Mauldin on Health Care

I read a weekly email from an economist named John Mauldin ... at least, I occasionally read it when I can find the time. I pulled from one of those letters for my previous post and I think I'd better do it again.

John had some very interesting things to say about health care that I think are an important contribution to the debate about how to handle the problems in our system. As he says near the end, the problems are more complex that most of us would like to admit.

John Mauldin, Economist

This post will be really long, but I couldn't cut it shorter and still convey the complexity of his ideas, so, refraining from further comment, here's what John has to say about health care.

... [my] good fiend Mark Yusko ... noted that an acquaintance of his, who was worth north of $10 million, had just had four stents put in his arteries. The hospital bill was $288,000. As he was over 65, Medicare paid everything. He paid nothing. Yet he is worth $10 million. I am not judging, by the way. My mother gets veteran benefits and Medicare, as well as Social Security. I will most likely take Medicare and Social Security when the time comes, if it is still there for me, even though I could afford not to. If my income were of the same stripe as Mitt Romney's, you can bet I would pay just 15% of it in taxes. Hold that thought.

On the same panel, Rich Yamarone said he had a stent put in last year. The bill was $90,000, and he was also nothing out of pocket, as insurance paid for it. His employer had paid for that insurance, so he used it. Just as I use my insurance when I need it. Hold that thought.

A good friend of mine recently had hip surgery, for a problem known of in advance by his insurance company. So they are not paying, saying it was pre-existing. And will not pay for the follow-up costs that are now looming, as it looks like he will need a full hip replacement. And he can't afford it. So he lives with steadily growing pain, while an attorney tries to get the insurance company to pony up. Hold that thought.

Two weeks ago my #2 daughter (in birth order - otherwise they are all #1) had some medical work done and mentioned a lump in her throat. The scan came back, and it was not good. The growths on her thyroid were almost as big as the thyroid. I called my doctor (Mike Roizen ...) and asked what to do, and he gave us a referral to what he said would be the best doctor in Dallas for this type of thing. We went to see him last Monday, thinking we would schedule a biopsy and hoping we could do it soon.

He said we could do a biopsy, but given the scan we already had, if it were his daughter he would remove the thyroid as soon as possible, whether or not the growth was malignant, and then do the biopsy. He had an opening a week later and she is scheduled for this coming Tuesday. Both he and Roizen agreed, and both told us the odds are quite high that it is benign, although complicated by the fact that Melissa's mother had thyroid cancer some 20 years ago.

Why talk about this with you? Here is the rest of the story. She is the one child I have with no insurance. I knew it and kept hoping she would get a job that included insurance. Now that looks like a bad economic choice.

I gently asked the doctor about costs. It was not as much as I feared, but definitely not cheap. As maybe in the mid-range of tens of thousands of dollars. His fee was the minor part. (I was actually surprised at how low as it was. I make more than that for an hour-long speech, and what skills and training do I have? Just saying.) But then he quietly said that the costs would go up a lot if it was malignant, as just the drugs to kill a thyroid cancer would be $25-30,000. The good news is that if it is a thyroid cancer, there is a proven therapy to beat it. Actually, the exact same treatment (radioactive iodine) as her mother had some 20 years ago.

I didn't bother to call other hospitals to negotiate a better price, or find a less expensive doctor. I simply had them schedule it. This is my daughter. It is her life, not a new car. Time seems to be of the essence. And life has blessed me that I can afford it.

But that's the point. How many people find themselves in that situation and their father can't step in? Or there is no father? You then go to a free clinic or an emergency room and try to get someone to help you, even though it's not an emergency. Or you put it off until it is an emergency, or it's too late.

Talk to your friends in the health-care world. And especially the nurses, who are the real soldiers on the front line. The stories they tell us about how broken our medical system is have shocked even me at times. And it is not just a system that has no money. It is a system that we expect to take care of all the needs that, in my youth, were considered as minor. And that is expected to take care of the homeless and the mentally unstable. Drug users. And a lot of people who do not take care of themselves with a simple, healthy diet and exercise, but expect full service when their bodies rebel, crowding out the service and driving up the costs for those who are in real need.

Medicare fraud? It costs us into the hundreds of billions. Doctors who test for everything because they are afraid of being sued if they miss something, running up costs sky-high? An unbelievable lack of technology in this day and age, because of government rules? Insurance and paperwork? Costs that are the highest in the world by a wide margin, yet no better outcomes?

And all staffed by amazing people who care a lot but are overwhelmed and caught up in a system they want to see changed.

The litany goes on and on. So, is the answer to simply to put hour heads down and accept the higher costs and rising taxes? Or let a bureaucracy control costs and require everyone to buy insurance, even if they can't afford it on the $15 an hour the average worker makes before taxes? Or let a "free" market somehow set the price of health care, working with private insurance and safety nets? All in a world of unlimited demand? Because when you or someone you love is sick or hurt, you want the best care you can get as soon as you can get it.

It seems simple. We need to have more-universal coverage. But there is a limit as to what any nation can afford. We look at countries with universal health care, but it is not something that many of us would be familiar with. Could we really ration health care at the end of life, which is where a large portion of our expense in the US goes? Or give up our right to sue if something goes wrong?

We have promised the Boomer generation more health care than we will be able to afford, without major reforms in what we spend our taxes on. And if we raise taxes enough to even come close to what we need, the shock to our economic body will mean recessions, higher unemployment, and fewer jobs which pay less.

.... There are no easy choices. As we will see, raising taxes has consequences in the short and medium term. The transition to where 30%, then 40%, of the economy will be taxes will be wrenching. If we can believe the polls, dialing back health care will not be popular. Raising taxes is no less popular. We want more health care, and we want someone else to pay for it. But there is no one else. It is just "we the people."

And what we do will define our job market for decades. There are no easy choices. We all marshal the "facts" as we see them to support our personal choices on jobs and health care, but it is far more complicated than most anyone wants to admit. There will be costs for whatever choices we make, even if we decide to do nothing at this time.

Creating Jobs

I recently read an excerpt from an interview Forbes did of a guy named Jim Clifton, CEO of Gallup. I pulled it from a weekly letter I get from an economist named John Mauldin. I liked some of the points he made and thought I'd pass them along.

Jim Clifton, CEO of Gallup

When asked the question, "What obstacles do leaders have when trying to create more jobs?", he responded,

There are no real obstacles. Just wrong thinking, bad assumptions. When you build strategies and policies on wrong assumptions, the more you execute, the worse you make everything, which is what we are doing now. There are three wrong assumptions that cause all the current job creation attempts to not work.

1. Innovation is not scarce. Entrepreneurship is scarce. We are spending billions and wasting years of conversations on innovation and it isn't paying off. Great business people are more valuable and rarer than great ideas.

2. America has about six million active businesses. Ninety-nine percent of them are small businesses. An incalculably huge mistake leaders are making now is spending time, money, strategies, and especially policies for those who need 'help' getting a job. A useful way to look at any citizen is this, 'Can she herself create jobs or does she need a job created for her?' We are spending all our time on the cart and doing little or nothing on the horse. We have our assumptions and futurism that backward. 'The horse (small and medium business) stopped, so we fix the cart (jobs).' If we change all our strategies and policies to favor the job creators (small and medium businesses) the horse and cart will get moving again. We have our compassion right, but the logic is staggeringly stupid.

3. It is wrong thinking to imagine that Washington has solutions. Job creation is a city problem. There is great variation in job creation by city in the United States. San Francisco and the greater Valley keep pumping away while Detroit isn't. Austin's cart works while Albany's doesn't. Cities need to look inwardly and say, 'What can I do to create great economy energy, to bring new customers for all existing companies and start-ups?'

I think Jim may not have formulated his answer (most likely delivered verbally) as elegantly as he might have, but I think his points are mostly valid. I admit part of the reason I liked the quote is because his 'staggeringly stupid' comment made me laugh out loud. But I agree that we get our logic backward a lot of times. Fostering job growth has to include encouraging the producers of jobs, which are historically small and medium businesses according to my friend John Mauldin. Mauldin's writings over the years have led me to believe that most large businesses don't create a lot of growth or innovation. There are exceptions. But I'd like to see more encouragement for people to start their own businesses and create economic value rather than seeking jobs from large businesses, hoping that someone will drive the economic growth necessary to create and continually validate the existence of that job.

I think he's probably right about where the solutions should originate. At the local level, people and governments can have a much greater impact. It seems logical to me that many of the solutions should come at the local and possibly state level. I want to see everyone have a job that keeps them meaningfully employed, but I don't think the Federal government is going to solve that problem. I don't believe they can.

Though there are valuable policies that governments can implement that can encourage economic growth, it may be that one of the best things they can do is to stop weighing down the horse. Unfortunately, just how that should be done is not something I can answer very intelligently.

Emotion vs. Logic

My son shared with me a frustration on Saturday and his argument was irrational. We were at a scouting activity and he was being excluded because other non-scouts had taken all the available slots. When I asked him what was wrong, he told me that people who weren't scouts shouldn't be allowed to participate. I tried to reason with him by telling him it was a family activity and if they didn't allow siblings to participate, families wouldn't want to come. He became more frustrated ... go figure.

Then I realized he was trying to share a feeling with me and the only words he could find were couched in something that didn't make sense ... and he knew it didn't make sense. But it was all he could find to share with me his angst because he felt excluded from the activity.

Feelings often don't seem to be rationally based or, if they are, we can't always find a rational way to explain them. We're too busy feeling them. But we need to share them with each other in order to bond and sometimes in order to deal with the emotions and let them go.

I often forget this in practice, but I think it's so important, when someone is sharing a feeling, particularly a negative one, to just listen. Refrain from giving advice. Refrain from passing judgment. Don't try to use logic. Just listen, empathize, try to enter into their emotion, recast it in your own words to make sure you understand what they're feeling, and let them talk it out.

Women seem to be much more emotional than men on average and I've had to learn this idea with my wife to keep our marriage healthy and happy. Unfortunately, I'm a very logical, left-brain kind of guy and I still mess up a lot .. but I'm getting better.

The Power of Leaders ... or Lack Thereof

Our society, and maybe all societies, tends to give too much blame/credit to our leaders. We blame/bless the President when the economy is bad/good. Really, he's just one among many that sets policies that affect the economy. That contribution can't be a large percentage of the total impact of fiscal and monetary policy. Appointed officials such as Fed governors have more influence on the economy than the President, but even they probably get more blame/praise than they deserve.

Tolstoy's 'War and Peace' gives some great arguments in favor of decentralizing the blame and praise. He also makes a pretty good case that in some ways, the guys with boots on the ground have a lot more to do with the success of an endeavor than the guys sitting behind the desk. One of his characters, Andrei Bolkonsky, consciously chooses a path that puts him on the field of battle rather than serving as an aide to the General because he believes he will have a much greater impact on the war in that capacity. I think Tolstoy goes a little too far with that idea, but it's a healthy counter to the ubiquitous concept that the leader is the one making everything happen.

Prince Andrei Bolkonsky

A CEO stepping into a company, for example, often finds his/her hands tied by the momentum of various projects, a corporate culture that may stubbornly refuse to change, or constraints imposed on him/her by predecessors that the new boss is powerless to change.

Leaders are people just like you and me. Their influence may be greater than the average guy on the street, but let's not overestimate their power. And let's not underestimate our own power either. Each of us can be an enormous force for good in this world. We just have to have a vision of what we want and work with firmness of mind to bring that vision to reality.

The Art of Unlearning

I've been studying neuroscience recently and I believe one of the foundational aspects of how our brain works is its ability to establish correlations. At a very basic level, one of the ways we learn seems to be the establishment of a connection between two or more objects, attributes, events, ideas, etc. Biologically, the synapses, or connections between neurons, are strengthened or weakened based on several mechanisms. The neuroscience community calls this elastic phenomenon 'synaptic plasticity' and it is believed to be an important mechanism by which we learn.

Pavlov's dogs are a good example of this phenomenon. Through repeated experiences, they learned that there was a correlation between the ringing of a bell and feeding time. In their minds, they correlated these two events over time such that one event (the ringing of the bell) would trigger physiological reactions (e.g. salivation) that indicated they expected the second event.

This seems to be why we often require repeated exposure to ideas in order to learn them. The synaptic plasticity doesn't occur with a single exposure to two ideas; it evolves over time as those experiences are repeated. Learning by repetition works really well for my kids and I think that's pretty universal.

So I got to thinking about the idea of 'unlearning' and I think it's a bit harder to do than learning. If learning is, at least in part, fundamentally the establishment of correlations, then one way to unlearn something is to break correlations, but that's not exactly a straightforward thing to do.

Suppose I have been building correlations all my life that connect a certain habit to various stimuli. Let's say I like to smoke. Every time I smoke a cigarette, I'm experiencing new visual, auditory, and olfactory stimuli. These stimuli can become correlated in my brain with the stimuli associated with smoking. Over time, a certain image, sound, or smell or even the thought of one of those stimuli can trigger the thought of smoking. If I have made it a habit, then my brain tends to reinforce the action with random sensory inputs that are correlated with the experience of smoking.

In the case of nicotine and other drugs, they actually modulate certain neuro-chemical processes in the brain by blocking or enhancing the reception of neurotransmitters, which makes them even more addictive than an ordinary, less brain-invasive habit. But the concept is the same. Habits and thought patterns can be triggered by association with other ideas and sensory inputs to the brain. Breaking a habit or unlearning a correlation is a lot harder than creating a habit or establishing a correlation.

Instead of associating ideas, to unlearn something, we have to disassociate them, which requires breaking correlations that have been embedded in the mind. I've found many times that I've had to unlearn things I had come to believe as a child or a young man. Some associations were formulated at school, some at home, and some who knows where. I imagine most people face this at one time or another.

I'm not sure I have a good formula for unlearning, but just as correlations are built with repeated associations, perhaps we can decorrelate ideas by thinking about one of the ideas and actively suppressing the other idea. If we repeatedly expose ourselves to cases where one idea is present and the other is suppressed, perhaps the brain will respond by weakening synaptic connections that were previously strengthened and over time, we won't automatically think of the second idea when presented with the first.

This seems like a really important skill to learn. Some people seem to become more closed-minded as they age leaving an unmalleable mind in a 70 year old. Keeping our minds open and flexible requires regular exercise, which requires the humility to admit that we'll always have a lot to learn. I think we also have to find joy in the learning process and be willing to undertake the effort to unlearn ideas we previously cherished when we find them incompatible with truth. In the words of the great Yoda, "[we] must unlearn what [we] have learned."

Dorian Gray and Earnest

I recently read The Picture of Dorian Gray by Oscar Wilde - sad story, but interesting idea based on a Victorian concept that evil actions make themselves known in the physical appearance of the person who commits them. There is some truth to this, but it can also be a dangerous philosophy by which we make faulty judgments of people.

I'm not sure I'd recommend the book. It's clever and interesting, but a bit pessimistic. And I'm not sure I like the morals that seem to be naturally drawn from the story.

A while ago, I read another of Oscar Wilde's books called 'The Importance of Being Earnest'. That book is witty and delightful. I also enjoyed the movie adaptation with Colin Firth. A quick read, funny, witty, satirical - I highly recommend that one. It makes for an enjoyable few hours.

Skellig

We went to the library last night and a book caught my eye in the childrens' section. I started reading it, checked it out, and finished it last night. It's called Skellig by David Almond.

It's a beautiful book about life, healing, love, friendship, and it struck me as a book of poetry that happened to be associated with a story. It was an easy read, but it was so beautiful, I decided to learn a little more about David Almond and William Blake, a poet that Almond quotes several times in the book.

Blake was a fascinating man and I think I'd better read some of his works. And I'm really fascinated by Almond and think I'd better search out some more of his stuff in the library. That book was in the childrens' section, but that only makes sense to me as a short work of fiction. It's a book of poetry, philosophy, and beauty and as an adult, it appealed to me strongly. Now I'm off in search of more beauty from Mr. Almond.

It's strange to find a contemporary author I enjoy, but I think this book has a quality that could turn it into a classic that endures after Almond is gone.