In the January, 2012, issue of The Atlantic Monthly, there is a lengthy article on the future of American manufacturing entitled “Making it in America”.  In profiling an individual company called Standard Motor Products and a few employees performing manufacturing operations, particularly a 22-year-old single parent named Maddie Parlier, reporter Adam Davidson concludes that the company will continue to perform manufacturing operations in the United States, but it will do so only if it can continually compare the cost of employees versus automated technology, and extract the best economic value from the process.

Employees who do not have high levels of education and technical skill will be continually insecure and will be displaced if they are not continually keeping ahead of the marketplace.  The most painful point the reporter makes is that anyone who starts his or her work career with major family or other responsibilities will have difficulty keeping current with the skills needed.  Maddie Parlier is 22 years old, has completed high school, but has not gone beyond it, is a single mother, and has no spare time or money to take courses and upgrade her skills.  She will be vulnerable to a future replacement by technology.

The problem with the increasing inequality of outcomes in our society in a time of global competition, continuous price pressure, and technology advancement is that continuous education and skill development are more important than ever.  However, achieving this goal is particularly difficult for those individuals who enter the workforce with the handicap of obligations that make continuous learning extremely difficult.

The story about Maddie Parlier begs two questions:

• Why did a woman who is obviously smart and a hard worker not continue her education beyond high school?
• How does someone like Parlier, with time-consuming family responsibilities, find the time to continue to upgrade her knowledge and skills outside of work hours?

When we consider these questions, we are inevitably led to a different way of defining the problem than is customarily used in analyses like these.

Why individuals like Maddie Parlier do not continue in school

My dad, who died in 2001, was a very intelligent person, with great wisdom and insight, and a continuous learner as an adult, but he dropped out of school after the 9^th grade.  My mom, also a person of great intelligence who was a continuous reader and learner all her adult life, dropped out of school after the 11^th grade during the early part of the Depression.  Why?

For them, going to school was an unpleasant and unproductive experience.  The classrooms experience did not engage either of my parents sufficiently to keep them in school, so they dropped out at the earliest possible opportunity.  While it is easy to say that we need better teachers and schools, the bigger problem is that schools do not teach people how to learn.  The educational paradigm is fundamentally flawed. Educators make the judgment that individuals have varying learning abilities, and assume that some people will learn, and others will fail to learn.

I can relate to my parents’ experience by what happened with subjects in which I did not do exceptionally well, like biology, chemistry and physics.

These subjects were taught in a standardized way.  I did not master them, but got good, although not exceptional, grades by sheer hard work and will power.  However, as an adult, I saw their value, and became genuinely excited to learn about the underlying principles of each subject. My daughter even gave me a brief chemistry tutorial on equation balancing recently.

Every one of us gets interested in a subject for different reasons, and we learn in different ways.  I think metaphorically and structurally, and recall information most effectively when I can engage multiple senses in learning the subject.

People have told me I have a photographic memory.  That is not true. I have a photographic memory on certain selective categories of information, but have a below-average memory on others.  My wife can remember the location of a house by a visual map of the color and style of the house and the houses around it.  She remembers foods she ate at a restaurant decades ago, and can even discern differences in the taste of an item from what she ate years ago. I cannot remember what I ate last Saturday night at the local tapas restaurant.

Why do I learn and retain information?

• The subject matter has to be important enough to want to retain it.  I tune out on information that will not matter to me, or that does not strike me as interesting.
• I take copious notes.  Contrary to popular belief, I do not file the notes, but review them once and discard them.
• When I take notes, my handwriting is highly legible, so that I can re-read what I have written.
• If a particular note is important, I underline it.  If it is exceptionally important, I place an asterisk next to it.
• After taking the notes, I re-read them, and I recite what I have written, so that I can hear from what I have written, in addition to seeing it.
• If the notetaking on a subject reveals a particular way of organizing and structuring the information, I create a visual structuring on the page of the notebook, either in the form of a graph, a flow diagram, or a chart.

The more of these tasks I perform, the more likely it is that I will remember what I have written.

My mother used to joke that the reason she dropped out of school was because she was required to do a paper on Sir Walter Scott’s Ivanhoe in her final semester as a junior in high school. I am sure that no one engaged with my mother in a way that helped her find meaning in the assignment.

Rather than trying to shoehorn every student into a one-size-fits-all educational system, let’s try to figure out the different ways in which to engage increasingly diverse populations in the art and the technique of learning.  The goal is “learning,” not “education.”

How do people with overwhelmingly complex lives carve out time for continuous learning, particularly of highly technical subjects?

How does someone like Maddie Parlier possibly carve out time to upgrade her skills?

• We have to create learning processes that provide more flexible self-learning opportunities.  It would be unfair to expect Parlier to attend a classroom course outside work hours, given her single-parent responsibilities, but she can learn online or in other ways.  If there are fees for such courses, she should be reimbursed under a company’s educational assistance program, just as she would if she were attending a class.  We need to make continuous learning as convenient and cost-free as possible.
• We have to teach people how to use small blocks of time as effectively as possible. A single mother holding down a job does not have big blocks of time for learning.  She might get a series of 5-minute blocks of spare time. We need to figure out how she can use them for learning exercises.
• We have to teach people how to multi-task more.

Alternative learning methodologies

Learning can happen anywhere, any time.  I love the text-to-speech feature of my Kindle, especially when I am in my car and can have the experience of listening to an audio book, even if it is in a computer-generated voice. I learn from online demonstrations of subjects.  I also have found that certain TV programs have presented subjects with far more impact than I have ever learned them in a classroom. My friends showed me about the many free tutorials on YouTube. I have even learned from a casual face-to-face encounter, such as a cooking demonstration at a supermarket or a restaurant.  We should test individuals to determine how they learn best, and should draw from their insights and experience, even at an early age, to figure out what is most likely to excite them. Courses should be created in ways that enable them to be delivered remotely and in a multiple ways.

What always amazes me about learning is what we discover about how people of all ages engage with the world.  Some people learn through video games and master complex subjects.  Others gain a great deal of insights from friends, work colleagues, peers, and even online communities.  Even today, I find that my best learning about potential applications for my I-Phone comes from other users.  One of my nephews told me about a new application called Soundhound, which enables my phone to pick up music sounds in a public place and identify the song and the artist.

In essence, everyone can learn, and we should figure out how to make that learning process happen.

How does learning fit into a busy schedule?

It is easy to criticize people who do not take time to improve their skills.  However, in the real world, people have multiple jobs, are juggling time-consuming family responsibilities, and often have challenging commutes to and from work.  Moreover, many jobs are physically and mentally draining. For many people, the ability to take time to learn simply does not appear to be there.  How can we help people carve out the time to learn?

• We need to show people how to simplify their lives, reduce the wear-and-tear of daily activity, and create learning time.  Too many people drive to work alone every day.  Even when public transportation is unavailable, there are many underutilized carpooling, vanpooling, and ride-matching services available to people.  I gained an extra 90 minutes a day of reading time when I commuted by train between New York and Connecticut. When shuttle services between the train station and the office were unavailable, many people gave me rides to and from the train, and I learned a great deal from them.
• Buying hot, healthy pre-prepared food virtually eliminates cooking time, and frees up time for other activities.
• If I were a young parent today, I would be looking for tools to order groceries, clothing, supplies, hardware and other items online for home delivery to save on shopping time.

If large blocks of time cannot be created, then we have to coach people how to use smaller time blocks more effectively.  I always felt that one of my advantages over other people was the use of 1-5 minute time blocks.  When I watch live television, I put the set on mute during commercials, set an alarm for 3 minutes, and do something productive. More and more, I record programs to reduce the watching time from the original running time by fast-forwarding through commercials. I recapture that time for other purposes.

How do I use 5-minute drives to and from the coffee shop? I turn my Kindle into an audio book and listen to a few pages while driving.  The Kindle also can be read outside while I am walking and even while I am waiting in line at the grocery store or some other retail outlet.  I have done a lot of reading in the security lines at airports, while I watch other people stare into space.  I also remember doing work during the many times I waited with my children at the pediatrician’s offices as they were growing up.  I took my own materials, rather than relying on what the doctor’s office had available.

Everyone has spare time. The only question is how to take advantage of it.

We need to teach people how to multi-task more.

When my children were young, I used to take them to the local doughnut shop, get a cup of coffee, browse the newspaper, and talk with them.  It was a great bonding experience for us, and I typically read to them and talked about whatever I was doing.  I also used to take them to museums on Saturdays and Sundays and learn as they were learning.

Today, the shoe is on the other foot.  When I am with my adult children, I ask them about what they are learning, what books they are reading, what movies or videos they have seen, and what places they would like to visit, and why.  My daughter is great in the sciences, so she continually directs me to good resources.

Also, as I noted above, we have a lot of waiting time in our lives that can be usefully deployed. Today, many people use their cell phones to talk or do text messages while they are waiting for someone, but it is easy to convert some of that time to learning time.

We have to change the paradigm from schooling to learning.  We have to change the paradigm from learning as a highly standardized activity to a highly customized one. We have to change the paradigm from learning as a process that takes place within specific certified courses to one that can occur anywhere.  I have no problem with testing people to see what they have learned, and rewarding them for having achieved a certain level of competence, but we need to make it as easy for them as possible.

This skill and knowledge gap is solvable. We can help the Maddie Parliers of the world compete in the global economy and support their families.

On December 31, 2011, I watched a Connecticut Public TV special called From Hitler to Hollywood. It caught my attention because it profiled the process by which the German and Central European film industry was built between the end of World War I and 1933, dismantled by Hitler because a significant part of the film industry participants were Jewish, and then recreated in Hollywood between 1933 and 1945.

There were several noteworthy insights from the program:

• The German and Central European film-makers were incredibly innovative, and they sparked the development of many features of American cinema that changed the films Americans saw, especially after World War II, when the industry was free to resume its normal kind of film-making.  Most noteworthy was the development of the “film noir” style of movie.  “Film noir” was a genre of film that usually was done in black-and-white, as opposed to color, presentation.  It was set in harsh urban settings, was a type of drama and action film, and often involved criminals or gangsters.  Films like The Asphalt Jungle, Dark Passage (which starred Humphrey Bogart and Lauren Bacall), and even On the Waterfront could be considered “film noir” movies.
• The filmmakers who emigrated from Germany and Central Europe created funds to help others trapped back in Europe come to the United States.  They not only sent money back to people trying to escape from Nazi-occupied countries, but helped them with contacts and created the equivalent of an “underground railroad” to enable people to get help crossing borders, hiding inside Nazi-occupied countries, and eventually finding their way to friendly countries.  Germany and the countries it occupied saw a huge drain on their artistic talent, but it would not have been as big of a drain as it turned out to be, had not American-based exiles provided a considerable amount of financial support.

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I love the New York Post headlines.  One of my favorites was in the Sunday, December 11, 2011, issue.  The headline was “E-Z CASH: Change he can believe in: Toll collector makes $100K.” On page 5, the story to which headline refers is entitled “High-Pay PA Crew Taking Their Toll.”  It describes what we have learned is an all-too-common rip-off of taxpayers, the use of what is called “pension spiking” to give people making a certain level of income the chance to get an even larger pension by awarding them a huge amount of overtime pay opportunity in their last year of employment, the only year that counts for pension calculations in many public-sector collective bargaining agreements.

In this case, the employer is the Port Authority of New York and New Jersey, an entity created by a contract between New York and New Jersey and jointly owned by the two states.  This entity is not accountable to elected officers or voters, except for the indirect influence that elected officials from the two states sitting on its board of directors have on the entity’s operations.  Oddly enough, entities like the Port Authority were created over several decades in the 20^th century because elected officials believed that they would operate in a more business-like fashion and not be subject to the corrupting influences of elected officials trying to “buy” votes by bestowing favors on constituents. However, the lack of public accountability means that the customers of the Port Authority, namely those who travel in the New York Metropolitan area, will bear the brunt of the abuses of the pension system.

In one sense, it should be easy to solve this problem: abolish this “pension spiking” scheme in the next collective bargaining session.  However, we get a hint of why these kinds of schemes are so hard to uproot. A toll collector named Princesella Smith is quoted as saying: “I’m blessed. I have a great job, and, in this economy, it’s great that I can cover everything with my eight hours a day and overs.”

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There have many articles recently in which the U.S. Postal Service has announced that a deterioration of first-class service is an inevitable result of the cost reductions it will have to undertake.  This is unfortunate, because we need a viable Postal System to perform many vital societal functions.  UPS and FedEx do a great job as for-profit institutions serving the needs of businesses and high-density residential areas, but they are far too expensive in serving lower density geographies.

Moreover, their fee structures would kill individuals and small businesses.  For example, UPS and FedEx charge over $10 for improperly addressed letters and packages.  This is a profitable source of revenue for both organizations.  They also have residential delivery surcharges, especially for more remote residential areas.  If they are to take on the responsibility for more mail delivery currently done by the Postal Service, they cannot use their current fee structure to do so.

How can the U.S. Postal Service take costs down?

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Not surprisingly, there has been a great deal of debate about raising personal income taxes on people who earn more than $250,000 per year.  The support and opposition have broken on political party lines. As a person who clearly would be subject to higher tax rates, were a tax reform law to pass, I wanted to weigh in on this subject.

I do not believe we can solve the deficit problem without raising taxes.  I also do not think that all tax increases on wealthier people are inherently bad.  I do not think the proposed tax rates are inherently bad relative to their effect on economic growth.  Furthermore, although I think we have a certain amount of “crony capitalism” in our country at all levels, money that gets redirected from the general public to a few favored corporate and union welfare systems, I think a certain amount of that will happen in any democract.

However, I have three fundamental issues with our tax system:

• Everyone should pay income taxes, except for the very poorest members of our society, and, for them, only for the period of time in which they remain below the federal poverty level.  Today, over 50% of Americans pay no income taxes.  That is wrong.  It disconnects over half of Americans from any economic stake in how income tax dollars are spent.  It has the psychological effect of deluding those not paying taxes that money will always be available from “the rich.”  Everyone should pay something.
• We need far tighter controls on how our tax dollars are spent.  I understand that, in a democracy, some uses of our tax dollars will go to causes that I would not personally support.  The majority of the voting public should help guide elected officials on the allocation of tax revenues.
• We need much more common sense in the way governments account for what they are spending, and what the long-term costs of that spending might be.  The whole issue of excessive retirement benefits has arisen because governments have hidden the long-term costs of these retirement obligations by using accounting rules that were prohibited for private businesses over two decades ago.  The Congressional Budget Office “scoring” of legislation is fundamentally flawed in two respects: first, it limits its evaluation to the ten-year period after the law is passed; and, second, it does not take into account the highly likely behavioral responses to a piece of legislation.  For example, any tax increase on businesses headquartered in the United States will cause some businesses to shut down U.S. operations and move investments and jobs abroad.  That kind of highly likely reaction to a tax increase is not factored into the CBO scoring model at all, even though any common sense evaluation of a tax law would take it into account.

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Over the past few weeks, I have been to a major data center, attended a medical school advisory board meeting, met with several providers of both wearable and non-wearable biometric data collection systems, and looked at the increasingly sophisticated array of biometric kits available at the major pharmacies.  I have concluded that we have the potential to improve health, to improve the quality of health care, to reduce health care system costs, and to transform the role of nurses and doctors through technology.

Each of the experiences I have described above has shaped my thinking, but each has done so in a different way.

The data center visit

I visited a large data center, in which the operators are using state-of-the-art monitoring systems for electrical power, climate control, and the performance of its computer and server systems.  A company on whose board I sit, Eaton Corporation, is a leader in providing comprehensive power management solutions for data centers. What is remarkable about the large data centers is the degree to which these centers no longer need human beings to monitor many system components.  The central control hardware devices and software programs provide data on thousands of points within the system.  There are less than 10 employees for a huge data center.

What insight does this have for health care?  To the degree that we are designing a system that enables remote and comprehensive monitoring of the state of health of a patient population, we can do so with relatively few healthcare professionals.  Although we talk about a serious labor shortage, the labor shortage assumes an indefinite continuation of the face-to-face diagnosis and treatment systems we now have, as opposed to the remote monitoring systems toward which we are heading.

The term the data center people when describing a center monitored predominantly by sophisticated hardware and software technology is a “lights out” system.  We must evolve to a “lights out” healthcare system on the same model.

The medical school advisory board meeting

As we think about healthcare professionals being trained in modern medicine, it becomes clearer than ever that healthcare professionals not only need to learn traditional human biology and body chemistry, but to be steeped in the field of bioinformatics.  Bioinformatics is a relatively young field of knowledge and skill in which diagnoses and treatments are developed through both onsite and remote data collection and the computer-generated analyses that use the data.

There will never be a complete loss of human judgment by trained health care professionals, but their efforts can be focused on those cases in which human judgment can make the biggest difference.  Getting good data on biometric indicators, health and healthcare history, and the foods, beverages, prescription drugs, over-the-counter drugs, and other items ingested by an individual is critical to enabling the human judgment factor to work best.

Medical schools are beginning to understand the importance of bioinformatics, and to incorporate course material on this field.

The visits with biometric device producers and health plan administrators

The Dossia Health Manager now is able to aggregate not only the comprehensive clinical history on an individual, but biometric and daily activity data that enables the healthcare professional to get a much more complete picture of the individual’s state of health.

Even better, there is an increasing effort to integrate biometric data tracking and management into health plan designs.  Employers and health plans have been providing services and incentives to get individuals to participate in health risk assessments, but these have been one-time exercises, as opposed to a program of capturing and tracking health data all the time.

There was a 2010 Kaiser Permanente study which supported the view that someone who regularly tracks blood pressure is 50% or more likely to control blood pressure.  This is consistent with a broad principle, often articulated about business objectives, that what gets measured gets managed.  The ability to capture blood pressure data with wearable devices is better than ever, and should be stimulated with incentives and rewards.

Shopping at the local pharmacy

Perhaps the most interesting learning I have done over the past month has come from wandering through several pharmacies while I was shopping for a few items.  Near the pharmacy counter at every counter is an increasing variety of home health test kits which are getting close to laboratory accuracy.

One which particularly caught my eye was a kit costing about $30, marketed by Bayer, which enables a user to draw a drop of blood and get a quick reading on his or her Hemoglobin A1c level.  Hemoglobin A1c is a leading indicator of Type II diabetes.  In the past, someone like me, who monitors this biometric indicator as closely as possible because of a family history of Type II diabetes, a genetic predisposition to the disease, and a slightly elevated level of blood sugar, would have had to get a physician to write an order for a laboratory test.  I would have had to schedule an appointment to get blood drawn, and would have had to wait at least one day, and possibly longer, to get my A1C reading.

Today, I can buy my own kit, draw my own blood, and get a same-day reading of my A1C level.  While I would not rely on a home test kit for a definitive diagnosis, I can track general trend information and can do so far more frequently than would be the case if I relied on a physician’s order and on having to schedule an appointment at a lab.

The next step in the evolution of these biometric devices is to make them able to communicate automatically with either a smart phone or a laptop or desktop computer, so that the data can be communicated directly back to a personal health record controlled by the patient.  Once that happens, the productivity of healthcare professionals will increase dramatically.

Instead of having nurses reside at a physician’s office or visit each patient at home, the nurse can work from either a home-based desktop computer or a mobile laptop or I-Pad device to track the health status of a much larger patient population than ever before.  Physicians would write orders to that nurse relative to what biometric indicators are most relevant for a particular patient.

Final comment

The biggest obstacle to adoption of this “lights out” healthcare system is the resistance of those who have built strong capability and income from face-to-face diagnosis and treatment systems.  If I operate a large medical practice based on the assumption that I must see every patient I treat, it will be very difficult to put into place systems and processes that operate as if I am not there.  The biggest challenge in diminishing this resistance is not technological or educational; it is the fear of losing income, jobs, or status.

One of the biggest causes of higher health care costs is “supply-driven demand.”  As Niko Karvounis wrote in a 2008 blog in Healthbeat:

“High consumption of care is driven by the crowd of academic medical centers, specialists, and equipment needed to perform tests. The Bay State has one doctor for every 267 citizens — versus one doctor for every 425 people in the nation as a whole. Supply drives demand. “

Supply-driven demand happens for two reasons, often overlapping:

• Healthcare providers believe in a particular treatment or therapy, and try to maximize the number of people who access it.  This is often reduced to the saying that “If you have a hammer, every problem is a nail.”  Supply-driven demand occurs when people who should not be customers for a particular service become customers because the provider of that service force it beyond its natural market.
• Healthcare providers have excess capacity, and try to get that capacity in use.  This happens with expensive diagnostic imaging equipment, hospitals, and outpatient centers.  It is even arguable that physicians react to reduced usage of their services by patients who become healthier by increasing the frequency with which they see other patients.

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Many commentators state that the U.S. does not have a single health care system.  They are correct: there are really eight different “systems.” Regardless of what happens with the legal challenges to the Affordable Care Act, I believe the U.S. healthcare system will continue to evolve in all eight in the way I describe below.

Some large self-insured employers will move their employees to the newly created state and federal health exchanges.  They will pay taxes or penalties to do so, but it will be better economically, in the short term, for them not to have responsibility for employee health care costs.

However, many employers will invest in the health and wellbeing of their employees, and derive competitive advantage from doing so.  Why?  For employers free to design an optimal healthcare system, including onsite clinics providing comprehensive primary care and developing a selective specialist provider and hospital network, the ability to design a good healthcare system gives them much more control over their employees’ health status, sense of wellbeing, and health benefits costs.

Some employers, like American Express, are even building care delivery networks outside the United States, in countries that have single-payer systems and that have government-employed doctors and government-owned hospital networks.  The staff physicians for these employers provide far better care, which is very attractive for talent recruitment and retention.

What employers will opt out of offering direct health care coverage?  Companies that have lost control of health care costs, such as those with exceptionally generous collective bargaining agreements, will welcome the chance to offload their entire population to health exchanges.  In many companies, CEOs simply do not understand that they can manage employee health and wellbeing and deliver shareholder value.  In others, corporate benefits departments do not want to assume responsibility for health care cost reduction.

Employers who retain health care coverage will develop better provider networks, and may even create multi-employer consortia.  This is happening in Southeastern Wisconsin, with Quad Med, Briggs & Stratton, Miller Coors, and Northwestern Mutual Life.  It is also happening with a consortium of labor unions in the New York City in the UNITE Here Health Center.

What will these employer-based health plans look like?

• They will migrate toward consumer-directed plans with high deductibles and co-pays for plan participants;
• Plan participants will be given significant incentives for making the best choices for their health, health care, and health benefit plan spending;
• Plan participants will be given continuously improving tools for self-managing health, including consumer-controlled personal health management systems like Dossia, clinical decision support tools, choices among health and wellness vendors, and good information and technology tools for continuously monitoring health; and
• Employers will put more decision power into the hands of plan participants and will force health plans to market directly and successfully to consumers to secure revenues.

These employer-based “accountable care” systems will be among the world’s best health care systems.

The wealthiest Americans will leave the core systems of which they are a part and pay extra for concierge medicine. They will consult with physicians who accept no Medicare patients and who direct their patients to the world’s best care, wherever available.  These Americans may actually be consumers of medical tourism, when that care is superior outside U.S. borders.

There is precedent for this.  In the UK, the top layers of UK society initially acquired supplemental health insurance through BUPA and, more recently, seek out care wherever it can be best delivered, including India, Singapore, and the United States.  Medical tourism started to meet the demand from single-payer systems abroad, but it will get bigger here.

There will even be increased medical tourism within the United States.  Concierge doctors will refer patients anywhere in the country in which they can secure the best care.  This system will also deliver exceptional care.

Some Americans will receive world-class care because of the lucky accident of where they are living.  Those Americans in the seven states in which Kaiser-Permanente is licensed to do business, or in Utah, where Intermountain Healthcare is based, or in Washington state, where Virginia Mason is based, or in Southeastern Pennsylvania, where Geisinger is based, will get excellent healthcare.

Other systems around the country will attempt to copy them, and some will succeed, but most will have difficulty, because, for the most part, world-class accountable care organizations will have been created in business models in which the primary care physicians are staff doctors paid a salary and in which there are tightly controlled specialist networks.  These systems work because they effectively limit patient choice by steering patients into a single managed care network.  They will stop seeming like a satisfactory alternative when the limitation on patient choice produces bad outcomes in a handful of high visibility cases.

There is precedent for this.  Back in the 1990’s, payers were effectively controlling healthcare costs and utilization through tightly managed care networks.  These systems also delivered a reasonable level of care quality.  However, they were dismantled because there were a variety of high-profile cases in which it appeared that the healthcare delivered was of inferior quality because the patient could not select the provider of choice.

Most government-run systems outside the United States use some form of provider choice control or give patients no choice as to providers.  Some have “gatekeeper” systems in which the patient cannot directly consult a specialist.  In the United States, such systems can survive only if they can avoid getting legislated or regulated out of existence because of the appearance of delivering inferior care.  They survive, but are highly vulnerable to being dismantled.

Many people have used the Veterans Administration and Military Healthcare systems as models for great healthcare at an affordable cost.  They have electronic health record systems.  They take advantage of broad clinical learning.  They deliver convenient and low-cost care through staff physicians and nurses paid on salary, and they develop long-term relationships with their patients.

However, because premiums paid by users are so low, and raising the prices paid by veterans and military families is politically suicidal, the federal government will reduce the financial burden of this system by quietly reducing the supply of care, rather than working to reduce demand.  They will shrink the size of facilities, the size of their staffs, or the hours of service, rather than increase the cost of accessing them.  Although shrinking a hospital or outpatient center is politically challenging, demanding that users increase their premium payments by several thousand dollars a year would be politically suicidal.  For example, the military health care system charges a 60-year-old military retiree $426 per year in premiums, a ridiculously low payment, considering that this type of retiree costs the system in excess of $10,000 per year on average.  However, raising premiums to even $1,000 per year is the metaphorical “third rail” issue; politicians will not touch it.

The best place for low income Americans dependent on Medicaid or other safety net health care programs is at community health centers.  These centers are generally better equipped to handle the complex problems low-income Americans face, particularly those with language and cultural barriers.

The top community health centers have expert resources to assist patients in applying for government benefit programs, in managing transportation and childcare issues, in addressing related social service issues, such as domestic violence, and overcoming language and cultural barriers.  They also tend to manage appointments for patients with more unpredictable schedules far better than a traditional private health practice.  Finally, they develop expertise in managing the different kinds of health problems very poor people have, compared with their non-indigent counterparts.

The Medicaid legislation passed in 1965 contemplated that Medicaid and Medicare patients would be part of mainstream health care systems and that Medicaid and other safety net programs were simply ways of paying for health care for poor people. We now know, from nearly five decades’ experience, that low income people have other overwhelming life challenges.  Their health care, economic and family needs are different, and are interrelated.  They need expert care a community health center is better equipped to deliver.

Medicaid and other safety net programs could have paid more for health care, and enabled private practice physicians to handle Medicaid patients, but the reimbursement rates for Medicaid providers are so low that private practice physicians have increasingly stopped seeing Medicaid patients.

Therefore, the community health centers will end up handling them, and will actually do a reasonably good job delivering care.

In trying to address budget deficit issues, the Obama administration and its successors will try to reduce what Medicare pays for health care.  This will cause even more medical practices to drop Medicare patients, because these patients have more complex health challenges for which the doctors will be paid less.

We continue to see a hemorrhaging of primary care physician populations, which leaves the Medicare populations even more poorly served by private practice physicians.

Medicare patients will seek out more care at retail clinics for minor illnesses or injuries, at urgent care centers for serious conditions, at emergency rooms for acute conditions.

We will see shrinkage of the physician population with the skill and will to take on older patients with more complex health care challenges.

Most Americans who work in small businesses, who freelance or are self-employed, who are unemployed, or who work for large companies that have abandoned health care coverage will end up in health exchanges.  They will get a progressively poorer quality of care from private practice physicians. They will wait longer for care, have long waiting times in doctor’s offices and hospitals, have short visits with healthcare providers, get too many diagnostic tests in place of more careful physical examinations because the fee-for-service system will survive and drive dysfunctional behavior by physicians and hospitals.

They will also visit urgent care centers and emergency departments more than they should, because these parts of the healthcare system will be accessible to them.

While the quality of care delivered through this government-regulated system will decline, the cost for patients will increase significantly.  There will be high deductibles and co-pays, and the risk pool in this population will get worse over time.  The state-run exchanges and any other system created and managed under the Affordable Care Act or any regulations emerging from it will receive those members not wanted in other systems.  For example, employers with already healthy populations will retain their health plans; employers with unhealthy populations will happily dismantle their health care coverage and drive employees to the exchanges.  There will be an “adverse selection” problem.

The titanic battle between proponents and opponents of the individual mandate, that is, the requirement that individuals either purchase health insurance or pay a penalty for not doing so is constitutionally and politically critical, but arguably irrelevant to whether our country will end with everyone insured.

The individual mandate design created by the Affordable Care Act, as well as the Massachusetts design, both are flawed in driving individuals to secure health insurance because the penalties an individual has to pay if he or she does not elect to secure insurance are inadequate.  I have commented on this more than once: if an individual driving into New York City were to have a choice between paying $40 to park legally in a garage or paying a $20 parking ticket for parking illegally on the street, the vast majority of individuals would elect to park illegally.  It’s nice to have a symbolic penalty, but such a penalty works only if the cost of noncompliance is close to, or better yet, greater than, the cost of following the law.

Because our elected officials did not have the courage of their convictions to create meaningful incentives or penalties for getting every individual covered by health insurance, a significant part of the population, many of whom will be young, healthy people who usually subsidize older, less healthy people, will remain outside the health insurance system.

They will actually have more attractive health care options available to them.  They will access retail clinics for treatment of minor illnesses and injuries. They will have more retail choices for both immunizations and periodic screenings.  They may even be able to access medical tourism options for surgical procedures that would otherwise be prohibitively expensive, even in an insured health care system. They will continue to access acute care at emergency departments.

They really do not need to secure health insurance until they have a condition that is both expensive and chronic, one in which emergency department care is inadequate.  In the past, they would not have risked waiting to get health insurance until getting a chronic condition, but the Affordable Care Act eliminates any barriers to them securing insurance whenever they can no longer operate in the uninsured system.

Oddly enough, absent a much more punitive individual mandate, the Affordable Care Act may actually drive more individuals into the uninsured system for longer stretches of their lives.

Final Comments

It is very difficult to reform the multiple health care systems that, in aggregate, employ over 15 million people, most of them in middle-class jobs, that contribute almost $3 trillion per year to our economy, and that are perceived to deliver two public goods, healthcare and insurance protection against catastrophically high healthcare expenses. Change will come from a combination of evolutionary development of better care for those who can acquire it outside the systems heavily regulated by the government and increasingly complex and dysfunctional government interventions.

The goal of universal healthcare equitably available to all Americans will not happen.  Those smart, rich, or resourceful enough to demand great care will get it; the remaining Americans, overwhelmed in trying to manage their daily lives or not sufficiently “street-smart” or rich will be lucky to get adequate, affordable care.  The more government tries to intervene to achieve fairness or to correct fraud, waste, and abuse, the more the system will create new opportunities for fraud, waste, and abuse. Moreover, as noted above, the government’s misguided attempt to eliminate denials of coverage for preexisting conditions will provide a perverse incentive for more individuals to drop out of the health insurance system until it becomes economically untenable for them to stay out. Every government intervention will result in a new set of “gaming” opportunities.

Some people would say that we have a crisis in health, healthcare, and health insurance, and that the crisis should be a call to action.  Unfortunately, the history of our representative form of government would suggest that crises are noticed and acted upon when they are triggered by highly visible events, coupled with strong leadership and large movements to take advantage of them.

Moreover, even when there is a crisis, there has to be an agreed-upon paradigm for how to think about the issue.  We do not have that:

• We do not have a consensus on how to resolve the healthcare crisis.
• We want everyone to have health insurance, but are not prepared to take the hard steps to penalize those who refuse to buy it.
• We support the goals of unlimited patient provider choice, unlimited access, very limited penalties for irresponsible and destructive patient behavior, and the belief that more access to care always yields better care and better health.
• We know that unlimited access and unlimited choice yield bad economics, but do not fully understand that most of the cost of healthcare comes from preventable and controllable decisions that should be penalized more; and
• We have exceptionally little understanding of the degree to which more care often means worse care and poorer health.

Our system will simultaneously improve in certain respects and deteriorate in many others for the next decade, but I am confident that it will settle into a complex, multi-segmented system like what I have described.

On the morning of September 11, 2001, I was in Pitney Bowes Stamford Main Plant building, having a difficult meeting with a group of factory employees, explaining why we needed to outsource much of the low-end product then manufactured in that facility.

I received a call a little bit after 9 am from Karen Garrison, then President of Pitney Bowes Management Services, who had seen the video footage of an airplane crashing into the first of the World Trade Center buildings.  I immediately began to return to the World Headquarters, a few blocks away. During my brief trip back to the Headquarters, an airplane crashed into the second World Trade Center building, One World Trade Center.

As I tried to absorb what had happened, I reflected on the fact that my wife Joyce had worked at One World Trade Center when we first lived in New York City in 1981 and 1982, and that I had been in the building many times over the years to visit customers.  By 10 am that morning, we had set up a command center in our boardroom, from which I ran the company for two weeks after that.  I left the boardroom many times, to address groups of employees both in the Headquarters and in other buildings, and to visit our New York offices.

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Our family was fortunate this past weekend in not experiencing any property damage or loss of power from Hurricane Irene.  700,000 other residents of Connecticut were not so lucky.  However, as I have thought about this disaster and others through which I lived during my lifetime, I have increasingly realized that much of the devastation of natural disasters is not “natural.”

Sometimes, the influence of bad human decision making on the scope of a disaster is obvious: Hurricane Katrina would not have been anything more than just another bad Gulf Coast hurricane, had the levees protecting big portions of New Orleans not failed to protect the city against water damage.  The levees were not built to protect against Category 4 or 5 hurricanes, so a disaster of the type that happened was inevitable and experts were not surprised when it happened.  Experts warned of this kind of problem, but were ignored year after year. Nevertheless, most of the time, we forget the degree to which we can anticipate disasters and minimize their impact.

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