Wednesday, May 07, 2008

Wine: taste and price


May 7, 2008
The Pour
Wine’s Pleasures: Are They All in Your Head?

THE mind of the wine consumer is a woolly place, packed with odd and arcane information fascinating to few. Like the pants pocket of a 7-year-old boy, it’s full of bits of string, bottle caps and shiny rocks collected while making the daily rounds of wine shops, restaurants, periodicals and the wine-soaked back alleys of the Internet. It’s harmless stuff, really, except to those within earshot when a wine lover finds it necessary to elaborate on the nose, legs and body of a new infatuation.

Yet in recent months American wine drinkers have taken their turn as pop culture’s punching bags. In press accounts of two studies on wine psychology, consumers have been portrayed as dupes and twits, subject to the manipulations of marketers, critics and charlatan producers who have cloaked wine in mystique and sham sophistication in hopes of better separating the public from its money.

One of the studies was devised by Robin Goldstein, a food writer, to try to isolate consumers from outside influence so they could simply judge wine by what’s in the glass. He had 500 volunteers sample and rate 540 unidentified wines priced from $1.50 to $150 a bottle. The results are described in a new book, “The Wine Trials,” to be published this month by Fearless Critic Media.

The book wraps the results in a discussion of marketing manipulations and statistical validity, but a brief article in the April 7 issue of Newsweek magazine, naturally, seized on the book’s populist triumphs: a $10 bottle of bubbly from Washington state outscored Dom Pérignon, which sells for $150 a bottle, while Two-Buck Chuck, the cheap Charles Shaw California cabernet sauvignon, topped a $55 bottle of Napa Valley cabernet.

“Their results might rattle a few wine snobs, but the average oenophile can rejoice: 100 wines under $15 consistently outperformed their upscale cousins,” the article exulted.

Two caveats are in order here. First, it turns out that the results of the tastings are more nuanced than the Newsweek article let on. In fact, the book shows that what appeals to novice wine drinkers is significantly different from what appeals to wine experts, which the book defines as those who have had some sort of training or professional experience with wine. The experts, by the way, preferred the Dom Pérignon.

Second, there is, of course, no such thing as the “average oenophile,” as Newsweek put it. Most people in the wine trade understand that consumers have any number of reasons for their buying decisions, whatever their psychological and financial state. Some are reassured by easy-to-understand labels with friendly animals. Others want only naturally produced wines or bottles with a modest carbon footprint. Some are status-seekers and score-chasers, while others are contrarians, or only drink red wine.

But assuming for the moment that it’s true that most drinkers prefer the cheap stuff, why does anyone bother buying $55 cabernet? One answer is provided by a second experiment, in which presumably sober researchers at the California Institute of Technology and the Stanford Business School demonstrated that the more expensive consumers think a wine is, the more pleasure they are apt to take in it.

The researchers scanned the brains of 21 volunteer wine novices as they administered tiny tastes of wine, measuring sensations in the medial orbitofrontal cortex, the part of the brain where flavor responses apparently register. The subjects were told only the price of the wines. Without their knowledge, they tasted one wine twice, and were given two different prices for that wine. Invariably they preferred the one they thought was more expensive.

“Forget those blurbs about bouquets, body and berries,” one newspaper account crowed. “A meticulous new study found that the more people think a wine cost, the more they like it. And the less they think it cost, the less they like it.”

Big surprise. Sommeliers all over know that the hardest wine to sell in a restaurant is the cheapest bottle on the list. “Yeah, clients don’t want to be embarrassed in front of a date, so they don’t order the cheapest wines,” said Fred Dexheimer, the wine director of the BLT restaurant group. The fact is, the correlation between price and quality is so powerful that it affects not just our perception of wine but of all consumer goods.

“It’s not just about wine, it’s about everything!” said Prof. Dan Ariely, a behavioral economist at the Massachusetts Institute of Technology and author of the book “Predictably Irrational: The Hidden Forces That Shape Our Decisions” (HarperCollins, $25.95), which examines how people make all sorts of real life decisions. Regardless of the situation, Professor Ariely found, suggestion has a powerful effect on perception and belief.

In one experiment, volunteers who received mild electric shocks were given placebo pills to relieve the pain. They were told that the pills cost either 10 cents or $2.50. The participants believed that both kinds of pills helped relieve pain, but the seemingly more expensive pills had a much greater effect.

“If you expect not to get something as good, lo and behold, it’s not as good,” Professor Ariely said. “We think of it as an objective reality. We don’t see how much is created by our mind.”

Even so, wine drinkers tend to be the punch line. People are unlikely to be ridiculed for buying $300 jeans that are washed, bleached and beaten over rocks instead of $60 jeans that will last a decade. But wine buyers who prefer the $20 bottle over a $10 bottle? All that stuff about aromas and complexity? Forget it!

Are wine consumers really easily manipulated victims, the flip side of the stereotype of wine drinkers as pretentious snobs? What have they done to be singled out from other consumers who might equally be portrayed as knuckling under to hype and salesmanship, like connoisseurs of clothes, handbags or shoes, car aficionados or golf fanatics, food or film lovers?

The answer rests, I think, both in the insecure and uncomfortable attitudes that Americans hold toward wine and in the difficulty of bringing some sort of objective and universal criteria to the fleeting and obscure realms of aroma, taste and texture.

The consumption of wine has been growing steadily in the United States rising to 283 million cases in 2006 from almost 189 million cases in 1993, according to the Adams Wine Handbook, which tracks consumption.

Yet drinking more hasn’t made Americans more comfortable with wine. People with little interest in wine tend to see it as somehow foreign and threatening. Even among the curious, fears abound, of being embarrassed or appearing unsophisticated, of choosing the wrong wine, or of liking the wrong one. Every year books come out purporting to help the winephobic avoid embarrassment, impress their bosses or learn shortcuts to wine knowledge. But I sense no decrease in the number of people whose questions to me are prefaced by a sheepish, “I don’t know anything about wine, though I really should.”

Meanwhile, consumers face an impenetrable swamp of winespeak: Wine Spectator recently evaluated one Argentine red as, “Dark and rich, with lots of fig bread, mocha, ganache, prune and loam notes. Stays fine-grained on the finish, with lingering sage and toast hints.”

To hack through it all, consumers embrace scores, an easy shorthand that unfortunately requires that every wine be judged on the same seemingly objective scale, regardless of the subjective nature of taste. Anybody can understand that a wine rated 90 beats an 89, right?

Yet the rating system has bred an attitude toward wine that ignores context, which is perhaps more important a consideration to the enjoyment of wine than anything else. The proverbial little red wine, so delicious in a Tuscan village with your sweetie, never tastes the same back home in New Jersey. Meanwhile, the big California cabernet, which you enjoyed so much with your work buddies at a steakhouse, ties tucked between buttons, doesn’t have that triumphant lift with a bowl of spaghetti.

This is one problem with trying to judge wine in the sort of clinical vacuum sought by studies like the one in “The Wine Trials.” In the end, I don’t think you can ever eliminate context. The trick is to distinguish between the harmful or disingenuous — the marketing come-ons, the point chasing, what the guy next to you thinks — from the beneficial: the food, the company, the environment. Even in a blind tasting situation, wine is evaluated in the company of other wines, which is a different sort of context but a context nonetheless. Perhaps they’ve chosen the best wines to be sipped and spat out, but not the best wines for dinner.

Ultimately, context may be the most underrated aspect of enjoying wine. Tyler Colman, a wine writer and blogger (, whose first book, “Wine Politics,” will shortly be published by the University of California Press, has a second book coming out this fall, “A Year of Wine” (Simon & Schuster), that focuses on context.

“The mood and the food and the context really matters,” he said. “It’s the neglected pairing.”

Just as understanding when to dress up and when to dress down is intuitive for many people, so, too, does it become instinctive over time for wine lovers to know which is the proper bottle to open. But that requires experience of many different wines. Eventually the novelty of great wines, or expensive wines, can wear off.

“Sometimes a great Beaujolais is a better choice than La Tâche,” said Nathan Vandergrift, a statistical researcher at the University of California at Irvine, who has seen the wine business as a retailer, an importer and distributor, and most recently as a blogger at the Vulgar Little Monkey Translucency Report. Mr. Vandergrift has had plenty of Beaujolais, and a fair amount of La Tâche, one of the most highly sought wines in the world.

Would that we all could achieve that sense of freedom and zen-like serenity, where we’ve had our fill of all else and can simply choose the right wine because it’s the right wine.

Smarter --> lower life expectancy?


May 7, 2008
Editorial Notebook
The Cost of Smarts

Research on animal intelligence always makes me wonder just how smart humans are. Consider the fruit-fly experiments described in Carl Zimmer’s piece in the Science Times on Tuesday. Fruit flies who were taught to be smarter than the average fruit fly tended to live shorter lives. This suggests that dimmer bulbs burn longer, that there is an advantage in not being too terrifically bright.

Intelligence, it turns out, is a high-priced option. It takes more upkeep, burns more fuel and is slow off the starting line because it depends on learning — a gradual process — instead of instinct. Plenty of other species are able to learn, and one of the things they’ve apparently learned is when to stop.

Is there an adaptive value to limited intelligence? That’s the question behind this new research. I like it. Instead of casting a wistful glance backward at all the species we’ve left in the dust I.Q.-wise, it implicitly asks what the real costs of our own intelligence might be. This is on the mind of every animal I’ve ever met.

Every chicken that looks at you sideways — which is how they all look at you — is really saying what Thoreau said less succinctly: you are endeavoring to solve the problem of a livelihood by a formula more complicated than the problem itself. Thoreau himself would not dispute that he was hoping to recover the chicken’s point of view. He went to Walden Pond “to remember well his ignorance.”

Research on animal intelligence also makes me wonder what experiments animals would perform on humans if they had the chance. Every cat with an owner, for instance, is running a small-scale study in operant conditioning. I believe that if animals ran the labs, they would test us to determine the limits of our patience, our faithfulness, our memory for terrain. They would try to decide what intelligence in humans is really for, not merely how much of it there is. Above all, they would hope to study a fundamental question: Are humans actually aware of the world they live in? So far the results are inconclusive.

Monday, April 14, 2008

Income: Costmetic Dentist vs. Primary Care Doc

Wall Street Journal

Tale of Two Docs:
Why Dentists Are Earning More
Dr. Bryson Focuses On Cosmetics, Not Insurance;
A Family Physician Lags
A $15,000 'Smile Makeover'
January 10, 2005

(See Corrections & Amplifications item below.)

YARDLEY, Pa. -- Randy Bryson and his brother-in-law Larry Fazioli are both medical professionals in their 40s who practice in Pennsylvania. The similarity ends there.

At Dr. Bryson's office here in suburban Philadelphia, a fountain softly burbles in the airy reception area, and patients are offered cappuccino or paraffin-wax hand treatments while they wait. Dr. Bryson works four days a week, drives a Mercedes, and lives in a 4,000-square-foot house with a pool. He and his wife, who works part-time in the same practice, together take home more than $500,000 a year.

At Dr. Fazioli's busy practice near Pittsburgh, patients crowd a utilitarian waiting room, and his cramped office is piled high with records awaiting dictation. Dr. Fazioli says he works between 55 and 80 hours a week, and his annual income of less than $180,000 has been stagnant or down the past few years. He drives a Chevrolet.

The key to their different lives: Dr. Bryson is a dentist, and Dr. Fazioli is a family-practice physician.

Once the poor relations in the medical field, dentists in the past few years have started making more money than many types of physicians, including internal-medicine doctors, pediatricians, psychiatrists, and those in family practice, according to survey data from the American Dental Association and American Medical Association.

On average, general dentists in 2000, the most recent year for which comparative data are available, earned $166,460 -- compared with $164,100 for general internal-medicine doctors, $145,700 for psychiatrists, $144,700 for family-practice physicians, and $137,800 for pediatricians. All indications are that dentists have at least kept pace with physicians since then.

Those figures are a sharp contrast to 1988, when the average general dentist made $78,000, two-thirds the level of the average internal-medicine doctor, and behind every other type of physician. From 1988 to 2000, dentists' incomes more than doubled, while the average physician's income grew 42%. The rate of inflation during that same period was 46%.

Factor in hours worked -- dentists tend to put in 40-hour weeks, the ADA says, while the AMA says physicians generally work 50 to 55 hours -- and the discrepancy is even greater.

"I feel so bad for Larry," says Dr. Bryson of his brother-in-law the doctor. "Especially when he's on call, he puts in some pretty long hours. Physically, it's really taking a toll on him."

Dr. Fazioli says he still gets a lot of satisfaction out of being a doctor and earns a comfortable living. But he admits he'd steer his children away from primary-care medicine as a career. Of his three sons, he adds, two might be interested in dentistry instead. "They see that Randy is doing OK," he says.

Many specialist physicians, such as cardiologists and radiologists, continue to rake in large incomes, generally exceeding those of specialist dentists such as oral surgeons and periodontists. But specialist dentists, too, have seen their paychecks increase at a much faster rate than their physician counterparts.

Healthier Teeth

Dentists have grown richer even as cavities, once the main cause for visiting them, have declined, largely because of fluoridation of drinking water and improved preventive care. According to a study published in the Journal of the American Dental Association in 1999, cavities in 6-to-18-year-olds dropped by three-fifths from the early 1970s to the early 1990s -- even though many children in lower socioeconomic groups still lack adequate dental care.

As people born in the 1960s and later have grown into adulthood, they tend to need fewer fillings than their parents did and are keeping their teeth longer. Painful disease-related procedures such as root canals are declining, too.

So why are dentists so handily outpacing doctors? In part, it's because dentists have avoided being flattened by the managed-care steamroller, and instead many have turned into upscale marketers. Dental care makes up less than 5% of the overall U.S. health bill, and hasn't been a major focus of cost-cutting.

Although some dental insurers have tightened up on reimbursements, most private dental insurance is still paid on a fee-for-service basis. Many optional procedures aren't covered by insurance, leaving dentists free to charge whatever the market will bear. About 44% of all dental care is paid by patients out of their own pockets, according to federal statistics for 2002, compared with just 10% for all physician and clinical costs.

While dentists may be able to focus more on marketing costly optional treatments, many physicians can't make the same kind of switch in their practices.

In competing for patients' own dollars, dentists have become more entrepreneurial, tapping into today's image-conscious zeitgeist. Many dental offices are festooned with pitches for everything from $400 teeth-whitening treatments to $1,200-per-tooth veneer jobs.

There are even $30,000-plus full "smile makeovers" offered by a growing coterie of dentists who specialize in high-end cosmetic procedures. Public awareness of such techniques has been heightened by reality-TV shows such as ABC's "Extreme Makeover" and Fox Broadcasting's "The Swan."

L. Jackson Brown, an economist who is associate executive director at the ADA, says cosmetic procedures account for about 10% of the nation's $80 billion annual dental bill, and are rising fast.

Sally McKenzie, a dental-practice consultant in La Jolla, Calif., who has been in business for 25 years, calls it a "golden era for dentistry." The most common call she gets, Ms. McKenzie says, is to help dentists manage "uncontrolled growth."

The situation is a sharp turnaround from the 1980s, when dentistry seemed to be in decline. Falling rates of tooth decay and a glut of dentists produced much soul-searching in the profession. Several dental schools closed, while others slashed enrollment. Dentists wrung their hands over their inability to get more insurance coverage -- a failure that now looks heaven-sent.

Dentists also have taken advantage of new technology, some of it controversial even within the profession. One major advance was the invention of porcelain veneers, which are wafer-thin shells of material that are bonded to the fronts of teeth to repair chips or misalignment. Unlike older surfacing materials, porcelain resists staining and looks like a natural tooth surface. Some dentists claim the procedure, which involves an irreversible filing down of natural teeth, can create problems. But proponents say that, done right, such veneers can stay in place for years.

"Today, you can create a smile" from materials that people "can't tell are not real teeth," says Joe Barton, a Jacksonville, Fla., dentist who specializes in cosmetic procedures. He says he typically charges from $12,000 to $14,000 to put veneers on 10 front teeth, requiring about 3½ hours of his time. "We are competing with cars and vacations and jet skis and new homes, in terms of what people are spending their disposable income on," he says.

Some dentists use sophisticated software-imaging programs to show patients virtual before-and-after photos of what their teeth could look like with cosmetic help. Others have installed $100,000 computer-assisted design devices to make crowns in their own offices.

Intra-oral video cameras, tiny pen-shaped devices that can be used to display images of the inside of a patient's mouth, have become de rigueur. The cameras, which typically cost $2,000 or more, have little clinical purpose -- but there's nothing like seeing an up-close video of unsightly teeth on an overhead TV to persuade a patient that something needs to be done.

The turnabout in fortunes has made some dentists pity their physician colleagues. Robert H. Gregg, a dentist in Cerritos, Calif., says he had an operation for a snapped Achilles tendon a few years ago, which required him to go under general anesthesia for more than an hour. He was amazed his insurer paid just $2,000 to his orthopedic surgeon for the procedure. "I get about $3,000 for a three-unit bridge," Dr. Gregg says. "He's getting pennies on the dollar to what his skill level was."

Dr. Gregg says he offered to pay more out of his own pocket. The surgeon's office manager, he adds, "told me I was the first person" to ever make such a request.

The dentist and physician who are brothers-in-law, Drs. Bryson and Fazioli, both grew up in western Pennsylvania. They are related through Dr. Fazioli's wife, Robin, who is Dr. Bryson's younger sister. She sardonically refers to her brother and husband as "the prince and the pauper." She says she "definitely" doesn't want her sons to follow her husband into medicine. "I see how hard he works," she says. "I tell them, 'maybe you should go into dentistry. See how well Uncle Randy is doing.' "

Dr. Bryson, 44 years old, wanted to be a dentist from the time he was 5, his sister recalls. "We called him Rockefeller Bryson," she says. "He always liked the finer things in life."

While attending dental school in Philadelphia, Dr. Bryson met his wife, Toni Margio, a fellow student. They soon opened a joint practice in affluent Yardley, about a half-hour north of the city.

By the late 1990s, their practice was booming. But Dr. Margio says they both felt like they were "always on roller skates." They worked 10-to-12-hour days, and had to rely on Dr. Margio's mother to care for their son, now 8 years old. Dental insurers were forcing them to discount fees.

Five years ago, after attending classes at the Las Vegas Institute for Advanced Dental Studies, a school known for an aggressive brand of cosmetic dentistry, they dramatically changed their practice. They stopped accepting insurance -- patients are billed directly and can wrestle with insurers on their own -- and started plugging veneers, whitening and other elective procedures.

"We shifted from needs-based dentistry to wants-based dentistry," says the youthful-looking Dr. Bryson, who has a dazzling smile. "It has totally transformed our practice and our personal lives. We see a much smaller number of patients, at a slower pace. I can't wait to get in in the morning."

At their open, two-story office, large photos of patients with gleaming smiles adorn walls painted light blue. Classical music plays in the background, and the air is filled with a pleasant smell. "Aromatherapy," says Dr. Margio, a petite, dark-haired woman with a perfect-looking set of teeth.

On a recent afternoon, a patient is sitting in one of Dr. Bryson's exam rooms with small electrodes attached to her face. The nerve-stimulating device feeds data about the patient's jaw muscles to a computer system.

"Move your lower jaw forward," Dr. Bryson instructs, peering at the computer screen. "Perfect."

The patient, who complains of jaw pain from grinding her teeth, is being fitted for a night mouth guard, or orthotic. Although many dentists charge from $200 to $500 for guards, Dr. Bryson sells one he says is designed to keep the patient's jaw more relaxed. The price: $2,200, little or none of which is likely to be covered by insurance.

'Smile Makeover'

To help patients afford such treatments -- or the $12,000 to $15,000 they charge for a partial "smile makeover" of eight to 10 teeth -- Drs. Bryson and Margio offer financing plans that allow patients to borrow from a bank and pay their bills over as long as five years.

The couple say their practice's gross revenues are up about 60% to about $1.6 million a year since they shifted their focus five years ago. Costs have also risen, to close to 65% of revenue in some years, mainly because of outlays for computers and continuing dental education.

Since changing their practice, Dr. Bryson says he has cut back from 60-hour weeks to 32 clinical hours a week, plus some paperwork time. Dr. Margio now works 18 clinical hours, giving her more time with their son. Both take every Wednesday off. "I coach my son's soccer team," Dr. Bryson says. "I don't miss a practice."

The work, he says, is also more satisfying. "I get patient letters, I get hugs. People cry when they see their teeth. I never got that before."

Across the state in New Castle, at 2 p.m. on a recent Wednesday, Dr. Fazioli was scheduled to have left his office an hour earlier. "This is supposed to be my half day," says Dr. Fazioli, a compact man with a mustache, graying temples and a self-deprecating manner. "But I'm lucky if I get home at 3 or 4."

An overflow of patients has left him behind schedule, and his desk is piled high with records to dictate. "Patient canceled colonoscopy," Dr. Fazioli says into his tape recorder, recounting his exam of an elderly woman. "Says she didn't feel comfortable with the procedure. She's still smoking cigarettes. Had a discussion with her about the need for total cigarette cessation."

He groans as a nurse brings in another armful of charts. "No more. I gotta get out of here."

Becoming a doctor once seemed like a dream job for Dr. Fazioli, who grew up in a mill town about 10 miles from New Castle. His father had operated machinery for a U.S. Steel mill until it closed in the 1970s. After working as a pharmacist, Dr. Fazioli attended medical school, and in 1990 hung out his own shingle as a family practitioner.

At first, the practice grew quickly. His income early on was more than $130,000 a year, and he added a couple of partners. Being a doctor in a small city, he says, means "you get a lot of respect. It's nice when you help people. They're grateful."

The trouble started with the managed-care reforms of the mid-1990s, Dr. Fazioli says. Signing managed-care contracts provided him with easy access to new patients. But more patients meant more office visits at the cut-rate fees demanded by insurers. The federal government's Medicare program has been another headache. Medicare patients make up at least a third of his practice.

"Our reimbursements have stayed flat, but our overhead is up," says Dr. Fazioli, 47. "My take-home pay has definitely gone down." He says he had hoped to slow down a bit as he neared 50, "But I definitely can't do that right now. I've got to keep seeing patients."

Although his typical work week is about 50 to 55 hours, every third week he's on call, pushing the work load closer to 80 hours and often requiring him to go to the hospital in the wee hours.

Dr. Fazioli and his family live in a colonial-style house in a wooded area outside of New Castle. He won't give his exact income, but says it's between $150,000 and $180,000 a year. If he had to do it all over again, he says, he'd still consider being a primary-care doctor, but "I'd look hard at other areas, other states."

As for his brother-in-law the dentist, Dr. Fazioli says, "Randy certainly did his homework. People who come to him want his service. He can charge as much as he can."

Dr. Fazioli recently went to a local dentist to get a bridge put in. The procedure, he says, took about 1½ hours over two visits. The bill: $1,200, all of which he had to pay from his own pocket. "I was thinking, 'How many people do I have to see to get that?' " Dr. Fazioli says. "If I made $200 in that amount of time, I'd be lucky."

Corrections & Amplifications:
The total number of root canal procedures performed in the U.S. rose 13% from 1990 to 1999, according to the American Association of Endodontists, a trade group of specialist dentists who focus on that treatment. But the rate among people 45 years and younger is declining. This article incorrectly said the total number of root canals is falling.

Sunday, April 06, 2008

Medicare having difficulty saving money


April 7, 2008
Health Plans
Medicare Finds How Hard It Is to Save Money

An ambitious three-year experiment to see whether the Medicare system could prevent expensive hospital visits for people with chronic conditions like congestive heart failure and diabetes has suggested that such an approach may cost more than it saves.

The test borrowed a practice long available through private health plans. Nurses periodically place phone calls to patients to check whether they are taking their drugs and seeing the right doctors. The idea is that keeping people healthier can help patients avoid costly complications.

After paying eight outside companies about $360 million since mid-2005 to try to improve such patients’ health, Medicare is still trying to figure out whether the companies were able to keep people healthier. But the preliminary data indicate that the government is unlikely to save money.

The experiment, meanwhile, is proving something else: how difficult it can be, politically and practically, to make fundamental changes in the sprawling $400 billion federal Medicare program, which now covers some 44 million Americans.

With health costs soaring, few would dispute that the government needs to find better ways to spend its Medicare dollars. But because the system relies heavily on private industry and is subject to Congressional oversight, few changes come easily, and even experimental programs can take on lives of their own.

Several of the companies, including two that specialize in disease management, Healthways and Health Dialog, are pressing Medicare to continue the project in some fashion beyond the end of this year, saying the government mishandled the experiment.

The senators from the home states of those two companies, including John Kerry, Democrat of Massachusetts, and Lamar Alexander, Republican of Tennessee, have taken up their cause, demanding that Medicare rethink ending the experiment.

“Stopping this program,” the senators wrote in a letter to Medicare last month, “creates serious health risks for the Medicare beneficiaries already enrolled and heavily reliant” on the services provided by the experiment.

Medicare, for its part, says the experiment so far has not reduced medical bills enough to offset the fees the companies are charging the government — as much as $2,000 a year for each patient. A final accounting of the experiment is likely to come no sooner than next year.

About 160,000 people have taken part in the test, known as the Medicare Health Support program, and some 70,000 are still receiving calls from nurses employed by the companies.

Experts say that Medicare and the companies alike were too optimistic about how easy it would be to prevent costly complications and hospital visits by patients who are very sick.

“Everybody shares some blame,” said Dr. David B. Nash, a health policy professor at Thomas Jefferson University in Philadelphia, who at the outset was enthusiastic about the program’s prospects for transforming Medicare.

On the experiment’s front lines are nurses like Jill Coker, who works for Healthways and makes 25 to 30 telephone calls a day, trying to ensure that each patient receives a call every few weeks. Through dozens of such nurses, Healthways, based in Nashville, is overseeing the care of 16,000 people in Maryland and Washington.

Ms. Coker said she spent most of her time on rudimentary issues, like explaining to patients what prescription drugs they are on and helping them devise ways to make sure they remember to take their medicine. She may also arrange a conference call with a patient’s doctor if there are some worrisome new symptoms, or she may direct someone to a specialist to get better care.

“There have been numerous diabetics who didn’t even know what an endocrinologist was,” she said.

Medicare has not finished studying how well patients do under the program and whether patients are satisfied with the help. Three of the original companies — Cigna, McKesson and LifeMasters — eventually dropped out.

The program has failed to meet the government’s original financial target: an overall savings to Medicare of 5 percent after factoring in the companies’ fees and the patients’ medical bills.

Initially, the companies were supposed to return their payments if they did not hit that target. Late last year, Medicare relaxed its standard, requiring only that the experiment not end up costing the government money.

The agency says that it will consider keeping any promising pieces of the program. But it says it cannot legally extend the experiment beyond December if it is not budget neutral.

“We want to lift up the seat cushions to find every nickel and dime we can find,” said Herb B. Kuhn, the deputy administrator for Medicare. The agency says no final decision on the fate of the program has been made.

But some health care experts say Medicare should move on to seek other ways of managing the care of the chronically ill, if alternatives seem to hold greater potential to deliver both cost savings and better care.

“Medicare is doing exactly what we should want Medicare to do — to test different life forms of disease management and see what works best,” said Dr. Arnold Milstein, the chief physician for Mercer Health and Benefits, a consulting firm. But, he said, “This particular form of disease management is not looking promising.”

Medicare is already exploring other ideas, like the development of so-called “medical homes,” where a doctor with a team of other professionals oversees a patient’s care. A few doctors’ groups involved in a separate Medicare experiment have reported some success in saving the government money by more actively managing their patients’ care.

Dr. Mark B. McClellan, who was the head of Medicare when the experiment began and is now a policy analyst at the Brookings Institution in Washington, says the point of Medicare’s experiments is to find out which approaches might work. “This is a hard problem that is not going to be solved all at once,” he said.

Many of the companies involved in the program say the experiment was flawed in the way it was designed and that Medicare has failed to work with them to make the program a success.

“We haven’t proven anything,” said Dr. Jeffrey L. Kang, a former Medicare official who is now the chief medical officer for the insurer Cigna.

The companies say Medicare signed up patients who were much sicker than they had expected. Instead of giving companies a chance to intervene before someone went to the hospital, Dr. Kang said, most of the patients were already so ill that it was “no longer a preventive program.”

The companies also say Medicare failed to make good on its promise to give them timely information about the use of prescription drugs, for example, or lab results that would have allowed them to help direct the patients’ care.

“We overestimated the real desire expressed by the organization,” said Ben R. Leedle Jr., the chief executive of Healthways, who has been an outspoken critic of Medicare. His company’s stock fell by 16 percent in a single day after the agency announced the experiment’s preliminary results in January.

Mr. Leedle says that Healthways will probably be able to demonstrate savings from at least some of its Medicare efforts, although the company also says it is projecting a loss on the experiment because it may have to pay back federal fees. Medicare has not made public data on the results for individual companies.

For its part, Medicare said that it had worked extensively with the companies to address their concerns and that its final analysis would take into account how sick the patients initially were.

One thing that already seems clear is that after the fees are paid to the contractors, any cost savings may be elusive. In late January, the agency estimated that to meet their targets the five remaining companies would need to reduce their monthly claims by an average of $300 to $800 per patient for the remainder of the experiment. That would represent a 20 to 40 percent reduction in the patients’ current medical bills.

George B. Bennett, the chief executive of Health Dialog, which is overseeing about 15,000 Medicare patients in western Pennsylvania, favors continuing the experiment, but with adjustments. He wants Medicare to give the companies more flexibility to manage patients in ways they say have already been proven to work among the employees they cover in commercial plans. Such measures, he said, include giving the insurer a bigger role in selecting the patients, with an eye toward identifying the ones most likely to be helped.

“Medicare actually has the possibility of saving $20 billion to $30 billion,” Mr. Bennett said, “if they undergo what is being done in the private sector.”

Whatever happens with this particular program, Medicare says it wants to keep experimenting. “We’re not giving up on this stuff,” said Mr. Kuhn, the Medicare deputy. “We definitely want these programs to work.”

Wednesday, March 12, 2008

Doctors and excess tests & consults


March 11, 2008
Many Doctors, Many Tests, No Rhyme or Reason

I recently took care of a 50-year-old man who had been admitted to the hospital short of breath. During his monthlong stay he was seen by a hematologist, an endocrinologist, a kidney specialist, a podiatrist, two cardiologists, a cardiac electrophysiologist, an infectious-diseases specialist, a pulmonologist, an ear-nose-throat specialist, a urologist, a gastroenterologist, a neurologist, a nutritionist, a general surgeon, a thoracic surgeon and a pain specialist.

He underwent 12 procedures, including cardiac catheterization, a pacemaker implant and a bone-marrow biopsy (to work-up chronic anemia).

Despite this wearying schedule, he maintained an upbeat manner, walking the corridors daily with assistance to chat with nurses and physician assistants. When he was discharged, follow-up visits were scheduled for him with seven specialists.

This man’s case, in which expert consultations sprouted with little rhyme, reason or coordination, reinforced a lesson I have learned many times since entering practice: In our health care system, where doctors are paid piecework for their services, if you have a slew of physicians and a willing patient, almost any sort of terrible excess can occur.

Though accurate data is lacking, the overuse of services in health care probably cost hundreds of billions of dollars last year, out of the more than $2 trillion that Americans spent on health.

Are we getting our money’s worth? Not according to the usual measures of public health. The United States ranks 45th in life expectancy, behind Bosnia and Jordan; near last, compared with other developed countries, in infant mortality; and in last place, according to the Commonwealth Fund, a health-care research group, among major industrialized countries in health-care quality, access and efficiency.

And in the United States, regions that spend the most on health care appear to have higher mortality rates than regions that spend the least, perhaps because of increased hospitalization rates that result in more life-threatening errors and infections. It has been estimated that if the entire country spent the same as the lowest spending regions, the Medicare program alone could save about $40 billion a year.

Overutilization is driven by many factors — “defensive” medicine by doctors trying to avoid lawsuits; patients’ demands; a pervading belief among doctors and patients that newer, more expensive technology is better.

The most important factor, however, may be the perverse financial incentives of our current system.

Doctors are usually reimbursed for whatever they bill. As reimbursement rates have declined in recent years, most doctors have adapted by increasing the quantity of services. If you cut the amount of air you take in per breath, the only way to maintain ventilation is to breathe faster.

Overconsultation and overtesting have now become facts of the medical profession. The culture in practice is to grab patients and generate volume. “Medicine has become like everything else,” a doctor told me recently. “Everything moves because of money.”

Consider medical imaging. According to a federal commission, from 1999 to 2004 the growth in the volume of imaging services per Medicare patient far outstripped the growth of all other physician services. In 2004, the cost of imaging services was close to $100 billion, or an average of roughly $350 per person in the United States.

Not long ago, I visited a friend — a cardiologist in his late 30s — at his office on Long Island to ask him about imaging in private practices.

“When I started in practice, I wanted to do the right thing,” he told me matter-of-factly. “A young woman would come in with palpitations. I’d tell her she was fine. But then I realized that she’d just go down the street to another physician and he’d order all the tests anyway: echocardiogram, stress test, Holter monitor — stuff she didn’t really need. Then she’d go around and tell her friends what a great doctor — a thorough doctor — the other cardiologist was.

“I tried to practice ethical medicine, but it didn’t help. It didn’t pay, both from a financial and a reputation standpoint.”

His nuclear imaging camera was in an adjoining “procedure” room. He broke down the monthly costs for me: camera lease, $4,500; treadmill lease, $400; office space, $1,000; technician fee, $1,800; nurse fee, $1,000; and miscellaneous expenses of $200.

“Now say I get on average $850 per nuclear stress test,” he said. “Then I have to do at least 10 stress tests a month just to cover the costs, no profit going into my pocket.”

“So,” I said, “there’s pressure on you to do more than 10 stress tests a month, whether your patients need it or not.”

He shrugged and said, “That is what I have to do to break even.”

Last year, Congress approved steep reductions in Medicare payments for certain imaging services. Deeper cuts will almost certainly be forthcoming. This is good; unnecessary imaging is almost certainly taking place, leading to false-positive results, unnecessary invasive procedures, more complications and so on.

But the problem in medicine today is much larger than imaging. Doctors are doing too much testing and too many procedures, often for the sake of business. And patients, unfortunately, are paying the price.

“The hospital is a great place to be when you are sick,” a hospital executive told me recently. “But I don’t want my mother in here five minutes longer than she needs to be.”

Dr. Sandeep Jauhar is a cardiologist on Long Island and the author of the new memoir “Intern: A Doctor’s Initiation.”

Friday, February 22, 2008

Go on a savings spree


February 22, 2008
Op-Ed Contributor
Go on a Savings Spree

CONGRESS has passed and President Bush has signed legislation to rescue the economy from the jaws of recession. The $168 billion package, which includes an effort to increase consumer spending by distributing $600 rebates to individuals, can be faulted in many ways: with two wars and a budget deficit the nation can’t really afford it; it will probably arrive too late in the business cycle to actually make a difference; and the near-universal aspect of the rebates doesn’t make much sense. But the most fundamentally troubling thing is the premise that while consumer overspending got us into this mess, more will get us out of it. This is akin to the old saw about curing a hangover with the hair of the dog that bit you.

What if instead of giving rebates we helped create an investor society by seeding universal investment accounts? This would not only pump cash into the economy, through the slightly more indirect route of investment, it would also help us correct some of the near-fatal flaws in our long-term economic landscape.

The recent slowdown in gross domestic product growth is only a symptom of recession, not the cause. While there are many things to blame for the current crisis — most notably the subprime mortgage mess — one factor that has received little attention is America’s low savings rate. In 2005, net private savings in the United States were negative. In other words, we were spending money that we didn’t have, chipping away at our national wealth.

The last time the savings rate dipped into the red was during the Great Depression. At that time, of course, it made sense not to save. Joblessness was high and money scarce; we needed to dip into our kitty to survive. But our negative savings during the Bush boom had a different cause. Evidently, we felt so flush with (paper) gains in the stock and housing markets that we spent money as if there were no tomorrow.

Republicans have long argued that the way to stimulate long-term growth is by promoting investment over spending. Hence their perennial efforts to lower taxes on capital gains, dividends and corporate profits. But whether such policies actually stimulate increased investment is open to debate, since the wealthy folks who gain most from these tax reductions are probably already investing their money. And the tax savings don’t trickle down as much as their advocates claim.

Democrats, more concerned with helping working families, consider consumer spending to be the magic bullet, so they favor tax rebates. But this only encourages us to continue our profligate ways.

Why not combine the best of both philosophies and try to stimulate investment by all Americans? The simplest approach would be to seed universal mutual fund accounts for low-income Americans. The best way to do this would be through a so-called refundable tax credit deposited directly into a special investment account for each taxpayer. In future years, the government could contribute an additional 50 cents for every dollar the taxpayer deposited into this account. Think of it as a universal 401(k), but one that could be used not only for retirement but also for things like a down payment on a house, college expenses or unexpected health costs.

Such investment incentives would do more than just help stimulate business growth by providing new capital. They would fundamentally change taxpayers’ lives. Some research suggests that asset-holders behave more responsibly and are more civic-minded than those without wealth. After all, they have a stake in the future of the economy and their community. This is why banks in cities don’t readily offer mortgages for apartments in buildings in which most of the tenants are renters, not owners. My own research suggests that having savings and investment equity is one of the best predictors of whether someone’s children will attend and graduate from college. Investing motivates people of all income levels to defer gratification and become knowledgeable about the economy and society.

Finally, to the extent that investment accounts grow, they decouple economic security from job security. By providing a cushion during employment transitions, they are the best possible form of unemployment insurance.

For some reason, legislation to create universal investment accounts — proposed by senators and representatives from both parties over the past decade — has repeatedly stalled in Congress. But now the economy is in trouble, and there is general agreement that this is a time for action. President Bush has already authorized the plan to stimulate more of the spending that got us into this trouble. But it’s still not too late to make the effort to create a true investor society.

Dalton Conley, the chairman of New York University’s sociology department, is the author, most recently, of “The Pecking Order: A Bold New Look at How Family and Society Determine Who We Become.”

Visiting Santa Monica


February 22, 2008
American Journeys | Santa Monica, California
Classic Beach, but Much More in Santa Monica

WITH its classic amusement pier, glittering bay and surfers bobbing on swells, Santa Monica was a perfect setting for “Baywatch.” But take a short walk inland, and this city on the edge of Los Angeles reveals itself as more than a stereotypical beach town.

Within its borders, drawings by Picasso and Dubuffet hang in the same art complex as a vast installation by a graffiti crew. A well-preserved Mission-style bungalow sits around the corner from a steel performance space by Frank Gehry. Shops sell goods ranging from vintage Parisian wedding gowns to a whimsical map made entirely out of license plates. There are homegrown coffee bars on nearly every block, with names like Groundwork or the Legal Grind, dispensing caffeine and counsel at the same time.

“The pier, the bike path — they’re the only things most people know about Santa Monica,” said Colleen Dunn Bates, editor of “Hometown Santa Monica,” an insider’s guide to the city. “And they’re fun. But they don’t reflect everything that the city really offers.”

Although it’s surrounded on all sides by districts that are part of the City of Los Angeles — Pacific Palisades, Venice and West Los Angeles — Santa Monica asserts its own identity as an eight-square-mile separate city, and its population of about 96,000 is spread through several distinct neighborhoods. To make the most of time there, enjoy the games and famed carousel of the Santa Monica Pier and then step back from the beach to sample the city’s variety the way Santa Monicans themselves do.

On one recent Saturday, Ren Farrar was luring passers-by to his stand at the open-air Santa Monica Farmers’ Market, close to the beach on Arizona Avenue. By state law, all goods at the market must be grown in California, and much of the produce is picked within 24 hours of its appearance there.

“Care to try a sample?” Mr. Farrar, 37, of Spring Hill Jersey Cheese of Petaluma, shouted as I walked by. Watching intently as I savored a cube of his Old World Portuguese, he observed, “This is mild enough to go with anything, yet firm enough to stand up to the heat.”

Down the block, Adams’ Stuff’ N Olives featured feta and anchovy-stuffed olives. Fair Hills Farms offered six kinds of organic apples. Across the street, shoppers dropped dried nectarines, plums and pears into bags. A family strolled by, munching on Cajun spiced almonds and sipping ice-cold lemonade, both produced only a few miles away.

Nate Allen, 30, a personal chef and restaurant consultant from nearby Venice, shops at the market routinely, as do many of the top chefs in the area.

“The greatest thing about this market is that you’re going to get what is absolutely perfect and in season for this region,” said Mr. Allen, who flaunts his trade by sporting a seven-inch-long tattoo of a knife on one forearm and a tattooed fork on the other. “For visitors, by the time you get to the last vendor, you’ve got a great picnic for wherever you want to go.”

He often takes his own picnic to the Backbone Trail, a 69-mile system that roughly follows the crest of the Santa Monica Mountains from Will Rogers State Historic Park just north of Santa Monica to Point Mugu State Park in Ventura County. Hikers can take an easy, sage-scented, two-mile loop from the parking lot at Will Rogers up to Inspiration Point, a sensational overlook of Santa Monica Bay from the Palos Verdes Peninsula to Point Dume in Malibu.

On a clear day, a hiker can see Catalina Island and the white dots of sails. Behind are the slopes of the Santa Monica Mountains, and in the distance, the high-rises of downtown Los Angeles. Up there, the muted chattering of birds and the hum of insects are the only sounds.

Back in northern Santa Monica, natural sights give way to architectural ones. Adelaide Drive, at the north end of the city, offers intriguing examples of early-20th-century architecture. Two of the homes designated as city landmarks are the Craftsman-style Isaac Milbank House (No. 236) — designed by the same firm that did Grauman’s Chinese Theater in Hollywood — and the stucco Worrel House (No. 710), which was built in the mid-1920s and has been described as a “Pueblo-Revival Maya fantasy.”

(Another selection of carefully kept old houses, in styles from Victorian and Craftsman to Spanish colonial revival, await in the Third Street Historic District.)

Some of the city’s best shopping is also on its northern rim, where the 10-block Montana Avenue district is known for upscale clothes, home décor, crafts, jewelry and art. At Every Picture Tells A Story (No. 1311-C) a lithograph of the cover of “Charlotte’s Web” signed by the illustrator, Garth Williams, hangs on a wall, and in the gallery (the store is also a children’s bookstore) original works by Maurice Sendak, Dr. Seuss and others are $150 to $150,000.

Next door, Rooms & Gardens (No. 1311-A) sells furniture, antiques and accessories like pillows fashioned from an antique Indian sari. The actress Mary Steenburgen, one of the store’s three owners, praised the walkability of the area — not a common commodity in Southern California — when I asked her about the location of her store.

“The thing I love about Montana is that you feel as if you are in a pedestrian city,” she said. “It’s fun to look out the window and see people walking by with their dogs, instead of just cars streaming by.”

Santa Monica is sunny almost all the time, but visitors who hit a rare rainy day might spend a good portion of it at Bergamot Station, a complex of art galleries that many miss because it’s so hard to find. Built on the site of a former trolley-line stop — hence its name — the complex is on Santa Monica’s east side, next to a freeway on a dead-end street. Inside corrugated tin warehouses, two dozen galleries show contemporary drawings, paintings, photographs, sculpture and mixed-media works.

Sherrie Goldfarb of West Los Angeles and her friend Nancy Recasner of Studio City, Calif., hopped puddles between buildings after one rain this winter. “I wander through here with friends and the variety of work is amazing,” said Ms. Goldfarb, 57, a regular at the galleries.

Many boldface names are represented. At Ikon Ltd./Kay Richards, drawings by Dubuffet, Basquiat and Picasso, among others, are on display through March 1. “Rarely Seen,” a show of Henri Cartier-Bresson photographs, is running through May 10 at the Peter Fetterman Gallery.

Those who want to sense what Santa Monica was like as a sleepy town of tiny bungalows can visit Ocean Park on the city’s south end, which borders Venice. This funky neighborhood, one of the birthplaces of skateboarding in the late 1960s (part of “Lords of Dogtown” was filmed there), got a makeover in the 1990s; the tiny bungalows now sell for millions.

Artsy Main Street, Ocean Park’s central artery of merchants, restaurants and galleries, manages to merge sneaker stores and used-book shops with Armani Exchange and Patagonia stores. At Varga (No. 2806) apparel and accessories seem jointly inspired by ’40s pin-ups, Barbie dolls and young Hollywood celeb-style. The inventory at Relish, off Main Street at 208 Pier Avenue, ranges from bath salts ($20 to $40) to a pinball baseball game ($110). The Frank Gehry-designed steel boxes of Edgemar (No. 2415-2449 Main Street) house retail tenants and a performance space around an open courtyard.

Appraise your purchases over a martini with a mermaid toothpick at the Galley (No. 2442), a steakhouse with signature décor (think tiki bar with Christmas lights), a soulful juke box and old-salt appeal. No wonder — it opened its thick plank doors in 1934, making it Santa Monica’s oldest restaurant.

As the day wanes, consider watching the jet set (the one with its own jets) fly into the sunset. Opt for dinner next to the runway at the Santa Monica Municipal Airport. Those in the know reserve a window table at the Pan-Asian fusion restaurant Typhoon or the more intimate sushi restaurant the Hump (pilot slang for the Himalayas) upstairs.

But at sunset, the most thrilling view in town is back at the beach, from the top of the solar-powered 130-foot-high Pacific Wheel, the Ferris wheel at the Santa Monica Pier. Yes, it’s touristy, and yes, it might be crowded, but it is, after all, the city’s iconic symbol.

As my seat on the wheel glided upward one evening, the entire city of Santa Monica, and far beyond, slid into view. Below, the cast and crew of the film “17 Again,” starring Matthew Perry and Zac Efron, were shooting on the beach, as they would be all night long. The whole scene was bathed in a deep pink and violet glow.

It felt just fine to act like a tourist for a while.


SANTA MONICA, adjacent to Los Angeles, has 3.5 miles of coastline, all publicly accessible; two miles of this waterfront make up Santa Monica State Beach. The city’s north-south numbered streets run from Second Street, a block from the water, eastward to 26th. The major east-west arteries are San Vicente, Wilshire, Santa Monica, Pico and Ocean Park Boulevards.

The Santa Monica Pier, with rides, games, souvenir shops and a 1922 carousel, is at the foot of Colorado Avenue. The Pacific Wheel, a Ferris wheel at the pier, will be closed May 5 to 22 as a new wheel is installed.

Beach lovers can step onto the sand from Loews Santa Monica Beach Hotel at 1700 Ocean Avenue (310-458-6700;; rooms from $349). The 72-room Ambrose (1255 20th Street; 310-315-1555;; from $229) feels more like a Mission-style hideaway with stained-glass windows and fireside library.

The Santa Monica Farmers’ Market is held on Arizona Avenue from Second to Fourth Streets, on Wednesdays from 8:30 a.m. to 1:30 p.m. and Saturdays from 8:30 a.m. to 1 p.m.

The Backbone Trail is in Will Rogers State Historic Park (1501 Will Rogers State Park Road, off West Sunset Boulevard, Pacific Palisades; 310-454-8212;, which is open from 8 a.m. to sunset daily. Parking is $7. Picnic tables are available at Inspiration Point.

Most galleries at Bergamot Station (2525 Michigan Avenue; are open from 10 a.m. to 6 p.m. Tuesday to Friday, and 11 a.m. to 5:30 p.m. on Saturday. Because Michigan Avenue is bisected by a freeway, the best access to this dead-end section of it is off Cloverfield Avenue.

At the Galley (2442 Main Street; 310-452-1934, a 12-ounce sirloin is $23 and seafood diablo is $24.

Typhoon, at the Santa Monica Airport (3221 Donald Douglas Loop South off Airport Road; 310-390-6565; offers Pan-Asian fare including Thai river prawns ($21) and stir-fried crickets ($10). Upstairs, the Hump (310-313-0977; serves some of the freshest sushi in town.

Wednesday, February 06, 2008

Americans cutting back on consumer spending


February 5, 2008
Economy Fitful, Americans Start to Pay as They Go

For more than half a century, Americans have proved staggeringly resourceful at finding new ways to spend money.

In the 1950s and ’60s, as credit cards grew in popularity, many began dining out when the mood struck or buying new television sets on the installment plan rather than waiting for payday. By the 1980s, millions of Americans were entrusting their savings to the booming stock market, using the winnings to spend in excess of their income. Millions more exuberantly borrowed against the value of their homes.

But now the freewheeling days of credit and risk may have run their course — at least for a while and perhaps much longer — as a period of involuntary thrift unfolds in many households. With the number of jobs shrinking, housing prices falling and debt levels swelling, the same nation that pioneered the no-money-down mortgage suddenly confronts an unfamiliar imperative: more Americans must live within their means.

“We don’t use our credit cards anymore,” said Lisa Merhaut, a professional at a telecommunications company who lives in Leesburg, Va., and whose family last year ran up credit card debt it could not handle.

Today, Ms. Merhaut, 44, manages her money the way her father did. Despite a household income reaching six figures, she uses cash for every purchase. “What we have is what we have,” Ms. Merhaut said. “We have to rely on the money that we’re bringing in.”

The shift under way feels to some analysts like a cultural inflection point, one with huge implications for an economy driven overwhelmingly by consumer spending.

While some experts question whether most Americans, particularly baby boomers, will ever give up their buy-now/pay-later way of life, the unraveling of the real estate market appears to have left millions of families with little choice, yanking fresh credit from their grasp.

“The long collapse in the United States savings rate is over,” said Ethan S. Harris, chief United States economist for Lehman Brothers. “People are going to start saving the old-fashioned way, rather than letting the stock market and rising home values do it for them.”

In 1984, Americans were still saving more than one-tenth of their income, according to the government. A decade later, the rate was down by half. Now, the savings rate is slightly negative, suggesting that on average Americans spend more than their disposable income.

Though the savings rate does not account for the increased value of stock and property, or the gains on retirement accounts, many economists still view it as the most useful gauge of the degree to which Americans are making provisions for the future.

For the 34 million households who took money out of their homes over the last four years by refinancing or borrowing against their equity — roughly one-third of the nation — the savings rate was running at a negative 13 percent in the middle of 2006, according to Moody’s That means they were borrowing heavily against their assets to finance their day-to-day lives.

By late last year, the savings rate for this group had improved, but just to negative 7 percent and mostly because tightened standards made loans harder to get.

“For them, that game is over,” said Mark Zandi, chief economist at “They have been spending well beyond their incomes, and now they are seeing the limits of credit.”

Many times before, of course, Americans have found innovative ways to finance spending, even when austerity seemed unavoidable. It could happen again.

The Me Decade was declared dead in the recession of the early 1980s, only to yield to the Age of Greed and later the Internet boom of the 1990s. Over the longer term, the economy should keep growing at a pace that reflects improving productivity and population gains.

But for the first time in decades, credit is especially tight as the bursting of the housing bubble has spread misery across the financial system. In homes now saturated with debt, conspicuous consumption and creative financing have come to seem a sign of excess not unlike that of a suntan in an age of skin cancer.

The return to reality is on vivid display at shopping centers, where consumers used to trading up to higher-price stores are now heading to discounters. Wal-Mart and T. J. Maxx are thriving, but business has slowed at Coach, Tiffany and Williams-Sonoma.

Not long ago, Elena Gamble would have looked at the Cadillac parked across the street from her modest home in Elk City, Okla., and felt a twinge of jealousy.

“We live in a small town, and everybody looks at your clothes and what you drive and where you have your hair done,” said Ms. Gamble, who earns about $2,600 a month as a grievance counselor at a local prison.

Now, she and her husband — a prison guard who brings home $2,000 a month — are grappling with $10,000 in high-interest debt. They no longer go to the movies or out to eat, except occasionally to McDonald’s. They quit their Internet service. Their car was repossessed. “What we say now is, ‘If we can’t afford it, we can’t buy it,’ ” Ms. Gamble said.

And when she looks across the street at that Cadillac, her envy has been replaced by pity for the neighbor on the hook.

“I say, ‘Oh my, you’re living here, and driving that? There’s got to be something wrong,’ ” Ms. Gamble said. “ ‘You’re in debt, and you’re in trouble.’ ”

For decades, that envy has been a prime engine of economic growth. Debt-willing consumers hungering for the latest-generation this and the fastest that kept factories busy from Michigan to Malaysia.

From 1980 to 2007, consumer spending swelled from 63 percent of the economy to over 70 percent, according to, while the share of after-tax income absorbed by household debt increased from 11 percent to more than 14 percent.

During the technology boom of the 1990s, an extravagant mind-set took hold. In ads for the discount broker Ameritrade, a spiky-haired hipster ridiculed middle-aged professionals for settling for conventional returns.

Even after the “stock market as money machine” line of thinking proved bogus, extra spending continued. The Federal Reserve cut interest rates to near record lows, banks marketed mortgages with exotically lenient terms and another fable of wealth creation took hold: the notion that housing prices could go up forever.

The come-ons for stocks were replaced by a new crop of advertisements. A house was no longer a mere place to live; it was a checkbook that never required a deposit. Between 2004 and 2006, Americans pulled more than $800 billion a year from their homes via sales, cash-out mortgages and home equity loans.

“People have come to view credit as savings,” said Michelle Jones, a vice president at the Consumer Credit Counseling Service of Greater Atlanta.

Some Americans have so much wealth that they can spend enough to fuel much of the economy. The top fifth of American earners generates half of all consumer spending, noted Dean Maki, chief United States economist at Barclays Capital.

For the others, some say credit is an intrinsic part of modern life, and Americans will soon be back for more. “A river of red ink runs through the history of the American pocketbook,” said Lendol Calder, author of “Financing the American Dream: A Cultural History of Consumer Credit.”

“Partly because of desire, partly because of optimism, partly because lenders have been free to invent useful borrowing tools that minimized shame and bother,” he added, “I think it will take a great catastrophe, greater than the Great Depression, to wean Americans from their reliance on consumer credit.”

Credit counselors are now swamped by calls not just from people of modest means, but from professionals earning six-figure incomes, their access to finance warping their distinction between necessity and desire.

“The longer someone has lived on a high income, the harder it is for someone to cut back,” said Manuel Navarro of Money Management International in San Diego. “I ask them, ‘Do you really need to have a 60-inch flat-screen TV hanging on your wall?’ ”

Fran Barbaro has an M.B.A. and a résumé of computer industry jobs with salaries reaching $150,000 a year. She used to have a stock portfolio worth about $1 million. She hung original art on the walls of her three-bedroom house in Boston.

But divorce, illness and motherhood drained her savings. Her home is worth less than she owes, and she owes another $200,000 to credit card companies, banks and tax collectors.

Ms. Barbaro, 50, said she knew she was living beyond her means. But her house demanded work. Her two boys needed after-school programs running $25,000 a year. Medical bills multiplied.

“These were simple day-to-day expenses,” she said. “The money was always there.”

Until it wasn’t. Her take-home pay is $5,200 a month, but her debt payments reach $4,400.

Ms. Barbaro has rented out her house while negotiating to lower her mortgage. She has moved to an apartment, where her sons sleep in the lone bedroom while she sleeps on a pull-out sofa.

“It’s the worst,” Ms. Barbaro said. “How do you salvage what you have and hopefully go back?”