Brave New World of Healthcare Revisited: What Every American Needs to Know about our Healthcare Crisis

By Richard D. Lamm and Andy Sharma

An informed and erudite look at the current state of the American healthcare system from former Governor Richard D. Lamm and political economist Andy Sharma, including: Will the retirement of the Baby Boomer generation bankrupt our healthcare services? What does the impending healthcare reform mean for the nation? Does the US still have the best healthcare system in the world?

• Language: English
• Publisher: Fulcrum Publishing
• Release date: May 1, 2013
• ISBN: 9781555918620

Book preview

Praise for The Brave New World of Healthcare

Resilience and fortitude are required to preach hard choices to a profligate nation. But Governor Richard Lamm has been the dean of the school of hard choices for at least two decades. Here he holds a stark mirror up to an American society willing to steal from its children and bankrupt the next generation. In scalding language fueled by scorn for an age where accountability and responsibility are sacrificed to greed and comfort, Governor Lamm uses the health care finance debacle as a metaphor for a nation unwilling to pay its own way. Though he risks being marginalized and dismissed as some early twenty-first-century prophet Jeremiah crying shame on an irresponsible society, he will surely be honored by our children for his courage and his integrity on their behalf.

Gary Hart Former United States Senator

Sooner or later—and let us hope sooner—we Americans are going to have to ask some tough questions about a health care system that can’t insure our working families and health costs that are rising at six times the rate of inflation.Dick Lamm asks those tough questions—and comes up with some answers. You may or may not agree with them, but unless our political leaders confront them as he has, we’ll never be able to guarantee all Americans decent health care at a reasonable cost.

Michael Dukakis Former Governor of Massachusetts and Democratic Presidential Candidate

Richard Lamm has never been a throw money at it politician, and yet he never hesitates to tackle injustices with his keen mind and wisdom. What greater injustice for Americans can there be than having 44 million of our fellow citizens having no health insurance? This book should be mandatory reading for every citizen. There is no one better than Lamm to challenge our thinking about how to rectify this wrong.

Patricia Schroeder President and CEO of the Association of American Publishers and Former Congresswoman

© 2013 by Richard D. Lamm and Andy Sharma

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by an information storage and retrieval system—except by a reviewer who may quote brief passages in a review—without permission in writing from the publisher.

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Acknowledgments

No trees grow to the sky, and no element of the US national budget can grow at more than twice the rate of inflation. Yet that is the rate of growth of healthcare during my professional lifetime. A series of healthcare decisions lie in our immediate future that will make our moral compasses gyrate, yet we have not even begun talking about them. Their difficulty will be compounded as we retire the baby boomers and find that Social Security financing and long-term care needs are competing for these same dollars.

This is not just another issue. I believe this is a nation-threatening issue. The numbers required to finance the future are gargantuan and began to come due when the first wave of baby boomers start to retire in 2011. They threaten to undercut the economy, crowd out other important public needs, and increase generational tensions. Instead of moving to meet this challenge, our nation gives tax cuts instead—with borrowed money! This raises what is to me a fascinating issue: are our institutions as we have developed them equal to the magnitude of our problems? Can our democracy make hard choices?

For most of American history, politicians were able to give voters more and more. We have a rich continent, populated by a creative and hardworking people. We have overcome a number of obstacles. But we have also become an overindulged people who seem to have lost the ability to tighten our belts and make sacrifices for our children and our future.

Healthcare presents not only challenging funding problems but also fascinating ethical and policy issues. Simply put, we have invented more healthcare than we can afford to deliver to everyone. This book represents my odyssey into healthcare ever since the midseventies, when I realized how much it was driving my budget.

I have been greatly enriched in my thinking about healthcare by Victor Fuchs, Haavi Morreim, David Eddy, and Robert Blank, among others. I am in their debt for ways that I cannot fully acknowledge.

I would like to acknowledge my lovely wife, Dottie, who has accompanied me to countless hospitals and clinics around the globe, many in the third world, with only the occasional interesting dinner with a dedicated doctor for her reward.

—Dick Lamm

I believe well-reasoned public policy requires good information. In other words, policy makers need to have a thorough and up-to-date understanding of key issues. My hope is that this book serves such a function for healthcare.

I would like to acknowledge my former professors at DePaul, Loyola, and the University of North Carolina at Chapel Hill. I have learned much from them and am pleased I could impart some of my knowledge to the readers of this book. I would also like to thank my father, my mother, who passed away from breast cancer in 2009, my older brother, my sister-in-law, and my niece and nephew for their support. Lastly, I want to thank Amanda E. Melvin for reading several versions of rough drafts.

—Andy Sharma

Preface

My wife, Dottie, survived breast cancer. I am forever grateful to the skill and caring of an excellent group of doctors and a good hospital. There is no doubt in my mind that we owe her health and her life to the brilliance of the US healthcare system. Cancer had spread to her lymph nodes, and the statistics were very much against her. Now, nearly thirty years later, I awake every morning next to a living testament to the genius and effectiveness of American medicine.

But I also have children. And increasingly, I see the healthcare system consuming massive resources that are desperately needed in other parts of the economy if we are to leave our children a sustainable society. When I graduated from college, in 1960, America spent 6 percent of our gross national product (GNP) on education, 6 percent on defense, and 6 percent on healthcare. In 2011, we spent 6 percent on education, approximately 5 percent on defense, and 17 percent on healthcare. That’s approximately $2.5 trillion a year on healthcare; before long, we shall spend $3 trillion a year. We spend 50 percent more than any of our economic competitors, and this expenditure has been rising at twice the rate of inflation during my professional lifetime—unsustainable in the new world marketplace. Yet, for all of our spending, we do not exceed our competitors in any basic health statistic, except life expectancy, at the age of 80. Granted, we have marvelous doctors and hospitals that often achieve the miraculous, but from a public policy standpoint, where every dollar is important, it is difficult to see what justifies such an extraordinary level of expenditure.

Compare categories of US spending as a percentage of our GNP:

Do we get our money’s worth? Reflecting the opinion of most experts who study healthcare systems, international expert George Schieber observes:

In comparison with other major industrial countries, health care in the United States costs more per person and per unit of service, is less accessible to a larger portion of its citizens, is provided at a more intensive level and offers comparatively poor gross outcomes.

American expectations for healthcare over the last thirty years have been developed during the most massive transfer of wealth into one sector (healthcare) that history has ever seen. Healthcare is a fiscal black hole into which we can pour all of our children’s future. Yet we are no healthier than many nations that spend far less, and we leave 50.7 million Americans uncovered by health insurance. Americans now spend on average approximately $8,000 per person on healthcare. Because we spend more doesn’t mean we get more, nor does it mean we are spending this amount wisely. Economists worry that we are unbalancing our economy and that it’s not wise national policy to spend one dollar out of every six dollars of our gross domestic product (GDP) on healthcare. Social policy experts point out myriad other public needs that are underfunded, yet polls show that Americans regard healthcare as one of the most important priorities; most Americans want to spend more, not less, on healthcare. That is politically important because in a democracy we generally get what we want, but is it wise public policy? Do we really know what we are doing?

The pressures will only increase. We live in the age of bionic body parts, a growing number of which are in common use. Some experts predict that, in this century, there will be human beings with more than 50 percent of their body weight in bionic parts. There is hardly a part of the human body that medical science is not reworking, either as a transplant or in the way of repair or revitalization. Motors smaller than a hair are now available to move through our circulatory system and complete microscopic cell repair. We have mapped the human genome and soon will be able to give people a biomap telling them with a large degree of predictability what diseases they will develop and at what ages. Yesterday’s science fiction stories are quietly becoming reality in today’s medical journals, and most of these procedures are awesomely expensive. An aging society should keep in mind health economist Victor Fuchs’s words: The appetite for healthcare is infinitely expandable, since it is almost always possible to secure some marginal increased benefit by fulfilling wants or desires for more treatment.

If US healthcare were a separate nation, it would have one of the largest economies in the world. This unprecedented and unsustainable growth of expenditures has distorted our expectations from the healthcare system and masked the necessity to make some hard choices. We have developed the illusion of endless pools of money that will allow us to do everything medically for everybody without restraint. Most Americans have come to view healthcare as a right, and we want everything that might do us some good and want someone else to pay for it. Then we want these expectations enforced by lawsuits and even a Patient’s Bill of Rights.

No item in any budget can grow forever at more than twice the normal rate of inflation, which healthcare has averaged over the last forty years. Princeton economist Uwe Reinhardt has estimated that at the rate of growth in healthcare spending for the last thirty years, by 2065 America will be spending 100 percent of its GDP on healthcare. He knows that this could never happen, but he uses it to illustrate that the status quo in healthcare is unsustainable. No trees grow to the sky. Something has to give. No nation can live by healthcare alone. But it isn’t healthcare alone that America has to worry about. What compounds the problem and keeps policy makers up at night is that Social Security is also poised to make incredible and unsustainable demands on the public treasury. Many fiscal chickens are simultaneously coming home to roost. Major structural flaws have appeared in two of America’s most popular social programs, healthcare and Social Security, yet we act as if they will repair themselves. Michael Kinsley, writing in Time magazine, captured America’s denial of reality:

The central problem of American politics [is] the inability of the electorate to deal with the hard reality we all had to learn as small children: that some of something usually means less of something else. . . . Our refusal to acknowledge that trade-offs are necessary . . . makes intelligent debate about . . . trade-offs impossible.

Americans can reasonably expect a lot, but not as much as we have come to feel entitled to. My aging body has the potential to keep my grandchildren from going to college. Healthcare can easily crowd out too many other important things we have to do with our limited funds. We need to start a national dialogue, and start it soon, on what we can reasonably expect of and realistically afford in our medical miracles. Americans want and expect what no nation can ever deliver: all the healthcare a technologically advanced society can develop and the resolution of our every health-related anxiety, while others help us pay for spare-no-cost medicine. Such a system is unsustainable, unaffordable, and inequitable and needs to be substantially amended and revised.

One

Aging

The Demographic Trap

The ancient Greeks believed the greatest tragedies occur when well-meaning, intelligent, caring humans invite disaster because they cannot see the big picture or understand new circumstances. A chorus warns them of impending disaster, but they do not hear. American public policy makers are ignoring a chorus of commissions and experts who are telling America that the baby boom is turning into the grandparent boom—with grave implications to America’s future. We are consuming more than we produce, spending more than we earn, and borrowing money from our children to maintain lifestyles and government services.

Demographics and Aging

One of the great challenges in America’s future is to retire the baby boomers without bankrupting the country or unduly burdening future generations. This demographic tidal wave is creeping up on America and could soon overwhelm American public policy. Yesterday’s baby boom is tomorrow’s grandparent boom. This demographic revolution presents us with some interrelated challenges, of which healthcare is the most troubling. How do we fund present programs for the elderly, let alone expand those programs for twice as many elderly? How do we adapt and fund our retirement and healthcare systems for an America of many more elderly citizens, fewer children, and exploding technologies? What are the social and political consequences of running a society whose average age will be approximately twice the average age as during our nation’s first two hundred years? How do we add desperately needed long-term care to costs already out of control? If we act soon, we can answer these questions rationally, prepare for our future, and avoid steep economic decline. But if we wait, we will be forced to make draconian decisions.

America is getting older—fast. In 1900, we could expect to live 47.3 years; by 2010, we could expect to reach the age of 78. It is likely that those born early in this century can expect to live to 85. We are not only increasing the number and percentage of elderly, but the elderly themselves are getting older as modern medicine performs its miracles and a larger percentage of our population lives beyond 75. The fastest-growing demographic cohort in the United States is people over 100; the second-fastest-growing cohort is people over 85. (America has approximately 5.7 million people over the age of 85 and 75,000 over the age of 100.) America is expected to double the percentage of people over 85 between 1990 and 2030. It is estimated that we will have as many as 17.6 million Americans over the age of 85 by the middle of this century. The baby boomers at the end of their lives will continue to cause distortions to American demographics and challenges to American public policy.

These two aging trends had a great impact on the general demographic growth of the twentieth century. Since 1900, the population of the United States has tripled. The population of those over 65 has grown ten times, and the population of those over 85 has grown thirty times. This trend will continue. More than 10 percent of the elderly have at least one child who is over age 65. These realities will push us into uncharted territory for public policy.

Extended longevity is clearly good news for us individually. We are going to live longer and have more health and life than any generation in human history. A vast majority of babies born today will live past their 65th birthday, while fifty years ago less than 30 percent lived to see their 65th birthday.¹ Today’s senior citizens have unprecedented