Friday, December 31, 2010

The Lame Duck That Lost It's Limp

It was heartening and amazing to see the Lame Duck congress pass a comprehensive tax program for the next year (however compromised by economically unnecessary but politically necessary giveaways), repeal Don’t Ask Don’t Tell, and pass the New Start treaty. After the goddamnest biggest case of legislative constipation anyone can remember. Everyone is asking, why should this be? Lame ducks are usually the weakest legislative animal in the barnyard.

I don’t know either, since I’m not close to the situation, but I do have some thoughts.

Most important has to be the Obama shellacking. Since the Republicans had gotten scorched two elections in a row previously, this evened the score, and the Republicans could now let things go through without seeming weak. They had just won, they had their honor back, so they could compromise from a position of seeming equality. Politically, their Just Say No strategy had won them the election, so there was little to gain by continuing. By the next election no one will remember the Lame Duck much, and a new electoral strategy will be in place.

And besides, both DADT repeal and New Start were not only popular with the public, but the military were strongly behind both, every past Republican Secretary of State and Dick Lugar were strongly behind New Start, so get it out of the way! Get your own new start.

Kyl and the Turtle (McConnell) had got themselves caught out there on the wing, playing the old game, so for them it was best just to vote as if they still believed what they had said (which they couldn’t have, really), and again, get it out of the way.

I wonder, however, if there isn’t something else happening, and some Republican sensibleness now coming down the pike. There might be a generational split developing in the Senate, as revealed by the current maneuvering to redo the rules in the next Senate – make the filibuster a talking filibuster, reform the initial motion to proceed to discuss legislation, and the placement of secret holds. The younger group (see Tom Udall) wants reform – they want action in the Senate. The leadership on both sides would lose some of their power with these reforms, and so are reluctant to proceed. But the Senate as a body is held in derision by the country as a whole at this point, so even the leadership must be sensitive to that, and maybe there will be some reform.

What about the upcoming term – more like the last term, or more like the Lame Duck? I’m an outsider, so I don’t know, but I suspect that Obama has spent two years learning hard lessons, and he will come back more aggressive, more teaching the country and less making a few lofty speeches that open him to charges of elitism and arrogance. I also think that Just Say No will not be much of a strategy from here on in. So, my prediction would be that there will be action. The President proposes and the Congress disposes. Success will depend on what is proposed. We’ll just have to see.

Budd Shenkin

Friday, December 24, 2010

Tales of a German Urologist

Urology is not where one usually turns for wisdom – humor of a certain sort sometimes, but not wisdom. Still, within humor there is often wisdom, and in a package that is easy to accept.

Enter my colleague Bernd Schmidt of Pleasanton. A tall man with a craggy face hidden by a rather sparse beard and ever-ready grin, he has a strong German accent that demands close attention to understand him. I really don’t know him that well, but I thought he introduced himself as “Ban,” so that’s what I call him at the doctors’ lunch table at ValleyCare Hospital, be it nickname, the pronunciation of Bernd, his accent, or my poor hearing.

Each specialty in medicine has its own stereotype, and as with most stereotypes, there is a core of accuracy. I once introduced myself at a party of lawyers in the City as a pediatrician, and was told that “you guys are all alike.” Yup, I could have replied, and so are lawyers, as typified by that remark by you, asshole.

But I digress. Internists are removed, cerebral or pseudo-cerebral, not the warmest buns on the table. Surgeons are cowboys who can’t wait to cut but can’t think well or broadly. Orthopedists are strong as an ox, and twice as smart. Urologists – well, urologists. They have a very down to earth attitude, shall we say. My med school classmates told me to prepare for a unique experience in my one-week Mass General urology rotation. They were right. My residents gloried in making rounds while smoking cigars, inquiring of their patients amid their smoke, “How you doin’?” Actually, It was refreshing not having to deal with the poseurs the MGH was rife with.

One of my classmates was interviewing for a surgery residency in at MGH with George Nardi, who had some post in the department. He waited for a while for Nardi in his hospital office, a converted exam room. Then Nardi burst in, hustled over to the sink, pulled out his penis and pissed right in the sink, with a gasp of relief saying, “Sometimes you just gotta go.” Nardi should have been a urologist.

My colleague Ban has a typical urologist get-rich scheme, inspired by the plastic surgeons. He wants to use Botox injections to take the wrinkles out of the scrotum. “Wouldn’t they be beautiful?” OK, Ban, good. You’re a urologist, all right. Wish you smoked a cigar. Maybe your scheme will work in San Francisco, who knows?

Ban had two stories yesterday at lunch. He related that in Germany you never, ever, marred the bed sheets of a patient. The German passion for order and cleanliness prevailed. So he was shocked when he came to America in training and saw that the urologists on rounds routinely used the bed sheets to write on as they made rounds. My MGH urologists were too busy with their cigars to write on sheets, but it did seem right in character.
But Ban said it didn’t always work out too well. A few weeks into it he was standing at the foot of the bed as the urology staff was gather on each side of the bed, discussing the case over the patients supine body, his head sticking out from under the sheets as he listened. The urologists drew pictures on the sheets, depicting the anatomy underneath. But what they didn’t notice was the patient. As they drew and discussed, “Then we’ll cut here, and then here, then pull this together,” and so on, the patients face became paler and paler, visible only to Ban at the bottom of the bed, as the others were in heated discussion. Finally, as they agreed, “Right, this is just where we’ll cut,” the patient sat up and vomited everything he had all over the bed sheets, the pictures, the pens, their hands, and their cuffs. Urologists.

But on a more serious note, Ban has another side to him, a really lovely and understanding, which is to say, perhaps a non-urological side. I told Ban that I had always been fascinated by Germany, but that as a Jew I had of course ambivalence, to say the least. Still, my father had been one of the first to buy a VW in the United States, on the grounds that it was pretty cheap. So my family heritage enabled me to be somewhat dispassionate. Ban is from the Hamburg area, and I said I had heard that the real rapid anti-Semitism was in the south, and especially in Austria.

Ban agreed. He reflected that as a German medical student he could change schools each semester within the German community, just so long as he passed all his requirements. So one semester he decamped to Vienna, where he rented a room in a house where the only TV was in the landlady’s living room. So he was watching TV with her one evening and there was a documentary of some sort about the holocaust, and Austria’s experiences. His landlady denied that there was much anti-Semitism in Austria. She said, “All that never happened here in Austria. It’s a lie. This movie must have been made by some Jew.”

Ban has remembered this story a long time. Reminds me of how one of my very favorite authors, Alan Furst, has never written about Austria and Vienna. “Just never wanted to do it,” he said at one of his readings I attended. Probably one of the cities I won’t visit, either.

It’s good to eat In the doctors’ dining room. You meet the most interesting people. Even urologists.

Budd Shenkin

Sunday, December 12, 2010

Tales of Worker-Management Cronyism

The auto industry, civil service, and our old friend health care – three separate very troubled American industries. But if you look at them critically, it seems to me they have a certain sameness, which then makes me think they might reflect a more general American problem.

I have recounted the tale of the auto industry before (see Paul Ingrassia’s book, Crash Course.) The auto industry was a major success of modern industrialization. Three large companies emerged with one large union. The UAW wrested very high wages and benefits from employers, extensive and strict work rules, company pay for union organizing jobs, and a job bank where workers were paid for years not to work. The success that liberals now celebrate was that, thanks to union power, line workers entered the middle class. I, too, like to see people do well, but in this case the collateral damage was really unacceptable.

As the UAW thrived, management didn’t do its job. They not only caved to the UAW, they also pursued their own slothful and self-indulgent agenda. The managers were not unhappy to see workers’ pay improve, because they simply applied a multiple of that pay to compute their own. They exerted no quality and efficiency discipline, they continued to populate their own managerial ranks with the mediocre products of local feeder educational institutions, and they passed costs onto the public. When Japanese competition appeared the American auto industry had so little muscle and so much fat that they simply went lifeless, dead by their own hand and evil constitution.

We are also now facing a crisis in civil service. I don’t know how it arose, but the civil service deal has been a tradeoff of lower wages for better benefits and security. The civil service was supposed to be quiescent and not union organized. The deal started to unravel when unionization was allowed. We are now faced with civil service workers who retain their security, but who now have generous pay and benefits while they work, and pension plans that will soon bankrupt the country. Civil servants can retire after 30 years of service, sometimes even earlier, which lets many retire before they do in France or Greece, at nearly full salary. Not content with that, many have plans whereby they get a percentage, sometimes 100%, of their highest yearly salary. They can accrue vacation time and other bonuses until one year when they get a large spike of salary, and that’s the base they figure from. These retirement benefits are generally unfunded. That is, they need to be paid for by others than those who granted the benefits, because they were future benefits.

Who was on the other side of the bargaining when these deals were struck? Civil servant managers and politicians. The problem was that as soon as you have unions, you have political campaign contributions – the best example in the world being the California prison guards union. In addition, city and county managers responsible for recommending solutions to the political powers are similar to the auto managers. The managers’ financial fate is aligned with that of the other workers, rather than opposed. So, we have had managers who will benefit by caving into union demands, and politicians who can curry present favor in exchange for someone in the future having to deal with it.

As a result, we are in the soup. Unfunded obligations simply hang over us. As with auto management and workers, politicians and civil service workers act more like cronies than adversaries, and the public takes it in the neck.

Finally, the health care industry also has common elements. Hospitals drive health care costs. Hospitals can compete with each other for business, but if they cut costs and become more efficient, what have the managers really gained? The way health care is set up, a lower cost provider doesn’t really gain anything. Because patients and referring physicians do not pay much of the cost directly themselves, it is better for a hospital to be fat with patient amenities, and fat with rich physician “directorships” of various services and departments, and fat by giving into the relentless demands of the nursing unions and SEIU. A larger hospital budget translates into larger manager salaries and perks. Let the pubic pay, now just about to the breaking point.

These three industries seem to have the same dynamic – lack of competition to discipline the managers, and a resultant cronyism between management and workers to the detriment of the public. It would be nice if managerial professionalism led the managers to stand up for the public interest, but people being people, that doesn’t happen. Would that there would be the equivalent of the Hippocratic Oath for professional managers and politicians, but that doesn’t even work consistently for physicians.

In our mixed economy, when a market isn’t working, government is supposed to intervene, and either make rules to create a market that works, or to enforce an administrative solution. You can see how that didn’t work in the auto industry, is not yet working in health care, and government is itself the problem in civil service. My own sense is that government could be made to work in all three instances if we had the will and wisdom. A stronger government more impervious to business influence could adjust cases one and three, and governmentally appointed independent commissions could have warded off the civil service disaster.

Government needs to be better, smarter, more professional, more independent -- just better. We need leaders! We don’t need Plato’s guardians, but do need big guys, smart guys, aggressive guys on our side. Guys like my hero, Elizabeth Warren. We don’t need bigger government, we need better government.

Which is why I support the Goldman School of Public Policy at the University of California, Berkeley, my alma mater. Maybe fine professional schools harbor the long term solution. We should think up a professional oath for them.

So what do we do in the meanwhile? Yesterday my wife and I went shopping in downtown San Francisco. It was a sunny day in the low 60’s with happy crowds. We walked in the sun, we ate lunch, the fries were really good, we laughed. Life goes on.

I was buying baubles at Gumps, where we had somehow wound up, and Ann took little 10 month old Lola outside to wait for me. She is a happy baby, but this time she sat down on the sidewalk and cried. As Ann picked her up, a nice man on the way into the store said wryly, “I wish I could do that, sit down on the sidewalk and cry!”

Sometimes, so do I.

Budd Shenkin

Wednesday, December 8, 2010

Health Care Costs

In response to my last post, from a colleague:

Hi Budd,

We all have our stories. I had radiation therapy for cancer. 12 weeks, 15 minutes a day. The charge was $3500. Per day. That’s 60 days treatment at $3500. $210,000. BCBS paid at 100%. I am lucky to get 80% on a $85 office visit.

What is going on here, with these costs? As I've said before, let's forget utilization - what about prices? There is just no curbing them at present, and to my mind no prospect of such. Here in the East Bay, the rising cost of health insurance, which is a consequence of these prices, is simply driving more and more people to Kaiser, which can control its prices. This exodus from private insurance reduces the pool of private patients at Sutter and elsewhere, who respond by raising prices even higher. This is what is called a death spiral.

Nothing goes on forever, so there will be an end to it, but it's hard to see right now what that end will be. I wish I could be brilliant and see it, but I'll leave that for the often-wrong economists. The idea of ACO's, like HMO's before them, is for a group of providers to be able to look at a group of patients and plan rationally for their efficient care, saving money and distributing it to themselves and kicking some back to the government, but it's a speculative program and will take some time to take effect. In the meantime life goes on, trends continue, and anti-trust is silent.

Budd Shenkin

Tuesday, December 7, 2010

Health Care Costs - What Hospitals Charge

So, where does our health care money go?

My wife has diabetes and was urged by her doctor to attend a series of self-care classes at our local hospital, part of the Sutter chain. First, she had a half-hour individual consultation. Then she attended a series of four 2-hour classes in a group of 6 or 7 patients on Wednesday afternoons. She was told that they "would bill Medicare." The classes were taught by a nurse.

Billing for the first visit, $280. Billing for each class, $400. Total, $1,880.

Seems like 6 students in a 2 hour class taught by a nurse, billed out as $2,400, or $9,600 for the set of 4 classes, might cover the salary of that nurse plus overhead - even at the inflated rates of pay for nurses at this hospital.

By mistake they sent the bill to our old insurance company, which excluded $470 of the charges, so the private insurance charge would be $1,410. Some hard bargaining there....

This is the same hospital that charged $13,000 for an abdominal CT scan.

So, tell me whether or not we need health care reform???? The market, she not working too well. But, alas, our just-passed health care reform will not touch this kind of billing at all. Health care reform? Not really - mostly enhanced coverage and money for clinics and some experiments in research and organization in health care that gores nobody's ox. A disgrace, really.

Budd Shenkin

Monday, December 6, 2010


I have been having major difficulties with the Obama Administration. I really hate to blow in the wind, although truthfully, like the majority of people (by definition!), I catch myself doing that all the time. A careful reader might remember that I blew against the wind last spring when everyone thought the Democrats would do poorly in the fall elections. I bravely stood up and said, “Not so!” I predicted that Obama would rally the troops, show leadership, and pull a Roosevelt 1934. So much for spitting into the wind.

I now find myself blowing with the wind instead of against it. I conclude that Obama is not much of a leader. He has a very small coterie of old friends – who the hell is Valerie Jarrett, and what is she doing in the President’s inner circle, I ask you? – and as my wife says, he really misses Ted Kennedy, who could have steered him right, who knew how to fight and when to cooperate. As Krugman says, he bargains with himself time and time again. And who knows what he really stands for? It’s just not clear. The policies of the Justice Department seen only to veer somewhat from the Bush years, and not bringing to justice the CIA people who destroyed the tapes is just ludicrous. It has become a nation of people and not of laws.

If I had been him, I would have been on TV every Saturday morning after cartoons, up there with a cabinet member or a chief adviser, questioning him or her, making the points about what we are trying to do, how we have to save the system, although we hate to reward people who brought it down. How we need to reach out to the soldiers in the economic field, “Main Street,” and take care of that aspect simultaneously, and how hard it is to do. How we have to find “shovel ready” projects and make sure that we are not shoveling shit, as governments are want to do. I would have gone into it in detail, and not worried if we looked like it was difficult to grapple with – let people feel the problems along with us. That’s what he promised to do, and it wasn’t a bad promise, either ideologically or practically politically. But he wilted.

Maybe I’m wrong. Maybe this “let’s all get along” President will yet turn the tide to civility. Maybe the Republicans, their honor restored by an historic victory, will now be able to deal with a Democratic President without seeming craven. Who knows? Just when I turn and blow with the wind, maybe that’s the capitulation the market was waiting for, to suck me in before it turns.

But here, look at this from the Incidental Economist blog [I have resisted a blog quoting a blog for a long time, but here I am, with the wind again! Oh, my.] The Obama Administration caves yet again:

Obama’s quiet $49 billion gift to America’s Health Insurance Plans
Posted: 06 Dec 2010 01:00 AM PST
America’s Health Insurance Plans (AHIP) is a trade association representing private health insurance companies including those that operate most Medicare Advantage plans. AHIP opposed the Affordable Care Act (ACA), spending heavily on ads that criticized the President and Democrats for supporting cuts in Medicare Advantage payments. These cuts, which Austin and I have shown would fall mostly on plans, not on beneficiaries, were scored by the CBO as worth $136 Billion over 10 years. They are the backbone of the financing for expanding coverage to the uninsured and one of the few real cost control measures in the law.
In the mid-term election the Democrats fared poorly. Many Democratic candidates had difficulty explaining their votes in favor of ACA, particularly to elderly Medicare beneficiaries concerned about Republican and AHIP charges that it will cut their Medicare benefits. On Veterans’ Day, just 8 days after the election, the Obama Administration quietly released a new regulation expanding quality bonuses to Medicare Advantage plans that receive only average quality ratings. Julie Appleby of Kaiser Health News reported a few days later that some analysts interpreted this as a gift to the plans worth about $1.3 billion over 3 years ($5.3 billion over 10 years). Austin and Brad Delong both expressed concern that this could be the beginning of the political unraveling of one of the few cost controls in the ACA.
How could a $5.3 billion give-away make a meaningful dent in $136 billion in savings? It couldn’t. But the $5.3 billion figure is probably wrong. A more realistic estimate is almost ten times larger.
The original quality bonus program written into ACA targeted bonuses to plans receiving 4 or 5 “stars”, representing approximately 23% of enrollees according to Brian Biles and Grace Arnold of George Washington University who analyzed the data last April. The new regulation will grant bonuses to plans receiving 3 or more “stars”, representing 84% of enrollees (3.7 times as many). Biles and Arnold estimated the cost of the original bonus program at $1.4 billion per year as long as plans don’t respond to the bonuses by improving their quality ratings. The details of the expanded bonuses have not yet been released, but if we assume the new program will be similar to the old one, we can make a rough calculation of the cost: 3.7 times $1.4 billion is $5.1 billion per year. Accounting for expected cost growth, that’s a $49 billion difference over 10 years. If plans respond to the incentive, the spending will be higher. That’s a heck of a stocking stuffer.
Do you remember when the President stood firm against withering opposition last year and rallied his party to achieve an historic expansion of health insurance coverage while insisting that the bill be fiscally responsible and reduce the long run deficit? Sure was inspiring. If I were one of those members of Congress who did the right thing, voted for the bill and just lost my seat, I don’t think this latest example of the President’s generosity toward his adversaries would lift my holiday spirits.

Budd Shenkin