Category Archives: Politics

NY Times is Copying Me

I’m not here to criticize Nicholas Kristof; not only have I linked to him before, but he is a two-time Pulitzer Prize winner and a Rhodes Scholar. But his most recent column says exactly what I’ve been saying recently.

First he says that “universal health care is not an economic or technical question but a moral one.” That is precisely what I said in this post. Then he quotes the new study showing 45,000 annual deaths from lack of insurance. Just as I did in this post. Then he closes by calling America a “great nation,” which is pretty similar to my phrasing: “the greatest…country.”

I’m not saying that Kristof is plagiarizing me. Let’s be honest: I’d be freaking psyched if a NY Times columnist stole my words. I’m just saying that if you want to know what the Times is going to say a fortnight hence, read Thoughtbasket now.

Lack of Insurance Causes 45,000 Annual US Deaths

Here is a link to a new study which estimates that 44,789 Americans die each year because they lack health insurance. This is the study that Rep. Alan Grayson referenced when he faux-apologized for mocking the Republicans’ lack of a health plan.

This is a purely statistical study, and I am totally unqualified to assess its methodology. However, it is being published in a peer-reviewed academic journal, and was written by fancy-pants researchers at Harvard Medical School, so it’s probably a pretty decent piece of work.

I Agree With WSJ Op-Ed — Amazing!

This is truly a miracle! For the first time in memory, there is an op-ed in the Wall Street Journal with which I actually agree. Mostly. And it’s by Holman Jenkins, who is usually such a tax-cutting, market-loving, poor person-hating cretin that I am often amazed he is even literate. But here we are on the same page. He expresses his views in his usual caustic and hyperbolic fashion, but I’m on board with his analysis.

The issue is net neutrality, and the possibility of FCC regulations on the matter. Jenkins points out that while there is a theoretical possibility of carriers favoring their own content over 3rd party content, this has yet to actually happen. He also notes that carriers invest billions in the infrastructure needed to carry ever more data, and that they need to recoup that investment. Finally, he points out that if carriers do not charge differential rates to content suppliers, the obvious solution is to charge differential rates to content users, namely charging more for heavy bandwidth users, which is clearly an equitable solution. In all cases, I agree with Jenkins.

This is also rare for the Journal, but the first two letters to the editor regarding Jenkins’ column, which can be found here, are also quite reasonable.

Health Care is a Moral Issue

T.R. Reid, author of “The Healing of America: A Global Quest for Better, Cheaper, and Fairer Healthcare,” recently wrote an article for Newsweek comparing the American health care system to the systems in other developed countries. The subtitle of the article is “To judge the content of a nation’s character, look no further than its health-care system,” and you can imagine where it goes from there. Reid notes that the U.S. is the only developed country that does not provide universal health care, and he quotes the facts that result: 22,000 Americans die per year because they can’t afford a doctor, and 700,000 Americans go bankrupt each year due to medical bills.

Reid compares this to Europe, where they approach health care with an emphasis on equality, on providing service to everyone. Here are some key quotes from Europeans regarding their view on health care:

  • A French physician: “But when we get sick – then, yes: everybody is equal.”
  • A former president of Switzerland: “Because it is a profound need for people to be sure, if they are struck by the stroke of destiny, they can have a good health system.”
  • A Swedish health minister: “The formula is so simple: health care for everybody, paid for by everybody.”
  • The Czech constitution: “health care for all.”

Reid sums it up: “The principle seems so obvious to people in Europe, Canada and the East Asian democracies that health officials asked me over and over to explain why it isn’t obvious to Americans as well.”

In America, on the other hand, we approach health care with an emphasis on freedom of choice, particularly during this summer of health care debates. But it’s not true freedom, since those without insurance are, in fact, denied any choice at all.

Reid again: “In the U.S., in contrast, some people have access to just about everything doctors and hospitals can provide. But others can’t even get in the door (until they are sick enough to need emergency care). That amounts to rationing care by wealth. This seems natural to Americans; to the rest of the developed world, it looks immoral.”

Republicans this summer tried to frame the issue as industrious workers supporting the lazy unemployed and uninsured, but that’s a canard. This frame ignores reality. To look at reality, take two factory workers: one is employed by GM, and has thus insurance, and the other is employed by a small local factory which doesn’t provide insurance. They are equally industrious, equally hard working, but the one without insurance is more likely to skip his doctors visits and – statistically speaking – more likely to die. Or take Nikki White, who was industrious and employed, until she became too sick with lupus to work, thus lost her insurance, was unable to afford the care she needed, and soon died.

The issue is not one of who works hard. The issue is whether we, as a society, want to let the people who randomly get sick (or randomly don’t have insurance) go bankrupt or die, simply because of their random bad luck. As Reid notes, this is a moral issue, and I don’t believe that American morals have decayed this far. We are better than this. We live in America, the greatest and richest country in the world. This country was founded on the premise that “all men are created equal,” remember? Not “all healthy men” or “all wealthy men.” Do we really want to live in a country that allows people to die purely because of their financial situation? I don’t think we do.

FYI, here is a New Republic article on the moral dimension of health care.

Follow Up to Markets & Health Care

Just a quick link to this article by a pediatric cardiologist giving both data and anecdotes on what bad consumers we all are when it comes to health care. Something to keep in mind as we look at more market-driven approaches to our health care system.

The Benefits of Financial Regulation

Harvard Magazine recently published an article regarding bank regulation. Like many articles (in fact, like the vast majority of articles I’ve seen), it makes the case that the current situation virtually guarantees another financial meltdown, since all major financial institutions now have implicit government backing, under the “too big to fail (TBTF)” doctrine. However, this article is a little different than many because it’s written not by a journalist, but by David Moss, a professor at Harvard Business School, which is, of course, the main source of the overconfident financiers who created the recent meltdown.

Professor Moss suggests a number of solutions to the TBTF problem and the moral hazard it creates. Most of these suggestions revolve around making the implicit guarantee an explicit one, with transparent limits and with the government charging for the guarantee. He would also add a tight regulatory regime.

The most interesting thing about Moss’ article was the graph I’ve inserted below. This graph has the date on the X axis, from 1864 to 2000. The Y axis shows the number of bank failures during each year. As you can see, bank failures were a regular occurrence in the American economy until 1932, when in the wake of the Great Depression a whole series of regulations were implemented, including Glass-Steagall. Then there is a long, calm period with very few bank failures, running up to the early 1980’s, when bank deregulation began under the Reagan administration. This graph speaks volumes.

Bank Failures Over Time

Bank Failures Over Time

Bank CEOs and Republicans are arguing strenuously against new bank regulations. CEOs have a good reason: they want to make as much money as possible. But Republicans are fighting regulation simply because they have an ideology that regulation is inherently bad. I think the last two years have proven this ideology wrong, but even if you don’t buy that, it’s hard to argue with the chart. So the question for Republicans is whether they are going to look at 136 years of data, or listen to the anti-government ramblings of people like former exterminator and creepy dancer Tom Delay, or fact-hindered quasi-philosopher Ayn Rand?

A Market Approach to Health Care

As regular readers know, I am focused on health care reform and am frustrated by the general dysfunctionality of the American health care system. My few posts have approached the problem from the perspective of working within the system we have, in particular by pushing doctors to emphasize patient care instead of revenue generation.

However, the latest issue of The Atlantic magazine has a fascinating article that takes the entire system to task and suggests a radical new approach. The author, David Goldhill, is a businessman rather than a policy guy, but he was driven to explore the health care system after his father died from a hospital-acquired infection. (Disclosure: I know David and am friendly with him) This article has been praised from the right and the left, and even has its own Facebook page.

Goldhill starts from the specifics and moves outward. He notes the 100,000 deaths per year in the US from hospital-acquired infections, and how hard it is to convince doctors to adopt a checklist that has been proven to dramatically reduce infection. “But many physicians rejected the checklist as an unnecessary and belittling bureaucratic intrusion, and many hospital executives were reluctant to push it on them.” He wonders how a society that shuts down restaurants for a single case of food poisoning tolerates this.

As a businessperson, Goldhill assumes there must be a reason for these terrible facts. Since people respond to economic incentives, the incentives in health care must be deeply flawed for our system to work as poorly as it does. Goldhill’s diagnosis: rather than following a market system, where consumers drive providers to lower costs and improve service, our health care system is a patchwork of information-obscuring insurance and lobbying-influenced regulations. In a market system, DVD players get better and cheaper, while in the health care system, nothing ever gets cheaper.

Goldhill’s treatment plan is to make health care more like a standard consumer product. Everyone will have catastrophic insurance, but in his system, those plans will have a deductible of $50,000 rather than the usual $2,000-$4,000. The government will provide subsidies to make this insurance affordable. But for most medical expenses, consumers will pay for them out of income and savings. Where will they get the money for this? Under Goldhill’s plan, since employers will no longer need to provide insurance ($12,000 per year for the average family), workers will be paid more, and thus have money to spend on medical expenses. If consumers are paying for most things themselves, the entire system will be subject to market forces, which improve quality and decrease cost.

I’m not doing justice to Goldhill’s solution. When read in full, it makes a lot of sense. Goldhill notes at the beginning of his piece that he is a Democrat who believes that everyone should be covered, and his system would do that. Ignoring the fact that Goldhill’s system will never happen (the insurance and hospital lobbies are way too strong), I have only one general critique, which has that Goldhill has, I think, too much faith in the market, which we have seen over the past two years is not always efficient, and is sometimes capricious and cruel. It’s bad enough when the market screws up your mortgage, but if it ruins your health care….

Here are two specific examples where I think Goldhill overestimates the wisdom of the market:

  1. Goldhill says that if companies did not have to provide insurance, all the money saved would go to the workers as increased salary, so they could afford their own health care. But we all know that the majority of the savings would actually go to executives and stockholders, and workers would be left uninsured and unable to pay for visits to the doctor.
  2. I certainly agree that we want people to be better informed consumers in the health care market, but as the mortgage debacle has shown us, many people are simply incapable of making intelligent decisions in a complicated environment. If somebody is unable to figure out if they can afford an adjustable rate mortgage, can we really expect them to intelligently perform the cost-benefit analysis between possible treatment plans for their cancer?

The New Republic vs. Ayn Rand

Jonathan Chait of The New Republic recently took on Ayn Rand and her philosophy, and thus he took on the entire intellectual edifice of the right, which is built on Rand’s view that any restrictions on the activities of capitalism ubermen is a moral abomination.

Chait critiques Rand on moral and logical grounds, but he is strongest when he subjects Rand’s worldview to withering factual criticism (see page 3 of his article). Alan Greenspan, a famous Randian, recently admitted that his free-market ideology was wrong. Passages like the below, from Chait’s article, should convince more Randians of the error of their ways:

“In reality, as a study earlier this year by the Brookings Institution and Pew Charitable Trusts reported, the United States ranks near the bottom of advanced countries in its economic mobility. The study found that family background exerts a stronger influence on a person’s income than even his education level. And its most striking finding revealed that you are more likely to make your way into the highest-earning one-fifth of the population if you were born into the top fifth and did not attain a college degree than if you were born into the bottom fifth and did. In other words, if you regard a college degree as a rough proxy for intelligence or hard work, then you are economically better off to be born rich, dumb, and lazy than poor, smart, and industrious.”

Medical Doctors: Stop Being Greedy

Check out this article about the panel that decides how Medicare reimburses every procedure, doctor visit or call in the medical world. The panel is completely run by the AMA, and dominated by specialists. So, big surprise, specialist visits and procedures are continually going up in value, while simple visits to your GP stay static. And the government does nothing to stop this; instead, the AMA — an organization of doctors — gets to decide how much doctors should get paid. Paid by taxpayers.

This is why simple tests cost $3,000, or why my GP tried to charge me $250 to spend 90 seconds freezing off a wart (I refused to pay). I have commented before on how greedy doctors are no better than subprime mortgage traders on Wall Street, and this article adds evidence to my viewpoint. A system where people get to decide on their own compensation is a bad system, and a world where jerk off dermatologists (yes, I’m talking about you, Dr. K) think they deserve $500k per year is a world with misplaced priorities.

So, AMA, organization of money-grubbing doctors that has fought health care reform for the past 60 years, I say to you: stop being greedy and screwing over your patients.

Auto Bailout Revisted; Thoughtbasket Gloats

Back during the heat of the auto bailout, when President Obama was being criticized for usurping the contractual rights of the bondholders, I wrote that he was doing no such thing…that he was merely playing hardball and winning. My money quote: “The creditors blinked first; they knew that if they took over the company it would essentially disintegrate overnight, and they would be left with a bunch of factories nobody would buy.”

New York Magazine recently did a long piece on Steve Rattner, Obama’s car czar, and in the sections that discuss Rattner’s negotiations with the creditors, it becomes clear that Rattner played the factual business hand, not the federal government will crush you hand.  To wit:

“In this go-round, Rattner held all the cards, and Lee [JP Morgan Chase Vice-Chairman Jimmy Lee] knew it.  The government was the lender of last resort, and if it walked away, Chrysler and GM would be sold off for parts.”

And then:

“Rattner almost laughed. “Jimmy, look. If you want the company, it’s yours,” Rattner told him. “If we can’t make a deal, then it’s your company,” which Lee knew he couldn’t afford.”

Finally, after JP Morgan Chase agreed, and only a few hedge funds were holding out, led by Daniel Arbess, portfolio manager of Xerion, we get the following:

“He’d [referring to Arbess] shrewdly picked up some bonds for as low as $.15 on the dollar. If the government paid $2 billion, he’d still make money. Did he want to risk that for the chance of greater returns? Arbess signed on.”

We don’t like to gloat here at Thoughtbasket, but sometimes we have no choice. Now if only we could get WordPress’ block quote function to work, life would be awesome.