Commentary from Dave Durenberger

April 23 , 2008

IT'S JOHN MCCAIN'S ELECTION TO LOSE
It seems quite clear to Washington DC types that Hillary and Bill Clinton are in this race until the Democratic Convention in Denver in August. They have nothing to lose - or so they think - in all out war. A substantial majority of Americans, and 99% of Republicans, believe John McCain can defeat Clinton in November. That's the first thing that makes this John's to lose. Second is that John McCain is the perfect candidate for November 2006 redux. An electorate fed up with the Republican Congress, and tiring fast of the Republican President, voted against everything they stood for. Campaign financing trade-offs for votes, big business interest preference in tax, spending and regulatory policy, earmarks for the undeserving and tax breaks for the oil, pharma, financial industries who are driving people off jobs and into bankruptcy. John McCain is well known for the same view of the GOP establishment. This is why McCain has become the darling of the Washington and New York media.

JOHN MCAIN'S STEADY AS SHE GOES
"The most important thing in political campaigns is figuring out what matters and what doesn't," is how Charlie Black describes his guiding philosophy in 36 years behind the best campaigns in the country. Is now the "even keel" of John McCain's step-by-step campaign for the Presidency. Charlie was 30 years old when the Republican National Committee sent him to Minnesota in the early spring of 1978. His job was to check out a MN Republican candidate for Governor as a potential for the second open seat for the U.S. Senate. I met his test and he worked every one of my three campaigns. Charlie and his wife Judy are still best friends and more committed to their personal faith than to politics if you can believe that in Washington. They both "know what matters and what doesn't."

©2008 MikeSmith

Randy Scheunemann came to work on my Senate staff from graduate school in foreign policy at Tufts. I hired him because his dad was mayor of Apple Valley and Randy seemed to know what he was doing. Randy made the most of my interest in Central America. He worked with both Ted Kennedy and Jesse Helms staff counterparts to help the three of us arrange the politics of ousting Panamanian dictator Manuel Noriega. Randy went on to work for House Foreign Affairs, for Bob Dole and his presidential campaign, for the NRA (he once was arrested during his Dole tenure for carrying a loaded rifle in his car onto the capital grounds). He ran the Committee for the Liberation of Iraq, a George Schultz led effort to convince Bush to invade Iraq in 2002-03. Randy is currently the foreign policy advisor to John McCain.

SENATOR RICHARD LUGAR (R-IN) HAS A QUESTION
When General Petraeus and Ambassador Crocker appeared before Foreign Relations two weeks ago, former committee chair Lugar laid out five consensus conclusions on the Iraq situation followed by a question. The conclusions of Middle East experts:

1. The surge created breathing space for increased economic and political accommodation.

2. Further security efforts by Americans will be marginal, not transformational.

3. The Iraqi central government has not demonstrated capacity to create top-down political accommodation.

4. Iraq's sectarian and tribal groups are so heavily armed and focused on increasing power that any political settlement is inherently fragile. And,

5. The Iraq struggle has stressed our military and severely strained U.S. military capacity in ways not experienced before.

The Lugar question. "Appealing for more time to make progress is insufficient. Debate over how much progress we have made and whether we can make more is less illuminating than determining whether this administration has a definable political strategy, recognizes the time limits we face, and seeks a realistic outcome designed to protect America's vital interests."

Petraeus answered: "We have our teeth in the jugular." Which, of course, is a non-answer without an explanation covering the Lugar premise. This Lugar question is one we should all be asking John McCain. Assuming Iraq is not Germany or South Korea, or any other place we've stationed troops since WW II for entirely different reasons. What are America's "vital national interests in Iraq?" What is a realistic outcome? Do you recognize the problem of some time limitations on achieving the outcome? What is your military strategy and what is your political strategy for achieving them?

These are much better questions for supporters of finishing the job in Iraq than for those who want to end it. And they are more important today than whether a 46-year old Senator has a misguided view of small town religion. MN Governor Jesse Ventura expressed similar views not so long ago and he's a kind of small town boy.

THE NEW DELTA AIRLINES
I rode the old NWA to Washington DC last Tuesday with House Transportation Committee chair Jim Oberstar (D-MN). He says he will do whatever it takes to ensure that the anti-trust division of the Department of Justice takes all the time and resources it needs to protect the traveling public and the American business interests that rely on air transport from the consequences of corporate self-interest. Delta would be the largest U.S. carrier. But not for long, says Jim. But not for long. United and Continental combine, then America has to seek partners and then the world has three dominant carriers because of U.S. airline links with the rest of the world's airlines. The impact is to substantially increase the cost of travel from the U.S. and to reduce or eliminate the "hub and spoke" service to smaller cities which fed the more competitive airline hubs of today.

FOR MINNESOTANS the concerns are that our local politicians start dishing out more of the tax freebies to the new Delta that they dished out every few years to the "new NWA" after Al Checci, Gary Wilson and the Marriott/Disney gang used the company's balance sheet to finance their acquisition to drive the corporation deep in debt just as competition got tough. Republicans and Democrats combined to make loans in exchange for promises rather than promissory notes. They will do it again in the silly competition among states for "corporate headquarters" or "jobs" or "image" or whatever.

Apparently Oberstar is not the only one concerned about the economics of this deal. Wall Street traders greeted the announcement by dropping Delta stock and NWA. On the other hand, airline execs and people who know him well are betting on Richard Anderson to make a strong Delta even stronger. Watching him perform at NWA, and then as head of Ingenix on the way to being fellow Texan Bill McGuire's favored replacement at United Health Care, convinced me. But, beware: guess who's on the Delta board? Al Checci and Gary Wilson!

©2008 Steve Sack

PASS IT ON
Northwest Airlines controls access for most Minnesotans to the rest of the world. They just announced their latest plan to increase fares, fees and to reduce service because of their need to pass on to their captive customers the increased costs of fuel.

Another Minnesota stalwart now headquartered in San Francisco, Wells Fargo, has decided to pass on the costs of their mortgage/credit financing mistakes to those of us who are their banking customers in the form of a $2.50 ATM fee, well above the national fee of $1.78 for what "the next stage" calls a "convenience fee."

American refiners of gasoline have agreed to "pass it on" by cutting refinery production and increasing the price of gas at the pump.

North Star Education Finance, Inc. a student loan company in St. Paul, raises money by packaging student debt into securities that are sold to investors. In much the same way, Wells Fargo securitized their real estate mortgages. NorthStar has decided to "pass on" the risk to this for-profit company of "turmoil in credit markets," to students by suspending any further lending.

HOMEBUILDER BAILOUT
Out in the nation's capital our Congressional leaders have passed over some options for dealing with homeowner/lender risk like allowing bankruptcy judges to adjust the re-payment terms on mortgages, in favor of using the tax code to save as many over zealous homebuilders and lenders as possible. They are about to permit bad judgment to be financed by credit against four years of past income as an adjustment to future income tax liability. Meaning more deficit financing of the guys who got us in this mess.

The four-years tax rebate for homebuilders ranks right up there with "earmarks" to pet zoos, museums, and bridges to nowhere to reveal the singular capacity today's Congress members have to dodge the truly complex, but predictable challenges of energy, transportation, housing, health, and education policy for the city council in Washington pot-hole fillers.

REPUBLICAN LEADERS DIFFER ON 'THE VISION THING'
MN Republican Senator Norm Coleman responded to MN Republican Governor Tim Pawlenty's line item veto of the state's contribution to a billion dollar light rail system from Minneapolis to St. Paul by saying on April 10th: "I've had this vision for 20 years of this connecting link between our Twin Cities."

The Governor apparently has a different vision which sees existing shared ride systems (buses and cars) as "connectors" or his vision may question the need for taxpayers to invest a billion dollars in extending the trip between the two cities' downtowns from the 15-20 minutes it takes me daily today to 35 minutes and compromising all the improvements needed like underground transit through the U of MN and building the system adjacent to an existing interstate rather than down the middle of an existing bus line.

GROVER NORQUIST is a good example of why the Republican majority in Congress has withered and John McCain is the party's likely candidate for President. He is a self-styled anti-tax crusader who coined the "No New Taxes Pledge" which "conservative" groups like the Club For Growth have been requiring of candidates for public office at all levels. He is worshipped alike by small minds and business self interest and somehow won an "office" in the Bush White House from which Condoleeza Rice, Karl Rove and other big Bushies made his Wednesday breakfast meetings of like minds the "place to be" in Washington. He had automatic entre to Republican candidates and office holders eager for his blessing. With the repudiation of the Washington Republican establishment in 2006 and the ascendancy of McCain, Norquist has taken to concentrating on Congressional races in which his goal is the defeat of Republican incumbents he doesn't like.

PATRICK EWING was inducted into the Naismith Memorial Basketball hall of Fame this month. You remember Patrick as the 7 foot star who rescued the ailing New York Knicks 1985-2000. I remember him as one of the best ever recruited to play for John Thompson I at Georgetown. What I really remember is the summer he spent in 1981 sitting behind the new majority Republicans on the Senate Finance Committee as a summer intern recruited by new chairman Bob Dole.

FRICK AND FRACK
As an ice-skating Minnesota kid I loved nothing more than a trip to the Twin Cities for the Ice Follies and the skating antics of two Swiss skaters. They were the Harlem Globetrotters of figure skating. Born in Switzerland, the two parted company on Frack's retirement at age 65. Werner Groebli (Frick) skated on many years and died this week at a home in Zurich at 92.

HEALTH PROFESSIONS EDUCATION
Academic Medical Centers are trying to increase pressure on Congress to expand funding for physician education. While consumer driven health care and the popularity of cosmetic surgery has made dermatologists a $475,000 a year endangered medical species, the medical education establishment is touting the lack of primary care physicians. Even while they expand their bio-medical, bio-sciences building and research capacity and allow their family, geriatric, and community health education departments whither on the vine. Congress appropriately has a cap on the number of Medicare-funded graduate medical education program positions and so far is holding tight on opening the spigot. MedPAC has been examining the issue as well and focusing on how to advise Congress to improve the value of medical education.

TAXPAYER ASSISTANCE AND SIMPLIFICATION ACT passed the House of Representatives with a requirement there be IRS oversight of Health Savings Account plans and purchases to determine what are the real costs to taxpayers and how much of the public expenditure is going to pay medical costs. Another study of HSAs by Kaiser Family Foundation staffers Gary Claxton and Paul Jacobs says the consumer directed health insurance subsidy is not reaching any of the low to middle income persons at greatest risk of going uninsured or underinsured because of their economics.

HEALTH INSURANCE PREMIUM INCREASES WILL START HEADING BACK UP TO DOUBLE DIGITS
After four years of declining percentage increases in premiums from an annual high of 14% in 2003, premiums will start rising this year. What's going on is part "insurance cycle" and in part the inability of health plans to encourage much cost containing behavior change among health care providers. Insurers are getting the benefit of consumer choice of generic drugs, greater discretion in service utilization, and greater recourse to high-deductible major medical plans with lower initial premiums, but that's not enough. Minnesota's eight non-profit plans reported last week they lost $71 million from operations last year and kept premiums level only with investment earnings - which are declining. UnitedHealth Group acknowledged this week its earnings are adversely impacted by a shrinking employer market for insurance products, a Wall Street problem for the large national insurers that MN non-profits don't face even though many have pretty good income from some for-profit operations.

HEALTH POLICY REFORM may be cyclical in nature. The last major national effort in 1993-94 was preceded by many state efforts at reform labeled "the states-that-can't-wait." The 1993-94 effort produced a lot of analysis, some hard feelings, a belief on the part of many Republicans in Congress that only they could do it right, and no bi-partisan consensus on either the urgency of reform or the need for change.

Public opinion polls show the public cares about high cost and coverage as much or more today than 16 years ago and all the 2008 candidates have plans. But consensus on what to do is elusive. So the RWJ Foundation is funding an effort to come up with a plan on which former Democratic and Republican leaders of the U.S. Senate can agree. Bob Dole, Howard Baker, George Mitchell, and Tom Daschle will work with former FDA/CMS Administrator Mark McClellan and Bill Clinton's health policy counsel Chris Jennings to develop such a plan to be presented after the presidential election. Senators Ron Wyden (D-OR) and Bob Bennett (R-UT) already have just such a plan with seven Republican and seven Democratic Senate co-sponsors.

Rather than a legislative proposal on coverage and financing reform, another group of people who were involved deeply in the 1993-94 experience will gather April 25-27 at the Oakridge Conference Center in Chaska, MN, to develop their best ideas for the leadership that will be required to enlist all Americans, along with their industry and legislative leaders, in health system and policy reform. These are people from the Clinton White House, the Senate and the House, and from the left, the right, and the mainstream. All of whom still enjoy high profile respect and involvement in the health system/policy world.

WAYS AND MEANS HEALTH SUB-COMMITTEE chair Pete Stark (D-CA) and ranking member Dave Camp (R-MI) were kind enough to ask me to be the lead-off witness last Tuesday at a series of hearing on "The Instability of Health Coverage in America." I used my time to trace the dual financing track Medicare and the entire U.S. health system has been on using both social insurance and private insurance where they work best to attain the public policy goals of access, quality and cost.

I traced the history of some big successes like the HMO Cost and Risk contracts with private insurance and the prospective payment system for hospitals in the 1980s. And how we missed the boat in assuming that doctors would not increase services in order to maintain income with the RBRVS system and with the rapid advance in specialized medical technology and its impact on subspecialty income. A transcript of my testimony is available at www.nihp.org.

IOWA DOCS MAY SUE FEDS OVER MEDICARE PAYMENTS
According to an April 16th story in the Des Moines Business Record, the Iowa Medical Society may sue the federal government for under-paying Iowa's 4,600 doctors who treat Medicare patients. The theory is a good one, but it's an old one that the Supreme Court has already rejected. The Iowa docs cited a recent Dartmouth study showing that Medicare spending of $39,243 per chronically ill Iowa patients for end-of-life care was 30% below the national average spending. It was 70% below what New Jersey docs spend on the same patients at the same stage or $66,770 per year.

The Iowa docs ought to sue their Congressional delegation including ranking Republican Finance Committee leader Chuck Grassley for neglect of duty. Grassley and Congress should pay the Iowa physicians for providing appropriate and medically necessary care to all Iowa Medicare beneficiaries. The implication in the Dartmouth work, and that of the Institute of Medicine, MedPAC and others, is that Iowa's docs practice style in end-of-life care is also much higher quality than the average because it avoids unnecessary hospitalization, tests, specialty surgical service. So Grassley et al should use their considerable influence not to raise the payments to the Iowa docs, but to lower all other payments to the Iowa level which would help beneficiaries in New Jersey, Florida and other poor quality/over-use states get better care and fewer benefits they may never use and probably don't need.

MEDICARE ADVANTAGE SUBSIDY FLAW
Grassley and others should immediately remove another discrimination against Iowa doctors which they built into the Republican Medicare Advantage amendments to the Medicare Modernization Act. The formula for privatizing Medicare rewards private health insurance plans with more money than is paid to doctors and hospitals. One example we heard last week from Abby Block, who runs the MA program at CMS, compares Medicare spending on beneficiaries who choose MA plans in Dade County (Miami) Florida with beneficiaries in La Crosse, WI near the NE corner of Iowa. The Iowan living in Miami receives a benefit worth 248% of the benefit her brother receives in La Crosse. That derives not only from excess, and often harmful, practice styles in Florida compared with Iowa/Wisconsin, but also the extra benefits and elimination of cost sharing by beneficiaries available from national plans doing business in Florida because of the statutory generosity of MMA supporters.

©2008 Wall Street Journal

COMPARATIVE EFFECTIVENESS INSTITUTE
In my last MedPAC meeting this month, I restated my concerns about our ability to create a U.S. version of UK's NICE in any one of the various public-private configurations the commission and many health researchers have considered. Besides the concerns perennially expressed by the medical technology industry and many of the specialty medical professions which support the industry, there are appropriate issues around accountability of elected officials and appropriators and, perhaps more importantly, of diffusion of evidence of value.

The current pluralistic clinical, research and education system in the U.S. is more able than that of any other country to develop and diffuse comparative effectiveness research. What it requires is public investment in effectiveness and efficiency research of the many inventions that come out of the $30 billion a year disease research institutes called the NIH. Peer reviewed research developed in major health and medical practice groups and institutions in this country, where the findings when clinically applied are rewarded by improved third-party financing, will diffuse research much more quickly. Clinical practice performance is the place to find predictability that only what adds value will be valued. As John Wennberg at Dartmouth says, "If you have it (evidence) you will use it."

NON-PROFIT HOSITALS
The Wall Street Journal story April 4th, "Nonprofit Hospitals Strike it Rich", on the exaggerated benefits of some non-profit hospitals, and the even more exaggerated justification for billions of dollars in tax breaks, has the second largest number of hits on WSJ online the week after.

Over at the Senate Finance Committee, ranking Republican Chuck Grassley of Iowa is as determined as ever to keep on the pressure for spending reform and community accountability. He quickly replaced Dean Zerbe with Teresa Pattera who is going to the hill staff from the IRS' tax-exempt institutions section. On my last meeting after 6 years on MedPAC, I asked my colleagues again to consider an analysis of the distortions in Medicare financing from one hospital to the next based on the amount of "tax benefit" accrued from the federal/state/local government tax exemption, the tax-free bonding authority, and the 501c(3) tax subsidy for contributions (like Mayo's $260 million in 2006, or on the $7.4 billion income earned by Ascension Health System on its investments).

LOBBYING BONANZA
Why do so many retiring members of Congress stay in Washington law, public relations, and public influence firms? Because, as George W Bush once said, "It is time to replenish the old coffers" after years at $162,000 a year. Who keeps them in clover. Last year the big buyers of influence were the U.S. Chamber of Commerce at $53 million and GE at $23 million. Right behind them were PhARMA at $22 million, the American Hospital Association and $20 million and AARP at $19,540,000. Amgen stood out as the biggest pharma spender on more than two dozen former members and staffers and their firms. Its $16 million put it ahead of General Motors, The National Association of Realtors, and Pfizer (at $13.8 million). "We resourced our advocacy to meet our challenges," said the Amgen head lobbyist. For comparison, Boeing and Lockheed-Martin who are engaged in one of the biggest Pentagon purchasing races in history, each spent $10 million.

BRUCE REUBEN came to Minnesota from Maine to head up the Minnesota Hospital Association. After nearly 10 years on the job he is getting ready to leave for Florida to take over a troubled Florida Hospital Association mid-summer. Those who know him will say Reuben is more than up to the job of leadership in the sunshine state. Obviously, we all know his hospitals all have a lot more money to work with than did his members in Minnesota. What Reuben brings to the job is a talent for knowing how to get ahead of the public policy game when "change is just around the corner." Best example in Minnesota may be his leadership on patient safety. No other hospital association was willing to move ahead on reporting "never events" but Minnesota did. Bruce spent a certain amount of his time on the road in other states demonstrating not only how to do it, but why it's important.

A PART-TIME REGISTERED NURSE by the name of Christian Kitchen earned $350,324 in 2007 holding down a variety of jobs in the San Francisco Public health Department including $216,277 in overtime pay for as much as 16-hour days. Mayor Gavin Newsom made less full-time at $214,659.

"I am giving Petraeus all the time he needs"
President George Bush, April 10, 2008

"Cheney Among Officials in Torture Talks"
St. Paul Pioneer Press headline, April 11, 2008

"Brazil opens condom factory to reduce spread of HIV, preserve rain forest"
Kaiser Daily News headline

The Humphrey Institute of Public Affairs at the University of Minnesota will host a conference on May 9 - 10 entitled "The True Working of Single Payer Health Systems: Lessons or Warnings for U.S. Reform." Further details and registration can be found online at the Center for the Study of Health Policy and Governance website.

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