:

* Consumers sometimes associate higher prices with higher quality, leading them to select inefficient, lower-quality health plans with higher premiums.

* Adverse outcomes — and ultimately greater cost — may result when conversions to new evidence-based treatment protocols disrupt care. Disruptions may be especially problematic for patients with serious, chronic illnesses and close ties to their care providers. Although careful targeting of incentives can protect vulnerable patients by identifying those who would most benefit from specialized care, it may also entail additional costs for technical and clinical expertise and for educating and communicating with patients.

SOME LESSONS LEARNED

Evidence on the impacts of financial incentives in private and public insurance plans is limited, but we do know that:

* In general, financial incentives work best when carefully targeted to a specific population, set of services, or health condition. However, providing high quality, effective care can be expensive, even when it is targeted.

* Incentives that improve care and reduce cost present challenges. For plan administrators, designing and using effective incentives can be technically demanding and administratively expensive. For providers, performance reporting can be time consuming. For consumers, choosing among plan options, providers, and treatments can be difficult.

* If not carefully designed, financial incentives can have unintended adverse consequences, including poorer health outcomes and higher long-term costs.

http://www.mathematica-mpr.com/publications/PDFs/Health/reformhealthcare_IB5.pdf

Comment: 

By Don McCanne, MD

Considerable attention has been paid to controlling health care costs through financial incentives to constrain consumer demand for care (e.g., consumer-directed health care, or CDHC) or to encourage value-based purchasing (e.g., pay for performance, or P4P). This is more than just a theoretical construct since the Patient Protection and Affordable Care Act (PPACA) “focuses on developing financial incentives to improve quality of care and constrain costs.”

A great many readers have told me that they often skip the excepts from the resource, and go straight to my comment. Today’s surprise is that I do request that you read the excerpts above so that you understand more clearly why CDHC and P4P are yet other diversions that will not save money and yet would risk adverse outcomes.

(I’ll omit the comment that a single payer financing system would bring all of us true consumer choice of health care, absent financial barriers, while providing us value-based purchasing though the power of our own public monopsony. Er… I guess I didn’t omit that after all.)