Economic Scene: Rethinking How to Split the Costs of Carbon

I have some good news for them, and some bad.

No, Apple hasn’t managed to produce the device without adding heat-trapping carbon to the air. The company expects an iPhone 5s to inject 70 kilograms — about 154 pounds — of carbon dioxide equivalent into the atmosphere over its lifetime, 11 pounds less than the iPhone 5 that Apple introduced last year.

The “good” news is that under the standard accounting of carbon emissions bandied about at climate talks, it’s not, mostly, Americans’ fault. About three-quarters of the carbon dioxide is considered the responsibility of other people — in places like China and Taiwan, South Korea and Inner Mongolia — where the phone and its parts were made.

The bad news is not just that the effort to curb global warming is as stuck as ever, but that, whether we like it or not, we’re all in this together.

The obstacles remain significant. Countless summit conferences since the Kyoto Protocol on climate change was adopted more than 15 years ago have failed to budge the fundamental roadblocks standing in the way of collective action: How should the costs be divided? Who did what to whom?

Globalization — which in the process of “exporting” production and jobs from rich to poor countries also “exported” the carbon dioxide emitted to make the products consumed by the rich countries — adds another complex twist to allocating responsibility for the carbon in the air. The disquieting question is this: Are emissions the responsibility of the countries that made them or of the countries for whom the products were made?

Two years ago, some of the greenest constituencies in the country asked Elizabeth Stanton and colleagues at the Stockholm Environment Institute-U.S. Center to perform a set of calculations on their carbon emissions. Rather than tally the carbon they produced, they wanted an inventory of the emissions generated in making, transporting, using and disposing of what they consumed.

They were in for a surprise. San Francisco, for example, generated only eight million metric tons of carbon dioxide equivalent in 2008. The city’s consumption, by contrast, added nearly 22 million tons of carbon to the air. Using consumption-based measurements, Oregon’s emissions in 2005 jumped to 78 million tons from 53 million.

“The people who hired us to do it saw themselves as so green and innovative,” said Frank Ackerman, who led the Climate Economics Group at the center at the time and now works with Ms. Stanton at Synapse Energy Economics, a consulting firm in Cambridge, Mass. “They thought that because they had nice initiatives going on they would come out lower, never mind the fact that a lot of the manufactures they consumed were made abroad.”

The focus on consumption makes sense. Understanding its impact on climate change is a necessary first step for families, and municipalities, to take concrete action to mitigate carbon emissions. This sort of recalculation, however, could have an unforeseen effect on the international politics of climate change by shifting responsibility on a global scale.

With the concentration of carbon dioxide in the air zooming last spring to its highest level since mastodons roamed the earth some three million years ago, the United Nations, against all odds, hopes 2014 will finally deliver the breakthroughs needed for the big carbon-spewing nations to agree on a plan by 2015.

“I challenge you to bring to the summit bold pledges,” urged the United Nations secretary Ban Ki-moon, as he invited global leaders to a nuts-and-bolts horse-trading meeting in New York next September.

The diplomacy of climate change appears as stuck as ever. Poor carbon-spewers like China justify their opposition to tight carbon limits on the grounds that, on a per-person basis, their emissions are still very low. Moreover, most of the carbon in the atmosphere now, they argue, was put there by Americans and other wealthy carbon-spewers, who burned a lot of fossil fuels on the way to getting rich. Forbidding the Chinese from doing the same would be tantamount to condemning them to stagnation.

Policy makers in Washington retort that while all this may be true, a deal that only required rich countries to limit emissions would be pointless: their carbon savings would be negated by growing emissions elsewhere. Heavy emitters of greenhouse gases — like the agriculture and chemical industry — would decamp from rich nations to the less carbon-restricted shores of the developing world.

Email: eporter@nytimes.com; Twitter: @portereduardo

This article has been revised to reflect the following correction:

Correction: December 24, 2013

An earlier version of this article gave incorrect figures for some emissions data. A study said that at least 1.2 billion tons’ worth of annual carbon dioxide emissions were exported from the developed to the developing world between 1990 and 2008, not 1.2 million tons’ worth. And in 2011 Europeans emitted 3.6 billion metric tons of carbon dioxide, not 3.6 million, and 4.8 billion tons were emitted to make things Europeans consumed, not 4.8 million.

This article has been revised to reflect the following correction:

Correction: December 25, 2013

An earlier version of a caption with this article misstated the emissions of the iPhone 5S relative to the iPhone 5. The 5S will release 11 pounds less carbon dioxide equivalent into the atmosphere than the iPhone 5, not 11 pounds more.

New Laws and Rising Costs Create a Surge of Supersizing Hospitals

The consolidations are being driven by a confluence of powerful forces, not least of which is President Obama’s signature health care law, the Affordable Care Act. That law, many experts say, is transforming the economics of health care and pushing a growing number of hospitals into the arms of suitors.

The changes are unfolding with remarkable speed. Two big for-profit hospital chains, Community Health Systems of Tennessee and Health Management Associates of Florida, are combining in a $7.6 billion deal.

In New York City, Mount Sinai Medical Center, which is one of the country’s oldest and largest private nonprofit hospitals, is buying the parent of Beth Israel Medical Center and St. Luke’s and Roosevelt Hospitals. Tenet Healthcare of Dallas, which operates in 10 states, is buying Vanguard Health Systems of Nashville, a network of 28 hospitals and facilities that includes Detroit Medical Center.

In fact, Booz & Company, a consulting firm, predicts that 1,000 of the nation’s roughly 5,000 hospitals could seek out mergers in the next five to seven years.

“There’s immense logic for them to become large super-regional systems, even some national systems,” said David W. Johnson, a managing director for BMO Capital Markets, which advises nonprofit health systems. Some chains are merging to increase their size and their negotiating clout with insurers, while others are trying to reduce costs and improve care, he said.

Some economists and health insurance companies worry that the trend could raise health care costs.

“The rhetoric is all about efficiency,” said Karen Ignagni, the chief executive of America’s Health Insurance Plans, a trade group that represents insurers. “The reality is all about higher prices.”

Whatever the outcome, hospitals are merging faster and in greater numbers than they have in years. After holding steady through much of the 2000s, the number of deals doubled to 105 in 2012 from 50 in 2009, according to Irving Levin Associates, a health care research firm. That is still less than half the annual peak during the last merger wave, in the late 1990s, but Booz and others say this is only the beginning.

Hospital executives say they have little choice but to combine given the coming changes in the industry. Many hospitals are struggling with lower payments from the federal government and declining patient admissions. They are also being confronted with fundamental changes in how they are paid under the Affordable Care Act and by private insurers.

Instead of being paid on volume, rewarded for filling beds and performing more tests and procedures, hospitals are becoming responsible for more of the total cost of a patient’s care. As a result, they have an incentive to keep patients healthy — and out of their facilities.

By combining, hospitals can reduce costs in back-office activities like billing and devote more financial resources to investing in expensive electronic medical records systems and physician practices to better follow patients outside the hospital. Under the new state exchanges created by the federal health care law, consumers will be able to tell the difference in hospital prices between markets that have consolidated and those that have not, Ms. Ignagni said.

The plans have similar designs, but a policy offered by the same insurer in, for instance, Northern California, where hospitals have merged, will be more expensive than one offered in Southern California, where the systems are smaller, she said.

Federal regulators are concerned that the growing number of mergers could lead to anticompetitive practices. The Federal Trade Commission has increased its examination of the deals and has blocked a handful of transactions.

Linking Factories to the Malls, Middleman Pushes Low Costs

Now, with sweatshop disasters there drawing international scrutiny, the business is looking for the next best place — perhaps South America or sub-Saharan Africa — where it can steer apparel buyers seeking workers to stitch clothing together for a few dollars a day.

As the world’s largest sourcing and logistics company, Li & Fung plays matchmaker between poor countries’ factories and affluent countries’ vendors, finding the lowest-cost workers, haggling over prices and handling the logistics for roughly a third of the retailers found in the typical American shopping mall, including Sears, Macy’s, JCPenney and Kohl’s.

Based in Hong Kong, the merchandiser owns no clothing factories, no sewing machines and no fabric mills. Its chief asset is the 15,000 suppliers in over 60 countries that make up a network so sprawling that an order for 500,000 bubble skirts that once took six months from drawing board to store shelf now takes six weeks at a sliver of the price.

That scale gives Li & Fung tremendous clout. “They are considered the Walmart of purchasing,” said Edward Hertzman, publisher of Sourcing Journal.

But in pioneering and perfecting the global hunt for ways to produce clothing more quickly and cheaply, Li & Fung, which had $20 billion in revenue last year, has been described by critics as the garment industry’s “sweatshop locator.”

“If globalization is a race to the bottom, where lowest wages win,” said Cathy Feingold, director of international affairs for the A.F.L.-C.I.O., “Li & Fung is the sherpa showing companies the fastest route down that slope.”

The business has been tied to labor violations and deadly accidents in several countries. It has also been faulted as failing to properly investigate complaints about conditions at factories, including one in Cambodia where hundreds of workers were sickened, and accused of cheating laborers of wages in Turkey.

In Bangladesh, Li & Fung has been tied to several calamities. It arranged the production of clothing for Kohl’s at one factory where 29 workers died in a fire in 2010. It brokered some work at another in 2011 where more than 50 workers who made Tommy Hilfiger clothing were injured and at least 2 died in an explosion and a stampede.

And last year, Li & Fung was responsible for some garments produced at the Tazreen Fashions factory, when 112 workers died in November in a fire after many of them were ordered to continue working even though alarms had sounded.

Such episodes highlight the often hidden role played by sourcing companies in trying to feed the West’s seemingly insatiable demands for ever cheaper merchandise. Worker advocates say that Li & Fung and others make accountability more difficult by adding a layer of insulation between reputation-conscious retailers and often poorly treated workers, allowing businesses to avoid bad publicity and legal liability when things go wrong.

Sourcing companies face an inherent conflict: they are expected to find low-cost factories for clients, but also to blow the whistle if the factories violate safety standards. Some critics say that the scale of Li & Fung’s operations and the speed at which it shifts production from one site to another give owners less incentive to improve their factories and make it difficult for Li & Fung to deliver on its pledges of carefully vetting its suppliers.

“We make our best effort to weed out bad factories,” said Bruce Rockowitz, chief executive of Li & Fung. “But we don’t always succeed.”

Mr. Rockowitz added that Li & Fung employees conduct rigorous on-site audits — unlike many competitors — to ensure that the company does business only with factories that adhere to safety regulations. In the case of Tazreen, Li & Fung had acquired a new subsidiary that placed orders at the factory, but the changes sought by Li & Fung had not been made 11 weeks later when the fatal fire occurred, a company spokesman said.

Kitty Bennett contributed research.

Economic Scene: Examinations of Health Costs Overlook Mergers

But when the Federal Trade Commission finally decided to look at the deal, it encountered an entirely different objective: to gain market power.

Mark Neaman, Evanston’s chief executive, had told his board that the deal would “increase our leverage, limited as it might be,” the investigation found, and “help our negotiating posture” with managed care organizations. The commission caught Ronald Spaeth, the Highland Park C.E.O., talking about the corporation’s three hospitals and explaining how “it would be real tough for any of the Fortune 40 companies in this area whose C.E.O.'s either use this place or that place to walk from Evanston, Highland Park, Glenbrook and 1,700 of their doctors."

It was a great deal for the hospitals. The fees they charged to insurers soared. One insurer, UniCare, said it had to accept a jump of 7 to 30 percent for its health maintenance organizations and 80 percent for its preferred provider organizations.

Aetna said it swallowed price increases of 45 to 47 percent over a three-year period. “There probably would have been a walkaway point with the two independently,” testified Robert Mendonsa, an Aetna general manager for sales and network contracting. “But with the two together, that was a different conversation.”

And who was left holding the bag? Not the shareholders of UniCare or Aetna. It was the people who bought their policies, who either paid higher premiums directly or whose wages grew more slowly to compensate for the rising cost of their company health plans.

The commission’s unusual investigation of the aftermath of the Evanston-Highland Park deal produced its first successful antitrust case against a hospital merger since 1990, after a string of defeats in court. Highland Park and Evanston were forced to negotiate separately with insurers, rather than as a bundle. Collusion was forbidden.

What was learned from the investigation is more relevant than ever today. It should draw policy makers’ attention to an elephant in the room that appears to have been overlooked in the debate over how to rein in the galloping cost of health care: a lack of competition in what is now America’s biggest business — accounting for almost 18 percent of the nation’s gross domestic product.

Our anguished search for ways to slow runaway health spending has so far mostly focused on how to eliminate waste: Might the fee-for-service system used by health care providers across the nation provide perverse incentives for doctors and hospitals to prescribe costly yet pointless treatments? Are doctors prescribing every possible test to insulate themselves from any conceivable lawsuit?

The Obama administration is betting heavily on waste control to address the problem. It has offered incentives for accountable care organizations, which get a bundled payment to keep a patient in good health rather than charge for individual procedures. It has financed research into comparative effectiveness — hoping to steer patients to the best therapies.

What is missing from the stampede of policy innovation is something to tackle one of the best-known causes of high costs in the book: excessive market concentration.

Two decades ago, there were on average about four rival hospital systems of roughly equal size in each metropolitan area, according to research by Martin S. Gaynor of Carnegie Mellon University and Robert J. Town of the University of Pennsylvania. By 2006, the number of competitors was down to three.

The share of metropolitan areas with highly concentrated hospital markets, by the standards of antitrust enforcers at the Justice Department and the Federal Trade Commission, rose to 77 percent from 63 percent over the period.

And consolidation is continuing. Professor Gaynor counts more than 1,000 hospital system mergers since the mid-1990s, often involving dozens of hospitals. In 2002 doctors owned about three in four physician practices. By 2008 more than half were owned by hospitals.

If there is one thing that economists know, it is that market concentration drives prices up — and quality and innovation down.

Research by Leemore S. Dafny of Northwestern University, for instance, found that hospitals raise prices by about 40 percent after the merger of nearby rivals.

Other studies have found that hospital mergers increase the number of uninsured in the vicinity. Still others even suggest that market concentration may hurt the quality of care.

Green: High Energy Costs Plaguing Europe

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Your Money: Medicare Expected to Pay More Costs of Chronic Conditions

It didn’t, for many years. But after the settlement of a landmark class-action lawsuit this week, Medicare will soon begin paying more often for physical, occupational and other therapies for large numbers of people with certain disabilities and chronic conditions like Alzheimer’s disease, multiple sclerosis and Parkinson’s disease.

The two questions patient advocates were left with this week were just how many people may benefit from the clarification of the regulations and how quickly.

The settlement, if approved by a federal judge, would end a lawsuit that accused Medicare of allowing the contractors that process its claims to use a so-called improvement standard over the last few decades. To the Center for Medicare Advocacy and the many other organizations that joined the suit, that standard seemed to call for cutting off physical, occupational and speech therapy and some inpatient skilled nursing for many people who had reached a plateau in their treatment.

Medicare is supposed to pay for reasonable treatment of an illness or injury as long as a doctor has prescribed it. For the sort of in-home care that this week’s settlement may affect the most, a doctor must have certified that you are, in fact, homebound and have prescribed treatment that only a skilled practitioner can provide. (The “skilled practitioner” rule keeps Medicare from paying for assistance with everyday activities like bathing and dressing.)

But for people who advocate for patients with particular diseases, having treatment cut off for lack of improvement was intensely frustrating.

“The idea that you would have to show improvement when you have a degenerative disease is blatantly absurd,” said Amy Comstock Rick, chief executive of the Parkinson’s Action Network. In her world, holding steady or degenerating more slowly than you might otherwise is often the definition of success.

Over the years, however, the Medicare contractors that process claims started to see things differently than patients and many health care professionals. And for family members of the sick, the denial could be quite abrupt.

“It was like falling off a cliff in that there was no longer any access to Medicare to help with even small, maintenance types of things, like range of motion,” said Maureen Conte, a Falmouth, Mass., scientist, recalling the six years her father lived after having a stroke. “Multiple times he was back in the hospital for things that I thought were preventable.”

Many other patients, however, may not have even received certain kinds of treatment because their doctors figured that prescribing it would be pointless. “Once it becomes clear what Medicare will and will not pay for, you end up changing your practice pattern based on what it covers,” said Peter Thomas, a lawyer in private practice who is the outside counsel for the American Academy of Physical Medicine and Rehabilitation.

The settlement agreement takes pains not to describe itself as an expansion of Medicare coverage. But it does promise that the Centers for Medicare and Medicaid Services will revise the manuals their contractors use to make clear that coverage “does not turn on the presence or absence of a beneficiary’s potential for improvement from the therapy but rather on the beneficiary’s need for skilled care.”

Moreover, the settlement specifies that skilled care can qualify for Medicare coverage even if it merely maintains someone’s current condition or prevents or slows further deterioration. Certain patients who have had claims rejected will be able to resubmit them.

Representatives of several patient advocacy groups expressed hope this week that Medicare would soon pay for many forms of therapy that it did not always cover before.

For people with cerebral palsy, physical therapy to maintain muscle mass is one possibility. For multiple sclerosis patients, there may be more approval for treatments for spasticity and gait training to prevent falls.

Wealth Matters: Planning for Health Care Costs in Retirement

Consider this example from an annual report from Fidelity Investments: For a 65-year-old couple retiring this year, the cost of health care in retirement will be $240,000, 6 percent more than that same couple retiring in 2011 would pay. The report assumes that the man will live 17 years and the woman 20.

“Most people don’t realize Medicare covers much less than traditional employer plans,” Sunit Patel, senior vice president in Fidelity’s benefits consulting group. “The $240,000 number captures the Part B premium for physician services, Part D for prescription drugs. Then there are deductibles and coinsurance, and benefits that are not covered like vision exams, hearing aids.”

Another study, this one from Nationwide Financial, found that people who were near retirement routinely and wildly overestimated the percentage of health care costs covered by Medicare. It covers only 51 percent of health care services, according to the Employee Benefit Research Institute.

Robert L. Reynolds, president and chief executive of Putnam Investments, which has its own study, bluntly summed up the situation at a recent news briefing. “It makes no sense at all to talk about retirement savings or lifetime replacement income without talking about health care expenses,” he said.

A calculator developed by Putnam, called the Lifetime Income Analysis Tool, shows people not only how much they have saved but also, starting next year, how much they need to save depending on their health (cigarette smokers with diabetes need to save the least because their life expectancy is the shortest) and where they plan to retire (Louisiana is the cheapest, Alaska the most expensive) so they can live at their same income in retirement.

Moving to cheaper and possibly warmer climates is something many retirees naturally do. But while someone may be willing to move to Florida to reduce state taxes and avoid the ice and snow of the north, most people have so little awareness about the costs of health care in retirement that those costs are probably not a driving factor.

Carol and Richard Bechtel had worked in the San Jose, Calif., area, she for Stanford University and he at various technology companies. When it came time to retire in 2006, they put a lot of thought into where they wanted to live. They picked a community in Fairfield Glade, Tenn.

Cost of living was a factor. They were able to sell their home of 37 years in San Jose, pay cash for a house on a golf course, and still have money left over to put in their retirement account. Quality of life also mattered. By their account, the Bechtels are thoroughly enjoying their new community and friends. Mr. Bechtel found a hangar close to their home for his airplane, and they are closer to their son and three granddaughters in Wisconsin.

But when it came to knowing their health care expenses in retirement, they were pretty typical: they had to check on what the exact costs were. Their premiums, between Medicare, a supplementary policy through Stanford and a dental plan, will cost them $9,058.80 this year. That is a whopping 14 percent increase from the same policies in 2011. And that number does not include any out-of-pocket medical expenses, like co-payments or the costs of over-the-counter medications.

“Health premiums are probably one of our biggest expenses,” Mrs. Bechtel said.

Yet Mrs. Bechtel was not complaining. She said her Stanford-sponsored plan was excellent and it had given them freedom to choose the doctors they wanted, particularly for her husband, who had some health problems recently.

“Our premiums are small compared to what our bills would be,” she said. “It really makes us realize how great my Stanford benefit is. It covers everything. I worry a little bit how Medicare may change.”

While most retirees pay for insurance that supplements what Medicare pays, how comprehensive and open each plan is varies. But the fear that they will not be able to choose the doctors or care they want drives some wealthier people to set up separate accounts for health costs.

Faith Xenos, chief investment officer for Singer Xenos Wealth Management near Miami, said she counseled clients to set aside 5 percent of their annual budget for health-related costs and deductibles. (If they don’t spend it, she tells clients to use the money to do something healthy.)

“Let’s all acknowledge insurance doesn’t cover everything,” she said. “We have this idea from years back that once you get your Medicare or your retirement benefits package that everything is covered.” That is not the case.

She added: “Everyone wants the best drugs, and those might not be the ones your policy covers. They might cover a drug but that might not be the one you want.”

For people wanting to retire before Medicare starts at 65, she advises buying a high-deductible plan and using a health savings account to cover some of the out-of-pocket expenses.

Then there’s the issue of long-term care insurance. Various studies estimate that the percentage of people who reach 65 and will need long-term care is 30 to 50 percent.