Richard D. Lamm has spent more than 20 years warning America that shrinking birth rates and growing life expectancy are rapidly rendering unsustainable the social contract built around Franklin Roosevelt's New Deal and Lyndon Johnson's Great Society. Lamm, a former three-term Governor of Colorado, compares his efforts to those of Winston Churchill during his wilderness years of the 1930s, futilely warning Britain against the rise of Hitler. Lamm argues that Social Security and Medicare are fiscally untenable and morally indefensible, transferring vast amounts of wealth to today's elderly at the expense of future generations.
Selected as one of Time's "200 Young Leaders of America" in 1974, Lamm served eight years in Colorado's legislature before being elected governor.
MANAGED CARE: What is your moral vision for health care?
RICHARD D. LAMM: Right now we don’t have a moral health care system. We have a technologically brilliant, but morally inadequate health care system because we let 40 million people go uncovered, and we need to keep our eye on that. To my mind, the most important thing is structuring a universal health care system. Some people disagree. Once you start with that moral overlay — that we have an obligation to cover everyone but not everything — then you realize you have to make some decisions on mental health coverage, coverage for illegal aliens, coverage of alternative medicine. None of those are happy decisions but at least they’re done within the context of universal coverage. You can’t say that everyone has an absolute right to have something like acupuncture. We may or may not want to cover acupuncture, but we have to make that decision within the correct moral system that says everybody in a society is entitled to certain basic health care.
MC: Talk a bit about the broader context within which health care must be provided. You maintain that future generations will be saddled with much heavier debt than has generally been admitted.
LAMM: From a public-policy viewpoint, there are three interrelated things we have to deal with: health care, income security, and long-term care. There’s a hydraulic relationship among those three. The money we spend on one we don’t have to spend on the other two. I don’t have the luxury of only looking at health care. My generation has cooked the books. We added incredible debts to your generation, your kids’ generation, and beyond by a variety of very subtle mechanisms that are not fully understood. Let me give you some examples. We know that the published national debt is $5.95 trillion, but we don’t recognize unfunded liabilities that younger generations will inevitably have to pay. It’s an obligation that you have that you cannot either morally or politically avoid. The unfunded liability of Social Security is probably $9 trillion, and estimates range up to $14 trillion. Add to that the unfunded liabilities of Medicare and military and civil-service pensions. I don’t mean to minimize the contributions of my generation because you can say that my generation won the Cold War — or somebody did — but we put aside no money for military pensions. People are retiring from the military at the age of 39. You can’t run pension systems when people retire at 39 and live into their 80s. I feel that the actual federal debt plus the unfunded federal debt that has to be paid at some point, and for which no contingencies have been made, amounts to about $20 trillion.
MC: What kind of choices or decisions do we have to make as a society to put a lid on the health care piece of that growing liability?
LAMM: The first step is to recognize reality. We must recognize the unavoidable and be honest with ourselves that we face some issues that aren’t going to go away. When I graduated from high school in 1953, there were 13 workers for every person retired. Now there are 3.3 and it’s heading for 2.5. That means that a husband and wife are not only going to have to support their own children, but also have to support either my wife or me.
MC: Yet political leaders of either party are not talking about these issues. What’s going to change that?
LAMM: The answer to your question is 2009.We’re going to wake up in about 2009 or possibly sooner because that’s when the baby boomers start retiring in large numbers. The first rule of public policy is that all things come home to roost. I don’t want to be too grandiose, but I’m doing what Churchill did in the 1930s. He just kept warning and warning and warning. Hitler was not nearly as inevitable as is the aging of our population. Everybody who will turn 65 in the year 2065 has been born. When he ran for president of France, Jacques Chirac said a very wise thing: "Politics is not the art of the possible but is the art of making possible what is necessary." The first baby boomer turns 65 in 2011 and so I’d say this issue explodes by the latest in 2009, which is the day after tomorrow in terms of public policy. We just won’t be able to avoid the question any longer. The number of elderly in the United States will double, the number of people over 80 will increase by three-fold, and it starts happening awfully fast.
MC: How do the boomers differ from earlier generations?
LAMM: The boomers have changed America as every generation does, but more dramatically than any generation in a long time. They’re controlling their own destiny and not in step with previous generations. They are going to look at health care very differently. That doesn’t minimize the moral problems. Should we give flu shots or pneumonia shots to people with Alzheimer’s disease? Some of these issues make our moral compasses spin. Should somebody be able to get a very expensive transplant beyond the age of 85? Should age be a consideration in the delivery of health care? I argue that we have a bigger moral duty to a 10-year-old than we do to an 85-year-old. I’m 66 years old and I have a 94-year-old father who is in relatively good health. I talk to my father every day. He is a wonderful man, but I recognize that I can’t design a health care system for what I would do out of love for my father. You can’t build a health care system a mother at a time. The question that I ask is, what should we subsidize with mutually collected funds.
MC: What would wise political leadership be doing now to prepare for the future?
LAMM: The most important rule in public policy is that the earlier you start dealing with the problem, the less draconian your solution will be. This has frustrated me since I started writing about it 20 years ago. I don’t want to sound self-serving, because I did not do any of the independent research. All I did was read what other people were saying and take it seriously. We realized two very important things 20 years ago. First, that the increase in life expectancy, which for a time we thought would plateau, would continue. We added 30 years of life expectancy last century and we keep adding more. Second, that there was a dramatic and continuing drop in the birth rate. The fact is that there are these outrageous women who want a career of their own.
MC: The nerve!
LAMM: Of course they should have their own careers. Is there any scenario you can imagine where all of a sudden women are going start having 3.8 children again as they did in 1960? It’s not going to happen. There was one woman in my law school class; now it’s 53 percent women. By 1980 we knew enough about life expectancy and birth rates to know there’s a train wreck coming. It is very important for a society to take its long-term trends seriously because they creep up on us and then they overwhelm us. If we had started in the ’70s to slowly segue into a better-funded Social Security system, we would have savings of $13 trillion rather than $9 trillion worth of unfunded liabilities. It’s easy to run a democracy if you have the kind of decisions that I had to make in political office, which involved dividing a growing pie. We could give everybody something. I believe that this is ultimately a test of democracy. Can democracy be called upon to make hard decisions?
MC: Doesn’t history suggest that the answer to that is no, that in good times our democracy tends to ignore problems that are not immediate?
LAMM: Yes, democracy is a crisis-activated system.
MC: So at some point there will be a crisis. All of a sudden it’s going to be front-page news that Social Security is running out of money, and by the way, so are Medicare and Medicaid. Is that what we’re really talking about?
LAMM: Exactly. Where were Hitler’s armies when Great Britain turned to Churchill? Answer, at Dunkirk. I’m not trying to argue against democracy in any way. I live and die by democracy, but we’ve got to find a way to make it better at anticipating what’s coming.
MC: As Churchill said, "Democracy is the worst possible form of government except for all the others that have been tried from time to time." What changes need to take place to realize your moral vision for health care?
LAMM: The whole society has to recognize that we can’t build a modern health care system one patient at a time. We have to understand that a doctor can only give to a patient what is his or hers to give. They can be caring and loving and respectful of confidentiality. Those things don’t involve resources. When it comes to resources, there’s a new moral level that has be laid on the scale. That is the moral level of how we spend group funds, whether they’re taxpayer funds or premiums paid to an insurance company or managed-care company.
MC: You won’t find anyone in the health care system arguing that we have unlimited resources.
LAMM: That’s true today, but wasn’t the case when I first went on the speaking circuit after I left office in 1987. I was met with overwhelming skepticism. It wasn’t hostility because people listened politely, but a lot of doctors and hospital boards and other health care providers vehemently disagreed that we had to set limits in health care. Today, practically nobody makes that argument. The problem today is that I don’t think the implications of limits have been thought through. Of all my frustrations, one of the biggest is that we have not had the maturity as a society to recognize what managed care has brought us. If health care costs had kept growing through the ’90s as they grew in the 30 years before that, we’d probably have spent another trillion dollars on health care, and we wouldn’t be any healthier.
MC: Part of the frustration with managed care has been with the way some companies achieved those savings, by putting obstacles in front of people and making it more difficult to get care.
LAMM: I don’t write the managed care companies a moral blank check, but I think that two studies by [University of California-San Francisco professors Roger H.] Miller and [Harold S.] Luft were really important because they showed that whatever the reason or methods used by managed care, it has kept us substantially as healthy as fee-for-service medicine. Yet we truly saved money. Part of my frustration is the fact that we’re such an overindulged society. We can’t face up to the reality that you can’t have everything that medical science has invented. Instead, we get things like the Patients’ Bill of Rights.
MC: Isn’t the Patients’ Bill of Rights a short-term political reaction and not necessarily a long-term part of the landscape.
LAMM: Yes, I think that’s exactly right. Still, instead of talking about the long-term issues that you and I are talking about, the whole political system is consumed by peripheral issues. The debate on prescription drugs ought to be whether or not you should be paying for my drugs in addition to my health care. I did not join the Democratic Party to transfer money blindly from the young to the old. Try me on the rich to the poor. Systems that I would have voted for have segued into systems that blindly transfer money to people because they’ve turned 65. This is crazy. There is a real problem with some elderly people and prescription drugs, but the methods we use to fund these systems have become desperately unfair. My generation hasn’t been fair to younger generations because the system that we set up and believe in so strongly transfers money indiscriminately to the elderly, even though they have the second-highest income and assets of any group in the country.
MC: Yet, in 2010 or 2011, I can see the over-65 cohort responding to any crisis in Social Security not with broad solutions but simply by demanding the same benefits their parents had.
LAMM: Who can blame them? I guess I can blame them. I answered my own question. This is the challenge. Every society has a challenge to meet the realities that it’s faced with. My parents faced a reality called the Depression, then faced a reality called Hitler and Tojo. I’m trying to point out a new reality, one that does not allow us to continue funding things in ways that are overwhelmingly popular but unsustainable.
MC: It would seem that Oregon’s Medicaid program is doing some of the things that you argue the rest of the country needs to do — such as shifting more cost responsibility to beneficiaries who choose more expensive pharmaceutical options.
LAMM: I was almost like Saul on the road to Damascus when I read the statement by Gov. John Kitzhaber, who has since become a close friend, that the legislature is accountable not only for what is funded, but for what is not funded. The whole thing fell into place for me. John, Al Gore, and I participated in a debate and Gore went on and on about this outrageous Oregon plan. Kitzhaber says, "Let me see here, where are we in Tennessee in terms of covering the medically indigent? You’ve got 47 percent covered and you’re complaining about Oregon." When I ran the state of Colorado, I covered 50 percent of our medically indigent people and I cannot possibly say that I didn’t ration medicine. I rationed medicine in the worst possible way. If I appointed Al Gore tomorrow as the new governor of Oregon, would he reverse what was done and cut half of the medically indigent people out so that we can cover end-stage renal disease for a few of them?
MC: I doubt it. If someone else has already made the tough policy choices and taken the medicine, most politicians are more than happy to reap the benefits.
LAMM: Exactly. What amazes me is why Oregon’s plan hasn’t been adopted in other places. I think it’s going to be. There has been movement in that direction in Virginia and the state of Washington. It’s taken a long time but I do think that change is coming. The problem has been the inability to admit that resources are limited. The model that we’re going on right now, where everybody feels they have the right to all the beneficial medicine that might do them some good, does great harm to our society and doesn’t allow us to maximize the health of our society. I’ve been watching what’s happening in the Netherlands and Sweden and other places where they have established priority-setting methods. I just spent some time in New Zealand that was sobering. New Zealand has a real sense of community. People feel that they really are tied to their neighbor and that you don’t leave your neighbor without certain basics like health care, but even they have been unable to look rationing in the face. They do it by queue and waiting lists. Every nation in the world rations medicine. It’s just a question of how you ration it, whether you ration it irrationally. Let me give you an example. Look at how much money we spend on end-stage renal disease. I see how that happened. They brought some people who were on renal dialysis in front of Congress and Congress said, oh my God, we can’t let these people die. If people could just have the moral imagination to think about what would have happened if we used the money we spend on end-stage renal disease in this society to cover people that didn’t have basic health care.
MC: Is Oregon doing it in the right way? You’re saying what they’re trying to achieve is laudable. How would you change the way they’re going about it at all?
LAMM: Federal maintenance-of-effort rules have prevented Oregon from going through the painful part of paring the list of what’s covered. Oregon has bought a better health care system and covered a lot more people, but they spend a lot more money. They haven’t really gotten to the tough tradeoffs that I think are needed. Given the federal rules, I don’t blame them. Ultimately I believe we have to make some hard choices unless we’re willing to have health care eat up all the other things that your kids and my grandkids are going to need for a decent society: school systems, roads, and everything else. Health care has the ability to crowd out everything else in society. At some point we have to say, "Look Lamm, should you get a new elbow so you can continue to play tennis at the age of 80 or are you going to live with some aches and pains as the price of getting older?"
MC: Or if you are going to get the elbow, you’re going to have to pay for it.
LAMM: That gets us into the question of a two-level health care delivery system, which I think is a red herring. I want to cover everybody with good basic health care. I’ve visited health care systems in lots of parts of the world, and I argue that there’s no place in the world that doesn’t have a two-level health care delivery system. Sweden is the most egalitarian system, but if you’ve got money in Sweden, you go to Harley Street in London to get your health care and there’s no way I can stop it. I cannot stop people from spending their own money the way they want to. I might not want to morally justify the fact that somebody can buy a heart transplant at the age of 85 if they’ve got the money, but I can’t justify it if they go off with a 30-year-old girlfriend either. The fact is that people with money can buy better houses and drive better cars and if they want, buy better health care than the rest of us. In Canada and in Sweden, they try to keep people from buying their way out of the system. And while there’s a certain logic to that approach and I have some sympathy for it, I think ultimately it is bound to fail.
MC: Your description of where things stand today, that we’re drifting along in a lot of ways, is fairly dark. Where do you see some cause for optimism?
LAMM: I’m optimistic about the fact that there’s increasing discussion about the difference between quality of life and quantity of life. I think that it is very important that we have the maturity to recognize that a social system should provide additional things that are not covered now, like Meals On Wheels, respite care, and emergency response systems. Those things add to the quality of life, but to cover them means we have to ask some questions about end-of-life care and how much money we spend on desperate measures.
MC: How would you handle coverage for someone who smokes three packs of cigarettes a day, eats a lot of fatty foods, drinks too much, and then wants a liver transplant or a lung transplant?
LAMM: We have to come to grips with that issue. In other countries that I’ve looked at, if you continue to smoke or don’t control your drinking, you get put way down on the list. It has to become a factor and it should be a factor. The nature of disease has changed. A century ago, disease was random. If you got typhoid you probably did nothing to advance that typhoid. Today, an incredible amount of disease is self-inflicted through drinking, diet, and smoking. The baby boomers will raise the issue as to whether they have a duty to subsidize everything for people whose own habits put them in that position.
MC: Thank you.