Don't think of Healthcare as a Benefit, or a Necessity -- Think of it as a Wage Reduction

Writing on the op-ed page of The Washington Post yesterday morning, Obamacare supporter Ezra Klein tries out a new line of advocacy: He advises workers to line up behind the Obamacare bill because it will raise their wages. As Klein explains, "health-care coverage is not a benefit. It's a wage deduction."

Any more questions? If one ever needed more proof that the healthcare policy establishment sees healthcare as a zero-sum game, Klein's column provides it. Which is not to say that Klein's piece is wrong, in any of its factual particulars.

But the point is that healthcare is, among other things, an economic good--and not only that, it is a transformative economic good. People will happily pay for better health--turn on a TV, and there you see ads for Boniva, or Restasis, or Aricept. Those are desirable goods. If Medicare pays for those drugs, fine, but if Medicare doesn't pay, lots of people would still want them. And of course, the sky would be the limit for drugs and treatment that would truly bend the curve on illness--a cure for Alzheimer's, for example, or even a drug that would significantly slow down its onset.

Cures. That's healthcare at its truest and most profound. The kind of healthcare that makes you better. It was success in the search for cures that turned medical scientists, from Edward Jenner to Louis Pasteur to Paul Ehrlich (the German discoverer of syphilis treatment, and the man who coined the word "chemotherapy," not to be confused with Paul R. Ehrlich, the American Malthusian) into heroes.

But Klein lives in his own new world, in which healthcare advances are to be feared, because they will raise costs, as noted here at SMS in September. In fairness to Klein, he is in good company inside and outside of the Beltway; much of the healthcare establishment has come to see healthcare through a prism of skepticism and negativity, in which awareness of the upside of healthcare is outweighed by appreciation of the downside. It's an intellectual style, a fad among wonks, but for the time being, it's all pervasive. Here's the Klein quote in its original context:

But health-care coverage is not a benefit. It's a wage deduction. When premium costs go up, wages go down. When premium costs go down, wages go up. Yet workers don't know that. In fact, the information is hidden from them. That means that cost control seems like all pain and no gain, which makes it virtually impossible for Congress to pass. It's like asking someone to diet when they don't realize it will help them lose weight.

Klein offers a contrarian defense of managed care, and then makes a good argument for transparency in healthcare costs:

One of the best reforms that could be made this year would be to give workers that information. So far, however, efforts have been unsuccessful. During the Senate Finance Committee's negotiations, Ron Wyden (D-Ore.) offered to give employees the option to reject their employer's offerings in return for a voucher that would help them choose their own insurance on exchanges, which meant they would save money if they chose cheaper plans. Much more modestly, Chuck Grassley (R-Iowa) floated an idea to simply require employers to report their health-care spending on workers' W-2 forms. Both were stymied by an odd-bedfellows alliance of employers and unions.

It's not too late, though. Perhaps the easiest way to dramatize the issue for workers would be to attach health-care costs to each paycheck. If employers listed the cost of health care alongside the bite taken by payroll taxes, it would be much clearer to workers that health-care coverage was coming out of their wages, not out of their employer's largess. That, at least, could help them see the costs of the system more clearly, which is, unfortunately, something that all the congressional debate isn't helping anyone do.

Yes, transparency is good. And yes, higher wages are good. But good health is better.

Cancer Death Rates Fall--Serious Medicine Works!

From the journal Cancer, via CNN:

New cancer cases and mortality rates linked to the disease have fallen significantly in recent years for almost all gender and ethnic groups in the United States, researchers said Monday.

Cancer diagnosis rates decreased by an average of 1 percent per year from 1999 to 2006, the last year data are available, according to an annual report in the journal Cancer.

Mortality rates declined between 2001 and 2006, according to the report. The decline was bigger among men, at 2 percent per year. For women, it was 1.5 percent per year in the same period.

"Death rates for all cancers combined from 2002 through 2006 were highest for black men and women and lowest for Asian/Pacific Islander men and women," the report said.

The declines in mortality rates were a result of a drop in death rates from common cancers: lung, prostate and colorectal in men; and breast and colorectal cancers in women. These are the leading types of cancer in men and women, respectively, the report said.

Despite an increase in the late 1990s, rates of breast cancer in women decreased by an average of 1.2 percent per year between 1997 and 2006, the report said.

Also decreasing were the rates of lung and bronchus oral cavity cancers among men and uterine and ovarian cancer among women, it said.

Serious Medicine works! The positive results are a result of better health behavior, but also better screening, and better treatment. (And of course, the behavioral changes, routine as they might seem, are in fact the result of serious research in decades past. That's the goal: Turn Serious Medicine into Routine Medicine.)

One would think that the political class would be more eager to take credit for these successes. But instead, it would appear that they are too busy rumbling over health insurance financing.

Pic is of colo-rectal cancer cells, from the Wellcome Trust.

Is "Health-care nation" a bad thing, or a good thing? The elites have one view, the people have another view. Which will prevail?

Robert Samuelson, the veteran writer for The Washington Post, makes it clear, in his column this morning, that he thinks "health-care nation" is a bad thing. That is, the idea that we have committed 17 percent of our GDP to healthcare, with the prospect of spending a lot more than that.

But is health-care nation really so bad? Is it such a bad idea that Americans are focused on their health? And if the people do focus on their health, is it not possible to see whole new industries developing to better serve the rest of the world, as other peoples focus increasingly on their health? That's billions of potential customers, benefiting, among others, our own American healthcare industry.

But for Samuelson, "health-care nation" is clearly intended as a dig, in the vein of Fast Food Nation,the muckraking 2001 book by Eric Schlosser, which attacked our burger-and-fries culture.

The shared presumption of both "health-care nation" and Fast Food Nation is the idea that Americans don't know what's good for them, and that haute cultural critics, such as Samuelson and Schlosser, will guide hoi polloi toward better decisions about food and health.

Here's what Samuelson said this morning about healthcare spending:

All this is transforming politics and society. The most obvious characteristic of health spending is that government can't control it. The reason is public opinion. We all want the best health care for ourselves and loved ones; that's natural and seems morally compelling. Unfortunately, what we all want as individuals may harm us as a nation.

That last sentence is worth dwelling upon, because it goes right to the heart of the Establishment worldview on healthcare. So let's repeat it:

Unfortunately, what we all want as individuals may harm us as a nation.

In other words, Samuelson is saying, we can't all get we want. Oh sure, the rich and powerful will get what they want, and we shouldn't worry about that too much, but if the masses, too, start getting what they want, well, that's trouble. Let's see: Where have we heard this kind of argument before? Can you say, "Louis XIV"?

Why is it a priori bad that people spend more on healthcare? Of all the possible things to consume--from "mcmansions" to machine guns, from fine art to Facebook, why is healthcare spending to be so vilified?

Is 17 percent of GDP really too much for us to spend on healthcare? As Louis Woodhill observes, if we were spending 17 percent of GDP on software, nobody would complain. Heck, nobody would complain if we were devoting 25 percent of GDP to software, or more, even, than that. Why? Because people think software is cool. It's an expenditure that passes aesthetic muster with the elites.

In a free country, expenditures per se should not be a great source of concern. In a free country, the presumption is that if people want it, they should be able to have it. In free country, the aggregation and satisfaction of personal wants is known as a "market," and is also known as "prosperity."

Yet expenditures are a source of concern to some, because some people just can't resist expressing an opinion, usually critical, as to how other people live their lives, and how they spend their money. And yet in a dynamic economy, choices and preferences are going to be changing constantly. So we just have to learn to roll with it, that's all.

Over the last century, expenditures for food, for example, have plummeted as a share of overall income, while expenditures for leisure have risen. In neutral economic terms, these changes are the result of rising productivity and prosperity. Food has become cheaper, leaving people with more money for leisure--and the leisure industry, from amusement parks to radio to movies to TV to videogames, has grown enormously. (Obviously some expenditures bring with them costly "externalities," and so we quite rightly restrict weapons of mass destruction and pollution--even if you personally can afford an A-bomb, society still doesn't want you to have one!)

But healthcare has positive externalities. If people are healthier, they are more productive and they live longer. And living longer, contrary to what many say, is a good thing, not a bad thing. Not only do people naturally enjoy a long life--and reward the politicians who help them live into their golden years--but a longer life means a longer working life, and that means more economic output. Life expectancy in the U.S. c. 1800 was around 35. In 1900, it was up to 47, according to Answers.com. How much work and output do you get out of people who die so young? What's the financial and social cost of families being deprived of breadwinners and caregivers?

Today, life expectancy in the US is pushing 80, and we are the richest country in the world. And all the other rich countries, too, have long life expectancies.

Of course, there is always room for improvement. Americans could eat healthier, and exercise more, and smoke less. And over time, improvements can be made. No doubt, for example, Schlosser's book has had an impact on eating patterns.

Furthermore, it can be argued that we are spending too much money on "futile care," as in, changing bedpans for the comatose and those stricken with Alzheimer's. Of course, to label someone as "comatose" is to skip over other possible names for that individual, such as "mother," or "father," or "loved one" or "dear friend." That's why nobody in electoral politics is too quick to try to pull the plug on anyone--if for no other reason than, as we have seen, the small "d" democratic system will put a stop to such efforts. (See "death panels.") Which, of course, drives the elites crazy, as they think about red ink in the future--or the peasants getting too much.

But if the elites were as smart as they like to think they are, they would be looking to use our healthcare expenditures as an asset to be leveraged, not as a liability to be squelched. Ask yourself: In the short run, with unemployment at 10 percent, is this really the time to cut back on labor-intensive healthcare spending?

And over the long run, the elites might figure out that, in fact, there are cures to be found in the thicket of millions of sick people, and trillion-dollar health expenditures. That is, lots of demand. And it's through cures, and only through cures, that we can bend the cost curve.

Cures bend the curve.

Use research and development and mass production to make people healthier--that's a win-win.

Unfortunately, the elites don't seem interested in solutions, only criticism.

An important new book, The Fatal Strain: On the Trail of Avian Flu and the Coming Pandemic, by Alan Sipress, reviewed in The Washington Post this morning.

H1N1, a.k.a. the swine flu, has proved to be serious public health issue, but not a massive pandemic. But it could be different next time, warns Sipress, who covered South Asia for the Post; he asserts that the pandemic killer will not be H1N1, but rather H5N1, an avian influenza that has killed millions of birds throughout East Asia since the 1990s. And so Sipress concludes, we are “closer to a global pandemic than...in a generation.”

And how will we deal with this threat? Will we have a strategy? We know that we did not have a strategy for swine flu.

A Caustic Comment

From Tom Toles in The Washington Post this morning.

"A Sunrise Industry: Life Sciences and the Genomics Wave"

A cure for Alzheimer's? How much is that worth in lives saved, humanitarian karma gained--and dollars made?

"A Sunrise Industry: Life Sciences and the Genomics Wave"--that's the title of an important article in The Huffington Post by Fred Hassan, former chairman and CEO of Schering-Plough and current senior advisor with Warburg Pincus.

As Hassan explains, genomics hold out the hope of transforming healthcare altogether, through the greatest medical tool of all--actual cures. "For example, just imagine the costs we will save if we can prevent Alzheimer's, and keep millions of older Americans out of nursing homes. Good health will be good economics." That is, not "bending the cost curve" by rationing or anything that might be construed as a "death panel," but bending it by curing disease. Good health is ultimately cheaper than bad health.

And also, potentially, good health, and the preservation of good health, is a money-maker--a big moneymaker. If a company (say Schering-Plough) could actually develop an Alzheimer's cure, and could bring it to market, well, that would be a big market, here and around the world. Which would be jobs and growth and capital gains for the New Jersey-based company, and for all Americans, and for all the people of the world.

But whatever company takes the lead on this--that would be a stock to go long on.

Or, of course, we can have a medical recession, or worse, in the form of a bad healthcare bill that seeks to slow down medical progress in the name of slowing down the rate of medical costs. In which case, we won't actually save any money, except on some notional piece of paper conjured up by the Congressional Budget Office, but we will have slowed down, for real, medical progress.

Hassan's whole article is a must-read, but here's the best stuff:

Until recently, we have seen disease as a homogenous condition that affects everyone who has the disease in the same way. Now we know that afflictions like cancer are not one disease, but are rather constellations of many diseases that affect different people differently. Likewise, until now most medicines have been one-size-fits-all, even though we knew that they worked great in some people, and less so, or not at all, in others.

All that will be changing -- in large part through genomics. We are entering the era of personalized health care. Our health will be improved, and disease prevented, according to what we need and what we know about ourselves. It's the same kind of individualized steps that might go with personal financial planning or choosing a family vacation -- except with more certainty of success than most of us achieve through financial or vacation planning!

This is enormously exciting. It is why life sciences will be our country's most important sunrise industry over the next several decades. Because of this sunrise, the tens of millions of baby boomers can expect to live longer and live better. And because of this sunrise, we will also have the power to avoid billions of dollars in new health care spending. For example, just imagine the costs we will save if we can prevent Alzheimer's, and keep millions of older Americans out of nursing homes. Good health will be good economics.

That last point is worth repeating: "Good health will be good economics."

Is Healthcare IT a White Elephant? Or Are Semi-Luddites on the Loose?

A curious article in Computerworld, headlined, as you can see above, "Harvard study: Computers don't save hospitals money/Hospital computer systems are often built for administrators, not doctors."

In the piece, reporter Lucas Mearian interviews Dr. David Himmelstein, who healthcare observers know to be one of the leading advocates for single-payer health coverage, a.k.a. British-style socialized medicine. Here at SMS, we are always reluctant to assess people's motives from afar, but a critic might wonder whether Dr. Himmelstein is throwing mud at a healthcare status quo that he doesn't like, for ideological reasons that transcend concerns about the practicality of a certain technology. Or it could be concluded, for reasons that we shall see, that Himmelstein just doesn't like technology very much.

But, we report, you decide. Here's the nut of the Computerworld story:

The problem "is mainly that computer systems are built for the accountants and managers and not built to help doctors, nurses and patients," the report's lead author, Dr. David Himmelstein, said in an interview with Computerworld.

Himmelstein, an associate professor at Harvard Medical School, said that in its current state, hospital computing might modestly improve the quality of health care processes, but it does not reduce overall administrative costs. "First, you spend $25 million dollars on the system itself and hire anywhere from a couple-dozen to a thousand people to run the system," he said. "And for doctors, generally, it increases time they spend [inputting data]."

Himmelstein said that only a handful of hospitals and clinics realized even modest savings and increased efficiency -- and those hospitals custom-built their systems after computer system architects conducted months of research.

The issues of healthcare IT, are, indeed, huge: there's $19 billion in the stimulus package for health IT, just for openers. But how well that money will be spent is subject to debate. This summer, my colleague at the New America Foundation, Phil Longman, wrote a thoughtful piece for The Washington Monthly about the software challenges confronted by the Department of Veterans Affairs. In a nutshell, none of this is easy. And so to the extent that Himmelstein wishes to be a part of the solution--achieving better healthcare outcomes for people--more power to him, even if we don't agree with him on single-payer.

But Himmelstein, who speaks from the authority of Harvard, as well as the medical profession, might wish to try harder to communicate a positive problem-solving tone--lest he be mistaken for a Luddite. A true optimist--and all doctors should be optimists, shouldn't they--would say that these problems can be solved.

But in fact, Himmelstein seems to have a second agenda, in addition to single-payer. He seems to be dubious about the value of health IT:

"For 45 years or so, people have been claiming computers are going to save vast amounts of money and that the payoff was just around the corner," he said. "So the first thing we need to do is stop claiming things there's no evidence for. It's based on vaporware and [hasn't been] shown to exist or shown to be true."

That seems to be Himmelstein's bottom line: This IT stuff is unlikely to work, or work well, so don't spend too much time on it. In this sense, Himmelstein is clearly part of a movement within medicine--a movement fitting snugly within the larger Green worldview--that argues that social and political concerns should trump technological advance. That's an opinion, but it is not an opinion supported by the weight of technological history, including med-tech history. And, fwiw, it's certainly a loser, politically, with the American people.

As Americans have always said, "If at first you don't succeed, try, try, again."

And that's the point here: When confronted with a hard challenge to an important goal, the way to solve it is keep pushing forward against challenges. That's the only way to overcome the difficulty. Remember what telephones were once like? And if you remember back to the days of heavy Princess phones, then maybe you're not old enough to remember rotary phones. And few today are old enough to remember the phones that came before rotaries, the "candlestick" phones of yore. It was hard work, every step of the way, to get from there to where we are now. And along the way, there were plenty of critics. But there were many more eager consumers, and so now we all have not just phones, but smartphones.

Here at SMS, we can see many ways to push ahead with healthcare IT, but would say that the challenges of healthcare IT are much more likely to be solved by our mixed economy, by a pluralist and competitive economy that accepts general goals articulated by society and then uses invention and entrepreneurship to find the best way forward. And that the best healthcare outcomes are likely to come from a similar approach on healthcare policy--sorry Dr. Himmelstein.

But every step of the way, in any field of scientific inquiry and engineering improvement, we have seen trial and error, followed by trial and success. Here at SMS, we have made this point many times, most recently concerning swine flu. It's easy to criticize the way that the federal government has handled H1N1, and we should never hesitate to speak truth to power (especially incompetent power), but the greatest laurels should go to those who can solve the problem.

And that's the mission of the Serious Medicine Strategy: To help develop a framework through which we can achieve the best possible medical and healthcare outcomes, for all Americans, and for the peoples of the world.