Beyond Healthcare Reform: Living Well

How our greatest invention makes us richer, smarter, greener, healthier, and happier

Edward Glaeser, a New York City born and raised Harvard professor, mentions Nashville only in a few sentences in his new book, disparaging it as part of a group of low-density, sprawl cities in the South.  Yet, I understand that Mayor Karl Dean has read the book and shared it with others. The reason  is that despite little and adverse mention of Nashville, the book is full of insights and ideas that apply to Nashville and other southern sprawl cities.

Glaeser has a witty, but practical approach to his descriptions and prescriptions.  As a New Yorker who grew into adulthood without owning a car, he clearly likes the city he grew up in.  Yet, in a chapter comparing New York to Houston (the definition of a sprawl city), Houston comes out ahead as a place that is more friendly to middle-income families. And, in his middle age, Glaeser has moved out of urban Boston to the suburbs, where he makes a commute by car into Cambridge to talk to his students about urban living.  At least he fesses up.

Like the movie “Urbanized,” Glaeser takes us on a world tour, beginning with his home town of New York City, but his focus is less on the particulars of design and more on describing why cities are triumphant, despite their problems, and what makes particular cities successful.

His central thesis is that cities bring together smart people who can “produce new thinking.”  The new thinking then is transformed into products that people need and want by accessing the vast and diverse resources provided by the city.

To support his thesis Glaeser uses the data-driven tools of economics and also, like street-smart Jane Jacobs before him, makes street-level observations of “the crowds swooshing by” as they head to work, home, or play.

Urban density is green

Glaeser argues that dense is good (meaning green and productive and fun), and this leads him to support positions that many will not like.

• Up not out. He is an advocate of building “up” (the elevator) rather than building “out” (the car).  Building up often involves tearing down what already exists (our heritage) and rebuilding in a new character (taller) that fits new demands for more concentrated and productive living.   Suburban living, he points out, is surrounded by greenery, but is not “green.” The suburbanite is tethered to a car to get anywhere, and separated (as opposed to stacked) living units cost more to heat and cool.
• Preservation should be focused and limited. In this same vein, he argues that preservation should be limited and focused rather than widespread and indiscriminate.  He says preservation restrictions should target only the most significant or beautiful structures, but not every old structure. Cities must be allowed to remake themselves if they are to remain productive and affordable.
• Mortgage interest deduction. The federal income tax interest deduction on home mortgages should be eliminated or capped, he argues. The deduction encourages suburban home building (McMansions) in leafy neighborhoods or green cow pastures (sprawl), and discourages the building of high rise rental apartments near the city’s core.

Nashville’s skyline has added a number of tall buildings in recent years, most related to banking or insurance, but recent high rises have included condos and apartments–downtown living. When I arrived in Nashville in 1972, only two of the 10 tall buildings you see in this picture had been built.

Batman occupies the top floor. AT&T occupies most of the remainder. Cell phones with ears no longer exist.  Built in 1994, it stands 617 feet tall (tallest in Tennessee).

Two successful cities: Houston versus New York

In one chapter, Glaeser makes a direct comparison between Houston (where building codes are non-existent) and New York City (where building codes control everything). He ends up praising Houston for its reasonably priced housing as a boon to the middle class.  By comparison, New York is a boon for the wealthy who can afford to live in Manhattan, and to the poor who can live outside the city in the suburbs, yet commute in on public transit. Houston doesn’t have restrictive covenants that limit housing construction, and so construction occurs as needed to meet demand.  New York has many restrictions on building, with the result that housing stock is expensive. The middle class are priced out into the city suburbs, producing long commutes.

Houston, despite its favorable mention, however, is a sprawl city, built around the automobile and hostile to walking except in the shopping malls that can only be reached by car.  Sprawl cities, despite their middle class appeal, are energy hogs, contributing far more than they should to Carbon emissions on a per capita basis.

The father of urban (or village) sprawl

Glaeser, in his discussion of urban sprawl and its ecological damage, accuses a former Harvard undergraduate of being the “father of urban sprawl.” It is a surprising choice. That former student, as a young man seeking the simple life surrounded by nature, built a cabin by himself from scratch in the woods near a New England pond.  Henry David Thoreau, sitting in his hut near Walden Pond, might be surprised at what he spawned, but someone living on an acre of partially forested land in Bellevue or maybe Goodlettsville (and commuting 12 miles downtown) might consider themselves to be living out his vision (except for the commute, and having to hold a job).  Such a suburbanite, of course, might admire the simple, leafy life, but would be a very active participant in suburban sprawl, using much more energy to get around and to heat or cool his or her home than someone living in a high-rise in the Gulch or downtown.  Thoreau’s “green living” has become “brown” in our own era.

On the left, the L&C (Life and Casualty) Tower, the company that sponsored the Grand Ole Opry, and the oldest tall building in Nashville. On the right, a condo tower, housing, among others, one of two couples I know who have moved to downtown towers. The L&C Tower was built in 1957 and is 409 feet tall.

Attracting talent

Glaeser has lots to say about why cities fail and why they succeed, and what he has to say represents the key rationale for reading his book and the reason the Mayor distributed it to his staff.  Mayor Dean may even have taken his new-term playbook in part from the chapter on education—the skilled and innovative work force that is the key to the success for the modern city.

In his world tour of cities, Glaeser finds that successful cities each have unique features contributing to their success.  But, he thinks that successful cities have one thing in common: they attract smart people and help them work collaboratively.  They do this in different ways, though.  To develop his argument, he takes a look at successful “types,” using several example cities for each type.  He discusses:

• Capital (Imperial) cities (Tokyo, which is now the largest city in the world with approximately 36 million people; ancient Rome also gets a review),
• Well-managed cities (Singapore: clean, productive and “disciplined”),
• Smart cities (Boston, anchored around its elite universities),
• Consumer cities (Vancouver, an attractive place to go for “fun”), and
• Cheap (affordable) cities (Chicago, which in recent years has also been well managed).

He takes us through a brief history for each  of the examples (about 15 cities in all) highlighting important events and interesting people along the way. The biggest surprise to me was an African city (Gaborone, Botswana) that he included in the “well managed” section.

I think Nashville has elements of all of these types:

• It is state government capital (though not a national capital or a nation-state);
• It has been well-managed in recent years (intelligent mayors and effective city administration);
• It is supported by a strong college/university infrastructure, including one of the nation’s elite research universities (Vanderbilt with its medical center also happens to be Nashville’s largest employer);
• It contains a downtown that thrives with music, sports, theaters, restaurants and bars; and
• It retains relatively cheap, close-in housing, including a lot of new high rise condo’s and apartments.

Glaeser’s description (and vision) of the city will find many harsh critics, including all of my neighbors who have fought so hard to keep commercial development at a distance.

I remember, in particular, the transformation of the nearby Richland Golf Club into a gated community (more or less a black hole for those outside the gate) rather than an accessible restaurant/office/condo district (the developer’s first offer) surrounded by a “buffer” of single unit houses.

I have a mild regret about that decision, and wish occasionally for a shorter walk to nice restaurants, a coffee shop, or even a corner grocery store, as is possible in much of close-in East Nashville.

But what my neighbors and I would not have liked is the traffic the commercial district would have generated from outside our neighborhood; the rude intrusion of fast-moving autos steaming off the interstate with grumpy drivers who are indifferent to the neighborhood and its values. So it was not the thing itself (the commercial/office district) that was the biggest problem, but the way office workers and retail customers would have gotten to the area (the flood of automobiles) that led to the resistance.

Yet, I think Glaeser is correct in predicting that the leadership of successful U.S. cities (even southern sprawl cities) will see the benefits of mixed use, higher density, taller buildings, more public transportation, and certainly more bikes and walkability, in order for talent to be attracted and collaborate, and for economic growth to continue. Nashville is certainly growing taller, but it is also building out, particularly its suburban counties. Competing visions aren’t bad, though, and the city may be better for the competition.  The most important insight about cities is that they shouldn’t be just “one thing.”

If you are interested in where cities might be heading (and why people are heading to cities), you will find “Triumph of the City” dense with “aha” moments, well worth your time (and money).

Triumph of the City, by Edward L. Glaeser, Penguin Press, 2011

Three years ago, I didn’t have a workable road bike.  I would occasionally pump up the tires of my son’s old mountain bike, bought 20 years ago, and ride a few neighborhood streets, pedaling up the hill at Love Circle to give myself an aerobic workout, and then returning home exhausted.  At the time, I saw the bike as an exercise toy. I would get on it, ride around the neighborhood for awhile, and then return home. As such, it suffered the fate of the various stationary bikes and treadmills that my family has bought over the years: used for a time, and then passed on to someone else after it sat idle for some months. My son’s bike stayed with us, but it was mostly in storage (and still is).

Over the past three years I have transitioned from “bike as exercise” to “bike as transportation.”  I now use a bike, a new bike, or rather a new-old bike (a ventage Raleigh), to get around Nashville. So far this month (December), my bike and I have covered about 125 miles, and since April our monthly totals have typically been 150 miles or more. I’ve become an urban biker. How did this happen?

Transition

I didn’t become an urban biker in the natural course of things. The default option is driving a car.  Cars are the ubiquitous ever-ready vehicle for getting around.  Our cities are built for cars, and many cities are built to exclude any other form of getting around, especially walking and biking.  Parts of Nashville are that way, completely hostile to walking and biking, but the part I live in has many streets (and often sidewalks) that support both alternatives to the car.

The bigger barrier to biking in my part of town or anywhere in Nashville is “car culture.”  There is the unthinking assumption by even smart people that the only way to get somewhere is by driving.

The best joke I’ve seen lampooning this “car culture” is the framing piece in “The Gods Must be Crazy.”

A man walks out of his suburban Johannesburg house in his pajamas to his parked car, gets in, backs the car the 40 foot distance out to the road. There he reaches out of his car window and retrieves his morning newspaper from the mail box. He then returns the car to his parking spot next to the house, where he re-enters his home to take his morning coffee with the news.

My own cultural transition to biking had three important elements: (1) several of my friends bike and over time I began to bike with them; (2) I serve on an advisory group (to the Mayor) and met people who were urban bikers and who set an example for every day biking that caught my attention; and (3) through research and interactions on the advisory group, I came to understand that biking is a viable alternative to driving for many kinds of trips.

My service on the advisory group (BPAC or Bike Pedestrian Advisory Committee) is a unique opportunity, not available to many, but the mentoring within a friendship group of bike riders was an early step that should be available to most.  In fact, I think mentoring by more experienced bikers is an essential part of anyone’s transition to urban biking. While many mature urban bikers often ride alone, learning the skills of urban biking requires rides with others, mentors, who show you how to enjoy the experience while avoiding the hazards.

Why I bike

Here is my list.

• Biking is an outdoor adventure. And the adventure improves with experience. Biking takes me places I would not (could not) otherwise go and gives me unique, and often exhilarating, experiences while getting there.
• Biking is physical. I don’t have to think about doing a workout for my health. It happens when I ride.  It is a good complement to walking and hiking, which are my other favorite outdoor activities.
• Bikes are green, zero emission vehicles.  I can go 20 miles on a bowl of cereal and a glass of orange juice.
• In the urban environment, bikes are rapid transit.  I cam able to cover five miles or more in 30 minutes (compared to the 15-20 minutes by car), and most of my destinations are less than 2 miles (10 minutes) away (see pictures at the end).  In the city, cars must wait for traffic lights, find scarce parking spaces, and often stack up at left turn signals and four way stops.

Surplus vehicle

Kathleen and I decided to sell our older car (a Prius) last December, to see if we could get along without a second car while waiting to purchase a Leaf, Nissan’s all-electric car. The Leaf will be built near Nashville (at the Nissan Smyrna plant) beginning in 2012, and Nashville is one of the cities outfitted with infrastructure (charging stations).

We sold the Prius in April for a very good price.  The Blue Book price for used Priuses had surged following the Japanese Tsunami and subsequent nuclear crisis, and that is when we made our sale.  Over the next several months, before a Leaf was available to us, we did quite well on one car.  As a result,  we decided the one-car family was working so well (I was riding my bike a lot more by then) that we recovered our deposit on the Leaf.

We’re now, happily, a one-car family with only occasional times when we both need a car going in opposite directions. Typically, I use our car only when I go places with Kathleen or with friends, when I use the car as a truck to haul stuff, or when I’m going somewhere after dark or in heavy rain. I also use it when the travel distance exceeds 10 miles or so. Finally, and without guilt, I bum rides with my friends..

Are bikers crazy?

In Nashville commuter biking seems heroic to some, and crazy (dangerous) to others, but it is mainly “seen” as invisible.  Many Nashvillians are surprised that urban biking even exists.  It is not something they think about. For them the car is the only thought when it comes to transportation.

And automobiles are seductive.  They offer speed and comfort, with no physical exertion required.  And so, most people opt to drive, particularly in a city like Nashville, which, until recently, was designed only for the car. (Street car tracks were ripped out here to make room for autos after WWII.)  To get more people out of their car and onto their feet or a bike or a bus, requires, in part, a redesign of the city, and in larger part, a redesign of the culture.

Biking is not for everyone.  Some can’t ride due to health or disability issues. And biking does require a degree of hardiness, especially in the cold of winter or the heat of summer.  Also, in Nashville there are the hills.

But for me, biking works right now, with no further structural changes to the city and with the support of the friends I have who ride. Urban biking is not only possible here, but enjoyable and relatively safe with proper precautions. Bikers are not crazy.

Some of my favorite biking/walking destinations (and distances from home)

Hillsboro Village in front of Fidos, where I get my coffee (2 miles)

Our neighborhood grocery, The Produce Place, with a bike rack featuring my transportation system (1.5 miles)

Cafe Nonna, on the porch where I meet with friends for a drink, featuring my two favorite servers, John Michael and Megan (1.5 miles)

Yours truly, returning from a biking adventure with groceries in the pack

Now showing at the Belcourt (in Nashville), Urbanized provides a stunning cinematic view of how urban design can solve a city’s problems, or make urban life worse, by taking the viewer on a tour of some of the world’s more interesting cities and the urban design projects which have shaped them. The theme of the movie is making cities both functional and green, and the worst enemy of both is the automobile.

We only get the briefest peek at Tokyo, the world’s most populous city, but what a visual treat. The longer look we get at Mumbai, which is vying for the title of world’s most populous (by 2050), is less delicious.

New York, Detroit, New Orleans, and Phoenix are the US cities profiled.  Phoenix takes a hit (a city of sterile sprawl), while New York is highlighted for the founding Godmother of urban design (Jane Jacobs, who praised neighborhood and mixed use back before it was popular), the destroyer of neighborhoods (Robert Moses, who routed expressways through established neighborhoods destroying them, much as happened in Nashville), and a grass roots initiative that created an elevated park and greenway in the central city out of an old, elevated rail line.

Detroit, of course, is a city of decline, from an inner city population of 2 million at its height, to around 700,000 today. (The metro area is larger.)  The focus there was an urban gardener, an inner city resident who took vacant lots and transformed them into vegetable gardens, in effect small farms.  In post-Katrina New Orleans, we take a tour of new homes in the devastated 9^th ward which were rebuilt using designs from west coast architects.  The film frowns while the audience chuckles at the beach-Malibu designs.

Other cities that get a review include Copenhagen (the masses bike to work), Rio (addressing fear of crime in the slums and seeking citizen input), Beijing (out of scale, loss of neighborhood), Mumbai (slums that stretch for miles and involve millions) , Brasilia (built from scratch by world class architects with sterile results), Paris (torn down and rebuilt two centuries ago with world class results), London (actually, Brighton, south of London, demonstrating how creative measurement can reduce energy use),  Stuttgart (a fight over a high speed rail terminal with its destruction of ancient oaks and historic buildings), and my absolute favorite segment, a focus on the former Mayor of Bogotá, Columbia.

In a portion of the Bogata piece, the Mayor is shown biking through a slum on a newly paved bike/walk path with numerous riders and walkers, while the street for cars is contrasted as a pothole-infested mud sink.  His explanation: he asked the residents what was needed, and they responded that they needed a way to get to jobs and to markets using the transportation they had, two feet or a bike.

Nashville’s urban design community went to the film on Friday night, where they did a post-film Q&A with one of the featured architects.  That means the theater is largely empty for your seating during the remainder of its time here (through December 15).  Don’t miss it if you are at all interested in the different directions Nashville’s design can take.

Note: This was posted from memory following one viewing, so there may be some errors.  The data below was obtained from the United Nations, Department of Economic and Social Affairs, Population Division (2009 revisions).

Estimated Metropolitan Area Population (millions) of cities covered in “Urbanized”

City                           1950                   2010

New York                       12.34 m                 19.43 m

Detroit                             2.77                    4.2*

Phoenix                           .22                      3.68

New Orleans                   .66                      .86*

Tokyo                               11.27                  36.67

Mumbai                           2.86                    20.04

Beijing                              1.67                    12.39

Brasilia                             .04                        3.91

Rio de Janeiro                  2.95                    11.95

Bogata                             .63                      8.50

London                            8.36                    8.63

Paris                                 6.52                    10.49

Copenhagen                    1.21                    1.19

Stuttgart                          1.48                    2.71

* Note that Detroit and New Orleans population figures in the movie related to the central city and not to the Metro Area.

In late October, representatives from TVA and Nashville Electric Service (NES) came to our house, installed two electric meters, and certified two solar panels I had just installed on our roof (with help from professionals).

Two new meters were put in place, the one on the left measures kWh generation and the one on the right measures kWh use.

Solar power is not something I thought would work in Nashville, at least not yet. But then, last spring I saw an ad put out by a Seattle company named Clarion Power. Clarion offered a 200 Watt solar panel system that cost between $500 and $800, and you just plugged it in to a power outlet in your home.  I was interested in alternative power, because at the time we (Kathleen and I) were considering the Nissan Leaf (all electric car), and didn’t want to run the battery entirely off of TVA’s coal-fired generated electricity. (I’ll say more about the Leaf and TVA’s generating sources in another post.)

As I went through the process of figuring out the economics, the incentives, and the products, I kept being surprised.  I had (and still have) reasons to be skeptical of the promises of solar energy in the near term (with current pricing), but took the first step towards testing my skepticism by installing a small system and taking full advantage of incentives.

Solar water heaters give birth to skepticism  

We installed a solar powered hot water system in the early 1980s, using a low interest TVA loan (for about $3,000) and employing one of several contractors approved by TVA.  The system did a fine job of heating water. We didn’t have to turn on the electric boost at all between June and October, and it provided a strong temperature boost to the electric heating for most of the other seasons.

The system perked along nicely for about 12 years, but then developed a leak in a critical (and expensive) component. By that time, the system’s warrantee had ended (but the loan payback had three years to go) and the original installer was out of business.  Also, TVA was no longer supporting the water heater systems, so a call to TVA produced a “you are on your own” response.

Eventually we got a repair estimate from a plumbing company ($800).  We declined, and left the system in place, but not working, until about two years ago.  In the intervening years, we experienced continual problems with leaks around the panel’s roof mounts.  Finally, a friend with far more construction savvy than I, removed the system, patched our roof, and put the panels on his roof. He fixed the heat exchanger leak that had plagued us, and now enjoys hot water from the sun for the cost of his labor plus a few parts.

Exit Clarion

The Clarion product (mentioned above) was very interesting, but not yet available.  I wanted to find out more, but after repeated inquiries at the web site, I got only automatic email replies.  There was no way to make a phone connection that I could easily find, and so for me the Clarion system never got beyond its pretty advertisement on a web site. And the last time I looked, even the web site was gone. Instead of Clarion Power, the web site is held by Clarion Labs, and besides a logo and an email option, nothing else is on the site.

Payback

With Clarion off the table, but with my interest in doing something peaked, sometime in April or May of this year, a friend suggested Backwoods Solar (located in Idaho) as a reputable mail order company for solar panels.  I hooked up (by phone) with a woman named Sequoya Cross, a sales rep there, and we started discussing price and then estimating payback.

Payback refers to the amount of time it takes for the solar system to fully pay for itself, i.e., to break even.  We pay for energy from our local utility on a monthly basis, based on the amount used, season (higher rates in the winter and summer will soon be implemented), and type of user (residential has a higher rate).  TVA had a large increase in 2008 (20%), and is going to seasonal pricing next year (2012).  Otherwise there has been a long term modest upward trend since 1980, but US projections through the coming decade are for relatively flat rates.

A solar power generating system, on the other hand, is paid for up-front with a flat fee and then the energy it produces repays the up-front cost (and hopefully more) over the life of the system by off-setting the household’s electricity use.

My first estimate at payback (using a friend with experience with these kinds of calculations) was about 23 years, assuming flat energy prices and with a 30% federal tax credit.  That is, the system would have to sit on our roof for about 23 years before it generated enough electricity to pay for itself. Twenty three years was too long, at least for me and my even more solar-skeptical wife.  I was looking for something under 10 years.  At that point, Sequoya told me that my local power distributor might have a program providing additional incentives.

TVA’s “Generation Partners” Program

I made a visit to the TVA website and discovered that the utility had a pilot program called Generation Partners. Generation Partners would provide a $1,000 rebate on the cost of a qualifying solar/wind system and then buy the electricity generated by the system at a premium (12 cents per kilowatt hour) over the existing rate, for 10 years.  The current rate is about 12 cents per kWh. So, the buy-back rate is almost 24 cents per kWh.  I put the new numbers into my spread sheet, and the results are below.

The payback estimate

Two 250 watt panels (0.5kW)     $2,140

Electrician fee & supplies               $997

Installer (with my assistance)         $120

Extra installation supplies                $16

Total                                           $3,273

TVA Rebate                                 ($1,000)

Federal tax credit                        ( $682)    30% of $2,273

Net cost                                        $1,591

TVA buyback (per year)               $172.80 (See note)

Payback time period                    $1,591/$172.80 = 9.2 years

Note:  The estimate is that the two panels will generate about 720 kWh per year. TVA, through my local utility, will buy that output from me at 24 cents per kWh reimbursing me $172 worth of electric power annually. 

With this calculation completed, I decided to buy the system. I found and contracted (fixed price) with a local electrician, hired the friend who took my old collectors off the roof for installation help, and then purchased the panels and related equipment from Backwoods Solar.  Meanwhile, I had applied for and gotten approval from TVA for the system.  The electrical work was approved by codes and the system certified by TVA.

The two panels are mounted on a south facing dormer set at approximately a 30 degree angle.

Power use versus power generation

Our panels are now generating electricity at the rate of 2 kWh per day on sunny days, and much less than 1 kWh on cloudy and rainy days. Later, when the days get longer and the sun higher in the sky, it may generate as much as 3 kWh per day.  The generation of kWhs compares favorably to our household’s usage only when we are on vacation and the household is essentially shut down.

Household Electricity Use

Minimum                   4 kWh per day (when out of town)

Maximum                   55 kWh per day (average for July 2011)

Average                       26 kWh per day (annual average for 2011)

The minimum is due primarily to the refrigerator, plus a couple of lights we keep on while gone. (I typically cut the water heater off if we are gone more than a day or two.) Our maximum electricity use occurs in the summer air conditioning and winter heating months.  Also, our use goes up when we are very active in the house, cooking dinners, taking long hot showers, and washing and drying clothes. (We have gas heat for the main floor, but use electricity for cooling the main floor and heat and cool our upstairs office area with electricity.)

The future

I expect Kathleen and I will install more panels on our roof over time, and also will look for ways to reduce our usage (more efficient appliances). Within a few years, the panels on our roof may be generating almost all the electricity we use, with some flowing back to the grid when we are on vacation. For a solar system to fully cover our  household use (on average), we would need about a 6 KW system (vs. our just installed 0.5 KW system), or 24 panels.

The TVA and federal incentives make residential, roof-top systems a viable economic investment in Nashville right now.  Payback on larger systems (5 or 10 KW) with less tree blockage than we enjoy can be down around 6 years, and one individual with a larger pole-mounted system (the owner of GroWild Nursery in Fairview) told me he expected a 4-year payback.

I will update blog readers on our generating results when we’ve got about 3 months experience.

Here are links to Nashville Electric Service, Generation Partners (TVA), and to several of the vendors I used or received bids from.

NES contact: Hugh Allen, dallen@newspower.com (You need to speak with Mr. Allen before you spend any money.)

http://www.tva.com/greenpowerswitch/partners/ (Describes the program)

http://www.backwoodssolar.com/ (provided solar panels)

http://www.sundogsolarenergy.com/  (local installation contractor)

http://www.newsystemelectric.com/  (local electrician)

I didn’t expect to be posting another piece on chickens so soon, but (1) there is a bill on urban chickens being considered by Metro Council, (2) its a hot topic, and (3) I attended a meeting in my neighborhood on the subject last Saturday.

Last year there was an attempt to get a bill passed in the Metro Nashville City Council to allow “back yard chickens” in Nashville, which failed.  Now a new effort is underway, with a new Metro Council.

Vision from the 1950s

The metro council members who are opponents of a change in the law don’t actually make a case, at least not in published news accounts.  They merely assume a case—chickens are farm animals and we live not only in a city, but in the part of that city zoned residential. Chickens are smelly and noisy, and attract wildlife. And my constituents don’t like chickens, except as food.  Case closed.

These assumptions are, of course, true and false, and would be equally true or false of dogs and small children, and especially of teenagers (except for the “food” part).

These defenders of the sanctity of “residential” neighborhoods view the city as something that segregates living, working, buying, and demographics into zones, and prevents the zones from intermingling except in rare circumstances at well defined edges.  Theirs is a vision of the city, developed in the 1950s and built around automobiles, that views the household as a unit of consumption and not as a unit of production, and residential living as a constrained concept that separates you geographically from other activities, whether they be restaurants, playgrounds, grocery stores, or farms.

The problem with these other non-residence activities is often not the activity itself, but the annoying car that is required to reach the activity and then must be parked somewhere.  The zoning laws have the by-product of forcing the resident to use a car to get to other places he or she wants to visit, since none of those destinations are allowed to be near enough to one’s residence to walk.

This “50s” suburbanized car-dependent version of the city is what is enshrined in metro’s codes (and believe me, codes are important).  So it’s not really chickens that are a problem; the problem is the definition of a city and what urban life is and should be. The alternative vision I will propose in more detail on another post is not a return to 19^th century America (though that vision has its attractions), but a reflection of new realities and opportunities driven by technology and how people in cities want to live.

Are chickens a nuisance?

I’ll come back to the vision in a minute, but first want explore a couple of details about the current law and then the proposed law.  To find out what the law says, I went the website where Metro’s laws are published and looked under “animals.” The key provision there was in section 8.12.020. It says rather simply that “No person shall keep chickens within the metropolitan government area in such a manner that a nuisance is created.”

Looking up “nuisance” on the web (I couldn’t find it defined in the code) a nuisance is the unreasonable (or unlawful) use of your own property in a way that interferes with someone else (a neighbor) being able to enjoy or use his or her own property.  So, issues of smell and noise are important, and under this part of the existing code are actionable.

In a concession to neighborliness, the “nuisance” provision remains unchanged in the proposed new law. If your neighbor’s chickens are a nuisance, under the proposed new law you can still file a complaint, as you can today.

5 acres and a chicken

Unfortunately, this fully reasonable requirement (don’t be a nuisance) is not the important part of the existing law. The important part is in the zoning codes. It is there we find the real restriction—that farm animals cannot be cooped up at all in the urban services district and further, in the general services area, such animals cannot be housed on plots of less than 5 acres.

An issue that has arisen here is that the definition of “farm animals” in the code is not clear.  Many consider chickens under the heading “pets” rather than “farm animals,” and statements about how back-yard chickens are treated by children (petted) suggests pets may be the better term.  However, the current law must be considered “vague” on this point, and sometimes vague is good.

The proposed bill would change all of this, allowing residents in the urban services with less than 5 acres to raise chickens in their back yards.  It adds a set of requirements on chicken owners, though.  In brief the new rules:

• Prohibit roosters
• Limit the number of hens to 6
• Require that the hen’s housing and outside pen must secure the chickens from predators
• Require minimum pen and housing size
• Require a permit tied to fee of at least $25 annually (the fine for illegal chickens under current law is $50)
• Have rules around feed and disposal of waste (it can be composted)

I should note that the square footage requirements of the proposed law (2 sq. feet per bird of indoor space and 6 sq. feet of outdoor space) are well in excess of what the standard “factory farm” has for chickens (they have no required outdoor space and as many as 5 birds are squeezed into slightly more than a square foot of cage (14 inches on a side)). However, the proposed rules are below the European standard for free-range designation (10 square feet of outdoor space per chicken).  Nevertheless,  this proposed new law takes a big step away from the  extreme lifetime confinement in the factory farm.

The benefits of backyard chickens, as stated by advocates, are outlined in Gloria Ballard’s excellent blog, http://gloriaballard.wordpress.com/2011/11/20/cluck/ so I won’t repeat them here, except to say that food production in a residential neighborhood, whether hen eggs or asparagus, should be encouraged as an element of healthy and enjoyable living, within reasonable guidelines.

Consume and Produce

Backyard food production fits in with a broader vision of the city as a place where people’s residences can also be productive, and not just consumptive. Under this broader vision, your home can be

• a location for work (almost 5% of Nashvillians work at home according to the 2010 American Community Survey),
• a location for power generation (solar panels are going on roofs and in yards around town as part of TVA’s Power Generation program), and
• a location for back-yard farming.

Where you live can be more than just an isolated refuge from city life; it can be an integrated part of the city, within reasonable limits.  The point is to avoid being a nuisance to your neighbor and to be neighborly; to respect your neighbors and their reasonable use of their own property.

Under current law, there are lots of people who have back yard chickens “under the radar,” and the number is growing all the time. (It’s a movement.) The proposed new law puts new requirements on these hen owners, and most of the requirements, if not all, seem quite reasonable.

What the proposed law doesn’t do is address the “vision thing,” the outdated idea, still operative, of what residential life in the city should be. It does, however, take a peck or two at a new vision.  Fortunately, the Nashville Civic Design Center is taking on the broader project, and even within the metro code, there is now some “mixed use” options.

I don’t plan to have back-yard chickens.  I would much rather my neighbors have them, and share their eggs with me occasionally. However, I would consider getting a permit so that I could borrow my neighbor’s chickens and let them peck my back yard free of ticks and other troublesome bugs from time-to-time.

In addition to Gloria’s blog, interested readers can check out UCAN (Urban Chicken Advocates of Nashville) on facebook: http://www.facebook.com/UCANUrbanChickenAdvocatesofNashville

I eat mainly plant-based products (Vegan-ish), but nevertheless occasionally consume eggs, milk products, and, on a very occasional basis, wild fish on location. I became Vegan-ish for reasons of improved health, more sustainable food production, and more ethical treatment of animals.  My particular interest in these “animal farm” visits is in knowing how the birds and cows, whose product I sometimes consume, are treated. Can animals (in this case milk cows and their brethren) be treated humanely and be raised ecologically, and the farm remain economically viable?

Several friends and I visited Hatcher Family Dairy in the fall of 2010, a sunny September day. The operation at Hatcher has a different feel from McDonald’s Farm (see previous post below covering my visit to Mr. McDonald’s farm). The Hatcher presentation is more sophisticated and there are more moving parts.

Hatcher Family Dairy is just off Interstate 840 (in fact, annoyingly split by 840) about 30 miles south of Nashville. Several friends and I went there last fall for the tour offered each Thursday morning.  Our tour included a large number of elementary age children overseen by a smaller group of frazzled parents.

The signage that greeted us (see below) is apparently mostly for the kids (except for the first item).

Lucy Hatcher, one of several Hatchers we met, was our guide for the morning, and she gave us a compelling pitch about family farms in general and Hatcher Farm in particular.

Ms. Hatcher first offered us the basics: family owned land and production facilities; 57 head of milking cows plus a few beef cattle and a bull; about 180 or so acres accessible to the cows.

Ms. Hatcher (one of five siblings who are active in farming) also gave us the interesting particulars about Hatcher Family Dairy. Hatcher, like Mr. McDonald (previous post), brands its products and sells them direct at its own outlet, and at farmer’s markets in Franklin and Nashville, grocery outlets (Whole Foods in Green Hills is where I have access to the milk), high-end restaurants, and supplies gelato ingredients (cream) to Mike’s Ice Cream.

Hatcher is not certified organic, though in practical terms they are nearly so.  They don’t give their animals antibiotics routinely, but will treat sick animals with antibiotics when bacterial infection is present, and feed the cows non-certified feed as a supplement to the pasture grazing.  According to Charlie Hatcher, one of two Hatcher Farm veterinarians, if antibiotics are used, the milk is discarded following withdrawal periods determined by FDA until the antibiotics clear the system. (He says that all milk, including organic, is required to be tested before the milk can be processed and offered for sale.)

Lucy Hatcher is shown showing off some of the Hatcher cows and the Hatcher bull.  She says that she and her siblings are all engaged with the farm, but that it is very hard work, and all of the next generation (including her own son) may not want to stay with it  The Hatchers collectively own 600 acres, but only about 180 are used for the dairy farm.

Hatcher Dairy definitely avoids the “factory farm” label.  Its cows are in the field most of the day, except they are milked twice, once in the morning and once in the evening.  (Milking takes less than 10 minutes.)  The cows seemed contented to my untrained eye, and were definitely adjusted to the presence of humans.

At birth the new calves are tagged with a number and a name.  They often get celebrity names, with a focus on popular culture and country music, but they also are given drink names (“Latte”). The names are placed on one of two ear tags for the cows, the other being an ID number, something like a social security number for cows. The naming is symbolic of treating the cows humanely.  It helps remind the Hatchers that the cows are more than a production unit, and it provides fun for the visitors to see some of the more interesting cow names.

Cows with especially good traits are selectively bred using artificial insemination.  (Sperm is purchased to provide diversity and to avoid in-breeding.)  Artificial insemination may be less fun for the cows and the bull, but it’s cheaper than bringing the bull on site.

About half the new calves are male (though sperm designed to produce only females is available for a higher price), and the males are raised for beef or are sold to neighboring “family” farms.  Ms. Hatcher emphasized that the male calves are not shipped off to become veal (which typically involves confined feeding), though she admitted they are slaughtered for beef when grown, but this follows a time of “living the good life” on the farm.

The cows live an average of eight years, though a few can live as long as 14 or more years.  This is a much longer productive life than typical factory farm cow. We were told that “factory farm” cows are productive for 4-5 years.

Hatcher Cows that are selected for breeding get two months off from milking towards the end of their pregnancy, and then are given some time with their newborns, but the newborns are soon separated into their own area, like children off to day care, and their mothers go back to work.

Some of the children get to practice milking one of the farm’s oldest, but still quite productive, cows while Ms. Hatcher explains things using the bull horn.  

Milk Economics

The cows are quite productive, squirting about 8 gallons of milk per day.  Since the Hatcher cows get about 70 percent of their nourishment from grass (the rest from feed), we were told that their milk has more Omega-3 fatty acids in it. (This is also said to be true of the eggs supplied by McDonald’s Farm.) The pasture, in turn, receives nourishment from the cows.  Their manure is recycled to the fields, producing verdant pastures. (We couldn’t see those pastures because they were over the hill from where our tour took place.)

The greener pastures were over the distant hill, just beyond the tree line.

My later visit to Harris Teeter Grocery Store to check prices found basic Teeter-branded milk selling for $3.50 per gallon.  Teeter brand organic sold for $5.00 per gallon, and the Horizon brand organic sold for $7.00 per gallon.  To break even, Ms. Hatcher said they had to sell their milk for about $5 per gallon, whether wholesale or retail.  At the Hatcher Store we obtained a half gallon for $3.25 ($6.50 per gallon), and at Whole Foods the price was about $8.00 per gallon (in half gallon jugs).

So, 57 cows producing 8 gallons per day year round (with some selected cows taking time off to give birth), has the farm’s annual production at about 160,000 gallons per year bringing in about $670,000 per year (at break even pricing).  That revenue must pay for the cost of feed, the labor of five full-time and several part-time Hatchers, and the cost of equipment.

In addition to fencing and buildings, and the normal complement of tractors, the Hatcher’s equipment costs include operating a dairy truck to transport the milk to market, the milking equipment (it’s not done by hand), and the processing equipment (pasteurized; separated into whole, 2% and skim, plus chocolate milk and cream), and bottled (or to be precise, poured into plastic containers) for sale.

The Future

We were told that the decision to process their own milk was a big one, requiring an investment of about $1 million.  That allowed Hatcher to exit the commodity market (with its strong price competition and limited quality differentiation) and offer their milk and related products in a market niche with higher prices and less competition. That niche (local product; grass-fed cows, though not entirely organic; humanely treated cows) is seeing growing demand, despite the much higher prices.  Charlie Hatcher says that the farm has yet to turn a profit, due to debt repayment, but that good milk sales through the recession have kept the operation growing.

My guess is that Hatcher will need to expand its operations and to constantly innovate to remain competitive, even as they are able to successfully brand themselves.  Their innovations to-date include a web site http://www.hatcherfamilydairy.com/Home.aspx, farm tours for a fee ($6), in-house Hatcher expertise (veterinarians; ag-school graduates), niche marketing at farmer’s markets and to high end restaurants, and investment in improved equipment and techniques. They might also consider developing an ice cream shop (sweetened with locally produced honey) and a product line of cheese.  Ms. Hatcher said that cheese is a whole different operation, and would likely involve another $1 million investment.

The expansion dictate will mean putting more cows in the field. To expand from 57 to 70 milking cows should require no additional land or equipment, and should lower their break-even sales price below $5.  The marginal cost of producing an additional gallon of milk as cows are added should be well below their average costs (the milking and production facilities are not running at full capacity).  Adding additional milking cows above 70 (the limit that their 180 acres will support) will take additional investment in land.  That means either (1) accessing more of the family farm or (2) moving their operation to a more remote location where the price of land is much lower than in the current spot in Williamson County.

Williamson County is one of the wealthiest counties in the nation, and so land there is quite pricey.  While owning a horse farm for fun is economically viable for the idle rich, operating a farm that is supposed to pay for itself is another matter.

I-840, which is the farm to market road for Hatcher Farms, can also bring market to farm. So this exit will undoubtedly soon have a McDonald’s fast-food drive-through competing against the Hatcher Dairy store.  And this may force Hatcher Family Dairy to improve their offering, bringing in a coffee shop to serve locally roasted coffee and Burger-Up (12^th Avenue hamburgers from locally raised cattle) to take Hatcher’s locally grown steers directly to consumers on site.

Urbanites from Nashville will come down on the four-lane farm-to-market road and buy from Hatcher and friends, by-passing the fast-food McDonalds  (not farmer McDonald, who is much further down the road). But the local-locals, the people who commute the other direction to work the service industry or factories in Nashville, will cross the street to McDonalds (not the egg farm, the fast food outlet), and get their Big Macs from cows raised in Brazil or Argentina.

My take sounds cynical, or maybe elitist.  But here is my point.  The family farm that treats animals humanely need not be “retro” (quaint and preserved as a historic reminder) but instead can lead the way to a better future, one that embraces innovation (including technology), while preserving life-style. At any rate, I’m buying Hatcher milk and McDonald eggs (actually my wife is), and she is enjoying the considerable upgrade from factory farm organic and corporate free range (our previous options).

The next generation spends a few weeks in “day care” with other calves before venturing out into the fields.

For more information about where to buy Hatcher Dairies products, check out the link provided above.

The mass of men lead lives of quiet desperation.   Henry David Thoreau

Ditto for the chickens.

In early September, I drove down to a chicken farm 90 miles south of Nashville near Hohenwald, TN.  I was investigating how this family farm (run by Will McDonald and his wife Kris) might be different from the industrial farm that now typically defines American agriculture.

I am a vegetarian, who nevertheless occasionally consumes eggs and milk products, and so my particular interest is in knowing how the birds, whose product I sometimes eat, are treated on this farm?  Can animals (in this case laying hens) be treated humanely and the farm remain economically viable?

A week before my visit, I had met Will and Kris McDonald at a farmer’s market near my home in Nashville. The McDonald’s sell their eggs there, and the egg carton label makes the claim that the eggs are the product of “free-range” hens.   I wanted to examine his claim.

I had read that the “free range” title can be misleading.  Chickens packed together by the tens of thousands in large hen-houses are designated “free range” if, for a small part of their lives, they are given the option to leave their “cave” for a few minutes each day and walk out onto the small patio created to gain the “free range chicken” designation. In those types of operations, few chickens take that opportunity since they are not likely to know that it even exists.

Tennessee’s beauty and culture

The farm-to-market road towards McDonald’s farm took me through a beautiful area of rural Tennessee.  The scenery is spectacular, and reminded me of the Vermont countryside, where I had vacationed in August.  The rolling hills, the rushing streams (we’ve had a wet summer), and the green pastures all resemble the verdant Vermont countryside.  There are differences.  The all-purpose vehicle of Vermont is the Subaru, which can handle snow.  Here the pick-up truck is ubiquitous.  In rural Vermont, cell phones don’t work very well.  I had strong cell coverage all along the road to McDonald’s farm.

The country road expanded into a divided four lane highway outside of Hohenwald (population about 4,000). (Another difference with Vermont:  Vermont’s farms-to- market roads are two-lane.  In Tennessee, almost every village has a four-lane divided highway connecting it to the nearest interstate.)

McDonald’s Farm

Just on the other side of Hohenwald I found McDonald’s chicken farm.  The area by the road is fronted by a small fenced area with hogs rooting around and a few cinder-block buildings.  Behind the buildings and the hog pen is a larger fenced-in area that includes numerous small hen houses and a colorful array of hens busy checking out and pecking at the ground in front of them.  To the right of the chicken area is a farm house that I presumed might belong to Mr. McDonald.  To the left are three mobile homes, which I later learned were rented out by Mr. McDonald.  (In addition to farming, he is involved in a construction business, and also has rental property on the edge of his various farms. )

I didn’t see Mr. McDonald immediately, so I called him on the cell phone.  He emerged from the small building next to the hog pen as he answered his phone.  He had been preparing some eggs for their Clorox rinse, necessary to reduce the risk of salmonella contamination.  He welcomed me, and we began our tour of his operation.

Will McDonald and a few of his laying hens

We entered the coop through a large gate.  I say “coop”, but it encompassed a large field (about six acres according to Mr. McDonald) where the hens (and a few roosters) have full run of the “yard.” Near our point of entry, there were several small hen houses, and much of the ground was bare from heavy duty pecking activity.  Nevertheless, grass covers about 90 percent of the fenced area, suggesting that these hens supplement their feed supply with pickings from the field.

Tick removal

McDonald told me that he decided to raise chickens about 8 years ago.  He was experiencing problems with ticks around his home, and so he bought a few chickens to scavenge the ticks.  The ticks were quickly gone, but the experience with raising a few chickens led him to develop his hen-layer operation. Mr. McDonald says that chickens confined to an area of forest will clear the ground of most everything, eating shrubs, grass, insects, and grub, as well as ticks. He described them as two-legged goats.

McDonald’s six acres now are home to about 2,500 hens and 5 or 6 roosters.  The hens provide Will and his customers eggs in exchange for an area to roam around in, some chicken feed, and housing. Will has several varieties (Rhode Island Red; Plymouth Rock; New Hampshire Red; and White Leghorn) and they lay, on average two eggs every three days—not quite one per day.  Productivity goes down during the hottest part of summer, but also during January and February.

I found the charcoal speckled Plymouth Rock and White Leghorn breeds a striking offset among the more numerous Rhode Island and New Hampshire “Reds.”

Will feeds the chickens a mixture that includes grains and protein, but the hens also obtain a portion of their nutrients (maybe a third) from the pasture where they are free to “range.”  To get even use and fertilization of the pasture, he has a movable pen that rotates the hens around the six acres. (I did not observe the movable pen in action.)  Once a year (in October) McDonald cleans out the accumulated droppings in the hen houses, composts it through the winter, and spreads in on the fields in the spring, returning to the soil some of what the hens remove during their daily foraging.

Egg economy

The corporate farm, against which farmers like Will McDonald must compete, offers eggs at extremely low prices. Those eggs are a commodity, indistinguishable except by price (first), size, and color. If Mr. McDonald tried to compete head-to-head on price, he would probably lose.  His operation could not become efficient enough outside of the factory farm techniques now used by chicken farmers across the country.

To get around the price competition conundrum, Mr. McDonald brands and markets his own eggs.  This allows him to fill a niche (local, free range) that brings much higher prices and avoids the head-to-head with the factory farm.  The lowest cost eggs I found in Harris Teeter in mid-September sold for around 16-17 cents each ($2.00 or so a dozen).  McDonald’s eggs sell for about 33 cents each ($4 per dozen at the west Nashville farmer’s market, where he sets up every Saturday morning).

If his production averages 1800 eggs a day, and he is able to sell wholesale to grocery stores and restaurants at about $3 per dozen, then his gross is around $450 per day.   Based on the cost of feed and other inputs (and excluding labor and the cost of the land), I would guess that his egg operation nets something like $70,000 annually.  With that income (my estimate) he pays himself and his wife (who helps him a few days a week) and the rent on the land.  Of course, Ms. McDonald also has a day job and McDonald has two other farms and several other product lines. He has 16 acres for a hog operation (and where he raises his hens from day-old chicks until they are ready to begin laying at about 7 months age) and 100 acres of pasture and woodland where he has 18 head of beef cattle. His product lines include pork, beef, poultry.  Add on his rental properties, and you see that he is an ambitious and busy man.

A long laying life

Mr. McDonald grew up on a farm, and learned farming from his parents and through trial and error.  To the best of my knowledge, he didn’t get a degree in agronomy, or in business.

A view of the area near the hen houses.  All told the hens could wander on six acres of mostly pasture.

Mr. McDonald says his hens can produce up to 10 years (he’s been in business about 8 years). He adds that the hens will produce fewer, but larger, eggs towards the end of their productive life.  As their laying days end, Mr. McDonald slaughters the hens and sells the poultry.  Ten years is an extremely long productive period according to sources I came across. The conventional factory farm literature suggests that a hen can lay for about a year before beginning to slow down, and is then slaughtered for the meat.

Ethical (or humane) chicken farming

The European Union defines “free range” as having constant open air access during the day and at least 1 square meter (approximately 10 square feet) of outdoor space per chicken.  McDonald’s chickens appear to have about 10 times that amount of space per bird (instead of a 3 foot square, his have a 10 foot square, on average, or 100 square feet). Of course, that’s the average.  Chickens flock together, and so they take their space as a group, with the flock getting the space and not the individual.

Nine inch square

The amount of space allowed for chickens in intensive farming (cages) is about a 9 inch square, and those chickens have their beaks clipped.  McDonald’s chickens did not have their beaks clipped, and more than 100 times the space of the factory chicken.

I was not there to audit Mr. McDonald’s operation (the state inspectors come and do an audit annually), but instead to observe and decide for myself what free range means and how it applies to his operation.  I didn’t get to see where McDonald raises his chicks. He buys day-old hatchlings and raises them to maturity in a different location (the location where he raises most of his hogs for slaughter).

The hens I observed looked healthy and vigorous.  I can’t say whether Will McDonald’s hens were happy, or if hens can even feel that emotion, but they did seem to be doing what chickens would do if they were in the wild. That is, they weren’t cramped together in a cavernous hen house, but instead were outside walking around, looking about, and pecking the ground. As far as I could tell, they were busy all day just “being chickens.”

I buy McDonald’s eggs at the West Nashville Farmer’s Market (Richland Park on Charlotte Pike) on Saturday mornings (May-October) or at Produce Place (Murphy Road) during the week.

The President has now signed the most ambitious health care legislation since the passage of Medicare and Medicaid . His signature launches the U.S. towards universal coverage, but with at least a five year delay until we arrive there. This reform will put the US into the same league as other advanced nations (Western Europe, Canada, and Japan all have universal coverage), but with our own unique market-oriented approach.

The legislation has passed and been signed into law, though the reconciliation fix is still in process. But might the bill be repealed by resurgent Republicans before it takes full effect?

Repeal is rare, but it happened once before.  In 1988, the Medicare Catastrophic Coverage Act of 1988 was passed (with a bipartisan majority and signed by President Reagan), and  then 16 months later it was repealed. Back then, the tax provisions, and to some extent, misinformation led to the repeal.

Misinformation remains a problem, but despite that historic precedent, in my view the Republicans face long odds in repealing this bill. The bill was crafted carefully with longevity in mind. It is front-loaded with benefits (some which cost no taxpayer money) and back-loaded with taxes (but mainly on the wealthy).

Back in 1988 the entire funding for the new Medicare provisions (less cost sharing, a new drug benefit) was paid for by the elderly themselves. About 40% had some form of tax increase as a result of the bill. (Having beneficiaries of legislation have to pay for something is apparently a bad idea.)

This new legislation raises taxes (called a Medicare tax) on only a small portion of the population, those in the top 2% of earnings ($200,000/$250,000 or more).  This is a powerful interest group, but they are not necessarily united in their opposition, one of the quirks of recent political developments.

The individual mandate might also stir a backlash.  It will be applied to those who don’t purchase health insurance and are not eligible for Medicaid and don’t have some of the other exemptions. Currently about 18 percent of the population does not have health insurance.  That number is expected to decline to 6% under the new law, of which about 3% are undocumented immigrants. The penalty, then, could at most be applied to about 3% of the population, and probably they will be over-represented by low wage, young healthy adults, who tend not to be nearly as politically active as the elderly.

Here are some of the other reasons why repeal will be difficult.

Business friendly. The bill is very business friendly. Small businesses get a tax credit right away. Businesses with fewer than 10 employees who earn annual wages of less than $25,000 annually get a 35% credit towards their health insurance premiums within 90 days of the bill’s signing. That credit increases to 50% in 2013. Business with less than 25 employees and wages less than $50,000 get half of the credit enjoyed by smaller businesses with lower wage employees.

Larger employers also get a stop loss benefit covering claims of employees in their retiree plans (age 55-64) that have large claims (80% of claims between $18,000 and $90,000).

Small employers (less than 50 employees) are under no obligation (mandate) to purchase insurance for their employees at any point. Larger employers will get the mandate in four years, but it will relate to full time employees only. Businesses with fewer than 50 employees have no mandate, and no new requirements.

Providers are on board. The provider industry benefits from the bill. Insurers, hospitals, physicians and drug companies get more business, and they get much of that business at commercial rates rather than Medicare rates. (However, this benefit is mitigated somewhat by the significant expansion of Medicaid, which typically pays rates well below those paid by Medicare, and physicians often complain that Medicaid services are rendered at a loss.)

Front loaded with some popular benefits. The bill is front loaded with popular benefits that will be hard to repeal. The most important are (1) elimination of pre-existing condition provisions in health insurance for children (within 6 months of passage), and progress towards eliminating the “do-nut hole” in the Medicare drug benefit (beginning immediately with a $250 rebate for 2010).

The legislation also establishes moderately priced high risk pools as an interim solution for insuring individuals who are rejected for coverage by insurers in the individual market. The pools would begin within 90 days of passage, and go away once the Exchanges are established in 2014.

Within 6 months insurers would have to do away with lifetime limits on coverage and be prevented from rescinding coverage for people who become ill or disabled. (Annual limits will be eliminated in 2014.)

Bargaining power. President Obama has left a few chits on the table that he can use for bargaining with Republicans if they do really well in the mid-term elections. The most valuable of these are malpractice reform and the Stupak amendment. He can trade these in exchange for legislative agreements with the Republicans.

Veto power. Until at least the 2012 election, Mr. Obama has veto power. Sixty votes in the Senate are quite hard to muster. Sixty seven will be a bigger challenge, and the two thirds super majority will also be required in the house. A full reversal seems unlikely, then, before the next presidential election, and would remain difficult even if Obama were defeated in the next election.

Opposition based on misinformation. Probably the most important barrier for Republicans is one of their own doing. The Republicans have largely attacked the reform plan by caricaturing it, giving it the “Saturday Night Live” treatment, but with anger rather than humor, and with a sloppy regard for the facts. With the reform legislation now enacted, the actual provisions contained in the reforms are going to become more salient to the general public, and therefore will begin to replace the earlier misinformation put out by the Republicans and their Fox News megaphone.

Government run health care? Not really. Private insurers are still out there, and your employer plan hasn’t changed that much, if at all.

Supreme Folly

I can imagine Supreme Court Justice John Roberts giving a frustrated “shout out” to Mr. Obama when he discovers during the 2012 election that the Democrats are raking in millions from the insurance and drug industries (now defined as constitutional persons) because those industries are concerned the Republicans will try to shut down the biggest insurance and prescription drug expansion in history.

No one can predict the future, but I think this health bill will thrive as its benefits become better known, and its costs are born mainly in the future and by the wealthy.

Note: I used a summary in the NYT to describe some of the provisions.  I will be checking these out the actual legislation in the coming few days, and make corrections where needed.

President Obama has proposed a health care summit in which he, and presumably the American people, would consider new ideas for health care reform from both sides of the isle. Obama’s general idea is to offer Republicans a chance to show-case their ideas on reform and compare them to the provisions of what he hopes will be a newly revised (and consensus) “Democratic” bill. The President thinks the Republican ideas will come out a distant second in such a comparison.

Republicans do have some ideas, and those ideas should get a full hearing in a deliberative setting. A summit is not perfect, but it is better than a town hall meeting with attendees as either props or as noisy agitators. And it may be better than the speeches we get on C-Span made by our representatives in the empty chambers of the House and Senate.

In this post I’ll discuss the Republican ideas for Medicare, a big component of any reform. (Paul Krugman covered some of what follows in his NYT column on Feb. 12, but I’m placing a different frame on the subject here.)

Republicans seem to have divided into two camps:

• Camp 1: those whose only goal is to stop what they refer to as “ObamaCare”
• Camp 2: those who have some real ideas of their own
  

Former House Majority leader Newt Gingrich used to be in the second camp (with ideas), but has now settled comfortably into the first camp (no ideas). Firmly in the second camp (with ideas) is Rep. Paul Ryan (R-WI), the ranking Republican on the House Budget Committee.

The Gingrich approach

Actually Gingrich has some ideas. He came out on the WSJ op-ed page with an approach that he title “Ten GOP Health Ideas for Obama.” Most of his ideas are small bore, and several are actually included in some form in the Democratic bills.

On the Medicare front, Gingrich outlined three ideas: (1) Don’t cut Medicare; (2) allow doctors and patients to control costs; and (3) meet the needs of the chronically ill.

His suggestions around items 2 and 3 are either already a component of Medicare (special needs health plans) or are part of the House and Senate Bills proposed by Democrats (rework Medicare reimbursement).

Both of the Democratic Bills are full of demonstrations (pilot projects) on how to make Medicare reimbursement move away from the perverse incentives of fee-for-service reimbursement while moving towards incentives for better quality. In his op-ed, Gingrich highlights a couple of ideas that are excellent: pay doctors for talking to patients (including communicating electronically or by phone) and more generally, allow doctors to repackage and reprice their services in ways that won’t increase Medicare costs. But again, this general approach is already in the Democratic bills. Gingrich doesn’t add value.

Don’t cut Medicare

Gingrich states his first, more distinctive, idea this way:

Don’t cut Medicare. The reform bills passed by the House and Senate cut Medicare by approximately $500 billion. This is wrong. There is no question that Medicare is on an unsustainable course; the government has promised far more than it can deliver. But this problem will not be solved by cutting Medicare in order to create new unfunded liabilities for young people.

This is his full statement. Gingrich doesn’t say how to solve the problem of “unsustainable course” that he has so succinctly identified. He probably saw what happened at town hall meetings this summer, and decided to lay low on the subject. In sum, the Gingrich approach appears to be “propose a few small bore ideas” but otherwise kick the ball down the road.

Road Map

On the Republican side, however, there is someone else, Rep. Paul Ryan, with a bolder approach. He titled his plan “Roadmap for America’s Future Act of 2010,” and has filed legislation and had it assessed by the Congressional budget Office (CBO). There are two big ideas for Medicare in his proposal.

The brute force method of expenditure control

First, the Roadmap would use a trigger mechanism (to begin in 2011) to rein in any annual cost increases in parts A, B and D that exceed “budgets.” (I’m leaving out the details.) As a result, the “savings” in Medicare from the Ryan proposals over the next ten years are similar to the savings likely to be achieved by the Democratic legislation, though the mechanisms are somewhat different.

The CBO ran a projection of Ryan’s proposal, but didn’t include a “year-by-year” detail. Based on where the projection ended, in 2021, Krugman, in his column on Friday, estimated that the Ryan savings were about $650 billion over the ten years compared to about $450 billion or so in the Democratic bills.

There is nothing in Ryan’s legislation that would fund reimbursement experiments (such as those suggested by Gingrich) or comparative effectiveness research (which got the label “death panels”). Instead, his approach uses the “it’s everybody’s fault” technique of punishment by cutting reimbursement rates a standard amount for “all” providers (hospitals, physicians, drug companies) when total federal expenditures on Medicare exceed allowable amounts (budgets).

So, the Democratic approach targets cuts for providers (and insurers) who are ineffective and inefficient. Ryan, using brute force, targets his cuts for all providers, no matter who is causing the budget-breaking expenditures.

Based on what we have seen over the past ten years regarding the physician reimbursement formula for Medicare, the Ryan approach will not work. Ryan’s cuts would be over-ridden every year by Congress in response to the hospital, physician, and drug company lobbies.

Vouchers

The second big change proposed in the Ryan Bill is to transform Medicare into a voucher system for new enrollees entering the program, beginning in 2021. The voucher could be used to purchase health insurance from private insurance companies. Medicare, as we know it, would stay in place until beneficiaries born before 1956 (including me) die off. Medicare would, then, die with the death of the last beneficiary. It is not clear whether the vouchers would be used within a Medicare Advantage style program (which is tightly regulated by the government), or in purchasing policies in what we now know as the “individual market,” which is regulated at the state level and is the weakest link in the current health insurance system.

According to the CBO analysis, the voucher amount would be set based on 2011 Medicare costs per beneficiary (as adjusted for age) and would rise at a rate that would split the difference between actual medical sector inflation (which now drives Medicare costs) and general inflation, which generally is quite a bit lower than medical sector inflation. The result is that when the beneficiaries go to purchase their policies in 2021, they will have to supplement the voucher with personal funds, or else “buy down,” purchase a cheaper policy with more cost sharing or, possibly, a more narrow range of benefits.

The idea of vouchers for health care is not radical. That is the approach now contained in both the House and Senate bills to help low income individuals purchase affordable coverage in the individual and small group market. However, it is a radical step for Medicare, where the beneficiary has been held harmless (for the most part) for excess health care cost inflation and for the cost of new technologies, as they emerge.

Bold or Timid

In sum, we have two Republican proposals on Medicare. Gingrich states the problem (Medicare is on an unsustainable path), but offers no solutions. Ryan, on the other hand, offers a radical solution, that over ten years is little different (though with a blunter hammer) from the Democratic approach, but thereafter introduces the controversial subject of vouchers into Medicare.

Ryan, at least, is an honest advocate, admitting up front (through the CBO analysis) that the vouchers would be designed to be underfunded (to help rein in costs), and leave beneficiaries worse off than under current Medicare, but with a motivation (through more limited benefits) to help hold down expenditures.

It’s hard to believe that Ryan’s proposal will be aired at the Obama summit, even though it actually incorporates Republican ideas for Medicare that have been voiced over the years. Republicans have just spent a season bashing the Democrats for “cutting” Medicare. Would they now offer up larger cuts over the next ten years, and a radical transformation after that? (Might vouchers be referred to as “death vouchers” by seniors in town hall meetings?) The Gingrich solution seems to be the operative Republican approach: leave Medicare alone and hope for the best (during the November elections).

One of the sticking points that emerged late in the health reform debate is the question of coverage of abortion. The House and Senate bills both were amended just prior to passage to make sure that premium subsidies do not cover abortion services.

In the House bill (HR 3962) the Stupak (D-MI) amendment prevents the use of federal funds to support the cost of any health plan that includes abortion coverage. Exceptions are provided for cases of rape and incest, and also where the life of the pregnant woman is endangered by the pregnancy. The amendment does not preclude a woman who receives a subsidy for her standard insurance policy from buying a supplemental abortion policy with her own money. The bill also requires insurers that do offer plans in the “Exchanges” that include abortion coverage to also offer similar plans that do not include abortion coverage.

The merged bill might include the Stupak provision, so it is worth exploring what the impact on abortion services might be if reform passes and the amendment is attached.

Abortion service use in decline

The induced abortion rate for women of child-bearing age peaked in 1980 and has steadily declined since then. As of 2005, there were about 1.2 million induced abortions performed each year in the United States according to the Guttmacher Institute, which tracks abortion and contraceptive statistics. The CDC (a Federal agency) reports that the number off annual live births is about 4.3 million, so about 20-25 percent of pregnancies that don’t spontaneously abort end in induced abortion. (I saw one estimate suggesting that between 30 and 40 percent of all pregnancies end in spontaneous abortion (miscarriage), though counts of very early stage miscarriages are difficult to make.)

Cost of abortion services

The Guttmacher Institute reports that abortion services obtained under local anesthesia outside of a hospital setting in 2005 averaged just over $400.  A national source I spoke with this week quoted prices from $350 to $1000, and local pricing I observed on websites (or obtained through interviews) in the Nashville area ranged from just over $500 to about $1,000. The price of abortion rises as the length of pregnancy rises. Almost 90% of abortions occur within the first 3 months of pregnancy, so costs are likely to be in the $400-$700 range for those pregnancies.

Insurance coverage of abortion

About 17 states cover abortion through their Medicaid programs (using state funds rather than federal funds). The current legislation would not directly affect this funding source, except the reform legislation might make more women eligible for Medicaid, and thus make more women eligible for state Medicaid funding for abortion services.

The Guttmacher Institute reported on three studies of insurance coverage of abortion, all conducted in the 2001-2002 time period. One of the studies queried insurers, a second questioned employers, and a third interviewed outpatient abortion providers. There were some differences between the insurer and employer responses, but an average between the two suggests that a majority of employers probably offer insurance coverage for abortion services. However, many policies have high deductibles, and the near poor and poor young women, who are more likely to have unintended pregnancies and to be seeking abortions, are less likely to be covered by an insurance policy anyway.

Despite fairly broad coverage for women with insurance, actual use of insurance coverage for abortions may be much more limited. According to a 2001 Guttmacher Institute-funded study of a sample of nonhospital providers of abortion services, about 74 percent of women obtaining abortions outside of hospitals, pay for the service themselves. About 12 percent pay a reduced fee and 62 percent pay full fee. In addition, 13 percent are covered by Medicaid and an additional 13% by private insurance. Thus, while most employers offer coverage, very few actual users of abortion services seek payment from private insurance. (Guttmacher offers the caveat that some women who pay out-of-pocket for the abortion service may later seek insurance reimbursement.)

The use of insurance for abortion services varies by geography (e.g., 27% obtain insurance reimbursement in the northeast versus only 5% in the south) and by state law. In the 17 states where Medicaid coverage is available (as of 2001), about 27% of the procedures were estimated to be covered by Medicaid. In the other states, Medicaid only covers in case of rape, incest, or health risk of the pregnant woman. Providers in the 17 states also reported a higher proportion of private insurers covering abortion services (19%). So coverage is geographically lopsided.

It appears, then, that abortion services are most often covered entirely out-of-pocket, but that reduced fees, private insurance, and Medicaid provide funding for about 1 in 3 abortions overall.

Making up the loss of insurance coverage

If the 13% of abortions now covered by private insurance were taken over by private foundation funding, how much money would be needed?

The average cost of an early term abortion is now probably around $600. So, if new private foundation money was sought to lower the fee to an affordable $100 for about 150,000 abortions annually (13% of the total), about $75 million in funds would be required. 

To support $75 million in grants to low income women, a foundation with an endowment of about $1 billion would be needed, which is about the level of endowment at some of our most well-endowed universities. For comparison, the Bill and Melinda Gates Foundation gave grants of $2.8 billion in 2008, with an endowment of $34 billion. (The Gates Foundation primarily uses its funds for public education initiatives and for world health concerns.)

Win-Win?

To summarize, the Stupak amendment is a win for those on the “pro-life” side, in that the reform legislation will prevent federal premium and cost sharing subsidies to be used for abortion services. The bill might even have a limiting effect on private insurance coverage for abortion services, since abortion coverage through insurance will have to be separated out for low income women.

For those on the “pro-choice” side, the reform bill should also be win, since the expansion of Medicaid will likely expand the availability of Medicaid funding of abortions in those states which now provide such funding from state sources. Also, the loss of abortion funding on the private insurance side is probably minimal, since current funding is likely minimal (13%).

Finally, pro-choice advocates can use their tax-deductible contributions to fund foundations or not-for-profit organizations supplementing funding to women seeking abortion services, and help insure that lack of funding is not a barrier to abortion services.

Most of my information on abortion services was obtained from the Guttmacher Institute. Its web site can be accessed through the link below.

http://www.guttmacher.org/index.html