Tuesday, April 19, 2011
Making Budget Cuts That Make Sense
Arthur Rubinstein, the great concert pianist, was once asked by a reporter how often he practiced. Every day, he replied. Somewhat taken aback, the reporter asked what would happen if he didn’t.
“Well,” Rubinstein said, “if I don’t practice for one day, I can see the difference. If I don’t practice for two days, the other musicians can see the difference. And if I don’t practice for three days, everybody can see the difference.”
In a weird sort of way, that’s a metaphor for what happens when an organization, be it a business or a government or a nonprofit, starts getting into a cycle of budget cuts.
Round One of the cuts can more often than not be made without doing too much harm. Employees can work harder, at least for a while; some compensating efficiencies can be found; and some cuts in product or service can be made that aren’t terribly obvious to most people.
If a second round of cuts is called for, they’ll typically show through the smoke and mirrors. Unless those cuts are carefully and shrewdly made by rethinking the organization’s scope and mission, as well as its practices and procedures, all the regular customers will notice them, and if it’s a business, so will the competitors. A third round, if it comes, is usually the beginning of an inexorable slide down the precipice.
Last week one of my Facebook friends posted a call to join with progressive and like-minded people in opposing all cuts to Medicare and Medicaid. I declined to respond because it seemed to be the wrong approach to the issue. The real question is how can those programs be made more economical and efficient in order to save them in something like their present form.
That requires changing practices and procedures, which is kind of like reforming the tax code. It means grueling battle with those who benefit from the status quo and often settling for less than the optimal result.
How could medical programs be cut without gutting their mission and leaving the beneficiaries unserved or underserved?
A simple but obvious change would be to rewrite the Medicare prescription drug law passed in the Bush administration, which prohibits Medicare from using its bargaining power to negotiate drug prices. Preventing Medicare from doing what the Veterans Administration and Wal-Mart do, to the benefit of their customers, is corporate welfare, pure and simple. A generation ago, Republicans would have been leading the charge against this sort of waste. In today’s House of Representatives, you couldn’t get it repealed.
We could also look at how other countries with universal health care seem to get the same or better overall health outcomes as we do at substantially less cost. That goes against the grain of American Exceptionalism, but if there’s one thing I learned in the business world, it’s that you should never hesitate to steal a good idea (unless, of course, it’s patented or copyrighted).
Other countries’ medical establishments seem to prescribe fewer prescription drugs and be slower to go to surgery. Looking at those questions, as well as looking at regional differences in treatment within our own country would surely generate some savings.
The wrong way of going about cutting the programs is the Paul Ryan approach — converting Medicare to a defined-benefit program run by private insurance companies. In addition to at least doubling the cost of administrative overhead, it would result in benefits being choked off to the sickest and neediest, creating, in effect, a wide range of private-sector death panels. I think everybody would see the difference.