In my last blog, I commented on a July 11 article by Mary Walsh of the New York Times on the crisis relative to horrifically large pension and retiree medical obligations for government employees.  Coincidentally, as I traveled to and from Europe between July 15 and 20, I had an opportunity to catch up on reading, and I read Roger Lowenstein’s great book While America Aged.

In this book, Lowenstein details the history of three out-of-control pension and retiree medical commitments, the commitment by the Big 3 automakers to their employees and retirees, the commitment to the Transit Workers Union and other municipal unions in New York City, and the commitment to San Diego’s municipal workers.  He draws broader conclusions from these analyses, consistent with Mary Walsh’s.  As Lowenstein puts it on page 1:  “America has a crisis of epidemic proportions.  The fabric of the nation’s pension system is collapsing – at the very moment when the American population is rapidly aging.”

I agree with Lowenstein’s conclusion, and I also agree with some of his key recommendations.  Most importantly, we need to apply private pension and retiree medical accounting to state financial statements.  Today, while governments are expected to size their obligations in total, they are not required to set aside money every year to pay for a portion of the long-term commitments they have made.  They are only required to cover the current year’s obligations in a pay-as-you-go system.  As noted in my last blog, private sector employers had to change to a full accounting of pension benefits on their income statements in 1987, and to a full accounting of retiree medical obligations in 1993.

While I agree with Lowenstein’s recommendation that there be a form of universal health care that combines benefit requirements for the elderly with those of people of all ages, I do not agree that it should be managed under the same system as Medicare or Medicaid.  Throughout his book, he eloquently talks about the many pressures brought to bear on elected officials to do something popular today, such as keeping down current-year expenses, while mortgaging the future. 

Unfortunately, much of what is required for a sensible health care system requires decisions to invest in health today to reap the benefits in future years.  For example, preventive screenings, immunizations, outreach to increase adherence to chronic disease treatment plans, and programs for youth health and fitness are great medium and long-term investments, but almost never is there a current fiscal year payback.  Therefore, any universal health care system that operates on annual budget cycles is likely to be subject to the same pressures as the corporate executives and government officials Lowenstein describes.

Moreover, just as Lowenstein described special interests that interfered with objective decision making in the San Diego and New York situations, health care has great potential for special-interest decision making, as evidenced by the power of medical lobbies to drive for coverage mandates that are highly-specific and often not justified by best-in-class health care.

If we are to have universal health care supported for underserved groups by the government, it is imperative that we construct a system that is not susceptible to annual cost reduction pressures.  Similarly, as Lowenstein recommends, any system needs to have highly-transparent analysis of the longer-term consequences of any major decision, since short-term savings often breed significantly higher long-term costs.

What shocks me most about these issues relative to government employee retirement obligations is how little attention is paid to them in the popular media.  Mary Walsh and Roger Lowenstein deserve credit for the courage of their convictions in dealing with a “dirty little secret” about the massive and often unintended wealth transfer from a large number of taxpayers to a small number of government employees.

I do not blame the employees or their union leaders for demanding rich benefits, because the leaders are expected to be strong advocates for their members, although they need to insure that pension trusts are appropriately funded.  However, I believe that we need to hold elected officials accountable for responsible decision making in the area of legislated or otherwise bargained-for employee benefits.  I also believe that our media do not do a good job educating the public on this issue, because, except for a situation like New York’s (where there was a major transit strike three years ago) or San Diego (where the city basically lost its ability to access the bond markets because of financial insolvency caused by under funded pensions) it is a crisis in slow motion, rather than a single dramatic event.

We must demand more relative to how our tax dollars are spent!!
 

In the July 11 New York Times there was an article on the serious issue of state and local government pension liability, and the debate about the extent to which the Government Accounting Standards Board should require governments to reflect pension and retiree health liabilities on their income statements.

I was pleased to see this issue get coverage because it is one of the biggest issues of our time. We are an aging society, and like every other developed country, we are facing the dual challenge of meeting our commitments to the elderly, while at the same time being able to meet commitments to the rest of our population. Before we can address the dual challenge, we need honesty and transparency as to what the commitments to our elderly populations are going to cost us. (more…)

In the July 11 issue of the New York Post, there was an article which highlighted the fact that the number of calls to the New York City 311 hotline requesting city service support for smoking cessation has tripled with the increase in taxes that have made a pack of cigarette cost around $10 in some communities.

I have always believed that cigarette and alcohol consumption could be cut significantly by increasing the price of these items. For hard-core addicts, price increases are probably less effective, except for those already predisposed to quit. But high prices are clearly a deterrent to those who are considering starting to smoke or drink, and, over time, reducing the health and other costs of cigarette smoking and alcohol abuse will reap large dividends in reducing the incidence of chronic and acute health conditions. (more…)

I want to begin by thanking Doctor Gerberding and her team for convening and hosting this extremely important conference. I come to you as a leader of a company, Pitney Bowes that defined employee health and well-being as a core value even before I became CEO in 1996.

Our mail stream businesses have always required a high degree of subject matter expertise and relationship-building with postal services and customers that take many years to learn and master. Therefore, for several decades, we had been a generous company in delivering benefits that rewarded and encouraged employee loyalty and commitment.

In 1990, this commitment to employee health and well-being was being challenged by our inability to continue offering health plans that essentially provided medical benefits without meaningful employee contributions in terms of premiums, co-pays and deductibles. Our costs were increasing at an alarmingly high 14% per year, and we were not delivering a high degree of employee satisfaction. When I became head of human resources in 1990, I had the unenviable task of committing us to a long-term course of action that required higher employee premiums, co-pays and deductibles, but I also recognized that we had to maintain and/or increase employee satisfaction with our benefit offerings, or we were going to lose one of our key talent retention tools. (more…)

In the July 1 New York Times, there was an interesting article about the effort of the Congressional Black Caucus to get the addition of menthol to cigarettes banned because menthol cigarettes are the choice of 75% of African-American smokers. There is a clear recognition that menthol and other sweeteners added to cigarettes make them more attractive to vulnerable populations, like young people, minorities with health risks that make smoking health-threatening and young women.

When I read this article, it occurred to me that the misuse of menthol and other sweeteners to attract people to cigarettes can be turned on its head to make healthy foods more attractive to eat. When our younger son, who is now 17 years old, was under 10 years old, we had a great deal of difficulty getting him to eat anything other than junk food. We had particular difficulty getting him to eat green vegetables. (more…)

One of the basic assumptions of many health care reform advocates is that a “richer” plan which provides a broader range of benefits and which has a higher percentage reimbursement for medical events is automatically better for the plan participant. This is flawed thinking.

A health insurance plan is better for plan participants and for society as a whole if it causes participants to engage in healthier behaviors and if it drives physicians, hospitals, and other providers to deliver a higher quality of health care. In the blog entitled “Results-Driven Health Care” explores the five steps to higher quality, and lower cost health care. (more…)

As we move into May, this is junior prom season at high schools, and I have a son who is planning to attend the prom. I remember my junior prom, which took place in May, 1965. It was a wonderful evening with a wonderful date, but what I also remember is that Brother Joseph Clark, our principal at my high school, Bishop Kearney High School in Rochester, New York, decided that the prom would start at 10 pm and end at 4 am. He said that no one would be allowed to leave the prom before 4 am unless he or she was picked up by parents. His explicit reason for this decision was to keep us in the prom venue until after the bars and nightclubs around town closed.

Today, this same issue has surfaced in a different way. New York City has decided to order all bars closed at 2 am, instead of 4 am. In the Sunday, April 27, New York Post, in the Page 6 Magazine, there were actually two op-ed pieces published on this subject, one opposing the earlier closing hour, and the other favoring it. The proponent, a female freelance writer, made the great comment that nothing much good happened between 2 am and 4 am. In fact, those extra hours probably led to more behaviors that people later regretted, if they could remember them, than during any other 2-hour period during the day. (more…)

Anyone who has read my past blogs knows that I have commented that too many health care reform advocates focus too much on universal health insurance coverage, and insufficiently on improving health, the supply of health care professionals, and the quality of health care. While many proponents of universal health care pay lip service to the value of prevention, those who advocate universal health care clearly want to address the visible and important issue of affordable coverage independently of, and prior to, the issues I have identified.

Unfortunately, they have it backwards. To solve the universality and affordability problem, the others have to be addressed. A compelling story appeared on the front page of the national edition of the April 5 New York Times, entitled “Universal Coverage Strains Massachusetts Care: Influx of Patients and Shortage of Doctors Create Long Waits.” (more…)

Anyone who has read this blog knows that, in discussing public policy issues, I have always tried to consider both the intended and unintended consequences of government decisions. For example, I have contended that, before governments mandate that “Do Not Mail” registries be created in each state, they should consider the economic and environmental consequences of such registries by both elected and appointed officials. If the goal of reducing unsolicited mail is to improve the environment, that goal may actually be undermined by a change in consumer behavior to engage in more face-to-face retail transactions begun by a drive in a motor vehicle to the retail store.

Using a similar analysis, the regulation jointly issued by the U.S. Departments of Labor, Health and Human Services, and Treasury limiting wellness incentives to 20% of the premiums paid by an employer-based health care plan participant is one which appears to have been decided without reference to whether it will maximize health improvement or lower health care costs for those not receiving the incentives. (more…)

I believe strongly that health is enhanced by healthy behaviors, such as good nutrition, exercise, and healthy lifestyles. To some degree, we can mandate healthy behaviors by law and regulation, or by centralized controls.

However, just as I noted in a blog several months ago in which I described some of the findings in the book Mindless Eating, authored by Brian Wansink, the best behavior change drivers are those of which the individual is not conscious. Steve Victor’s Fit For Life blog provides a brief summary of the book’s key takeaways.

For example, in our World Headquarters at Pitney Bowes, we have created a healthy environment by the food we serve and the way we price it. We have an on-site clinic and on-site fitness center, and we have many outreach programs for preventive screenings and immunizations. (more…)