By E. J. Dionne Jr.
Washington Post
Tuesday, November 29, 2005

Decades ago, Walter Reuther, the storied head of the United Auto Workers union, was taken on a tour of an automated factory by a Ford Motor Co. executive.

Somewhat gleefully, the Ford honcho told the legendary union leader: “You know, not one of these machines pays dues to the UAW.”To which Reuther snapped: “And not one of them buys new Ford cars, either.”

The historian William L. O’Neill tells this story in “American High,” his fine and appropriately titled book about the 1950s, a time when “autoworkers were the best-paid production line operatives in the world.” It helps explain why General Motors’ layoffs of 30,000 workers, announced last week, have become a new litmus test in American politics.

Almost everybody right of center sees the job losses as inevitable, the result of the American auto industry’s failure to meet foreign competition and the “excessively” generous wages, health benefits and, especially, retirement programs negotiated by Reuther’s union.

The believers in inevitability inevitably cite the economist Joseph Schumpeter to the effect that capitalism “is by nature a form or method of economic change and not only never is, but never can be, stationary.” It is capitalism’s gift for “creative destruction,” Schumpeter argued, that guaranteed new consumer goods, new methods of production and new forms of organization.

A different story is told left of center, though it will come as no shock that progressives can’t quite agree on a single narrative. The left is united in talking about rising health care costs and the fact that most of our foreign competitors have government-run health insurance systems that take the burden of health care off employers. The iconic number: providing health care for workers and retirees accounts for $1,500 in the cost of each American-made car.

Critics of globalization tell an additional story of how free trade is sending many of our best-paying blue-collar jobs offshore. There is also the decline of union membership, a chicken-and-egg tale, since private-sector unions historically were strongest in the older manufacturing industries such as steel and cars. The UAW’s numbers tell the story: 1,619,000 members in 1970, 1,446,000 in 1980, 952,000 in 1990, 623,000 in 2004. Where have you gone, Walter Reuther?

The contrast between these two accounts explains why economic conservatives currently hold the upper hand in America’s political debate. The conservatives have a single, coherent story and stick to it: Economic change is good for everyone, especially for consumers, who get better stuff at lower prices. The fact that “producer groups” (such as those unions) are losing their “monopolies” and their capacity for “rent seeking” is cheered as progress.

The left’s narrative is less compelling not only because there is no single story but also because few on the left attack the current system with the same gusto the right brings to defending it. Gone, for good reason, is the time when significant parts of the left called for “government ownership of the means of production.” Much of the left accepts a certain amount of creative destruction because, in Margaret Thatcher’s famous phrase, there is no alternative.

But this muddle reflects a default on parts of the left and, especially, within the Democratic Party. Because so many Democrats fear that they might sound like — God forbid! — socialists, they are unwilling to challenge the right’s core story. Capitalism, all by itself, would never have achieved the rising living standards that were the pride of the United States in O’Neill’s 1950s and still are today. The rules enforced by the National Labor Relations Board made it possible for Reuther’s union to organize by protecting workers’ rights. Cheap 30-year mortgages, which became the norm because of Federal Housing Administration guarantees, created a nation of homeowners.

As medical costs rise, more Americans will need government help. More employers will need to offload the costs of medical insurance to avoid bankruptcy. Yes, that’s “socialized medicine,” just like Medicare. But don’t tell anyone. The phrase plays terribly in focus groups.

For 60 years New Dealers and social democrats, liberals and progressives, turned Schumpeter on his head. They insisted that few would embrace capitalism’s innovations if the system’s tendency toward creative destruction was not balanced by public innovations to spread the bounty and protect millions from being injured by change. It’s a compelling story. Walter Reuther knew it well. Too bad it isn’t told very often anymore.

By E. J. Dionne Jr.
Washington Post
Tuesday, November 29, 2005

Decades ago, Walter Reuther, the storied head of the United Auto Workers union, was taken on a tour of an automated factory by a Ford Motor Co. executive.

Somewhat gleefully, the Ford honcho told the legendary union leader: “You know, not one of these machines pays dues to the UAW.”To which Reuther snapped: “And not one of them buys new Ford cars, either.”

The historian William L. O’Neill tells this story in “American High,” his fine and appropriately titled book about the 1950s, a time when “autoworkers were the best-paid production line operatives in the world.” It helps explain why General Motors’ layoffs of 30,000 workers, announced last week, have become a new litmus test in American politics.

Almost everybody right of center sees the job losses as inevitable, the result of the American auto industry’s failure to meet foreign competition and the “excessively” generous wages, health benefits and, especially, retirement programs negotiated by Reuther’s union.

The believers in inevitability inevitably cite the economist Joseph Schumpeter to the effect that capitalism “is by nature a form or method of economic change and not only never is, but never can be, stationary.” It is capitalism’s gift for “creative destruction,” Schumpeter argued, that guaranteed new consumer goods, new methods of production and new forms of organization.

A different story is told left of center, though it will come as no shock that progressives can’t quite agree on a single narrative. The left is united in talking about rising health care costs and the fact that most of our foreign competitors have government-run health insurance systems that take the burden of health care off employers. The iconic number: providing health care for workers and retirees accounts for $1,500 in the cost of each American-made car.

Critics of globalization tell an additional story of how free trade is sending many of our best-paying blue-collar jobs offshore. There is also the decline of union membership, a chicken-and-egg tale, since private-sector unions historically were strongest in the older manufacturing industries such as steel and cars. The UAW’s numbers tell the story: 1,619,000 members in 1970, 1,446,000 in 1980, 952,000 in 1990, 623,000 in 2004. Where have you gone, Walter Reuther?

The contrast between these two accounts explains why economic conservatives currently hold the upper hand in America’s political debate. The conservatives have a single, coherent story and stick to it: Economic change is good for everyone, especially for consumers, who get better stuff at lower prices. The fact that “producer groups” (such as those unions) are losing their “monopolies” and their capacity for “rent seeking” is cheered as progress.

The left’s narrative is less compelling not only because there is no single story but also because few on the left attack the current system with the same gusto the right brings to defending it. Gone, for good reason, is the time when significant parts of the left called for “government ownership of the means of production.” Much of the left accepts a certain amount of creative destruction because, in Margaret Thatcher’s famous phrase, there is no alternative.

But this muddle reflects a default on parts of the left and, especially, within the Democratic Party. Because so many Democrats fear that they might sound like — God forbid! — socialists, they are unwilling to challenge the right’s core story. Capitalism, all by itself, would never have achieved the rising living standards that were the pride of the United States in O’Neill’s 1950s and still are today. The rules enforced by the National Labor Relations Board made it possible for Reuther’s union to organize by protecting workers’ rights. Cheap 30-year mortgages, which became the norm because of Federal Housing Administration guarantees, created a nation of homeowners.

As medical costs rise, more Americans will need government help. More employers will need to offload the costs of medical insurance to avoid bankruptcy. Yes, that’s “socialized medicine,” just like Medicare. But don’t tell anyone. The phrase plays terribly in focus groups.

For 60 years New Dealers and social democrats, liberals and progressives, turned Schumpeter on his head. They insisted that few would embrace capitalism’s innovations if the system’s tendency toward creative destruction was not balanced by public innovations to spread the bounty and protect millions from being injured by change. It’s a compelling story. Walter Reuther knew it well. Too bad it isn’t told very often anymore.

By Rhiannon Tudor Edwards
Health Affairs
November/December 2005

It was quite a military exercise to get us all—me, my husband, two children (aged nine and five), and my guide dog, Vikki—from Wales to Seattle, Washington, in the fall of 2004. I have retinitis pigmentosa, have been visually impaired since birth, and have been legally blind for the past ten years. Vikki, a black labrador retriever, is my first and only guide dog. I’ve learned a lot—sometimes inadvertently and often unexpectedly—from her, even about U.S. health care. As I sit and reflect on our time in the U.S., she snores gently at my feet.

As background, I am a health economist from the United Kingdom who spent a year in the U.S. studying U.S. health care thanks to a New York–based foundation that provides fellowships to mid-career scholars from British Commonwealth countries. With its assistance, I spent a year in Seattle at a health studies center. My overwhelming sensation from living in the U.S. is one of bewildering choice. The right to choose and the act of choosing are a national obsession. I was overwhelmed by the heart-stopping, paralyzing choice of coffees (particularly in Seattle, the home of Starbucks), TV channels, and salad dressings, and, of course, the role of choice in U.S. health care.

Traveling with Vikki, my family and I were bemused, amused, and occasionally baffled by such a truly American phenomenon as doggie day care, where you can maintain contact with your pet over the Internet throughout the day. There are hotels that not only tolerate visitors with canine pets but actually supply a range of designer dog biscuits for your four-legged friends and provide dogs to dogless guests craving canine company. Amongst its wide range of restaurants, Seattle is home to the Three Dog Bakery, where owners can take their dogs for brunch.

A Tale of Two Medical Visits

During our time in Seattle Vikki developed a large lump on her side, and we decided to take her to a vet. As we walked into the veterinary office, we were greeted warmly and offered a choice of three vets. On what basis was I supposed to choose amongst these vets, never having met them and not knowing what was wrong with my dog? All I wanted was someone who would look at Vikki, provide any necessary treatment, and reassure me. Then I would be on my way. The lump turned out to be a simple benign tumor that probably resulted from a bite received during a rough-and-tumble play session at an off-leash dog park. Ten minutes and $120 later, the tumor had been drained, and we left reassured. The vet explained that we might have to have it drained again. Because we were on a pretty tight budget, the additional cost of a possible second draining was a real factor in deciding how to manage Vikki’s care.

In the U.K. all veterinary costs for guide dogs are covered by the Guide Dogs for the Blind Association. This charitable organization is the single provider of guide dogs for blind people in the U.K. It covers all of the costs associated with guide dog ownership throughout the life of the dog. There is no choice of guide dog providers, but there is universal coverage of the costs associated with owning a dog, which removes any financial barrier to ownership. This is essential, given that 70 percent of blind and visually impaired people of working age in the U.K. are unemployed. That figure is much the same in the U.S. It takes about the same amount of time (six to twelve months) in both countries for a suitable dog to be matched to a blind person. In the U.S., people can choose from a range of guide dog providers all over the country, such as Pilot Dogs, Guiding Eyes for the Blind Inc., and Guide Dogs of America. However, owners must cover veterinary and other costs of owning a guide dog themselves, either through insurance or out of pocket.

As if in sympathy to Vikki’s plight, I developed what can only be described as roaring sinusitis. This is the kind of sinus pain that makes your face ache right down into your teeth. I put up with it for two weeks, consuming copious amounts of over-the-counter decongestants and breathing in steam inhalations. Eventually I decided it was time to consult a doctor. My sponsor offered a pretty comprehensive health insurance package through Blue Cross and Blue Shield. At a time when I wanted nothing more than to curl up in bed, I had to go online to make my way through a bewildering array of acronyms—HMO, PPO, and so on—to find providers covered under our insurance. Once I had chosen one of these providers, I had to select from a range of specialist physicians and specify a geographical location. All this choice at a time when I felt rotten. Once I had located a number of family doctors, I found that none of them could see me for between twenty-four and seventy-two hours, and, worryingly, none would guarantee that they would accept my insurance—despite the fact that I’d located each physician through my health insurer’s Web site. The irony was that in the U.S. there was more choice of providers unable to offer me an immediate appointment. In the U.K. it is routine to wait a day or two for a primary care appointment at your nearest general practitioner (GP) clinic. It is possible to choose with which clinic to register; however, in practice, we simply registered with our nearest provider.

Eventually, my husband, Paul, and I elected to go to a family health clinic in Seattle that took walk-in patients. The waiting room was extremely basic, and the bedside manner with which we were greeted was far less friendly than at the vet’s office where Vikki was treated. It went through my mind that this visit was not the outcome of an informed choice. The first question put to me was whether I would be billing an insurance company for the appointment. I then had to surrender my insurance card and wait whilst it was checked. The primary concern of the clinic was not “What is the problem?” or “Have you been here before?,” just “How will you be paying?” After handing over my Blue Cross insurance card, I was presented with five pages of forms to complete. The forms asked for background information, Social Security number, insurance details (again), and then there was a health questionnaire. Of course, for a blind or visually impaired person, forms are difficult or impossible, so this became a job for Paul.

After waiting about half an hour, I was asked for my $5 copay. Another half-hour later, I was shown into a small examining room. Fifteen minutes after that, a nurse practitioner came in, confirmed that I had a sinus infection, and wrote a prescription for Augmentin. On the way out, the receptionist—who wanted to photocopy the prescription I had been given—chased us across the road. All of the records, I learned, were paper and kept for only one year. At the Safeway pharmacy I was asked for more insurance details and proof of identity. The pharmacist wanted to see my driver’s license, which, as a blind person, I was not able to produce. By now I was feeling really rough. Two signatures and a further $5 copay later, I had the antibiotics in my sweaty little hand and retreated to bed.

In the following week, concerned American friends asked, without exception, what brand of antibiotic I had been prescribed. This just would not happen in the U.K. Perhaps we have a naïve acceptance that antibiotics are antibiotics and that the doctor would have prescribed whatever was appropriate. What is more, we probably don’t even consider that we might have had a choice in the matter.

Ice Cream, Health Care, and Choice

The following weekend, on a recuperative visit to Baskin-Robbins, it struck me that although thirty-one flavors of ice cream—a different flavor for each day of the month—are rather overwhelming, I was able to make an informed choice. Of course, since I’m blind, this involved Paul reading aloud the list of flavors: “pistachio almond, chocolate chip cookie dough, nutty coconut…” He read at least twenty names before he lost patience.

Can we treat health care like ice cream? Does more choice raise collective society benefit or well-being? I guess it all hinges on whether we have the necessary information with which to choose, actually want to choose, and can influence the organization and quality of health care through exercising our choice.

According to economic theory, ice cream is kept at a socially optimum quality, and individual consumer benefit is maximized, by the act of having each of us choose a favorite flavor. Even if we have not sampled “rocky road” or “raspberry royal dream,” we can—or most of you can—see it and imagine what it tastes like. Tiny spoons are provided so that we can have a sample. We can weigh the financial sacrifice of paying for the ice cream versus the benefits of its consumption.

Can we as individual patients really do this for health care, too? And do our individual choices about our own health care lead to the kind of overall health care system that many of us would like to see? In economics, the invisible hand of the competitive market is promoted as the most efficient mechanism for balancing supply and demand for goods and services. The invisible hand does, indeed, work very well for currency and many consumer goods. In a perfectly competitive market there need to be many buyers and sellers who cannot individually influence price. Consumers need to be fully informed and the best judges of their own well-being. The good or service needs to be homogeneous, meaning the same thing or standard. For example, dollars are dollars in a currency market. There needs to be free entry into and exit out of the market rather than professional control of who can and who cannot supply a good or service to the market. None of these conditions holds in the case of health care. Yet as interest in consumer-focused health care in the U.S. increases, the market is held up as a means to promote that goal of all goals—consumer (in this case, patient) choice.

How valuable is choice in health care? Does it lead to outstanding population health status or equitable access to necessary health care? Apparently not, when the U.S. is compared internationally.

In the end, given all the choice in the world, as patients we depend on an agency relationship where the doctor is the agent acting in our best interest. We depend on our doctor not only to provide what care we need but also to make the decision as to what that care is. A 2002 Harris Interactive telephone survey of 1,013 U.S. adults, which asked whether they had seen or responded to ratings of hospitals or physicians, found that only 1 percent of respondents had made a decision to change health plans, doctors, or hospitals on the basis of performance evidence. It seems that as isolated individual consumers, particularly at the time when we are ill, we cannot influence the organization or quality of health care through the market. The bottom line: Choice leaves us isolated.

Can Less Offer More?

After a stay in the United States I simply do not believe that more choice is better in health care. It certainly is not a rational alternative to universal coverage or even wider basic health care coverage for all. The market mechanism has not lead to high-quality health care in the U.S., even for those with health insurance. There are enormous efforts being made to improve the quality of American health care by developing quality indicators. Some of these, such as the Health Plan Employer Data and Information Set (HEDIS) measures, have evolved to help employers choose health plans for their employees. Yet, ironically, given the escalating costs of providing health benefits, this results in employees’ being offered a diminishing choice of plans.

Proponents of consumer-focused health care, and in particular health savings accounts, promise that this will restore choice for the consumer. In fact, these things further isolate the patient, making him or her take greater financial responsibility for health care that, in my view, is disguised as the privilege of choice.

On arriving in the U.S., I believed that most Americans wanted universal health care and that it was only a matter of time until political processes led to wider coverage for the forty-five million Americans who are currently uninsured. I was naïve. I truly found it a surprise to read commentaries in U.S. publications disparaging the poor quality and lack of choice that other countries in the Western world allegedly put up with in the name of universal health care. So if individual consumers cannot influence the quality of health care, and if the majority of the population and stakeholders—such as insurers and providers—do not want a greater role for government in organizing and financing health care, how can the quality of U.S. health care be improved?

The current wisdom appears to be that the key to quality improvement will be through pay-for-performance. This is not a new panacea. All forms of provider reimbursement (fee-for-service, per capita payment, and salary) are in some way paying for performance. What is certain is that however future pay-for-performance schemes are designed, providers will respond and deliver whatever is being paid for, whether or not this leads to better health status or more equitable access to necessary care in the U.S.

Ultimately, choice comes at a price. As consumers, we are expected to pay for the privilege of choice, and if we cannot pay, we do not get to choose and, more than likely, do not get at all. In the ice cream market, if we can’t all afford ice cream every day, it’s not a life-or-death situation. With health care, it’s very different.

After my year in the U.S. came to an end, my family, Vikki, and I returned to the U.K. having made many American friends and in awe of the natural beauty of the Pacific Northwest. With respect to ice cream and health care, Vikki and I both chose the “rocky road” route. I left the U.S. convinced that having less choice in health care is a price well worth paying for universal coverage.

Rhiannon Edwards (r.t.edwards@bangor.ac.uk ) is a senior research fellow in health economics and founding director of the Centre for the Economics of Health at the University of Wales, Bangor, in the United Kingdom.

A Commonwealth Fund Harkness Fellow in health care policy during 2004–05, Rhiannon Edwards thanks the Commonwealth Fund and the Center for Health Studies, Group Health Cooperative, in Seattle for her U.S. experience. She also thanks Paul Gash, Sara Wood, and Bronwyn Tunnage for reading support and help in preparing this essay. Her views are not necessarily those of the Commonwealth Fund, its directors, or staff.