Three little observations in this informal post.

One – more anecdotes in the never-ending story of medical pricing transgressions from reasonability.

The nurses at Alta Bates Medical Center are on strike again! They will spare no efforts in their mission to bring better care to patients, as their picket signs proclaim. That has to be their motivation. The logic is inescapable: happy employees produce the best work, and how better to make them happy than to pay an average wage of $138,000, with top earners making $295,000? And in the bargain they get the extra kick of besting their eternal rivals, the physicians. That must really make them happy.

I received my billing information for visiting an ENT doctor to check on my nose bleeds after my surgery. We waited two hours (by the clock, two hours), he spent no more 10 or 15 minutes with me, stuck a fiber optic device up my nose to view it better, finding no specific lesion and a slightly deviated septum. He billed for a new patient visit at the intermediate level – absurd, as he hardly asked me anything at all and they collected no significant history – and for the procedure, which as I said, was only slightly more advanced than looking at ears through an otoscope. He billed a total of $500 and got paid $349.65. That’s a lot of money for a brief visit. I should have billed him more for the 2 hour wait.

Finally, my friend and colleague Charley Woodard told me about a patient who was referred to Alameda Hospital for a basic x-ray of an arm, I think it was. Charge - $1,400, and the insurance paid it.

Reflection on these anecdotes: there are many fancy ideas of how to fix medical costs, how to make things more efficient, etc. I hope a lot of these ideas wind up working. But the heart of it is, so many people charge too much and no one can stop them, it seems. The prime component of increasing medical costs is hospital costs, and 30% of hospital costs are nursing costs. Is anyone up to challenging the nurses? Do we need a Margaret Thatcher? Reagan put it to the air traffic controllers. Who can put it to the nurses? I love a good nurse, and I found my care excellent last August. But there is a right price for everything, and these prices I’ve cited are not the right prices.

Medicare has actually been pretty effective in going after one specialty after another – last hit was cardiology, as I understand it. The ROAD to wealth in medicine is now said to be Radiology, Ophthalmology, Anesthesiology, and Dermatology. That seems to be a pretty good agenda to me.

We need a government with guts. Sure won’t find it with Obama.


Which brings us to item number two, politics. We’re in the middle of the Iowa caucus season. The whole Republican panoply of ignorance and incompetence has been remarkable. I can only believe that the majority of those running don’t expect to win, but hope that their publicity will lead to enhanced speaking fees. What a racket.

The very ordinary Mitt Romney is not certifiably stupid or insane, and thus stands out. Most of the others will fall of their own weight; some, like Gingrich, have needed to be shot down by a healthy airing of the facts.

But what a dispiriting prospect -- the ineffectual Obama facing a fairly empty suit, Mitt Romney. The Days of the Pygmies have arrived. I believe in the economic analysis of Paul Krugman, and all the contenders are still bowing to the convention of let’s try austerity – for everyone else, that is, since all the proponents are pretty well fixed themselves. Dispiriting.


Finally, number three, the role of war in economics. Everyone talks about the causes of the economic decline as due to so many complicated things. Then they add at the end, “And fighting two wars without paying for them doesn’t help.” I’m wondering, aren’t the wars more important than a postscript? Yes, the mortgages and CDO’s and CDS’s and the housing bubble and the smothering of the middle and working classes and the Bush tax cuts and everything else, yes, they are all too true. Too true.

But isn’t war the ultimate wasting of resources? War made sense for Hitler, I was reading in “1938: Hitler’s Gamble,” by Giles MacDonogh. They kept running out of money to finance the war machine, so annexing Austria and absorbing Czechoslovakia and taking their treasuries and their factories, and taking all the assets of the Jews made sense (until they found out that they couldn’t run all those businesses they took over, and the money stopped.) The great Aaron Wildavsky said, “Never do anything for just one reason,” and the Nazis followed that advice. They wanted to get rid of the Jews because they hated them, but they also wanted their wealth. Two reasons added up to a policy.

War also made sense for the Romans, who absorbed the territory, awarded the lands to their generals and others, and reaped the taxes. War can make economic sense.

But our wars in Iraq and Afganistan? It’s pure outgo and no income. When you spend a lot of money and get nothing in return, isn’t relative impoverishment the inevitable result?

I’sn’t that what happened in the 1970’s, the time of stagflation? I forget how much the Vietnam War cost, but it was another fruitless expenditure. When you spend a lot of money and get nothing for it, aren’t you going to suffer economically?

World War II was a war of total necessity, and is praised in economics for getting us out of the Depression by pump-priming, after Roosevelt mistakenly adopted austerity in 1937. We paid wages and manufacturing costs for product that was not exchangeable (war-making), but was necessary. Everyone was amazed that the post-war period did not bring inflation, but instead sustained and orderly growth. What makes that period different from the 1970’s and the present?

I would nominate the spirit of victory, as well as and the foresightedness of the government with the GI Bill and the Marshall Plan, expenditures that would result in increased productivity. That’s what we need now, government investments in education, infrastructure, and technology, to prime the pump now and to yield increased productivity in the future. We also need severe regulation of the financial world, and measures to repair the financial health of banking and mortgaging victims. But with no spirit of victory and no confidence, retrenchment is all the country can come up with, which is bad news.

Anyway, that’s what I think. Bad wars lead to bad economics. If you win a war and get money and territory, that can work. If you win a war and gain confidence and spend money in real investment, that can work. But if you lose a war, or don’t win it, and there is no spirit of victory and no confidence that investment can yield fruit, stagnation is the result, or worse. That’s where we are.

Happy New Year!

Budd Shenkin