As the son of a mother who, mercifully died suddenly as a result of an automobile accident when she was in the early stages of Alzheimer’s disease, and a father who deteriorated over an 15-month period, all of which was spent in a rehabilitation center and a nursing home after he broke his hip at age 82, I have thought a lot about end-of-life issues.

As a result, I was gratified to see an incredibly incisive and thoughtful article on this subject by Dr. Atul Guwande of Harvard Medical School in the August 2, 2010, issue of The New Yorker. The subject of end-of-life care for individuals with terminal illnesses or diseases is not a new one, but Guwande brings new insight to it.

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Daniel Henninger wrote a significant an Op-Ed piece in The Wall Street Journal on July 22 entitled “The Liberal’s Dilemma.” The “dilemma” of which Henninger speaks is the conflict between the broad agenda many liberals, virtually all Democrats, have in place to improve the well-being of broad swaths of the U.S. population and the narrow, but disproportionate demands of public sector employees’ unions, active and powerful private sector unions like SEIU and the narrow, but powerful and well-organized political classes that contribute a sizable chunk of campaign financing for the Democratic party.

The problem those who want to produce broad societal change face is that, to the extent they honor and defend the retirement benefit obligations and other huge financial benefits demanded by the unions and the political classes, the funds available for the much broader agenda drop well below critical mass.  In fact, it is fair to say that, absent a major pullback from these long-term retirement benefit obligations, almost no money will be available for the or below broader agenda.

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Many people have wondered why I, who have been passionate about universal access to health care, would have been, at best, lukewarm about both the recently enacted Patient Protection and Affordable Care Act (the name of the national health insurance reform legislation) and the earlier Massachusetts health insurance reform legislation.

Supporters of these pieces of legislation consider them a necessary first step toward longer-term health care system transformation.   Many point to a September 2009 Harvard Medical School study which estimated that lack of health insurance cost 45,000 American lives each year. If this admittedly imperfect legislation saved those 45,000 lives, how could it be negative? Moreover, how could anyone who cares about human life not enthusiastically support this legislation?

The flaw in their thinking is that they assume that the legislation has no other consequences that might result in reduced health care access, and, therefore, a potentially greater loss of lives for other reasons.

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Recently, I re-read Michael Lewis’ great book Moneyball, which, on the surface, is a book about baseball, and, particularly about Billy Beane, the General Manager of the Oakland Athletics.

Lewis, who wrote books such as Liar’s Poker, Panic, and The Big Short, is clearly intrigued by fields of endeavor in which individuals succeed because they recognize the value of data when others are operating more by the seat of their pants.  Lewis described a baseball talent evaluation marketplace in which Billy Beane, who was obsessively driven by performance statistics, battled baseball scouts, managers, and coaches who tended to evaluate players based either on their visible physical and athletic skills or the performances these individuals observed.  As a result, when Beane overruled his organization and made decisions based on his statistical analyses, he tended to acquire undervalued talent and get a premium price when he disposed of overvalued talent.

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The title of this blog is meant to provoke thinking about a fundamental dilemma that elected officials in any democracy face: when serving the public broadly means that jobs of a small number of people could disappear, what happens?

We have known for a long time that government is more responsive to a well-organized single-issue constituency, even if the vast majority of voters would oppose the position the single-issue group is taking.  For example, that is why government officials have consistently been reluctant to take on the National Rifle Association, even though the vast majority of Americans favor a more aggressive regulation of guns than is the case today.  I am not making a value judgment about this issue, other than to say that elected officials think of the electorate as a collection of well-organized, passionate special interest groups than they do a mass of voters to which they have to respond.

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Recently, I published a lengthy blog responding to Congressman Chris Murphy, a blog in which I took the position that the national health insurance reform legislation was flawed because it simultaneously increased the guaranteed access to health insurance nationally, but left critical cost management components to future actions by the Secretary of Health and Human Services and to states and localities.  To me, that was exceptionally risky for two reasons:

• It’s no different from any other situation in which you commit to spend money before you have it, and when you have confidence that you can get it, which, by the way, is why Bear Stearns and Lehman Brothers went bankrupt: they had fixed debt and contractual commitments, but found the short-term markets for getting cash temporarily closed to them.
• The obstacles to the cost reductions that could take health care spending down are formidable and, perhaps, unconquerable.

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The narrow purpose of this blog is to respond to Congressman Murphy’s comments, but the broader purpose is to give my perspective on the recently enacted health insurance reform legislation, so this blog will be very long.

Preliminary Comments

There were many good things in the legislation, including an enhanced focus on prevention, on health care quality, on expanding the reach and supply of community health centers, on tackling the challenges of long-term care, on correcting issues associated with senior citizen prescription drug coverage, and on experimenting with innovative and potentially transformational payment methods.  There was much to like about it, and I will devote my life to working with what has been enacted to make it achieve the goals of transformational and improved health care.

I empathize with lawmakers like Congressman Murphy who do not get presented with perfect, simple choices, especially on an issue like this, which is so contentious.  They have to make choices based on imperfect options.  He, like many of his colleagues, is trying to do the right thing, and has an exceptionally difficult job, and does it extremely well.

I took a few extra days to read this legislation, which was not easy to do, and his comments made me think much more carefully about my views, so I thank him on behalf of all of us.

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I have been asked by many people to comment on the health insurance legislation which was approved by both houses of Congress last night.  I waited until now, although the legislation filled 2,562 pages, so I cannot comment on all of its implications.

This legislation stopped being about health care reform, and eventually stopped being about constructive health insurance reform a while ago.  It essentially got enacted to prove that the Obama Administration could get something significant done.  As a political accomplishment, it is a landmark.  As a positive step toward fixing what is wrong with our health care system, I can only say that the President’s wish that he be the last President to have to address health care will not get fulfilled.  This legislation will require significant rework in most areas for a long time.

In every bad piece of legislation, there are good components, and this is no exception:

• There are specific areas of focus on prevention, and I commend leaders like Senator Harkin for being thoughtful in getting prevention on the agenda, and making meaningful progress on it.
• There are some small steps to improve the supply of doctors and nurses and other health professionals, and these are welcome.
• Closing the “doughnut hole” drug coverage for senior citizens was a good idea, because a deductible that kicks in at $3,400 was a great idea in theory, but a problem in practice.
• The legislation begins to address the long term care problem, which will become more significant as we all age.

What’s fundamentally wrong with the legislation?  It taxes many people to extend insurance coverage to 30 million Americans without addressing the fundamental flaws in the system that caused them and others to be without coverage in the first place.  The problems of uninsurance and underinsurance result from excessive costs which are passed on in higher insurance rates.  This legislation, by guaranteeing coverage and preventing insurers from terminating it when people get sick, will make the costs even higher and will create a vicious spiral in which in which rates go up, more people need subsidies, and taxes go up to cover those who cannot afford coverage.  In particular, the likely consequence of guaranteed coverage, regardless of current medical conditions, is that people who do not want insurance coverage will wait until they get sick to apply.  The penalty for that behavior, which undermines the financial model for this system, is far too low, and does not even go into effect until 2014.

The ways to break this spiral are also bad:

• The rate of cost increases can be reduced by reducing what insurance companies pay doctors and hospitals, but that will drive doctors out of the profession, and cause hospitals to charge more to those not securing government or state-regulated insurance, like self-insured employers and individual policyholders.
• The government and private insurance companies can start reducing what is covered and ration care, which is politically almost impossible to imagine.  This legislation is testimony to the government’s inability to deny coverage for everything every vocal interest group wants.
• The doctors will either cram more patients into an already crowded schedule, which reduces care quality for everyone, or they will delay seeing people longer, or they will simply drop service for patients who have Medicaid or other state insurance plans for low-income people.  Those individuals, who have insurance coverage, will get treated in emergency departments and drive significant cost escalation.

In effect, this legislation has the perverse effect of taxing many Americans to give more insurance coverage to people who will have inadequate access to the right kind of care.  We will be taxes heavily to enable more people who will have insurance cards to go to emergency departments.  The insurance will pay far more than if they had the right kind of care.

I would make one other prediction:  the very wealthy will drop out of the traditional insurance system altogether and access what will be a booming growth industry, concierge physician practices in which the patient pays a flat annual fee to be given a guaranteed high level of service.  Our health care system will end up having a gap between the service offered the rich and the poor far greater than what exists today.

What proponents of this legislation never understood is that health insurance access does not guarantee health care access.  In the 8^th Ward of Washington, DC, one of its poorest areas, there is one urologist serving a sizable population.  According to multiple studies done relative to that population, over 90% of the population has Medicaid or some other form of insurance coverage.

With the passage of this legislation, the percentage of the population with some form of insurance coverage increases to closer to 100%, but there will still only be one urologist, and, therefore, a large part of the population will end up going to the emergency department at the most convenient hospital to get care.  The legislation does nothing to improve health and, even if it improves the broad supply of doctors, will probably do nothing to get more doctors into the 8^th Ward.  The 8^th Ward problem is representative of a problem that exists in many parts of the country, and this legislation does little to address it.

Last year, Connecticut enacted a flawed piece of legislation over the Governor’s veto.  Like this legislation, the battle to pass it was really a political battle in which the Democratic majority won.  The good news is that the Democrats in Connecticut are earnestly working to try to do something good to improve health and health care, and work around the flaws in the legislation, and may eventually figure out how to rework this legislation to turn it into something good.  Let’s hope that the same process can play out in Washington.

There will be many more chapters to this story.

Although the health insurance legislation will not immediately attack employer-provided health benefits, I feel that there are many threats to their continuation.  Accordingly, I feel compelled to respond to ill-informed points of view of influential and otherwise justifiably highly-respected people.  In a column entltled ”In the Wilsonian Tradition,” columnist George Will refers to the need to “transition from the irrationality of employer-provided health insurance.”

There are a handful of arguments usually made against employer-provided health insurance, some coming from the political right and some coming from the political left.

Argument 1: Employer-provided health benefits are a vestige of political and economic conditions that no longer exist.

Opponents of employer-provided health benefits argue that, because such benefits began during World War II because employers were subject to wage controls, they must serve no useful purpose.

There are two flaws with this argument:

• If health benefits did not make business sense, employers would not have chosen to offer it at any time, or would have stopped offering it as soon as they were no longer subject to wage controls.  There were many other benefits they could have offered. Both the Conference Board and the Human Resources Policy Association, which have a majority of large businesses in their membership, have found in private surveys that the vast majority of their members want to offer health benefits.  They see it as a business imperative, not something they would prefer not to offer.
• The argument is irrelevant.  The merits of employer-provided health benefits need to be debated based on today’s conditions, not what triggered the decision by employers to offer them 65 years ago.

Argument 2: Employers do not belong as an intermediary between patients and doctors.  Patients do not trust their employers to provide health benefits, and would prefer to deal directly with the health care providers.

While I am sure that some employees distrust employers, the confidential surveys Pitney Bowes and other companies have done over a long period of time indicate that employees are highly satisfied with the way a first-rate health benefit is administered.

Employers who offer a stingy health benefit or who administer their health benefit program poorly or offer no choices among insurers, providers, or health plans will be rated poorly by employees.  However, judging health plans by the poorest offerings is liking saying that all elected officials should resign because some of them are crooks.  The best employer health benefit programs are far better in addressing patient needs than either Medicare or any private insurance program.

Argument 3: We are competitively disadvantaged because our employers absorb health benefits costs and our foreign competitors do not.

The comparison between GM and Toyota relative to the cost of health benefits, usually quoted at a $1,500 per car disadvantage for GM, is flawed at many levels:

• GM has a poorly designed health benefit largely because it made no effort to use the health benefit to drive healthy behaviors by its employees.  The Japanese have lower health care costs because they eat less, pay a lot more attention to infectious disease control, and are far more controlling than is the U.S. on health-related behaviors.  They also tightly control health care costs.
• The cost of health benefits is built into the Japanese tax system.  Everyone pays for health benefits, not just the employer and employee.  The real meaningful comparison is the portion of Japan’s corporate income taxes allocable to health care versus GM’s cost of health benefits.  It’s on the income statement, but as part of a corporate tax payment.

Argument 4: Employers have no reason to be delivering health benefits.

This argument is the most flawed.  Large self-insured employers can aggregate more economic and non-economic benefits when they invest in improving employee health than any kind of payer.  Besides reducing health care costs, employers investing in improved employee health get reduced absenteeism, disability, and workers compensation costs, improved productivity at work, improved quality of work, and increased loyalty and retention.

Some people who say that the VA system is a great health care system and want that to be the model for everyone.  If our goal was to produce the best broad-based health care system, they might be right, although employers have a significant advantage in being able to offer care on worksites, which produces much better use of the health care system.  However, if our goal is to maximize population health and give businesses incentives to invest in creating healthy environments, that would not be right.  The VA does nothing to make the environment in which people live every day healthier, whereas employers can make environments healthier.

In the UK and Canada, it has been difficult for national governments to get employers to invest in workplace health because employers gain no benefit from reducing health care costs.  The other benefits, standing alone or in aggregate, are insufficient to trigger investments in health benefits.  Put them together as the U.S. has done and some very good investments get made.

Another reason employers get big economic leverage from offering health benefits is that they alone, by controlling the work environment in which employees spend a majority of their waking hours, can provide an environment in which people eat nutritious foods, get sufficient exercise, do not smoke or drink alcohol on the job, and are safe from being victims of violence, accidents or injuries.

Finally, through a quirk of the 1974 Employee Retirement and Income Security Act (ERISA), self-insured employers have more freedom to innovate and to correct mistakes than either government payers or state-regulated private insurance plans. The best self-insured employer plans have lower costs, provide better health care, create a more productive environment, are more innovative in embracing good new treatments, and are faster to avoid popular, but bad, treatments like the high-dose chemotherapy that government mandated in the early 1990’s.

Argument 5: Employer provided health benefits only work for large self insured employers with stable populations, not for high-turnover large businesses or for small businesses.

This argument, which sounds superficially persuasive, is not borne out by experience.  Companies like Costco, Safeway, WalMart, Wegmans and Starbucks, all operating in businesses with traditionally high employee turnover, have managed to build strong business cases and to achieve success with employer provided health benefits.  They have reduced unwanted voluntary turnover because of their cultures of health and have improved work productivity.

The issue with small businesses is not their inherent inability to implement health benefit programs, but the rigid and misguided state insurance regulations that prohibit insurers from offering wellness incentives to the small business marketplace.  That is starting to change, and I am pleased that Connecticut now allows its insurers to offer wellness incentives.  Moreover, Quad Med and other large employers now offer health care to small businesses that share industrial and offer park space with them.  The UNITE Here Health Center in New York City offers a walk-in clinic for members of five labor unions in the Garment District.

I will continue to fight for employer-provided health benefits because they integrate health, health care, and insurance in the most productive way, and recognize that we have to create healthy environments for people to maximize their potential.



Harvard professor and author Louis Menand wrote a very insightful article in the March 1, 2010, issue of The New Yorker entitled “Head Case: Can Psychiatry be a Science?” In it, he describes the complexity of defining, diagnosing, and treating psychiatric disorders.  He quotes many experts in the field of mental and behavioral health disorders who, as he put it, in referring to the work done Professors Jerome Wakefield and Allan Horwitz

“…the increase in the number of people who are given a diagnosis of depression suggests that what has changed is not the number of people who are clinically depressed but the definition of depression, which has been defined in a way that includes normal sadness.”

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