Saturday, January 31, 2009

Marx, Capitalism, and The Second Depression

Marx was so prolific and so opinionated and so emotional that not only was he powerful, but he has also been very hard to digest. Also, virtually no one, including me, reads Das Capital - kind of like Wealth of Nations. We all know something about it - widgets for WON, maybe Labor Theory of Value for DC, if that's where it comes from - but we know most of what we know from rumor.

But, even with the difficulty of knowing only by rumor rather than having read the original, let me venture an observation on the present crisis. It is this: Marx predicted that capitalism would inexorably have blow offs and crises, and that capitalism would lead to the increasing degradation of the proletariat. (He then gave a roadmap to utopia, but let's not discuss that.) What he failed to consider was the ameliorative policies that capitalist government would come up with. One part of the amelioration is regulation. Another is what people would call wealth-redistribution, which I have no problem with, but which is a derogatory word in the minds of the untutored.

So, I think you see where I am going with this. Governments have since Marx come up with a great many ameliorative policies, from Bismarck's time to the present. The state intervenes to cushion the swings and preserve the system, and also to prevent the degradation of the proletariat. The state recognizes the need for unions for extra-state cushioning, as an example. It regulates stock offerings, the functions of capitalistic institutions, all so that the marketplace will operate in a functional manner. There need to be rules.

so if we see extreme ups and downs in the business cycle, we should look for the absence of counter-balancing forces. We certainly see too far up and too far down now. There can be no better indicator that counter-balancing forces have been stripped away.

One measure stripped away would be the Glass-Steagall Act of 1933, which separated deposit banking from investment banking. From Wikipedia: Provisions that prohibit a bank holding company from owning other financial companies were repealed on November 12, 1999, by the Gramm-Leach-Bliley Act, which passed the U.S. Senate in one form on a party-line vote of 54 (53 Republicans and 1 Democrat) to 44 (all Democrats) and on a 343-86 vote in a different form in the House of Representatives, before being resolved by a joint conference committee; the conference report was approved by both houses of Congress (Senate: 90-8-1, House: 362-57-15) and signed by President Bill Clinton.[2][3] We have seen where this has led.

Another was regulation by the SEC. This function was virtually eliminated over the past decade, much to the joy of Bernard Madoff, it seems.

There are many others that I can't name offhand but you might well be able to.

So, the point is that stripping away the ameliorative functions of the state to reveal the naked effects of capitalism have led us to a situation which Marx would recognize. He was right, and it would have been nice for ignoranti like Phil Gramm, pretender to wisdom but purveyor of ignorance, to have recognized. It would have been nice for the Clintons not to have been carrying water for the banks. It would have been nice.

Not that deregulation is a bad thing per se. Regulation can go way to far, can be far too interventive for little reason, and can be counterproductive. I personally am no fan of unions, having seen unions of nurses and hospital workers up close. No question. But the ignorant and greedy stripped away far too much.

Now we are in unknown territory again, as we were in the 1930's. Roosevelt knew he would have to innovate and experiment, and discard what didn't work. Experimentation is good and exciting, but in the face of such suffering, it's not a necessity we should be faced with. We can lay this necessity not only at the greedy -- that's to be assumed, after all, that's why we have regulation -- but at the evil and the ignorant. I cite Phil Gramm as the typical persona behind whom many others lurk because he is prominent and particularly disagreeable. He is a symbol that Marx would recognize. And, unfortunately, this is a situation he would recognize.

Budd Shenkin

Sunday, January 25, 2009

What to do with Medicaid

This post presents a short prescription for a near term proposed policy change for Medicaid. I give a short history of Medicaid for the general reader; the sophisticated health care reader can just skip to the end where I have recommendations.

Medicaid, Title XIX of the Social Security Act, which funds health care for the poor, has a long and tortured history. It was originally passed, believe it or not, as an unintended consequence of lobbying by the AMA. In objecting to Medicare (which became Title XVIII) because of its being a social insurance program, where everyone would pay in and everyone would be covered, the AMA proposed that a better program would be needs-based, and respect the importance of free choice of physician, and the importance of private practice.

The great Wilbur Mills of Arkansas, Chairman of the House Ways and Means Committee, a wily one, then said to them that he accepted their argument. But, he said, let's also respect the views of the Medicare advocates, and have two programs, a health care sandwich, with Medicare for the elderly and Medicaid for the poor. Medicare would be a federal social insurance program funded by payroll deductions; Medicaid would be a federal-state needs-based program funded by general revenues. Since all the poor could not be covered, income status would be combined with categories such as maternal and child health, and the disabled, linked to welfare categories, so a fair number of the poor would be covered, but not all. And so it happened.

Fast forward forty-five years. Health care costs have soared as few organizational innovations have worked to rationalize the care process. Both programs are floundering on the issue of costs. Because states can set the level of payment for Medicaid providers at whatever level they desire, and few physician groups have been able to have influence, few states have levels of payment that can support practices, which consequently opt out. The initial promise of free choice of physician with the poor then enjoying the same level of care as private patients, has been severely compromised. But the importance of Medicaid is high, since it covers about one-third of children in the United States. Nonetheless, since disabled adults are also included under Medicaid, a great bulk of Medicaid payments go to their very high expenses, and children receive a smaller and smaller proportion of Medicaid dollars.

In the early 70's another program was added, EPSDT, or Early and Periodic Screening, Diagnosis and Treatment. The theory was that if special funds were available to look at kids and examine them, more of this would be done. It was a stupid concept from the beginning, since there was no thought of how this would actually work - I know, I was there in Washington at the inception. But because it was another pot of money for caring for poor kids, no one really opposed it. As of now, it is simply a supplemental source of money that practices can bill for when they do their well child visits, do a lot more paper work, and get paid some extra money.

It is important to distinguish two words: "coverage" and "access." It is easy to "cover" a population - just make them eligible at a given income level. But where the rubber hits the road is the level of payments to providers. Make this low enough, and no one will sign up for the program, no one will "take Medicaid," and "coverage" is chimerical. Patients will be covered, but there will be no provider to actually provide the care.

Add one more wrinkle. Prior to the creation of Medicare and Medicaid hospitals and health departments ran clinics for the poor. There was no charge for patients, and often the doctors worked for free as part of their civic duty. In the 1960's "community clinics" appeared, often involving the ideology of community control, and the medical ideology of group practice. These were funded by OEO initially, then the U.S Public Health Service, and then other groups. They succeeded in being seen as idealistic and avoiding the opprobrium of charity. They received separate funding from the federal government that exceeded that of Medicaid - often they would receive Medicaid funding and then be topped off by extra payments to cover their "costs." These costs might have been higher than private practice costs, not only because of difference in efficiency, but the clinics also would accept those ineligible for Medicaid, and they might offer additional services.

Now, a short observation on what has happened in Medicaid here in Alameda County over the past 13 years. Originally, we were funded by Medicaid on a fee for service basis. The payments were very low, but in Alameda County 2/3 of pediatric patients were served by private practices. There were county clinics and free-standing independent clinics as well, the latter receiving the extra funds to supplement their Medicaid payments.

Enter managed care. By state mandate, each county had to have two programs, one by the county (Local Initiative) and one by a private insurance company, that would be available for patients to sign up for, and available for both clinics and private practices to become providers for. Amazingly, it worked. The Local Initiative with groups of local physicians and set their capitated fees at a rate reasonable for that time. Blue Cross, the private competitor, did not set their fees at a reasonable level, but with time and physician defections, eventually became competitive and even exceeded the levels of the Local Initiative. Amazingly, under this capitated arrangement, the physicians were paid much more than they used to be paid under straight fee for service while rendering the same care, and the state reduced its payments overall. It is still not understood where the money had been wasted under the previous system, and how the new managed care system had improved things. One thing for sure - patients were served better, not worse, than previously.

So, here is our present situation. The states have had trouble funding Medicaid for many years now. With Depression II looming, the financial embarrassment of states is becoming severe and acute. Medicaid is one of their biggest headaches; they just can't fund it. Since Medicaid is run through the states, levels of payment and care vary drastically. In California, levels of payment have sunk so low in many areas that access to care is not a practical reality - not Alameda County, but around the state where physicians are not organized and county health departments garner most of the money for their own bureaucratic and inefficient purposes. In other states with better physician organization - North Carolina, for instance - payment rates are up to 95% of Medicare rates, still poor, but bearable. In sum, though, Medicaid is a program that pays few providers enough to thrive, but costs enough to break the back of state governments.

This is the time for reform. Here is what I would do right now if I could, and I recommend this to policy makers:

1. Federalize the program; deal the states out. The governors would welcome this; Medicaid has become one of their number one headaches. Make payment somewhat regionally dependent, but view health care as a right, much like civil rights, and eliminate the depredations of some states (like mine, California.) It would also mean that efforts to influence the program could be centralized, and we wouldn't have to have 50 separate efforts like the one in North Carolina.

2. Eliminate EPSDT and fold the funding into Medicaid. There is no evidence I am aware of that validates EPSDT (called CHDP here in California) as helping anyone, except insofar as it forms another pot of money to fund and from which to draw. It adds more layers of administration, and at least as we experience it, lots of worthless paperwork.

3. Make it a principal to consider "access" along with "coverage." This would mean that before the government extended the reach of Medicaid recipients, payment levels would have to be "adequate." This would mean, almost automatically, that the incomes of patients covered would be low enough that there wouldn't be a lot of "crowd out."

4. Separate pediatric Medicaid from adult Medicaid. These very separate efforts should have separate funding and separate ways to administer the program.

5. Allow and encourage local managing organizations of health care providers to run the programs. I have mentioned previously the positive experience we have had in our local area with a group of pediatricians and pediatric specialists managing the delivery of care and the distribution of payments, credentialing, etc. This is the IPA model, which can really work well.

6. Eliminate the favoratism shown to Federally Qualified Health Clinics; make them play on the same field as private medicine. If there are special deals to be made for special programs - e.g., the Medical Home demonstrations, whatever - make these available to all.

I believe that all these proposals would be achievable in the near future, would markedly improve the program, and would be easily understandable to legislators. I believe that these proposals would also meet the need to lighten the load of state government financing. I believe that they would also decrease administrative overhead by eliminating multiple levels of bureaucracy.

-- Budd Shenkin

Sunday, January 11, 2009

Health Care for the Underserved

I've always been a well-meaning kind of guy. Hey, Jewish doctor, son of 30's Commies, from Philadelphia by way of Harvard, what would you expect? My father always targeted me to public health, motivated by a concoction of intentions. His own history mainly, I think. As an ambitious Jew in America he craved acceptance and prestige. It wasn't enough for him to be a successful neurosurgeon, because he wasn't a professor at Penn. He worked hard as a private practitioner in a working class hospital. His friends from med school had gone into public health and he envied their status, even if he made more money. He resented academics because he thought they "had it easy." He also competed with his younger friend Paul Korshin, a professor of English at Penn, because to be a cultured person, my dad said he had to know not only science and his profession, but everything a professor knew culturally as well. It must have been tough to compete all the time.

Anyway, his own complexity and that of my mother must have led to a lot of complexity of my own, as I sought to fulfill their own ambitions and to compete with them in the fields of unexpressed but well indicated ambition. "That's Phil Klein's house. It's beautiful, and he got it for a song." So now I have a beautiful beach house that we made money on the moment it was done. That's just the way we are.

So, health care for the underserved, as we euphemistically call them. When I was a younger doctor avoiding the draft in the Public Health Service, and doing what I wanted to do anyway, which was to work in government and run programs, I followed my mentors and believed in community health clinics. Not the old-fashioned clinics which didn't have any class or pizzazz to them. My Dad worked for a short time at the clinic run by a labor union in Philadelphia and then quit, saiying, I remember, they treat me like shit. Fuck them. OTD (out the door). Not that, but the new clinics with "community participation" or "community direction," figuring that this "redistribution of power" would unleash the power of the people and stop oppression. Lotsa luck, but this is what we were thinking about. The advanced text was Saul Alinsky. I would ask as we were urged to construct some funded by the PHS, in imitation of the Office of Economic Opportunity, I would say, Where is an example of one that is working. There were vague responses. But this was the late 60's.

So, I learned about these clinics and I learned about administration in the PHS and how things get done in organizations and how right people are when they point to the many many jobs that are taken by people in the bureaucracy that are worth nothing at all. And I came to be charged at the age of 28 with administration of the Migrant Health Program, with 8 million dollars of grants that then swelled unexpectedly under the Nixon administration to $14 million, I think, and there I was in charge, especially when John Frankel, DDS, who was supposed to mentor me had a heart attack. We wound up programming all the new money into health centers, not just giving it out to county health departments in rural areas, the way that they had done before.

So, that's background. (I can indulge myself in going on like this, I figure, since I'm sure there will be so few readers of this - a weak excuse perhaps, but why not?) Now, I've had nearly 30 years of experience building a private practice in the East Bay, where we have about 25% Medi-cal patients. We have lots of clinics in the East Bay around us. These Federally Qualified Health Centers get about 3 times what we get for each visit, because they get extra funds from the government who make up the Medi-cal payments to "cover the costs" of the clinics. Talk about an uneven playing field. So here I am, a veteran of the clinic movement who now operates on the other side.

So I see the government acting under the assumption that care for the underserved comes from clinics - which in our area it doesn't. It's a true statistic -- 2/3 of the kids on Medi-cal in Alameda County are served by our private practices. The patients get to choose, and this is where they go. Yet the government figures, let's make sure we give care to the poor - that means poverty clinics, right? So Bush gives more money for community clinics, and what will Obama do?

Here's what I say on our American Academy of Pediatrics listserve for SOAPM (Section on Administration and Practice Management):

In reading the sketchy information available about what Obama will do for health, I'm wondering how the eventual balance will come out between paying for the underserved to see us in our office, and paying more for community health centers.

In my past I was an advocate for community health centers, and I still think they often fill a vital role in areas that private practitioners will not easily go. Some inner cities, for instance, and rural areas such as the Rio Grande Valley where I personally was responsible for initiating several health centers in a former life.

On the other hand, Medicaid sought to guarantee equal access to quality health care for the underserved, and in areas such as where I practice at present, as I have mentioned before, 2/3 of poor patients choose to be served by private practitioners. So, while it would make sense I would think to set up and fully fund more clinics where they were needed, in areas such as ours, it would not make as much sense. (Obviously, these are competitors of me and my private practice colleagues - full disclosure.) In fact, what happens in our area is simply that the clinics are paid 2-3 times as much per visit as we are.

[Also, there is an interesting article in last month's Pediatrics, which asks the question, why are so many "community" referrals not completed by the patients? The not surprising answer - the "community services" are degrading, the patients are treated in a patronizing fashion, etc. So they don't go. So much for socialism, Russell.]

So what comes to mind is the same one that everyone is asking about the rush to inject funds into the economy by the government (which I fully support) -- how smart will the injection of funds be? How much will go to make Medicaid a real option for the poor, by making "coverage" equal "access," by bringing rates of pay up? Or how much will "coverage" not equal "access," but instead go wasted on bureaucracy, and in this case, be flung ideologically to stick on health centers that really should concentrate on being more competitive, rather than bureaucratically successful at garnering funds?

So, that's today's post.

Budd Shenkin
(written from Makena, Hawaii)

Thursday, January 1, 2009

Start of a Blog

Amazingly enough, it's true, a blog can start in about 10 minutes. Of course, given how I do things, it starts months before, thinking about it, getting around to it, imagining it, and doing something else in the meantime. But now, over a holiday season in 2008, because of judicious planning and some luck, I actually got everything done that I had scheduled myself to do, in time for the Rose Bowl. So here I sit, earphones on and listening to Buddy Holly, waiting for dinner in a little time, watching USC win again (much to Ann's chagrin, because after all, that's where her brother went to school), and generally feeling good.

So, blog, here you go. My aim is for 10 people (including me, so I guess it's already down to 9) to read it. Set achievable goals!

Topics - what I think about and know something about. Politics, health care, thought, not popular culture but our sociological culture, maybe even pediatrics. BGut what I reallyh like to do is to predict and see the prediction come true. Like, when I called the general election for Obama a few days before the Iowa caucuses, on the basis that I woke up one morning and thought that people were ready to turn the page, and Hillary wasn't turning the page.

Budd Shenkin