If It Sounds Like an Evil Villain from a Spy Movie Came Up With the Concept...

... It’s Probably Not True
(Or, Some Misconceptions About Health Care Reform)

To counteract the incredible display of horse manure flying about the airwaves, on tv, and being suggested to you by your friends and neighbors, I put together this list of a few misconceptions about health care reform. Note that I am talking about the general gist of the main bills currently on hold in Congress while our representatives are on vacation or being harangued at town hall meetings. Note also that I don’t necessarily agree with all terms—current terms, that is—of the health care bill(s). In fact, in my most recent post, I suggested a few quick reform measures of my own. Nevertheless, the amount of disinformation being broadcast motivates me—no, compels me—to put together this list.

1. The current health care reform bills will produce a system of socialized medicine in this country.

First—no, they wouldn’t. Socialized medicine is the direct control of the practice of medicine by the government. The government employs virtually all medical providers (doctors, nurses) and hospitals and places of care. All citizens receive health care free of charge unless they elect to pay for it privately. Regardless of what you might think about socialized medicine, that is not what Congress is proposing. The bills before Congress propose to achieve a few core objectives: (i) stop health care insurance companies from being able to cherry-pick their insureds; principally, this means that individual policies would be treated akin to group policies. This is very important, incidentally, to self-employed people and small businesses. It would also mean the elimination of the “preexisting condition” exception from insurance policies. Anyone who has been confronted with this form of denial realizes that this is the correct and humane thing to do; (ii) offer a government-subsidized plan to the working poor and lower middle class families (akin to Medicare); (iii) make—yes, make, as in require—the uninsured get insurance (and objective (ii) is very closely related to this objective). The culmination of all three of these principal goals is intended to produce the goal of universal coverage; viz., everyone can get health insurance of some kind in this country.

Second—every time I hear someone shout out “socialized medicine” with that sort of crazy glint in their eye, I wonder: Do they really know what they’re talking about? I don’t think so. I think it’s like we all accused someone of being a Communist back in the ‘80s. I think really it’s a substitute for “bad.” So, what they’re really saying is—health care reform! Bad!

Well, maybe if it’s the wrong kind of health care reform. And maybe socialized medicine would be bad, though the Brits seem to think it’s okay. In any case, that’s not what we’re getting, so this is a misconception and is FALSE.

2. A faceless government bureaucrat will make your health care decisions for you.

Okay. This one makes me smile a little bit, because, I mean… isn’t a faceless insurance company bureaucrat making your health care decisions for you right now? I know that’s the case for us, where my wife and I were prevented from having our second child for a year and a half because of insurance waiting periods. (Needless to say numerous conversations over the years with … wait for it… faceless insurance company bureaucrats trying to get something covered. If you haven’t experienced this yet, just wait—it’s coming, my friend. Unless, of course, health care is completely reformed). Wouldn’t it at least be better if the faceless bureaucrat were a government employee, theoretically working for you, and also subject to review by Congress and our elected representatives?

Also, of course— and here’s the zinger—uhm, no. A faceless bureaucrat would not be making health care decisions for anyone. The healthcare plan “czar” (is anyone besides me getting a little tired of the use of the word “czar” every time we set up a program where one guy is the head honcho? It’s like appending “-gate” at the end of any supposed scandal. Do they have a special course on hackneyed phrases in journalism school?) would be in charge of approving plans proffered by insurance companies who want to participate in the healthcare exchange. Doctors would be in charge. Or, as I prefer to think about it after spending some time in the hospital with my wife following her c-section, patients are in charge.

3. Health care reform will encourage euthanasia of the elderly.

This falls under the category of “if it sounds crazy, it probably is.” I am continually amazed at the capacity for some people to be so gullible and… ingenuous (as in, innocent… not “ingenious,” as in clever). Look, if it sounds like a concept of an arch villain in a spy movie, it’s not likely to be true, okay? A purpose of health care reform is not to kill elderly people. The fact that this assertion even has to be refuted disgusts me. But thanks to people like Sean Hannity and friends, this disinformation is countenanced and given air time. (Much like the “Obama was not born in Hawaii” claims. Complete and utter garbage.)

I was going to call this the “top five” misconceptions about health reform, but it’s late and I’m tired. There is also a certain level of tolerance I have for mentally engaging with and refuting what, seem to me, to be such blatant errors. Where is our independent media? Oh, wait, that’s right, we lost it when Fox started winning the air wars.

My tolerance level and endurance for this sort of thing is also taxed by an undercurrent of dismay and cynicism. These arguments—these outright lies, really—are not the real powers that need to be fought. These misconceptions are propagated by very powerful interests that stand to lose a great deal with health care reform. Insurance companies, certain health care providers, pharmaceutical companies, basically everyone profiting from skyrocketing health care and treatment costs (sellers, not providers for the most part—hospitals and, for the most part, doctors have not seen lasting prosperity from the massive inflation in health care costs over the last 20 years). My dismay and cynicism arise from the fact that the people fighting this battle on the ground for these powerful interests are harming themselves—they have been manipulated and do not even realize it. It’s truly disgusting. With a little money and an ingenious campaign of disinformation, powerful, fortified interests can manipulate people to fight a battle that harms their own interest.

But that’s the nature of the beast in our current socio-economic-political system. There will be no discussion on the merits. Only a Machiavellian power struggle.

We will see a similar event with the global warming bill—already tremendously watered down. When the time comes, I will fire up the ol’ blog. But for now, I shine my blazing beacon of truth on health care reform! And will continue to do so as long as I can tolerate it.

Peace be with you.

A Healthcare Proposal

Healthcare reform. It’s all the rage—except for the fascinating revolt of the middle class playing out in Iran. But I digress.

It’s easy to digress when you’re talking about healthcare, because it’s hard to understand, miserable to confront, and there are so many vested interests filling the airwaves with misinformation, you can almost feel the magnetic radiation bouncing off your skin.

But I’m going to attempt to identify some of the main problems and propose one or two possible solutions.

First, what are the problems? The conservative pundits would have you believe that we have a wonderful field of competition out there—one of the most common statistics I’ve heard George Will, Michael Steele, Lindsey Graham and others on the right cite is that there are “1300 competing providers of health care” out there—as though the sheer number proves 1) competition exists, and 2) that it’s working.

Neither proposition is true. Anyone who has ever had any sort of medical procedure beyond an annual check-up and has received a bill knows that the care they got wasn’t worth what they’ve been charged. Not that the care is bad, but--$500 for 1 hour in a hospital room? $2,000 for a simple ER visit with an xray? There is a hidden cost that is being surcharged to all persons who receive healthcare, especially hospital care, which is directly related to those who cannot afford to pay their bills—usually, the uninsured. This cost is passed on to others who can pay or have insurance. This is not the market in action. This is some kind of strange dance between insurance companies and hospitals and other healthcare providers. And we get caught in the middle. And oh, by the way, insurance companies reap a healthy profit. (At least they did operating in their own industry. Once they started speculating in exotic financial vehicles (insuring credit swaps, e.g.), they started losing money.)

So, regardless of whether we have some sort of faux competition among health insurance companies, the market itself is not currently working. Not existent, actually, because we have this weighty anchor pulling us down, inflating our costs threefold or more.

What’s more, we have moved to a strange confused view of health insurance versus health care. Insurance is a contract for money payable upon the occurrence of certain events. Perhaps one of the purest examples of insurance is auto insurance. You don’t think you will get in an accident (your fault or otherwise) but you better have insurance to cover the risk that you will, otherwise you will end up with a large sum out of pocket. In fact, states require auto insurance, because too many people were causing accidents and did not have the means to reimburse the damages of the person they injured—medical bills or automobile repairs.

Compare this to health insurance. You have a plan that has certain benefits. You pay a premium, as with auto insurance, but certain in-network procedures and certain medications are completely “free,” while others aren’t. Certain coded procedures are allowable, while others are not. These days, you’re not really buying insurance, but a health plan with insurance-like features (like a total pay-out limit). And, because it’s insurance and not a health plan, meaning you have to make a claim against the contract you’re paying for and the insurance company has the right and does carefully scrutinize the treatment (and carefully crafts the language of its policies to limit payouts), it’s a crappy health plan.

The current state of things, then, is that (1) we have a broken market for healthcare “insurance” (or healthcare plans) with (2) a hidden and uncontrollable variable linked to the uninsured, and (3) plans that are full of holes and inevitably create an antagonistic process between the claimant (the patient) and the insurance company. Meanwhile, hospitals, and to a lesser extent doctors, are caught in the middle.

How do we fix this morass? Here are some ideas, none of which are mutually exclusive:

1. Government mandate for healthcare insurance. We all hate government mandates, right? Here’s one that would instantly fix a lot of problems: Require all persons in this country to obtain catastrophic health care insurance. That’s right, I’m asking for this invasion in our lives, but for our own good. Much like the requirement for liability insurance for automobiles (which is required in almost every state in the union), the cost protection we all gain from not having to subsidize someone’s $1 million treatment far outweighs the impairment of our liberty. Catastrophic health care insurance is pretty self-explanatory: it insures against high-cost medical events. Essentially, it is very high deductible health insurance. The mandate I would be looking for is something on the order of requiring all persons to obtain a health insurance plan with a $25,000 (or less) annual deductible. It should be very cheap, because a person rarely spends more than that amount in a year. Proviso—I’m not sure where the number should be exactly; we might be a little high or a little low here. But I think an optimal number could be reached. Also, we will still have to have Medicare, because as people age, the cost of even a catastrophic health care insurance policy becomes prohibitive; this is not a unifying healthcare reform effort in the sense that all pieces line up under this one piece of legislation.

A corollary to this idea is that either the government would have to offer insurance alongside competitors to “uninsurable” people; e.g., people like my mother who have had breast cancer or some other kind of disease, probably as an extension of Medicare. Or, the government would have to impose on the insurance industry a requirement that such persons cannot have preexisting conditions held against them. The insurance industry has actually offered this carrot to prevent the current overhaul of healthcare that we’re seeing.

2. Preventive healthcare. A lot of folks are not going to like this one, but we can tamp down a lot of health care costs by providing for free to every person legally in this country (perhaps even illegally, since illegals go to the hospital, too, and drive up all of our costs) preventive care, including annual checkups, vaccines, and routine procedures. This would cause some cost for the government, but I believe that the savings would be greater. These people would also presumably contribute income rather than being sick, and generate tax revenue. Obviously, this is hard to gauge, but I think it’s a fair risk to benefit us economically, and allows us to feel good about ourselves as a society from a moral perspective, because we are taking care of our own.

3. Bar healthcare providers from discriminating against single payers. A lot of small business owners and independent contractors cannot afford a group policy that offers discounted rates. When we go to the hospital, doctor, etc., we sometimes don’t get the negotiated rate. Prevent healthcare providers from engaging in these practices. It unfairly punishes those people who need the most help and create the most jobs in this country.

These are just a few ideas. But the goal should be to get everyone covered, at least for the big stuff, and to control health care costs by engaging in preventive medicine and restoring true market prices. There are many other approaches, including a full-on national health insurance plan. I leave discussion of that for another day, mainly because I have no idea what it would look like in the United States at this point in time. But there is no doubt—none—that we cannot continue to skate along this increasingly steep slope of skyrocketing health care costs and arbitrary (and occasionally immoral) healthcare treatment.

GM Still Doesn't Get It

30.1 Billion dollars. Billion with a capital "B" because it's a huge frickin' number. And it will be wasted. Like the 9 billion before it. And more billions before that in subsidies, non-tarrif barriers to trade, loans, etc.

GM CEO Fritz Henderson says GM has made mistakes. That GM is now going to be a corporation focused on the customer. And with that statement, I know he doesn't "get it" any more than Rick Wagoner got it as he watched GM steadily lose market share while blaming everything except the root cause. He blamed Japanese policy as protectionist and undercutting US competitiveness. He blamed anti-union policies in southern factories. But what Fritz and Rick have never acknowledged is GM simply builds bad cars.

That's right. GM's cars suck. They are unreliable, shoddily built, made with cheap components, and problem prone. From the Cobalt to the Corvette. Any GM car that makes it past 150,000 miles - nothing for a Japanese-built car - is considered exceptional. And when the car breaks, GM frequently fails to stand behind its cars or its warranties. Five years ago, Hyundai built crap cars just like GM, but they stood behind their warranties, and steadily stole market share from GM. Now they build good cars, and are still stealing marketshare from GM.

Consider my own experience. Since I was a kid, the only car I ever wanted was a Corvette. I even remember the first Corvette I ever saw - a two-tone black and silver "C-3." So, when I had the money, I ordered and bought a 2001 C-5 Corvette, Navy blue with black interior. It was beautiful. When I sold it in 2006, it had less than 30,000 miles on the odometer. In that time, I had all four tire sensors replaced, both window motors replaced, the temperature regulator failed (clogged by the "100,000 mile coolant" that coagulates if a car is not driven daily), the seals around the roof tore and ceased to be waterproof (leaked in the rain), the leather on the drivers' seat wore through and 12 of 16 pushrods were found to be bent. The icing on the cake was the poor fit and finish - I could see wires through the dash...

The story behind the pushrod repair explains why GM finds itself in bankruptcy as of 9 AM this morning. Shortly after the dealer's mechanic told me the source of the noise I heard, I was called in to talk to the GM warranty claims agent. I don't remember her name, but I remember the conversation after I was told GM would not pay for the warranty repair. I asked why not. Here is the conversation:

Agent: "Well, we feel it is obvious you have repeatedly red-lined the engine."
Me: "Excuse me?"
Agent: "We have determined because you caused the problem, it is not our responsibility to cover the repair."

To understand the ridiculousness of this statement, consider this: The Corvette redlines at 7500 rpm. In 6th gear, the car would do 90 mph at 2400 rpm. The car would do 90 mph in 3rd gear at 4500-5000 rpm. To "repeatedly redline the engine" I would have had to "repeatedly" downshift from 6th gear to 3rd gear at something like 130 mph - something I never did.

Here's the rest of the conversation:

Me: "So you are accusing me of abusing my car?"
Agent: "We aren't accusing you of anything. We just feel you have exceeded the terms of your warranty." (huh?)
Me: "Amazing. You realize I am never going to buy another Chevrolet?"
Agent: "I am sorry you feel that way."
Me: "I'm sure you do." click.

What I should have said (I've had a little time to think about this since 2002...): "And you realize I am going to tell everyone I know about this and encourage them to not buy Chevrolets?"

And so I have. In 2002, I knew Chevrolet - and GM with it - was headed for the toilet. And why? Simple. They don't build good cars, and then they fail to stand behind their product.

This is the company that is going to "focus on their customers." Sure. I'll believe it when I see it. And I don't expect to see it. But good luck, Fritz. You'll need it. It's just a shame we will all have to pay for it.

Quick Thoughts on the “Tea” (Bag?) Parties

Yeah, yeah, I know. Where have all the posts gone? Perhaps it’s spring fever. Or maybe the fact that it’s not an election year. (Or that I’ve been busier with work. Which is good.) But I have posted fewer blog entries recently. I won’t say I “promise” I will put more together, but I will “try.”

So here’s something now that I’ve been meaning to discuss. All these “tea” parties—which with great misfortune began to be known as “tea bagging” parties… ehhh—on April 15. What was that all about? I think it was about a lot of things, actually. I don’t think it was what many conservative commentators were trying to frame it as, that being some kind of conservative groundswell/revolution for the Republican point of view. As has been written about extensively by others (I promise—go read it if you haven’t already), most of the supporters were not fans of Republicans, either. Some of them even got booed when they tried to sort of preempt the event or earn some political points.

I think the tea parties were a groundswell of sorts, but mainly of the Ron Paul-esque libertarian variety. I think that the economy being in the tank has hurt a lot of people, and many of these people are feeling very poorly used. So they’re mad.

What the tea parties were not about was accuracy. The guys in Boston who threw the tea into the harbor to protest the British Empire’s tax upon the product were, in fact, not represented. A Parliament and king across an ocean were making policy and extracting money from the colonies for their own imperialistic purposes (i.e., war-funding in Europe). They were quite ill-used. So, to make a point, they threw out the tea which was owned by a government-sponsored merchant outfit (the East-India Company) in protest. The people who attended the tea parties circa 2009 voted or had the opportunity to vote. Presumably, their candidate lost. I doubt they would be protesting if they’d voted for Obama, though I suppose I could be wrong. They also are not being taxed more now than they were last year. They’re being taxed less. So, the name for the protest was a bit weak in my opinion.

The hyperventilation about the government suddenly being tyrannous also seems to be quite resoundingly false and misleading. Is the government suddenly a dangerous tyrant because it, on the advice of virtually all economists—the specialists in the field of our capitalistic economic science—is attempting to stimulate the economy with public investment? Because, based on similar recommendations, it is trying to save the financial system? Because it is trying to fix our wildly warped and UNCAPITALISTIC health care system? Because it is attempting to internalize the cost of pollution emissions? These all seem to me to be good purposes for the government to pursue. Indeed, some of these tasks are things that ONLY the government can do, because it requires enormous collective action.

Let me tell you what I think. I think that our government is now LESS restrictive and “tyrannous” because we no longer have a government that thinks it is okay to take people and hold them indefinitely. To torture people. To set up warrantless wiretaps. That refuses public disclosure at all costs and destroys electronic records. That initiates costly wars upon specious evidence with questionable motives. That favors the wealthy at the expense of the poor. That cynically disputes science in order to reward special interests.

I also have a name for those protestors: sore losers. Believe me, guys, back in 2004 I was ready to move to New Zealand. How could the country have re-elected that fool and his bungling outfit? I get it. But I got over it. In part, because I knew that eventually the pendulum would swing, the information would get out there, and we’d see some backlash—like we did in 2006 and 2008.

You lost, your agenda is on the wane and losing steam. I’d try to convince you of the errors of your ways if you’d listen. But I know you won’t. So, I’ll just say, and this should be pretty familiar to you: This is America. Love it or leave it.

It's a bittersweet life

Perhaps it's just because it's late. Perhaps it's because the song has sentimental ties. But the line "you make some money, then you die" has always resonated with me. Song being: Bittersweet Symppony http://www.youtube.com/watch?v=Zx3m4e45bTo -- It's like our capitalistic system is grinding us down, driving our virtues to a simple matter of "well, did you make some money?" It saddens me, everytime I hear it. Yet, I count it among my favorite songs. I think because it speaks the truth, and, as you, my loyal readers know, I appreciate the truth. True, that we are driven by unaccountable forces. True, that the system is NOT fair. True, that those that deserve not are sometimes -- oftentimes-- rewarded.

I believe that is enough for a sad late night posting, don't you?
Happy Easter, all!
D

90% tax on AIG, other bonuses

So today we hear that Congress--at least the House-- is about to pass a law that taxes at 90% all bonuses paid out to AIG and other institutions that have recently received money from the federal government. The intent of the bill is clear: take back some of those "outrageous" bonuses paid to executives at institutions that they helped drive into the ground. Regardless of what you think about the bonuses, the thought struck me: wouldn't this be an unconstitutional bill of attainder? The Constitution expressly prohibits Congress from passing a bill of attainder, which is a bill or law that focuses expressly on one particular person or group. (The purpose being I think pretty clear-- the government can't pick favorites but must instead pass laws that are generally applicable both on their face and in substance). Here, it's pretty clear that the one particular group inspiring the law are these AIG executives.

Just a thought. Not going to write a law review article about it. My guess is that there is a Supreme Court case that says that the Commerce Clause gives Congress enough leverage to override the proscription against bills of attainder and that the section referencing bills of attainder has been narrowly construed... but I'd like to hear a law professor's thoughts about this. Any law professor is welcome to appropriate this thought up and contact NPR!

That's enough for today-- and tomorrow! NCAA madness beckons!

Musings on the Effects of the Stock Market's Precipitous Decline

The DOW Jones Industrial Average is, as I type this, hovering around 6,750. There are other things to talk about, including the sobering news about AIG and continuing bank failures and the struggles of the financial system... but let's think about this one issue for a minute from a couple of different angles. What does it mean that broad stock averages (and I mean the S&P 500 and Wilshire 5000 more than the DOW, really, but most people who are not brokers focus on the DOW, even though it is probably the worst of the averages as an indicator of stock market performance) are down roughly 60% from their highs less than a year and a half or so ago?

First, clearly, a lot of people have lost a tremendous amount of money. But not everyone lost the same amount-- to have the prices drop as they have, a great deal of selling has to have and did occur. So, some people cashed out earlier, and though there were some straight-out losses, it was not a zero-sum game. Where did that money go? Well, it's hard to say definitively, but based on market movements and such, a lot of it seems to have gone to precious metals and to (government) bonds. It doesn't take a PhD in Economics to know that the macro effect of over half of the investment in our public companies moving to metals which, last time I checked, sit in coffers and don't go out and hire people, make things, or offer services, is extremely bad. Funding the government isn't so bad, though, especially if the only way the government can spend money is through borrowing, which is certainly the case with the federal government of the U.S. these days. But it also is not as good a vehicle for economic growth, because it means that the public at large will have to service interest payments on huge sums for up to 30 years. Interest payments don't do much, though I suppose it funds the incomes of the people collecting them and thus would presumably stimulate the economy when they spent money-- which might have been okay in 1970 when over 90% of US bonds were held by US residents or the US itself andwould presumably spend money in the US, but isn't so good now, when roughly 40% of US bonds are held by foreign governments, and that number is likely to grow much higher as the public debt increases by about $3.5 trillion over the next 3 years. So, from a macro perspective, this is a body blow to the economy it seems to me.

Let's step away from the macro-economic viewpoint (which no one really understands anyway)for a minute here, though, and focus on some micro-economic effects of the stock market's raging decline. Here's one that cooks my own goose: if you started investing in 1996, then you have seen a 0% return on your money. 0%. Let me just type that number again (before it goes negative, because it probably will): 0%. I graduated from college in 1996. If you're like me, and started working in the late 1990s, and saved--okay, I could have saved a little more, but I tried--you haven't gotten anything out of it, basically. I should have bought a fancy car, gone on a couple of nice vacations, had a few more great meals, seems to me.

Another micro-economic impact: those poor employees who were incentivized to invest their 401ks in company stock have gotten slammed, especially those working for any bank anywhere or for AIG and other countless institutions.

Let's go back to the macro here quickly, because another bad effect of all this just occurred to me: what will be the impact of over a decade of lost return on social security? These people, including myself, who have done what they were "supposed to do"--not even talking about the people who have blown all their money or got into stupid credit card debt-- they are going to be, net and average, just poorer when they retire. Thus, they will be relying on social security MORE, not less. There's been talk about saving the liquidity of social security by lengthening the number of years it takes to qualify for it or reducing payments in some way-- we could be in a for a really sad episode in about 30 years, when a lot of old people will desperately be scrimping and saving and competing in the workplace long past the time when their parents and grandparents retired. All in all, we've stepped back. Our parents were better off; our grandparents were better off.

But maybe our kids will be okay. If they don't mind us oldsters around so much later on.