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One of the things missing from most conversations regarding energy (independence) and environmental policy is transportation policy. There are no real solutions to the problems of foreign oil and global warming without including the who, what, when, where and how of transportation. The first real foray into combining transportation with energy and environmental policy may have come from Mr. T. Boone Pickens. The Pickens Plan includes compressed natural gas for automobiles and wind turbines for power production. He takes the natural gas used for power generation and replaces it with wind. He uses the natural gas from power generation in a compressed form to power automobiles. His plan is a good start. However, if we also closely examine trucking, rail and other modal approaches, we might be able to actually end our dependence on foreign oil while decreasing our national carbon footprint.
Since the national interstate system was begun in the 1950’s by President Eisenhower, trucking has been on the rise. Tractor trailer vehicles opened a new option to commerce. For the first time, a tomato could be picked in California and be on a shelf in Alabama the next day. At the time, rail was not efficient enough to compete with the tempo of truck delivery. Today, rail carriers can compete on speed utilizing multi-modal systems. A multi-modal or piggyback system consists of a container that can have wheels like a truck or mounted with no wheels on a rail car. These containers are also stacked on ships. This system allows rail carriers to go from ship to rail to highway without missing a beat. For example, containers may be off loaded from a ship in San Diego, mounted on a railcar to Memphis, clearing customs in Memphis and finally mounted on wheels and delivered to a market in Collierville. Collierville is a suburb of Memphis, Tennessee. The problem arises when the container is destined from Memphis to Mobile, Alabama.
See, Mobile is served by several rail yards much closer than Memphis. To be sure, some of those rail yards do not offer customs clearance. However, customs clearance could either be established or completed at the port of entry. The real question becomes why a truck is used when rail is less expensive per mile and has a smaller carbon footprint. Actually, rail is considerably less expensive. This is so because the trucking industry is subsidized. Yup, you pay for most of the cost of those bananas you bought at the market in your gas tax. See, a tractor trailer does 16,000 times more damage than your Ford Expedition to a road. But, trucking only pays a pittance toward the cost of the repair of roads in gas tax. Said another way, with a gasoline tax of 37 cents per gallon, a truck would have to pay about four million dollars per year in taxes to be taxed equally*. We might decide the local apples are a better deal than the bananas if we had better price signals.
Since the price signals are so skewed toward trucking in the United States, we have made bad decisions regarding spending on infrastructure. Citizens have rebelled against higher gas taxes. Some of this is due to the extraordinary price of gas. But, due to those inaccurate price signals, people have determined congestion relief is not affordable. Depending on where you live, you might spend three or more hours per day in traffic. This time represents lost productivity, more carbon and most of all zero miles per gallon. Better and less congested roads can not be reconciled by the public in the face of trucking subsidies and high gas prices.
Energy policy is more complicated than only high gas prices. Due to extraordinary gas prices, it looks like we will be having the conversation quite soon. As the oil lobby is marginalized in this debate, perhaps we can discuss ideas which will actually reduce the amount of oil we consume. Moving freight from the road to the rail road might be a great start. It is a win win. We win the battle against congestion. We have fewer catastrophic accidents between trucks and cars. We reduce our carbon footprint. But, most of all, we use less gas and diesel. Using less oil reduces demand and lowers the price. If we mix in a few other ideas like the T. Boone Pickens Plan, sustainable biofuels and electric vehicles, we could finally stop empowering the petro-dictators who seem so bent on seeing America fail.
*This is based on the conservative estimate of 680 gallons per year. Trucks will use much more.
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If you have ever wondered why we, as the American Silent Majority, are under-represented, you need to look no further than this presidential election. Although this website is devoted to solutions and not personalities or parties, the political evolution of Senator John McCain has become an irresistible cautionary tale. It is cautionary because his evolution illustrates nicely what is wrong with the American Silent Majority.
John McCain, for most of his political career, might have been considered a friend of the American Silent Majority. He was a solutions man. He tended to be less interested in ideology or party and more interested in how to fix a problem. In his 2000 campaign he talked about “building a bigger Republican Party”. That was code for dragging the wingers kicking and screaming toward the moderate middle. He backed his dream of a more inclusive Republican Party with his rhetoric. McCain called Jerry Falwell and Pat Robertson “the agents of intolerance.” With Russ Feingold, a Democrat, he wrote sweeping campaign finance reform legislation. In 2001 and 2003 McCain voted against his party and George W. Bush on tax cuts that our grandkids would have to pay off. Being one of the two Republicans who voted against the cuts he said, “I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us at the expense of the middle-class Americans who need tax relief.” He ran a principled campaign in 2000 that made him sleep really well at night. But, George W. Bush and his right wingers beat the crap out of him. However good or noble he felt, he lost.
John McCain learned a lesson in 2000. We did not see the results until Bush’s 2004 campaign. But, McCain heard the right wing of the Republican Party loud and clear. He has flip-flopped to the right on everything from social security to oil drilling and immigration to gun control. But, perhaps the most shocking of all, McCain changed his stand on torture. In order to solidify his “heir to W” status, he used semantics to appear to support the George Bush doctrine regarding detainees. He decided the military should not torture. But, the CIA could torture all they wanted. I wonder if his interrogators in Hanoi were military or intelligence officers.
Intelligence should be the hallmark of the American Silent Majority. We saw what the right wing was up to in the 2000 election. We stood by while the wingers called McCain unpatriotic and ran ads which made their grandmothers blush. Most of us didn’t call them a liar at the water cooler. We didn’t put up a sign in the yard or even give a few bucks to his campaign. Finally, some of us didn’t vote. Now, we have turned a perfectly good candidate into a right-wing hack. McCain found he can’t rely on the moderate middle to put him in office. So today, we are stuck. We can either vote for a man who owes the right wing or a man who stands for some kind of nebulous change.
We are to blame for this crappy choice.
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This is the 4th and final in a series of articles on the state of healthcare in America
So, where do we start if we choose to thumb our noses at 20 years “Harry and Louise”? You remember those two. They were the ones who were trotted out by the healthcare industry during the last attempt at reform. Their TV commercials stopped the previous debate cold. Let’s pretend we have a blank check. Let’s pretend all of our emotional issues which surround healthcare won’t be exploited. If we could do anything, we should start with extraordinary pharmaceutical industry profits (see previous article about how). But, what else might be done to reform a broken system. Yes, the system is broken. If you don’t believe it, just multiply your current health insurance premium by fifteen percent a year. After you multiply your employer’s portion by fifteen percent, ask yourself two questions. How many years will you be able to afford coverage and what will you have to do without? How many years can your company sustain these costs and stay competitive in the global economy. See, companies have to pay a sort of tax on American labor in the form of healthcare premiums. As a labor force, no matter how productive we are, Americans are becoming uncompetitive due to healthcare. So the obvious question is, will we be able to allow everyone timely access to prudent lifesaving treatment AND remain competitive? Well, I hope so. Our economy and well being depends on it. We really can’t take no for an answer.
One thing that has become increasingly disappointing in this political season is how the third rail of healthcare is being ignored. Costs have become the political third rail because any candidate that mentions the cost of healthcare is always accused of rationing. The word rationing is so incendiary no politician will touch it. Many proposals that would limit costs are quickly labeled rationing by the healthcare industry and their political stooges. Sure, some of our skyrocketing premiums provide the best healthcare in the world; but, much of those dollars end up providing extraordinary rates of return for healthcare companies. So, how do we get an industry so politically connected to submit to cost controls? Is it possible to slow down costs which increase at five times the rate of inflation while insuring life saving advances continue in medical technology? Well we just do it, that’s how. Mark Twain popularized a quote from Benjamin Disraeli that claimed there were three kinds of lies, “lies, damned lies and statistics.” That being said, we could mandate by law that healthcare related companies submit to audits for a span of two years. At the end of those two years, we could compile the numbers and conduct a top to bottom town hall meeting. In that meeting, we can sort out all the lies, damn lies and statistics. If a healthcare sector, for example, claims they are charging more for their product or service due to litigation, we will know exactly what and how much it costs. We would be able to take a steely-eyed look at inefficiencies and profiteering. At that point, we as a nation could determine which sector needs regulation or nationalization. I have a feeling we will find sectors that have not been good corporate citizens and have helped create a great drag on our economy.
Secondly, we should cover people whose healthcare costs are passed on to us anyway. Many studies tell us covering the 47 million uninsured Americans would actually partially pay for itself. These claims are based on savings generated by these Americans getting preventative medicine. This preventative approach would save us from having to pay for health problems that have festered and become expensive. The common sense approach tells us there would be savings in productivity, bankruptcies and savings we can’t even contemplate. Truth is, there is so much cost shifting in our healthcare system, knowing how much it would cost to cover the uninsured or be saved is next to impossible. I have purposely stayed out of philosophical debate on the uninsured. This debate asks whether or not basic healthcare is a right or a privilege. Many times these debates are more about political cover than philosophy anyway. Instead, I have tried to look at this debate about the uninsured from a strictly economic standpoint. Regardless of morality, covering uninsured could save all Americans money.
Another problem that needs attention is health insurance portability for the insured. This is particularly critical in the new global economy. Thomas Friedman, the famous New York Times columnist tells the only way to compete in the new global economy is universal portability. In his book, The World is Flat, he says a global economy moves so fast we should be able to change jobs and retrain for both our personal and national economic survival. He might be correct regarding world competitiveness issues. However, the only way to execute Friedman’s suggestion might be “single payer”. Single payer probably scores pretty high on the left wingometer. While single payer would be socialized medicine, many right wingers suggest we only have an insurance problem. They suggest we trash 50 years of state insurance regulations and allow people to buy insurance as national groups. Oversight of the new national insurance companies would be non-existent and you can bet the right wingers won’t support a Washington oversight bureaucracy to fill in for the states. The answer is probably somewhere in the middle. A mix of state based public and private insurance with the price controls discussed earlier is probably where we will end up. Even smaller groups with pre-existing condition protection will become viable with responsible price controls.
There is also the problem of pay for procedures. Much of the money in healthcare is spent on surgery and other drastic last ditch efforts that could have been avoided by good preventative medicine. One of the best examples I have heard of is diabetic amputations. If we had paid the family doctor for good patient care plan and rewarded the patient in premium reductions for taking care of himself, we would all be much richer. Instead we pay a surgeon tons of money to chop off a limb. Some blood tests, a little training and some insulin is better for everybody. We have to find a way to help general practitioners help us. Today, a family doctor sees 100 patients a day and gets paid the same a surgeon does in 15 minutes. Our current system needs to change.
Finally, we need to get involved. Yup, you with the Twinkie, that means you. It also means the smoker and others. If people insist on being a heart attack waiting to happen, they should pay more for their insurance. Now, we must have reasonable goals and not cholesterol, blood sugar and other targets generated by pharmaceutical company research. The goal should be a healthy body. The goal should not be to sell more Lipitor.
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This is the third in a series on the state of healthcare in the United States. This article explores a few ways to lower the cost of prescription drugs. Remember, these are presented as common sense solutions from a dumb engineer.
First and foremost, we should eliminate direct marketing to patients. It is a waste of money and many doctors tell us it is dangerous. It is especially true when more is spent marketing Vioxx than Pepsi. Some of the claims were actually false and dangerous. With this direct marketing system doctor’s find themselves defending drug choices which are actually cheaper and may be safer to patients who have neither the training nor education for the debate.
Secondly, we need to re-introduce supply and demand into our prescription drug market. Several years ago, my company’s drug coverage was converted to a “point of sale” policy. I had to pay for my drugs and then be reimbursed by the insurance company. I was made painfully aware of the costs of my drugs. This system may not work well for lower income families and some allowances may have to be made in their case. But, having to float the insurance company a loan for prescription drugs made me ask my doctor about cheaper alternatives from time to time. Some drug stores would have to begin charging actual market price for some generics. Insurance companies and drug companies would also have to eliminate formularies for a system like this to work. The beauty of real supply and demand without direct patient marketing is how a doctor, patient and the pharmacy have to work together in a constructive way to eliminate waste and improve safety.
Some say the most constructive way to eliminate waste in the prescription drug market would be to critically examine doctor’s relationship with drug companies. Today, doctors depend on drug companies for drug samples and continuing education. Although samples, if used correctly, are an excellent resource for doctors, they may come at too high a price. The price becomes daily propaganda from a drug rep. Doctors have become too dependent on drug companies for annual continuing education requirements for medical licenses. Since continuing education classes sponsored by pharmaceutical companies are free to the doctors, a requirement to maintain a medical license and held in Cancun, pharmaceutical continuing education has become the only source of that education for some physicians.
The pharmaceutical industry frequently tells us importing drugs from Canada will destroy their ability to conduct real research and development. If that is the case, we must be subsidizing the rest of the world’s research. Shouldn’t we allow the wholesale importation of drugs so that market forces will even the playing field?
Finally, as the recent news from Wall Street will attest, corporate America will often trade immediate profits for long-term stability. If the pharmaceutical industry insists on making the kind of profits outlined in the previous article, government might need to review the patient system for drugs. They obviously need no protection.
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This is the second in a series of articles on the state of healthcare in the United States. This article explores the state of prescription drugs. I feel pharmaceuticals should be a part of any comprehensive healthcare reform.
Wonder drugs are everywhere. There is a new drug called Avastin. It is chemotherapy for several kinds of cancer. Avastin is unlike most any anti-cancer drug used today. Most chemotherapy is merely a form of targeted poison. Being a poison, most other chemotherapy agents have very severe side effects. Avastin belongs to a class of drugs which block a tumor’s ability to trick the body into providing blood flow. Without the formation of blood vessels, tumors can’t thrive and most shrink. Although it is a new drug and long term clinical trials are unavailable, Avastin’s side effects seem to be very mild compared to other chemotherapies. Wikipedia says a round of treatment with Avastin can approach $50,000.00.
Avastin was developed by a company called Genentech. Genentech is the company all other biotechnology companies aspire to be. Their research and development has become legendary and so have their profits. The company made a 25 percent profit last year. Genentech is so successful that pharmaceutical giant Roche is in the process of buying the company. Roche made a 32 percent profit last year. According to Fortune, Roche is not alone in the Pharmaceutical industry. The pharmaceutical industry makes a median profit on revenue of over 18 percent. The average for the rest of the Fortune 500 companies is a little over two percent. While they spend only 12 percent of their revenue for research and development, they tell us they won’t be able to deliver new drugs without the high profits.
But, a system already exists to reimburse the pharmaceutical industry for the cost of research and development for prescription drugs. It’s called a patent. The theory behind patents is reward research by giving the inventor the exclusive right to sell or license a product for a set period of time. But, the pharmaceutical industry has figured out a way to pervert this process too. They “make a new drug” by changing it to a long acting version or combining it with another drug and extend the patent. This requires little research and development and allows drug makers to continue their monopoly. This process is laid out nicely by an article titled “High Prices” in The New Yorker . Additionally, The Washington Post says the drug makers are able to manipulate congress into making Medicare rules which prohibit states from steering patients toward cheaper generics once they are past patent protection. Drug makers game the laws and the lawmakers as our costs go up over 15 percent a year.
So what are they spending our money on? Fortune tells us the industry spends over 30 percent of their revenue on marketing and administration. What do we, the customer, get for that huge marketing expenditure? Well, my high school friend gets free lunches for one. See, my friend is the receptionist for my internist. One day while we were negotiating my next appointment, she got a call. I overheard her talking about lunch. It was about nine in the morning so I kidded her about being hungry. She told me her entire office got several offers from different drug reps every day for lunch. The office staff had to decide early so the successful rep could get the food delivered by lunch time. Beyond free lunches for my friend, we get to watch a Viagra, Cialis or Levitra commercial almost every single commercial break on TV. If that’s not enough, we get to wait in the waiting room while our doctor yuks it up with some supermodel drug rep that wouldn’t know the difference between a cell and cellular phone.
That’s the same drug rep who gives bad information to the ole doc about her drug company’s drugs. The Journal of the American Medical Association says at least eleven percent of the information a drug company rep tells a doctor is inaccurate. In the case of the anti-arthritis drug, Vioxx, according to WebMD, drug reps were instructed by the manufacturer, Merck, to tell doctors the drug was actually good for the heart. They told doctors this when the company knew there were cardiovascular risks associated with the drug. The sad truth is many drug reps don’t have the education or training to know anything about clinical implications of drugs.
For that matter, most of us lack the education or training to understand critical details of prescription drugs. Drug commercials for laypeople are inherently dangerous. That’s why a drug commercial always includes the phrase, “ask your doctor if ____ is right for you.” In other words, you probably have no business making prescription decisions based on a 30 second commercial. You probably need about 12 years of medical school to suggest a powerful prescription drug.
My suggestions for a fix next time