A Better Solution than Budget Cutting

President Obama's proposed that we cut roughly one trillion dollars of spending each year from the federal budget. That's going to cause an enormous amount of pain for honest people just barely making ends meet, as well as exacerbate our already painfully slow economic recovery. There is a much better solution to our problems and it amazes me that our leaders are unable to see it.

The black market or underground economy is estimated to be larger than a trillion dollars; possibly as much as double that much (eight to ten percent of our gross domestic product--and even larger in most other nations). Now suppose we could heavily tax that activity. Then we wouldn't have to reduce spending as much, and could make crime a lot less profitable as well. It has all sorts of nice side effects too, like creating a huge disincentive to illegal immigration, all forms of vice, and even theft. Right now, a dollar stolen will buy more goods than a dollar earned honestly. That's a terrible state of affairs. Why don't we reverse that and make sure that a dollar earned buys more than one that is stolen?

It's relatively easy to do because there is nothing you can do with money (no matter how you get it) except to eventually spend it. Even putting it into the bank, or stock market, is a form of spending it. And if you don't spend it, it will evaporate slowly anyhow--we call that process inflation.

One way to accomplish this is to create a new kind of tax that only applies to money earned via the black market. There are a lot of different ways to do that. The easiest is probably a very high national sales tax, like 100%. It's easy because we already have the infrastructure at almost every point of sale to calculate it. Suppose that for every dollar of income that you reported, the government gave you a dollar's worth of national sales tax credit. Then no one who could report their income would ever have to pay that sales tax because having the dollar to spend also meant they'd have a dollar of credit too. But people working here illegally, or acquiring their income in ways that cannot be reported would not have the credit. Thus criminals would effectively be taxed at the rate of 50%--higher than anyone earning their money legally.

There are even better ways too, but they're not as easy to implement. The best way I can imagine wouldn't just solve the problem of taxing the black market, but would also protect us from exploitation by the people we do business with, help our doctors maintain our health, protect us from identity theft, and give us all a whole new source of revenue by allowing us to sell our consumption data (rather than allow banks and credit card companies to sell it without our consent and keep the proceeds themselves.) Effectively it's a universal transactor which is an entity that stands between us and the people we do business with. Only the universal transactor would actually know who we are. We pay it, then it pays our creditors ensuring that they cannot lose or sell information about us.

Cornering rascals

I wish President Obama would realize that he needs to look for better ways to motivate congress. He needs to make it easier for us to directly pressure our legislature. Take health care for example. Congress's vested interest is to structure all legislation to best suit the industries that most support them. These are the ones that generate the most profits and will always be things like financial services, or insurance, and never things like health care.

To overcome this tendency Obama must find a very straightforward way to measure their performance. In the case of health care reform this seems easy. Ask the GAO for a pie chart that shows all of the things health care dollars are spent on; from doctors, nurses, and hospital administrators, to marketers, insurance brokers, financial analysts, lawyers, and lobbyists. Color every slice with either blue or red depending on whether it represents an activity that actually delivers health care. Put in on a prominent web site with the simple promise to veto any legislation that does not leave us with a significantly smaller red area--at least 25% smaller.

Directly below it there should be two pie charts, one for each party, that represent how the allocation would change under the solutions they're each proposing (according to the GAO.) That would leave them with few options but to look for ways to outdo each other cutting the fat out of health care infrastructure or risk being replaced by people from the other team in the upcoming election. He should make it easy for us to email our representatives to let them know we're watching them via the web page and do indeed intend to replace them if they lose the contest.

And he should advertise the site relentlessly begging us to let them know that this new mechanism is going to be steadily refined and gradually evolve into something that enables citizens to more objectively measure the performance of their elected representatives and find out what they are presently working on. He should challenge congress to do the same thing to him as well; find ways to objectively record the alternatives he faced for each choice made.

Finally, don't clutter any site with a lot of distractions, like ads, pleas for campaign contributions, links to irrelevant affiliates or party propaganda, etc. Keep it simple, bipartisan, and deeply focused on the specific major issues presently before congress. If you give the American people a tight enough set of reins, I'm almost certain we could get some useful work out of those unbroken beasts on the hill.

Our biggest mistake

Whenever I try to reason out why something that seems crazy to me is as it is, I always end up concluding that something very fundamental about my perspective is different. Thus the challenge I face in trying to explain a suggestion is actually to coax the reader to share that perspective, if only for a moment.

An example of this is noticing that any genuine health care industry's most fundamental goal would be to put itself out of business--render the administration of health care honestly obsolete. Even if that end is never reached, it suggests that the best measure of a health care industry is how few people need any health care. To me, that suggests I should compare it to the way we deal with fire. (I posted a reform strategy earlier.)

The only real difference between the two industries is that you are unlikely to ever have a health condition that seriously threatens your entire community. Whereas the opposite is true for fires. You're very unlikely to have one that does not threaten everyone else as well. Too bad for all of us I suppose because if we viewed health care as we do fire, we'd have no doubt discovered enormous numbers of preventative measures we could deploy to mitigate the need for emergency response.

Because of the difference we can easily see why we have basically a socialistic approach to fire (where the state pays for fighting them and forces compliance in safety measures from us.) Private companies compete to sell us compliance, insure any loses, but also have a conflict of interest in that an opportunity is created for them to lobby government to adopt standards that may be more about generating business for them than making our lives safer from fire.

Because of the similarities, we already incorporate part of health care, emergency response, into fire departments. The logistics involved in having more than one coordinated entity to cover an area make response any other way simply impractical. A fringe benefit is that you can get a pretty accurate idea of what it costs to provide that part of health care per person per year. There are about 201,200 paramedics earning a median wage of $28,400 to cover roughly 300 million Americans. It comes to $19 each, but just pays the salaries. So the per person per year cost of the 911 based emergency health care response is about fifty bucks.

How is this paid for now? Haphazardly probably best describes it. And very unfairly considering that everyone in a community enjoys exactly the same coverage whether they pay anything for it or not. Its just another tiny cut in the flesh of our credibility as a society, no big deal on its own. But these cuts are everywhere, and they're remarkably easy to fix, completely needless artifacts of a legacy predating computers that should now yield to a better mechanism that leaves us more connected to reality.

We can fix only what we can see is broken. By burying the costs of things in layers or mixing them together we undermine our own ability to address them. We disconnect our ability to see our own role in creating them. We make it harder to discover relationships between things. A better idea of the true cost of health care would leave us more motivated and better able to discover and evaluate preventative measures.

But worst of all we undermine our own ability to have respect for our society! We have allowed the infrastructure of our lives to become opaque and arcane and no longer respect or even trust it. This seems to do everything from allowing people to rationalize criminal behavior to avoid paying all their taxes. It's just incredibly dumb to accept this situation for lack of fixing such amazing simple problems--like letting people actually see an itemized bill for the things our society does for us we might not even notice.

If our government honestly wanted to become better at governing us well, wouldn't their highest priority be to ensure the electorate had enough education, knowledge, and information to choose the best representation and most competent peers and successors? To me that means giving us a map of our economy, looking for ways to educate us on the reasons things cost what they do, on how our choices affect those costs, and what opportunities there are to avoid them. We need the information necessary to better connect the choices we make to the actual price we, as individuals, pay for them. Not doing that is our biggest mistake because it costs us the very selective pressure that would enable us to make the sort of choices that leave us most empowered, free, and striving towards the goals that enchant rather than simply sustain us.

Putting some soul into health care

My previous three posts have all been about health care. I'ld like to briefly summarize them here and then finish. In the first one I define a governmental agency, like the National Institute of Health, that would act as a transactor for every payment that can be considered a health care expense or a purchase of health care insurance and why I think it is such a wise approach to health care reform. In the second one I outline how that change would affect the basic components of our present health care system and better motivate them to focus on on their specific role, and not just any old way they might increase profits. (And assumed that the present practice of allowing employers to pay the health care expenses of their employees with pre-tax dollars was on its way out.)

In the third one, the previous post, I brought your attention to a particular node or place in cyberspace that would hold all of your medical information and suggested it should exist inside the transactor's databases because that is the most private information about us and that should be very important to our government to protect. The goal is to create an environment where that node actually becomes a personal life advocate for us. A sort of virtual personal assistant that remembers everything about us, has a nearly perfect knowledge of our health history, diet, habits, and myriads of other information that it can use to detect the sorts of things that correlate with opportunities for preventative medicine and make us aware of those choices.

Building a soul for ourselves in cyberspace

Health isn't just being physically fit. It's being educated enough to at least make informed health choices. It's having the infrastructure a person needs to function. Those things are just forms of preventative medicine. The real medicine we'd need by neglecting them is more expensive than the non-medical preventative medicine we need to treat them. If citizens are so important to their governments, how is it no government has even thought to create a computer program that looks for the people it can easily find, would benefit from help, and that it can easily afford to help? That's what this is. Nothing more than a task running on some server in cyberspace with no more to do than be there for you. It's job is to keep you as happy and healthy as you, and it, can figure out how to do.

Think of it as a crude attempt to create a soul for humanity designed to help us be us. We create this computer program that knows a lot about everyone, and uses that information to help us make wiser decisions. If, for example, your behavior changed in some way that correlated well with people who later had a medical problem, this little advocate will make you aware of it. Have a pain you don't understand? It might save you a visit to the doctor or direct the ambulance to where you're lying. If you wanted to change something about yourself, it could be of help since it could look for what worked for others like you that wanted the same thing and got there. If you wanted to learn something, same deal. It will be capable of whatever we are clever enough to teach it. As computers grow in power and software in sophistication I wouldn't be surprised if it renders the field of psychology utterly obsolete in just a few years by doing a much better job of helping us see ourselves clearly and make the changes we want.

The idea is to create a focal point, like the iPhone did, where everyone is invited to deploy their solution to help us be better people (or get more out of the device). Does this imply that I consider people devices? Yes, I suppose it does. Why is that a problem? Doesn't an actor want to get the most out of their instrument? I'm not suggesting we look for ways for others to get more out of you. Just how we can enable you to get the most out of you. No one is going to use an iPhone application that they find annoying. It's the same thing here. If the sort of software that emerges from a system like this was a nuisance, who would use it? Okay, I suppose masochists would love it. But they can almost certainly find devices already that are better suited to amuse them.

Creating the incentive to empower us

Like the iPhone, I'm advocating a standardized forum where anyone can deploy software they believe would be useful helping people become better. We will be the ones to decide how we interact with the data made available this way, and the developers of the software we choose to use will be paid a tiny amount per user by the transactor. The first applications will most likely be electronic patient advocates that help people avoid treatment mistakes (like taking a drug while you are using a different drug that is incompatible,) follow progress, and be sources of information, encouragement, and a connection to supporters. But I would expect lots of stuff to emerge, from software that helps kids do well in school or learn an instrument, to ones that teach adults how to eat more wisely or cope with tragedy.

I see these things as going a long way to lowering the level of overall uncertainty and stress in our lives. I think collectively they'd lead to substantially lower health care costs and healthier longer lives for most people. I also think they would push many other boundaries that limit the opportunities that appear to us and thereby increase the growth rate of our economy.

But most importantly, I see this as a solution we can adopt very quickly and without undue immediate impact (other than starting to phase out employer paid health care.) We can even delay the flow of insurance premiums through the provider to give that industry time to come up with standardized contracts, computer procedures and the other infrastructure needed for a smooth transition. The providers should be routed that way as quickly as possible because there is simply no reason not to. The limiting factor there is to standardize the format of medical information and design and deploy equipment well suited for error-proof collection and delivery of it. All of that should happen regardless of what we do because we need that information for so many things--from better evaluating the efficacy of treatments to the competency of practitioners.

I should also note that I've pretty much avoided any discussion of funding mainly because this suggestion is actually independent of how health care costs are ultimately reckoned with. This is just about how we might get the most out of whatever we do decide to spend.

Resistance is meaninglessness

The most useful things I know of are all actually just tokens for metaphysical entities. Like words, formulas, money, contracts, and yeah, I suppose, even people. And although every bit of their utility never leaves the metaphysical realm, they don't become very usable until they have a functioning physical form.

A meme isn't even knowable by it's holder until we have a word or phrase that can adequately contain it. A fact about the structure of our world isn't all that much more tangible even after we've outfitted it with a perfectly tailored formula. It can take a great deal of training just to see a blurred image of it. And cash seems more real to us that the real things we trade it for that seem mostly fake! This should amaze us.

Contracts can actually be too real. And people aren't just real, their physical manifestation can even be nice, naughty, or if you're really lucky, both. My only point in all of this is to illustrate what wonderful things can happen when something metaphysical somehow gets inside a body that suits it. Because I think that trick might just lead us to a great deal more than cheaper health care.

So I've long wondered what metaphysical concept, property, or idea could be embodied into a tangible entity whose presence in our environment would just naturally lead to our becoming deeply enfranchised. (Whenever I ask my wife something like this she looks at me or responds like I've been caught preparing to torture her. It's not easy to discuss this stuff.)

I stumbled onto what I think might be a solution when I was looking at what a mess my room had become and wishing I had a copy of me to do all the things I didn't feel like doing but knew I should do. I know I could tell the clone what it ought to be doing and that it would agree because it could see I had much more important things to do. But by that point I didn't want my clone to do any work because I wanted his complete attention while I explained what seemed like a clever way to solve the problem I mentioned above. Besides, if my room wasn't such a mess I wouldn't have stumbled in the first place.

Competing with your virtual clone

I realized that if we are all better at telling ourselves what to do than we are at doing it ourselves, then maybe, if we could make a virtual copy of ourselves more tangible, we could use it to improve ourselves. It could be a very natural, private, and compelling process--if the only way to endow my avatar with a property was to achieve it in real life then I might be onto something. And I started to look for ways that might work.

Then I noticed that my soul is already in cyberspace (well, bits of it), why not just make it official as a tangible presence for ourselves by pulling those bits together? We can do that to some extent already at sites like facebook and youtube, but I'm picturing a node, or URI, that's connected in various ways to a great deal more. The safest node in cyberspace is the one that represents us in the universal health care transactor I described earlier.

You can't secure liberties without robustly engineering them into the fabric of society. You already have lots of nodes that represent you in cyberspace. I'm not too happy about that. In fact, you might say I'm sort of ticked off that our government is so careless about defending our privacy and the integrity of our identity. Just because it's more intangible than I am doesn't mean it's not rather important to me. And just because the bits of your soul are presently scattered about cyberspace doesn't mean that a clever piece of software can't box them together faster than you can say 'unholy packet.'

Giving our souls an address in cyberspace is the best way to ensure our government puts protecting them above even us. We just have to ensure that if they fail there is no longer a way for them to collect our taxes. It's the ultimate identity protector because it need never share anything the identifier doesn't have a need to know. If the software running the database is open source, and can be proven by anyone to be correct, and the mechanisms is uses to protect us from even the most sophisticated attempts of our own government to get at it are verifiably robust, I believe we will be a lot better off than if we leave things to our leadership to work out. This is a technology that needs to emerge from academia fully tested and ready for governments to deploy or be left out of a new economic reality.

I guess I never got to what I promised in the prior post--a mechanism whereby we encourage ourselves to make wiser health care choices. Whoops. Maybe I'll make it there with the next one. Right now I'd like to bite something resembling food.

Consequences of a single health care transactor

In my first post I talked about creating a selective pressure that could direct progress by narrowing economic opportunities to be mostly in the direction we want our economy to evolve. This is the sort of thing I was talking about. Finding ways that don't so much change things as they are now, but undermine their ability to grow in any direction besides improving. Here's how I think the single transactor system I describe in my previous post would affect our nation:

Fewer Health Care Lawyers.

The impact on of a single transactor system on everyone in the health care industry that doesn't actually provide health care is not good. The lawyers will most likely have less work because patients wont be suing insurers for coverage that can no longer be denied or delayed. (Obviously proving fraud on the part of the insured is important if it took place and the system must be designed to allow that to happen without simultaneously giving insurers access to enough information to cherry pick who they cover.) Less malpractice suits are likely too, because the transactor will have a lot more data and better tools to discover subpar providers quickly. Less contracts will be needed since the transactor will have standardized ones.

Less marketing and administrating. No sales force.

Marketing departments and advertisers will have less work since health insurance will be as generic as we can make it. A lot less clerks, accountants, and secretaries are likely to be needed since the transactor is handling all health care payments electronically. The sales forces aren't needed at all since health insurance could only be purchased via the transactor.

(This process of creative destruction is a rough but necessary part of capitalism. These jobs are artifacts of the system we have now and would no longer add value to a single transactor system. I do believe there is some injustice in destroying these jobs because they only exist as a consequence of our governments willingness to ignore the payroll tax fraud implicit in employer provided jobs perks.)

Wiser more competitive HMOs and Insurers.

Not having a brand-able product to market will leave insurers with only three ways to compete; lowering overhead, earning a higher yield with premiums, or improving their ability to deploy preventative medicine effectively (so that it genuinely does save money by reducing a patients need for more expensive treatment later.) Of those, it is the last one that promises the most profit. This tightly aligns the fortunes of both insurer and insured--they profit most by helping us stay as healthy as possible and via no other way.

Perhaps our government should encourage this practice even more by offering some fraction of the savings generated by a breakthrough in preventative medicine as a reward to the discoverers. I would prefer this to the patent mechanism we use now, for health care technologies, because it promises the most rapid deployment, avoids a great many costs, and can generate the same or even better financial rewards for the discoverer genuinely commensurate with the utility of their invention.

A national health care database.

A universal health care transactor will create more jobs than it will destroy. Jobs for people to build and maintain the databases needed, design the most efficient and error-proof input and output equipment for providers, and create tools for allowing users to find the information they're looking for in the database.

It offers more opportunities for entrepreneurs to create insurance, medical products, drugs, and information processing technologies for the heath care marketplace formed by a common transactor. This is because a very accurate idea of how much of a market exists can be purchased enabling a more competent and believable business plan to be developed.

It might fund itself. The transactor would have a lot of information of great value to insurers, researchers, and entrepreneurs and can be carefully regulated to protect the public and the intellectual property of its clients. If we are clever enough, we might make health care solutions as easy to discover, deploy, and profit from, as iPhone applications are today. But every one of these jobs will share the property that they are directly involved in improving the quality, access, or affordability of health care. Contrast that with the system we have now, where most of the profit comes from passing on costs to the insured if at all possible, or by marketing coverage more effectively.

Trading your lifestyle data for health care coverage.

Suppose you were able to collect a great deal of data about what you consume, when and how long you sleep, where you go, and what sort of exercise you get. A transactor is in the unique position of making that safe to do (best protecting the information from government and industry) while allowing you to profit from anonymized access to it. This kind of data will enable the most comprehensive understanding of any relationships that exist between lifestyle choices, health care needs, and effective preventative measures. It will help patients by giving their health care providers a better window into a patients health than even the patient themselves could deliver. And regardless of whether they are conscious at the time.

I think the best way to protect our privacy is to create a single regulated mechanism for collecting information about us and make it illegal for anyone else to maintain certain kinds of information about people. (They must use the regulated mechanism to both store and retrieve that sort of information when they have a legitimate use for it. This would apply to all government agencies as well.) This may seem backwards to many people--actually creating a formal way to store everything about us in order to protect us from exploitation by entities with exactly that information. I think this belief is naive. The information exists and is collectible today by pretty much anyone with the desire to do so. We're constantly reading about this or that database of credit card customers, patients, or credit union members being stolen and exposing those people to identity theft or other fraud. By requiring those companies to use a common, heavily regulated and protected store for that kind of information we can better protect it and improve the accuracy too. This is a threat I think we had better face head on and very seriously.

Right now companies that collect data about us are free to sell it. That's the source of a lot of the unsolicited invitations you get. That can't happen if we switch to a common store. Instead you'll browse a web site that shows you the list of outstanding offers to buy anonymized access to your data and can pick which, if any, you'd like to indulge. There will even be studies you can be paid to participate in that ask you to change something about your lifestyle for a test period because researchers have the ability to verify that you did. This should dramatically reduce the cost and improve the accuracy of a great many kinds of clinical trials.

All of these things work together to lower health care costs and protect our privacy. I believe they would improve our health care system a lot all by themselves. But there is one more minor change I'll propose in the next post that should do a lot more. And it consists of how we might better connect what we pay for the choices we make in life to the true cost those choices have on us and others.

A single transactor system

The Observation: A single transactor system is better.

If a provider must collect from the patient their expenses will be higher than if they collect from a single payer. This seems like the easiest way to save some money relatively quickly.

The Proposal:

Suppose that all money paid to health care providers for any professional service had to go through a single agency charged with the task of maintaining the records, protecting the identities of those involved, and ensuring that each provider's prices are consistent and independent of the source of the payment. (Not trying to set prices, but ensuring that the same service isn't billed at multiple prices.)

My Reasoning:

Most importantly it promises to lower costs by removing the burden of collecting fees from providers. It gives them the ability to discover the prices and ratings of their competitors which might also encourage them to be more competitive. And it assures us that all issues or complaints with any medical procedure will be funneled through a single agency allowing the highest degree of quality control.

It forces all providers, insurers, and other payers to register with the paying agency allowing them to establish the computer connections necessary to ensure the process takes place automatically, that the patients records are maintained in a standardized and secured place, and that those records are complete with respect to each transaction that takes place. It ensures that an accurate record of what each taxpayer spent on health care is available for tax preparation.

By establishing a single database of all medical procedures researchers can find trends and correlations that enable more preventative medicine to take place.

• It allows for control over how much information insurers can know about those they insure making it harder for them to illegally cherry pick clients by canceling the riskier or more expensive ones. Once a company has registered their coverage it's up to the regulators to decide whether they should even get to know which of their clients needed it. It prevents the insurers from bullying individuals entirely, since everything must go through the transactor they'll have to treat all of their customers the same way.
• It allows entrepreneurs access to the information they need to to find out where the greatest need for innovation exists and where their efforts are likely to pay off most.
• It gives ordinary people access to a great deal of completely unbiased information in choosing between providers and insurers and gives them a reasonable idea of what it would cost them to self insure. Combined with a mechanism that allowed people to borrow some multiple of their prior years tax return for payments made through the transactor it could help people avoid finance charges for unexpected health expenses that break their budgets.

Related Video Clips

(I am not affiliated with any other these organizations in any way. The links are provided here as supporting testimony.)

Patient Privacy Rights is a 501(c)3 non-profit organization located in Austin, TX. Founded in 2004 by Dr. Deborah Peel, Patient Privacy Rights is dedicated to ensuring Americans control all access to their health records.

Glenn McGee on Health Data Chips on Prime Time with Erica Hill

Device connectivity should enable a single source of truth for patient data.