Seeing The Elephant Part 5

Immigration and Health As mentioned earlier, one of the most p.r.o.nounced changes in immigration is its unintended affects on global health care. While we'll explore the risks of cross-border pandemics in the next chapter, immigration linked to demographic trends and globalization are reshaping the nature of medicine in both industrialized and developing countries.

With increased health spending, medical workers are becoming globally mobile. Doctors and nurses from nearly every emerging market-Africa, Southeast Asia, Eastern Europe, Central and Latin America-are being recruited to work in countries with aging populations. For example, in 2005, one third of practicing doctors in the United Kingdom were from overseas.75 The reasons for the health sector migration, according to the WHO, vary. On one hand, troubles in home countries encourage highly skilled workers to leave and take care of Europe's aging populations. A lack of promotion prospects, poor management, unmanageable workloads, inadequate living conditions, and high levels of violence and crime are some of the reasons a health care professional chooses to leave. These motivations are compounded by the opportunities available in other countries. Immigrating doctors and nurses can find better remuneration, upgrade their qualifications, work in a safer environment, and provide a better environment for their own families. The reasons for the health sector migration, according to the WHO, vary. On one hand, troubles in home countries encourage highly skilled workers to leave and take care of Europe's aging populations. A lack of promotion prospects, poor management, unmanageable workloads, inadequate living conditions, and high levels of violence and crime are some of the reasons a health care professional chooses to leave. These motivations are compounded by the opportunities available in other countries. Immigrating doctors and nurses can find better remuneration, upgrade their qualifications, work in a safer environment, and provide a better environment for their own families.76 While the immigration of health care professionals benefits the countries to which they move (as well as their own livelihoods), their emigration is often detrimental to the regions they leave behind. With 11 percent of the world's population and 24 percent of the global burden of disease, Africa is home to only 3 percent of the world's health workers.77 According to the WHO, approximately 25 percent of doctors and 5 percent of the nurses trained in Africa are working in wealthy OECD countries. This has startling implications for those African countries losing health care workers. As health care professionals head to other countries, South Africa surfaces as the only country in the sub-Saharan region that will meet WHO guidelines for the number of health care professional per sector of the population. According to the WHO, approximately 25 percent of doctors and 5 percent of the nurses trained in Africa are working in wealthy OECD countries. This has startling implications for those African countries losing health care workers. As health care professionals head to other countries, South Africa surfaces as the only country in the sub-Saharan region that will meet WHO guidelines for the number of health care professional per sector of the population.78 As the global economy accelerates, health care, too, is being pulled quickly into a market-based system.While doctors and nurses can move across borders these days to satisfy cross-border demand, so can patients. Medical tourism-where patients go abroad for better or cheaper treatments and surgeries-is becoming common. But increasingly, older Americans are simply moving for good. New innovative medical technologies and treatments allow aging Americans to live healthier and more productive lives, but at a cost: U.S. Federal Reserve Chairman Ben Bernanke recently noted, "per capita health care spending in the United States has increased at a faster rate than per capita income for a number of decades," with Americans now spending more on health care than for housing or food. Government estimates show that by 2020, health spending will exceed 22 percent of the nation's gross domestic output, largely as Americans age. 79 79 Indeed, growing old in the United States is becoming more expensive. Average monthly costs living in a U.S. nursing home is now more than $5,000, according to MetLife. Indeed, growing old in the United States is becoming more expensive. Average monthly costs living in a U.S. nursing home is now more than $5,000, according to MetLife.80 For many, this sum of money puts an a.s.sisted living facility out of reach. As a result, many American retirees have found a solution: go global, with a growing number moving south of the border to various destinations in Latin America. For many, this sum of money puts an a.s.sisted living facility out of reach. As a result, many American retirees have found a solution: go global, with a growing number moving south of the border to various destinations in Latin America.

In Mexico, for example, a patient can receive a studio apartment, three meals a day, laundry and cleaning service, and 24-hour care from English-speaking staff for only $1,300 a month-a quarter of what an average nursing home costs in some parts of the United States.81 While many U.S. insurance companies and government providers such as Veterans Affairs, Medicare, and Medicaid will not cover foreign medical bills, some overseas governments will even cover foreigners living in their country. For example, the Mexican Social Security Inst.i.tute (IMSS) allows foreigners to benefit from their services. An American with diabetes living in Mexico, who needs regular amounts of insulin and other medications, can pay $140 a year and have all of his medical bills covered. While many U.S. insurance companies and government providers such as Veterans Affairs, Medicare, and Medicaid will not cover foreign medical bills, some overseas governments will even cover foreigners living in their country. For example, the Mexican Social Security Inst.i.tute (IMSS) allows foreigners to benefit from their services. An American with diabetes living in Mexico, who needs regular amounts of insulin and other medications, can pay $140 a year and have all of his medical bills covered.82 Interestingly, the U.S. Emba.s.sy in Mexico has no reports of Americans filing complaints against Mexican nursing homes. Interestingly, the U.S. Emba.s.sy in Mexico has no reports of Americans filing complaints against Mexican nursing homes.83 Furthermore, as the industry expands, the Mexican government has begun projects with U.S. university hospitals and health care companies to begin standardizing the care available for Americans living in retirement homes. Furthermore, as the industry expands, the Mexican government has begun projects with U.S. university hospitals and health care companies to begin standardizing the care available for Americans living in retirement homes.

It's not only the price of the services that make living in places like Mexico or Panama comfortable for Americans. Many U.S. retirees live alongside other expats in enclaves such as Lake Chapala, an American-style retirement community about 50 minutes from Guadalajara and 600 miles from Texas (voted second best climate worldwide by National Geographic!). The communities here are being designed with cushy resort amenities such as restaurants, satellite television, and newspapers, libraries, social clubs and even movie theaters-all in English. There are dozens of restaurants, and the community has more than 50 English-speaking social organizations.84 In contrast to the United States' restrictive visa regulations, which have only become stiffer since 9/11, foreign governments have adopted legislation to facilitate this kind of immigration.85 These foreign government incentives are not philanthropic gestures toward ex-pats, but rather shrewd commercial ac.u.men; they are luring a potent form of foreign direct investment. U.S. (and European) retirees-like multinational corporations-are good for local business. These foreign government incentives are not philanthropic gestures toward ex-pats, but rather shrewd commercial ac.u.men; they are luring a potent form of foreign direct investment. U.S. (and European) retirees-like multinational corporations-are good for local business.86 They create demand for services (such as construction of medical facilities and homes and ongoing medical treatment) and for day-to-day household items. According to a survey of U.S. retirees living in Mexico and Panama, retirees spend considerable amounts of money in their newly adopted homes and on local spending-often more than $250,000 in the first 18 months of such a move. They create demand for services (such as construction of medical facilities and homes and ongoing medical treatment) and for day-to-day household items. According to a survey of U.S. retirees living in Mexico and Panama, retirees spend considerable amounts of money in their newly adopted homes and on local spending-often more than $250,000 in the first 18 months of such a move.87 This is happening elsewhere in the world, where foreign governments have been making the most of the fact that American retirees are good for their countries. American baby boomer retirees who can no longer afford to live in Florida or Arizona on a pension have figured out they can enjoy a higher standard of living elsewhere.

Toward an Immigration Policy To address immigration challenges earnestly, the United States must accept global labor compet.i.tion and integration.The United States, like other wealthy countries, is undergoing a ma.s.sive demographic s.h.i.+ft. Its citizens are better educated and less fertile than ever before, yet the need for low or unskilled workers only continues to grow and there are plenty of countries willing to supply the talent. Moreover, the flow of workers is not within U.S. policymakers' powers to stop; as long as there are jobs, workers will come, whether or not the law condones migration. However, with some foresight-and acknowledgment of the useful tool immigration can be-a combination of looser restrictions on educational visas, amnesty for workers who are already in the United States illegally, and guest worker measures may help achieve the balance of skilled and unskilled workers the country so direly needs to fix the ailing immigration system.

The United States is not the only country facing immigration challenges:There are more people migrating to Asia, Latin America, and Europe than ever before. As a result, one can argue that international organizations, destination countries, and origin countries all need to work together to create a comprehensive, functioning pro-immigration environment. The line between destination and source country is beginning to blur, as previous net sending countries are becoming net destinations. Still, sending countries have understandably different interests from destination countries. Destination countries are concerned about attracting the right kind of labor, protecting domestic jobs, and integrating immigrants. Source countries are focused on losing skilled workers, dependence on remittances, and the role that diaspora communities play in domestic politics. These interests would be best coordinated through a multilateral forum versus the haphazard approach of the past.

Today, the UN High Committee on Refugees (UNHCR) and the International Organization for Migration (IOM) are the two major intergovernmental bodies that work with immigration policy. The UNHCR focuses of refugees-a decreasing percentage of immigrants. The IOM, founded in 1951 to deal with displaced WWII refugees, tackles the whole spectrum of immigration policy and has 121 members. Ninety-five percent of the IOM's funding comes through voluntary contributions for projects, leaving the organization spa.r.s.e funds to do more than advise on policy; it doesn't have the teeth to enforce immigration policies. To create a more effective multilateral forum, the IOM could be folded into the UN system, therefore gaining access to a wider members.h.i.+p and steadier funding. In addition to keeping better tabs on migration trends, this newly reincarnated UN IOM could be charged with developing a global registry of immigration and coordinating efforts between Interpol and individual countries to identify international criminals and terrorists who are trying to cross borders illegally. It could additionally work on measures to rapidly identify medical outbreaks like avian flu. More important, the UN IOM should create international guidelines and develop best practices in immigration policy for host countries to ensure that quality standards for the working conditions of migrant populations are met. It could also work to garner better financial support for refugees who are forced to immigrate during times of civil wars and natural disasters.

Facing the ticking demographic time bomb, efforts to block immigration may mean a slow, yet certain, economic strangulation. The United States and other rich nations will continually need professors, doctors and nurses, apple pickers and nannies; the countries risk depopulation and economic stagnation if they do not learn to better embrace immigrant communities. Places like the United States that are primarily destination countries need to focus on creating realistic realistic policies and immigration reform. Not addressing illegal immigration or simply building a wall between countries (like the unfortunate one being built between the United States and Mexico) does not insure that immigrants are going to disappear. Destination countries should view the potential of this labor as added productivity, a tool to be used in the economy by government like monetary or fiscal policy with important links to Social Security and other retirement systems. Hopefully, such a mind-set would help lessen the xenophobic stigma attached to immigrants. After all, in the United States, virtually every citizen descended from an immigrant within the last three to four generations.The United States has always been a magnet for the world's best and brightest, but there is compet.i.tion in the Macro Quantum world. In the next generation it is likely that some emerging market economies will become choice destination countries for immigrants. Mexico already receives large numbers of immigrants from Central America. Don't be surprised to find that Americans may even begin to leave for better opportunities abroad in the not-so-distant future. policies and immigration reform. Not addressing illegal immigration or simply building a wall between countries (like the unfortunate one being built between the United States and Mexico) does not insure that immigrants are going to disappear. Destination countries should view the potential of this labor as added productivity, a tool to be used in the economy by government like monetary or fiscal policy with important links to Social Security and other retirement systems. Hopefully, such a mind-set would help lessen the xenophobic stigma attached to immigrants. After all, in the United States, virtually every citizen descended from an immigrant within the last three to four generations.The United States has always been a magnet for the world's best and brightest, but there is compet.i.tion in the Macro Quantum world. In the next generation it is likely that some emerging market economies will become choice destination countries for immigrants. Mexico already receives large numbers of immigrants from Central America. Don't be surprised to find that Americans may even begin to leave for better opportunities abroad in the not-so-distant future.

Finally, there is great need for origin countries to control exit out of their own borders. Historically, the United States has served as an employment outlet for Mexican labor. This reliance was risky, because the outlet valve could be abruptly curtailed by more effective border control. While a freer flow of people across borders needs to be cultivated, there should be a structured, organized system, not a hodgepodge of country-specific policies. Moreover, origin countries should no longer free ride by relying upon wealthier destination countries to do all of the policing. After all, the line between origin and destination is increasingly blurred. Many of the states sending extra workers abroad are also playing host to inflows of workers from elsewhere. Because their interests are no longer so distinct, sending and receiving countries, working through a multilateral UN IOM, could coordinate domestic policies to maintain, and hopefully accelerate, the capitalist peace in the twenty-first century.

Good Fences Make Good Neighbors?Ninety-six miles of wall through the heart of Berlin became an emblem of the Cold War struggle between good and evil, between freedom and oppression, between democracy and communism. Today, a wall intended to cover the 2,000-mile border between the United States and Mexico is currently under construction. It will cost an estimated $49 billion to build and maintain for 25 years.o Is there some sort of ideological message that the U.S. government is trying to send with building the fence? Is Mexico our enemy? Is there some sort of ideological message that the U.S. government is trying to send with building the fence? Is Mexico our enemy?There are millions of illegal immigrants who enter into the United States by crossing the U.S.-Mexico border each year. The U.S. government traditionally places a lot of the blame on the Mexican government for not keeping its citizens within its own borders. Nonetheless, this is only one side of a very complicated problem.When President Bush met with newly elected Mexican President Felipe Calderon in 2007, Bush repeatedly expressed the necessity for Mexico to do something to stem the tide of illegal immigration. Calderon made a commitment to do so, but under one condition: that President Bush better control the illegal arms entering Mexico from the United States. Ninety-five percent of illegal weapons in Mexico come from America.p Today, drug cartels are often better armed than the police and the military. In 2007, more than 2,500 Mexican citizens were killed in the cross fire with these smuggled weapons. Today, drug cartels are often better armed than the police and the military. In 2007, more than 2,500 Mexican citizens were killed in the cross fire with these smuggled weapons.A second argument used to bolster support for the border fence centers upon national security in the wake of 9/11. In discussions about the fence, for example, Republican Congressman Duncan Hunter, a member of the House Armed Services Committee, said, "If you look at the list of people who have crossed that piece of the border in the last several years, there are a ton of people that come from terrorist nations and from states that back terrorism."q But Mexico isn't one of them. The construction of the border fence is an example of Micro Domestic policy made by the U.S. government that is causing unfettered resentment from our southern neighbor, and rightfully so. It has become wrapped in a mixture of ideological terms that run the gamut from illegal immigration to the global war on terrorism. This focus on the flow from south to north, however, is misplaced. If the U.S. really wanted to get political support from Mexico to patrol its border, it would enact tougher gun laws (much to the chagrin of the National Rifle a.s.sociation and arms producers!) and enforce them better. But Mexico isn't one of them. The construction of the border fence is an example of Micro Domestic policy made by the U.S. government that is causing unfettered resentment from our southern neighbor, and rightfully so. It has become wrapped in a mixture of ideological terms that run the gamut from illegal immigration to the global war on terrorism. This focus on the flow from south to north, however, is misplaced. If the U.S. really wanted to get political support from Mexico to patrol its border, it would enact tougher gun laws (much to the chagrin of the National Rifle a.s.sociation and arms producers!) and enforce them better.The fence has likely exacerbated crime and had a large human cost as well. because the fence surrounds strategic U.S. cities, immigrants are forced to cross in rural and inhospitable stretches of desert instead. This has increased the cost-as well as the profits-or human smugglers, but it has also resulted in a larger number of deaths: Between 1996 and 2000, border crossing deaths increased fourfold.rFurthermore, the United States desperately needs the immigrants from Mexico and other countries to maintain a dynamic economy. Strangely, there may be more unintended Freakonomic Freakonomic consequences of such fence building. Did anyone ever think that to build the fence we'd employ illegal, undoc.u.mented immigrants? We've already mentioned that Hispanic construction workers in the United States have drastically increased over the past 15 years. According to the Bureau of Labor and Statistics, foreign-born workers comprise 20 percent of the U.S. construction workforce. consequences of such fence building. Did anyone ever think that to build the fence we'd employ illegal, undoc.u.mented immigrants? We've already mentioned that Hispanic construction workers in the United States have drastically increased over the past 15 years. According to the Bureau of Labor and Statistics, foreign-born workers comprise 20 percent of the U.S. construction workforce.s If 20 percent is the official number, then one can estimate that the actual percentage of undoc.u.mented workers in construction is much higher. So even if the myriad of lawsuits and legislative debate about the fence are completed, the very people that anti-immigration Americans hope to keep out of the United States with the fence may ironically be a large part of its construction. If 20 percent is the official number, then one can estimate that the actual percentage of undoc.u.mented workers in construction is much higher. So even if the myriad of lawsuits and legislative debate about the fence are completed, the very people that anti-immigration Americans hope to keep out of the United States with the fence may ironically be a large part of its construction.

Chapter 6.

Promoting Tomorrow's Health instead of Paying for Yesterday's Ills So many people spend their health gaining wealth, and then have to spend their wealth to regain their health.

-A. J. REB MATERI

Amid today's globalization, goods are moving, people are moving, and their diseases are going with them-as microbes tucked delicately into the corners of their suitcases, as trans.m.u.ted superbugs gone airborne and recycled in airplane ventilation systems, as the threat of anthrax sachets sent via mail, or even as the lead fumes of the Chinese-made toys wrapped for the holiday season. While these cross-border epidemics and bioterrorist threats have dominated the headlines lately, the Macro Quantum concept of health must extend far beyond germs, terrorists, and tainted goods. Health is a vital component of a nation's comparative advantage, and failing to treat it as such significantly handicaps the domestic labor force and impedes businesses from functioning.

Consider that the most probable killer today is mundane chronic illness-largely preventable ailments linked to smoking, inactivity, and obesity, such as heart disease, stroke, cancer, and type II diabetes. As globalization and prosperity have spread, so have sedentary, overconsumptive habits and the maladies that accompany them. Globally, chronic diseases are expected to increase 17 percent between 2005 and 2015.1 While some of this increase is the inevitable product of aging populations, many of these afflictions could be nipped in the bud through cheap and easy preventative behaviors: regular health checks, exercise, proper nutrition, and avoiding cigarettes. While some of this increase is the inevitable product of aging populations, many of these afflictions could be nipped in the bud through cheap and easy preventative behaviors: regular health checks, exercise, proper nutrition, and avoiding cigarettes.

By ignoring easy preventative fixes, not only must we later spend multiples of the cost of prevention on remediation, but we're actually depleting the most valuable resource-human capital. Reliance on remediation results in shortened life spans and less productive people. Chronic conditions cause major limitations in activity for more than one of every 10 Americans, or more than 25 million people, according to the Centers for Disease Control and Prevention (CDC).2 In addition to individual suffering, businesses saddled with huge health and pension costs also are penalized-especially in the United States where employers, not the government, foot most of the bills for employee healthcare. (See In addition to individual suffering, businesses saddled with huge health and pension costs also are penalized-especially in the United States where employers, not the government, foot most of the bills for employee healthcare. (See Table 6.1 Table 6.1.) To ensure a level global playing field for U.S. companies, we must radically s.h.i.+ft how we think about health and health care. Remember our earlier discussion about GDP as a product of population and per capita output. Chronic illness affects both variables: population (better health makes for longer life spans and lower infant mortality) and per capita output (not only is a healthy worker much more effective than an unhealthy one, but a company unburdened by high costs of overspending on employee health care and sick days is also more efficient). (See Figure 6.1 Figure 6.1.) As President Theodore Roosevelt once said, "No nation can be strong if it is comprised of citizens who are impoverished and sick." It is only by combining good policies with lifestyle changes that health can be converted from a drag on the U.S. economy into its biggest a.s.set: healthy, productive people.

Table 6.1 Life Expectancy by Country (Average for the 2005-2010 Period) Life Expectancy by Country (Average for the 2005-2010 Period) SOURCE: UN 2006.

Americans are in worse shape than most believe. It should come as no surprise that as the world's richest country the United States leads the way in terms of lifestyle diseases. Chronic illnesses account for roughly 70 percent of health costs and deaths in the United States,3 well above the 60 percent global average. well above the 60 percent global average.4 The nation has witnessed a quadrupling in the rate of childhood obesity and a doubling in the asthma rate over the past 30 years. The nation has witnessed a quadrupling in the rate of childhood obesity and a doubling in the asthma rate over the past 30 years.5 But what may come as a surprise is that the United States spends more than any other country on health care-a whopping $2.3 trillion in 2007, or $7,600 per person-yet the country still ranked only 38 out of 195 in terms of life expectancy. But what may come as a surprise is that the United States spends more than any other country on health care-a whopping $2.3 trillion in 2007, or $7,600 per person-yet the country still ranked only 38 out of 195 in terms of life expectancy.6 Figure 6.1 Increase in Value of Labor if Global Chronic Illness Is Reduced by 2 Percent Annually until 2015 Increase in Value of Labor if Global Chronic Illness Is Reduced by 2 Percent Annually until 2015 SOURCE:WHO.

While most industrialized countries provide their citizens with at least a basic standard of care-often called "socialized medicine"-most Americans and their employers are largely responsible for their own health care costs.Yet the U.S. government's annual outlays of $600 billion tops what most foreign universal systems spend on socialized medicine.7 One study comparing Australia, Canada, New Zealand, the United Kingdom, and the United States found that the United States performed poorest in 16 out of 30 measures of care, and "stands out for income-based disparities in patient experiences-particularly for more negative primary care experiences for adults with below-average incomes." One study comparing Australia, Canada, New Zealand, the United Kingdom, and the United States found that the United States performed poorest in 16 out of 30 measures of care, and "stands out for income-based disparities in patient experiences-particularly for more negative primary care experiences for adults with below-average incomes."8 This underscores our major quandary: We're spending more on health care than any other country, yet by many measures, we aren't getting the care we need. Indeed, as the ultimate expression of the U.S. system's dysfunction, we have seen a growing number of dissatisfied Americans go abroad for health care. (See This underscores our major quandary: We're spending more on health care than any other country, yet by many measures, we aren't getting the care we need. Indeed, as the ultimate expression of the U.S. system's dysfunction, we have seen a growing number of dissatisfied Americans go abroad for health care. (See Figure 6.2 Figure 6.2.) While lifestyle choices are ultimately the responsibility of individuals, the public sector is culpable for failing to spread awareness on health issues, allowing health care costs to rise beyond the reach of many Americans, and incentivizing curative-as opposed to preventative-medicine. National health care systems everywhere vary in the degree of central control, regulation, and cost sharing they impose, as well as in the role of private insurance, but the U.S. health care system is uniquely convoluted and bloated by any standard.9 Its complex incentive structure leads to overconsumption of medical services for some and being priced out of the system for others, as well as misunderstandings between doctors, insurance companies, and patients. And as far as preventative care goes, consider that for fiscal year 2009 the U.S. Centers for Disease Control (CDC) requested $932 million for "health promotion," including chronic disease prevention as well as genomic and birth defect research-a decrease of $30 million from the previous year. Its complex incentive structure leads to overconsumption of medical services for some and being priced out of the system for others, as well as misunderstandings between doctors, insurance companies, and patients. And as far as preventative care goes, consider that for fiscal year 2009 the U.S. Centers for Disease Control (CDC) requested $932 million for "health promotion," including chronic disease prevention as well as genomic and birth defect research-a decrease of $30 million from the previous year.10 This is only about two-thirds the amount requested for health-related terrorism spending ($1.419 million) and half the amount requested for infectious diseases ($1.870 million). This is only about two-thirds the amount requested for health-related terrorism spending ($1.419 million) and half the amount requested for infectious diseases ($1.870 million).11 Addressing the United States' skewed pricing structure and the poor delivery system could reduce U.S. companies' burden, freeing them from the huge disadvantage they have compared to companies from countries with socialized systems of medicine. Addressing the United States' skewed pricing structure and the poor delivery system could reduce U.S. companies' burden, freeing them from the huge disadvantage they have compared to companies from countries with socialized systems of medicine.

Figure 6.2 Per Capita Health Care Spending and Average Life Expectancy Per Capita Health Care Spending and Average Life Expectancy SOURCE: UC Atlas, University of California Santa Clara. http://ucatlas.ucsc.edu/health/spend/cost_longlife75.gif.

Of course, poor service delivery and chronic illness are not the only health challenges amid globalization that merit attention. The epidemics and bioterrorist worries mentioned earlier have been international issues for as long as people have been crossing borders: The bubonic plague was carried by rats on merchant s.h.i.+ps; European settlers in North America used rudimentary germ warfare in the form of smallpox blankets; and the Spanish flu made its way as far as the Arctic and remote Pacific islands. Despite the millennia of exposure we've had to these challenges, the infrastructure designed to tackle these cross-border contagions and hoax panaceas remains poor. From the Chinese government's secretive handling of 2003 SARS outbreak,12 to the American man infected with a deadly strain of tuberculosis who took two transatlantic flights in 2007, to the American man infected with a deadly strain of tuberculosis who took two transatlantic flights in 2007,13 it is clear that better coordination is needed to prevent and prepare for low-probability, high-impact pandemics. Moreover, greater multilateral coordination is needed to create uniform safety and product trade standards combating counterfeit drugs, tainted food, and unsafe products. it is clear that better coordination is needed to prevent and prepare for low-probability, high-impact pandemics. Moreover, greater multilateral coordination is needed to create uniform safety and product trade standards combating counterfeit drugs, tainted food, and unsafe products.

Managing epidemics, bioterrorism, and counterfeit drugs should form an integral part of a Macro Quantum global health plan. But a truly comprehensive scheme must also consider the less headline-grabbing side of health-the health care incentive structure, cost of care, chronic illness management, and preventative care measures. In the Macro Quantum world, health is a compet.i.tive a.s.set that needs to be harnessed through sound public policy. The public sector must take a more active role in defending health and combating chronic illness. As Jeanne Lambrew of the Center for American Progress writes, "disease prevention is more like homeland security than health insurance: everyone needs it, no one notices if it works, and it depends on persistent, strong leaders.h.i.+p and systems."14 Having a health system unable to cope with the modern challenges is a recipe for disaster, especially in a world where the G7 has aging, ailing populations. Having a health system unable to cope with the modern challenges is a recipe for disaster, especially in a world where the G7 has aging, ailing populations.

The Bottom LineCompanies have a vested interest in healthy workers. One study shows productivity losses a.s.sociated with workers with chronic disease are as much as 400 percent more than the cost of treating chronic disease.t Globally, chronic-disease-related deaths accounted for approximately 56 percent of all deaths in the working-age population, as well as about 40 percent of total lost time in 2005. Moreover, unhealthy workers force employers to manage the costs a.s.sociated with disability, unplanned absences, reduced workplace effectiveness, increased accidents, and negative impacts on work quality or customer service. In the long run, many economists believe that workers actually "pay" for health care through lower wages. But in the short run, it is likely that employers are saddled with these costs. And in the United States, where according to a New America Foundation report, manufacturers spend more than twice as much for health benefits than their foreign trading partners, Globally, chronic-disease-related deaths accounted for approximately 56 percent of all deaths in the working-age population, as well as about 40 percent of total lost time in 2005. Moreover, unhealthy workers force employers to manage the costs a.s.sociated with disability, unplanned absences, reduced workplace effectiveness, increased accidents, and negative impacts on work quality or customer service. In the long run, many economists believe that workers actually "pay" for health care through lower wages. But in the short run, it is likely that employers are saddled with these costs. And in the United States, where according to a New America Foundation report, manufacturers spend more than twice as much for health benefits than their foreign trading partners,u this can hurt business. (See this can hurt business. (See Table 6.2 Table 6.2.)Because of the dominant practices in pensions and retirement health benefits, U.S. companies are forced to have a vested interest in the health of their retirees as well as their employees. And these costs can be ma.s.sive as life spans continue to lengthen. Indeed, some experts believe large U.S. automakers' struggle to deal with underfunded pensions-not comparative disadvantage in manufacturing-is what is strangling the industry.Table 6.2 Lost Productive Years of Life Due to Cardiovascular Disease Lost Productive Years of Life Due to Cardiovascular DiseaseSOURCE: "A Race Against Time:The Challenge of Cardiovascular Disease in Developing Economies," Center for Global Health and Economic Development, 2004.

How do retirees' health care costs cuckold U.S. business? If you ever took a basic accounting cla.s.s, you will be familiar with the discipline's fundamental principle: What a company owns (a.s.sets) must be equal to what it owes (liabilities) plus what has been invested in it (equity). But if accounting were always so straightforward, companies wouldn't need to hire a staff of specially trained experts to prepare their books. Pensions are a clear-cut example of how complicated accounting rules can obscure a company's real financial outlook. Before the 2006 U.S. Pension Protection Act was enacted, companies were able to exploit accounting rules to keep future health care and retirement benefits off the balance sheet, making the companies look more desirable. Companies made generous commitments on this front in exchange for lower salaries for unionized workers, but these companies failed to hold enough a.s.sets to fund these future commitments.The 2006 reform required companies that underfund their pension plans to pay additional premiums and required that companies measure the obligations of their pension plans more accurately-using a principle that comes close to "mark-to-market,"v that is, valuing a.s.sets at their current market values, allowing for a bit of "smoothing" to keep prices fairly constant. Previously, a.s.sets used to fund pensions were recorded at historical book value. But as interest rates fell, so did the value of these a.s.sets, while the value of the liabilities continued to grow as more and more employees retired. In 2005, one expert calculated that growth in pension liabilities outpaced a.s.sets by 50 percent between 2000 and 2005. that is, valuing a.s.sets at their current market values, allowing for a bit of "smoothing" to keep prices fairly constant. Previously, a.s.sets used to fund pensions were recorded at historical book value. But as interest rates fell, so did the value of these a.s.sets, while the value of the liabilities continued to grow as more and more employees retired. In 2005, one expert calculated that growth in pension liabilities outpaced a.s.sets by 50 percent between 2000 and 2005.w With the reform, all of a sudden, companies that had vastly underfunded their pensions found themselves in hot water. Consider General Motors' predicament even before the credit crisis toppled the stock market. With the reform, all of a sudden, companies that had vastly underfunded their pensions found themselves in hot water. Consider General Motors' predicament even before the credit crisis toppled the stock market.The United Auto Workers union and GM made deals that were heavy on benefits, relatively light on wages. Commitments for pensions and "other postemployment benefits" (OPEB) didn't count as obligations on its balance sheet. But then GM had to start pouring cash into its pension funds as workers retired or were let go and paying out these benefits became a reality. In 2006, GM still had an unfunded liability of $85 billion solely for health care of employees and retirees-almost eight times the market value of the whole company. In 2006, GM still had an unfunded liability of $85 billion solely for health care of employees and retirees-almost eight times the market value of the whole company. Some joke that GM is no longer a car company, but a pension fund that makes cars to pay its debts. If it goes bankrupt, these liabilities are probably the reason. Some joke that GM is no longer a car company, but a pension fund that makes cars to pay its debts. If it goes bankrupt, these liabilities are probably the reason.According to company estimates, health care costs add about $1,500 to the cost of each GM vehicle, $1,400 per vehicle for Chrysler, and $1,100 for Ford.x Consider that j.a.panese car companies are still compet.i.tive despite coming from a country with high wages. In j.a.pan, the government-not the company-is largely responsible for retiree health care costs. Pension reform and a greater public role in health care need to be defined if the beleaguered fate of the domestic auto industry is not to beset other U.S. industries. Consider that j.a.panese car companies are still compet.i.tive despite coming from a country with high wages. In j.a.pan, the government-not the company-is largely responsible for retiree health care costs. Pension reform and a greater public role in health care need to be defined if the beleaguered fate of the domestic auto industry is not to beset other U.S. industries.

Unhealthy Lifestyles In contrast to the frenetic interchange of goods and services witnessed each day, certain segments of the population aren't moving nearly enough. This sedentary lifestyle comes with a price tag: nagging ailments and shortened life spans. While breakthroughs in the health industry have continued to add years to life expectancy, our greater capacity to consume has created a culture of overconsumption.

In the United States approximately 25 million children are technically obese-a whopping one-third of American children and teens.15 Obesity then puts our country's workers on a downward spiral for the rest of their lives, leaving them more susceptible to diseases later in life that include type II diabetes, high cholesterol, heart disease, hepat.i.tis, liver failure, and sleep apnea. Obesity then puts our country's workers on a downward spiral for the rest of their lives, leaving them more susceptible to diseases later in life that include type II diabetes, high cholesterol, heart disease, hepat.i.tis, liver failure, and sleep apnea.16 And child obesity is but only the latest manifestation of poor lifestyle choices. And child obesity is but only the latest manifestation of poor lifestyle choices.

Between obesity rates; cigarette, drug, and narcotics usage; and the increasing amount of time Americans spend in cars and at desks, is it such a surprise that, according to UN estimates, the average life expectancy in Cuba is greater than the average life expectancy here in the United States?17 While Americans tout their medical care as the best in the world, capable of treating nearly any disease that arises, statistics show that the United States lags in many ways.While we do have some of the best specialist physicians in the world, adopting bad habits and relying on surgeries and specialized care later on is not wise. Better small decisions made daily can free the country from huge medical bills down the road. While Americans tout their medical care as the best in the world, capable of treating nearly any disease that arises, statistics show that the United States lags in many ways.While we do have some of the best specialist physicians in the world, adopting bad habits and relying on surgeries and specialized care later on is not wise. Better small decisions made daily can free the country from huge medical bills down the road.

Of course, government policy cannot make choices for individuals, but it can help to educate people and skew incentive structures through taxes. Consider what happened to the tobacco industry in the late twentieth century. Today we know that cigarette smoking can cause lung cancer, heart disease, emphysema, bronchitis, chronic airway obstruction, atherosclerosis, and peripheral vascular disease, just to name a few. Many of these diseases are not totally curable, and others, such as peripheral vascular disease, require extreme forms of treatment such as amputation of limbs. But when cigarettes were first introduced in the United States in the early nineteenth century, these health complications were largely unknown. Although early-1900s progressives campaigned against the habit for hygiene and moral reasons, during World War I, army surgeons praised cigarettes for helping the wounded relax and easing their pain.18 But by the 1950s, scientists were aware of cigarettes' carcinogenic properties. But by the 1950s, scientists were aware of cigarettes' carcinogenic properties.

Since the 1960s, government policy toward tobacco has helped to wean more and more Americans off these "cancer sticks." Although today cigarette smoking remains the leading preventable cause of disease and death (in 2006, an estimated 20.8 percent-45.3 million-of U.S. adults were cigarette smokers19), as Figure 6.3 Figure 6.3 shows, this marks a significant decrease. Success is largely due to a multi-p.r.o.nged government policy: limiting advertising, warning potential consumers and children of health side effects, and raising prices. Since 1969, it has been prohibited to advertise cigarettes on TV and radio, and since 1999 billboards have also been off-limits. Since 2002, 43 states and the District of Columbia have increased cigarette taxes, increasing the average state cigarette tax from 43.4 cents to $1.11 a pack. The current federal tax is 39 cents per pack. shows, this marks a significant decrease. Success is largely due to a multi-p.r.o.nged government policy: limiting advertising, warning potential consumers and children of health side effects, and raising prices. Since 1969, it has been prohibited to advertise cigarettes on TV and radio, and since 1999 billboards have also been off-limits. Since 2002, 43 states and the District of Columbia have increased cigarette taxes, increasing the average state cigarette tax from 43.4 cents to $1.11 a pack. The current federal tax is 39 cents per pack.20 The slew of lawsuits brought against tobacco companies have stipulated increased spending for anti-tobacco campaigns. The decrease in smoking over the last 40 years shows us that similar policies-taxes, limits on advertis.e.m.e.nts, and awareness campaigns-may work when applied to other lifestyle choices. The slew of lawsuits brought against tobacco companies have stipulated increased spending for anti-tobacco campaigns. The decrease in smoking over the last 40 years shows us that similar policies-taxes, limits on advertis.e.m.e.nts, and awareness campaigns-may work when applied to other lifestyle choices.

Figure 6.3 Estimated Percentage of U.S. Smokers by Gender, 1965-2006 Estimated Percentage of U.S. Smokers by Gender, 1965-2006 SOURCE: CDC.

While it appears the United States is winning the battle against smoking, U.S. tobacco companies continue to export the addiction to emerging markets. In 2007, more than a fifth of cigarettes produced in the United States were destined for overseas.21 Tobacco use is a risk factor for six of the eight leading causes of deaths in the world, and 80 percent of tobacco-related deaths will occur within a few decades according to the World Health Organization (WHO). Tobacco use is a risk factor for six of the eight leading causes of deaths in the world, and 80 percent of tobacco-related deaths will occur within a few decades according to the World Health Organization (WHO).22 But research shows that increasing tobacco taxes by 10 percent decreases tobacco consumption by 4 percent in high-income countries and by 8 percent in lower income countries. But research shows that increasing tobacco taxes by 10 percent decreases tobacco consumption by 4 percent in high-income countries and by 8 percent in lower income countries.23 That means the strategies that have worked in the United States could be even more effective in markets where incomes are more limited. Alternatively, more stringent regulation of trade in tobacco and of growing illegal cigarette smuggling could also help to slow the increase in smokers and smoking-related health problems. That means the strategies that have worked in the United States could be even more effective in markets where incomes are more limited. Alternatively, more stringent regulation of trade in tobacco and of growing illegal cigarette smuggling could also help to slow the increase in smokers and smoking-related health problems.

Both domestically and globally, food and diet is the next arena that requires our attention. The Department of Agriculture reports that in 2005, total U.S. animal protein intake (red meat, poultry, and fish) amounted to 200 pounds per person, 22 pounds above the level in 1970.24 Even though Americans have been gradually switching to less fatty meats, they lose the benefit by consuming more calories and less nutritious foods. Indeed, the increase in caloric intake in the United States is linked to consuming more processed foods. Back in the early 1970s during the Nixon administration, the United States faced a problem that resurfaced in 2007 and 2008: rising food prices. In 1973, food prices. .h.i.t an annual inflation level of 8 percent. President Nixon devised a domestic food policy to help ease the impact on American wallets. Nixon held down the prices of processed foods while allowing the prices of raw farm produce to rise. Even though Americans have been gradually switching to less fatty meats, they lose the benefit by consuming more calories and less nutritious foods. Indeed, the increase in caloric intake in the United States is linked to consuming more processed foods. Back in the early 1970s during the Nixon administration, the United States faced a problem that resurfaced in 2007 and 2008: rising food prices. In 1973, food prices. .h.i.t an annual inflation level of 8 percent. President Nixon devised a domestic food policy to help ease the impact on American wallets. Nixon held down the prices of processed foods while allowing the prices of raw farm produce to rise.25 Hence, processed foods became drastically less expensive for the average American consumer than unprocessed foods. In order to support the processing and help his approval ratings, the Nixon administration began to heavily subsidize corn, a legacy still with us today. As one researcher discovered, 13 types of processed corn are found in a typical McDonald's meal. Additionally, corn and its by-products, such as high fructose corn syrup, make up about 25 percent of all of the edible items available on our supermarket shelves. Hence, processed foods became drastically less expensive for the average American consumer than unprocessed foods. In order to support the processing and help his approval ratings, the Nixon administration began to heavily subsidize corn, a legacy still with us today. As one researcher discovered, 13 types of processed corn are found in a typical McDonald's meal. Additionally, corn and its by-products, such as high fructose corn syrup, make up about 25 percent of all of the edible items available on our supermarket shelves.26 High fructose corn syrup permeates nearly every possible type of processed food. It's harder for your body to digest and results in the consumption of higher than normal levels of fructose. Higher levels of fructose, in turn, lead to increased levels of type II diabetes and surging rates of obesity. High fructose corn syrup permeates nearly every possible type of processed food. It's harder for your body to digest and results in the consumption of higher than normal levels of fructose. Higher levels of fructose, in turn, lead to increased levels of type II diabetes and surging rates of obesity.27 The dependence on corn feed and increased intake of processed foods, calories, and protein also spill over into the environmental realm: The average American diet produces an extra ton and a half of carbon dioxide-equivalent annually (in the form of actual carbon dioxide as well as methane and other greenhouse gases) compared to a strictly vegetarian diet. By cutting down on just a few eggs or hamburgers each week, greenhouse gas emissions would be drastically reduced.28 In 2002, energy used for food production accounted for 17 percent of all fossil fuel use in the United States. In 2002, energy used for food production accounted for 17 percent of all fossil fuel use in the United States.29 In 2007, another period of food price inflation kicked off, and as prices soared, questions about the way we produce and consume food became crucial to matters of security, trade, poverty, and environment, not to mention health. Demand for food has been on the rise-both in terms of the demand for human consumption and for ethanol production. Extra calories are a good thing for people formerly afflicted by hunger, but in the United States, extra consumption is truly excess consumption. Not only is it bad for the average American's waistline, it is contributing to instability around the globe. Policies that worked for smoking can help again today. A combination of nutrition awareness (such as posting nutrition information at restaurants and elementary education programs) and consumption taxes on high fructose corn syrup could help to get Americans back into shape. We must extend prevention activities outside of traditional settings into schools, work-places, and sites like supermarkets and pharmacies,30 and craft policies that make nutritious foods and healthy portion sizes an appealing (and perhaps cheaper) option. and craft policies that make nutritious foods and healthy portion sizes an appealing (and perhaps cheaper) option.

Health Care Providers and Insurance Beyond lifestyle choices, there are a number of systemic variables that encourage poor health. The U.S. health care system is characterized by an insurance infrastructure that creates perverse incentives by emphasizing curative instead of preventative medicine and by too much demand relative to supply.These attributes are substantially interlinked, whereby health care providers, by training, focus on treating versus preventing disease. Insurers have little incentive to invest in preventive practices today that will only benefit other insurers tomorrow.31 Under the traditional U.S. health care scheme, doctors are paid according to how much care they provide. The more drugs they prescribe and the more surgeries they perform, the higher their paychecks. Insured patients pay only a small fraction of the cost of treatment and so have little reason to question their physician's diagnosis. Many believe this has resulted in chronic overtreatment of patients. An estimated 30,000 Americans are killed each year by unnecessary procedures and overtreatment-that's the equivalent of a 747 airliner cras.h.i.+ng and killing everyone aboard once a week.32 An additional 90,000 to 400,000 patients are estimated to be harmed or killed by the incorrect use of a drug (resulting from either incorrect prescription, dosage, or multiple prescriptions). An additional 90,000 to 400,000 patients are estimated to be harmed or killed by the incorrect use of a drug (resulting from either incorrect prescription, dosage, or multiple prescriptions).33 Some critics estimate that Americans spend between $500 billion and $700 billion dollars annually on care that does little if anything to improve our health; that is roughly 5 percent of GDP. Some critics estimate that Americans spend between $500 billion and $700 billion dollars annually on care that does little if anything to improve our health; that is roughly 5 percent of GDP.34 Exacerbating the overtreatment crisis, Americans' medical histories are kept largely in hard copy format. Electronic medical records (EMRs) are used by less than a quarter of primary care physicians, Exacerbating the overtreatment crisis, Americans' medical histories are kept largely in hard copy format. Electronic medical records (EMRs) are used by less than a quarter of primary care physicians,35 despite the fact that centralized EMRs could help emergency care facilities and other physicians better treat patients and not prescribe unneeded or potentially harmful treatments, thereby saving billions of dollars (not to mention potentially saving lives). despite the fact that centralized EMRs could help emergency care facilities and other physicians better treat patients and not prescribe unneeded or potentially harmful treatments, thereby saving billions of dollars (not to mention potentially saving lives).

Beyond the perverse incentive structure for doctors, patients, and insurers, a shortage of doctors and nurses (see box 2) pushes up prices of care in the United States, which also makes patients less willing to seek out early treatment. The average cost per day in a U.S. hospital is four times the average in the rest of the developed world.36 This results in major imbalances: While 16 percent of our economy is dedicated to health services, we still live in a country where 47 million people lack any health insurance and millions more have inadequate coverage. The U.S. Census Bureau reports that 15.6 percent of Americans have no insurance, meaning all health costs are out-of-pocket. This results in major imbalances: While 16 percent of our economy is dedicated to health services, we still live in a country where 47 million people lack any health insurance and millions more have inadequate coverage. The U.S. Census Bureau reports that 15.6 percent of Americans have no insurance, meaning all health costs are out-of-pocket.37 Uninsured patients will often use emergency rooms for nonemergency care, because emergency rooms are mandated to accept patients regardless of ability to pay for services, overcrowding these critical facilities.Worse yet, uninsured Americans may wait until a condition has deteriorated to the point where emergency care is actually required. Uninsured patients will often use emergency rooms for nonemergency care, because emergency rooms are mandated to accept patients regardless of ability to pay for services, overcrowding these critical facilities.Worse yet, uninsured Americans may wait until a condition has deteriorated to the point where emergency care is actually required.

Even for insured Americans, the picture is not much rosier. Because health insurance in the United States is considered largely a responsibility of employers, some employers looking to cut costs and reduce overconsumption are switching to "consumer driven health care," that is, health savings accounts (HSAs) and high-deductible health plans (HDHPs). HDHPs and HSAs are paired to help avoid the moral hazard of health care overconsumption a.s.sociated with the traditional U.S. insurance scheme. But consumer driven health plans actually tend to reinforce the curative bias. An HDHP is an inexpensive health insurance plan that usually won't pay for the first several thousand dollars of health care expenses but will generally cover you after that. Because HDHPs are less expensive than traditional health plans, the savings can be deposited in an untaxed HSA to save for future health care costs. But what we find is that when patients are responsible for paying for routine care-even when small amounts of money are involved-they do not seek care at all. Forgoing basic annual physicals can allow medical conditions to go unnoticed and untreated until they become much bigger problems. For example, one study showed that even a $10 copay (the amount a patient is responsible for covering) caused a significant reduction in the use of mammograms, despite the fact that paying for a mammogram now is immeasurably cheaper than treating cancer down the road.38 Another study found that targeted prevention used to control hypertension among seniors could save Medicare $890 billion over 25 years. Another study found that targeted prevention used to control hypertension among seniors could save Medicare $890 billion over 25 years.39 Consider by contrast the socialized medical system of the United Kingdom, where the National Health Service (NHS) provides most medical services, although private services are available. Routine care is largely the responsibility of general pract.i.tioners, who are typically private doctors that contract with the NHS; they are paid by the NHS according to work they do and their performance. Patients pay a fixed fee for each drug prescribed regardless of the amount of drug prescribed or the cost to the pharmacy; the cost of drugs is charged to the NHS. General pract.i.tioners can refer their patients for more specialized treatment. While the U.K. system has its detractors who claim the system discourages hospital purchase of specialized equipment and increases wait times for critical care, overall satisfaction rates are high. Because routine and preventative care is largely free of cost, the United Kingdom also avoids some of the problems of cost-conscious citizens failing to seek preventative care.

In the United States, a transition to a U.K.-style socialized medicine system is not only contentious but unlikely. Yet redefining the public sector's contribution to health care is necessary to fix what ails American health care. The public sector could increase immunization and screening programs and introduce more convenient care clinics that grant access to nurse pract.i.tioners and other medical professionals for quick advice and other prevention measures.

Medical Tourism The cost of treatment is getting so out of hand that Americans are realizing that they can go abroad, even to developing countries, to get treatment for less money. Indeed, there has been a growing response by the approximately 85 million uninsured or underinsured Americans to the rising costs of care here in the United States.40 They're going on vacation. They're going on vacation.

For about $10,000, an American citizen can fly round-trip to India, receive a heart valve replacement procedure at a hospital with U.S. board-certified doctors, and enjoy an organized vacation package.41 While $10,000 is still a sizable amount of money, it is roughly 5 percent of the cost for the same procedure in the United States. In 2006, 150,000 U.S. citizens traveled abroad to destinations such as Argentina, Mexico, Costa Rica,Thailand, Singapore, and India for everything from LASIK eye repair to neurosurgery. Thailand boasts an official number of 600,000 medical tourists per year from all over the world. While $10,000 is still a sizable amount of money, it is roughly 5 percent of the cost for the same procedure in the United States. In 2006, 150,000 U.S. citizens traveled abroad to destinations such as Argentina, Mexico, Costa Rica,Thailand, Singapore, and India for everything from LASIK eye repair to neurosurgery. Thailand boasts an official number of 600,000 medical tourists per year from all over the world.42 Medical outsourcing can, however, be misconstrued. Here in the United States, outsourcing as it is portrayed in the media has become synonymous with American job loss and attacks on U.S. industry. But if the average American cannot afford something as basic as health care in his or her own country, then there might be something wrong with the system. The fact that the medical tourism industry as a whole, which was valued to be worth $20 billion in 2006 (and is expected to double in value by 2010) indicates the global system is working better than the national one.43 Americans, Canadians, Brits, and other nationalities are realizing the value of tapping into the resources available for medical care abroad. Americans, Canadians, Brits, and other nationalities are realizing the value of tapping into the resources available for medical care abroad.

American universities are also getting involved. Medical schools and teaching hospitals affiliated with them appear to be head-to-head in a new race to franchise themselves globally. What might have originally started as school partners.h.i.+ps has morphed into something completely different. For example, in Bangalore, health care facilities fall under recognizable (and well-reputed) brands such as Johns Hopkins, Tufts, and Harvard Universities. It appears, however, that the universities are not necessarily going into emerging market countries to partner with hospitals strictly to make money. As the costs of surgeries are so much lower than in developed countries, this seems to have some validity for the time being. Instead, they, like the hundreds of thousands of medical tourists each year, have recognized a growing trend, namely, "that health care is moving toward an international platform, where it will be of the same high quality no matter which region of the world one is in. In th