A Reminder- How Government Helps Make the "Self-Made" Man

                                    Robert A. Levine   April 30, 2012

There are myths proclaimed by some right-wing partisans and Ayn Rand acolytes that “rugged individualists” working alone have been responsible for America’s great accomplishments and that government is the enemy of progress. In their quest to reduce taxes, particularly for the wealthy, and cut the size of government, this myth has been promulgated by ideologues to gain support from the middle-class, needed to elect legislators who share their vision.

Unfortunately, many Americans have accepted this narrative and because of it, often vote against their own interests. In a recent essay, The Future of History, Francis Fukuyama noted “individuals are not sovereign entities, but beings heavily shaped by their surrounding societies.” Pounding away at the failings of “big government,” conservatives have ignored the positive effects of government and the fact that no one in the modern interconnected world is able to make it on his or her own. Aside from its role in national security and protecting Americans from foreign threats, the federal government is a necessary part of citizens’ everyday lives and provides the internal fabric that holds the nation together. Unlike the 18^th century, for an individual to be successful in this day and age, government help is essential.

Businesses could not function without the nation’s infrastructure (though it currently needs work). Building the interstate highway system, bridges and tunnels and maintaining them, was and is a federal concern. The integrity of America’s ports and airports, and air traffic control, all comes under the aegis of federal agencies. Products and people could not move if it were not for the government. Apportioning the broadcast spectrum for TV, radio, cell phone companies and so forth, insuring the safety of transmission lines, pipelines, and so forth, are all functions of the federal government.

In addition to regulating interstate commerce, international trade agreements negotiated by the federal government set the ground rules for US trade with other nations, and have opened up markets for American products. American businesses are also protected by the government when foreign companies dump their goods in this country. Intellectual property rights, here and abroad are nominally safeguarded by the government, though in this area federal agencies have fallen short. The Export-Import Bank helps American companies sell their products to other nations.

Funds for research and development, since WW II, have come from the federal government over and above the private sector and have resulted in many benefits. The development of much of the Internet, global positioning systems, drones, came from work funded by DARPA (Defense Advanced Projects Research Agency). The NIH and funds for medical research have led to many advances, including treatments for cancer and other diseases.

Educational standards are promoted by the federal government and funding is provided to support K-12 schools and higher education, in addition to Head Start. Pell grants, Stafford loans and other programs allow many students to attend colleges they would otherwise not have been able to afford.
The safety of the foods Americans eat and the medications they use are federal government responsibilities. Federal regulators protect investors from financial predators and uphold the integrity of the banking system.
The government provides a safety net for older people and the disabled through Social Security, keeping them from impoverishment. Medical care for seniors and those who can’t afford it is covered by Medicare, Medicaid and other programs.

Businessmen and entrepreneurs need government to help them communicate with their suppliers and customers, receive materials and get their goods to market. The educated work force that businesses require depends on the local, state and federal governments, with federal agencies providing a supervisory role and extra funding. A large part of the health and safety of their workers is a federal responsibility. People who claim to have made it on their own are either unwilling to acknowledge the actions of government for ideological reasons, or are engaged in self-promotion.

The federal government is inefficient in many of its operations, but its expansion has occurred during both Democratic and Republican administrations. Those who rail against the government should focus on fixing it and not just making it smaller so they can pay less in taxes. And the money saved should go to paying down the deficit. For different reasons, both the weak and strong among us need a robust federal government in today’s world.

Resurrecting Democracy
www.robertlevinebooks.com

Corporate Ethics- An Oxymoron?

Robert A. Levine 4-26-12

Two front page articles in the New York Times earlier this week reminded me of just how pervasive the lack of ethics has become in the corporate world, where making money is the only thing that counts. Perhaps the same level of corruption has always been there but is reaching public awareness more frequently now.

One of the articles was about the way Walmart’s business in Mexico had been able to expand rapidly by bribing officials to expedite the necessary permits. When an internal investigation by Walmart uncovered this corrupt behavior in 2005, it was suppressed by corporate executives and those involved were allowed to go unpunished. In fact, the major figure responsible was subsequently promoted to vice-Chairman of the company.

Another report examined the actions of insurance companies in changing to a new payment method for out-of-network care. This change increased patients’ costs while it saved the insurance companies money. However, this new method contravened a previous settlement the companies had made with New York State over manipulation of data that was supposed to improve payments to providers and protect policyholders from additional costs.

Also this week, 60 Minutes on CBS examined the fraud and deception by Lehman Brothers officers prior to its bankruptcy in 2008. To date, none of the executives of Lehman Brothers, including the Chairman Richard Fuld, have been charged with criminal activity by the government. They have been able to walk away with tens to hundreds of millions of dollars obtained at the expense of shareholders.

Similarly, none of the executives of any of the other financial firms that precipitated the recession, and necessitated the bailout by American taxpayers, have ever been brought before the criminal bar of justice. Angelo Mozillo, Kerry Killinger, Stanley O’Neal, Charles Prince are but a few of the names that live in infamy. Reports have confirmed that these executives and others provided false information about their companies to stockholders, investors and regulators or condoned activity by employees to make it seem as if their firms were healthy when they were actually in dire straits. They also vetted investment vehicles, like CDOs, they knew were of poor quality to unsuspecting buyers. There were real estate loans as well, approved for applicants by mortgage brokers even though it was known the applicants could not afford them. Unsurprisingly, these loans subsequently went bust and contributed to the economic meltdown. But the more loans handed out, the greater the bonuses received by the mortgage brokers and banking executives.

There are also instances of short cuts taken by corporate executives to save money that increased risks and flouted safety regulations, resulting in deaths or environmental damage. BP fits into this category with its Alaska pipeline spill and Deepwater Horizon blowout in the Gulf. The mine explosion in West Virginia in the Upper Big Branch mine owned by Massey Energy that killed twenty-nine miners is another example.

At random, other instances of corporate malfeasance that come to mind include the Enron debacle, the TYCO scandal and the Savings and Loan scandal. But in addition to these illustrations of corruption that are well known to the public, there are almost daily instances of illegal and unethical behavior by corporations and their executives to enhance corporate bottom lines along with executive salaries and bonuses.

Capitalism provides people with the opportunities to make money. Human nature drives some of them to illegal or unethical behavior to increase their remuneration. It is up to the government to provide a strong regulatory structure and prosecution of lawbreakers to minimize corrupt behavior. This also helps the economy by maintaining a level playing field so that honest businessmen and women have a fighting chance in the marketplace.

Resurrecting Democracy
www.robertlevinebooks.com

The Big Game Redux

The Big Game Redux

            Robert A. Levine   4-25-12

Last week in an article entitled The Big Game, I decried the skewed funding by state and local governments that favored athletics over academics. I focused particularly on Texas, where there was inordinate spending on high school athletic facilities and coaches while funding for teachers and academics was being reduced. College coaches were also receiving outlandish sums compared to faculty members, while student tuition was being increased. I noted that this emphasis on athletics over academics did not bode well for the United States in terms of the nation’s ability to compete economically in the years ahead, since an educated populace is a vital resource.

An article yesterday by Jordan Weissmann in theatlantic.com (http://bit.ly/IrgVUe) describes a situation that has arisen at the University of Florida in Gainsville where its sports budget has been increased at the same time funding for its computer science department is being slashed. This is the result of the state cutting the university’s budget by 30% over the last six years, a total of $240 million. Much of the athletic department budget is covered by $36 million in annual contributions from alumni, and the athletic department does generate income for the school, providing $6.1 million to the university’s operating budget last year. However, if the state and the university’s alumni had some foresight, they would be funding an expansion of the computer science department before contributing money for sports. Florida and the nation will certainly derive more future benefits from the computer scientists that the university produces than from its football players.

Resurrecting Democracy

www.robertlevinebooks.com

Moral Hazard, Health Care Coverage and the Individual Mandate

            Robert A. Levine   4-23-12

Whether the Affordable Care Act (ACA), now before the Supreme Court, will survive in its current form is in some doubt, with the individual mandate particularly in danger of being overturned. Though Congress has the power to regulate interstate commercial activity, opponents of the law believe it can not impose a tax or fee on inactivity, such as the failure of citizens to purchase health insurance.

The individual mandate was included as part of the law to pressure young healthy people to obtain insurance. This was to balance the cost of insuring men and women with chronic illnesses and pre-existing conditions. Without the mandate, it was believed many young Americans would not bother with coverage, as is currently the case. If that happened, writing policies for those with pre-existing conditions would not make financial sense for the insurance companies, or the premiums would be too expensive for those who were sick.

Many individuals in their twenties and thirties do not see the need for heath insurance, assuming they are unlikely to become seriously ill or injured and that it is a “waste” of money. They know that if necessary, they can always receive Emergency Room care without insurance, and think they will be able get coverage after the fact. And if medical expenses become crushing because of a major illness or injury, the involved person (having limited assets) can simply declare bankruptcy, erase the debt and start over. This is a prime example of moral hazard, where the economic risks of illness for uninsured people is placed on the backs of others.

Health insurance allows individuals to receive care without having to worry about financial ruin in case they are faced with unexpected medical expenses. An immediate expenditure of funds to buy coverage guards against the possibility of much greater losses in the future. Carrying health insurance requires men and women to take responsibility for their own well being and not be dependent on the social safety net should they fall ill. It is unfair to other citizens for uninsured people who can afford coverage to receive medical care. It means their care is paid for by government subsidies to hospitals (which is bourn by taxpayers) or by an increase in insurance premiums for all policyholders. However, as long as men and women know they can obtain medical treatment in Emergency Rooms or walk-in clinics, and that they will be hospitalized if necessary even without coverage, there is less incentive for them to purchase insurance. And bankruptcy is an easy way for young people who have not yet accumulated significant assets to discharge debt.

If the ACA or the individual mandate is voided by the Supreme Court, a way must be found to persuade reluctant citizens who have the financial means to buy health insurance. A law that prohibited medical facilities from providing care to those who did not have coverage would certainly be effective, but this is a non-starter. It contravenes societal and medical mores about treating sick or injured patients regardless of economic circumstances. A more realistic approach would be to enact a law that prevented medical expenses incurred by uninsured men and women from dismissal through bankruptcy. Citizens who were irresponsible and neglected to obtain insurance would be indefinitely liable for all their medical expenses, eliminating some degree of moral hazard.

If this measure were passed, those who were too poor to pay for coverage would enroll in Medicaid and those who could afford it would be more inclined to purchase insurance. Allowances would have to be made for people who were emotionally disturbed or mentally impaired.

Though not a perfect answer, the above strategy is a logical approach to the problem of citizens who choose not to purchase health insurance, shifting the cost of their care onto the government and those who have coverage. If the individual mandate or the Affordable Care Act is overturned, Americans who are not obtaining health insurance might be motivated to do so by legislation that does not let them off the hook for the medical expenses they incur.

Resurrecting Democracy
www.robertlevinebooks.com

Turning Back the Clock Politics

                    Robert A. Levine   4-19-12

The gridlock in Washington and the difficulty Congress has in passing significant legislation does not require intricate analysis and pontificating by pundits over its cause.

Conservative initiatives that would have Americans live in the past are the main divide between conservatives and liberals or moderates. It’s the reason conservatives want to expel moderates from the GOP whom they label as RINOs (Republicans In Name Only). The more conservative a politician is, the more he or she sees the past through rose-colored glasses and wants to move America back in time. They want to go back beyond the Great Society of Johnson, the New Deal of Roosevelt, and even measures favored by Nixon such as the EPA.

Examining conservative stances, their love affair with the past becomes readily apparent. Smaller government and lower taxes head the list. This is in disregard of globalization and the problems raised, the complexity of citizen’s lives, the need for an adequate safety net, protection against external and internal enemies, a suitable infrastructure for the nation, food, drug and environmental monitoring, safety standards for air travel and automobiles, allocating the wireless spectrum and off shore drilling, and numerous other functions of government in the modern world. Conservatives would like to shrink the federal government’s role and spending in virtually all of the above areas, except for the military.

As for lowering taxes, America’s marginal income tax rates are among the lowest they have ever been and among the lowest in the developed world. During the early 1950s through 1963, the marginal tax rate was above 90%, and as recently as 1979 it was 70%. In moving the nation back past the New Deal, conservatives would probably be happy with the income tax rate of 7% that was in place in 1913.
And conservatives want government to be less intrusive in people’s lives, except when it comes to hot-button issues of importance to them, such as a woman’s right to choose and same-sex marriage. This really has to do with religious beliefs and government should not be involved in regulating these areas. However, many conservatives would like the wall between government and religion to be torn down and for policy to be concordant with religious practices. Perhaps they would feel more comfortable in the Massachusetts’ colony in the 17^th century, when religion and government walked hand in hand, controlling people’s lives.
Conservatives also do not think contraceptive coverage should be an expected part of health insurance since this could lead (God forbid) to women’s sexual freedom and possibly sexual relationships outside of marriage. Better that America should go back past the 1960s, before oral contraceptives became widely accepted and state laws banning the sale and use of contraceptives were overturned by the Supreme Court. And conservatives believe a woman’s place is still in the home with the man as the breadwinner for the family, with no need for equal pay for equal work laws.

There’s also the “old West” model of society that conservatives promote; every citizen packing guns and standing their ground against whomever they see as miscreants. There’s no acknowledging the danger of weapons in an overwhelmingly urban nation and that weapons should be limited to hunting, sport shooting or home protection.

Their rejection of scientific information take us back in time as well, with an unwillingness to accept evolution, the “big bang” theory or global warming, and a desire to teach non-science in the classroom.
In addition, conservatives are suspicious of America being corrupted by foreign influences. This may be one of the reasons for their adamant opposition to sensible immigration reform, besides the economic grounds and possible racism. The overwhelmingly WASP nation that existed around the time of the revolution would probably fit the bill for them.

Unfortunately, the Supreme Court is currently dominated by conservatives who hold many of the above views and would like to take America back to a simpler and more freewheeling time of robber barons and gunslingers.

If conservative ideology becomes more ascendant in the future, America will indeed be returned to a previous era, its stature in the world eroded, economic inequality heightened, and the gains women have made rolled back. Perhaps if the electorate truly understood how conservative policies would change the nation, America might remain in the present with a brighter future.

Resurrecting Democracy
www.robertlevinebooks.com

The Big Game- Can America Compete?

                        Robert A. Levine   4-16-12

As an avid sports fan who follows teams on a college and professional level, I find the skewed priorities favoring sports over education for allocation of resources by state and local governments disturbing. Support for sports teams at high schools and colleges has continued or expanded even as school funding has dwindled, with coaches and athletic programs as the tails wagging the educational dogs. With March Madness having just passed, it’s appropriate to ask whether America will be able to participate in the “big game” of national economic competitiveness in future years, since contending is dependant on an educated populace.

There is little question that America does a poor job of educating its citizens compared to other nations. The Program for International Student Assessment in 2009 had the U.S. at 17^th in reading proficiency, 31^st in math and 23^rd in science. Instructors estimate that over 40% of college freshmen are unprepared for course work. Equally disheartening, employers say that 39% of applicants are not qualified for entry level jobs.

Yet despite the above deficiencies, funding for teachers’ salaries, additional teachers and facility upgrades is being curtailed throughout the nation. Admittedly, there are many reasons why America’s students perform poorly, including a lack of parental interest, poor teaching, language barriers, cultural mindsets, and so forth. And while increased funding is not the only answer to improve student performance, better teachers, more teachers and better facilities, all requiring increased funding, would certainly help.

On the other hand, money is being spent freely on athletic programs at many high schools and colleges. Texas is emblematic of the support given athletics while education is being starved. In the NEA rankings in December 2010, Texas was 33^rd in teacher salaries and 44^th in per student spending in K-12 schools. State testing (SERI) in science and mathematics in 2011 had Texas students 31^st. In the percentage of state populations over age twenty-five with at least a high school education, Texas came in last. Yet a new football stadium for Allen, Texas, high school last year was built at a cost of $60 million. The new stadium seats 18,000 people, replacing one that held 14,200. In 2006, high school football coaches in Texas averaged $73,800 in salary, versus $42,400 for teachers. And it isn’t only coaches and stadiums that athletic programs require, but assistant coaches, administrative personnel, training and weight rooms, and so forth.

On a university level, Texas football coach Mack Brown was the highest paid in America in 2010, earning $5.1 million plus incentives. This was while a pay freeze was in place at the university and tuition was being increased. While other Texas coaches earned less, they were still well paid compared to professors at their institutions.

The focus on sports in Texas is mirrored in other states with poor educational achievement. In Alabama, the head football coach currently has a guaranteed salary of $44 million over eight years, while full time faculty members will earn an average of $650,000 during this same period. In other words, the coach will be paid over sixty-six times the annual salary of faculty members. Another report showed that between 1985 and 2010, average salaries for professors at public universities around the nation rose 32% while those of football coaches went up 650%. This sends a message to students and faculty that they are not valued and that athletics is more important than education. Indeed, athletic prowess rather than academics is the way many universities brand themselves.

In general, states that most strongly embrace school sports are the ones that fare worst academically. Supporters of university sports programs argue that they bring in money and provide positive publicity for the school. And indeed that’s the case for some institutions that consistently have winning records in the major sports. But not every university can be a winner and there are far more that lose money on athletics than those that are profitable. And building athletic powerhouses on a high school level makes no sense at all.

To prepare America for the “big game,” the culture at high schools and universities must be changed, with more focus on academics and less on sports. Consideration might be given to having sports teams separated from the schools and run as independent clubs with school affiliations. Having an Ivy League-like de-emphasis on athletics is another option. Sports-rabid alumni, however, are unlikely to agree to these kinds of changes.

America is in competition with nations where students are willing to put in long hours of study, and academic proficiency is lauded. Sports are fun but need to play second fiddle to academics if America is to thrive in the 21^st century’s “big game.”

Resurrecting Democracy
www.robertlevinebooks.com

Freedom of Religion Is Not Absolute

               Robert A. Levine   4-12--12

 Rick Santorum made separation of church and state an issue in his campaign for the presidency, denouncing John F. Kennedy’s commitment to that principle and using freedom of religion as a rallying cry. The uproar regarding coverage for contraception further highlighted the continuing schism in America over those wanting absolute freedom to follow their religious beliefs and those accepting that when a conflict exists, civil law must override religious precepts.

Previous court battles have affirmed that freedom of religion in America is not an absolute right. Though the First Amendment to the Constitution prohibits Congress from any actions favoring the establishment of a religion or “prohibiting the free exercise thereof,” there have been a number of instances where the general welfare has taken precedence over religious practices, forcing a religion to change its edicts. Since the state is responsible for regulating harmful conduct, if there is disagreement between a religion and the state over some element of religious practices, civil law must be observed. Of course, the difficulty arises in determining which religious practices may be detrimental to society.

One prominent example of a conflict between church and state, where the Supreme Court ruled that civil law must be followed, involved the Mormon practice of polygamy. In 1862, the Morrill Act was passed by Congress prohibiting plural marriages. The Court upheld the conviction of a Mormon in 1878 for violating the law which he said had interfered with his religious duty. However, polygamy continued to be openly practiced by Mormons with the argument that it was protected by the First Amendment. Finally, in 1890, the president of the Mormon Church acknowledged that civil law had primacy over church law and the practice of polygamy was ended by the church, aside from some fundamentalist splinter groups. Similarly, the Muslim practice of allowing up to four wives under Islamic law is illegal in the U.S.

Another area where civil law was in dispute with religious officials was over the handling of pedophilia by the Catholic Church. For most of the 20^th century (and past centuries) the church dealt with child molestation by priests as a sin, rather than as a criminal offense. When a case of pedophilia was discovered, the name of the perpetrator was generally not reported to the civil authorities, with disciplinary measures meted out by the church. Often, this consisted of transfer to another position where the perpetrator might still have contact with children. Or a life of prayer and penance might be ordered. It was only after a series of scandals, numerous suits and some criminal trials in recent decades that the church agreed to treat pedophilia as a criminal offense, allowing an arm of the state to decide on punishment.

It is clear that religious freedom is not absolute in America. However, two questions must be answered by the courts in dealing with conflicts between church and state. One is how egregious the issue in contention is to the beliefs of a particular religion and the second is whether favoring the religion would contravene the general good to a sufficient degree to harm society. On the issue of contraception, it is clear that women’s health will be impacted if coverage is not available for low-income recipients. It also seems that when the Obama administration allowed church-affiliated organizations to opt out if they so desired and have the insurance companies pay for contraception, the church’s objections had been met.

We live in a pluralistic society where conflicts between what are considered civil rights or social needs and religious beliefs are constantly playing out. Finding a middle ground when dealing with galvanizing issues, such as abortion or same-sex marriage appears to be nearly impossible. On the other hand, the availability of contraception for all women seemed to have been settled decades ago and yet has come back to haunt us again. It is unfortunate that when the nation faces so many serious economic problems, the two political parties must devote so much time and energy to an issue like contraception coverage which should have been a minor administrative decision.

To truly insure freedom of religion for everyone, the wall separating church and state must remain in place as a bedrock principle of American democracy.

Resurrecting Democracy
www.robertlevinebooks.com

To Cut Health Care Costs, Unnecessary Care Must Be Targeted

                                                                        Robert A. Levine   4-9-12

Until the Supreme Court makes a decision about the legality of the Affordable Care Act (ACA) and its provisions, health care is in limbo regarding legislation that might be enacted to control health care costs and provide care to the uninsured. However, the health of the economy and federal government demand that these costs be controlled.

Recent recommendations by physician panels that doctors reduce the frequency of commonly used tests and procedures because they are often unnecessary reinforces the importance of attacking unnecessary care as a way to constrain costs. This advisory was issued by the American Board of Internal Medicine Foundation. The president of the organization, Dr. Christine K. Cassel asserted that the uninsured would be able to get coverage without any increase in government spending and that rationing of care would not be required if only appropriate care was provided.

An article in the Archives of Internal Medicine last September reported that many physicians believed their own patients were receiving too much care. The Congressional Budget Office and a number of analysts have placed the amount of unnecessary care at about 30% of health care expenditures, or $900 billion out of a total of $2.7 trillion; a considerable saving waiting to be harvested.
While politicians have spoken about broad cuts to Medicare and Medicaid to shrink the nation’s budget deficits, they have not mentioned targeting unnecessary care as a way to lower overall health care costs. They do not want to antagonize the powerful stakeholders in the health care system who would suffer financially by legislation having this objective. These stakeholders include organized medicine, insurance companies, trial lawyers, pharmaceutical companies and hospitals.

To reduce unnecessary care, physicians’ incentives to order or perform tests and procedures must be eliminated, and the rationale for defensive medicine must be ended. The paths to achieve both of these goals are clear, but the obstacles in the way require heavy lifting on the part of Congress if they are to be removed.

In order to curb defensive medicine, the ordering of unnecessary tests and procedures by physicians to protect themselves against malpractice suits, malpractice reform is needed. Trial lawyers, who are major contributors to the Democratic Party, are strongly opposed to any major changes in the malpractice process. The current system, which does not work effectively for either patients or physicians, greatly benefits these trial lawyers. Peer panels to review cases before suits can go forward should be required, with their analysis allowed to be introduced at any trials. Caps on the amounts given to injured patients for pain and suffering should also be legislated.

Even more significant in reducing unnecessary care would be ending the incentives physicians have to perform excessive tests and procedures which help determine their incomes. This means finding an alternative paradigm in order to end the fee-for-service payments that drive unnecessary care. Other methods that could be employed include bundling of payments for particular services, capitation, or having physicians on salary. Over 30% are doctors are already on salary and as I’ve mentioned previously, I favor this course as being the simplest one to implement. There are many ways this could be done. It works for the Kaiser system, Cleveland and Mayo Clinics, and there’s no reason why it can’t be successful when applied broadly. Physician salaries could also be augmented related to their productivity, patient satisfaction and quality of care.

Overall health care costs are skyrocketing. Federal budget deficits are partially due to increased spending on Medicare and Medicaid. Curtailing unnecessary care is an obvious way to bring costs under control and reduce the budget deficits and national debt while putting more money into the more productive parts of the economy. Getting it done in the current Washington environment is another story.

Resurrecting Democracy
www.robertlevinebooks.com

After the A.C.A.- Are There Answers?

                       Robert A. Levine  4-2-12

If the Affordable Care Act (ACA) is overturned by the Supreme Court, which now seems probable, how can health care costs be controlled and care provided to the one sixth of Americans who have no insurance? A bipartisan solution to the problem appears to be impossible. Evidence for this is reinforced by the fact that the individual mandate provision of the ACA, which originally had been a conservative Republican concept, became an anathema to Republicans once it had been adopted by Obama and the Democrats, and a focus of their opposition to the law.

Addressing the significant problems of overall health care costs, the one sixth of Americans who have no coverage, and increased spending by the government for Medicare and Medicaid, appears to be beyond the gridlocked, highly-partisan legislative bodies in Washington. And unless solutions to these problems are found, budget deficits and the national debt will continue to grow and the American economy will suffer. If after the November election one party controls the presidency and both Houses of Congress, with a filibuster proof majority in the Senate, there would at least be the possibility that a health care plan could be enacted. However, a more likely scenario is a continued division of the seats of power between the two parties and continued disagreement over what should be done. And cutting Medicare and Medicaid spending as the Republicans propose, or raising a few premiums, is not the answer.

The general animus between the parties and over health care in particular, masks the fact that the steps to constraining health care costs are straightforward and fairly obvious. However, it would entail abandoning the rigid insistence by conservatives on market-based solutions for all economic problems.

The market simply does not work in regard to health care, encouraging predatory behavior among the stakeholders in the system. When physicians are paid by fee-for-service, their income is determined by how many tests and procedures they perform and the intensity of the services they provide. And since there is an asymmetry of knowledge between laymen and physicians, patients usually accept whatever physicians recommend. This has led to a huge volume of unnecessary care; up to 30% of health care spending- $900 billion out of $2.7 trillion last year, with some adverse events as well. (Some unnecessary care is also generated by defensive medicine to ward off malpractice suits.)

Another 15-25% of health care spending is consumed by administration and overhead because of the complexity and inefficiencies of the insurance based system. Unable to reduce health care costs, insurance companies merely pass onto consumers in premiums whatever they pay out to providers. These companies also don’t cover those with pre-existing conditions and withhold payment for services whenever possible, to increase profits that will enhance executive salaries and shareholder dividends.

To curb unnecessary care, and save a good portion of the $900 billion dollars annually wasted there, fee-for-service payment for physicians should be eliminated. Capitation, bundling of payments for services, or having physicians on salary are all preferable options. Over 30% of physicians are already salaried and this would be the simplest and most efficient method of curtailing unnecessary care and its attendant costs.

A single payer system to reduce administration and overhead would also save hundreds of billions of dollars. This could be established through a Medicare for all system under the aegis of the government, or under a quasi-governmental agency similar to the Federal Reserve and free of political interference. Unfortunately, the chances of having this sensible path followed in the current political environment are slim to none.

Malpractice reform, expensive new technology that provides few benefits, and drug costs, must also be addressed to maximize savings for the health care system.

America’s per capita spending on health care is 50% higher than other developed countries. In terms of metrics like life expectancy and infant mortality, the medical outcomes are worse, and one sixth of Americans have no health care coverage. The nation can do much better in terms of cost and quality. The problems of soaring health care costs and lack of coverage have been ongoing problems for decades and need to be solved once and for all. Labeling necessary reform measures as “socialistic” and trying to placate the stakeholders in the current system will not help the nation find solutions. Pragmatism needs to win out over partisanship for America to win the battle over health care costs.

Resurrecting Democracy
www.robertlevinebooks.com