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The Next Healthcare Battle

Thursday 7/20/2017 – Most people are at the least relieved with the demise of the latest vicious Republican healthcare proposal cooked by old-all-white-all-male-Republican Senators. Obamacare appears to be safe for the moment. But now is the time to double down on the battle for real healthcare reform in this country.

Millions are still not covered by Obamacare; the performance of the healthcare system is appalling; it is a giant ripoff of over-priced-super-profitable prescriptions and procedures masquerading as health.

Here are the basic facts:

  • Health outcomes: the US ranks
    • 56th in infant mortality out of 225 countries;
    • 48th in maternal mortality out of 184;
    • 42nd in life expectancy at birth out of 224.1
    • all developed countries provide universal healthcare and do much better
  • Healthcare spending: the US spends more than double per capita on healthcare compared to other developed countries.

    (click for full size)

Obamacare Is Not the Solution

Obama and the Democrats never had the political will and strength to tell the pharmaceutical companies, doctors, hospitals and insurance companies that their game was over. We should be outraged that they charge exorbitantly high prices and deliver terrible results. But they live in a marketplace where they set the prices and the incentives in their marketplace urge them on to prescribe more drugs and procedures. The things that are being purchased in their marketplace are not health. We need to demand that we develop a healthcare system focused on health not profits.

The Proof Is In the Pudding

Just look at the chart from the Commonwealth Fund2 comparing performance and spending. Certainly if all of these countries (and others not included in this study) have figured out how to deliver much better healthcare at half the cost we need to demand that our government do at least as well.

 

 

  1. Current CIA The World Factbook – https://www.cia.gov/library/publications/the-world-factbook/ accessed 5/13/2017 []
  2. http://www.commonwealthfund.org/publications/fund-reports/2017/jul/mirror-mirror-international-comparisons-2017 accessed 07192017 []

Delusions of Empire – Iran in Iraq 15 Years After Bush’s War

Bush Mission Accomplished on aircraft carrierEveryone who wants to know already understands how disastrous President Bush’s Iraq War has been. Hundreds of thousands of lives lost, perhaps several million displaced people and financial costs in the $ trillions. This to depose a dictator not much different than many dictators the US has supported and continues to support elsewhere. After the close of the military phase we undertook the completely idiotic grand administration of the country by Bush’s cronies, most notably Paul Bremer. In his role as the head of the Coalition Provisional Authority, Bremer ruled by fiat. His first two orders were to disband the Ba’ath Party and dismantle the Iraqi Army. In one fell swoop he released a swarm of armed angry men to the countryside. The rest is the rapid decline into violence and chaos and the creation of Iraq as a central rallying point for extremist of all brands. It turns out that exporting American democracy, rule of law and all the other delights of our civilization was not as simple as shock and awe that began the war.

The ensuing history up to this day can only be seen as a catastrophically expensive and destabilizing bit of American overreach for objectives that were never clear excepting the weapons of mass destruction that were never found.

In the context of ceaseless angst and drum beating by politicians and experts over the threat of Iran to us and the rest of the world there is new evidence that the Iraq War has redounded to the benefit of Iran. In the July 15, 2017 NYTimes Tim Arango wrote an article about Iran’s quite comprehensive penetration of Iraqi society and government and the pipeline that exists between Iraq and the fighting in Syria. “Iran Dominates in Iraq After U.S. ‘Handed the Country Over'” appears to be Part 1 so presumably there will be more to follow. 

Affirmative Action For Whites – began in the 1930s

As noted here in “Creating Segregated America in the 20th Century – government in action” segregated America didn’t happen by chance nor by choice of the victims. Consistent white supremacist government action supported by private institutions created the segregation that persists and flourishes in the 21st century. But there is a flip side to this. At the same time government law, regulation and policy created white affirmative programs to provide white people enormous advantages in jobs, education, housing, healthcare and more throughout this period. Columbia University professor Ira Katznelson’s When Affirmative Action Was White: an untold history of racial inequality in twentieth-century America1 lays out the history of Federal legislation, most prominently of the New Deal era, that created the booming white middle-class of the post-WWII decades while excluding African Americans. 

In June, 1965 President Johnson gave a commencement speech at Howard  University, “To Fulfill These Rights” about efforts to end segregation and poverty in the African American community. He outlined the growing disparity between white America and black America as follows:

A WIDENING GULF But for the great majority of Negro Americans-the poor, the unemployed, the uprooted, and the dispossessed–there is a much grimmer story. They still, as we meet here tonight, are another nation. Despite the court orders and the laws, despite the legislative victories and the speeches, for them the walls are rising and the gulf is widening.

Here are some of the facts of this American failure.

Thirty-five years ago the rate of unemployment for Negroes and whites was about the same. Tonight the Negro rate is twice as high.

In 1948 the 8 percent unemployment rate for Negro teenage boys was actually less than that of whites. By last year that rate had grown to 23 percent, as against 13 percent for whites unemployed.

Between 1949 and 1959, the income of Negro men relative to white men declined in every section of this country. From 1952 to 1963 the median income of Negro families compared to white actually dropped from 57 percent to 53 percent.

In the years 1955 through 1957, 22 percent of experienced Negro workers were out of work at some time during the year. In 1961 through 1963 that proportion had soared to 29 percent.

Since 1947 the number of white families living in poverty has decreased 27 percent while the number of poorer non white families decreased only 3 percent.

The infant mortality of nonwhites in 1940 was 70 percent greater than whites. Twenty-two years later it was 90 percent greater.

Moreover, the isolation of Negro from white communities is increasing, rather than decreasing as Negroes crowd into the central cities and become a city within a city.

Of course Negro Americans as well as white Americans have shared in our rising national abundance. But the harsh fact of the matter is that in the battle for true equality too many–far too many–are losing ground every day.2

Without exploring the ironies of Johnson, who was present in the Congress and Senate when much of the legislation that generated these disparities was passed with his support, now calling for a solution, this is the central set of facts that persist to this day with only a worsening in some areas in the ensuing five decades following his Great Society programs.

Katznelson recounts the central political facts of the political coalition that passed the New Deal legislation of the 1930s. Northern Democrats had to rely on the support of Southern Democrats for their majorities in both the House and Senate. The Southern Democrats were white supremacists across the board. They could effectively guarantee that every piece of legislation and the regulations that implemented it would exclude African Americans. Any Federal action that might upset the white supremacist regime in the South was foreclosed.3 Second, Southern Democrats also insisted that the administration of programs be handled at the state and local levels of government. This provided further opportunities to exclude or harass African Americans seeking to take advantage of the Federal programs. And third, Southern Democrats made sure that no anti-discrimination policies could be attached to a Federal program.

With the passage of the Social Security Act in 1935 the first national comprehensive economic security program proved not to be so comprehensive and not so national. Southern Democrats forced the final bill to exclude farm workers and maids. This excluded 65% of African Americans nationally and 70 to 80% in the South from the retirement program. To be sure these exclusions in a country that was still quite rural and agricultural also kept 40% of whites outside of Social Security. In the second portion of the bill, Aid for Dependent Children and help for elderly poor, where cost sharing between the Federal and state governments was involved, the impact of local administration was even more decisive in excluding African Americans. Three states, Texas, Kentucky and Mississippi did not participate at all. The third leg of the Social Security Act, unemployment insurance required that an unemployed person’s employer had paid into the system and that they had a history of “regular and stable employment”. Combined with the exclusions for farm workers and maids the availability of this insurance for African Americans was miserable. The net of these affirmative action programs for whites and others is that by 1950 over $100 billion had been transferred to the white population in preference to black America.4

Katznelson details how the same coalition of complicit white Northern Democrats and Southern white-supremacist Democrats crafted labor legislation and the great post-WWII GI Bill to further favor whites. All of these white affirmative action policies contributed to the increasing disparities between white and black America described by president Johnson.

Taken together, the effects of these public laws were devastating. Social Security, from which the majority of blacks were excluded until well into the 1950s, quickly became the country’s most important social legislation. The Labor Laws of the New Deal and Fair Deal created a framework of protection for tens of millions of workers who secured minimum wages, maximum hours, and the right to join industrial as well as craft unions. African Americans, who worked on the land or as domestics, the great majority, lacked these protections. When unions made inroads in the South, where most blacks lived, moreover, Congress changed the rules of the game to make organizing much more difficult. Perhaps most surprising and most important, the treatment of veterans after the war, despite universal eligibility for benefits offered by the GI Bill, perpetuated the blatant racism that had marked military affairs during the war itself.  At no other time in American history have so much money and so many resources been put at the service of the generation completing education, entering the workforce, and forming families. yet comparatively little of this largesse was available to black veterans, With these policies the Gordian knot binding race to class tightened.5

In short African Americans were excluded from the great boom of the 25 years that followed WWII.

This affirmative action for white people and persistent segregation have been the drivers of the continued disparities that mark American society. The ability of African Americans to fully participate and succeed in American life has been and continue to be severely inhibited. Since home ownership is the primary source of wealth accumulation for middle class Americans, we now see a multi-generational gap widening. The persistent segregation with its accompanying poor education, healthcare, lack of job opportunities and mobility, have produced African American incomes and wealth that areis a fraction of what would have been expected to result from the boom decades following WWII. Of course, since the mid 1970s everyone, excepting the top 10 percent, in America has suffered from stagnating incomes and a worsening of wealth accumulation. The fate of African Americans in this environment are predictably somewhat worse.

Katznelson ends his book with an examination of the affirmative action programs following President Johnson’s initiatives. The results have not been very good in terms of changing the fundamentals of income and wealth.

 

 

  1. Ira Katznelson. When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America. New York; London: W.W. Norton, 2006. []
  2. http://www.presidency.ucsb.edu/ws/?pid=27021 accessed 07162017 []
  3. This is a repeat of the failure of Northerners and their politicians to make the emancipation of slaves real when they abandoned Reconstruction in 1877. Not only did newly minted civil rights for African Americans disappear over the following years to the semi-totalitarian system called Jim Crow but the very people who had cleared the land and made it productive were left landless and forced into the new slavery of share cropping. []
  4. Katznelson p. 142 []
  5. Katznelson p. 143 []

New Orleans, Mayor Landrieu, and the Future of Race in America

In recent months there has been news of conflict over the removal of three statues of leaders of the Confederacy from public spaces in New Orleans. On Friday 5/19/17 Mayor Mitch Landrieu gave a powerful speech about the need to deny the falsifications of history that are those statues and to embrace the phrase, e pluribus unum, from many we are one. The speech is well worth listening to (it is 23 minutes long):

Creating Segregated America in the 20th Century – Government in Action

Today, more than 50 years after the much lauded 1960s era Civil Rights Acts legislated the end of segregation in housing and education, this country is as segregated as ever. The official explanation is that this is de facto segregation, the comforting idea that this segregation is a function of choice. This is notion amplified through our mass media and education system. It is a complete delusion.

There is a piecemeal awareness by some that, over the years – from the 1930s to the present, government and private business carried out policies that created and reinforced segregation. Some are aware of the history of Redlining in the real estate market. But fewer know that this was not a construct of private industry but the result of Federal policy. See the map created by a Federal agency below for an example. Investigate redlining in your city at MAPPING INEQUALITY – Redlining in New Deal America  for a complete set of these maps. 1  

Piecemeal bits of the story of segregation in housing hide the full reality of how our country came to look the way it does.

A new book, The Color of Law: A Forgotten History of How Our Government Segregated America by Richard Rothstein2 provides a compelling, comprehensive history. Rothstein’s relatively compact, readable exploration of this story presents dozens sad details to flesh out his argument. It will re-educate you about what you think of the history and politics of the 20th century and on into the 21st.

The story is not just about government. It includes a broad set of private and industry players acting in concert with government action and support. All of them pursuing explicit white supremacist beliefs.

Rothstein sets his story within the context of the distinction between de facto and de jure legal states.

De facto means a state of affairs that is true in fact, but that is not officially sanctioned. In contrast, de jure means a state of affairs that is in accordance with law (i.e. that is officially sanctioned).3

His primary objective is to demonstrate that government, Federal, state and local, took a long string of affirmative actions to set up and sustain segregation that is clearly unconstitutional and illegal. He proves the de jure nature of the history then puts the burden on the government, our government, to remedy the situation. 

Rothstein describes in great detail the following types of government actions:

  • Federal legislation with supporting regulations – e.g. New Deal legislation – Federal Housing Administration (FHA), Fair Labor Standards Act, Tennessee Valley Authority (TVA), Civilian Conservation Corps (CCC), Public Works Administration, US Housing Authority, Federal Works Administration.4
  • Local zoning and land use regulations – these have been used and continue to be used to concentrate populations and functionally prevent the integration of suburbs.
  • Real estate industry – supported and enforced segregation through redlining practices based on government maps and discriminatory practices enforced by the courts.
  • Restrictive covenants in land and building contracts and deeds – these were written in based in part on maps created by the Federal government. These blatantly racist legal practices were enforced by state courts into the 1950s.
  • IRS grant of non-profit exemption to religious and educational institutions that supported segregation.
  • Insurance companies and banks supported whites only housing development.
  • “Slum clearance” via the Interstate Highway System and other Federally funded projects
  • Locating public schools to reinforce segregation.
  • State sanctioned violence against families attempting to move into white neighborhoods
  • Suppressed African American incomes due to segregation in housing and education – the concentration and reinforcement of poverty by the government
  • Unions were allowed by government to exclude blacks from membership
  • Real estate tax assessments and therefore tax burdens are higher on African Americans than whites.

    HOLC redlining map for Los Angeles – 1937

Rothstein notes that the San Francisco Bay Area Rapid Transit (BART) system was built in 1967 largely with Federal transportation dollars without a single African American worker on the entire project. This because the government refused to enforce the law against the wishes of the local trade unions.

As recently as July 2, 2017 the New York Times ran a story with the title, “Program to Spur Low-Income Housing Is Keeping Cities Segregated” – the beat goes on.

The Future

Rothstein does not end his book without addressing the question of what should and can be done to remedy government created and enforced segregation.

The first necessary step is for white people to accept responsibility for the racist actions of their government and their civic and economic institutions. The problem of segregation is not an African American problem. White people created this system and white people must bring it to an end. We need to create a broad public recognition of the facts of the history and reject the comforting notion that all of this happened by a combination of choice and chance. Here the education system needs to abandon its passive voice and actively teach the real history of the 20th century. Rothstein cites a widely used 2012 American history textbook that has this to say about residential segregation:

 “African Americans found themselves forced into segregated neighborhoods.” That’s it. One passive voice sentence. No suggestion of who might have done the forcing or how it was implemented.5

More active steps might involve banning exclusionary zoning in the suburbs. Rothstein envisions much more direct action:

We might contemplate a remedy like this: Considering that African Americans comprise 15 percent of the population of the New York metropolitan area, the federal government should purchase the next 15 percent of the houses that come up for sale in Levittown [built with Federal subsidies and excluding African Americans from ownership] at today’s market rates (approximately $350,000). It should then resell the properties to qualified African Americans for $75,000, the price in today’s dollars that their grandparents would have paid if permitted to do so. The government should enact this program in every suburban development whose construction complied withy the FHA’s discriminatory requirements, If Congress established such a program and justified it based on the history of de jure segregation, courts should uphold it as appropriate.6

Other Resources

Rothstein has appeared regularly in recent years. One can find recordings of his lectures, speeches and interviews readily on the internet. Here is a 13 minute speech by him, “A Human Rights Address: How Ferguson became Ferguson” 8/15/2015:

 

See also Ta-Nehisi Coates’ June 2014 essay in the Atlantic: “The Case for Reparations

 

  1. see http://news.nationalgeographic.com/2016/10/housing-discrimination-redlining-maps/ for examples of the  Federal Home Owners Loan Corporation maps. https://dsl.richmond.edu/panorama/redlining/#loc=4/36.71/-96.93&opacity=0.8 Go Look up your own city []
  2. Rothstein, Richard. Color of Law: A Forgotten History of How Our Government Segregated America. Liveright Publishing Corporation, 2017. []
  3. https://onlinelaw.wustl.edu/blog/legal-english-de-factode-jure/ []
  4. It must be noted that the original sin of the Constitution with its 3/5ths compromise to count slaves to mollify the Southern slave holders came back in a new form to continue white supremacist rule, now throughout the country.  Roosevelt could not pass his New Deal legislation without the support of Southern Democrats, white supremacists to the last. So segregation was written into law and regulation throughout the New Deal and on into the 1960s. This reflects the racism of Northern whites who have repeatedly failed to confront the issues raised by the alleged freeing of slaves at the end of the Civil War. []
  5. Rothstein, P. 199 []
  6. Rothstein, p. 202 []

Capitalism and Innovation

Innovation is at the heart of capitalism

We have been constantly told this for so long that it is now an assumption that has become an accepted fact. On the other hand, government is slow-footed, clumsy, bureaucratic, rule bound and the antithesis of innovative. This is the flip side of the capitalism is innovative story. One famously turned into a much quoted phrase by President Reagan, “Government is not the solution to our problem, it is the problem.”1

So, when you see this image  from the Charles Koch Institute you do not need to be too clever to know that this fits into this narrative.2  Markets drive innovation. Technology becomes more powerful and prices fall as products reach the mass market.

What does government have to do with these technologies?

The first satellite based phone call was made in 1962 featuring VP Johnson and the Chairman of AT&T Fred Kappel. NASA, a government agency put the satellite up and AT&T provided other parts of the technology. From today’s perspective this might appear to be a joint project between government and private industry. That would be a mistake. The AT&T of that time was a government regulated national behemoth that held a monopoly on telecommunications. Thus it did not suffer the risk aversion that makes it impossible for capitalist corporations to invest in projects that will not turn a profit within a few years at the outside.3

iPhone and the State

see Mazzucato, Mariana. The Entrepreneurial State, p 116.

Apple is one of our cultural darlings. Noted and notorious for its creativity and sense of style. But all of the basic technologies that they first applied to develop the iPod and then the iPhone are the fruits of government-funded research. LCD screens, click wheels, multi-touch screens, the internet, GPS, Siri, and more…..4

 

Risk and Capitalism

For all of the chest beating about the bold risks taken by capitalists, the capitalist time horizon is very short when compared to the many years of work that have gone into almost every significant scientific and technological advance. Without extensive government investment in activities that deliver longer term success, the capitalist system will simply eat its seed corn until it is gone. This is so not just for scientific and technological development, but also for education, health, environment, and infrastructure. Capitalism is not structured to fund any of these necessary activities without government action to protect these areas of human endeavor.

 

  1. 1st inaugural address 1983 []
  2. Unfortunately I have not been able to find the original page this appeared on. The original Koch website economicfreedom.org no longer exists []
  3. This is not to argue for the return of our telecommunications sector to this regulated monopoly or oligopoly state. The important fact is that AT&T was sufficiently protected from the short term quarter to quarter focus that now dominates the capitalist world that it maintained a national system of research labs, Bell Labs, that did much fundamental research. []
  4. see Mazzucato, Mariana. The Entrepreneurial State: Debunking Public vs. Private Sector Myths. Revised edition. New York, NY: PublicAffairs, 2015. []

4th of July- Saugerties NY – Vintage Tractor Club

Richard Edelman invited us to his front lawn in Saugerties where a parade happened by today. The parade reached our view point at 11:30am or so and only ended at 1:15pm. There were way too many fire trucks and too few marching bands. Then, the Saugerties Vintage Tractor Club appeared with some 22 old tractors. The high light of the day.

The John Deeres are my sentimental favorites. During my college days in Wisconsin I worked for a dairy farmer, Henry Moeller, who had a tiny, by Wisconsin standards, farm with 85 head of milking cows and a few hundred acres of corn and hay. He had a recent vintage Massey Ferguson tractor, but also, being a thrifty guy, he had retained his circa 1948 John Deere Model B. The sound of it running is so characteristic. Here is a video of one being started. Listen for the sound.

Saugerties NY 4th of July Parade 2017

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The Rule of Law, Justice, American Delusions

Fairness, an equal shake, blind justice, jury of peers, rule of law…Amendments IV, V, VI, VII, VIII, and XIV…. these are all ubiquitous and universally applauded features of American life. Like blind lady justice they are ubiquitous in every area of our culture. This system of justice makes us superior to most other countries in the world.

This is the delusion of the American justice system.

Our current exhibit, Prison, at Davis Orton Gallery shows photographic works on prisons and the impact of prisons in American life. During the show (June 24 to July 23, 2017) we will also be holding four public discussions about the justice system and prisons in conjunction with several local organizations. More here.

So, I am thinking about the justice system and incarceration in America.

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It is widely known that the US has more people in jail than any other country on earth both in absolute numbers and as a percentage of the population.1  “The American criminal justice system holds more than 2.3 million people in 1,719 state prisons, 102 federal prisons, 901 juvenile correctional facilities, 3,163 local jails, and 76 Indian Country jails as well as in military prisons, immigration detention facilities, civil commitment centers, and prisons in the U.S. territories.2

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Growth of Incarceration

The present situation is a relatively recent phenomenon, dating from the early 1970s and President Nixon’s race baiting War on Drugs and a more generalized campaign rhetoric adopted by many politicians of the need to get tough on criminals.

These policies have persisted largely without change to this day despite the fact that the crime rate in the US has dropped significantly. “Using the FBI numbers, the [violent] rate fell 50% between 1993 and 2015, the most recent full year available. Using the BJS data, the rate fell by 77% during that span.” In regards to property crimes, “FBI data show that the rate fell 48% between 1993 and 2015, while BJS reports a decline of 69% during that span.”3

Much comment has been made about the obviously racist features of this incarceration, the relationship to drug use and the racist application of drug laws.  Racist policing policies and practices have come to the attention of the white population in recent years due to omnipresent smart phones and social media. The prison industrial complex has joined the national vocabulary and only become more commonly used with the rise of the private prison industry.

Click to enlarge.

Lets focus on just a single element of how the blind scales of justice have been turned into a plea bargaining machine. Ever since 1963 when the Supreme Court in Gideon v Wainwright determined that a poor person was in fact covered by the 6th Amendment and its call for “Assistance of Counsel”4 we are used to the reading of the Miranda rights on our evening TV cops shows that includes the assurance that legal representation is a right.

The reality is that legal representation for the indigent is worse than a charade. According to the ACLU 80% of those arrested for a crime can not afford a lawyer. But, no where in the country is a robust system of legal representation for these people in place. And as widely known, legal aid attorneys all too frequently meet their clients for a few moments before a court appearance and have no real resources to represent the client in a meaningful way.  A result of this is that local, state and Federal prosecutors have enormous, compelling power to manipulate the alleged criminal into pleading guilty to a crime. Prosecutors pile up charges knowing that when confronted with the most severe charges the arrested person will cave in to a lesser charge. They know that their legal aid lawyer is not capable or even motivated to defend them. This scenario is probably all to well known to you from the media.

But, we need to see the scale of this abuse of judicial power to understand the extent to which the blind scales of justice are a complete, cynical fraud. 

In actuality, our criminal justice system is almost exclusively a system of plea bargaining, negotiated behind closed doors and with no judicial oversight. The outcome is very largely determined by the prosecutor alone.

In 2013, while 8 percent of all federal criminal charges were dismissed (either because of a mistake in fact or law or because the defendant had decided to cooperate), more than 97 percent of the remainder were resolved through plea bargains, and fewer than 3 percent went to trial. The plea bargains largely determined the sentences imposed.

While corresponding statistics for the fifty states combined are not available, it is a rare state where plea bargains do not similarly account for the resolution of at least 95 percent of the felony cases that are not dismissed; and again, the plea bargains usually determine the sentences, sometimes as a matter of law and otherwise as a matter of practice. Furthermore, in both the state and federal systems, the power to determine the terms of the plea bargain is, as a practical matter, lodged largely in the prosecutor, with the defense counsel having little say and the judge even less.5

In future articles I will discuss the bail system, post-incarceration oppression, and sentencing practices.

  1.  The Growth of Incarceration in the United States: Exploring Causes and Consequences | The National Academies Press accessed 6/25/2017 []
  2. see: https://www.prisonpolicy.org/reports/pie2017.html []
  3. “5 facts about crime in the U.S.” by John Gramlich  http://www.pewresearch.org/fact-tank/2017/02/21/5-facts-about-crime-in-the-u-s/ accessed 6/25/2017 []
  4. In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence. []
  5. Why Innocent People Plead Guilty” by Jed Rakoff in New York Review of Books 11/20/2014 accessed 6/24/2017 []

Healthcare and Markets – why don’t they work together?

A consistent chattering point in American discussions of healthcare is the claim that if we can only bring transparency and competition to healthcare we will drive prices down and bring sanity to healthcare. The rest of the world knows that this is not the answer but we seem to remain in the thrall of universal free-market thinking.

To answer this question lets start with an example of a market that works reasonably well and which we all know very well. In our little patch here in Hudson we have four supermarkets within about a six mile radius servicing roughly 20 thousand people. I can choose to shop at Price Chopper, ShopRight, Hannafords, or Walmart. There are also farmer’s markets and roadside stands. I have lots of suppliers to choose from. Generally I shop at two places, but I certainly stop at all of them with some frequency. When I step inside I regularly pick up the green and red peppers, the onions, and other vegetables that I like to chop up for my cooking. Now, I do not hold a degree from CIA (Culinary Institute of America) so I am not exactly expert, but I generally can identify a fresh vegetable when I see one. Unlike some Presidents I do know how much things generally cost and there are price points for green peppers, for example, that reduce how many I pick up from three or four to one or none.

So,  a functioning market has a number of suppliers (sellers) and lots of buyers. The product for sale is understood by the buyers and they can examine it for quality readily. Prices move up and down in reaction to supply and demand. Market capitalism in action.

Health is not a green pepper

Health is complex and above all it is about life and death of the buyer, me and you. It is inherently emotional. Generally, people will do whatever is necessary to avoid pain and discomfort. This is not a choice between green and yellow peppers. Further, diagnosis and treatment options require many years of advanced education and training to understand. It is simply not true, and never will be true, that people without this training can make well informed decisions about which treatment path to take. Then, unlike our supermarket example, here in Hudson there is one supplier of health services, Columbia Memorial Health, the local hospital. To choose a different supplier I can drive an hour north to Albany or 45 minutes south to Rhinebeck. Even in Boston where I lived for many years, the choices were broader but then I was faced with the fact that the appearance of choice confronted me with my lack of expertise to make a well informed optimal decision. Health is not green peppers. Doctors and hospitals are not grocery stores. I did not graduate from Harvard Medical School.

Fee for services not for health – perverse incentives in action

In reality our market based healthcare system operates just as one would expect given the imbalance of expertise and relative small number of suppliers.  The suppliers have enormous power and they are taking advantage of the buyers, us. They set the prices as they wish. Through historical accident we have added a mixture of government and private insurance that obscures what is going on. Worse, this market is not selling health at all. In a self-enriching cycle, the doctors and hospitals are incentivized to use as many tests, procedures, and prescriptions as possible. They are paid for these; not for health. This is the pay for service model.

Every other developed country in the world understands all of this very well and has for decades. Each country has evolved systems to establish a national or regional budget per capita for health. This is done in negotiations between the government, other stakeholders, and the medical providers. The providers are expected to deliver health. Markets and profits enter, if at all, only peripherally. It is up to them to determine how many tests, procedures and drugs to prescribe. They can decide that preventive medicine is more effective than costly technology intensive treatment. They  optimize the mix.

The proof is in the pudding

Here are a set of facts that speak loudly to both the cost and poor quality of the American healthcare system. The US spends $9,800 per capita on healthcare. Our developed country cohort spends approximately one half of that (excepting Switzerland the outlier at approximately 70% of our spending). These countries all achieve a life expectancy between 81 and 83 years while the US is at 79 years. This numerically small gap in fact represents a very significant gap in performance. According to the most recent CIA World Factbook: “The US ranks 56th in infant mortality out of 225 countries; 48th in maternal mortality out of 184; and 42nd in life expectancy at birth out of 224.“ These facts should outrage all Americans.

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The Democratic Party and Healthcare – Preserving Obamacare Cannot Be The End Game

While our current attention is on the Republican Party’s transfer of wealth to the rich and corporations through the charade of a healthcare reform, the Democratic Party needs to face up to its future and the future of our healthcare system in particular.

The Global Context

The chart shown here tells you everything you need to know about the outrageous amounts of money we pay versus the astonishingly poor outcomes for our health. Basically we pay twice (200% more) than almost every other developed country in the world for healthcare that is distinctly second rate.1 To put it simply we have a healthcare system that is ripping us off and laughing all the way to the golf course. It is a market system that incentivizes tests, procedures, and prescriptions, not health. It is a market system in which the providers, doctors, hospitals, insurance and pharmaceutical companies set prices as they wish.  Our healthcare system consumes just shy of 20% of our economic output. Our developed country competitors use 8%-10% of their output.

click for large size.

Preserving Obamacare is not enough to bridge these gaps.

Obamacare addresses the lack of access to healthcare in a significant but hardly comprehensive manner. It only hints at changes to the incentives and pricing that drive the unhealthy outcomes. Obamacare is not the solution. Better than nothing, but given the enormous resources being spent and the fundamental failings of the outcomes it is not sufficient.

Health Not Profits

In order to create a world class healthcare system we need to focus it on health not profits. Every other developed country long ago recognized that a market based system would not work because health is not a commodity like corn, cars, or cell phones. It is complex, multi-dimensional, and emotional. It requires a system capable of a holistic approach to people and the society they live in. Each of the countries with universal healthcare approaches implementation very differently in the details, but all have some sort of national/regional health budget that is negotiated with the various constituents. This amounts to a lump sum per person with which the health system operates to deliver health outcomes. The proof that it works is in the chart above. 

Outrage and Political Will – Stop Taking Big Money from the Rich and Corporations

The Democratic Party must absorb the reality of our situation. We need to develop and express some outrage at the current healthcare providers. It will not be a simple task to bring a sector of the economy that consumes nearly a fifth of economic output to understand that we cannot allow this to continue. We need them to evolve to a system that consumes a tenth while vastly improving healthcare for the entire population. A basic truth here is that we as a society cannot and should not allow one sector to consume so many resources, so inequitably, for such poor outcomes. In the global context this is not sustainable and makes us less competitive and less flexible to meet the changes. 

None of this will happen as long as Democrats are taking money from the rich and corporations. If there is a single lesson from the Bernie Sanders campaign it is that with messages and programs that reflect the needs of the vast majority of Americans, you can raise enough money to fight off the Republican Party and its wealthy and corporate sponsors. Time to start now.

  1. The US ranks 56th in infant mortality out of 225 countries; 48th in maternal mortality out of 184; and 42nd in life expectancy at birth out of 224. – source Current CIA The World Factbook – https://www.cia.gov/library/publications/the-world-factbook/ accessed 5/13/2017 []