Whether he made a values-based judgment that he had simply received a windfall and did not deserve to profit simply from being in the right place at the right time, or whether he believed that he would receive more long-term economic benefit from giving up the ball does not matter: he did an admirable thing.

Everyone’s behaviors are on a continuum from being totally generous of spirit to others to being totally mercenary and interested only in helping oneself.  To be generous of spirit does not mean that one withdraws from the capitalist system, lives like Mother Teresa or Paul John Paul II, and deny or give away everything material.  A person whom I consider an example of practicing behaviors that are generous of spirit, and whom I have always admired, and got to meet by serving briefly on a board of directors with him, is Neil Armstrong, the astronaut who was the first person to walk on the moon.

His behavior that I would consider exceptionally generous of spirit is his refusal to engage in any behavior in which he personally profited from his status as the first person to walk on the moon.  He could have made millions of dollars in commercial endorsements from his lasting fame and celebrity, but he steadfastly declined every opportunity to do so. He has lived a successful life and is a wealthy person, but he recognized that many people contributed to his accomplishment as an astronaut and that he should not draw a disproportionate benefit from it.

I have aspired to be more like Neil Armstrong in not trying to extract maximum economic benefit everywhere I could.  I have given free advice to many people for which they would have paid thousands, or even tens of thousands, of dollars, or arranged introductions that have resulted in financial success for others without receiving any short-term economic benefit, even when I was not financially secure earlier in my life.  I did well financially, although I could have done better.  I never once negotiated my own compensation package, even when others around me negotiated theirs.

I have met many people who have given generously of their time, their insight, and even their services and not asked for anything in return in the short run.  I have also worked with people whom I know could have driven harder bargains with their employers.  I admire athletes like Hall-of-Fame baseball player Tony Gwynn, who stayed in San Diego and made far less money than he could have made with many other teams.  I also admire teachers who have stayed in seniority-based public education compensation systems and foregone great opportunities to make far more money in corporate training and education positions.

At the same time, I have experienced extreme distaste and stress by encountering people who think of the world as a place in which they have to extract compensation for every deed with economic value and have to extract as much as the market will allow them to extract.  People who expected to be compensated for everything they did were very common in New York.  Many jobs only made economic sense if the jobholder could get tipped consistently.  However, there was a broader philosophy that no one ever did anything for others without getting paid for it, and closely related to the fact that everything could and should be compensated was a philosophy that everything was for sale.

I remember the scene in the 1991 film Goodfellas, in which the protagonist Henry Hill takes his future wife on a date to the Copacabana.  From his car to his front-row table, he passes many hotel and restaurant workers and hands out money to every one of them.  The front-row table clearly would not have been available to anyone else.  It was moved into place and set up especially for Hill and his date.  That scene was director Martin Scorsese’s depiction of a culture in which everything was for sale and that such a culture was so ingrained that it was a regular part of everyone’s daily routine.

In 1980, the 12-year-old son of one of our neighbors regularly cut our lawn.  He was receiving what we thought was a fair price for his services.  He tried to double his price, and when we asked why, he said that his parents told him to see how much he could get from us.  He was told that if we objected, he could negotiate downward, but that he should try to maximize his short-term return.  We never employed him again, and I sent him a note telling him why.

What the Christian Lopez story reminded my wife and me about ourselves was that we are people who believe strongly that our capitalist system works best when people give value without expecting to be paid top dollar immediately for everything they do.  George Gilder, an American writer, philosopher, and Republican activist, wrote a powerful book in 1981 entitled Wealth and Poverty, in which, among other things, he described capitalism by saying that it “begins with giving.”  What Gilder meant was that capitalism, by its nature, requires one or more individuals to expend capital at a point in time and to provide goods and services for which he or she will get rewarded at a later point in time.  Capitalism requires an act of faith that investment will yield later reward.

To the degree that everything someone does requires immediate reward, the capitalist system collapses.  Such a system usually does not enable the granting of credit, except in a very close circle of family and friends.  Credit given to people one does not know is essential to the optimal growth of an economy.

Unfortunately, America has moved progressively toward a country in which there is more and more distrust, and more of an expectation of immediate gratification and maximum economic reward.  Some of this is a result of an increasingly mercenary society.  Some of it is the result of people being influenced by others to become more mercenary than they would be on their own.  Sadly, some people have become more mercenary as they have become more financially desperate.

I was saddened by the experience with the 12-year-old boy. He seemed liked an enterprising young person who could have been generous of spirit, but whose mind had been poisoned by his parents, with whom we ultimately had a dispute on unrelated matters.  I do not know what effect, if any, our refusal to continue to do business with him had on his values, but I suspect that his parents probably found a way to deflect the blame for that situation on to us.

It is reassuring that there are people like Christian Lopez in the world.  He did the right thing.  He may, or may not, ever receive economic benefit comparable to what he gave up. However, if he lives the rest of his life with values consistent with those that led him to make the quick decision to return the ball to the guy who truly created the potential for its economic value, Derek Jeter, he will live a far more satisfying life, and he might even be more financially successful than he otherwise would have been.

Here’s to you, Christian Lopez!!!

The Old Paradigm: Healthy people subsidize those who get sick or injured through no fault of their own.

Throughout the history of U.S. health insurance, the prevailing paradigm was that everyone paid for health insurance, with the healthy people paying higher premiums to subsidize those who became sick through no fault of their own.  State insurance regulators authorized the issuance of health insurance policies with three rating frameworks:

• Community rating: everyone paid the same premiums;
• Adjusted community rating: differences in premiums are allowed, based on population demographic factors like gender, age, and geographic differences in health care delivery costs; and
• Experience rating: those with pre-existing conditions either were denied coverage, paid more, or had coverage exclusions.

All these systems assumed that insured people had no control over their health.  Therefore, adjusting premiums based on individual behavioral risk factors, such as smokers’ penalties, allowed in life insurance policies, or premiums based on taking a drivers’ education course, part of automobile insurance ratings, were not allowed in health insurance policies.

The old paradigm made more sense in the early 20^th century because most health care costs arose from life-threatening infectious diseases or catastrophic injuries, believed to be beyond individual control. There were fewer treatment options for major diseases, and they did not have huge cost differences. Therefore, rewarding patients with lower premiums, deductibles, or co-pays for intelligent, discretionary treatment decisions made less sense.

The New Paradigm: Health insurance premiums, co-pays and deductibles are adjusted based on patient behaviors.

Recent decades have seen a radical shift in health care cost drivers.  Preventable and controllable diseases, such as Type II diabetes, heart disease, many cancers, and behavioral health and substance abuse conditions, comprise the vast majority of our health care costs.

Additionally, there are huge differences in the intensity of care provided to individuals, based on their providers selections and decisions they make among discretionary treatments.  Differences among end-of-life treatment options are hundreds of thousands of dollars.  Prostate cancer or back pain options can vary by tens of thousands of dollars. More health care costs are controllable.

Health insurance regulations and plan designs have not recognized these realities. Self-insured employers have the best chance to design health plans with the new paradigm because they feel the most pain and have the most plan design flexibility.

Value-based health insurance plan design is the new paradigm for self-insured employers.

Principles

Value-based health insurance plan design for self-insured employers is the new paradigm.  It is based on the following principles:

• Plan members are rewarded for behaviors reducing the risk of incurring preventable medical conditions.
• Plan members are rewarded for making intelligent choices of high value providers.
• Plan members are rewarded for intelligently evaluating treatment options.
• Plan members that adhere to treatment protocols get rewarded.  Those refusing to adhere to treatment protocols get penalized.
• Providers delivering better care at lower cost are rewarded with higher reimbursement rates.

Evolution of value-based health insurance plan design

Employers like Pitney Bowes adopted relatively simple versions of value-based health insurance, and obtained excellent results:

• They made preventive care free to plan participants, while charging participants for accessing the health care system.
• They supported health plans by making preventive care such as immunizations, health screenings, and health risk appraisals conveniently available, and paid participants for health-promoting behaviors.
• They enabled individuals to adhere to chronic disease treatment plans by making maintenance medications free of charge.
• They steered participants to treatment paths that increased their intelligence in making treatment decisions:
  • Pitney Bowes provided higher mental health reimbursement rates to participants accessing eight free behavioral health counselor visits before selecting their treatment path.
  • Pitney Bowes introduced a multi-stage treatment path for treating morbid obesity, with bariatric surgery as a last-stage, as opposed to first-line, treatment.
  • They created higher charges for emergency department use for non-urgent care, or for excessive diagnostic imaging test use.

These plan design implementations were successful, but the patient-controlled, portable, personal health management system, with a core personal health record, takes value-based health plan design to a new level.

The newest paradigm: value-based health insurance plan design rewards the right behaviors more precisely, faster, continuously, and more powerfully through a personal health management system.

Large self-insured employers understood that employees needed help navigating complex health care systems.  They purchased disease, care, and large case management programs, often from third-party insurance administrators to improve engagement. They also provided health-promoting behavior incentives, either within health plans or in separate employer-sponsored wellness programs.

The 2011 Towers-Watson Survey of employee benefits executives indicates that large employers are dissatisfied with these programs.  These programs achieve about 10% engagement from the target population, and have not produced hoped-for health outcomes.

Employers are also dissatisfied with prevention and wellness programs, because they believe that they are not securing additional participants.

How do personal, portable, patient-controlled health management systems solve these problems?

Personal health management systems allow data collection more frequently, more precisely, and in real time.

Daily tracking of biometric data increases the likelihood of controlling the disease being managed. For example, tracking blood pressure for a person with hypertension increases the likelihood of controlling hypertension by over 50%, based on a 2009 Kaiser-Permanente study.  This supports Peter Drucker’s observation that “what gets measured gets managed.”

A new value-based health plan design application would reward an individual partially for tracking key biometrics and partially for controlling them.

Personal health management systems create new and more effective ways of delivering health care coaching that an employer can reward.

Rewarding someone for engaging in a wellness program or for engaging with a health coach, nurse, or physician to manage a medical condition has produced disappointing results.  Wellness program providers routinely get only between 10-15% of the target population engaged in these programs.

Tailoring communications to consumer preferences will improve consumer engagement. The ability to supplement face-to-face and telephonic communications with text messages, or online web site, e-mail, and live chat tools makes these programs more effective, especially if the consumer receives rewards for every contact, not just the initial contact.

The value-based health plan could vary the co-pays and deductibles for an individual who engages frequently with health coaches or nurses in managing a chronic condition.

Personal health management systems are more effective at monitoring adherence with chronic disease treatment plans and other necessary medical practices.

One inherent frustration of self-insured employers is that high health care expenses come from individuals who fail to adhere to their chronic disease medication regimens, thereby ending up receiving expensive acute care.  A personal health record will receive information as to whether a prescription is filled within minutes after it is filled. The Vitality Glowcap device also enables monitoring of whether users are taking their medications.

In addition to making maintenance medications free of charge, the value-based health plan could provide incentives for filling a prescription within a specified period, for taking medications on schedule and for getting timely refills.

Personal health management systems can provide exceptional patient decision support tools for health care treatment decisions on conditions for which a variety of imperfect treatment options are available, such as back pain, obesity, mental health, prostate cancer, and end-of-life care.

Treatment differences manifest themselves in such discretionary decisions as:

• caesarian surgeries,
• surgery as a first-line option for relieving back pain,
• prostate cancer victims using either the most expensive laser treatment technology instead of watchful waiting,
• administering chemotherapy extending life a few weeks, but resulted in shortening life for many patients, and
• using bariatric surgery for morbid obesity.

The personal health management system can provide tools for patients to understand the strength and weakness of all treatment options.  Requiring patients to study these options does not automatically nudge them toward the least expensive option, but helps them control the decision, as opposed to having it imposed on them by their physician. It also makes them more active partners in managing their health.

The value-based health plan gives strong financial incentives for patients to engage in a careful, interactive decision process before making a choice among discretionary, imperfect treatment options.

Personal health management systems are great vehicles for helping patients, those making care decisions for them, and those working with them to improve their health to determine their life goals and values, as well as their sources of well being in their daily lives. Armed with such information, physicians and other health care professionals can help patients and those making care decisions for them make the best decisions on how to optimize health and well being.

Many flawed health promotion strategies assume that, if we educate individuals on healthy behaviors, they will engage in those behaviors.

Optimal health does not generally drive individual behavior.  Otherwise, no one would smoke, abuse alcohol, overeat, play inherently dangerous sports, or drive recklessly.  Many factors influence health-related decisions, such as peer and family acceptance, the pleasure derived from unhealthy behaviors, the perception that unhealthy foods cost less than healthy counterparts, and the belief that the unhealthy behavior has healthy side effects (smoking suppresses appetite and keeps smokers thinner.)

We need to understand life goals and values before changing them.  The personal health management system is wonderful for engaging in a dialogue to determine life goals, and figuring out what motivates both healthy and unhealthy behaviors.  The Mayo Clinic has a wonderful tool called “motivational interviewing,” which is great for this purpose.

These life goals are particularly critical to understand when the individual is unable to make healthcare decisions.  End-of-life decisions lend themselves to decision processes tested against life goals and values.

Value-based health plans, combined with personal health management systems, would be a major step forward in helping us produce better health care at lower cost.

mjcritelli

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

Pension Benefits

The future pension obligation for an employer is determined with the following factors taken into account:

• The pay taken into account and against which the formula will be applied;
• The assumed level of pay increases for current employees;
• The percentage of pay that will be provided;
• The life expectancy at retirement age;
• The investment return on monies in the pension trust;
• The discount factor applied to future year obligations; and
• The cost of living increases applied to pension payments.

Many employers also provide for a lump-sum pension payment right from their plans.

I want to zero in one of these factors: life expectancy.  The fundamental assumption under the laws governing pensions is that individuals “retire” and draw a pension when they are no longer working.  The end result is that employers are paying retirement benefits to individuals no longer delivering any services to them.  This is also true of other post-employment benefits, but, other than retiree medical coverage, these benefits tend to be temporary.

When the Social Security system and private pension plans were created in the 1930’s, the life expectancy for a benefit recipient retiring at age 65 was around 5-7 years.  Today, many organizations have agreed to retirement benefits at age 55, and the life expectancy is around 27 additional years.  In effect, pensions are paid over a much longer period of time than they were decades ago, both because of earlier retirement and longer life span.

Moreover, in the early days of Social Security and private pension plans, people truly stop working when they retire.  Today, many retirees from one employer, especially at age 55, go to another employer and work full-time.  This is sometimes called “double-dipping.” We want to provide income for the elderly who cannot work, but many pensions go to people who are working or are able to work.

Many solutions have been proposed to reduce the pension obligation burden, among them:

• Changing the pay calculation formula to reduce the wage or salary base subject to the pension formula;
• Reducing cost-of-living adjustments;
• Requiring an individual to work longer to begin collecting retirement benefits; and
• Reducing the percentage payout.

The common element of all these solutions is that they require employees or retirees to give something up. Inevitably, these solutions get resisted by employees or their union representatives.  But what if there were a solution that actually increased someone’s take-home income and cost the employer less?  There is such a solution.

The solution requires the tax law to be changed to allow someone to keep working, although at a reduced pay rate, but get enough of his or her pension benefit to take home more money in the current year. Current law allows someone to work part time for the employer and collect a pension, but limits that work to 750 hours a year.  We need a solution that allows an employee to collect a portion of his or her pension and work full time, although at a reduced pay rate.

How would this work?

Today, if someone makes $100,000 a year and has a pension that equals 75% of his or her pay, and gets the right to retire with a full pension at age 55.  In effect, the employer pays $75,000 per year for 27 years, plus cost-of-living adjustments.  Without adjusting for pay increases for an active employee or cost-of-living adjustments for a retiree, the employer is responsible for $1,725,000 if the employee lives to age 82.

However, imagine a law that allows the employer to start to pay down the pension immediately, but only if the employee takes a pay reduction.  For example, let’s assume the law allows the employer to pay $30,000 a year for the employee from the pension and $75,000 in base pay. The employee would get 5% more. The employee decides to work 10 additional years.  The first ten years cost the employer $300,000 instead of $750,000, and the employer can take an immediate reduction in its pension costs.

Why has this not been seriously pushed before?

• Historically, companies wanted older workers to retire so that they could replace them with younger workers.  The reduced pension cost of keeping an older worker was more than offset by the reduced cost of replacing the older worker with a younger work.  However, in my proposed solution, the employer can effectively replace a $100,000 worker in place with a $75,000 worker, without losing that older worker’s skills and experience.
• In many cases, the older workers were not as productive as those who replaced them.  Today, there is ample data to show that older workers are more productive, more loyal, and do higher quality work than those who replace them.
• Moreover, in many industries, it is extremely difficult to replace older workers, because there are fewer younger people with the same skills.  Such positions as mechanical and aeronautic engineers are particularly hard to replace.
• People always thought of pensions as a very small post-employment benefit that did not burden the employer.  Because of a combination of lower investment returns, higher percentage payouts, much lower discount rates on future benefits (which makes them higher), and longer life expectancy, the per-year cost of future benefits has grown dramatically.  This was not as attractive a solution under earlier conditions, but the math makes it much more attractive now.
• The math might be more complicated if the average employee can retire at age 55, but actually retires at age 62.  In that case, the program can be implemented at the average retirement age, rather than the initial retirement age.  There is still a savings, but it might be smaller, although still significant.

This is not a solution for every organization, because many employers simply need to shrink their workforce or to replace older workers with people who have very different skills. However, it should be available to employers who can make it work.

There needs to be another change in the law: employers need to be able to offer this kind of program to some workers, perhaps those over a certain age or a certain level of experience, but not other workers.  Right now, tax and labor laws severely limit discrimination within a workforce.  This is a great transitional strategy to help employers move away from defined benefit pension plans that no longer work for them..

Retiree Medical

I have talked about the easy solution to the retiree medical problem: helping people stay healthier longer, so that they do not have the long, slow decline with multiple chronic diseases that adds $200-300 thousand dollars to lifetime medical costs, relative to healthier retirees.  Taking the medical inflation rate down by 1-2% per year would significantly reduce what employers have to set aside for retiree medical coverage.  Moreover, healthier employees are more productive and do better quality work.  Employers just need the will and the skill to fix the problem by focusing on a culture of health for both employees and retirees.

The challenge for managing retiree health is more complicated, because retirees are more geographically scattered, but there are many opportunities for retiree outreach, especially if “corporate practice of medicine” laws can be modified to give employers an opportunity to provide primary care clinical services to retirees who do not have their own primary care physician.

These are win-win solutions, as opposed to solutions that involve cutting back benefits, and creating resentment by employees or retirees or their families.

I would hope this is a first step to getting government finances in order.  Like many people with discretionary assets, my wife and I own tax- exempt bonds.  We are deeply concerned about whether we are getting accurate and complete information about the state of finances in Connecticut, and in the few other states in which we have government bonds.

According to an editorial in the Friday, August 20, 2010, Wall Street Journal, entitled “The SEC’s Jersey Score” Congressman Barney Frank believes that the credit-rating agencies should apply different standards to government securities issuers because they rarely default.  He is wrong.  They do default, and California defaulted last year by paying in IOU’s instead of cash for a period of time.  During the Great Depression, many units of government were essentially insolvent.

The issue is much bigger than whether states and localities pay their bondholders on time.  They are cutting back vital services to their citizens and punitively raising taxes and user fees and reducing their base of employees in clumsy and dysfunctional ways to meet their payment obligations.  They are essentially becoming nothing more than conduits for payments from all the citizens to a much smaller group of militant, well-organized state and local employees and retirees who are receiving excessive benefits.

This is not an income transfer from the rich to the poor, but from all the citizens, rich, middle class, and poor, to a small group of citizens who are taking a greater share of the citizens’ wealth than is justified by the type and duration of services they perform for the state and its citizens.  The reason this income transfer system has arisen and persists is because it is the path of least resistance for government officials.  More state and local employees, particularly as union members, means more votes and more campaign contributions, and a greater chance of being re-elected.

Only time will tell whether this lawsuit is an aberration or whether it scares risk-averse public officials into doing the right things in terms of disclosing the true story regarding the financial health of the governmental entities they lead.

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.

For example, he points out that many people have the mistaken belief that more intensive hospital-based care generally prolongs life, whereas hospice care shortens it.  Hence, many people make the decision to employ all possible life-prolonging measures for themselves or their loved ones, believing that, in so doing, they are buying time for something else to work on their behalf.  Yet Guwande states:

“Like many people, I had believed that hospice care hastens death, because patients forego hospital treatments and are allowed high-dose narcotics to combat pain.  But studies suggest otherwise.  In one, researchers followed 4,493 Medicare patients with either terminal cancer or congestive heart failure.  They found no difference in survival time between hospice and non-hospice patients with breast cancer, prostate cancer, and colon cancer.  Curiously, hospice care seemed to extend life for some patients; those with pancreatic cancer gained six weeks, those with lung cancer gained six weeks, and those with congestive heart failure gained three months. The lesson seems almost Zen: you live longer only when you stop trying to live longer.”

The second point Guwande makes is that there is often a trade-off between extending life and being mentally alert: those who receive hospice care are often able to manage their affairs without losing mental alertness, and are able to make plans for themselves and others with competent professional assistance.  Those who receive hospital care are often in situations in which they are removed from loved ones, lapse into unconsciousness, and experience completely debilitating pain and discomfort.

We tend to think of end-of-life issues mostly in terms of the elderly, but Guwande’s story focused on the terminal illness of a woman who was delivering her first child.  What none of us can know is whether, by opting for more aggressive treatments, she and her husband missed opportunities to discuss longer-term questions about the dying mother’s preferences as to how her daughter would be raised.  I lost a wonderful cousin to breast cancer 22 years ago when she was 41 years old.  She left behind a husband and a 4-year-old daughter when she died.  However, she had ample time and alertness to have many discussions with her husband that enabled him to gain the value of her insights on raising a daughter to adulthood as a single parent. The value of those conversations was incalculably large, but, in many instances, aggressive hospital care makes these conversations almost impossible to have.

The question Guwande’s observation begs is: why, if the more aggressive treatments shorten life, reduce the quality of life, and reduce the ability of patients to spend valuable time with loved ones, would patients choose more aggressive treatments?  He gives two answers:

• Every prognosis for a terminal disease contains a traditional bell-curve distribution with an average life expectancy for the patient, but with wide variations from a few weeks to years or even decades.  Although the size of the curve for those with the disease living a very long life indicates that few people survive for a long time, many people convince themselves that they will be the exception, rather than the rule.  When they opt for aggressive, expensive treatment, they are effectively buying a lottery ticket for the biggest jackpot of all, a long life, but often with the odds associated with buying a lottery ticket for a $200 million lottery prize.
• Physicians, either out of desire to keep up hope for patients, or out of the desire to keep patients from going elsewhere for treatment, or because they simply do not know the appropriate life expectancy, routinely overestimate survival times, often by over 500%.

Guwande pointed out that people seem willing to explore hospice options, as long as more aggressive treatment options are not foreclosed to them.  He cites a Johns Hopkins pilot program that reduced hospital care and costs for patients who opted for hospice care, but knew that they could receive hospital care at any time.  He recommended that Medicare and other health plans eliminate the irrevocable either-or decision for terminally ill patients.

He also has an interesting set of recommendations for changing the decision criteria and process for patients opting for end-of-life decisions.  Clearly, getting individuals to discuss their options with physicians and loved ones in advance is preferable to getting decisions made when a person is already terminally ill. That recommendation is not new.

However, the insight he brings to it is that the dialogue is as much about giving reassurance to the loved ones as it is to getting a particular decision from the patient.  Even loved ones who want to respect the wishes of the patient will feel guilty using less than the most aggressive treatments.  The discussion that, in advance, addresses their deepest concerns of guilt is extremely productive.  Similarly, a discussion between the patient and the physician, which helps the physician understand when being overly optimistic or recommending the most aggressive treatments is not helpful to the patient, is also desirable.

How do policymakers avoid getting caught up in the “death panel” trap?  The simplest answer is to broaden the dialogue beyond end of life treatment discussions.  There are many circumstances in which individuals are incapacitated and unable to register their preferences when a situation is not life threatening, but decisions have to be made quickly.  For example, the physician often encounters something unexpected during a surgical procedure when the patient is under a general anesthetic.

There are also many situations in which all treatment options are imperfect, and in which there is no ability to get a better answer even after all medical risks and probabilities are assessed.  This is the current situation with prostate cancer treatment options.  The discussion about the patient’s broader values and preferences is probably one that cannot be handled fully at one time or in one circumstance.  It would be most helpful for health plans and Medicare to cover an annual discussion that is free flowing and that simply enables a physician to get to know the patients far better than he or she can in the context of individual office visits designed to diagnose, treat, or decide on a treatment option.

Although many people legitimately criticized those who raised the “death panel” argument, the “death panel” advocates’ concerns could have been addressed, and the right kind of dialogue could have taken place if it had been framed as a way of increasing patient empowerment, as opposed to a piece of a larger program to increase government control over the health care system.

Nevertheless, the biggest conceptual breakthrough toward which Guwande takes us is that more aggressive care is not better care, and, in many end-of-life situations, it may actually shorten life and worsen the quality of the life that is led immediately before death.  Moreover, because of the inability of patients to engage with loved ones on transitional issues, it may have negative long term consequences.

This plays out very well in insurance products like life insurance, auto insurance, and property and casualty insurance.  Life insurance is the simplest because the insurance company determines, for an entire policyholder population, when people are likely to die, and sets premiums to make sure it can pay out when people die.  Auto and property and casualty insurance work similarly, with the defined benefit being either the fair market value of the auto or the legal liability level of the policymaker.  Because the definition and scope of fair market value and the potential risk of legal liability have not changed very much over time, these are relatively stable risks to insure.

Health insurance is different.  Medical conditions that give rise to the need for care keep expanding, either because patients or doctors expand the frequency of health care system usage, or lawmakers expand the coverage mandates over time.  For example, 30 years ago, it was inconceivable that many states would require insurance companies to cover fertility treatments, since infertility is not a disease, illness, or injury.  While fertility may be a societal good that we should encourage, it is not of the same kind of risk as diabetes, cancer, or clinical depression.

Additionally, the range and cost of treatments has expanded.  The particular dilemma insurance companies face today is that there are many treatments that “work” consistently with the definition of covered treatments that have “worked” for patients in the past, but the cost has skyrocketed.  For example, we now see cancer drugs that extend life by an average of 4 months that currently cost $100,000.  While an insurance company may make a policy decision that the risk-benefit calculation does not justify covering that drug, elected officials have a hard time leaving alone a decision that will cause a low-income patient to die four months earlier than would have been the case if he or she had access to the drug.

When we hear about under-insurance, we are often dealing with extremely expensive, marginally effective treatments that, if subjected to a cold-blooded economic calculation, would not be covered.  Unfortunately, elected officials are confronted by flesh-and-blood human beings who demand the treatment for themselves or their loved ones, and who can be very vocal and passionate.

These kinds of decisions do not work well inside a government-run or government-regulated health system.  It is always easier to mandate coverage to extend life for the few people that are affected, at the expense of higher insurance premiums for the many that will have to pay more.  No single decision makes insurance prohibitively expensive for policymakers, but the cumulative effective of many decisions to force marginal health care treatments into the mandated coverage system inevitably drives up cost to punitively high levels for low and middle-income people.

Over time, the end result is that health insurance payments become a gradually increasing tax on the many to benefit the few.  Elected officials then decide that they must increase other taxes on “wealthier” individuals to make sure that “the middle class” and “the poor” do not pay too much in health insurance premiums.  They eventually discover that there is not enough “wealthy person” income to cover costs, so they move to the next set of tactics, which are to reduce payments to doctors, hospitals, and other providers.

Unfortunately, the burden of these reduced payments does not fall evenly and fairly on providers.  Large academic medical centers, which have to be part of an insurance plan’s network to make it viable, usually have the clout to prevent themselves from being dialed back in terms of reimbursements.  Smaller, more financially shaky, community hospitals will end up being the victim of a disproportionate amount of payment reductions.

Similarly, expensive and powerful specialist physician practices retain their pricing power at the expense of smaller and less powerful primary care practices.  The latter end up getting the brunt of price reductions on their services.

Over time, the better of the primary care physicians leave practices and insurance networks, and move into concierge practices that are designed to give participating physicians an appropriate reimbursement for their services.  The poor and the middle class end up with a generous insurance plan, but fewer and fewer doctors and other providers willing to serve them.

If all we do with health care legislation is create health insurance reform that broadens insurance access and prevents higher-risk participants from being denied insurance, we will end up with a scenario of the kind I have described here.

Unemployment is psychologically devastating.  I know: I was unemployed for several months in early 1979, when I left my law firm and was trying to secure another legal position.  I was asked to look for another job because I was told I would not be made a partner.  My stay on the unemployment rolls was brief, but terrifying.  As a result, I empathize with anyone who has lost his or her job.

However, the news media do a disservice to those who are unemployed by giving the impression that their future is totally out of their control, and that giving up is a reasonable response to the situation. I have watched many people lose their jobs.  In fact, my first law client was an African-American with a sixth grade education, whose employer had wrongfully terminated him.  He was 43 years old, married with 11 children, and lived in a desperately poor part of Chicago.  Four years elapsed between his termination and his court-ordered reinstatement, but he found ways to cope with his situation and earn a living to support his family.

Those who transcend despair do so because they find small ways of taking control of their destiny. In his best seller The Seven Habits of Highly Effective People , Steven Covey tells the story of Victor Frankl, a concentration camp victim, who found ways to assert control in an environment in which he appeared to be absolutely powerless.  Covey’s conclusion is that “it’s not what happens to you; it’s what you do with what happens to you.”

How do people who successfully cope with unemployment? First, they find or create income-earning opportunities, even if they are small or part-time.  I have watched people become dog walkers, funeral home greeters, taxicab drivers, tutors, market research survey takers (a job I did when unemployed after college), personal trainers, traffic crossing guards, temporary construction workers, house sitters, baby-sitters, and musical performers, in addition to those who secure minimum wage work as waiters or retail clerks.

Second, they learn new skills.  Many people have learned from friends how to sell on eBay and Amazon.com.  Many people will teach others how to sell items online, and those who learn can earn income and new and marketable skills.

Third, by working in temporary assignments, they audition for potential new employers.  Our long-term part-time baby sitter, who got a little incremental income from us every year, started with a temporary baby-sitting service and worked twice for us in 1993.  After that, we hired her directly, and she secured a small, but steady, income stream.

What many stories about unemployment miss is that people have the ability to get employers to create jobs for them. Those who do temporary work for an employer and develop and demonstrate skills the employer desperately needs are much more likely to get jobs created that match their skills than if they sit back and wait for a job to be created.

Fourth, they are reliable, courteous, and disciplined in managing their lives when unemployed. Someone I know worked recently as a recruiter for a temporary staffing firm.  He was astounded by the unreliability of many people for whom he was trying to find temporary work.  They would get an assignment, and then fail to show up for work.

Fifth, they volunteer in the not-for-profit sector to serve others less fortunate than themselves. Although the purpose of their volunteerism was to help others, they often secured full-time positions.

Sixth, they use or build support systems. In the 1930’s, African Americans in Harlem devastated by the Depression banded together to prevent any of them from being evicted.  They would hold rent parties to help the friend closest to eviction get current on their rent. Those who cope best with unemployment are more focused on building or drawing on support resources in times of economic disaster.

There is even a barter system that has been created in economically-depressed communities called TimeBanks.org, which helps match people with different skills with people that need those skills.  For work an individual does for others, he or she secures “dollars” that can be used to “purchase” services such as child care, transportation, home repair, and even companionship. This kind of exchange helps people connect socially with one another, learn new skills, and reduce their cost of living.  It keeps them active, and gives them a sense of control over their future, but creating a new support system for them.

Finally, they treat unemployment as a gift as well as a setback.  At Pitney Bowes, during my tenure as CEO, we went through a transition in which we wound down and ended our manufacturing operations in Stamford.  Many good manufacturing people had to leave the company.

I recall two encounters: one in Greenwich and one at a gardening store in Stamford.  In Greenwich, an angry custodian at a school at which my son was playing chess told me that I had ruined his life by the company’s decision to wind down Stamford manufacturing.

In Stamford, a different gentleman approached me and thanked me for making the manufacturing transition decision, which forced him to realize that he was much happier doing outdoor gardening work.  He discovered that many people needed more affordable landscaping services.  He had started a landscaping and yard maintenance business with another laid-off Pitney Bowes employee, and was happier than he had ever been in his life.

The news media does a very poor job telling a balanced story on the issue of unemployment.  They foster the myth that when unemployment occurs, the only way out is for someone else to create jobs for people.  As a result, an unemployed person comes to believe that the future is out of his or her control.  That’s devastating and morally indefensible.  We owe those displaced by unemployment  guidance on how to increase their likelihood of securing reemployment, and how to restore their sense of  and self-worth and self-control.

At a time when businesses are trying to reduce costs to continue to be profitable when revenues are either declining or flat, it is tempting to reduce spending on government advocacy, especially if a business believes that it is adequately represented by trade associations or coalitions.  Nothing could be riskier.  Let me illustrate my point by discussing the evolution of health care legislation.

Contrary to what is sometimes reported in the popular media, large, self-insured employers want to continue to control and manage their own health plans for their employees, and are unenthusiastic about the “single payer” system, which would take control of health care costs away from them, and place it with a government-owned organization.  While some employers think a single payer plan will reduce their health care cost outlays, this is probably not the case, and, more likely than not, they will pay more, except that it will be in the form of one or more kinds of taxes.  In fact, when I hear the comment that Toyota has an advantage over GM because Toyota does not have to pay health care costs, I am astounded that any intelligent person accepts this argument uncritically.  Someone, whether it is Toyota or another category of Japanese taxpayer, pays for the health care costs of Toyota employees.  While a single payer system spreads the cost over a larger population, the real driver of health care costs is not who pays, but how much is paid, based on usage and cost-per-unit.

However, getting back to the point of this blog, President Obama has repeatedly said that if individuals like their health care plan and their current doctor, under his proposed reform framework, they will be able to retain what they have.  He has repeatedly commended companies like Pitney Bowes and, in his June 15 address to the AMA, Safeway and its great leader Steve Burd, for their great health care programs.  The implication for a business leader listening to the President is that any legislation emerging from Congress will be designed to leave such plans intact.

However, if one looks at the proposed health care reform legislation emerging from the Senate Health, Education, Labor, and Pension Committee called the American Health Choices Act, the fine print yields a very different conclusion, as does the perspective emerging from conversations many people have had with the staff of the House Ways and Means Committee.  In their view, anyone, including employees currently in a self-insured employer plan, should be free to participate in a government-sponsored plan, and the President has publicly stated that there should be competition among government plans, private insurance, and self-insured employer plans.  The details of that competition become critical, and they will determine whether the public plan merely attempts to cover people who do not have satisfactory, affordable coverage today, or whether it puts self-insured employer plans into a death spiral. 

Moreover, a similar bill pending in Connecticut and passed by both houses of the General Assembly called the SustiNet bill similarly opens up a public plan to those earning at or less than 4x the Federal Poverty Level, and SustiNet requires an employer of an individual who enrolls in the public plan to pay a penalty into that plan.

Why does this matter?  Every health plan is designed around the principle that healthy individuals who spend less on health care each year subsidize those with large health care bills.  If a healthy individual leaves a plan, the employer or insurance company or government payer loses a profitable member, and has to increase rates from other members.  Over time, the rates go up, more healthy people leave the plan, and the plan becomes unsustainable.

I was a member of the HealthFirst Authority, a public-private task force very capably co-chaired by two dedicated and thoughtful individuals Tom Swan and Margaret Flinter.  The HealthFirst recommendations to the General Assembly struck the appropriate balance between covering the uninsured and protecting existing plans.  Unfortunately, as the legislation made its way through the system, it got much more threatening to large self-insured plans. 

I have talked with many CEOs and government affairs representatives of self-insured employers.  None of them picked up on this obscure provision of the SustiNet legislation.  The Connecticut Business and Industry Association understood it, but the CEOs and other senior executives of large Connecticut companies outside the health care industry really did not understand or focus on this legislation, even though it threatens a basic employee benefit they offer.

It is great that President Obama receives CEOs at the White House and listens to them.  It is also great that Democratic and Republican Senators and Congressmen listen to CEOs and others who advocate on health care.  However, the real battles are on obscure provisions in the legislation, as well as complex, irrational, and non-transparent budget scoring rules that CEOs and their government affairs teams never touch or understand.  There is an old saying that “the devil is in the details,” and that is clearly true here.  Unfortunately, businesses are not engaged at the level of detail that enables them to pick up these issues and address them.

At a time when government is more activist than ever, it is not enough that businesses and other stakeholders have meetings with senior government officials or their key staffers, and present generic concerns.  They need to understand at the level of specific legislative language and budget scoring rules what is happening, and how to modify existing proposals and rules.

CEOs and board of directors have often told me that it is not their job to get into the detail relative to governmental actions because they have “experts” whom they hold responsible for this, but my response is that it is absolutely their job to get into the detail that makes a life-and-death difference to their business.  Government affairs professionals, lawyers, lobbyists, and trade association representatives can only understand and influence issues to a limited degree.  CEO brainpower and influence is needed on the most important issues, and mastery of the details is essential.