Voices of August: Health Reform, Market Plunge, and Wisdom of Crowds

We must learn to welcome and not fear the voices of dissent. We must dare to think about “unthinkable things,” because when things become unthinkable, thinking stops and action becomes mindless.

Senator William Fulbright (1905-1995), Speech in the Senate, 1964

August 6, 2011 – The Dow Jones fell 513 points yesterday, and as I write it is down another 100. Talk of a double dip recession is in the air.

As I witness these events, I am thinking of my book The Health Reform Maze (Greenbranch Publishing, Baltimore), which will be available in several weeks. Chapter 2 of the book, “Wisdom of Crowds,” starts out this quote,

“The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations.

Title of 2004 book by James Surowieck, in which he says aggregation of information in groups results in decisions that are often better than could have been made by any single member of the group.

It seems to me the Voices of August, are telling us something. These dissenting Voices may represent the overloaded guns of August. They may be accentuated by the ugly mood induced by howling Dogs of August, but I believe we should listen to these Voices.

• Investors are telling us they do not trust the fundamentals – overspending by government , under-consuming by the public, and under-performing by politicians.

• World Markets are telling us it is time for the U.S. to get its act together - to make structural changes in response to the demands of the public and business, to aging populations, to welfare state burdens.

• American voters are telling us, in the November 2010 elections and in the latest New York Times/CBS poll, that 82% of us disapprove of what the government and politicians are doing.

• American Patients, especially seniors and increasingly the poor and uninsured, are telling us they depend on entitlement programs – in the 2nd quarter of 2011, government spending on health care rose to 57.5% of all health care spending, and Medicare/Medicaid spending rose 10%.

• American Physicians, in survey after survey, are telling us the health reform law, as now structured, will cause some 25% to drop out of Medicare and 50% or so to cease seeing Medicaid patients, just when demand for physicians services peaks. Two of the reasons for this pulling out of government programs are – One, underpayment by federal programs, and Two, high administrative costs, which are four times those of their Canadian counterparts.

• U.S. Businesses is telling us they cannot afford Obamacare. In surveys by reputable consulting firms, somewhere between 30% and 50% are saying they will drop coverage for employees between now and after 2014, when Obamacare kicks in. Businesses are also telling us they are not hiring because of the uncertainties and consequences of Obamacare, which they fear will be enormous.

• American Financial Observers, on both sides of the political aisle, are telling us fundamental restructuring of entitlement programs are needed. Most frequently mentioned include Medicare vouchers, as in the Ryan Plan, delay in the age of entry in Medicare, means testing of Medicare recipients, higher taxes on those making over $250,000, systematic tax reform with flattening and broadening of taxes with plugging of tax loopholes, and expansion of health savings accounts and high deductible plans, which have been shown to decrease health spending by 20% or so.