Tuesday, August 14, 2012

Check out this new blog

I've been working for a few months with Dan Callahan, Shep Nuland, and Mary Crowley of the Hastings Center to develop a new blog. It's called Over65. Our aim is to foster a voice for progressive-minded folks over 65 who will comment thoughtfully on health care, social security, and other aging-related issues. We felt that there's a lot talk about  the Medicare generation, but not enough talk from that group. We think of the blog as the first step in what we hope will become a series of linked projects, aiming to build a foundation for more thoughtful policy discussion of issues involving aging and intergenerational equity than has happened to date.

I'll be travelling for two weeks, and will look forward to returning to both blogs when I'm back

Thursday, August 2, 2012

Old against young in Japan

If you read about a country with economic problems where "already indecisive leaders [are] loath to upset retirees from the baby boom who make up more than a quarter of the population and tend to vote in high numbers," you might guess that the article was about the U.S. and Medicare. It's not.

It's about Japan and the value of the yen.

In 2007 the Japanese yen was trading at 123 to the dollar. In the post-2008 economic crisis the yen was seen as a safe haven currency. Its value went up. It now trades for about 78 to the dollar.

So what does the exchange value of the yen have to do with intergenerational conflict? An article in today's New York Times explains why the old and the young are fighting about currency.

The strong yen makes imports cheaper. Cheaper imports drive down domestic prices as well. Older people on fixed incomes can buy more. What cost them 123 yen in 2007 costs them only 78 yen now. But a strong yen makes exports more expensive, and Japanese industry - very export dependent - is suffering. This hurts the young.

Japanese political scientists say the government has tolerated the strong yen out of fear of the elderly. Shigeru Ono, a 62 year old retired oil company manager who lives on a monthly pension of 130,000 yen (approximtely $1,660), understands the intergenerational conflict:
The strong yen and deflation have been a boon for us baby boomers. But I also know that they cannot be good for my son’s generation.
The U.S. is struggling to contain the cost of Medicare. Japan is struggling with the impact of a strong yen. In families, grandparents cherish children and grandchildren. But in wider society the relationship between generations is playing out differently.

The future well being of both countries depends in large measure on the balance of competition and cooperation between old and young.

Wednesday, August 1, 2012

Massachusetts nibbles at the cost bullet

On the last day of the legislative session, the Massachusetts Senate unanimously approved a 350 page health reform bill. The House approved it by 132-20. Governor Patrick has said that he will sign it. (The bill itself is not yet available on line - I've read about it but not yet seen it.)

Like the Affordable Care Act, the Massachsetts bill includes a wide range of policy steps - creating an oversight agency, promoting transparency about costs, supporting wellness programs, encouraging global budgets and an end to fee-for-service, and more. But the key component is the line in the sand about overall health care costs: between 2013 - 2017 cost increases should not exceed the growth of the state economy. For 2018 - 2022 cost increases should be at least 0.5% below the state economy growth.

So what happens if costs exceed the target?

Since total health care cost is the sum of thousands of independent charges (by hospitals, medical offices, equipment vendors, and more) and payments (by insurers, patients, government, and more), there's no one to hold accountable and no real enforcement mechanism.

Representative Steven Levy's twitter comment on the cost containment commitment was (1) "lol" and (2) "only concrete thing in it is more bureaucracy and fees." He's not right, but he's not completely wrong.

Even without a true accountability structure or enforcement mechanism, the cost commitment matters. The situation reminds me of all the times my wife and I said to our sons some form of - "we expect you to do XYZ." By the time they were teen agers they were smart enough to ask - "what happens if I don't do XYZ?" We tried to avoid too much sabre rattling and generally said something like "we expect XYZ to happen - if it doesn't we'll deal with it then..."

Of course XYZ didn't always happen. Sometimes there were consequences. Sometimes there were apologies and resolutions to do better. Occasionally our sons would persuade us that XYZ was the wrong expecation - it should have been ABC. But we always took it seriously if XYZ didn't happen.

Managing a state with 6.5 million residents and $80 billion in health expenditures is rather more complex than managing a four person family, but I expect the same process I experienced as a parent to happen in Massachusetts.

Until now we've not had explicit expectations for health costs. Now we do. Measuring how we're doing in relation to a commitment is different than wringing hands over "unsupportable cost increases." Our legislators and Governor have made a promise. It's not clear how they, and we the citizens, will accomplish it. But we can't avoid paying attention to it, working on it, learning from what happens, and taking next steps.

The law sets a process in motion. It's not a silver bullet. It's more like tying a string around  a finger to ensure vigilant attention. But that's more than our state, or any state in the U.S. has done before.