new dog old trick

ObamaCare Legislative Follies

Watching the slow-motion train wreck that is ObamaCare has been instructive regarding the state of our republic in the early 21st century. And what it tells us is not good. How in the world can we be at the point where supposedly there is an agreement in the Senate on health-care reform when there isn't actually a bill to read, and the CBO hasn't scored it, so nobody actually knows what's in it or what it will cost, and yet supposedly 60 Senators have signed up to vote for it? The world's greatest legislative body in action? Only in bizarro-land.

Washington D.C. is broke folks. And only we can throw the bums out. All of 'em. Democrats and Republicans. Elephants and Donkeys. Start over. This has been building for over a decade but the time has come to break the iron triangle of Big Government - Crony Capitalism - Main-stream Media/Academia.

Anyway, here's the article I was reading this morning as I was catching up on my blog reading after a week on the road that prompted this little rant... The Health Care Bill No One Can See.

Two-thirds of a year into our intense national debate, and it’s pretty amazing that there are no details for the public to read, analyze, or debate on health care reform.

So without a real bill, senators have been reduced to shadowboxing over the complex 2,000-page bill that doesn’t exist. The process is such a non-process that it has produced a surreal environment.

and more from the article...

After eight years of screaming about President Bush’s secrecy, it is interesting that the mainstream media is largely mum about the legislative abuse now underway.

Even in small town city councils, most bills have to be read three times and public meetings convened before a bill becomes law. This principle has died on the national scale.

For PJTV, I tried to pin down where the secret Democratic Senate meetings were being held on health care. They turned out to be a movable feast. Some were announced; many never were. No one knows who sat in what meetings and on what topics.

We don’t know how AARP fared in influencing details of the bill. Or how SEIU shaped the bill. Or what Big Pharma was promised for its endorsement of an early Obama plan.

Citizens cannot see who authored which provisions, who won big federal favors, or who will get new privileges in the Brave New World of Big Brother delivering health care.

No one knows … yet.

A penchant for secrecy is a style of governing that is well known in many authoritarian countries. We don’t have to stretch our imagination to see these governing styles on display in Iran, China, Venezuela, Cuba, and North Korea.

Thankfully America isn’t Venezuela. And Obama has not become Hugo Chavez.

I suspect the face of authoritarianism here may arrive with more benign faces. It may emerge with subtle velvet hands like those used by regulators out of the European Union’s faceless bureaucracy. There, regulations are hatched in private among elites, then paternalistically dispensed to their citizens. The EU model is driven by an impenetrable bureaucracy that has little accountability, protects special groups, and informs the public in a genteel way about what it is they can and cannot do.

This may be more in tune with the Obama administration and so-called “progressives.” As they stand in awe over Europe for its many “superior” ways, they may be looking at a neo-European governing style as a role model.

Rather than assume their penchant for secrecy with the health care bill is an aberration, this could become their governing norm.

  

Why can't we do health care reform right?

I generally prefer to stay away from political issues on my weblog. But I think I'm going to start making an exception to that on Saturday and/or Sunday and use those days to dip my toes into the waters of public policy debate and political opinion. I'll try to keep Monday through Friday focused on my normal fare of business and entrepreneurship discussions. Not that some of these political issues don't have major implications for entrepreneurship in the U.S.

The hottest current political issue is the debate over improving or reforming healthcare in the U.S. I certainly agree that there are aspects of our current system that need to be improved. In fact, as a self-employed person who is also a cancer survivor, I'm only able to obtain insurance through a "guaranteed issue" policy - the most expensive thing you can get. So I should be one of those people cheering on the Congress to pass a one of the current reform bills. On the contrary, I think both the House and Senate bills are unmitigated disasters. Bad policy, bad politics, and bad economics.

It's all been analyzed by people better equipped than me to discuss it and here are three of them. All three articles are worth reading in their entirety.

Kill the Bills. Do Health Reform Right. by Charles Krauthammer:

Insuring the uninsured is a moral imperative. The problem is that the Democrats have chosen the worst possible method — a $1 trillion new entitlement of stupefying arbitrariness and inefficiency.

The United States has the best health care in the world — but because of its inefficiencies, also the most expensive. The fundamental problem with the 2,074-page Senate health-care bill (as with its 2,014-page House counterpart) is that it wildly compounds the complexity by adding hundreds of new provisions, regulations, mandates, committees, and other arbitrary bureaucratic inventions.
    
Worse, they are packed into a monstrous package without any regard to each other. The only thing linking these changes — such as the 118 new boards, commissions, and programs — is political expediency. Each must be able to garner just enough votes to pass. There is not even a pretense of a unifying vision or conceptual harmony.

The result is an overregulated, overbureaucratized system of surpassing arbitrariness and inefficiency.

...

The bill is irredeemable. It should not only be defeated. It should be immolated, its ashes scattered over the Senate swimming pool.
    
Then do health care the right way — one reform at a time, each simple and simplifying, aimed at reducing complexity, arbitrariness, and inefficiency.

...

The better choice is targeted measures that attack the inefficiencies of the current system one by one — tort reform, interstate purchasing. and taxing employee benefits. It would take 20 pages to write such a bill, not 2,000 — and provide the funds to cover the uninsured without wrecking both U.S. health care and the U.S. Treasury.

We Pay Them to Lie to Us. by John Stossel:

I happily suspend disbelief when a magician says he'll saw a woman in half. That's entertainment. But when Harry Reid says he'll give 30 million additional people health coverage while cutting the deficit, improving health care and reducing its cost, it's not entertaining. It's incredible.

The politicians have a hat full of tricks to make their schemes look cheaper than they are. The new revenues will pour in during Year One, but health care spending won't begin until Year Three or Four. To this the Cato Institute's Michael Tanner asks, "Wouldn't it be great if you could count a whole month's income, but only two weeks' expenditures in your household budget?"

To be deficit-reducers, the health care bills depend on a $200 billion cut in Medicare. Current law requires cuts in payments to doctors, but let's get real: Those cuts will never happen. The idea that Congress will "save $200 billion" by reducing payments for groups as influential as doctors and retirees is laughable. Since 2003, Congress has suspended those "required" cuts each year.

...

I will chew on razor blades when Congress cuts Medicare to keep the deficit from growing.

Medicare is already $37 trillion in the hole. Yet the Democrats proudly cite Medicare when they demand support for the health care overhaul. If a business pulled the accounting tricks the politicians get away with, the owners would be in prison.

I'll point out that there are CEOs in prison for accounting shenanigans of significantly less magnitude, and that harmed a whole lot fewer people, than are going to be impacted by the fiscal dishonesty and malpractice in the current healthcare bills.

Finally this from the CATO Institute folks: ObamaCare's Cost Could Top $6 Trillion by Michael Cannon.

Congressional Democrats are using several budget gimmicks to disguise the cost of their health care overhaul, claiming the House and Senate bills would cost only (!) about $1 trillion over 10 years. Now that critics have begun to correct for those budget gimmicks, supporters of ObamaCare are firing back.

One gimmick makes the new entitlement spending appear smaller by not opening the spigot until late in the official 10-year budget window (2010–2019). Correcting for that gimmick in the Senate version, Sen. Judd Gregg (R-NH) estimates, “When all this new spending occurs” — i.e., from 2014 through 2023 — “this bill will cost $2.5 trillion over that ten-year period.”

Another gimmick pushes much of the legislation’s costs off the federal budget and onto the private sector by requiring individuals and employers to purchase health insurance. When the bills force somebody to pay $10,000 to the government, the Congressional Budget Office treats that as a tax. When the government then hands that $10,000 to private insurers, the CBO counts that as government spending. But when the bills achieve the exact same outcome by forcing somebody to pay $10,000 directly to a private insurance company, it appears nowhere in the official CBO cost estimates — neither as federal revenues nor federal spending. That’s a sharp departure from how the CBO treated similar mandates in the Clinton health plan. And it hides maybe 60 percent of the legislation’s total costs. When I correct for that gimmick, it brings total costs to roughly $2.5 trillion (i.e., $1 trillion/0.4).

Here’s where things get really ugly. TPMDC’s Brian Beutler calls “the” $2.5-trillion cost estimate a “doozy” of a “hysterical Republican whopper.” Not only is he incorrect, he doesn’t seem to realize that Gregg and I are correcting for different budget gimmicks; it’s just a coincidence that we happened to reach the same number.

When we correct for both gimmicks, counting both on- and off-budget costs over the first 10 years of implementation, the total cost of ObamaCare reaches — I’m so sorry about this — $6.25 trillion. That’s not a precise estimate. It’s just far closer to the truth than President Obama and congressional Democrats want the debate to be.

Beutler and other supporters of ObamaCare can react to this news in two ways. They can continue to deny the enormous cost of the legislation they support. Or they can question how President Obama’s health plan came to be so blessedly expensive, and how (and by whom) they were duped into thinking it wasn’t.

Fixing healthcare and why we spend so much

Three good readings on healthcare - taken together they make a bit of sense on why we spend so much and what an alternative, market-centered consumer-driven approach might look like.

Start here, at the Atlantic. It's a long article by David Goldhill provocatively titled "How American Healthcare Killed My Father." Yikes. But, despite being somewhat too full of off base economic insights (which can be corrected by our other two reads), it eventually gets around to grappling in a serious manner with a consumer-driven, market-oriented approach to healthcare reform. It's also wise enough to realize that quick fixes probably aren't at hand for the current situation, which took over 50 years to get to the current point.

A couple of tastes (emphasis in bold is mine) ...

Indeed, I suspect that our collective search for villains—for someone to blame—has distracted us and our political leaders from addressing the fundamental causes of our nation’s health-care crisis. All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.

...

I’m a Democrat, and have long been concerned about America’s lack of a health safety net. But based on my own work experience, I also believe that unless we fix the problems at the foundation of our health system—largely problems of incentives—our reforms won’t do much good, and may do harm. To achieve maximum coverage at acceptable cost with acceptable quality, health care will need to become subject to the same forces that have boosted efficiency and value throughout the economy. We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition); overcome our addiction to Ponzi-scheme financing, hidden subsidies, manipulated prices, and undisclosed results; and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy.

...

The most important single step we can take toward truly reforming our system is to move away from comprehensive health insurance as the single model for financing care. And a guiding principle of any reform should be to put the consumer, not the insurer or the government, at the center of the system. I believe if the government took on the goal of better supporting consumers—by bringing greater transparency and competition to the health-care industry, and by directly subsidizing those who can’t afford care—we’d find that consumers could buy much more of their care directly than we might initially think, and that over time we’d see better care and better service, at lower cost, as a result.

A more consumer-centered health-care system would not rely on a single form of financing for health-care purchases; it would make use of different sorts of financing for different elements of care—with routine care funded largely out of our incomes; major, predictable expenses (including much end-of-life care) funded by savings and credit; and massive, unpredictable expenses funded by insurance.

For a bit of great reading on the issue of healthcare costs, and what is "spending too much" on healthcare, read the two articles below.   

Forecasting the cost of U.S. Healthcare by Robert Fogel grapples with the issues that drive expenditures on healthcare. Those issues are several and each complex but Fogel (Nobel laureate in economics) surveys the big issues. His conclusion:

The main factor is that the long-term income elasticity of the demand for healthcare is 1.6—for every 1 percent increase in a family’s income, the family wants to increase its expenditures on healthcare by 1.6 percent. This is not a new trend. Between 1875 and 1995, the share of family income spent on food, clothing, and shelter declined from 87 percent to just 30 percent, despite the fact that we eat more food, own more clothes, and have better and larger homes today than we had in 1875. All of this has been made possible by the growth in the productivity of traditional commodities. In the last quarter of the 19th century, it took 1,700 hours of labor to purchase the annual food supply for a family. Today it requires just 260 hours, and it is likely that by 2040, a family’s food supply will be purchased with about 160 hours of labor.¹²

Consequently, there is no need to suppress the demand for healthcare. Expenditures on healthcare are driven by demand, which is spurred by income and by advances in biotechnology that make health interventions increasingly effective. Just as electricity and manufacturing were the industries that stimulated the growth of the rest of the economy at the beginning of the 20th century, healthcare is the growth industry of the 21st century. It is a leading sector, which means that expenditures on healthcare will pull forward a wide array of other industries including manufacturing, education, financial services, communications, and construction.

Maybe we should spend more on Healthcare by James DeLong - now there's a title that flies in the face of the convention wisdom driving the ObamaPanic over ObamaCare. Very much worth a read, especially in combination with the two articles above.

Too bad none of this seems to be on the agenda of the national debate that we should be having, but aren't, about healthcare reform. Certainly none of this seems to be a glimmer in the eye of either the Democrat or the Republican statists in Washington, or any of the special interest groups (hospitals, insurance companies, physicians, etc.) so heavily invested in the current system and the current political leadership.

Camille Paglia goes off on Obama over Healthcare reform

Ouch, this has got to leave a mark. It's a good thing this comes from someone that professes to still believe in the President.

When someone as articulate as Paglia decides that it's time for a good rant, and when the title is Obama's Healthcare Horror, you know it's going to be fun.

It's a shame that Paglia makes the case against ObamaCare better than most of the Republican leadership has even tried to do.

... I must confess my dismay bordering on horror at the amateurism of the White House apparatus for domestic policy. When will heads start to roll? ... Obama seems to be surrounded by juvenile tinhorns, bumbling mediocrities and crass bully boys.

Case in point: the administration's grotesque mishandling of healthcare reform, one of the most vital issues facing the nation. ...

But who would have thought that the sober, deliberative Barack Obama would have nothing to propose but vague and slippery promises -- or that he would so easily cede the leadership clout of the executive branch to a chaotic, rapacious, solipsistic Congress? ...

There is plenty of blame to go around. Obama's aggressive endorsement of a healthcare plan that does not even exist yet, except in five competing, fluctuating drafts, makes Washington seem like Cloud Cuckoo Land. ...

You can keep your doctor; you can keep your insurance, if you're happy with it, Obama keeps assuring us in soothing, lullaby tones. Oh, really? And what if my doctor is not the one appointed by the new government medical boards for ruling on my access to tests and specialists? And what if my insurance company goes belly up because of undercutting by its government-bankrolled competitor? Face it: Virtually all nationalized health systems, neither nourished nor updated by profit-driven private investment, eventually lead to rationing.

I just don't get it. Why the insane rush to pass a bill, any bill, in three weeks? And why such an abject failure by the Obama administration to present the issues to the public in a rational, detailed, informational way? ...

... It isn't conservative rumors or lies that are stopping healthcare legislation; it's the justifiable alarm of an electorate that has been cut out of the loop and is watching its representatives construct a tangled labyrinth for others but not for themselves. No, the airheads of Congress will keep their own plush healthcare plan -- it's the rest of us guinea pigs who will be thrown to the wolves.

... I thought the Democratic party was passionately committed to freedom of thought and speech.

But somehow liberals have drifted into a strange servility toward big government, which they revere as a godlike foster father-mother who can dispense all bounty and magically heal all ills. The ethical collapse of the left was nowhere more evident than in the near total silence of liberal media and Web sites at the Obama administration's outrageous solicitation to private citizens to report unacceptable "casual conversations" to the White House. If Republicans had done this, there would have been an angry explosion by Democrats from coast to coast. I was stunned at the failure of liberals to see the blatant totalitarianism in this incident, which the president should have immediately denounced. His failure to do so implicates him in it.

...

Surely, the basic rule in comprehensive legislation should be: First, do no harm. The present proposals are full of noble aims, but the biggest danger always comes from unforeseen and unintended consequences. ...

What was needed for reform was an in-depth analysis, buttressed by documentary evidence, of waste, fraud and profiteering in the healthcare, pharmaceutical and insurance industries. Instead what we've gotten is a series of facile, vulgar innuendos about how doctors conduct their practice, as if their primary motive is money. Quite frankly, the president gives little sense of direct knowledge of medical protocols; it's as if his views are a tissue of hearsay and scattershot worst-case scenarios.

Sensible options on healthcare from John Mackey

You know those alternatives to ObamaCare that the Obamacrats keep saying that nobody is offering up? Well, here is a proposal from John Mackey, the CEO of Whole Foods, in today's Wall Street Journal: The Whole Foods alternative to ObamaCare (eight things we can do to improve health care without adding to the deficit).

We would all be better off if we were talking about real healthcare reform alternatives, like these proposed by John Mackey, in less partisan, transparent, open debates and other forums rather than what has been going on the last couple of months. At least, that's my opinion.

Here are some high spots from Mackey's proposals, but read the whole thing.

While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction—toward less government control and more individual empowerment. Here are eight reforms that would greatly lower the cost of health care for everyone:

• Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). ...

• Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. ...

• Repeal all state laws which prevent insurance companies from competing across state lines. ...

• Repeal government mandates regarding what insurance companies must cover. ...

• Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year. ...

• Make costs transparent so that consumers understand what health-care treatments cost. ...

• Enact Medicare reform. We need to face up to the actuarial fact that Medicare is heading towards bankruptcy and enact reforms that create greater patient empowerment, choice and responsibility.

• Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren't covered by Medicare, Medicaid or the State Children's Health Insurance Program.

Many promoters of health-care reform believe that people have an intrinsic ethical right to health care—to equal access to doctors, medicines and hospitals. While all of us empathize with those who are sick, how can we say that all people have more of an intrinsic right to health care than they have to food or shelter?

Health care is a service that we all need, but just like food and shelter it is best provided through voluntary and mutually beneficial market exchanges. A careful reading of both the Declaration of Independence and the Constitution will not reveal any intrinsic right to health care, food or shelter. That's because there isn't any. This "right" has never existed in America

Even in countries like Canada and the U.K., there is no intrinsic right to health care. Rather, citizens in these countries are told by government bureaucrats what health-care treatments they are eligible to receive and when they can receive them. All countries with socialized medicine ration health care by forcing their citizens to wait in lines to receive scarce treatments.

Although Canada has a population smaller than California, 830,000 Canadians are currently waiting to be admitted to a hospital or to get treatment, according to a report last month in Investor's Business Daily. In England, the waiting list is 1.8 million.

[...]

Rather than increase government spending and control, we need to address the root causes of poor health. This begins with the realization that every American adult is responsible for his or her own health.

[...]

Health-care reform is very important. Whatever reforms are enacted it is essential that they be financially responsible, and that we have the freedom to choose doctors and the health-care services that best suit our own unique set of lifestyle choices. We are all responsible for our own lives and our own health. We should take that responsibility very seriously and use our freedom to make wise lifestyle choices that will protect our health. Doing so will enrich our lives and will help create a vibrant and sustainable American society.

Mr. Mackey is co-founder and CEO of Whole Foods Market Inc.

Changing American Health Care: First, do no Harm

Some great facts to add to an evidence-based discussion of the health care "crisis" and what, if anything, should be in "Obamacare".

I've been concerned for some time that there are problems with the American system of health care. However, I'm even more concerned that we might make the system worse in a rush to impose ideologically-based solutions to the health care problem. Let's take our time, try to work from a consensus on what the problem(s) even are, and then have an evidence-based discussion/analysis of the impact of various proposed solutions. It seems to me that the process in Washington right now is the antithesis of that.

Anyway, here is an article from the Hoover Institution at Stanford University that contains 10 facts about our health care system that I found very interesting. I've kept a bit of the discussion of some of the facts below, but follow the link above and read the whole thing.

1. Americans have better survival rates than Europeans for common cancers. Breast cancer mortality is 52 percent higher in Germany than in the United States and 88 percent higher in the United Kingdom. Prostate cancer mortality is 604 percent higher in the United Kingdom and 457 percent higher in Norway. The mortality rate for colorectal cancer among British men and women is about 40 percent higher.

2. Americans have lower cancer mortality rates than Canadians. ...

3. Americans have better access to treatment for chronic diseases than patients in other developed countries. ...

4. Americans have better access to preventive cancer screening than Canadians. ...

5. Lower-income Americans are in better health than comparable Canadians. ...

6. Americans spend less time waiting for care than patients in Canada and the United Kingdom. ...

7. People in countries with more government control of health care are highly dissatisfied and believe reform is needed. More than 70 percent of German, Canadian, Australian, New Zealand, and British adults say their health system needs either “fundamental change” or “complete rebuilding.”

8. Americans are more satisfied with the care they receive than Canadians. ...

9. Americans have better access to important new technologies such as medical imaging than do patients in Canada or Britain. An overwhelming majority of leading American physicians identify computerized tomography (CT) and magnetic resonance imaging (MRI) as the most important medical innovations for improving patient care during the previous decade—even as economists and policy makers unfamiliar with actual medical practice decry these techniques as wasteful. ...

10. Americans are responsible for the vast majority of all health care innovations. The top five U.S. hospitals conduct more clinical trials than all the hospitals in any other developed country. Since the mid- 1970s, the Nobel Prize in medicine or physiology has gone to U.S. residents more often than recipients from all other countries combined. In only five of the past thirty-four years did a scientist living in the United States not win or share in the prize. Most important recent medical innovations were developed in the United States.

The author's conclusion:

Despite serious challenges, such as escalating costs and care for the uninsured, the U.S. health care system compares favorably to those in other developed countries.

Read my lips - it's the healthcare stupid

As quite a few business and econ webloggers have noted, healthcare is one of most important issues facing our economy in the minds of lots of small to medium-sized business owners and entrepreneurs. And, I might add, to lots of ordinary working and retired folks. Yet the level of dialog on proposals to try to address the problem is very low. It's also a personal hot button issue for me (full disclosure here) as I'm a recently minted cancer survivor who is just beginning to understand the impact of that fact on my ability to get insurance as I look to start a new business.

Jeff Jarvis pointed at a column by Paul Krugman in Friday's New York Times on the subject. BuzzMachine... by Jeff Jarvis (scroll down a ways when you follow the link - the post is titled The Health-Care War). A tip of the hat to Jarvis - I've completely turned Krugman off due to his shrillness and blind partisanship, but I think this article is useful. I can't say that I agree with his prescription on how to fix the system but it's good to see the issue getting aired. Hopefully this will prompt some more discussion of the issue and possible solutions in the mainstream media.

The Krugman article can be found at the NYT site here. This link will rot so I'll copy in a few of the meaty bits below. Again, I think a single payer system modeled on Canada (read, greater government control of the health care system) is the wrong answer - but we need to have the debate. Also, see the comments on Jarvis' blog regarding his post to get more flavor for people's feelings on the issue.