Robert Reich Connects the Dots between the Macroeconomy, Angst, Politics and Health Care Costs

Posted by

Jane Sarasohn-Kahn

First published 2/22/11 on Health Populi

“I’m not a class warrior. I’m a class worrier,” Robert Reich told a standing-room only crowd of thousands of health IT geeks as he delivered the first keynote address of the annual meeting of HIMSS, the Healthcare Information Management and Systems Society. This year’s crowd will have reached about 31,000 people interested in health information technology’s transformative role in health care. The 31K represents an 18% increase in attendance from last year’s crowd. The HIMSS economy is strong.

Robert Reich warns, however, that the U.S. macroeconomy is far from healthy…and health care costs will be a long-term threat to the nation’s economy unless policymakers slow them down.

Reich, who has served under 3 Presidents, written 14 books, and has been named one of the 10 most successful cabinet members, told the HIMSS audience that not only did “the great recession wear me down,” noting his small stature, but that the “gravitational pull of the great recession wore everything down.”

He noted that “We have two economies” in America: one is doing well, with the Dow hitting 12,000, corporate profits up, and companies sitting on about $2 trillion worth of cash.

Then there are the rest of “us.” Different from past recessions, this one exploded with the bubble of debt and housing which has severely impacted the middle and working classes in the U.S. “Last month, 36,000 jobs were created,” Reich said. “To get back down to 6% unemployment, we will need to generate 300,000 new jobs month to month for 4 years.”

“I’m not a class warrior. I’m a class worrier,” Reich confessed, calculating that the top 1% of Americans takes home 28% of income. Today’s middle class doesn’t have the cash to buy America out of the recession.

The middle class is angry, Reich observed, as peoples’ “lifetime savings shrink from nest egg to robin’s egg.” Most Americans’ #1 asset isn’t connected to the Dow Jones Index; it’s in their home values, which have been declining in the past several years. This has resulted into anger, frustration and anxiety, Reich explained. And these factors have found their way into American politics.

“It’s not just Medicare that’s the problem – it’s addressing underlying health care cost increases,” Reich argued. “Baby Boomers are getting older and 76 million bodies corroding at the same time.”

And those Boomers will be even more politically engaged than the current makeup of the AARP.

Reich forecasts that, “Whatever you call it – outcomes based, quality, capitation,” or accountable care, health care will be paid based on value-for-money. There will also be pressure to do something about prevention, Reich expects.

While Reich said it’s likely that Republicans in the House will de-fund mandated individual coverage, insurance companies would be in a tough position to accept higher risk pools resulting from healthier people not buying into health insurance.

Dismal scientist that he is as an economist, Reich ended on an optimistic note: “HIT is on the front lines to be part of the answer, a big part of the solution,” he believes.

Health Populi’s Hot Points: Health costs are inextricably linked to the larger economy and political life of Americans. In the post-recession U.S. economy, consumers in the nation are facing increasing costs for energy, food, and health care. Reich points out that demographics are easy: we know Boomers like Bill Clinton, Cher, and Reich himself were born in 1946 (part of the World War II generation of men coming home to their wives, he joked). It’s straightforward to project the aging of Boomers, which Reich characterizes as a pig moving through a python.

Reich recognizes that the U.S. hasn’t historically been good at taking a long view, although he served on a Medicare Commission and made recommendations to do just that. But the nation isn’t yet brave enough to face down health costs. It isn’t just about “reforming Medicare.” It’s about transforming how and what health care gets paid. And since you can’t manage what you can’t measure, getting data on health inputs and outputs (THINK: outcomes) can’t come fast enough. That’s the primacy of adopting health IT through electronic records, interoperable systems, and open architectures that support data liquidity. That’s what Reich’s optimism is pinned on.

Jane Sarasohn-Kahn writes about health economics and related topics at Health Populi.

 

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