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Tuesday, June 30, 2009

California meltdown,0,7552895.story

Time for California to pay the piper. There is a theme here which is not unique to California. Why is California broke? It is rather simple. They are attempting to live beyond their means. The largess which the state of California desires to bestow is limited by the how much stuff (goods and services) are produced. No matter who is elected they cannot change the iron rule of scarcity. You cannot allocate and distribute what has not been produced.

Prosperity depends upon people getting up in the morning and being productive. You cannot legislate around this. The state of California is like many of its citizens(and this is certainly not unique to California). It has borrowed against the future to pay for wants in the present and the bill on the credit card has come due. Throughout the country citizens have pulled equity out of their home mortgages to pay be immediate enhancements on the assumption that their assets will be more valuable in the future and future borrowing against inflated asset values can be used indefinitely to pay for present consumption.

Governmental spending works the same way. There is a limit to how much you cna borrow against future earnings in terms of taxes to pay for current consumption. Otherwise the model for financial success would be unfettered borrowing. I believe we are seeing a financial tipping point analogous to when individual borrowers can no longer find entities to finance their unsustainable spending. When key states like California, Arizona, and New York insist on borrowing massive sums of money in order to close present budget gaps, who will lend them these funds if they are concerned about defaults? Is this where you want invest your retirement nest egg?

What will be the result of California issuing IOU's in lieu of payments for promises given? Who will be first in line to get paid? What happens to faith and trust when some do not get paid? The ripple effect will extend substantially beyond those directly impacted financially.

Sunday, June 28, 2009

Health care- needs vs. wants

Sometimes it is the simplest questions which needs to be asked to address the most complicated problems. The health care reform debate has a dizzying array of elements; economic, legal, moral, and practical. At the heart of the debate is a moral question- "is health care a right?"

In order to define whether health care is a legal right, it is essential to define what health care is. One can approach this question using general rules or by developing extensive menus of what and what does not fall under the category of health care. Either way, creation of a legal right to health care creates the requirement to standardize a menu of included and excluded services and context where the rules apply.

In order to develop such lists, we need to come to grips with a very fundamental issue. Does the right to health care confer the right to what patients want or does it confer the right to what someone else believes that they need? It is relatively easy to define what people want since their desires are self defined. It is much more difficult to define other people's needs.

Within the context of clear acute life and death issues, it may be possible to make such a call.
However, much of health care occurs under more mundane circumstances. There are about 30 million hospital admissions each year in the US. However, there are over 1 billion ambulatory visits annually in the US. These ambulatory visits are frequently focused on the management of chronic conditions which may be uncomfortable and function limiting. What do patients in these circumstances need and can these needs be separated from their wants? Are "expensive" interventions which have no impact on life expectancy but improve patient quality of life in the realm of needs or wants?

If definition of the scope of a health care right is based upon patient needs, who makes those decisions and upon what criteria? Creation of entities which measure effectiveness of interventions relies upon defining what constitutes effectiveness. Obviously use of life or death metrics use clear and unambiguous endpoints. However, such endpoints have only limited utility when trying to assess the vast majority of interventions which occur in more mundane, non-life or death settings.

Given these ambiguities, what do patient have the right to? Who draws the line and upon what criteria? How often do the criteria change?

Health care: Super Wicked Problem

Even though the economy remains in the tank, the health care debate has gone cycle up. Like the past episodes, there is a sense of urgency that something must be done now driven by stories of human tragedy and financial calamity.

The discussion is unfocused to say the least, although this is not surprising since the health care quandary is the quintessential "wicked problem" as described by Hans Rittel in 1973. (See Wicked problems have been succinctly defined by the following characteristics:

  1. The problem is not understood until after the formulation of a solution.
  2. Wicked problems have no stopping rule.
  3. Solutions to wicked problems are not right or wrong.
  4. Every wicked problem is essentially novel and unique.
  5. Every solution to a wicked problem is a 'one shot operation'
  6. Wicked problems have no given alternative solutions.
Before one can even begin to address how to solve such problems one needs to frame or define the problem. Individual stakeholders in the process will invariably have radically different world views and different frames for understanding the problem. When people discuss health care issues, what problem(s) do they identify? Is the major and most important problem in health care the large number of uninsured or is it the frightening growth of health care costs which threaten to consume our economy?

The solution to one aspect of a wicked problem often creates or aggravates another aspect of the same problem. Health care spending has growth explosively at a rate faster than underlying economic growth or inflation at least since Medicare was introduced. This growth has taken place despite many attempts to restrain it. If the priority for health care reform is to expand benefits to cover those who are not presently covered, growth in expenditures will undergo even more substantial growth when benefits are expanded to cover a larger segment of the population.

As difficult and at odds these two elements are, they alone do not even close to fully define the contradictory complexity riddling the health care debate. Each of the individual stakeholders when patients, health care providers, other elements of the health care industry, private payers, public payers, or politicians, has something at stake and a unique agenda.

What is the major problem that health care reform should address?