Would Someone Please Pay Attention to this Woman?

One of the thought leaders in the arena of health care reform today is a Darden School professor, Elizabeth Olmsted Teisberg. She is virtually unknown in her home state of Virginia, but political leaders ought to make her acquaintance. She teamed up with Michael Porter, Harvard Business School’s competitiveness guru, to write a critically important book, “Redefining Health Care,” that should be must read for anyone legislating the makeover of the U.S. health care system.

I haven’t read the book, but I’ve read the summaries, which I humbly digest for popular consumption.

Much of the Porter/Teisberg critique will sound familiar. Americans spend more per capita on health care than anywhere else in the world, but we get less value than many other nations. The American system provides inadequate access to health care for tens of millions of citizens. Quality breakdowns are endemic: Medical errors contribute to some 200,000 deaths a year. The diffusion of medical knowledge takes years. Fear of tort liabilities distort the practice of medicine.

Administrative costs, at 20-25% of expenditures, are staggering.

Unlike politicians, Teisberg doesn’t demonize particular groups — greedy doctors, rapacious pharmaceutical companies, predatory insurance carriers, etc. She and Porter suggest that the problem stems from the way competition is structured in the health care industry.

Health care competition is not focused on delivering value for patients. Instead, it has become zero sum: the system participants struggle to divide value when they could be increasing it. Although health care offers tremendous value, the unnecessary costs of zero-sum competition undermine and erode that value. It is the zero-sum competition in health care that has created … high costs, low or variable quality, under- and overtreatment, too many preventable errors in diagnosis and treatment, restrictions on choice, rationing of services, limited access, and a raft of costly lawsuits.

Zero-sum competition in health care is manifested in a number of ways, none of which creates value for patients:

Competition to shift costs
Competition to increase bargaining power
Competition to capture patients and restrict choice
Competition to reduce costs by restricting services

Shifting costs doesn’t provide more value for anyone, Teisberg argues. So, what’s the solution? Value-based competition.

Healthy competition is competition to improve value for customers, or the quality of products or services relative to their price. It leads to relentless improvements in efficiency. Product quality and customer service improve. Innovation propels advances in the state of the art. Quality adjusted prices fall, and the market expands and more customer needs are met. Choice expands as firms work to distinguish their products or services from others. Excellent firms prosper while firms with low quality, poor service, or high costs decline or go out of business unless they make fundamental improvements in the way they operate.

And how do we create value-based competition? In Senate testimony, Teisberg made the case for universal access, measuring results, and restructuring the payment system. I won’t linger on the universal access issue, as it is familiar to most. But the other two recommendations warrant elaboration.

Measuring results. “Through meaningful outcomes measurement, clinical teams are able to accelerate learning about what truly improves health outcomes and what improves the efficiency of effective care,” Teisberg testified. Congress should require outcomes measurement and turn the data over to professional organizations for analysis. The purpose of measurement, she emphasizes, is not to enable consumer shopping. It’s to accelerate learning and improvement in medical practice.

Payment. “In the current system, financial success and medical success are not aligned,” testified Teisberg. The reimbursement system covers treatments piecemeal: by procedure, by visit, by intervention and by hospital stay. It encourages poor coordination, redundant treatments and inattention to the patient’s full cycle of care. Instead, the system should pay clinical “teams” for treatment of a patient’s medical condition over the full cycle of care.

Realigning the payment system would restructure the way health care is delivered. Providers would compete on their ability to deliver the best outcomes at the most reasonable price. Competition then would become a positive force rather than a negative one.

Sadly, while legislation discussed in Washington strives to deliver universal access, it does little to address the underlying problems of escalating cost and sub-par outcomes. Rather than creating healthy competition over how best to deliver value, legislation would perpetuate, perhaps even intensify, the zero-sum gamesmanship and cost shifting that is the bane of American health care. Is it too much to ask for Senators Mark Warner and Jim Webb to consult one of Virginia’s intellectual superstars in order to rechannel health care reform in a more positive direction?

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73 responses to “Would Someone Please Pay Attention to this Woman?

  1. Thanks for that. I wish there were far more of this type of content in the current debate and less posturing by pols. Obama would have done better, I think, if he had announced a year of policy discussion where the White House spot-kighted these kinds of inputs (it could have been eclectic and swept in a number of viewpoints) so that the citizenry were better informed before the politicians started mangling this issue. It's a very important debate, very complex, and it needs to be addressed. What we're likely to get now is a mish-mash of provisions intended to push particular buttons, but no systemic improvement.

    NoVA Scout

  2. ditto with what NoVa Scout said with one proviso.

    Those on the "other" side have had the opportunity to do What Ms. Olmsted is doing but for whatever reason – they choose to "act up" or, more likely, they let their brethren to the right essentially define the character of the opposition to be perceived as anti-Obama and anti-Gov.

    and here's a point from here message:

    " She and Porter suggest that the problem stems from the way competition is structured in the health care industry.
    Health care competition is not focused on delivering value for patients."

    She's right. How did this happen? How much of this is typical of what happens in an unregulated industry and how much of it is some perversions introduced by the govt?

    but here's the money question.

    Does anyone think that this can be delt with by the "incompetent" govt?

    I could digress a bit and ask people if they think the same govt that is considered "incompetent" at entitlement programs is also "incompetent" at regulation (or not) and if they think that – think can we explain why the same govt is incompetent at things like Medicare but very competent at Tricare – or FDIC, NTSB, etc.

    There was mention of demonizing. Yes.. I agree – on both sides.

    Obmacare is a pejorative. From that point on in a conversation – we have personalized an issues that has been decades in the making and had a lot of different players in it including this lady – but now it's one guy and his solution that the opposition chooses to "contribute" to the debate.

    so in that spirit – I will offer the following non-demonizing suggestions that might be actually revenue neutral if you consider than doing these things saves the money spent on ERs:

    1. – outlaw Hospitals charging different prices to different people. no more cost shifting.

    Make them publish a list for all their services and the cost and anyone who gets those services pays one price for them whether it's cash on the barrel or insurance.

    2. – Put a tax (indexed) on all Hospital Services roughly equal to the cost of ER care for folks who don't need ERS.

    Use that tax to build free-standing primary and urgent care clinics for those without insurance and allow the hospitals to turn away and refer non ER cases these clinics.

    3. – Use the rest of the tax for any primary care student in Medical School who will agree to serve 5 years or more in these clinics.

    but I thank Jim for keeping the issue hot here in BR – as I do truly believe that sooner or later – the majority of people will realize – that what we are doing right now will not lead to solutions – and only delay the inevitable.

    With the news that the deficit is worse than hoped for – we're in even more trouble now.

  3. Larry, I'd like to clear up an important point you raised in your comment above: "How much of this is typical of what happens in an unregulated industry and how much of it is some perversions introduced by the govt?"

    I don't fully know the answer, and I'll admit that up front. But I think I know pieces of the answer. (Perhaps if I read Teisberg's book, as opposed to the Web highlights, I would find a full explanation.)

    Payments. The current payment systems is organized around DRGs (Diagnostic Related Groups). This system was put into place by Medicare and Medicaid (I believe). The Federal government comprises roughly 40 percent of the market for health coverage, in effect dictating the structure of the payment system used by the 1,700 or so health insurers that account for the rest of the market. Reform of the payment structure by necessity must be led by Uncle Sam, although it undoubtedly would be helpful if the bigger insurance companies participated in the re-thinking process. Government created the misalignment of financial incentives, and government must fix it.

    Measurements. This is a rare instance in which I think government intrusion into the marketplace is justified. Requiring health care providers to measure outcomes data is not nearly as intrusive, however, as most forms of government regulation. Indeed, it is a case where government can help private sector competition work more effectively by providing providers system-wide data that they could not possibly generate on their own. But please note: Teisberg doesn't suggest that federal bureaucrats should analyze the data — she suggests handing it over to the medical professions to mine for insight into how to improve their own performance.

  4. I am skeptical. I am doubtful that 'value competition' can lead to a dependable standard of care. We might see innovation, and pockets of excellence, but we would also see more stratification and sudden gaps in coverage.

    We keep clinging to competition, while other countries pull ahead with the known solution to the health care problem- universal single payer.

  5. Here's a little more info for anyone who thinks that Medicare is mandatory (it's not).

    but even within Medicare, there are different variants available beyond the plain old Vanilla version that many think is the only thing available.

    The point I'm making is that even with Medicare, it's optional, you are free to pursue other market-based alternatives including Medigap and Medicare Advantage offered by pvt providers or just forget it all together and pay for the level of care you want and can afford.

    and yes.. Medicare is projected to go broke in less than a decade – which is exactly what would happen to private providers if they did not raise their rates, cut coverage, and shed more people. Medicare will have to do two of these three things.

    Medicare benefits, in my view, are way, way too generous.

    It ought to require co-pays – unless you qualify for assistance.

    The co-pays should increase for more than basic care and should increase substantially for elective services and equipment.

    We all know that this will have to be part of what will have to be done – but instead of getting this advice and support from the fiscal conservatives – we get scare tactics designed to scare the folks on Medicare telling them that their benefits will be taken away, etc.

    Both sides MUST HAVE an honest conversation here and agree that at the end of the day, people, that are financially able are going to have to pay more of their share and that they should anyhow.

    Retired people with substantial incomes should not be receiving free or discounted health care.

    At the MOST, they should get back what they payed into the system over their careers in my view.

    It should work more like social security does than covering any/all healthcare regardless of your ability to pay and regardless of whether or not – the services and equipment are elective.

    I am coming to the conclusion that what is missing from this debate – to the detriment of all of us – is the advice and counsel of moderate but fiscal conservatives focused on the issue -without blaming anyone but telling it like it is and advocating making the hard choices that we must make.

    The true fiscal conservatives voice has been missing, muted, and shouted down..

  6. Bacon,
    Woah! Beware business school gurus bearing data and efficiency reports!
    Elisabeth O. Teisberg may be absolutely right that the insurance and medical system are woefully out of whack but that's not exactly news these days.
    What worries me about her "value" are the following:

    (1) Medical care is not like General Electric making light bulbs or refrigerators where inputs and outputs can be measured. The likes of Jack Welch can go in and whip everyone to get with Six Sygma or whatever the management trend of the day is. Remember the "balanced scoreboard" bullshit we had to deal with at Media General? It sure didn't help their stock which went from the $60s to about $9 now after falling below $1.Whatever happen to all that insight they were supposed to have gotten from "balanced scorecards."
    (2) Human beings are what we are talking about here, not widgets or silicon chips. In case you haven't noticed, they are incredibly complex and do not always have the same result.
    (3) Measuring outcomes can be very complicated in health care. If someone is in a car wreck and breaks a leg, sure it is easy to measure how well the surgeon operated, set the leg, etc. But the life cycle of cancer can be 50 years. How do you know if a procedure taken in 2009 will have the correct result in 2049?
    (4) You make it sound as if no one measures outcomes. Nonsense. Hospitals have had auditing committees for decades and so do insurance companies.
    (5) Teisberg may be right about the system being adulterated by a zero sum, pass the buck kind of game. But, hey, that's what we got when managed care got underway in the 1970s, coupled with how Medicare and Medicaid are operated. Managed care was designed to keep down costs. It did so by creating byzantine systems of supposed checks and balances over what doctors and hospitals were doing with the idea of screwing someone out of money somewhere down the line. In some cases, they deserved toget screwed out of money but probably not so in most cases.
    (6) Managed care promotes a kind of fill-in-the box mentality. If a patient seems to have this disease, fill in these bozes because if you don't either the insurance company will deny payment or a malpractice lawyer will tighten his future case. What does checking in the boxes have to do with the true welfare of the patient? They don't matter. I remember my dear old Dad, a surgeon and urologist, complaining about how he'd struggle over deciding what to do with a patient and then have a gum-smacking, barely literate indidividual just out of high school at a call center deciding if he made the right decision according to the simple-to-read guidebook in front of her.
    (7) You say that the debate is about access but it should also be about value. Chaaa! One reason the U.S. compares so poorly for advanced nations in infant mortality is not that hospitals and docs are baby killers (although they could be) but that so many poor women have no access to care at all because it costs too much.
    (8) Why do you want only our two Democratic Senators Warner and Webb to read the book? Last time I checked, there are plenty of Republican congressmen around, too, including House Minority Whip Eric Cantor who gets a lot of money from the health industry. Funny you didn't mention him.
    (9) Personal tip. When you write that something is a "must read" book and then you admit you haven't read it, well, that doesn't inspire confidence.

    Peter Galuszka

  7. "Realigning the payment system would restructure the way health care is delivered. Providers would compete on their ability to deliver the best outcomes at the most reasonable price. Competition then would become a positive force rather than a negative one."

    Compete with who?

    We have one hospital where I live and it's a regional medical facility that serves a 40-50 mile radius. The next closest competitor is 50 miles away.

    In many cases, once you get to the specialist-level (if you can get an appointment), there is not much competition because there aren't that many specialists, particularly in less populated areas.

    So, what is she saying as far as competition is concerned….do we need more specialists that compete against each other or more hospitals in markets that are only served by a few….or both?

  8. Good point, RBV. Under Teisberg's plan, value-based competition would emerge where there are competing hospital systems. But there would be little competition dominated by a single integrated system like Carilion, Sentara or Inova. To get value-based competition in those markets, I would think that regulatory barriers like Certificate of Public Need would have to be done away with.

  9. Value-based competition.

    Sounds a bit like the market based auctions that I frequently suggest in other areas. After all, how do you determine value without a market?


  10. "Medical care is not like General Electric making light bulbs or refrigerators where inputs and outputs can be measured."

    I disagree, sure it is, just like a lot of other things. We just prefer to think it is subjective, so we don't have to worry about the price.


  11. Jim and RH,

    "Under Teisberg's plan, value-based competition would emerge where there are competing hospital systems."

    and just where are those competing systems inb this state and others where you have tohave a Certificate of Public Need as decided by state bureaucrats heavily influened by those health firms who already have the monopoly. It's great to propse all this stuff, but a reality check now and then would be helpful.

    RH, if you think people's medical problems can be measured like traditional business inputs, well, let's just say I hope I never have to work for you.

    Peter Galuszka

  12. re: certificate of need

    yes… I don't know about other states but in Va, it gets involved in issues that it seems like it should not be.

    For instance, a local doc wanted to set up (invest $767,000) a virtual colonoscopy facility in Fredericksburg – and the local hospital was opposed to it and

    " The board of directors of the Northwestern Virginia Health Systems Agency, meeting in Culpeper, voted 10-8 to recommend to the state health commissioner that she deny his proposal."


    "The office is located on the hill behind Mary Washington Hospital, near Cowan Boulevard.

    "Every physician that built on this particular site has this same exact deed restriction," Brown said. "The deed restriction is to protect MediCorp's [the hospital] interest."

    Brown added, "We intend to enforce our deed restriction. They will have to find another location for their project."

    Other members of the panel noted that the Fredericksburg area already has 11 existing or approved CT scanners, and that those scanners aren't busy enough to justify adding another, according to state standards.

    "I can't see how we can possibly vote to approve this," said Louis Hodges.

    Several members of the group said that virtual colonoscopy was a good idea, and they asked DeTrane to work with MediCorp to provide the service.

    But after the meeting, DeTrane said he was not optimistic about an alliance.

    "I have been trying since Day 1 to work with them," he said. "But it's either their way or no way. They want to control the market. They want to be able to have no competition, and they're going to use their influence to make it that way."


  13. Larry –

    Interesting post. I did some googleing and found this link;


    It would be interesting to see a map that shows how much "competition" exists within each health district.

    How many districts have more than one provider in terms of hospitals and emergency services?

    I know for a fact that the Lord Fairfax District only has one provider…same for the Central Shenandoah.

    It looks like VA's health care districts operate more like a fiefdom as opposed to something that should enhance competition.

  14. "RH, if you think people's medical problems can be measured like traditional business inputs, well, let's just say I hope I never have to work for you."

    Like I said, most people prefer this be subjective: it makes life easier for them.

    Whether we are able to measure the effects or not the facts are still the same: every time we waste resources on one person, one bad policy, or even one perfectly good activity, when we might have done better, then that means one other person, one better policy, or some better activity did not get done.

    How many times have i struggled with one task all day here on the farm, when if only I wasn't so stubborn and pig-headed I would have dropped it after an hour or so and moved on. Put that job on the list of things that needs a different tool, and put it aside until it makes more (economic) sense to do.

    I work on something for a week and maybe I don't see the results for a year. But just because it is hard to measure, doesn't mean it is impossible.

    Consider Auger Electron Spectroscopy. Until 1950 the Auger effect was considered a nuisance: noise in the signal. Eventually it was found to contain valuable information.

    Or, read Freakonomics to discover how social activities and drivers are revealed by their economic fingerprints.

    I understand where you are coming from, but I I'm afraid I think such conclusions result from lazy thinking. We can do a lot better with results oriented medicine.

    I remember when my father was having jaw pain which was diagnosed variously as tooth misalignment, TMJ etc. One dentist wanted to do $25,000 worth of dental work on him, to which he replied, "Are you crazy? I'm 78 years old!"

    Eventually, he found the right dentist, who told him to go have a chst X-ray. Sure enough, neck pain emanating from the jaw can be a symptom of lung cancer. He had a lung removed and then lived until he was 83, with no more jaw pain.

    You tell me, can we do better, or not? Should we have spent the $25k on his teeth?


  15. Competition can lead to better performance, but it can also lead to a waste of resources.


  16. Where there is no competition (e.g., retail electricity, privately owned water, etc.), we tend to have price and service regulation. Should hospitals be regulated by the Virginia State Corporation Commission?

    I am still amazed to see the differences between traditional health care paid by insurance and laser eye surgery and plastic surgery that is not. The former sees price increases after price increases, but the latter has seen competitive price cuts.

    If the latter is the model, how do we get from here to there? And how do we deal with the catastrophic cost issue?


  17. the goal of private industry is to maximize profits – period.

    and it should be.

    one of the ways to maximize profits is to either get rid of the competition or to insulate yourself from competitive pressures.

    I would venture to guess that have the rules legislated by Congress as been in one way or another to protect a specific business interest through subsidies, tax breaks and even regulations to stifle competition.

    It's their job but it's the job of govt to not let them be successful at those efforts.

    For instance, hospitals have been forced to accept any/all who appear at their doors – and in return for that, they have been given the right to construct mechanisms such as cost shifting.

    Insurance companies who have no choice but to ay 10 bucks for an aspirin or 50 bucks for a disposable bedpan pass those costs onto those who pay the premiums and to get rid of customers who cost them more than what they pay in premiums.

    Hospitals in turn do not want other health care providers willing to provide aspirin for a dime and so they participate in govt boards that "regulate" competition, in effect, by not allowing it if it harms the existing hierarchy.

    Anyone who thinks this is competition and suggests that govt "intervention" in this is unwarranted are not seeing the reality – that just like in Va – the need for a "certificate" translates into, in effect, those are are ostensibly being regulated to decide what kind if any competition they want or not.

    We are at the stage with health care that if we really want competition – we will have to literally "claw" it back because they system is thoroughly infested with special interests that have constructed elaborate parasitic constructs designed to maximize profits and minimize competition.

  18. Folks,
    I am reading a lot here about the promise or not of competition and the free market. But the fact remains that the curent system won't allow ANY competition. It won't even allow you to know the real prices of anything — medicines, medical procedures, hospital stays, you name it.
    Take NPR this morning with a fascinating story (my details might be fuzzy since i was in my car). A young man needed to take a drug for a skin condition.
    One generic drug did the trick, but he had to take it twice a day. Cost per month: %100.
    His doctor, not knowing the cost implications, recommended a brand drug which was time release so he had to take it only once a day. Otherwise, it as the same as generic. Monthly cost: $600.
    When NPR went to the drug maker to find out why time release added nearly $500 a month to the cost, they wouldn't talk.
    Fact is, doctors don't know what drugs cost. They can't because of the way Big Pharma negotiations separate deals with insurers and greatly overcharges on brand drugs even if they are really not much better than generic. They do so to recover their R&D cost. Sometimes that can be huge, but often the drugs are the same with a little chemical twist.
    My point is that it is pointless to talk about competition unless you can know what the real prices are.
    Thus, be wary of academics bandying about stats when no one knows what they are.

    Peter Galuszka

  19. My plan does this right. They pay all but about $5-15 for a generic then they pay a set amount for a multi-source prescription drug and another set amount for a sole-source prescription drug.

    When my Doctor prescribes, I ALWAYS ask him if there is a generic available and how it might differ in his/her mind from the proprietary and I make it clear that unless they want to make a case for the non-generic that I want that option myself.

    This is yet another one of those deals where most folks don't really care as long as they are "covered".

    They also don't usually have a clue what the risks are with some newer drugs which are being released on fast-track cycles these days as a result of further deregulation of the FDA.

    Medicare Part D – done off budget exploded this trend with more and more people on Medicare Part D wanting the drugs they see advertised on TV and Doctor's don't really care as long as the money part of the transaction in not on their dime.

    The pharmaceuticals convinced our legislators by giving them "free speech" money to have the government "cover" the cost of very expensive prescription drugs of dubious benefit in many cases – or at the least – if they are not required – that the person who wants them pay for a substantial portion of the cost.

    this is how our system is working right now.

    The one Doctor I go to that cares about this issue asks me when he prescribes "how good is your prescription plan".

    and I tell him, I want generic if it is the same and he says "why should you care if your plan covers it"?

    So Big Pharma charges the govt an arm and a leg for a drug that you and your doctor don't care about the cost of it – and then Big Pharma takes some of those profits to express their "free speech" to the folks that make the laws that promote expensive "govt-provided" drugs on demand.

    some day, I'll convince Groveton and others of just how corrupt our system is by demanding that corporations be allowed to have "free speech".

    "free speech" is a big part of what is wrong with healthcare.

  20. Peter, You've identified a critical part of the problem with America's health care system: the total lack of price transparency. That's something we can both agree upon. The hope held by some Republicans of encouraging patients to take on a more active consumer role in health care is a non-starter given (a) the lack of price transparency, (b) the lack of outcomes data, and (c) the hideous complexity of the decisions to be made.

    I have a couple of questions:

    (1) Why is the health care industry unique among all industries for lack of price transparency? Was it always that way? If not, how did it get that way?

    (2) What can we do to restore price transparency?

    (3) Would it be a good thing to restore price transparency, regardless of whether you favor a government-run health care system or a market-based system? Would price transparency lead to more economically rational decisions, regardless of the government's role? Is it an issue that pro- and anti-Obamacare advocates can rally around?

  21. Larry, we agree for once, when you say, "The system is thoroughly infested with special interests that have constructed elaborate parasitic constructs designed to maximize profits and minimize competition."

    My question for you: Was the health care system always like that? If not, how did it get that way?

  22. Larry –
    I still don't want government any more into my health care than they already are. And I still dislike Obama more than a root canal. That said, let me throw something out there.

    Many years ago my mother worked as an admitting clerk in our county hospital. You know, the pesky person who hounds you for information such as insurance, next of kin, address, etc. Back then the county hospital was an extension of the medical school (in our area). Many med students would do both an internship and a residency there.

    I was young (in my teens and early twenties) so I don't really know/remember how it was set up. And my mother passes several years ago so I can't ask her. But the county hospital was where the poor, the indigent, the drug overdoses, etc. were hauled to. I believe the hospital ran with the help of county taxes, money from the medical school and Lord knows whatever other sources. It was fantastic experience (IMO) for interns and residences as they were seeing (probably) cases that they never would have seen in a typical hospital or in private practice.

    Because I don't know how the financial arraignment was I can't really say what happened to it (the arraignment). The hospital (which still exists) became more a part of the medical school and doesn't see the same clientele anymore. However, looking back (20/20 hindsight) it appeared to be a beautiful arraignment and I've often wondered why something like that couldn't be put in place again. Rather than make all of us the equivalent of cattle with the waiting lines of DMV times ten.

    Again, it is short sightedness (IMO). It is greed, on the part of the government. It is another power grab and controlling move by politicians (on both sides). While something needs to be done, the 'solutions' that the politicians have brought to the table make things worse (sometimes in ways we can't even think of right now) rather than better. The 'solutions' presented have been and continue to be horrible.

    Just one man's opinion.

  23. Jim asks "how did it get that way"

    I told you – "free speech"

    look at the current dynamics in Congress with the more than obvious of money influence.

    they're actually flaunting it.


    I agree with you on the county hospital deal.

    I don't understand why every community cannot have a free or reduce-fee free standing clinic for both primary and urgent (but not emergency) care.

    I suggested an approach earlier.

    Tax hospital charges.

    Use that money to build/operate 24-hr free standing clinics.

    Let the hospitals, REQUIRE the hospitals to reject all non-ER cases at the door and refer them to the free-standing clinics.

    Why don't we do this?

    but question back at you Accurate –

    you say you don't want govt involved in health care but how will something like this happen if you leave this in the hands of the special interests?

    See.. you've chosen pvt as a lesser evil than the govt (in your own mind) but you fail ultimately because there is no answer forthcoming from the pvt path that you prefer.

    that's the fundamental problem here.

    people don't want the govt involved but the system as currently operating is not going to change on it's own.

    so why pick a path that you know will fail?

    16 other countries provide govt-regulated healthcare that results in better health outcomes across the board for most metrics – despite the you-tube/blog anecdotal hysterics.

    This is not an Obama issue. He just happens to be the guy in charge right now – after 16 years of someone else in charge who did nothing either.

  24. Jim,
    I'll try to answer your questions although as you know I am not a health care economics expert:

    (1) Why is the health care industry unique among all industries for lack of price transparency? Was it always that way? If not, how did it get that way?

    Answer: My guess is the shift to managed care in the late 1970s and early 1980s. Prior to that, doctors could charge what they wanted and so did hospitals. The outcry over cost overruns was so loud that the concept of insurers acting as cost managers came into being. They opted to allow what could be paid based on a Medicare standard for expenditures. If Medicare agreed to pay X for procedure Y that was the basis. INsurers may or may not (usually not) pay what the doctors billed. Ditto hospitals and other health insurers. Insurance companies then started negotating separate deals with phamaceutical firms agreeing to pay whatever for drug. Then they introduced copays which is a way of dunning the patient for a drug a doctor prescribed. The mopre expensive the drug the creater the co-pay. It is a way to punish the patienmt for needing a more epxensive drug.
    What the move did was shift cost setting power from the doctors to big for-profit insurance firms. In many ways the doctors shot themselves in the foot and in many ways, the doctors can't really be tasked with price control. Their first concern is the well-being of the patient and that's the way it should be regardless of what free market academics think.

    (2) What can we do to restore price transparency?

    Good question. I know doctors who like a public option because at least they would know where they stand. Maybe get one pricing list. It would work for drugs, but drug firm and insurers benefit by keeping things opaque. It would be harder to do for med prcedure since, say, a surgical tech costs a lot more in CHicago than in rural Mississippi. Of the the big thing about the public option in any of the reform plans is that VERY FEW WOULD BE ELIGIBLE FOR IT. You would not be if you were in a regular, company paid, private insurance plan.

    (3) Would it be a good thing to restore price transparency, regardless of whether you favor a government-run health care system or a market-based system? Would price transparency lead to more economically rational decisions, regardless of the government's role? Is it an issue that pro- and anti-Obamacare advocates can rally around?

    Answer: To some extent price transparency is a great start. But once again, a doctor may be hard-pressed to get to a proper diagnosis and must have the patient's health his or her bhief concern. They can go and spend a lot of time dickering over nbickel and dime pricing.
    As far as the anti-Obama forces rallying around trasnparency, don't think so, since some benefit so imeensely by keeping things in the dark. They profit and stay in control by doing so.


  25. just wanted to point out that we do have other industries that do not have price transparency.

    The airline industry is a good example.

    One of the business channels did a report on this and showed numerous examples of people sitting right next to each other who paid wildly different fees for the same type of seat of the same plane.

    the difference is that each customer is still free to shop for the best price – for their needs whereas with our health care system you have virtually no options.

    What we need is this.

    Your insurance tells you that the most they will pay for a colonoscopy is X dollars.

    Then you go shopping looking for the lowest price from the providers with the best reputations – you know like when you buy a set of tires or hire a contractor.

    I don't mind driving to Charlottesville from Fredericksburg for a colonoscopy if they have a crackerjack reputation and they don't cost any more than other providers in Fredericksburg but I'd like to be able to do that research online.

    but again.. I ask everyone here – how will you fix this without the govt?

    And again I ask. How can govt be too incompetent to provide single-payer healthcare but perfectly competent to regulate pvt healthcare?

    It just doesn't add up for the folks who are opposed to one level of govt involvement on the grounds that they are incompetent – to turn around and support govt involvement at regulating that same area.

    If you are a person that believes that the current system won't be fixed without the govt being involved – then you are, in effect, saying that you believe the govt is competent "enough" or else you would not support the govt even regulating pvt healthcare from the get go.


  26. Larry,
    It's fine if you are willing to go to Charlottesville for a colonoscopy but don't go to Leesburg. The Post did a series a while back about a drug addict doctor who did colonoscopies. He gave himself he drug and then did the procedure anyway.

  27. thanks for the 'tip' Peter!

    that puts a whole different perspective when you say the Doc ripped you a new one.

  28. the goal of private industry is to maximize profits – period.

    And get them as soon as possible. $1 today is worth $1.10 a year from now. Short term profits matter.


  29. "…to protect a specific business interest through subsidies, tax breaks and even regulations to stifle competition."

    Absolutely. A good deal of our so called safety regulations are nothing but barriers to enetry.


  30. depends on how you make the short term profits and if you did it without harming something else.

    characterizing short term profits as "investing" though is an oxymoron.

    Investing implies a patient strategic purpose – sustainability.

    You don't build, empower enterprises that provide employment and contribute to the economic wellbeing of society by prioritizing short term profits.

    For instance, short term profits usually negate money spent on things like system engineering or R&D or even Demming-type retrofits for efficiency and cost-effectiveness.

    Short term profits are just another word for greed – which is not illegal but since it is not contributing in the same way that other investments do – it need not be encouraged nor incentivized and certainly does not deserve to be rewarded by policies designed to encourage other, investing activities that contribute and add value to others.

    we allow gambling. It's legal in some places and contexts. But we don't reward it.

    We don't encourage people to gamble and we don't subsidize gambling and we don't allow gambling losses to be written off on your taxes unlike other losses that are considered legitimate to be written off.

  31. Larry –
    I read your idea about the immediate care clinics – if it was ONLY for those who had no money or for some reason choose it by their own accord fine. I'm not sure I want to tax regular hospitals for it though.

    The funny thing is the old county system was in fact, something that (obviously) had to do with government. But by the same token, it was NOT a place you wanted to go to if you had a choice. Funny, I really don't think the medical treatment was worse, but it did have a stigma attached to it and it felt like and was like most government programs where the 'clients' are just so much cattle.

    For the most part I think power, money, greed and corruption has made the government as bad as it's ever been, if not worse than ever. They can not run social security because they continue to raid it. They can not run medicare because they have unrealistic ideas of cost and doctor reimbursement. They can not run the post office nor Amtrack; so please don't question why I don't think that they can run health care.

    Do I trust them to regulate it? Yes, I'm a building inspector, I believe I'm pretty good at what I do. When I have my own house built I will be inspecting it. However, the fact that I know what I'm looking for when I inspect doesn't make me fit for building it. There are some things that I could probably do pretty well, but there are many things that I'd suck at. It's easier to inspect (and find and point out errors and problems) than it is to build it (IMO).

    Why can't there be a county hospital that serves as a teaching hospital any more? We need something like that not only for the indigent, but for the times when we (typically non-indigent) fall on hard times like being laid off work. When I was laid off recently, I just sucked it up till I got to the point where my new health insurance with my new employer kicked in. Years ago when I had been laid off and ended up with a job with no health insurance (and really crummy wages) I had to go to a free clinic. It was humbling, for someone like me, but I sat there, the only white face in a sea of Hispanics, and waited my turn like everyone else. Did I feel like cattle – you bet I did. By the same token I was grateful and gave them a donation when I finally got back on my feet a couple years later.

    Bottom line, the government proposals on the table stink to high heaven. Best learn to "MOO" if they go through. And sorry, Obama gets all the credit so too he should get all the blame for this snafu. I rue the day that man got elected.

  32. accurate – who would do building inspections if not the govt?

    if the govt is too incompetent to build something, how could/should they be trusted to inspect it?

    I think you're having the same issue but you don't recognize it.

    it's the same deal with the teacher clinics.

    who would you think would do this if not the govt?

    the tax on the hospitals for the clinics would be revenue neutral Accurate – because right now you are paying for the ERs through your premiums.

    I suggested that we divert that money to build clinics and free the hospital from having to treat non-ER cases – and at the same time prevent them from using the ER situation as an excuse for cost shifting.

    It would take the govt to do this.

    And again.. if you don't think the govt is competent to run health care – why in the world would you think they would be competent to tell others how to run health care?

    you're totally inconsistent in your views IMHO.

    Amtrak is not going broke by European Standards because the Europeans treat trains like we do schools – something that will not pay for itself by charging fees but something that is necessary for society – ergo a legitimate tax-funded function.

    We judge Amtrak on it's farebox revenues. Europe & Japan do not.

    The P.O. is not going broke any more than Medicare of SS or Tricare is going broke.

    This is a total misrepresentation done by using a double standard where pvt industry is allowed to charge more, reduce quantity and quality – to control costs while the govt is not but if we don't allow govt to do the same thing that pvt industry will do to control costs – we say that it is going "broke" because it cannot control costs.

    this is an Alice-in-Wonderland perspective where Govt is held to two standards at the same time while pvt industry is held to neither.

    Show me a post office system in the world that operates the same level of service, quality, and reliability for what our Post Office charges – including the rate increases that might be necessary.

    You more than likely don't even know others for comparison sake – but even without knowing – you basically say the PO is going broke because the Govt does not know how to run a PO.

    The fact that all of this kind of rhetoric is coming to light in tandem with Obama – is – in my mind – not a coincidence at all in my view.

    The same incompetent govt under George Bush was apparently the best in the world when it came to building humvees and UAVs or for that matter providing the dependents of our military with single-payer government health care.

    The "incompetent" govt is what provides you with a reasonably accurate weather forecast Every DAy – Accurate – from satellites that operate 24-7 to provide you with that information.

    These satellites were designed, produced and built under government contract and supervision.

    Your GPS system similarly is govt owned and operated….

    When a pilot sitting in front of a computer terminal in Arizona fires a hellfire missile from a UAV in Afghanistan – the whole system was designed and constructed under the supervision of civilian govt employees working with and directing prvt contractors.

    You depend on the govt every time you board an airliner.

    you depend on the TSA, the FAA and the NTSB to help make that plane safe.

    If govt was so incompetent, how could you trust it to do this job reasonably well?

    I can go on and on..here.. but you're using a myopic perspective that feels like it has a significant partisan flavor to it.

  33. accurate – who would do building inspections if not the govt?

    Actually, government will allow youto hire your own PE for inspections.


  34. "You don't build, empower enterprises that provide employment and contribute to the economic wellbeing of society by prioritizing short term profits."

    No, you do that by exploiting short term profits.

    If I'm building a high rise I need an elevator operator, and he is working for short term profits. The power companythat sells me the electricty to rn the elevator wants to get paid this month.

    You are kidding yourself if you think you can distinquish some kind of moral value based on how long you stay involved in something.


    We don't encourage people to gamble and we don't subsidize gambling and we don't allow gambling losses to be written off on your taxes unlike other losses that are considered legitimate to be written off.

    Investing, even for a day is not gambling. Gambling has no underlying business.

    Even the most arcane derivative has some underlying business that makes the derivative valuable.

    Investing and gambling are simply not the same. If you invest you own something. If you bet on the next card, you do not own something.



  35. Larry –
    "who would do building inspections if not the govt?"

    As RH pointed out there are lots of other options. There are hundreds of private companies licensed all over the USA that are allowed to do private inspections. There are some cities that have done away with the public sectors and have only private firms do the inspections, with the state or county inspecting the records on a semi-regular basis.

    Many years ago (this shows my age) I believe Sacramento did not have a public city police force, they hired it all out. We have firms that run private prisons that are hired by public entities. Years ago I worked for an entity that contracted to run a city's wastewater plant. The city owned the equipment (it already existed) but all the operations, hiring, firing, meeting permit requirements were bore by the contractor. The people working there were not city employees but employees of the company. And you know there are hundreds of examples where the government (for whatever reason) gave up control of something and let private enterprise come in and run it and it was run for a profit. Yet, government was allowed to oversee the operation to make sure it met certain standards.

    I disagree with you about Amtrack, the PO, etc. We should hold them to the same standard that we hold private companies to. No, the government can NOT run a train system, they show it year after year. If the PO was not subsidized it would go broke and in fact even with the subsidy it's claiming a loss and is looking for ways to cut costs.

    No, I believe that regulating and doing are NOT the same thing. We have government regulators who do food inspections (slaughter houses), I don't know, I don't care if they themselves can slaughter a cow, but I do care that they know how to inspect the slaughtered cascaras.

    The government needs to be there as a safety net, but it does not need to be the be-all-end-all. It does need to oversee, but it doesn't need to be the one to 'do it'. For the most part the government is cumbersome and slow. It is inefficient and lacks foresight. It is wrought with rules and regulations and tied up by unions. The old joke still remains the same, "When do you know you're in trouble? When you hear the line, 'I'm from the government, I'm here to help you.'"

  36. " The government needs to be there as a safety net, but it does not need to be the be-all-end-all"

    we agree on this part.

    we probably also agree that SS was not intended to be-all-end-all and indeed does not function that way but instead as a minimal safety net.

    on regulation:

    yes.. you can hire pvt companies but who set the standards and how many times have you hear that the govt sets regs that drive up the cost of doing business unnecessarily or outlaws products and procedures that should not be?

    at the end of the day – you are presented with two basic options on these kinds of issues.

    do you want the govt to do it or do you want to let private industry do it?

    you do not have "none of the above" as a choice.

    So do you want pvt industry to run health care or do you want the govt to tell pvt industry run health care?

    and why would you have an entity that doesn't do health care itself deciding for pvt entities the "right" way to do it?

    you cannot properly regulate unless you know and understand the thing you are regulating – right?

    You're wrong on Amtrak and the PO because like a lot of folks like you – you judge it on whether or not it can operate on fees alone.

    Other countries don't judge them the same way.

    Instead, they judge them like we do schools, law enforcement, roads, etc.. Even Toll Roads now are being designed to not operate solely on tolls.

    Where I come down on these things is this.

    If the function will not get done by pvt industry – then the govt, as the only other option has to step in.

    You might have pvt companies doing building inspections but they'd be paid for and controlled by the govt – because what you know – but what you refuse to admit is that if we let the building industry self-regulate itself with their own inspections – we know what would happen.

    we have hundreds of years of experience to know what happens.

    so I make the point again..

    If you think govt is incapable of actually delivering health care itself why would you ever think they would be qualified to tell pvt industry how to do it?

    you can wiggle and squirm but you cannot escape this basic question.

    In fact, we often hear that the govt should hire people from the industries that they regulate so they do it "right", don't we?

    but why would the govt do that – instead of just letting those people regulate themselves to start with?

    Why would you have the people delivering health care at the VA or implementing a single-payer system for TRICARE instead of turning it over to the pvt sector and just paying soldiers and vet a set amount for them to go out and get their own care?

    why is that?

  37. Larry –
    You drive me crazy when you accuse me of being partisan, which I readily admit to; but give yourself a pass when it comes to supporting Obama and the democrats. You appear to agree with them and the notion of big government.

    Is the government capable of doing everything? Thank God, NO. Yes, we have satellites for communications and GPS. But thank God it was NOT the government that built them. Yes, the oversaw the carrying out of a contract but many of the examples that you gave proved my point that the government isn't in the business of doing, but IS in the business of regulating. In Obama's world, he seemingly WANTS the government to run everything. MORE government involvement in banking, more government involvement in car manufactoring; and now more government involvement in health care. Bottom line (in my world) screw the government, again I'll say they do an inefficient job using an excess of money.

    BTW – I'm presently employed by a governmental agency and I see it every day, in every way. It's a great job for me to retire in, but as far as using the money this entity gets efficiently? No way, no how – yet this is the story that I see and hear every day. Sorry, as Reagan said, "Government is not the solution to our problem. Government is the problem!"

    Let government regulate, get government out of 'doing'. Typically government is out of it's element when it tries to run something. Even when they try to bring in 'experts' in the field, it typically doesn't work if government is actually running the show. Too much politics, too much union interference, too much red tape. Why do you think someone like Brad Pitt can go down to New Orleans and get more accomplished in six months than FEMA and the state of Louisiana has been able to do since Katrina. Bottom line is that government has it's place but that place isn't "doing" – IMO the ONLY exception is the military – period.

  38. " You appear to agree with them and the notion of big government."

    nope. I'm opposed to govt doing anything that pvt industry can do – and this part is important – WILL DO in a way that there is a net benefit to society and not predatory.

    re: satellites

    Accurate – the govt sets the specs and determines the design and runs the tests.

    they control the process and they bear responsibility for the success or failure of such ventures.

    Accurate – you cannot regulate correctly if you don't know how to actually do what you regulate.

    this is why the govt HIREs people and puts them on the govt payroll who do know and they do this in response to legitimate criticisms that they screw things up by not understanding what they are trying to regulate.

    so this is true.. govt does screw up but this is also true – pvt industry does also – all the time and will and does cause harm to the marketplace and to society as a whole with it's activities that are focused solely on their own well-being and no one else.

    this describes the health care system.

    The people who are opposed to the govt doing health care – they use Medicare as an example of how the govt has "failed" but not a one of them advocates getting rid of it.

    In other words – they argue against providing Medicare to those under 65 but they are not being honest with their reasons and motivations because if they were – they would say – "we need to get rid of all govt healthcare and turn it back over to the private sector"

    that would be an honest position.

    that would be a consistent position with one set of values that you would hew to.

    but the current conservative position is inherently dishonest because they are using double standards to do what they accuse the liberal folks are – relativism when it comes to health care.

    fess up Accurate – your position is not self-consistent. You don't have a single philosophy.

    you're fine with the govt doing some things but you're opposed to that same govt doing other things but your criteria for differentiating is bogus.

    My criteria is simple.

    The govt does it, as bad as it might do it, when it is demonstrated that pvt industry cannot or will not do it.

    this describes our health care system and you've taken a idealogical position that is non-responsive to the issue.

    you provide no workable alternatives that do not require the govt to take a role.

    you use arbitrary and subjective criteria to say that the govt should tell health care HOW to do something but you say the govt really doesn't know itself how to do it…

  39. re: H1N1 vaccine

    Accurate this is an excellent example and Glenn Beck himself has weighed in on this.

    The question is – who decides that we need H1N1 and why?

    Glen Beck's position is totally consistent and makes it crystal clear what he is about whereas the rest of you guy are doing smoke & mirrors.

    Mr. Beck says the govt is incompetent and he puts his money where his mouth is by saying that because they are incompetent in his eyes, he does not trust their determination about how to deal with this issue.

    but you're going to find that the majority of folks would trust pvt industry alone – to determine what needs to be done about these kinds of things.

    they'd sell us dozens, hundreds of vaccines by telling us that if we don't take them we risk bad stuff happening to us.

    so why would/should we trust govt to tell us what to do if you think pvt industry is more competent than the govt?

    As I said – give Mr. Beck credit for sticking to his principles.

    what about the rest of you guys?


    " but you're going to find that the majority of folks would — NOT — trust pvt industry alone"

  41. No Larry –
    You are setting up an either/or scenario and it's not. I don't mind if the government wants to regulate something (within bounds), inspect something but I just don't want them being it. You are trying to set me and my argument up as if I don't want them to build then I don't want them to inspect – not so. Look, I inspect buildings, I know what the codes say, I read what the plans say. All I'm allowed to do is tell them that it is not correct. I can look at a roof and say the pitch (per approved plans) is 2/12 but your pitch is 3/12, it's wrong you need to fix it to the spec. I may or may not have a clue as to how to fix it, but I'm not allowed to tell them how to fix it. I am strongly discouraged to even make a suggestion as to how to fix it. My job is simply check what was done and ensure that it meets whats written on the approved plans.

    Larry – "the govt sets the specs and determines the design and runs the tests.

    they control the process and they bear responsibility for the success or failure of such ventures."
    As far as the government writing the specs (for a satellite, a bridge, a whatever) – if in fact a governmental agency actually writes the spec, it is then handed over to a contractor to build it. At that point the government is just another customer. No better, no worse, the customer has the right to check their project, the contractor has the duty to make sure any and all inspections are carried out and that the project is passing those inspections; no different than any other customer. In many cases the government doesn't do much more than figure out that a bridge needs to be built at point A, and hires an engineering firm to do all the computation, drawings, specifications which is then bid out to a contractor. Again, the government is nothing more than a customer – they don't know diddly squat.

    I never claimed that private industry didn't screw up. And THAT is exactly where government inspection, government regulation comes in and is a good thing. But government running things isn't usually a good thing.

    I'm not inconsistant. I don't mind government having regulations. I think government inspection is necessary. What I don't want and don't need is government running things.

    Say what you will, your ideas, your views and the things you espouse are in line with big government. Sorry Larry, while we both agree that changes need to be made to our health system, government is NOT the answer to that problem.

    I guess we'll agree to disagree and you can have the last word.

  42. Accurate – you cannot know how to inspect if you don't know how it should have been built to start with.

    and the govt is not limited to using ignoramuses either. They are free to hire the very same experts that actually did the work for pvt industry so that they know how to properly regulate.

    If they don't do that – they make dumb regulations that make things more expensive and limit productivity – a claim made often and not without justification.

    but we also know what happens when they don't regulated when they should.

    Here's an example. The govt does not require hamburger to be tested for e coli. And do you know what the hamburger folks give as the reason as to why they don't test?

    because if they actually find e coli in meat form the suppliers an they report it – the suppliers will not sell them meat anymore.


    now I know this is an anti-Republican liberal rag and all that rot but still…

    did you hear this on Fox News?

    Did they talk about how to fix this?

    Do you really think that Reagan's simplistic view that Govt is the problem here?

    here's you have the govt regulators and they have decided to let the industry self regulate and what has happened?

    How would you fix this without the govt know HOW the entire supply chain process actually does work?

    To regulate effectively to protect public health AND not ruin productivity or make the product too expensive – you simply have to know the entire process or else your regulations are going to do more harm than good.

    you cannot effectively regulate Accurate unless you know the the insides and outs of what you are regulating.

    Satellite requirements are not written on the back of an envelope and delivered to contractors.

    Those requirement require exceptional knowledge and skill to write.

    If they are not – you'll get satellites that don't work.

    just remember – the govt is free to hire experts – that actually work for pvt industry – and they do.

    there is nothing inherently incompetent about that.

    the question is – should the government be doing that?

    so the idea that the govt is incompetent is just simply a simplistic Reqanesque concept that is just not true.

    there are hundreds of counter-examples all around you.

    Can govt be incompetent?

    yes. we know this for sure.

    does it have to be?

    no – we know this for sure also.

    the same govt that operates the Post Offices and Amtrak also operates NOAA and the FDIC.

    We can and do philosophically disagree about govt but my point is and continues to be that your position is not consistent.

    For every example of an incompetent govt, I can show you a very competent govt – and so you need to adopt a philosophy that is self-consistent with regard to the competence of govt.

    If we can own and operate air craft carriers with excellent medical care for the sailors; if we can own and operate a VA system that has pushed the innovation envelope for prosthetic devices using DARPA expertise. If we can provide worldwide health care for military dependents …

    .. then you're going to have to explain why we cannot do that for others….in need of care….

    you even cite county hospitals as providing clinics..

    well.. "county" is govt Accurate.

    who do you think decided to provide that clinic – private industry?

  43. Larry:

    Your views on the problems with the health care system and examples of its failings are right on. Thank you for your many posts on this string in support of rational and fact based consideration of the issues involved.

    EMR agrees with a lot of your suggestions such as cutting the cost of Medicare by having a sliding scale for payments and more freedom to sort out what tests are really needed.

    You and Peter are right about the lack of transparency and understanding of the system.

    But in the long run, there is no way to "fix" the existing system.

    This is another example of the need for Fundamental Transformation or COLLAPSE.

    A better way to go would be Regional health care systems — REAL Regions, not phony state or federal 'districts.'

    Competiton comes from Community Hospitals, Village Clinics and Neighborhood Health Networks within each Region meeting quality and cost criteria that reflect nation-state-wide standards.

    Fund health care with:

    Fees that reflect both wealth of patient AND how much they have done to maintain their health. If one chooses risky behaviors then they pay a higher percentage (up to 100 percent) of the total costs.

    Fees on food products that cause health problems (e.g. foods with levels of salt, sugar and fat that can be expected to produce obesity) see Kestler "The End of Overeating."

    Taxes on nicotine, caffeine, alcohol, and all recreational drugs.

    In addition to providing health care the Regional system should also provide wellness care — sponsor recreation and sports activites to foster health humans.


  44. Oops:

    David A. Kessler, MD is the author of "The End of Overeating."

    Where does private competion come into this strategy for functional health care?

    Every doctor is an Enterprise.

    End this foolishness of 'medical Enterprises' that hire lawyers and MBAs and lobbiest to figure out ways to game the dysfunctional system and end up with things like four times the number of square feet of medical space about which EMR has written before.

    And Big Pharm? Regional Pharm with no investers from outside the Region. Let the 'investers' look the citizens they sell unneeded meds to in the eye at church / synagog / mosque next week.

    Economies of scale help Enterprises, not citizens.


  45. "I disagree with you about Amtrack, the PO, etc. We should hold them to the same standard that we hold private companies to. "

    And you were doing so well up to that point.

    If you hold them to the same standard as private companies, they would go bankrupt. There are some things that are worth doing even though you cannot make them pay, based on direct user fees alone.

    That is one reason we have government. But it is a little thing that my conservative, no-government friends overlook. A straight business model makes no sense for government. Government can afford to and has reason to support systems where the total system provides a net benefit: there are benefits to people other than the direct users.

    But, government also has an obligaion to protect peoples property. Therefore, even if a system represents a net benefit government may not be able to support it if it causes too great a transfer of wealth.

    Conservatives think ANY transfer of wealth is bad, and therfore ANY kind of government subsidy is bad, even for services as basic as the post office.

    The argument I make here is two-fold. First, we need to do a much better job of analysing and measuring system benefits, so that we can tell what is worth doing and what isn't. Second, we need to do a better, more creative job of integrating the market into political decisions.

    We make better decisions whne we have to pay the price, and we know what that is. The conservative position is that bureaucrats are not sufficiently accountable, and that is (one reason) why we have bad government.


  46. Larry claims that the Europeans have made a conscious decision to fund rail travel, even though it does not pay. Or else they have decided that it does pay, but in ways that the traveler should not have to pay for.

    I dunno what the average European thinks about this. What I do know is that the European rail system and road system cost about an equal amount, and yet the road system carries far more travelers. On that basis alone it would appear that they are not getting the most transportation for their Euros. But for the total system we just do not know what the total system costs and system benefits are.

    We ought to be able to do a better job of finding out, rather than just decalaring victory, as Larry has done.

    And once we know THAT, then we can set about doing a better job of protecting people's property equally, which is what the conservative beef seems to be about.

    I don't see nay point in a statement that starts off, "I disagree with you." The correct approach, it seems to me is to ask the question, "How do we go about seeking the information that is so incontrovertible that we both must agree with it? What would it take to convince you of the truth of X?"

    Rather than start off with a bald face claim that Amtrak and PO should be held to the same standard as privqte companies, we ought ot agree on what standard they should be held to, and then work on that. Suppose we find out that the private company standard does not lead to the best outcome for all? Suppose we find out that such a standard leads to a worse outcome than what we have now?

    Suppose we find out that the private company standard leads to excess concentration of wealth precisely because it does NOT do what government is supposed to do: protect people's property equally.

    If we had PROOF of that, then we could undo things, just as we can undo Obamacare, if it turns out as bad as the Republicans predict.

    Now is the time to set up yaredsticks so we can find out, and we need to agree on how long those yardsticks are, before we set about measuring with them.

    Rather than "I disagree", "Here is what it would take for both of us to agree." or even, "Go right ahead, but let's at least agree on what would amount to a failure, and set standards for that."

    Suppose we find out that under the new plan everyone pays more and because of that we have still more uninsured, but despite that longevity and infant mortality are improved. Is that a success or a failure?


  47. "The govt does it, as bad as it might do it, when it is demonstrated that pvt industry cannot or will not do it.

    this describes our health care system and you've taken a idealogical position that is non-responsive to the issue."

    It seems to me that Larry is spot on here.

    For example, pointing out how bad other systems are dose nothing to improve our system ( andespecially when the examples given are false or distorted).

    Republicans have made it clear they are not interested in and willnot participate in anything that involves improving health care or reforming health insurance.

    What they want is to see Obama fail.


  48. "Economies of scale help Enterprises, not citizens."


    Thanks to WalMart I can buy jeans today at a fraction of th eprice I could buy them thirty years ago.

    Sure, WalMart makes money. The way they do it is by helping citizens out. These citizens are voting with their wallet and 99%+ of them have voted for WalMart at one time they made an elective purchase or another.

    This kind of statement is an oxymorohomily, a false platitiude.

    How do they make all that money unless they are doing something people are willing to pay for?

    And where does that put Amtrak?


  49. "Taxes on nicotine, caffeine, alcohol, and all recreational drugs."

    Make a note, EMR is in favor of legalizing recreational drugs.

    Good plan, that way we will be so stupefied we won't notice when he takes over control of the rest of our lives.


  50. re: European rail. They treat rail like we do airlines, schools, libraries, jails, etc.

    they believe that rail mobility is a taxpayer-provided service just as the others.

    they don't see rail having to pay for itself any more than schools or jails or libraries paying for themselves.

    Places like NYC could not function without it's rail system and even those who go on and on about it "not paying for itself" will (in their weaker moments) admit this.

    Again – I'm all about consistency of a persons view.

    You cannot jump up and down about transit not paying for itself and then turn right around and say that it is needed.

    Well you can.. but you lose points big time.

    A large majority of the American public has no problem with rail and transit. They support it – even subsidized – just like their counterparts in Europe and Japan do.

  51. re: post office

    the post office won't go bankrupt no more than UPS or Fed Ex will.

    The post office will raise it's raise until it covers it's expenses.

    If you want to tell me that if they do that, their service will become too expensive, I'll laugh in your face.

    tell me how much is too much to charge for a letter that can go coast to coast in usually 3 days or so.

    What should we be charging for first class mail? Got a clue?

    try sending that same letter via Fed Ex or UPS for less than a buck.

    rank the private post office systems in the world according to value. Where does ours rank?

    the folks who say this have ZIP for evidence.

    Every time the Postal Service tries to do their version of a BRAC – all those folks spending time yammering about how incompetent the government is scream bloody murder.

    I am not an Obama supporter.

  52. There is nothing inconsistent in my statements. What I say is that you cannot make the argument that autos do not pay their own way and then expect them to ALSO pay the way for transit which does not pay anything like its own way, either.

    THAT is illogical and inconsistent, but that is the argument that is frequently made.

    In fact, what I am arguing for is more consistent arguments and measures of worth that are MORE comprehensive, to the point that the one or the other or both arguments are seen for what they are – stupid.

    Even New York only handles around 10% of its traffic via rail, so while places like New York can't operate without rail, neither can they operate without cars. And anyway, how many places are there like New York? Are we to assume that we need to build MORE places like New York, just so we can justify spending billions on a transport system that carries 10% of traffic?

    Instead of assuming that I am the enemy, and putting words in my mouth or presuming that I have some agenda, you ought to try listening to what I have to say.

    It is really pretty simple. The government has an obligation to protect everyone's property equally. The government is able to do some things that benefit everyone that private business cannot do, and that means they sometimes have to step on people's property. If there is a real benefit then the people who get stepped on can be compensated without making anyone else worse off.

    It isn't always easy to see how you do that, but it can be done, if we insist.

    All too often, some people are willing to use governement to AVOID doing what is just and fair and honest. They do it to gain an unfair property advantage. We should call such people what they are: dishonest crooks.

    Out of self preservation, wehshould disavow all such people and insist on government that is fair, transparent, predictable, and speedy.

    In the present political atmosphere the category of dishonest crooks seems to include both political parties – each side pushing a philosophical agenda in pursuit of power instead of a rational agenda of success oriented activities.

    So don't talk to me about trains vs cars and which one pay s its way and which one doesn't. It is ridiculous. We need the best transport system we can figure out how to build – all things and all modes considered.

    All I said about Europe is that the plain and simple evidence is that they get more transportation for each auto dollar than they do for each rail dollar. By itself, that does NOT constitute all things considered.

    It does suggest that train advocates need some powerful and expensive benefits to justify rails 80% cost disadvantage as far as transportation goes. You cannot win that argument by flapping your hands and saying the benefits are intangible or not measurable.

  53. "A large majority of the American public has no problem with rail and transit. They support it – even subsidized – just like their counterparts in Europe and Japan do."

    This kind of argument is utterly meaningless. There is no way to justify rail transport for much of America. It will work in a few places.

    I have no idea what the public feeling is about what they spend on trains in Europe of Japan, and frankly , I doubt you do either. All we know that it is paid for.

    Since there is fundamentally no rail in the US and almost no one has experienced it, what basis have they got for saying they support it?

    And when you start taking huge sums of money out of their pocket, will they still suppport it.

    And finally if it happens, will they use it, or is the reason they support it is for the "other guy" so that it makes their drive a little easier, never mind the cost?

    I'm not against rail, but I am against building based on really, truly, lousy, and most probably false arguments.


  54. I never mentioned cars.

    All I said was that rail is considered a necessary taxpayer provided service in many countries and in urban areas in this country.

    this has nothing to do with cars in that context.

    The Europeans do not see it as a contest between rail and car.

    They think both have their uses and both are needed and both should be paid for with taxes as well as user fees.

    there are some mobilities that cars cannot do well and there are some that rail/transit does not do well but there are also, in each case, things they do very well and most urban and urbanized areas want the mix.

  55. this is the future for Medicare:

    Medicare Premiums to Rise 15 Percent as Costs Jump

    " Among those who face higher premiums next year are new Medicare beneficiaries, high-income people and those whose Medicare premiums are paid by Medicaid. Premiums can be as high as $353.60 a month, or more than $4,200 a year, for Medicare beneficiaries who file tax returns with adjusted gross income greater than $214,000 for an individual or $428,000 for a couple."


    this is the way it has to be – or some version of it – if Medicare is to be kept from going – not going broke – that's the wrong term – from requiring additional subsidies from the general fund.

    as costs escalate – it will inevitably lead to higher premiums, higher co-pays, probably deductibles and so on and so forth with emphasis on treatments and procedures that are elective in nature.

    In order to keep Medicare – there will be no choice but to squeeze it harder to tighten it.

    But as I've been saying – that's going to be exactly what pvt heathcare is going to do also.

    the primary difference is that Medicare cannot cut costs by getting rid of the more expensive users and pvt industry can.

    so.. in a sense.. all things being more or less equal – the primary difference is this requirement to not get rid of people – and this essentially becomes the cost driver that results in some people saying that because Medicare cannot control THIS cost – it proves that the govt is incompetent.

    and conversely, pvt healthcare IS competent because they WILL control costs (not true as we have seen but this is the premise when comparing it to the govt)… anyhow.. pvt healthcare controls costs better than the govt – because they can ruthlessly dump anyone who a prolifigate user of medical care.

    but here's the reality. They don't get rid of them.

    They walk to the ER of the hospital – usually when their condition has worsened significantly and requires, even beyond the basic ER care, heroic and expensive last-ditch efforts to bring them back and that cost goes right back to the people paying premiums for pvt healthcare –

    this being the same people who say " Govt – keep your hands off of my health care"

    .. which is stupideze for … " yes.. leave my pvt healthcare company alone so they can double my premiums over the next 10 years"

    " I'd rather do that – than for me to pay one penny for those who don't deserve "free health care".

    this is what this conversation really is if you step back and listen .. clear out the anti-Obama and anti-Govt smoke screen – and get down to the essence.

    there is a substantial number of them who believe that many, if not most of the folks without health care deserve to be without it and that those who have it – have it because they deserve to have it.

    This is why much of the conversation focuses on "illegals" an those who choose to go without it and those who are just plain irresponsible.

    Most of us would not walk away from a person hurt on the side of the road … we'd screech to a stop and call 911 but apparently more than a few of us will indeed walk away from that same person if they are in a bedroom 10 houses down from us – hurt and out of options.

    This has been going on for more than 16 years and this year, the latest in the blame game de-jure is a 10 month President.

  56. They think both have their uses and both are needed and both should be paid for with taxes as well as user fees.

    there are some mobilities that cars cannot do well and there are some that rail/transit does not do well but there are also, in each case, things they do very well and most urban and urbanized areas want the mix.


    Agreed. Now all we need to do is understand, exacty, what it is that rail brings to the table that makes it worth four times as much per trip.

    Once we understand that, we can quantify it and use that information to make rational choices as to how to spend our next transprotation dollar.

    I don;t think we can assume that Europe has the right mix or that the same mix is economically attractive in the US.

    Right now we seem to be working on the basis that rail is good, whith the consequence that ozens of proposed rail projects are chasing enough money to do a decent study on onoe of them.


  57. They think both have their uses and both are needed and both should be paid for with taxes as well as user fees.

    there are some mobilities that cars cannot do well and there are some that rail/transit does not do well but there are also, in each case, things they do very well and most urban and urbanized areas want the mix.


    Agreed. Now all we need to do is understand, exacty, what it is that rail brings to the table that makes it worth four times as much per trip.

    Once we understand that, we can quantify it and use that information to make rational choices as to how to spend our next transprotation dollar.

    I don;t think we can assume that Europe has the right mix or that the same mix is economically attractive in the US.

    Right now we seem to be working on the basis that rail is good, whith the consequence that ozens of proposed rail projects are chasing enough money to do a decent study on onoe of them.


  58. "Passenger Focus polled 754 passengers on the Arriva Trains Wales network as part of the its autumn 2008 National Passenger Survey (NPS).

    The survey asked people to rate several factors including station facilities, car parking, the availability and helpfulness of staff, punctuality of trains and ticket value for money.

    The survey found passengers' satisfaction had declined in some areas from the time of a previous survey in autumn 2006, including in ticket buying facilities, the availability of staff at stations and the frequency of trains.

    However there were rises in the satisfaction rates in the availability of parking facilities and on-train toilet facilities.

    Simon Pickering, Passenger Focus manager for Wales, said: "It is clear that while certain areas have improved, services and facilities at stations are still short of passengers expectations."

    BBC news


    I catch at least 2 trains a day and have never completed a survey… If I did my score would show the truth.. the fact that I pay over £600 a year for a ticket and rarely get a seat makes me very unsatisfied!

    Stephen James, Cardiff


    Arriva Trains Wales remain one of the worst operators in Europe…the whole of the uk rail network needs pulling into the 21st century. That applies to rolling stock (which is seeing improvement) and outdated timetabling (what's with winter/summer and Sunday times – do we do things differently in these periods – we do if we want to use public transport).



    when i get the train from shrewsbury it is always never on time when i need to be in welshpool at a certain time. something has got to be done now.

    mikey cairns, welshpool

    I have been commuting to Cardiff every day for the last nine years and do not believe there is anything to be satisfied about. There are no facilities at all at my station, only a tiny, draughty 'bus stop' type shelter, and despite all trains having to travel through it, they only stop here once every two hours. The trains are frequently late or cancelled, and no other provisions are made, so while the passengers at my station are waiting for our train to arrive, we all have to stand and watch other trains go straight through, having stopped at the station before and which will be stopping at the station after, just not our station.

    A Williams, Pontypool, Wales


  59. "It is about the price paid that the largest proportions of Europeans are unsatisfied.
    45.9% share this view about the rail services between cities,
    whilst only 41.6% are satisfied with this service."


  60. no. wrong again. you still see this as a contest between the two modes.

    Your question is akin to asking why we would should pay twice as much as education …or 1/2 as much – compared to what?

    or comparing electricity to water/sewer in terms of cost benefits.

    you don't have anyway to truly quantify it – and not with roads either except in your own mind.

    If your approach was correct, wouldn't the FTA not be using it's current criteria for cost-effectiveness?

    Have you actually looked at how they do this? You ought to.

    they have a regime/protocol that produces a threshold for cost-effectiveness but it has nothing to do with comparing rail to roads.

    At the least – you should be able to say WHY you disagree with the FTA's approach rather than just summarily dismissing it as wrong because your way is right (sic).

  61. you need to provide reference links.. not doing that raises questions about what you are intending to accomplish by posting these things – at least in my mind.

    Post the links please.

  62. "Abstract:
    Competing values complicate debates on the reform of public services. Attention for competition and efficiency is balanced by concerns for equity and universality in service delivery. These potential value conflicts are best visible in the reform of services of general interest. Despite debates at the European and the national level, current research on services of general interest has been limited to scholars in law and economics. Citizens' opinion on the guiding principles of service delivery is generally disregarded. In this article, we analyze a number of Eurobarometer surveys dealing with services of general interest, as well as a general survey of citizens' perceptions of the public sector in Belgium. We delineate clusters of citizens' public service delivery value orientations, and show that one-sided or ideology-based reform strategies probably negate many of the continuing dilemmas in public service delivery. "

    "The impact of public serice Values on Services of General Interest Reform Debates


    "…one-sided or ideology-based reform strategies probably negate many of the continuing dilemmas in public service delivery. "

    Well, imagine that.


  63. "…one-sided or ideology-based reform strategies probably negate many of the continuing dilemmas in public service delivery. "

    where are your links?

  64. "Those going by direct buses were more pleased with travel time, punctuality and comfort than those using various rail services. The biggest difference in customer satisfaction regarded punctuality: The direct buses received an average score of 4.0 whe the rail services received 1.6 on a five poing satisfaction scale.

    About 50% of the residents were delayed at least a few times per week when travelling by public transport.

    Hypothetical choices revealed valutaions as followed:

    One extra change was valued as 5-15 min travel time
    "Often 5-10 delay" was valued as 25 min travel time
    The time value was estimated to SEK 12-16 per hour (based on monthly cards)
    There was no significant preference for train or bus
    High comfort with reclining seats, air conditioning and individual reading lamps was valued as 12 minutes travel time.
    The travel mode seems to be chosen mainly on criteria as travel time, number of changes and comfort."

    From a survey following the stockholm congestion charging survey.


    Imagine that, they back calculated the cost of travel time as revealed by the choices customers made.

    Oh, yeah, and they preferred the buses to the trains.


  65. The Commission's 2001 White Paper on Transport aspired to change the direction of EU transport policy to deal with the increasing challenges of congestion, noise pollution and accidents, largely caused by excessive use of the private car.

    It aimed to break the link between growth in transport and economic growth by urging a shift towards more sustainable transport modes (inter-modality), such as railways and water transport, and promoting the modernisation of public transport (see LinksDossier on Transport White Paper).

    But, with the continued rise in transport demand, the Commission's mid-term review of the White Paper, adopted in June 2006, shifts the focus from curbing overall transport growth to "decoupling of transport growth from its negative effects". It notably emphasises the concept of "co-modality", whereby each transport mode is optimised and integrated into efficient logistics chains.


    In other words, the european commission has concluded that their previous emphasis on public transport has failed and now recognize that the yneed to accept the auto and a more integrated transport plan.


  66. re: Stockholm survey

    where are your links?

    what part of it says that the public rejects rail and transit as options and want more roads?

    once again.. you're off to cherry-picking from larger contexts.

    not good guy.

    show me the report that says a major urban area has concluded that cars are more cost-effective and rail and transit need to be abandoned.

    have you found it yet?

    I know you look all the time.. but what you report back with is crumbs and even those are usually select excerpts where you exclude the larger context and conclusions.

    just FYI – Ray – taking polls about the public's attitude about transportation – does not mean that the public giving the answers don't want rail and transit – unless they ask that specific question and the answer is clear and unambiguous.

    ferreting through such polls that ask questions about attitudes about services and attempting to use them to demonstrate that the public doesn't like or want rail or transit is not going to get you the truth.. but only what you want to believe….

    this is my last post here because this threat is about health care..

    why don't you wait until another transportation thread is posted and in the mean time save your ammunition until then?

    but as always, I want to see your links.. trust – but verify – the info

  67. "Over the last three weeks, I have tried to put together figures for a hypothetical high-speed rail line between Dallas and Houston. A link between Dallas and Houston is not one of the designated corridors, but a link between the country’s fourth and sixth largest metropolitan areas is not obviously less sensible than many of the proposed links.

    In one blog post in this series, I estimated that if the rail link had the same ridership as all airlines now connecting the two cities (1.5 million), then annual costs would exceed the direct benefits to riders by $546 million. In another post, I estimated the environmental and other social benefits from 1.5 million riders to be $21.6 million, excluding the environmental costs of building the rail line.

    These numbers suggest that costs will exceed benefits each year by $524 million if the rail line has 1.5 million customers, and by $401 million if the region’s rail demand has a huge rate of growth and attracts three million riders. "

    from an article by Ed Glaeser


  68. "The engineering of HSR is complicated but its economics is very simple. High proportion of
    fixed and sunk costs, indivisibilities, long life and asset specificity make this public investment risky,
    with a very wide range of values for the average cost per passenger-trip. The social profitability of
    investing public money in this technology depends in principle on the volume of demand to be
    transported and the incremental user benefit with respect to available competing alternatives.
    The lack of private participation in HSR projects increases the risk of losing money; or
    reworded in more precise terms, of losing the net benefits in the best alternative use of public funds.

    The Economic Effects of
    High Speed Rail Investment
    Ginés DE RUS
    University of Las Palmas

    RH (Emphasis mine.

  69. "show me the report that says a major urban area has concluded that cars are more cost-effective and rail and transit need to be abandoned.

    have you found it yet?"


    Nope, never suggested there was such a thing. Have you got th eone that says trans are ore cost effective and cars need to be abandoned?

    Here is what I do have, a report that measured the eternal benefits of rail transport in five European cities and one US city. This is the amount non-users are willing to pay for transit even though they don't use it themeselves, including the amount extra they pay to leive near a transit station.

    The answer?

    $56 per house hold per year up to $106 Euros per year per household.


  70. I know you look all the time.. but what you report back with is crumbs and even those are usually select excerpts where you exclude the larger context and conclusions.


    Not really. In this case I looked at a doezen articles, and I made no effort to select those that had a negative bias. There was one article from a rail transport promotion article which made a number of good claims but they were made as unsupported generalities pinting to the conclusion that "rail is good".

    In other words, I think it is a fair sample of what is out there. What we know from this is that there are at least some users who are unsatisfied.

    We also learn that the European rail system is not unified: they use different electric and signal systems, and sometimed different track guages.

    I try to provide the source so anyone interested can go look to see if I am unfairly biasing things. In this case, I don't think I am.

    I'm like Glaeser: I would love to see a better answer for trains. I like trains. But I don't beleive the answer is there.


  71. what part of it says that the public rejects rail and transit as options and want more roads?


    I never said it said that. Part of the Stockholm experiment included expanded mass transit, including high speed buses.

    The article just says that people preferred the buses to the trains. Apparently they were more prompt and went to more places, even if they were slower than the trains.

    Instead of jumping down my throat, accept it for what it is. Search on part of the quote and the report will come up.

    You could do this your self if you were willing to, instead of simply and baldly asserting that Europeans love their trains and they will pay any amount to support them.


  72. That part in bold from the university of sapin could have been written by me.

    What alternative use of funds buys us the most public benefit? That is the only question I am asking and the only one worth asking. Part two of the question is that providing you hae a good public benefit, how do you ensure that it is fairly paid for?


  73. Let's put it this way, if it comes down to 800 billion for health care or 800 billion for trains, I'll take health care.


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