Sustainable Living August 17, 2009March 15, 2017 EAT LESS MEAT “If you care about the planet, it’s actually better to eat a salad in a Hummer than a cheeseburger in a Prius.” – Bill Maher . . . here. A BATTERY CHEAP ENOUGH TO CHANGE THE GAME? Here is one more of a slew of encouraging high-tech reports: a battery the size of a refrigerator that could cost $2,000, last a decade, sit in millions of basements, recharging from solar panels on the roof, powerful enough to handle all your needs (with the power company there merely as a backup). Brighter days do lie ahead, disruptive as getting from here to there may be.
Health Care Reality Check August 14, 2009March 15, 2017 GREENHOUSE GAS REDUCTION – WITHOUT COST Good news: This brief piece claims that nonresidential buildings could be turned green, or at least greener, at low cost and with close to a one-year payback – a potential savings of tens of billions of dollars a year. HEALTH – WITHOUT MEDICAL CARE Take 10 seconds to eyeball this pair of Michelangelos. Point, set, and match. HEALTH CARE reform – WITHOUT MISINFORMATION If you haven’t already gotten the “viral email” senior Presidential adviser David Axelrod kicked off yesterday, here’s the nub: 8 ways reform provides security and stability Ends Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history. Ends Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses. Ends Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics. Ends Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill. Ends Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender. Ends Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive. Extends Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26. Guarantees Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won’t be allowed to refuse renewal because someone became sick. Learn more and get details. 8 common myths about health insurance reform Reform will stop “rationing” – not increase it: It’s a myth that reform will mean a “government takeover” of health care or lead to “rationing.” To the contrary, reform will forbid many forms of rationing that are currently being used by insurance companies. We can’t afford reform: It’s the status quo we can’t afford. It’s a myth that reform will bust the budget. To the contrary, the President has identified ways to pay for the vast majority of the up-front costs by cutting waste, fraud, and abuse within existing government health programs; ending big subsidies to insurance companies; and increasing efficiency with such steps as coordinating care and streamlining paperwork. In the long term, reform can help bring down costs that will otherwise lead to a fiscal crisis. Reform would encourage “euthanasia”: It does not. It’s a malicious myth that reform would encourage or even require euthanasia for seniors. For seniors who want to consult with their family and physicians about end-of life decisions, reform will help to cover these voluntary, private consultations for those who want help with these personal and difficult family decisions. Vets’ health care is safe and sound: It’s a myth that health insurance reform will affect veterans’ access to the care they get now. To the contrary, the President’s budget significantly expands coverage under the VA, extending care to 500,000 more veterans who were previously excluded. The VA Healthcare system will continue to be available for all eligible veterans. Reform will benefit small business – not burden it: It’s a myth that health insurance reform will hurt small businesses. To the contrary, reform will ease the burdens on small businesses, provide tax credits to help them pay for employee coverage and help level the playing field with big firms who pay much less to cover their employees on average. Your Medicare is safe, and stronger with reform: It’s myth that Health Insurance Reform would be financed by cutting Medicare benefits. To the contrary, reform will improve the long-term financial health of Medicare, ensure better coordination, eliminate waste and unnecessary subsidies to insurance companies, and help to close the Medicare “doughnut” hole to make prescription drugs more affordable for seniors. You can keep your own insurance: It’s myth that reform will force you out of your current insurance plan or force you to change doctors. To the contrary, reform will expand your choices, not eliminate them. No, government will not do anything with your bank account: It is an absurd myth that government will be in charge of your bank accounts. Health insurance reform will simplify administration, making it easier and more convenient for you to pay bills in a method that you choose. Just like paying a phone bill or a utility bill, you can pay by traditional check, or by a direct electronic payment. And forms will be standardized so they will be easier to understand. The choice is up to you – and the same rules of privacy will apply as they do for all other electronic payments that people make. Learn more and get details. 8 Reasons we need reform now Coverage Denied to Millions: A recent national survey estimated that 12.6 million non-elderly adults – 36 percent of those who tried to purchase health insurance directly from an insurance company in the individual insurance market – were in fact discriminated against because of a pre-existing condition in the previous three years or dropped from coverage when they became seriously ill. Learn more. Less Care for More Costs: With each passing year, Americans are paying more for health care coverage. Employer-sponsored health insurance premiums have nearly doubled since 2000, a rate three times faster than wages. In 2008, the average premium for a family plan purchased through an employer was $12,680, nearly the annual earnings of a full-time minimum wage job. Americans pay more than ever for health insurance, but get less coverage. Learn more. Roadblocks to Care for Women: Women’s reproductive health requires more regular contact with health care providers, including yearly pap smears, mammograms, and obstetric care. Women are also more likely to report fair or poor health than men (9.5% versus 9.0%). While rates of chronic conditions such as diabetes and high blood pressure are similar to men, women are twice as likely to suffer from headaches and are more likely to experience joint, back or neck pain. These chronic conditions often require regular and frequent treatment and follow-up care. Learn more. Hard Times in the Heartland: Throughout rural America, there are nearly 50 million people who face challenges in accessing health care. The past several decades have consistently shown higher rates of poverty, mortality, uninsurance, and limited access to a primary health care provider in rural areas. With the recent economic downturn, there is potential for an increase in many of the health disparities and access concerns that are already elevated in rural communities. Learn more. Small Businesses Struggle to Provide Health Coverage: Nearly one-third of the uninsured – 13 million people – are employees of firms with less than 100 workers. From 2000 to 2007, the proportion of non-elderly Americans covered by employer-based health insurance fell from 66% to 61%. Much of this decline stems from small business. The percentage of small businesses offering coverage dropped from 68% to 59%, while large firms held stable at 99%. About a third of such workers in firms with fewer than 50 employees obtain insurance through a spouse. Learn more. The Tragedies are Personal: Half of all personal bankruptcies are at least partly the result of medical expenses. The typical elderly couple may have to save nearly $300,000 to pay for health costs not covered by Medicare alone. Learn more. Diminishing Access to Care: From 2000 to 2007, the proportion of non-elderly Americans covered by employer-based health insurance fell from 66% to 61%. An estimated 87 million people – one in every three Americans under the age of 65 – were uninsured at some point in 2007 and 2008. More than 80% of the uninsured are in working families. Learn more. The Trends are Troubling: Without reform, health care costs will continue to skyrocket unabated, putting unbearable strain on families, businesses, and state and federal government budgets. Perhaps the most visible sign of the need for health care reform is the 46 million Americans currently without health insurance – projections suggest that this number will rise to about 72 million in 2040 in the absence of reform. Learn more. ☞ Share all this with your friends? Visit the new White House “Reality Check” web site and share it with your list? Have a great and healthy weekend.
Perverse Incentives And a Six-Minute Must-See Video August 13, 2009March 15, 2017 HOW’S YOUR DRIVING? Find out with a free five-minute test of your vision and reflexes. Then consider buying DriveSharp to improve your ability. It’s “clinically proven to help drivers see more, react faster, and cut crash risk by up to 50%.” If everyone in the world buys it, two things will happen. The roads will become safer; and, as a tiny stakeholder, I will become rich beyond imagining. Here is Walt Mossberg’s review in yesterday’s Wall Street Journal. HOW’S YOUR HEALTH CARE? France spends 11% of its GDP on health care and ranks #1 worldwide. We spend 18% and rank #39. The 7% difference – their 11% to our 18% – saps our prosperity and handicaps our global competitiveness. Here’s one estimate of our system’s “top money wasters” – beginning with overtesting. (Note that one of the things the President wants is national research into “what works,” so we learn to waste less money on unhelpful testing.) Tom Anthony: “This New Scientist video disects healthcare spending and its results. The incentives of our system are all wrong.” ☞ Yes. This must-see six-minute video makes our handicap vivid . . . and reaches much the same conclusion as Atul Gawande’s New Yorker article linked to Friday – too much “entrepreneurial medicine.” Dr. Richard Feinberg: “Dr. Gawande’s article is fantastic, one of the best I have seen . . . getting the big picture and so much of the detail right about healthcare costs. I just love the part where he shows how spending time with the patient and collaboration among physicians improves the quality of outcome at a lower price. Looking at the picture from a patient perspective, there is a ton of research showing that doctor-patient communication is the most important variable in patient satisfaction (excluding cost). Healthcare must create incentives (reimbursement, quality outcome rewards, etc.) for providers to spend more time talking to patients, not less. Current reformers have a tremendous opportunity at hand if they can embrace such policy.” And speaking of perverse incentives: “HOW AMERICAN HEALTH CARE KILLED MY FATHER” Not my father (that was tobacco), my friend David Goldhill’s father. I read this in manuscript and now see it featured in The Atlantic. Exceptionally smart and provocative. A small taste to whet your interest: About a week after my father’s death, The New Yorker ran an article by Atul Gawande profiling the efforts of Dr. Peter Pronovost to reduce the incidence of fatal hospital-borne infections. Pronovost’s solution? A simple checklist of ICU protocols governing physician hand-washing and other basic sterilization procedures. Hospitals implementing Pronovost’s checklist had enjoyed almost instantaneous success, reducing hospital-infection rates by two-thirds within the first three months of its adoption. But many physicians rejected the checklist as an unnecessary and belittling bureaucratic intrusion, and many hospital executives were reluctant to push it on them. The story chronicled Pronovost’s travels around the country as he struggled to persuade hospitals to embrace his reform. It was a heroic story, but to me, it was also deeply unsettling. How was it possible that Pronovost needed to beg hospitals to adopt an essentially cost-free idea that saved so many lives? Here’s an industry that loudly protests the high cost of liability insurance and the injustice of our tort system and yet needs extensive lobbying to embrace a simple technique to save up to 100,000 people. And what about us—the patients? How does a nation that might close down a business for a single illness from a suspicious hamburger tolerate the carnage inflicted by our hospitals? And not just those 100,000 deaths. In April, a Wall Street Journal story suggested that blood clots following surgery or illness, the leading cause of preventable hospital deaths in the U.S., may kill nearly 200,000 patients per year. How did Americans learn to accept hundreds of thousands of deaths from minor medical mistakes as an inevitability? . . . How can a facility featuring state-of-the-art diagnostic equipment use less-sophisticated information technology than my local sushi bar? How can the ICU stress the importance of sterility when its trash is picked up once daily, and only after flowing onto the floor of a patient’s room? Considering the importance of a patient’s frame of mind to recovery, why are the rooms so cheerless and uncomfortable? In whose interest is the bizarre scheduling of hospital shifts, so that a five-week stay brings an endless string of new personnel assigned to a patient’s care? Why, in other words, has this technologically advanced hospital missed out on the revolution in quality control and customer service that has swept all other consumer-facing industries in the past two generations? I’m a businessman, and in no sense a health-care expert. But the persistence of bad industry practices—from long lines at the doctor’s office to ever-rising prices to astonishing numbers of preventable deaths—seems beyond all normal logic, and must have an underlying cause. There needs to be a business reason why an industry, year in and year out, would be able to get away with poor customer service, unaffordable prices, and uneven results—a reason my father and so many others are unnecessarily killed. . . . my dad’s doctors weren’t incompetent—on the contrary, his hospital physicians were smart, thoughtful, and hard-working. Nor is he dead because of indifferent nursing—without exception, his nurses were dedicated and compassionate. Nor from financial limitations—he was a Medicare patient, and the issue of expense was never once raised. There were no greedy pharmaceutical companies, evil health insurers, or other popular villains in his particular tragedy. Indeed, I suspect that our collective search for villains—for someone to blame—has distracted us and our political leaders from addressing the fundamental causes of our nation’s health-care crisis. All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. ☞ David basically wants to put the consumer back in charge, with government insurance for catastrophic care and setting safety standards. I’m not sure that would work, or that such a radical change would be possible even if it could. But if you can find the time, you will find his thoughts compelling.
All Hail David Pogue Yes! Yes! Yes! Yes! August 12, 2009March 15, 2017 But first . . . JULIA AND JULIE Nothing blows up, so you may not like it (a trailer for 2012 preceding the feature has everything blow up – it’s the end of the world and only John Cusack seems likely to survive), but Julia and Julie is great fun. THAT SPECULATIVE BASKET – AVNR, JAV, PARS Suggested last week, two of these three little drug stocks reported their results yesterday. JAV’s reported ‘p-value’ was 0.053, JUST missing ‘statistical significance’ on its primary endpoint. (As I understand it, there has to be less than a 5% chance good results could have been more than random. And here there was a 5.3% chance. Oops.) (Then again, I never took statistics. If I have said this wrong, I have a terrific readership to correct me.) Technically, this is a “failed” study and the stock closed at $1.48, down from last week’s $1.90 or so. So you could sell without too horrible a loss. Then again, some of the secondary endpoints apparently were statistically significant. I’m told it’s possible that they can file this data along with other studies and make a case. Also, there is a second product that they expect to file for approval this year. So, being stubborn by nature – and having gambled only money I can truly afford to lose, I’m holding on. AVNR reported success and the stock jumped as high as $4.09 from last week’s $2.20 before falling back to $2.87. I had put in a ‘good til canceled’ order to sell some of mine at $3.90 – so by the time I turned on my computer yesterday morning, it was already done. In hindsight, I guess I should have put in to sell all of it at $3.90. But having sold some, I’m in no special rush to sell the rest. PARS, the third leg of our speculative stool, isn’t expected to report its results until next month. HOW MUCH TO BET Chris Hanacek: ‘When you post a tip and caveat ‘only with money you can really afford to lose’ this may be selling it short. What do you think of using the Kelly formula as a basis for deciding how much of my “money I can lose” to allocate?’ ☞ I had not known about the Kelly Formula, and now that I’ve researched it, I need an Advil. That sort of calculation may be worth doing for something as regular as a series of basketball games or blackjack games, where you know the exact pay-off if you win, the exact loss if you lose . . . and you know, at least more or less, the odds of winning . . . and you know when the game ends. And even with stocks, it may be helpful to the math majors in the crowd. But I think most of us just have to do it ‘by feel.’ First off, really do ‘play’ only with money you can truly afford to lose. Which generally means not playing at all: most people on this planet, especially these days, have no such money. Second, especially if it took you a while to build that cache of play money – not $500, say, but $500,000 – for heaven’s sake, obviously, don’t ‘bet’ it all on one stock (or one anything else), ever. Just what portion of your play money to bet on any given position is what Chris is suggesting the Kelly formula might help quantify. But for me, the real mental effort should probably go into trying to judge the ‘inputs’ of the Kelly formula rather than actually working it through. If your judgment is good in assessing the contours of the bet, you are miles ahead. What are the odds of a 50% gain? A double? A tentuple? A 50% loss? A total loss? And so on. If you actually could know these things (and you can’t), you could figure exactly what a bet was ‘worth’ – and how well worth making. Everyone is different. If I were 30, earning big bucks and able to set aside $1,000 every quarter for this kind of thing, I might bet the full $1,000 on a single stock, even though that were, at first, 100% of my play money. No point in splitting it five ways, and no harm in losing it all. But if I were 60 and had built a $250,000 kitty of play money, I certainly wouldn’t put more than a fifth of it into any one thing – and generally nowhere near even that much. Thoughts? And now . . . YES! YES! YES! YES! In The New York Times and on his blog,’ David Pogue has “been ranting about one particularly blatant money-grab by American cell phone carriers: the mandatory 15-second voicemail instructions.’ In small part . . . These messages are outrageous for two reasons. First, they waste your time. Good heavens: it’s 2009. WE KNOW WHAT TO DO AT THE BEEP. Do we really need to be told to hang up when we’re finished!? Would anyone, ever, want to ‘send a numeric page?’ Who still carries a pager, for heaven’s sake? Or what about ‘leave a callback number?’ We can SEE the callback number right on our phones! Second, we’re PAYING for these messages. These little 15-second waits add up-bigtime. If Verizon’s 70 million customers leave or check messages twice a weekday, Verizon rakes in about $620 million a year. That’s your money. And your time: three hours of your time a year, just sitting there listening to the same message over and over again every year. . . . ☞ If you’re mad as hell, you don’t have to take it anymore. Read David’s full post and join his crusade!
Three More Years! Three More Years! August 11, 2009March 15, 2017 PALS AROUND WITH TERRORISTS? Sarah Palin is an idiot; but just to make the point to those who haven’t gotten it, the Wall Street Journal notes that, far from palling around with them, he kills them: President Obama has . . . stepped up the pace of drone attacks, which are now thought to have killed more than a third of the top Taliban leaders. These columns reported a month ago on an intelligence report showing that the strikes are also carried out with little or no harm to civilians. For cosmetic political reasons, the Obama Administration no longer wants to use the phrase ‘global war on terror.’ Yet in Pakistan and Afghanistan it is fighting a more vigorous war on terrorists than did the previous Administration. Whatever you want to call it, the death of Baitullah Mehsud makes the world a safer place. HEALTH CARE – IT’S GOING TO WORK OUT Matt Miller‘s take over at The Daily Beast is encouraging. ‘The truth is that everything that’s taking place right now is irrelevant,’ he writes. What matters is what happens in conference once the House and Senate pass their bills. (Something neither the House or Senate did in 1993, when the Clintons were trying this.) Only after something passes the House and the Senate will the real work begin. The conference committee to hammer out a final, identical bill will be the mother of all summits. That’s where President Obama must weigh in heavily to shape and then sell the outcome. . . . The White House’s only job until we get to conference is to shape the climate of opinion with one simple end in mind. Legislators need to get the message that their constituents want “change” on health care, and will punish them for supporting the status quo. . . . You can’t channel surf on cable these days without seeing pundits who insist that [Obama] has blown it by not detailing what he wants in a final bill . . . The nattering nabobs of an earlier era would have likewise slammed Abraham Lincoln when he said, apropos of his general outlook, that “my policy is to have no policy.” But Lincoln knew a thing or two about political leadership. Within general parameters (pro-slavery or anti-slavery, pro-health reform or anti-health reform), a president’s job is to preserve enough flexibility to get the results he seeks while carrying most of the people along with him. A studied ambiguity as events unfold is indispensable to this task, and Obama intuits this just right. Once we get to conference, however, Obama’s role must change. That will be the moment. That’s when he and his team have to knock heads, crafting a deal that covers everyone, funds this in economically rational ways, and slows system-wide cost growth. As importantly, that’s when Obama must move from Rose Garden jawboning and press conference talking points to a riveting series of speeches on health care that will rival his race speech during the campaign. He needs to take the issue to an entirely new level of adult conversation, frame the case for “change” versus “the status quo” in ways that empathize with the fears and aspirations of all sides, and show why the path he’s forged is good for average Americans and a fit with the journey the country has been on since its founding. Only Obama can provide the macro political framing and cover and energy that at the end of the day (around Thanksgiving) gets a majority of legislators to transcend their own preferred versions of reform and agree to act. Even if his poll numbers are a bit tarnished, does anyone really want to bet against Obama seizing the presidential megaphone and making this compelling? Between now and then, everyone should take a deep breath. The talking heads have to fill up air time, but the rest of us should remember: until we get to conference, it’s all prelude. NAQ – THE SPACULATION CONTINUES There’s good news and bad news. The good news is that, if this deal is approved, our NRDC warrants get an extra three years to run, way out until October 23, 2014. Just in time for my 100th birthday! (I really have to change the photograph on this page.) The bad news is that the strike price at which they are exercisable will rise from $7.50 to $12 (though the price at which conversion can be forced will rise from $14.25 to $18.75). If you have no idea what I’m talking about, just as well. If you’d like a refresher, here‘s a recap of the various SPACs we have dabbled in as they looked 15 months ago. But if you do own the warrants, here’s the deal: The stock closed yesterday at $10.02. The warrants will now give you the right to buy it at $12 any time until October 23, 2014. If the stock should rise, say, 60% in that time, to $16 (and assuming this deal is approved), the right to buy a $16 stock for just $12 would be worth approximately $4 – a nice gain on today’s 27-cent warrant price. But if the stock appreciated less than 20% – let alone fell – the warrants would expire worthless. And so, here in Casablanca, we wait. And wait. And wait.
Don’t Miss This Maddow August 10, 2009March 15, 2017 TEAMVIEWER You download this free software and so does your colleague or computer tutor – whoever. Then start a session where you both see the same screen and can work on it together. Use skype.com – also free – to talk as you do. Who needs airplanes or actual human contact anymore? This is great if you want to help your grandmother fix something on her computer . . . or if you and your co-chair want to go over the seating chart . . . or if you have to finalize the brochure but have cooties and can’t go in to work. And if you do have cooties . . . HEALTH CARE Ralph Sierra: “A good article from the respected business columnist Steven Pearlstein.” ☞ The gist: . . . The recent attacks by Republican leaders and their ideological fellow-travelers on the effort to reform the health-care system have been so misleading, so disingenuous, that they could only spring from a cynical effort to gain partisan political advantage. By poisoning the political well, they’ve given up any pretense of being the loyal opposition. They’ve become political terrorists, willing to say or do anything to prevent the country from reaching a consensus on one of its most serious domestic problems. . . . Health reform is a test of whether this country can function once again as a civil society — whether we can trust ourselves to embrace the big, important changes that require everyone to give up something in order to make everyone better off. Republican leaders are eager to see us fail that test. RACHEL MADDOW EXPOSES FAKE PROTESTERS This is just so good, I yield the balance of my time to Rachel. Share it with your list? Tomorrow: Health Care – It’s Going To Work Out
Check THIS Out August 7, 2009March 15, 2017 Listen. I know it’s August, and I know there’s always some controversy or other. But this health care fight is really important in almost the same way the Bush-Gore fight was important. Powerful interests were determined to install Bush and so he was sold as a man with “a humble foreign policy” even though he was already planning to attack Iraq . . . and he was sold as a man “the vast majority” of whose huge tax cuts would go “to people at the bottom end of the economic ladder” even though by “bottom” he actually meant “top” . . . and common citizens rose up in Miami in spontaneous protest, intimidating public officials to “stop the vote count” even though they turned out to have been Republican staffers flown in on corporate jets. And so on. My point is, it’s happening again. Powerful interests are pulling out all the stops to mislead the public. We shouldn’t let it happen again. Yesterday, I offered this – “If you ever really need your health insurance policy, you have less than even odds that the insurance company will actually pay for your health care.” – guessing that it was overstated but closer to the truth than the insurance companies would have us think. Today, I offer this incendiary, heart-wrenching six-minute video, even though it’s not a dispassionate analysis. And this important New Yorker article which is a dispassionate analysis. The author, Dr. Atul Gawande, a surgeon, goes to McAllen, Texas – which has the highest health care costs in the country but by no means the healthiest residents – and asks why. Why, indeed. The short form: because our system is screwed up in ways Obama is trying to fix. And because “entrepreneurial doctors” there, and in so much of the rest of the country, have the wrong incentives. So much is at stake. If we could have better care at lower cost, it would go a long way toward getting the country back on a prosperous long-term track. I think the situation is serious enough that we should each spend an hour a day learning, thinking, and advocating about it until we get health care reform. That’s an extraordinary burden – but not as onerous as, say, going off to war or suffering through a depression. We can do this. Excerpts from The New Yorker: . . . McAllen is in Hidalgo County, which has the lowest household income in the country, but it’s a border town, and a thriving foreign-trade zone has kept the unemployment rate below ten per cent. McAllen calls itself the Square Dance Capital of the World. “Lonesome Dove” was set around here. McAllen has another distinction, too: it is one of the most expensive health-care markets in the country. Only Miami—which has much higher labor and living costs—spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns. The explosive trend in American medical costs seems to have occurred here in an especially intense form. Our country’s health care is by far the most expensive in the world. In Washington, the aim of health-care reform is not just to extend medical coverage to everybody but also to bring costs under control. Spending on doctors, hospitals, drugs, and the like now consumes more than one of every six dollars we earn. The financial burden has damaged the global competitiveness of American businesses and bankrupted millions of families, even those with insurance. It’s also devouring our government. “The greatest threat to America’s fiscal health is not Social Security,” President Barack Obama said in a March speech at the White House. “It’s not the investments that we’ve made to rescue our economy during this crisis. By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost of health care. It’s not even close.” The question we’re now frantically grappling with is how this came to be, and what can be done about it. McAllen, Texas, the most expensive town in the most expensive country for health care in the world, seemed a good place to look for some answers. . . . . . . [P]ublic-health statistics show that cardiovascular-disease rates in the county are actually lower than average, probably because its smoking rates are quite low. Rates of asthma, H.I.V., infant mortality, cancer, and injury are lower, too. El Paso County, eight hundred miles up the border, has essentially the same demographics. Both counties have a population of roughly seven hundred thousand, similar public-health statistics, and similar percentages of non-English speakers, illegal immigrants, and the unemployed. Yet in 2006 Medicare expenditures (our best approximation of over-all spending patterns) in El Paso were $7,504 per enrollee—half as much as in McAllen. An unhealthy population couldn’t possibly be the reason that McAllen’s health-care costs are so high. (Or the reason that America’s are. We may be more obese than any other industrialized nation, but we have among the lowest rates of smoking and alcoholism, and we are in the middle of the range for cardiovascular disease and diabetes.) Was the explanation, then, that McAllen was providing unusually good health care? . . . . . . Medicare ranks hospitals on twenty-five metrics of care. On all but two of these, McAllen’s five largest hospitals performed worse, on average, than El Paso’s. McAllen costs Medicare seven thousand dollars more per person each year than does the average city in America. But not, so far as one can tell, because it’s delivering better health care. . . . . . . In 1992, in the McAllen market, the average cost per Medicare enrollee was $4,891, almost exactly the national average. But since then, year after year, McAllen’s health costs have grown faster than any other market in the country, ultimately soaring by more than ten thousand dollars per person. “Maybe the service is better here,” the cardiologist suggested. People can be seen faster and get their tests more readily, he said. Others were skeptical. “I don’t think that explains the costs he’s talking about,” the general surgeon said. “It’s malpractice,” a family physician who had practiced here for thirty-three years said. “McAllen is legal hell,” the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere. That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. Didn’t lawsuits go down? “Practically to zero,” the cardiologist admitted. “Come on,” the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization here, pure and simple.” Doctors, he said, were racking up charges with extra tests, services, and procedures. The surgeon came to McAllen in the mid-nineties, and since then, he said, “the way to practice medicine has changed completely. Before, it was about how to do a good job. Now it is about ‘How much will you benefit?’ ” Everyone agreed that something fundamental had changed since the days when health-care costs in McAllen were the same as those in El Paso and elsewhere. . . . . . . The primary cause of McAllen’s extreme costs was, very simply, the across-the-board overuse of medicine. ☞ It turns out, more care does not necessarily lead to better outcomes. Picking up from Dr. Gwande’s narrative: . . . In a 2003 study, another Dartmouth team, led by the internist Elliott Fisher, examined the treatment received by a million elderly Americans diagnosed with colon or rectal cancer, a hip fracture, or a heart attack. They found that patients in higher-spending regions received sixty per cent more care than elsewhere. They got more frequent tests and procedures, more visits with specialists, and more frequent admission to hospitals. Yet they did no better than other patients, whether this was measured in terms of survival, their ability to function, or satisfaction with the care they received. If anything, they seemed to do worse. That’s because nothing in medicine is without risks. Complications can arise from hospital stays, medications, procedures, and tests, and when these things are of marginal value the harm can be greater than the benefits. . . . To make matters worse, Fisher found that patients in high-cost areas were actually less likely to receive low-cost preventive services, such as flu and pneumonia vaccines, faced longer waits at doctor and emergency-room visits, and were less likely to have a primary-care physician. They got more of the stuff that cost more, but not more of what they needed. In an odd way, this news is reassuring. Universal coverage won’t be feasible unless we can control costs. Policymakers have worried that doing so would require rationing, which the public would never go along with. So the idea that there’s plenty of fat in the system is proving deeply attractive. “Nearly thirty per cent of Medicare’s costs could be saved without negatively affecting health outcomes if spending in high- and medium-cost areas could be reduced to the level in low-cost areas,” Peter Orszag, the President’s budget director, has stated. Most Americans would be delighted to have the quality of care found in places like Rochester, Minnesota, or Seattle, Washington, or Durham, North Carolina—all of which have world-class hospitals and costs that fall below the national average. If we brought the cost curve in the expensive places down to their level, Medicare’s problems (indeed, almost all the federal government’s budget problems for the next fifty years) would be solved. The difficulty is how to go about it. Physicians in places like McAllen behave differently from others. The $2.4-trillion question is why. Unless we figure it out, health reform will fail. I had what I considered to be a reasonable plan for finding out what was going on in McAllen. I would call on the heads of its hospitals, in their swanky, decorator-designed, churrigueresco offices, and I’d ask them. . . . [W]hy do hospitals in McAllen order so much more surgery and scans and tests than hospitals in El Paso and elsewhere? . . . Health-care costs ultimately arise from the accumulation of individual decisions doctors make about which services and treatments to write an order for. The most expensive piece of medical equipment, as the saying goes, is a doctor’s pen. And, as a rule, hospital executives don’t own the pen caps. Doctors do. . . . There was no sign . . . McAllen’s doctors as a group were trained any differently from El Paso’s. One morning, I met with a hospital administrator who had extensive experience managing for-profit hospitals along the border. He offered a different possible explanation: the culture of money. “In El Paso, if you took a random doctor and looked at his tax returns eighty-five per cent of his income would come from the usual practice of medicine,” he said. But in McAllen, the administrator thought, that percentage would be a lot less. He knew of doctors who owned strip malls, orange groves, apartment complexes—or imaging centers, surgery centers, or another part of the hospital they directed patients to. They had “entrepreneurial spirit,” he said. . . . . . . Many physicians are remarkably oblivious to the financial implications of their decisions. . . . . . . Then there are the physicians who see their practice primarily as a revenue stream. They instruct their secretary to have patients who call with follow-up questions schedule an appointment, because insurers don’t pay for phone calls, only office visits. They consider providing Botox injections for cash. They take a Doppler ultrasound course, buy a machine, and start doing their patients’ scans themselves, so that the insurance payments go to them rather than to the hospital. They figure out ways to increase their high-margin work and decrease their low-margin work. This is a business, after all. In every community, you’ll find a mixture of these views among physicians, but one or another tends to predominate. McAllen seems simply to be the community at one extreme. . . . About fifteen years ago, it seems, something began to change in McAllen. A few leaders of local institutions took profit growth to be a legitimate ethic in the practice of medicine. Not all the doctors accepted this. But they failed to discourage those who did. So here, along the banks of the Rio Grande, in the Square Dance Capital of the World, a medical community came to treat patients the way subprime-mortgage lenders treated home buyers: as profit centers. . . . ☞ Believe it or not, I have abridged what you’ve read above – and the article goes on extensively from here. My argument is that, for the love of your country, your family’s health, and the future course of your 401(k), you should read the whole thing. And then join the President in pushing for reform.
Cooking Like a Hun And Getting Involved in Reforming Health Care August 6, 2009March 15, 2017 YUM Dan Becker: “Regarding your Dashboard Cookie Recipe, here in Austin, Texas, our month of July had 26 out of 31 days with over 100 degrees Fahrenheit! So our local paper ran a recipe for sun-drying Juliet tomatoes. I tried it with grapes, and it worked well also. I guess any sort of fruit would work well. Just put it on the dashboard in the morning, and you have a healthy snack for the ride home in the evening.” Greg Bandy: “See also Manifold Destiny: The One! The Only! Guide to Cooking on Your Car Engine!” ☞ Listen, if it’s going to be this hot, there’s no point making it hotter and wasting energy by firing up your oven. The Huns had a similar notion. They would place slabs of raw meat between their saddles and their horses’ bare backs and “cook” the meat in the course of a long ride. I know this because when I was 12 I wrote a book about Attila (properly pronounced AT-ill-a, by the way). It began, “Like demons out of hell they came [riding down upon the Romans] . . .” and ended when my parents decided completing it would take too much time away from my studies and hurt my chances of getting into a good college. “Oh, please,” I said, rolling my pre-teen eyes. “They’re going to reject me because my grades suffered, but I wrote a book?” We’ll never know who was right or whether I would have found a publisher (in hindsight, I think not); but I did learn a lot about barbarians. HEALTH CARE – RECISSION My guess is that this is overstated – “If you ever really need your health insurance policy, you have less than even odds that the insurance company will actually pay for your health care.” – but my guess is also that it’s closer to the truth than the insurance companies would have us think. HEALTH CARE – FACT FROM FICTION James Musters: “This newsletter does for health reporting what Dean Baker does for economic reporting, or Media Matters does for political reporting.” HEALTH CARE – CYNICISM Take 30 seconds to watch the opposition. HEALTH CARE – GET INVOLVED Find an event near you. MYMDOS.COM Hey – look at that. MYM for DOS, orphaned 15 years ago, has its own web page. With its own forum. You can only reach it though on a dial-up modem using 5-1/4 inch floppy disks. (Just kidding.) I have nothing to do with it, but am happy to see MYM still kicking.
Worried – But Enjoying It August 5, 2009March 15, 2017 GLDD, TKF, CPNO, PGRX Our dredging company, GLDD, reported good results for the quarter and, closing at $6.19 last night, up from $2.33 when suggested six months ago (though still down about 40% from its all-time high). For me, this is a long-term holding, as I can imagine its earning $1 a share someday and selling at 12 times earnings. TKF is now more than double where it was when suggested at $5.47 in April, although – like an idiot – I suggested selling half last month at $9.11. I was worried. And you know what they say: “A bull market climbs a wall of worry.” Well, I’m still worried (not specifically about TKF) – it’s just been too easy. At some point, weeks or months from now – most likely when people have finally decided we’re in the clear – I think the bear will return. So if you didn’t sell half your TKF at $9.11, you might sell it now at $11.72. But I’m holding the other half. CPNO is now up 80% from where it was last suggested . . . but down 40% from where it was first suggested (with some nice distributions along the way), and I am compelled to note that losing 40% and then gaining 80% barely gets you past breakeven. (Right? If you start with $1000 and lose 40% you’re down to $600. Then gain 80% and that $600 becomes $1,080. But – and here is why they talk about the power of dollar-cost-averaging – if you bought $1,000 of CPNO at $30 and then another $1,000 worth at $10, you’d now have 133 shares at $18 . . . rounding everything off here . . . for a total of $2,400, which does begin to feel like a gain. And the other thing to say about this is that you could now sell the $30 shares for a loss that will lower your income tax, while holding the $10 shares for what could be an eventual, more lightly taxed, long-term gain.) Of PRGX Chris Brown writes: “Better than expected EPS number from PRGX today. Aristides Capital has reduced the position size to one-half of our initial # of shares, having sold some @ $4.85ish this morning. Message from conference call is that company is in process of reinventing itself, expanding what they can do with customer data it mines for clients. Has some good ideas, but realistically it’s going to be a slow process. I think estimates for next year are still close in spite of the good EPS this morning. Fundamentally, 8 PE multiple x 66 cents EPS gives a very conservative $5.28 price target. Further upside to that is possible, but is dependent on future signs of operational improvement. Chart has a lot of room to the upside IF the stock breaks above $5.70.” Up about 50% from where Chris suggested it two weeks ago, I’m selling half. HAVE YOU LOST YOUR MIND AND BECOME A DAY TRADER? Seriously, what’s happening to me? It’s like I’ve been invaded by CNBC. Well, actually not. I think that with money you can truly afford to lose there are some opportunities. And that the tax control you get – selling your losers to lower your income tax and using your long-term capital gains to fund your charitable giving – improves your odds. (Right now I own, among others, PARS, AVNR and JAV – all three of them highly speculative tiny drug companies. As mentioned a couple of weeks ago at 29 cents, PARS, now 41 cents, should either be zero or in the $2 to $4 range within the next few months. Like PARS, the other two await imminent results of drug trials that my guru thinks should be positive but certainly may not be. Around $2 now, he thinks they may double if the news is good, drop to $1 if it’s not.) That said, market timing is very tough to do successfully – unless you really are in the latter stages of a bubble. (Even random walkers should have had no problem in 2000 avoiding Internet stocks; or with the Dow above 14,000 a couple of years ago avoiding most stocks; or with home prices at the crazy heights they reached around the same time not buying one.) So the bulk of the money wants to have “in the market” should be there through a program of steady investing, year in and year out – but only money you will not need to touch for many years – very possibly through plain vanilla ultra-low-expense Vanguard index funds, as long suggested . . . but now perhaps in something even better: MAGIC FORMULA Kirk Elliott: “Have you looked at Magicformula’s new investment offering – Formulatrading.com? It looks like a good way to invest using the rules from Joel Greenblatt’s The Little Book that Beats the Market.” ☞ It does indeed. There are no guarantees of course, but my guess is that over time, it will outperform index funds by more than enough to justify the 1% annual fee (versus 0.2% or so in an index fund). To me, the underlying rationale is simple and, as I have argued before, worth considering.
Common Cement, Engine Block Burgers … . . . and WHERE did I leave my keys? August 4, 2009March 15, 2017 ELLEN’S COMMENCEMENT SPEECH So much fun I watched it twice. COOKING LIKE A GUY™ WITH A HOT ROD Denis Trover: “Out here on the desert even the women use the guys’ way to cook.” ☞ I love it. A carbecue! The advice here is really helpful. E.g.: Obviously, you don’t want to drive around the block 300 times just to cook dinner. That would be a waste of gas and time. Rather, if you’re already driving somewhere, find something to cook that fits into your travel plans . . . And this, for one of those days when the car is parked in the blazing sun: Prepare your favorite cookie dough recipe. Slice evenly and place on lightly oiled baking sheet. Place the baking sheet on top of your vehicle’s dashboard . . . Pluses include: Dinner ready the minute you pull in your driveway; saves the gas or electricity that would have been needed to cook. Minuses: wastes a lot of aluminum foil; can’t have chocolate chip cookies and hot dogs at the same time unless willing to drive for hours with no a/c in the blazing sun. I KEEP FORGETTING TO RECOMMEND THIS AmazingMemorySecrets.com. Benjamin is a friend, and truly amazing. You can trust him. He may steal your watch (right off your wrist – that’s how I first met him) but he always gives it back. Want to remember people’s names? Where you left your keys? Check it out.