There is a relatively easy pair of solutions to the unemployment crisis.  The biggest issue for private sector employers which have provided retirement benefits for their employees is the burden of providing for future benefits for current and future retirees. (Government accounting is different. Government employers only have to provide for what they out in the current year.)  What many people do not understand is that when a private employer provides such benefits, it not only covers what it pays in the current year, but a share of what it will pay out in future years.  The exact allocation between current and future year benefit expenses varies from employer to employer, but there is no question that portion of current-year benefit expense allocable to future years is huge and it gets in the way of employers hiring new workers.

So how do we solve this problem?  It’s very simple, but the answer varies between pension and retiree medical expenses.

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I am continually amazed by how experts who make excuses for why certain problems have remain unsolved overlook simpler and less expensive solutions to these problems.  For example, a whole population of advocates have pointed out that low-income people living in inner cities, particularly those lacking access to an automobile, are trapped in what are now called “food deserts,” that is, areas in which people lack access to affordable healthy food. Very often, the food deserts have abundant access to less-healthy junk foods, cigarettes, alcohol, and, of course, illegal drugs.

The usual solutions are to put supermarkets in the inner city, or to have farmers markets in the inner city or urban gardens in abandoned lots.  While all of these solutions are excellent long-term answers, all have problems or limitations.

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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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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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In the Friday, March 26, 2010, issue of The Wall Street Journal, there was a very thought provoking article entitled “Reynolds Faces Very Tough Test with Smokeless Tobacco Lineup.” The article specifically details the strategic intent of the tobacco companies to address the public’s concern with the harm created by smoking by moving their customers toward forms of tobacco ingredient ingestion that do not require the inhalation or the creation of smoke.  The article identified lozenges and other forms of orally ingested nicotine products.  In effect, the product becomes nicotine and the other addictive ingredients of tobacco, not the cigarette, cigar, or other delivery system for that nicotine.

The theory behind this strategy is that smoking, not ingestion of harmful ingredients, is the health risk both to the user and to bystanders.  Clearly, when someone orally ingests nicotine, there is no second-hand smoke problem for others, and, for the user, there is no problem with small particulate matter in the lungs.  The remaining hazard is the chemical alteration of the body from the ingestion of nicotine and other substances.  Smokeless ingestion systems are less harmful than traditional cigarettes, but some degree of harm remains.

Even more interesting, Altria recently acquired a company that markets smoking cessation products, which positions it to offset the decline of sales of cigarettes.

This article poses two big strategic questions in the battle to improve health:

• Can we enlist those who have produced unhealthy products and services to transition to healthy or, at a minimum, less unhealthy offerings?
• Should we support the marketing of transitional products that retain addictive behaviors which are still harmful, but are less harmful than what they replace?

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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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On Friday, February 26, 2010, Gerald F. Seib, the Wall Street Journal reporter for the Capital Journal column, wrote an insightful column entitled “Parties’ Differences Are Clear – and That’s a Start.”  In his column, he explained clearly the philosophical differences between Republicans and Democrats on health insurance reform.

He stated that there were three fundamental differences:

• Democrats favor comprehensive reform and transformation; Republicans favor a more incremental approach.
• Democrats believe that access is the priority, rather than cost reduction; Republicans believe that if health care costs are reduced, the access problem will get solved.
• Democrats believe strongly that the government needs to set standards for health insurance and health care; Republicans believe that the market, particularly consumers, need to decide what they want for health insurance and health care.

Where do I stand?

• I am somewhere between the two parties on the comprehensiveness issue, although I tend to believe that comprehensive reform opportunities come along infrequently and we should take advantage of this one.  On this issue, I would agree with the Democratic philosophy.
• On the other hand, I do not believe we can tackle the insurance access issue without understanding why access has been a problem in the past. Runaway health care costs cannot be deferred until later.  Business and global competitiveness depend on addressing cost before access.
• Relative to health care needs, I believe the government should create a safety net for those unable to get coverage from private insurance, although I do not believe that safety net should include either guaranteed issue or elimination of pre-existing condition requirements for private insurance policies.  The burden for the least healthy members of our society, and them alone, should be borne by all citizens, not in a way that burdens every private insurance policy.  Government is totally ill equipped to decide on minimum coverage for everyone else.  Over the years, elected officials have repeatedly added coverage mandates to all insurance policies because of the power of special interest groups, whether or not the mandates represented good medicine.  Think back to the excessive expansion of bone marrow transplants combined with high-dose chemotherapy in the early 1990’s because cancer advocacy groups mistakenly believed it could save lives.  In fact, after a Congressional mandate was also adopted in many states, the treatment was found to be worse, on average, than doing nothing.  It shortened lives.

Some very smart people have said to me: “Why don’t we solve the insurance problem now, since we can, and we’ll get to cost reduction later?”

Aside from the competitiveness issues to which I referred above, there are two other problems with expanding coverage and not dealing with upstream prevention and health care system issues:

• Giving someone access to health insurance is not only not the same as giving them access to health care, it often results in lower quality care for everyone because of increased demand, and, eventually, decisions by doctors to stop treating Medicaid patients because they get reimbursed less than they do through commercial insurance.  Having an insurance card, but no doctor to use it with, is useless. Massachusetts has had universal health insurance since 2006, but both the access to care and the quality of that care have suffered.  More non-elderly adults report difficulty in getting access to physicians in 2009 than they did in 2007.
• To the degree that there is universal insurance, but inadequate access to doctor care, there is even more strain on our emergency departments. Many studies have pointed out that a majority of the people who access the emergency department for non-urgent care, that is, inappropriately, have insurance coverage, but either do not have timely access to care or are too impatient to wait until they can get access.  The system gets stressed at its weakest point, emergency care.

I am most disappointed that the Democratic majority in Congress and the very capable White House staff could not establish a prevention and wellness agenda, and begin to take on the badly broken fee-for-service health care payment system.

People who argue the practical politics of tackling the insurance issue always point out to me that politicians are swayed by hard-luck stories, individuals who died or went bankrupt because they could not afford sufficient health insurance to cover catastrophic health problems like cancer, heart disease, or a serious injury.  Unfortunately, no health insurance system can eliminate these tragic stories.  Moreover, increasing demands on the health care system without increasing the supply of physicians and nurses creates other kinds of tragedies.

Politicians are very moved when an individual tells a story about being unable to afford a “life-saving” cancer treatment because of no or inadequate health insurance. What puzzles me about these stories is whether the patient has attempted to get relief directly from the pharmaceutical manufacturer.  Every pharmaceutical company has programs to provide life-saving drugs for individuals who cannot afford them, and they provide relief for many patients every year.

However, the tragedy of someone who had no primary care physician because doctors in his or her community did not accept Medicaid patients, and, who, as a result, has an undiagnosed heart or diabetic condition, is a harder one to portray on the evening news.  The patient generally does not understand that, but for a stingy government program, he or she might have had access to a doctor who could have diagnosed and treated the condition earlier.  A public health official from India described the explosive growth of undiagnosed chronic disease cases as a “health tragedy in slow motion”

Implementing universal and affordable health insurance without addressing the imbalance between supply and demand in the underlying system will simply swap one kind of tragedy for another, at a much higher cost to the taxpayer and to businesses that can create jobs to bring many more people out of poverty.  The Democratic majority seems hell-bent to do something, even if it is the wrong something, relative to health insurance.  That’s too bad, and we will all pay dearly for the mistake.

Recently, the U.S. Preventive Services Task Force was the subject of a great deal of criticism for issuing revised guidelines that recommended that, except for women who have specific elevated risk factors, such as a family history of breast cancer, women not receive regular mammograms until age 50. These revised guidelines were roundly attacked.  As Blogger Helen Searles wrote in a December 1 posting:

“Within hours of announcing its findings, the Task Force faced a barrage of attacks from women, doctors, journalists and politicians across the U.S. The onslaught was swift, harsh, and emotionally charged.”

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