Friday, January 29, 2010

1st in War; 1st in Peace; 37th in Health Care

Probability of death in males 15-60 in US, Australia and Sweden; 1970-2005
(Compiled by US official data and World Health Organization)

By Sandy Prisant

In the week we apparently have decided to adopt collective amnesia and opt for total denial rather than health care reform, don't walk just yet.  Remember that the problems won't be walking away. And remember that left unsolved, they will simply scuttle all the other economic stuff you'd now prefer to think about:
Ranking 37th —
Measuring the Performance of the U.S. Health Care System

Christopher J.L. Murray, M.D., D.Phil., and Julio Frenk, M.D., Ph.D., M.P.H.
New England Journal of Medicine  (6/1/10)

Evidence that other countries perform better than the United States in ensuring the health of their populations is a sure prod to the reformist impulse. The World Health Report 2000, Health Systems: Improving Performance, ranked the U.S. health care system 37th in the world1 — a result that has been discussed frequently during the current debate on U.S. health care reform.

The conceptual framework underlying the rankings2 proposed that health systems should be assessed by comparing the extent to which investments in public health and medical care were contributing to critical social objectives: improving health, reducing health disparities, protecting households from impoverishment due to medical expenses, and providing responsive services that respect the dignity of patients. Despite the limitations of the available data, those who compiled the report undertook the task of applying this framework to a quantitative assessment of the performance of 191 national health care systems. These comparisons prompted extensive media coverage and political debate in many countries. In some, such as Mexico, they catalyzed the enactment of far-reaching reforms aimed at achieving universal health coverage. The comparative analysis of performance also triggered intense academic debate, which led to proposals for better performance assessment.

Despite the claim by many in the U.S. health policy community that international comparison is not useful because of the uniqueness of the United States, the rankings have figured prominently in many arenas. It is hard to ignore that in 2006, the United States was number 1 in terms of health care spending per capita but ranked 39th for infant mortality, 43rd for adult female mortality, 42nd for adult male mortality, and 36th for life expectancy.3 These facts have fueled a question now being discussed in academic circles, as well as by government and the public: Why do we spend so much to get so little?  Comparisons also reveal that the United States is falling farther behind each year (see graph). In 1974, mortality among boys and men 15 to 60 years of age was nearly the same in Australia and the United States and was one third lower in Sweden. Every year since 1974, the rate of death decreased more in Australia than it did in the United States, and in 2006, Australia’s rate dipped lower than Sweden’s and was 40% lower than the U.S. rate. There are no published studies investigating the combination of policies and programs that might account for the marked progress in Australia. But the comparison makes clear that U.S. performance not only is poor at any given moment but also is improving much more slowly than that of other countries over time. These observations and the reflections they should trigger are made possible only by careful comparative quantification of various facets of health care systems.

Of course, international comparisons are not the only rankings that should inform the debate about reforming the health care system. Within the United States, there are dramatic variations among regions and racial or ethnic groups in the rates of death from preventable causes. While aiming to provide solutions to the problems of incomplete insurance coverage and inefficiency of care delivery, health care reformers have given insufficient attention to the design, funding, and evaluation of interventions that are tailored to local realities and address preventable causes of death. The big picture — the poor and declining performance of the United States, which goes far beyond the challenge of universal insurance — will inevitably get lost if we do not routinely track performance and compare the results both among countries and among states and counties within the United States.

Although many challenges remain, the available methods and data are better now than they were when the World Health Organization’s rankings were determined. As part of its reform efforts, the U.S. government should support and participate in international comparisons while commissioning regular performance assessments at the state and local levels.

Experience has shown that whenever a country embarks on large-scale reform of its health care system, periodic evaluations become a key instrument of stewardship to ensure that initial objectives are being met and that midcourse corrections can be made in a timely and effective manner. To be valid and useful, such evaluations cannot be an afterthought that is introduced once reform is under way. Instead, scientifically designed evaluations must be an integral part of the design of reform. For instance, the recent Mexican reform adopted from the outset an explicit evaluation framework that included a randomized trial to compare communities that were introducing insurance in the first phase of reform with matched communities that were scheduled to adopt the plan later. This external evaluation was coupled with internal monitoring meant to enable policymakers to learn from implementation.

In addition to its technical value, the explicit assessment of reform efforts contributes to transparency and accountability. Such assessments can also boost popular support for reform initiatives that inevitably stir up fears of the unknown. In the polarized political climate surrounding the current U.S. health care reform debate, the prospect of periodic evaluations may help reformers to counter many objections by offering a transparent and timely way of dealing with unintended effects. Built-in evaluations may be the missing ingredient that will allow us to finally reform health care in the United States.

Sunday, January 17, 2010


By Sandy Prisant

Most of Florida Power & Light rate hike rejected

TALLAHASSEE, Fla. (Associated Press) 15 Jan -- State regulators under pressure from politicians and consumer advocates Wednesday rejected more than 99 percent of Florida Power & Light Co.'s request to raise base rates by $1 billion this year and all of a $247 million proposal for 2011.


Yogi Berra was right. It ain't over 'til it's over. Just when Sen. Dodd is jettisoning a US Consumer Protection Agency in finance. Just when the President's "body of work" is resulting in poll numbers that look more like those of the man he replaced. Just when Haiti slips light years further away from hope. Just at this moment--a little light shines at the end of the tunnel, in The Miami Herald article quoted above. 

A small group of people and public defenders took on a giant. And won. In real life. In a place where they still can't figure out who won the 2000 election. In a state where a dozen or so local public officials are ousted or arrested for corruption almost every year. This means that a few serious people (albeit with the Governor's implicit support) can still get things done in this age. That's to Florida's credit and a hopeful reminder to the nation.

Having been afforded the opportunity to testify before the Florida Public Service Commission in this matter and then provide line-by-line analysis of Florida Power & Light's combined rate petitions, here are paraphrased excerpts from sworn testimony to the Florida PSC in West Palm Beach, August 2009:

"Commissioners, good evening. My name is Alexander Prisant. I'm a homesteader in Boynton Beach and was previously a manager for the American Electric Power Company, one of the very few utilities in this country a good deal larger than FP&L. Maybe it would be helpful if I gave you a slightly different perspective from what I have been hearing tonight and what is actually happening here.

"Just to quickly cover my credentials, I helped write Congressional testimony for the US House of Representatives that led to the construction of 14 nuclear power plants around Lake Michigan. I was personally responsible for setting up the strategy for the lawsuit against the entire US Environmental Protection Agency and the personal lawsuit against the Director of the EPA in the 1980's. So I am a friend of big power.

"Having said that, I am embarrassed by what is being proposed here and I have been embarrassed by petitioner's presentation. There are a couple of hard truths that need to be talked about. In general, these proposals are outside---and I can only speak for myself personally--but outside of my 30 years of experience, outside of industry norms, and unconscionable without better performance.

"In the several states where American Electric Power operates, I had to make these kinds of presentations to people who demanded proof of performance. The hard fact is that within the industry, at the top level, Florida Power & Light is not considered a leader in best practices.

“The performance of transmission and distribution functions in Florida are not equivalent to many states. I am shocked to hear that in 2009 you folks are still trying to grapple with weather issues. In AEP’s states, we have tornado issues. We had to address those 30-40 years ago. Did Florida not have hurricanes 40 years ago? Instead you want the taxpayers, during a Depression, to take care of them now. No vision at all.

“Next: It is hard for consumers to understand a lot of the technical issues involved; this is a complex industry, but there are red flags that any of us can see. FP&L, in its first bill, offered me insurance at my cost for power surges—which would provide an extra payment to the utility as reward for poor performance, while FP&L avoids all liability.

“What is really scary is that I was offered a similar deal by an electric utility once before—in the Middle East. Does FP&L want to operate to the Middle Eastern standard?

“What specifically is the $1.6 billion in rate hikes over 2 years to be used for? I have heard no specifics tonight. If I walked into a hearing in the state of Indiana, for example, and said: ‘listen guys, I just want to raise my one billion dollar profit up to two billion,’ I’d have been run out with a shotgun.

“As effectively a protected monopoly, with a protected return, FP&L is now asking for a 12.5% ROI. Two things come to mind: First, how many companies of this size in this state have a guaranteed income of 12 or 11 or 10% ROI? I can’t think of any. And I’ve really tried.

“Next, if there is guaranteed rate of return of even half that—I have no background in finance—I guarantee you that within one week I will deliver to this Commission six sovereign wealth funds, three hedge funds and three other major financial groups from around the world that, in this environment, will dive in with both feet for a guaranteed rate of return of 6.25 or 6.125%. Think about it—this is a time when the Chinese and Japanese are having to live with T-bill rates of 2 percent. They would jump at 6%.

If, as FP&L proposes, investors were offered 12% guaranteed, off its customers’ backs, those investors might rightly fear Federal authorities intervening, because there must be something illegal going on.”

Commissioner Edgar: “May I ask you to sum up, please.”

Mr Prisant: “Yes. I will sum up by just saying this: Florida is losing population.

What is going on here?”

Monday, January 11, 2010

How Are We Really Doing? America slides deeper into Depression as Wall Street revels

December was the worst month for US unemployment since the Great Recession began.

By Ambrose Evans-Pritchard
International Business Editor
The Telegraph, London 

History repeating itself? President Obama has been accused by some economists of making the same mistakes policymakers in the US made in the Great Depression, which followed the Wall Street crash of 1929, pictured Photo: AP
The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.

Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.

The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.

Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.

Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor "harsh, repugnant, shocking and repulsive". We are not far from a de facto moratorium in some areas.

This is how it ended between 1932 and 1934, when half the US states declared moratoria or "Farm Holidays". Such flexibility innoculated America's democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process.

This policy is entirely justified given the scale of the social crisis. But it also masks the continued rot in the housing market, allows lenders to hide losses, and stores up an ever larger overhang of unsold properties. It takes heroic naivety to think the US housing market has turned the corner (apologies to Goldman Sachs, as always). The fuse has yet to detonate on the next mortgage bomb, $134bn (£83bn) of "option ARM" contracts due to reset violently upwards this year and next.

US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. "If the 2008 and 2009 loans go bad, then we're back where we were before – in a nightmare."

David Rosenberg from Gluskin Sheff said it is remarkable how little traction has been achieved by zero rates and the greatest fiscal blitz of all time. The US economy grew at a 2.2pc rate in the third quarter (entirely due to Obama stimulus). This compares to an average of 7.3pc in the first quarter of every recovery since the Second World War.

Fed hawks are playing with fire by talking up about exit strategies, not for the first time. This is what they did in June 2008. We know what happened three months later. For the record, manufacturing capacity use at 67.2pc, and "auto-buying intentions" are the lowest ever.

The Fed's own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc.

Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse.

This has not stopped an army of commentators is trying to bounce the Fed into early rate rises. They accuse Ben Bernanke of repeating the error of 2004 when the Fed waited too long. Sometimes you just want to scream. In 2004 there was no housing collapse, unemployment was 5.5pc, banks were in rude good health, and the Fed Multiplier was 1.73.

How anybody can see imminent inflation in the dying embers of core PCE, just 0.1pc in November, is beyond me.

Mr Rosenberg is asked by clients why Wall Street does not seem to agree with his grim analysis.

His answer is that this is the same Mr Market that bought stocks in October 1987 when they were 25pc overvalued on Shiller "10-year normalized earnings basis" – exactly as they are today – and bought them at even more overvalued prices in 2007, long after the property crash had begun, Bear Stearns funds had imploded, and credit had its August heart attack. The stock market has become a lagging indicator. Tear up the textbooks