Uwe Reinhardt, Ph.D. sends us a message in response to news reports on the elimination of retiree health benefits by Bethlehem Steel and by Aetna. Our response follows his.

Click on this link to learn about another American chicken coming home to roost. (Not ever having raised chickens, I don’t actually understand this metaphor, but I hope its use here is appropriate). Bethlehem’s workers should have expected this, as should all other workers with retiree benefits promised them by a corporation. After all, they were presumably adults when these deals with their company were done.

For some reason, millions of American workers in their prime were convinced that their particular company was stronger, smarter and had longer longevity than does the United States government. Where people learn such civics and economics has always been a mystery to me. But that is the “truth” they knew, perhaps because they had been taught it in high school or on TV or by their local Chamber of Commerce.

Did it ever occur to anyone that when the executive of the ABC Corporation in, say, 1975, promised a worker then that “the company” would purchase him or her $10,000 or more worth of health care 30 years hence (when that promising executive might be dead already), that such a promise was highly dubious on its face? How could that executive possibly have known that the ABC Corporation would even exist in 2005? After all, it might have been wiped out in 1995 by a competitor in Shanghai or Singapore or Japan. If not that, it might have been wiped out by a future American genius, such as Jerry Levin of Time Warner, who virtually gave away that company to the shareholders of AOL, a fluffy virtual company whose stock would be called “funny money” if it were not so tragically worthless (not even to speak of the geniuses who ran WorldCom, Enron and so on). If not that, the ABC Corporation might in the future be headed by a ruthless, greedy executive who might look to breaking such earlier promises as a nifty way to shore up the company’s bottom line and, thereby, the value of his gazillion stock options–all to the loud cheers of an adulating financial press?

Where did Americans ever gain the impression that, over the long haul, a string of unknown future ABC Corporation executives of a corporation constantly being buffeted by global competition would be a more reliable source of retirement security than the government of these United States? Who teaches them these fairy tales? Can anyone enlighten me on this one?

In 2001, General Motors acknowledged in its annual report to have completely unfunded liabilities for retiree benefits other than pensions (mainly health care) of $34.5 billion. The company’s net worth (shareholders’ equity) that year was $19.7 billion. It gives you some idea of the financial pressures besetting the company for having taken on this social security system on behalf of GM workers, current and former. Although Rock Wagoner, the current CEO, is widely acclaimed for his operating skill, GM’s stock tanked when earnings were up recently, reportedly over the huge unfunded retiree benefit overhang (health care plus unfunded pension obligations that should, ideally, have been funded). Can’t you see some future GM manager simply throwing in the towel, union be damned? Sitting out a strike over that issue might be worth it to the GM shareholders and the executive’s stock options.

I guess I am supposed to feel sorry for the Bethlehem Steel workers who might lose the promised health benefits, or for other workers who surely will in the years ahead. I don’t. “Should have respected your government more,” is what I would tell them. “Shouldn’t call everyone who proposes to have government do what a private corporation cannot possibly do a ‘socialist.’ Now sit back and enjoy your American dream, my friends. And a dream it was, if only you had thought about it.” That’s where I am on this one.

Best

Uwe R.

Here’s another story on retiree health benefits. Like the previous one, it comes to me courtesy of Naomi Shaiken.

http://www.ctnow.com/business/hc-aetna0208.artfeb08,0,5399206.story?coll=hc%2Dheadlines%2Dbusiness

Similar story–same response by me.

Uwe

Don’s comment: What is your response to Professor Reinhardt’s message? Are you angry with him for slamming the hapless working stiff who is the victim of corporate abuse? Are you angry with the corporate leaders who are depriving their hard-working employees of their promised benefits? Are you angry with the union leaders who failed to assure that trusts that they fought for were fully and permanently funded? Are you angry with the superfluous vested interests that are thriving as they continue to dispense the “government can’t do it” rhetoric? Or are you angry with yourself for your continued inertia when the need is so great?

Regardless, do NOT walk away from this message simply fuming. Do NOT simply leave it to others to take up the task of reforming health care. The average American really does not understand the policy implications of various reform proposals. It will take a massive grassroots effort to educate the public. Each one of us MUST be a part of that effort.

The Coalition for a National Health Program (CNHP) is being launched to conduct education and advocacy on the only truly workable, cost-efficient solution: a publicly funded, publicly-administered national health insurance program for the United States. Participation in the coalition will require “only” that you agree to support health care reform by mobilizing friends, associates, organizations and the community in activities that advance the understanding of this option that is clearly the imperative. The strength of this movement will not be in funds, but in people: you, me, and everyone else that cares about the future of health care in America.

The CNHP website:
http://www.cnhp.us

Bookmark it now, and be prepared to visit it soon to sign on, and to use its resources in your grassroots efforts.

Our concern is health, and everyone agrees that war is unhealthy.

The concepts in the following article make it clear that there are options other than war.

Washington Post
February 9, 2003
Is There a Better Way to Go?
By Jessica Tuchman Mathews

http://www.washingtonpost.com/wp-dyn/articles/A42716-2003Feb7.html

Jessica Tuchman Mathews is president of the Carnegie Endowment for
International Peace:
http://www.ceip.org

All of America must understand that war is not our only option, only our worst one.

Please make this message yours, and share it with others.

GhanaHomePage
Ghana
05 February 2003
Health Insurance scheme to be fully operational

The National Health Insurance Bill would soon be placed before Parliament and become fully operational by the end of the year, Vice President Aliu Mahama, said on Tuesday.

The Vice President, who said this when he launched the Ghana Health Service (GHS), the service delivery arm of the Health Ministry, urged Ghanaians to support the scheme when it is implemented.

He said: “It is better to have an arrangement that enables you to prepare and plan for inevitable but unpredictable day of ill-health by paying for a health insurance policy, rather than the “Cash and Carry” system, which makes you pay when you are ill and at your most vulnerable.

“I am convinced that in the long run, health insurance is a more humane way of paying for health services and I urge you all to support the system when it comes into being later in the year.”

The insurance scheme is being tested in 42 districts by mutual health organisations, owned by the communities. Vice President Mahama stressed the government’s commitment to ensure that Ghanaians stay healthy and work for the growth of the economy…

http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=32446

Comment: As the United States moves further toward a consumer-directed health care system “which makes you pay when you are ill and at your most vulnerable,” Ghana is creating National Health Insurance which “enables you to prepare and plan for inevitable but unpredictable day of ill-health.”

American Heritage Dictionary: “civilized” – adjective: … 2. Showing evidence of moral and intellectual advancement; humane, ethical, and reasonable…

Hmmm…

Health Affairs
Web Exclusive
February 7, 2003
Health Spending Projections For 2002-2012
By Stephen Heffler, Sheila Smith, Sean Keehan, M. Kent Clemens, Greg Won, and Mark Zezza (from the Office of the Actuary, Centers for Medicare and Medicaid Services)

Projection for 2003:

National Health Expenditures (NHE) (billions):
$1660.5

NHE, per capita:
$5775

NHE, as percent of GDP:
15.2%

Both the recently released historical health spending estimates and this set of projections have highlighted the enormous pressures mounting on our health care system. Private health insurance premiums are rising at rapid rates, federal and state budget shortfalls exist, a softer labor market has reduced the number of people with private insurance and has increased Medicaid enrollment, and provider costs are continuing to rise. These trends have the unique, although not unparalleled, impact of affecting all of the relevant parties-from payers to providers to employers to consumers-at the same time.

Experience indicates that changes in the mechanisms of payment and delivery of care, as well as consumers’ preferences and public sentiment, will result in a slowdown in growth, temporarily alleviating some of these pressures. However, experience also indicates that society is likely to be willing to allocate more of each dollar of income to health care. We project both of these outcomes over the next decade: national health spending growth slowing from 8.7 percent in 2001 to 6.7 percent in 2012, and the share of GDP accounted for by health care increasing from 14.1 percent in 2001 to 17.7 percent in 2012. The intriguing part of the next decade may be where it leaves us, since the baby-boom generation will begin to become eligible for Medicare at the end of the projection period, and an unparalleled set of pressures on the system is likely to develop.

http://www.healthaffairs.org/WebExclusives/Heffler_Web_Excl_020703.htm

The Washington Post
February 5, 2003
Director Seeks ‘Just the Facts’ To Improve Medical Care
By David Brown

It is an embarrassing but no longer well-kept secret that despite health care spending of about $1.3 trillion a year — including about $25 billion in federally funded research — many Americans receive medical care that is not terribly good.

Agency for Healthcare Research and Quality (AHRQ) enters a new phase of its occasionally rocky journey with the appointment expected today of Carolyn M. Clancy, 49, as the fourth director since its founding in 1989.

As Clancy sees it, AHRQ has two big challenges. One is to help develop the “evidence base” of medicine — the raw material of better care. The second is to identify the best ways to get doctors and nurses to use optimal, up-to-date treatments.

The first effort acknowledges that the body of medical research on just about any important subject is vast — too big for the average practitioner to grasp. Over the past 15 years, however, there has emerged a set of rules and methods by which a team of experts examines all the studies on a given question, evaluates their validity (combining numerous ones, on occasion, to increase the statistical power of the results) and ultimately extracts conclusions — the “best evidence” — from the mass of information.

This work is expensive and laborious. Health care organizations and professional societies cannot easily do it. Consequently, AHRQ has helped establish “evidence-based practice centers” at 13 universities, and is paying researchers there to create “systematic reviews” of many topics.

She describes the second challenge as the effort to figure out “what systems or strategies make the right thing to do the easy thing to do.”

AHRQ is paying for dozens of studies of how clinics and hospital systems improve care, vaccination rates and patient satisfaction, and reduce waiting time, overlooked lab results and medication errors.

Carolyn Clancy, M.D.:

“The key is information. Making information available at the point of care when you need it.”

http://www.washingtonpost.com/wp-dyn/articles/A26125-2003Feb4.html

U.S. Department of Health and Human Services press release: http://www.ahcpr.gov/news/press/pr2003/clancypr.htm

Agency for Healthcare Research and Quality: http://www.ahcpr.gov/

Comment: The appointment of Carolyn Clancy as director of AHRQ is an important step forward for improving the quality of our health care system. She understands the issues that will make our system a better system for those who matter the most: the patients. Her strong, patient-oriented values are exemplified by the fact that she is a former president of Physicians for a National Health Program.