Wednesday, September 23, 2009
Try Our Seasonal Vomit Blizzard!
Why would you use a picture to advertise this? It's the grossest-looking desert I've ever fucking seen.
Tuesday, September 22, 2009
Political Absurdism in Action
Bill Clinton was on The Daily Show last Thursday for an extended interview that can be viewed in full on the TDS's website. The earlier post about the employer mandate in the House health care reform bill reminded me of an exchange that occurred between Bill Clinton and Jon Stewart.
If you remember the Democratic presidential primary last time around, you'll probably recall that there wasn't much breathing room between the candidates on most policy issues. Honestly, looking back it was the mostly wonkishly absurd thing you can imagine. Bill Richardson trying to distinguish himself by setting the cap on his cap-and-trade carbon proposal a little bit higher than anyone else's. John Edwards arguing with Obama over tactics of all things: should we choose an aggressive or conciliatory approach when beginning health reform negotiations? Hillary getting booed for making the point to a liberal-leaning audience that lobbyists do have a role to play in the legislative process (a fact Obama, it seems, has come to appreciate).
Once the field had been whittled down to the Final Two the major policy difference concerned the question of mandates: does the health reform plan need to include an individual mandate that forces people to obtain health insurance? Hillary Clinton included an individual mandate in her health care plan, Barack Obama did not. In fact, he frequently made the mandate an object of scorn and repeatedly used it to club Clinton over the head. Here's part of an Obama ad during the primaries:
Let's pop into the Bill Clinton interview (the bit I'm talking about starts around 4:30 minutes in):
It sounds to me like he's combining two different things here. After that last sentence he went into the example of how 9/11 affected the Bush agenda and forced the President to react to unforeseen circumstances. And certainly that's true, the President (and any elected official) always has to be flexible enough to roll with the punches.
But that's not the same as choosing to believe something during a campaign because it's politically convenient, which is how I read that bolded part. Obama is not a dumb man and I doubt he had some Eureka! moment upon becoming President that convinced him that mandates are better policy. It doesn't seem plausible to me that he knew significantly less about health care policy last year than he does now. So perhaps Bill is correct: in order to win votes, Obama chose to believe in a policy idea that his rational side would ultimately reject, a transition that PolitiFact labeled a full flop (the highest degree of flip flop they bestow ).
In the picture Bill Clinton presents, Obama was not being deliberately disingenuous. Not exactly, anyway. Instead of simply knowing he was trashing a policy that he would ultimately have to embrace, he somehow made himself genuinely believe that a plan without a mandate would be superior--so he could still feel good about himself, as Bill put it. And this is a part of what I was getting at when I posted about political absurdism--in practice, the only political or policy truths that exist are the ones we choose to will into existence. Rationality often takes a backseat to apparently deep-seated (but perhaps newly fabricated) beliefs that may turn out to be extremely capricious.
When his goal was to win a primary, it was politically important for Obama to believe mandates were unnecessary or even destructive. Now that his goal is to create a reform plan that doesn't collapse in on itself when implemented, it's likely necessary for him to believe in the importance of the mandate. Of course, it may never have risen to the level of actual belief, Obama may have just been playing dumb (with others but perhaps also to some extent with himself) but still partially engaging in the sort of doublethink that makes human beings so maddeningly complex. Avoiding blatant dishonesty in the face of the demands the political system makes on a person occasionally requires a compartmentalization of what one knows and what one believes. Which one--political knowledge or belief--is more malleable I'm not quite sure.
In this case, the campaign was about believing, governing is about knowing. It's interesting to see Bill Clinton sort of almost make that point.
If you remember the Democratic presidential primary last time around, you'll probably recall that there wasn't much breathing room between the candidates on most policy issues. Honestly, looking back it was the mostly wonkishly absurd thing you can imagine. Bill Richardson trying to distinguish himself by setting the cap on his cap-and-trade carbon proposal a little bit higher than anyone else's. John Edwards arguing with Obama over tactics of all things: should we choose an aggressive or conciliatory approach when beginning health reform negotiations? Hillary getting booed for making the point to a liberal-leaning audience that lobbyists do have a role to play in the legislative process (a fact Obama, it seems, has come to appreciate).
Once the field had been whittled down to the Final Two the major policy difference concerned the question of mandates: does the health reform plan need to include an individual mandate that forces people to obtain health insurance? Hillary Clinton included an individual mandate in her health care plan, Barack Obama did not. In fact, he frequently made the mandate an object of scorn and repeatedly used it to club Clinton over the head. Here's part of an Obama ad during the primaries:
SCRIPT: Announcer: "Hillary Clinton's attacking, but what's she not telling you about her health care plan? It forces everyone to buy insurance, even if you can't afford it, and you pay a penalty if you don't. Barack Obama believes that it's not that people don't want health care, it's that they can't afford it. That's why the Obama plan reduces costs more than Hillary's, saving $2,500 for the typical family. For health care we can afford, vote for change we can believe in."
Let's pop into the Bill Clinton interview (the bit I'm talking about starts around 4:30 minutes in):
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
| Exclusive - Bill Clinton Extended Interview Pt. 2 | ||||
| ||||
Jon Stewart: Is it hard not to give a little poke, give a little thing--because Obama now he says, well, in health insurance maybe there should be an individual mandate. That was something Hilary had said during the campaign, he had come out against that, now he's saying it's a good thing. You sit at lunch and lean over and go like "yeah, that individual mandate, looking good now isn't it?"
Bill Clinton: You know, I don't. I ran in too many elections to know that you get in these elections and you have to highlight the differences and minimize the commonality otherwise how will people make a choice? And what you have to do when you're running so that you can feel good about yourself is to at least believe in the differences. But then after an election there are always circumstances, particularly if you become President, where circumstances take over and then the job becomes a constant contest between doing what you pledged to do when you ran--without which you will feel like you let the American people and especially the people that voted for you down--and responding to incoming fire...
It sounds to me like he's combining two different things here. After that last sentence he went into the example of how 9/11 affected the Bush agenda and forced the President to react to unforeseen circumstances. And certainly that's true, the President (and any elected official) always has to be flexible enough to roll with the punches.
But that's not the same as choosing to believe something during a campaign because it's politically convenient, which is how I read that bolded part. Obama is not a dumb man and I doubt he had some Eureka! moment upon becoming President that convinced him that mandates are better policy. It doesn't seem plausible to me that he knew significantly less about health care policy last year than he does now. So perhaps Bill is correct: in order to win votes, Obama chose to believe in a policy idea that his rational side would ultimately reject, a transition that PolitiFact labeled a full flop (the highest degree of flip flop they bestow ).
In the picture Bill Clinton presents, Obama was not being deliberately disingenuous. Not exactly, anyway. Instead of simply knowing he was trashing a policy that he would ultimately have to embrace, he somehow made himself genuinely believe that a plan without a mandate would be superior--so he could still feel good about himself, as Bill put it. And this is a part of what I was getting at when I posted about political absurdism--in practice, the only political or policy truths that exist are the ones we choose to will into existence. Rationality often takes a backseat to apparently deep-seated (but perhaps newly fabricated) beliefs that may turn out to be extremely capricious.
When his goal was to win a primary, it was politically important for Obama to believe mandates were unnecessary or even destructive. Now that his goal is to create a reform plan that doesn't collapse in on itself when implemented, it's likely necessary for him to believe in the importance of the mandate. Of course, it may never have risen to the level of actual belief, Obama may have just been playing dumb (with others but perhaps also to some extent with himself) but still partially engaging in the sort of doublethink that makes human beings so maddeningly complex. Avoiding blatant dishonesty in the face of the demands the political system makes on a person occasionally requires a compartmentalization of what one knows and what one believes. Which one--political knowledge or belief--is more malleable I'm not quite sure.
In this case, the campaign was about believing, governing is about knowing. It's interesting to see Bill Clinton sort of almost make that point.
Monday, September 21, 2009
The Employer Mandate
We all know there's been a great deal of confusion about the health care bills in Congress. I could spend days addressing all the misconceptions and bad arguments floating about (and maybe I will) but there's one particular claim I saw someone make the the other day that I want to address here. The House reform bill contains an employer mandate, meaning employers of a certain size have to offer their employees health care or else they face a fine equal to 8% of each of their employees' wages. The argument some conservatives advance is that since health care costs per employee often cost most than the fine, many employers would choose to stop offering coverage. The most prominent and persistent voice I've heard making this argument is the Republican Senate candidate in Pennsylvania, Pat Toomey:
To illustrate why this argument doesn't really hold water, let's zoom in on the average employee of Stanek Enterprises. He's making $50,000 a year in salary and gets a health benefits package equal to $15,000. So he's effectively being compensated $65,000 per year (notice that health care is 23% of the total compensation package). Suddenly H.R. 3200, with its employer mandate and competitive Health Insurance Exchange (including a robust public option), passes. ToomeyLogic suggests that since I can now skate by paying 8% of my employee's wages in fines to the government, I'll somehow be saving if I drop health coverage for my employee--after all, health care makes up 23% of my employee's compensation package. Thus the incentive is for me to drop coverage for my employee.
This logic is silly from top to bottom. First of all, Stanek Enterprises doesn't offer health care now (pre-H.R. 3200) because someone's forcing us to. We're doing it to stay competitive and attract the best employees we can. Let's suppose for a second that after H.R. 3200 passes I do decide to drop coverage for my employee. Before he was effectively making $65,000 (adding up his salary and health benefits). I can't continue to pay him $50,000 with no health benefits or I'm essentially giving him a $15,000 pay cut--a good incentive for him to move on to greener pastures (perhaps to our arch rival, Todd Industries). So I have to keep my employee's total compensation package pretty much the same if I want to stay competitive. This means I have to bump up the employee's salary to around $65,000. Of course, since I'm not offering him health care I also have to pay a fine equal to 8 percent of his wages--about $5,000.
So my cost-cutting effort is now costing me $70,000 per employee instead of the $65,000 I was paying. The only way to get around this is just to cut the total compensation package my employees are receiving, which doesn't make any sense if I want to stay competitive. So why didn't I just continue offering my employees health care in the first place?
If we drill even deeper into this idea, we'll see that even if for some reason I decide to replace health care benefits with additional wages (and take the hit by paying the mandate fee), my employees are still effectively making less. The reason is that health benefits aren't taxed like income.
Let's walk through this visually. Our average Stanek Enterprises employee is being paid $50,000 in wages/salary (the dark blue part of his income) and he's getting $15,000 worth of compensation in the form of health care (the dark red part of his income). Taxes (the turquoise bit) are taken only out of his salary:
So the total amount the employee is getting is the sum of the dark blue and dark red areas.
Now suppose I eliminate health care coverage but, in the interest of staying competitive and retaining my valued employees, I replace it with additional wages. These wages are now subject to the income tax and you can see that the box that used to be dark red (i.e. health benefits) is now dark blue (wages) but now it's missing a chunk--the taxes my employee is now paying on his additional wages:
But this leads to a problem. In the first scenario, the total compensation my employee was receiving (dark blue + red) is greater than what he's receiving under the second scenario (the sum of the dark blue areas). So even if I'm offering a compensation package equal to $65,000 in both instances, in the scenario where I drop health care benefits my employee is actually receiving a smaller portion of that $65,000. This tax benefit of getting health care from your employer (instead of buying it yourself) is exactly why most people get health care through their employer in the first place. As someone who's not fond of this system explains:
Regardless of whether we like the employer-based system (and there are good reasons not to), the argument that H.R. 3200 will destroy it is flawed. The House bill actually reinforces the employer-based system (the Congressional Budget Office estimates that an extra few million people who wouldn't have employer-based coverage under the current system would have it if H.R. 3200 passes).
At the heart of the bill that presently has gone the farthest through Congress is an employer mandate that forces all but the tiniest businesses to provide workers with a government-approved insurance plan. If they fail to meet this mandate, they are hit with a new tax ranging from 2 percent to 8 percent of the company’s payroll.
As a result, millions of workers will either lose their employer-provided health insurance or lose their jobs altogether. For many large businesses, the new tax will be preferable to the $12,000 average they now pay for employee insurance, pushing millions of people out of their current coverage and into the clutches of the government’s new health care bureaucracy. For many small businesses, the mandate and accompanying tax impose a burden they simply can’t afford. They will be forced to lay off workers, adding further to our current jobs crisis.
To illustrate why this argument doesn't really hold water, let's zoom in on the average employee of Stanek Enterprises. He's making $50,000 a year in salary and gets a health benefits package equal to $15,000. So he's effectively being compensated $65,000 per year (notice that health care is 23% of the total compensation package). Suddenly H.R. 3200, with its employer mandate and competitive Health Insurance Exchange (including a robust public option), passes. ToomeyLogic suggests that since I can now skate by paying 8% of my employee's wages in fines to the government, I'll somehow be saving if I drop health coverage for my employee--after all, health care makes up 23% of my employee's compensation package. Thus the incentive is for me to drop coverage for my employee.
This logic is silly from top to bottom. First of all, Stanek Enterprises doesn't offer health care now (pre-H.R. 3200) because someone's forcing us to. We're doing it to stay competitive and attract the best employees we can. Let's suppose for a second that after H.R. 3200 passes I do decide to drop coverage for my employee. Before he was effectively making $65,000 (adding up his salary and health benefits). I can't continue to pay him $50,000 with no health benefits or I'm essentially giving him a $15,000 pay cut--a good incentive for him to move on to greener pastures (perhaps to our arch rival, Todd Industries). So I have to keep my employee's total compensation package pretty much the same if I want to stay competitive. This means I have to bump up the employee's salary to around $65,000. Of course, since I'm not offering him health care I also have to pay a fine equal to 8 percent of his wages--about $5,000.
So my cost-cutting effort is now costing me $70,000 per employee instead of the $65,000 I was paying. The only way to get around this is just to cut the total compensation package my employees are receiving, which doesn't make any sense if I want to stay competitive. So why didn't I just continue offering my employees health care in the first place?
If we drill even deeper into this idea, we'll see that even if for some reason I decide to replace health care benefits with additional wages (and take the hit by paying the mandate fee), my employees are still effectively making less. The reason is that health benefits aren't taxed like income.
Let's walk through this visually. Our average Stanek Enterprises employee is being paid $50,000 in wages/salary (the dark blue part of his income) and he's getting $15,000 worth of compensation in the form of health care (the dark red part of his income). Taxes (the turquoise bit) are taken only out of his salary:
So the total amount the employee is getting is the sum of the dark blue and dark red areas.
Now suppose I eliminate health care coverage but, in the interest of staying competitive and retaining my valued employees, I replace it with additional wages. These wages are now subject to the income tax and you can see that the box that used to be dark red (i.e. health benefits) is now dark blue (wages) but now it's missing a chunk--the taxes my employee is now paying on his additional wages:
But this leads to a problem. In the first scenario, the total compensation my employee was receiving (dark blue + red) is greater than what he's receiving under the second scenario (the sum of the dark blue areas). So even if I'm offering a compensation package equal to $65,000 in both instances, in the scenario where I drop health care benefits my employee is actually receiving a smaller portion of that $65,000. This tax benefit of getting health care from your employer (instead of buying it yourself) is exactly why most people get health care through their employer in the first place. As someone who's not fond of this system explains:
The policy mistake that produced this illogical mess took place during World War II, when the government imposed wage controls. Unable to compete for workers by paying them more, employers began providing medical care, and the new benefit spread rapidly.
When the Internal Revenue Service caught on, requiring employers to include the value of medical benefits as part of the wages they reported, workers, who had grown accustomed to the benefits, protested. Congress responded with legislation that made employer-provided medical benefits tax-exempt.
Regardless of whether we like the employer-based system (and there are good reasons not to), the argument that H.R. 3200 will destroy it is flawed. The House bill actually reinforces the employer-based system (the Congressional Budget Office estimates that an extra few million people who wouldn't have employer-based coverage under the current system would have it if H.R. 3200 passes).
Friday, September 18, 2009
Polls, Pollsters, and Polarization
Pollster shows us the way the winds are blowing for health care:
Interesting, a recent Quinnipiac poll of the Buckeye State found essentially the same thing as the national numbers:
Split right down the middle.
The same basic story is apparent. Opposition has grown but is now slowed to a near halt. Support reversed its decline sometime in August and has begun an upturn.
And my big point is that this is essentially the picture you see in all these different trend estimates. The details are slightly different. A bump here and a drop there, and the precise estimates of support and opposition differ by as much as 2 points up or down. But the big picture is that opposition ramped up significantly through June or July but has recently slowed or stopped. Support fell less precipitously but has been working back up for a month (despite or perhaps because of the circus coverage in August.) We could pick a chart to fight over the details, but we shouldn't. It is the big picture of public opinion that is important here. Within a couple of points, opinion is evenly divided. The White House has gained a bit of momentum, but will be challenged to lower the opposition numbers, not just raise the support numbers.
Interesting, a recent Quinnipiac poll of the Buckeye State found essentially the same thing as the national numbers:
Turning to the ongoing health-care reform debate, Quinnipiac found 44 percent of Ohio voters back the plan while the same percentage opposes it. The remaining 12 percent didn’t weigh in.
The so-called public option portion of the proposed reforms clinched 57 percent support among Ohio voters, but an even wider margin – 68 percent – said in a separate question that they don’t believe Obama will be able to overhaul health care without adding to the federal budget deficit.
Split right down the middle.
Wednesday, September 16, 2009
A Visual Metaphor
Look at all that beautiful green. Now focus like a laser on the red dot for a minute or so:
The green just sort of...goes away.
What happens to a thousand pages of substantive health care reforms when all of our national attention is devoted to non-issues like "death panels," illegal immigrants accessing health care, abortions being offered in health care plans, and so on? The rest of the bill just sort of...goes away. It's a testament to the political savvy of Republicans. Time to start looking at the green circle again.
A tribute to the late Howard Margolis.
The green just sort of...goes away.
What happens to a thousand pages of substantive health care reforms when all of our national attention is devoted to non-issues like "death panels," illegal immigrants accessing health care, abortions being offered in health care plans, and so on? The rest of the bill just sort of...goes away. It's a testament to the political savvy of Republicans. Time to start looking at the green circle again.
A tribute to the late Howard Margolis.
Monday, September 14, 2009
Doctors Want a Public Option
Many moons ago, Jim shared with us how he decided not to join the AMA. In the comments we talked about the public health insurance option in the health care reform plans and I remarked that I'd like to see a clear-cut picture of how widespread support of a public option is among rank-and-file doctors. The Robert Wood Johnson Foundation has granted my wish. The details come from the New England Journal of Medicine:Overall, a majority of physicians (62.9%) supported public and private options (see Panel A of graph). Only 27.3% supported offering private options only. Respondents — across all demographic subgroups, specialties, practice locations, and practice types — showed majority support (>57.4%) for the inclusion of a public option (see Table 1). Primary care providers were the most likely to support a public option (65.2%); among the other specialty groups, the “other” physicians — those in fields that generally have less regular direct contact with patients, such as radiology, anesthesiology, and nuclear medicine — were the least likely to support a public option, though 57.4% did so. Physicians in every census region showed majority support for a public option, with percentages in favor ranging from 58.9% in the South to 69.7% in the Northeast. Practice owners were less likely than nonowners to support a public option (59.7% vs. 67.1%, P<0.001), but a majority still supported it. Finally, there was also majority support for a public option among AMA members (62.2%).
Clickable:
Can I speak to the head of the household, please?
With all the talk about health care I thought I'd give you guys my sales pitch regarding another humanitarian issue. I was browsing the Cleveland Food Bank website tonight and I wanted to share some of their information here with you guys. As of 2007 Ohio, with the 7th largest population in the U.S., had the 3rd highest number of kids who are on the brink of hunger. Only Texas and California (I'm assuming boosted by a high number of immigrant families) beat us out. The downturn in the economy has undoubtedly only added to the number of people out there who need help, and Cleveland is probably a big (if not the main) contributor to Ohio being number three.
However, according to the Cleveland Food Bank's website they're able to stretch every dollar donated into giving four people a full and healthy meal. I hate to sound like a telemarketer here, but if you guys are interested in donating it's really fast, simple, and straightforward on their website, and all you need is your credit card. And since it's local, you know exactly where the money is going and I'd bet the farm it is absolutely corruption-free (two of the concerns I generally have when donating money). You can click "repeating" donations or "one time", and subscribing to their e-mail server or providing your phone number is not required.
Anyway, enough of the soliciting - I just never knew it was so easy to help. Next, I'd like to tell you guys about my amazing new product, a super absorbent shammy cloth called...
However, according to the Cleveland Food Bank's website they're able to stretch every dollar donated into giving four people a full and healthy meal. I hate to sound like a telemarketer here, but if you guys are interested in donating it's really fast, simple, and straightforward on their website, and all you need is your credit card. And since it's local, you know exactly where the money is going and I'd bet the farm it is absolutely corruption-free (two of the concerns I generally have when donating money). You can click "repeating" donations or "one time", and subscribing to their e-mail server or providing your phone number is not required.
Anyway, enough of the soliciting - I just never knew it was so easy to help. Next, I'd like to tell you guys about my amazing new product, a super absorbent shammy cloth called...
Saturday, September 12, 2009
Selling insurance across state lines
Spengler: There's something very important I forgot to tell you.
Venkman: What?
Spengler: Don't cross state lines.
Venkman: Why?
Spengler: It would be bad.
Venkman: I'm a little fuzzy on the whole "good/bad" thing here. What do you mean, "bad"?
Spengler: Try to imagine all life as you know it stopping instantaneously and every molecule in your body exploding at the speed of light.
Stantz: Total protonic reversal!
--The Ghostbusters, discussing health care reform proposals
Another wonky--but accessible!--post. I want to walk through one of the key alternative Republican ideas for reforming the health care system. At its heart lies one of the recurring Republican economic panaceas: deregulation. The idea I'm talking about was mentioned by Rep. Charles Boustany in the lackluster Republican response to Obama's speech to Congress last Wednesday night: "Let's also talk about letting families and businesses buy insurance across state lines."
Sometimes it is erroneously claimed that some oppressive federal law is keeping health insurance companies from selling their product across state lines. The reality is that a 64-year-old federal law called the McCarran-Ferguson Act essentially declared that, unless the federal government opts to step in, regulating the insurance industry is a state prerogative. The reason you can't buy insurance from another state is that your state doesn't allow it--in other words, it's not so much that you can't buy it but that an out-of-state insurance company can't sell it to you. States require insurers to be licensed in their state and to comply with various benefit mandate, community rating, and guaranteed issue regulations in their state.
A state could choose to allow its citizen to buy insurance policies that are sold in (and regulated by) other states. Bills allowing the purchase of out-of-state health insurance have been proposed over the past few years in Colorado, Pennsylvania, and Vermont (though they didn't pass). Rhode Island actually passed a bill last year that directs state officials to examine the feasibility of allowing insurers licensed in Massachusetts and Connecticut to do business in Rhode Island.
What advocates of across-state-lines insurance selling are calling for is a new federal law that essentially forces states--against their will--to allow the laws of other states to extend into their state. The exemplary legislation for this kind of proposal has been introduced by Arizona Republican Congressman John Shadegg in the last few Congresses; in the current Congress, it's called H.R. 3217, the Health Care Choice Act of 2009. Essentially, it allows health insurance companies operating under the laws of a "primary state" to sell insurance policies to people in "secondary states." The laws of the secondary state don't apply to the policy because only the primary state from which an insurance policy originates can regulate it. So let's suppose I live in Ohio and I find an insurance policy that a company based in, say, South Dakota is offering. Right now I can't buy that insurance because the South Dakota-based company isn't licensed in Ohio and likely isn't in compliance with Ohio insurance regulations. But if H.R. 3217 passed, that South Dakota-based insurance could be sold to an Ohioan, slithering into the state surrounded by a cocoon of South Dakota state law protecting it from Ohio's regulators. A hint of the potential problems with this sort of idea can be gleaned from the notice that H.R. 3217 would require the insurance company to provide me:
This policy is issued by [name of insurance company] and is governed by the laws and regulations of the State of South Dakota, and it has met all the laws of that State as determined by that State’s Department of Insurance. This policy may be less expensive than others because it is not subject to all of the insurance laws and regulations of the State of Ohio, including coverage of some services or benefits mandated by the law of the State of Ohio. Additionally, this policy is not subject to all of the consumer protection laws or restrictions on rate changes of the State of Ohio. As with all insurance products, before purchasing this policy, you should carefully review the policy and determine what health care services the policy covers and what benefits it provides, including any exclusions, limitations, or conditions for such services or benefits.
To really dig down int the dangers of this proposal, let me share the Parable of the Credit Card Industry. Once upon a time, banks faced the same quandary that health insurance companies face today. States could protect their residents with anti-usuary laws that limited the interest rates that banks could charge on credit cards. But in 1978 a Supreme Court decision, Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp, ruled that nationally-chartered banks were subject only to the anti-usury laws of the state in which they were chartered. Thus an anti-usury law in Ohio couldn't necessarily protect an Ohioan from outrageous credit card interest rates if the bank that issued the credit card was based in another state. Rather, that Ohioan would be at the mercy of the laws of that other state.
The result of this decision was exactly what one might expect. Certain states, looking to attract banks to relocate to them, repealed their anti-usury laws altogether. Thus states like South Dakota (now you know why I used South Dakota as an example) and Delaware that fostered a loose or nonexistent regulatory atmosphere became hubs for the credit card industry. Here's a typical example: not long after Marquette, Citibank charted a subsidiary in South Dakota through which to issue its credit cards. I won't go into the abuses of the credit card industry here but I'll note that Marquette is guilty of enabling those abuses. The moral is that deregulatory steps that prevent states from protecting their residents and effectively level the regulatory playing field at the lowest common denominator have enormous destructive potential.
What does this suggest about allowing health insurance companies to sell policies across state lines? It indicates that states would have an incentive to relax regulations to attract insurance companies and insurers, in turn, would have an incentive to relocate to the state with the most lax laws. But consumer protections exist, as the name would suggest, to protect consumers and abruptly shedding them is dangerous. The dirty little secret about a health insurance pool is that the healthy people subsidize the less healthy people; if a healthy person gets ill or injured, they in turn are subsidized. This, of course, is why the health reform proposals being offered by the Democrats right now (H.R. 3200 and the like) all contain an individual mandate: if we want to make it so that "uninsurable" people with pre-existing conditions or whatever can obtain health insurance, we have to mandate that healthy people enter the insurance pools and pick up some of the tab, too.
If an insurer locates itself in a state that lets it deny coverage to anyone it wants, it can construct a pool of the healthiest, cheapest individuals. Healthy people like it because the plan offers them cheaper premiums, the insurance company likes it because it's profitable (fewer payments for health benefits translates into larger profits). But if these sorts of plans pluck healthy people out of insurance pools all around the country, all of the other insurance pools suffer as they are left less healthy and more expensive. The rising costs of these pools in turn encourage the healthy people who are still in them to shop around for one of the cheaper "healthy people only!" plans and you get what's called a death spiral. It's not implausible to speculate that in many cases the insurance system will simply become unsustainable--numerous states currently operate small high-risk insurance pools for the "uninsurable" and these operate at a loss. Why would a private insurance company try this, particularly if it can relocate to a place with nonexistent consumer protection regulations? When all is said and done we likely end up with fewer insured people and, for many people, higher premiums. Total protonic reversal.
The vaunted benefits of the increased competition associated with this sort of deregulation flow to a specific segment of the population: healthy and easily insurable folks. These people do indeed stand to see cheaper premiums as insurance companies fall all over themselves attempting to attract their business. But everyone else stands to lose, perhaps substantially. Ultimately the issue is that profit maximization and the expansion of health insurance coverage are not compatible in the absence of consumer protections preventing insurers from simply slamming their doors in the face of less profitable prospective customers. The race to the regulatory bottom that bills like H.R. 3217 would trigger is propelled by competitive pressures. That should serve to remind us that, in the face of perverse incentives, competition in an unregulated free market isn't always the solution to every problem. So Egon was right--don't cross
Thursday, September 10, 2009
About those Social Security privatization ideas...
COLUMBUS - Ohio taxpayers and most public employees would pay more, and some workers would have to stay on the job longer before retiring under plans proposed to ensure the long-term solvency of Ohio pension funds badly wounded in the stock market decline.
The five public retirement funds representing state and local government employees, highway patrolmen, local police and firefighters, teachers and school administrators, and other school employees presented lawmakers with plans that largely ask government, current workers, and retirees to share in the pain.
"We cannot invest our way out of this situation," said Rep. Todd Book (D., Portsmouth), chairman of the Ohio Retirement Study Council. "... That would require the market to go up 20 percent each of the next five years. That's not likely to occur."
Our public pensions--ensuring a secure retirement for Ohio's teachers, firefighters, and police officers--in this state took a hit when the stock market nose-dived last year (I know some of my dad's future retirement funds were affected, for example).
Now imagine we handed all of our federal retirement funds (i.e. Social Security) over to Wall Street. Where would events like the "Great Recession" leave millions of seniors around the country if we transitioned to such a system?
Yeah. That's why the idea went down in flames in 2005.
Wednesday, September 9, 2009
Truman Says
There's an episode of The West Wing where the Republican Speaker of the House, an admirer of Harry Truman, says (apparently seriously) "If Truman were alive today, he'd be a Republican." Now I imagine they put that in there because that's just one of those stupid, indefensible things people say (you know, suggestions of the form "if ___ were alive today, he'd be a ____) but I still get steamed when I think about it. I want to climb into the TV and slap that fictional character upside the head--how can anyone who claims to know anything about Truman think he would be a Republican today?
For fun, here's a slice of a great campaign speech he gave during the 1948 presidential campaign:
He had that fiery style that makes you laugh at the same time you're nodding your approval. And, given the political events going on right now, we shouldn't forget that Truman is more relevant today than ever. He is, after all, the President who first set for us the goal that only now, some 60 years later, may come to fruition: the goal of ensuring that every American has access to decent health care. Tonight, President Obama will address a joint session of Congress and, more importantly, the American public to lay out the goals of health care reform as he sees it. As he faces down Republicans raving about death panels and socialism, he might do well to consider something else Truman said in that speech:
As Truman himself once pointed out, key to the Republican playbook is the principle "If you can't convince them, confuse them." It's time to stand up and bring the public on board with Democratic principles. We need to see the right combination of forcefulness, strength, and inspiration tonight. We need to see Obama channeling some Truman. Don't give them hell, Mr. President, just tell the truth and the Republicans will think it's hell. And remember, in still more words from Truman, "Always be sincere, even if you don't mean it. "
For fun, here's a slice of a great campaign speech he gave during the 1948 presidential campaign:
Well, I have been studying the Republican Party for over 12 years at close hand in the Capital of the United States. And by this time, I have discovered where the Republicans stand on most of the major issues.
Since they won't tell you themselves, I am going to tell you.
They approve of the American farmer-but they are willing to help him go broke.
They stand four-square for the American home--but not for housing.
They are strong for labor--but they are stronger for restricting labor's rights.
They favor a minimum wage--the smaller the minimum the better.
They endorse educational opportunity for all--but they won't spend money for teachers or for schools.
They think modern medical care and hospitals are fine--for people who can afford them.
They approve of social security benefits-so much so that they took them away from almost a million people.
They believe in international trade--so much so that they crippled our reciprocal trade program, and killed our International Wheat Agreement.
They favor the admission of displaced persons--but only within shameful racial and religious limitations.
They consider electric power a great blessing-but only when the private power companies get their rake-off.
They say TVA is wonderful--but we ought never to try it again.
They condemn "cruelly high prices"--but fight to the death every effort to bring them down.
They think the American standard of living is a fine thing--so long as it doesn't spread to all the people.
And they admire the Government of the United States so much that they would like to buy it.
He had that fiery style that makes you laugh at the same time you're nodding your approval. And, given the political events going on right now, we shouldn't forget that Truman is more relevant today than ever. He is, after all, the President who first set for us the goal that only now, some 60 years later, may come to fruition: the goal of ensuring that every American has access to decent health care. Tonight, President Obama will address a joint session of Congress and, more importantly, the American public to lay out the goals of health care reform as he sees it. As he faces down Republicans raving about death panels and socialism, he might do well to consider something else Truman said in that speech:
True liberalism is more than a matter of words. It demands more than sound effects. It cannot hide behind the catch phrases of the Republican candidate for President-catch phrases like "unity" and "efficiency." Unity for what cause? Efficiency for what Purpose, I wonder ?
The American people, in this critical year, are entitled to a full and open discussion of the issues. They are not getting it from the Republican candidate for President.
It is no service to the country to refuse, in the name of unity, to discuss the issues. It is no service to democracy to conceal the difference between the major parties.
Unity in a democracy cannot be produced by mealymouthed political speeches.
Unity on great issues comes only when the voice of the people has been heard so clearly, so strongly, so unmistakably, that no one--not even the second guessers--can doubt what the people mean.
Thomas Jefferson did not seek unity by concealing the real issues between himself and Alexander Hamilton. He made the issues clear, so that the people could reach a decision. And their decision determined that democracy rather than autocracy should prevail in this great country of ours.
Andrew Jackson did not seek unity with the moneymakers in Philadelphia. He made the issues so clear that the people decided to place the control of the money in the Government of the United States, and not in a few private banks.
Abraham Lincoln did not seek unity with Stephen A. Douglas. He made it clear that this Nation could not continue to exist half slave and half free.
Franklin D. Roosevelt, in 1933, did not seek unity with the economic royalists. He proposed the New Deal.
And today, I do not seek unity by concealing the issues between me and the special privilege groups that control the Republican Party.
I never will seek that sort of unity.
Real unity is behind basic principles and concrete programs. Real unity cannot be achieved without a definition of the issues, and a decision by the American people.
As Truman himself once pointed out, key to the Republican playbook is the principle "If you can't convince them, confuse them." It's time to stand up and bring the public on board with Democratic principles. We need to see the right combination of forcefulness, strength, and inspiration tonight. We need to see Obama channeling some Truman. Don't give them hell, Mr. President, just tell the truth and the Republicans will think it's hell. And remember, in still more words from Truman, "Always be sincere, even if you don't mean it. "
Tuesday, September 8, 2009
About those poor people
Some sobering news out of Arizona today:
A sign of the times, to be sure. But it raises an important question: how does health care reform help the poor?
Right now, the health insurance program most closely associated with the poor is Medicaid. It's important to note that not all poor people are eligible for Medicaid; in fact, a significant chunk of the poor are not eligible. Childless adults are ineligible, as are parents whose incomes, while still below the poverty line, pass some threshold. In other words, even adults in an eligible class can't just be poor, they must be poor enough.
The situation in Arizona illustrates a key issue with Medicaid (though technically Arizona's KidsCare Parents Program is an outgrowth of SCHIP, the programs work in the same way): unlike Medicare, which is funded and administered entirely by the federal government, Medicaid is administered and partially funded by the states. This is why each state has slightly different standards and programs. The way Medicaid funding works is simple: the federal government pays some portion of a state's Medicaid costs (between 50% and 83% of costs) by providing some amount of matching funds for every dollar a state spends on its Medicaid program. The exact portion the federal government contributes, called the federal medical assistance percentage (FMAP), is determined by a formula in which the only real variable is the state's per capita income. States with higher per capita incomes have to foot a greater percentage of their Medicaid bills.
You can imagine the problem this causes. When a state falls on hard times, the drag on its social safety net gets hit on two fronts: (1) if incomes take a hit, so too do the tax receipts that fund the state-financed part of programs like Medicaid and (2) more residents of the state slip into the range of eligibility and thus benefits paid out will tend to increase. The result is that states facing budgetary shortfalls are likely to cut spending on programs (and thus also get fewer federal matching funds) just when they're needed the most, as we see today with the KidsCare Parents program in Arizona.
For people who don't get employer-based health insurance but are not technically poor, the health reform plans provide subsidies ("affordability credits" in the House bill) to help them pay for health insurance. In the House bill, H.R. 3200, these subsidies are available for people with incomes between 133 and 400 percent of the federal poverty line. The needs of poor people are addressed by expanding Medicaid eligibility to everyone with incomes below 133 1/3 percent of the federal poverty line. Since Medicaid-eligible individuals are ineligible for affordability credits in the Exchanges, Medicaid will effectively be their only option.
As I mentioned above, simply being poor isn't enough to make you eligible for Medicaid right now. Under H.R. 3200 it will be. But these Medicaid expansions are going to cost money. The original version of the House bill promises "100% FMAP for non-traditional Medicaid eligible individuals," meaning the federal government will foot the entirety of the bill for expanding Medicaid (for a few years). In other words, the burden on states would not increase. But as I discussed in my last post, H.R. 3200 only made it out of the Energy and Commerce committee because Blue Dog Democrats and members of the Progressive Caucus agreed to pass a Blue Dog amendment and two unity amendments.
The Blue Dog amendment was about lowering the price tag of the final bill; a cynic might say this was for cosmetic reasons. But one of the ways they did that was by revising the "100% FMAP" promise. Instead, initially the federal government will cover the full cost of expanding Medicaid but starting in 2015 states will face 90% FMAP, meaning the federal government will cover most of the costs of expansion but states will still have to pick up 10% of the check. For every dollar a state spends on the Medicaid expansions after that point, they get nine dollars in federal matching funds. But states will still be paying more than they are now; the Medicaid expansions will thus be a further strain on state budgets.
The genius of the Blue Dog amendment, of course, is that it makes the health care plan look slightly cheaper over the next decade. It puts some of the costs of Medicaid expansions on the states and it slightly lessens the amount of affordability credits non-poor shoppers in the Health Insurance Exchange can collect. No less money is actually being spent, they've just found ways to transfer the costs to someone else and make the federal government's books look a little better. Meanwhile states face larger Medicaid liabilities and people buying insurance in the Exchanges have to spend a little more out of their paychecks.
Needless to say, state governments don't like the Medicaid provisions of the Blue Dog Amendment. And I'm left wondering what happens when states get into situations like the ones they're in now--the kind of situation that leads Arizona to eliminate health insurance for 10,000 poor parents. Sure, everybody below 133% of the poverty line is supposed to be eligible and the original draft makes paying for that the federal government's problem. But with the Blue Dog amendment, states take a degree of financial responsibility for this. What happens during the lean years? Clearly, some states can't even pay for the Medicaid or SCHIP programs they have now. Hence the cuts.
The reality, of course, is that even if over 12% of the population is technically poor, the poor are not a powerful political constituency. Suggest cutting Medicare and AARP, a group that's almost 40 million strong, will raise hell. Cut Medicaid or SCHIP benefits and you'll hear nary a whisper. Senator Ron Wyden, a Democrat from Oregon, has described Medicaid as a "caste system" (his own health care plan--the Wyden-Bennett plan--does away with Medicaid, integrating the poor into the same program as everyone else). This is one of the dangers of pursuing incremental change. On the one hand, incrementalism is often politically necessary because if the Haves under the current system stand to lose, then their opposition can kill hopes of reform. But the sad fact of the matter is that those who lose under the current system might well still lose under an incrementally reformed system. Even one that takes a stab at universality.
Nearly 10,000 working parents will lose their health insurance
this month in the wake of state budget cuts, leaving some families with nowhere to turn as they seek affordable coverage.
KidsCare Parents, a program that provides low-income families with inexpensive insurance, will end Sept. 30. The Arizona Health Care Cost Containment System, which administers the program, could not pay the $6 million annual cost following cuts by the Legislature. The state faces a $3 billion budget shortfall.
The move comes as demand for government assistance is skyrocketing. Arizona has lost an estimated 240,000 jobs since December 2007, and AHCCCS has added 150,000 people to its rolls since January. . .
KidsCare Parents began in 2003 as an extension of the federal State Children's Health Insurance Program, called KidsCare in Arizona. To be eligible for coverage, families had to make less than two times the federal poverty level, or about $44,000 a year for a family of four.
For a $6 million annual contribution, Arizona received $18 million in federal grants to administer the program for parents. Patient premiums, which were set at 3 to 4 percent of monthly income, covered the rest. The parents' program was a boon to families like the Dowlings, who were told they made $40 a month too much to be eligible for AHCCCS.
A sign of the times, to be sure. But it raises an important question: how does health care reform help the poor?
Right now, the health insurance program most closely associated with the poor is Medicaid. It's important to note that not all poor people are eligible for Medicaid; in fact, a significant chunk of the poor are not eligible. Childless adults are ineligible, as are parents whose incomes, while still below the poverty line, pass some threshold. In other words, even adults in an eligible class can't just be poor, they must be poor enough.
The situation in Arizona illustrates a key issue with Medicaid (though technically Arizona's KidsCare Parents Program is an outgrowth of SCHIP, the programs work in the same way): unlike Medicare, which is funded and administered entirely by the federal government, Medicaid is administered and partially funded by the states. This is why each state has slightly different standards and programs. The way Medicaid funding works is simple: the federal government pays some portion of a state's Medicaid costs (between 50% and 83% of costs) by providing some amount of matching funds for every dollar a state spends on its Medicaid program. The exact portion the federal government contributes, called the federal medical assistance percentage (FMAP), is determined by a formula in which the only real variable is the state's per capita income. States with higher per capita incomes have to foot a greater percentage of their Medicaid bills.
You can imagine the problem this causes. When a state falls on hard times, the drag on its social safety net gets hit on two fronts: (1) if incomes take a hit, so too do the tax receipts that fund the state-financed part of programs like Medicaid and (2) more residents of the state slip into the range of eligibility and thus benefits paid out will tend to increase. The result is that states facing budgetary shortfalls are likely to cut spending on programs (and thus also get fewer federal matching funds) just when they're needed the most, as we see today with the KidsCare Parents program in Arizona.
For people who don't get employer-based health insurance but are not technically poor, the health reform plans provide subsidies ("affordability credits" in the House bill) to help them pay for health insurance. In the House bill, H.R. 3200, these subsidies are available for people with incomes between 133 and 400 percent of the federal poverty line. The needs of poor people are addressed by expanding Medicaid eligibility to everyone with incomes below 133 1/3 percent of the federal poverty line. Since Medicaid-eligible individuals are ineligible for affordability credits in the Exchanges, Medicaid will effectively be their only option.
As I mentioned above, simply being poor isn't enough to make you eligible for Medicaid right now. Under H.R. 3200 it will be. But these Medicaid expansions are going to cost money. The original version of the House bill promises "100% FMAP for non-traditional Medicaid eligible individuals," meaning the federal government will foot the entirety of the bill for expanding Medicaid (for a few years). In other words, the burden on states would not increase. But as I discussed in my last post, H.R. 3200 only made it out of the Energy and Commerce committee because Blue Dog Democrats and members of the Progressive Caucus agreed to pass a Blue Dog amendment and two unity amendments.
The Blue Dog amendment was about lowering the price tag of the final bill; a cynic might say this was for cosmetic reasons. But one of the ways they did that was by revising the "100% FMAP" promise. Instead, initially the federal government will cover the full cost of expanding Medicaid but starting in 2015 states will face 90% FMAP, meaning the federal government will cover most of the costs of expansion but states will still have to pick up 10% of the check. For every dollar a state spends on the Medicaid expansions after that point, they get nine dollars in federal matching funds. But states will still be paying more than they are now; the Medicaid expansions will thus be a further strain on state budgets.
The genius of the Blue Dog amendment, of course, is that it makes the health care plan look slightly cheaper over the next decade. It puts some of the costs of Medicaid expansions on the states and it slightly lessens the amount of affordability credits non-poor shoppers in the Health Insurance Exchange can collect. No less money is actually being spent, they've just found ways to transfer the costs to someone else and make the federal government's books look a little better. Meanwhile states face larger Medicaid liabilities and people buying insurance in the Exchanges have to spend a little more out of their paychecks.
Needless to say, state governments don't like the Medicaid provisions of the Blue Dog Amendment. And I'm left wondering what happens when states get into situations like the ones they're in now--the kind of situation that leads Arizona to eliminate health insurance for 10,000 poor parents. Sure, everybody below 133% of the poverty line is supposed to be eligible and the original draft makes paying for that the federal government's problem. But with the Blue Dog amendment, states take a degree of financial responsibility for this. What happens during the lean years? Clearly, some states can't even pay for the Medicaid or SCHIP programs they have now. Hence the cuts.
The reality, of course, is that even if over 12% of the population is technically poor, the poor are not a powerful political constituency. Suggest cutting Medicare and AARP, a group that's almost 40 million strong, will raise hell. Cut Medicaid or SCHIP benefits and you'll hear nary a whisper. Senator Ron Wyden, a Democrat from Oregon, has described Medicaid as a "caste system" (his own health care plan--the Wyden-Bennett plan--does away with Medicaid, integrating the poor into the same program as everyone else). This is one of the dangers of pursuing incremental change. On the one hand, incrementalism is often politically necessary because if the Haves under the current system stand to lose, then their opposition can kill hopes of reform. But the sad fact of the matter is that those who lose under the current system might well still lose under an incrementally reformed system. Even one that takes a stab at universality.
Monday, September 7, 2009
Trigger Happy
It's Labor Day! In an even-numbered year, this is the day that usually marks the start of general election campaigns. This year it will have to be the day on which the campaign for health care reform begins in earnest.
So where are we? All eyes remain on the Senate. While you only need 50 votes for final passage of a bill in the Senate, you need 60 to bust a filibuster and actually get to that final vote. On one hand, we should be grateful--the threshold for cloture was actually higher when Medicare passed in 1965 and prior to 1917 there was no rule allowing a cloture vote. On the other hand, perhaps we should be outraged that a Catch-22 lies at the heart of national policy-making: Senate Rule V declares that, unless changed, Senate rules exist in perpetuity (by contrast, the House votes on rules at the beginning of every Congress) but changing the rules to eliminate filibusters is itself subject to a filibuster.
Regardless, the filibuster is a reality. The assumption seems to be that everyone who would vote against a health care bill containing a public option would also vote against cloture (i.e. vote against actually voting on the bill); I haven't seen it explained to my satisfaction why that's necessarily the case but all the recent talk of using filibuster-proof budget reconciliation rules to pass the bill indicates that Senate leadership seems to have reached the conclusion that this is indeed the case. So, leaving aside talk of reconciliation, Democrats need 60 votes. Let's assume for a moment no Republican will vote with the Democrats. Okay, then they've already lost.
A few weeks ago, on paper there were 60 Democrats in the Senate. Well, not really--there were 58 Democrats and two Independents who vote with the Democrats. Now Senator Kennedy has passed away. Senator Byrd's vote isn't a slam dunk because he has numerous health problems, though we can assume he'll make it into the chamber to vote. However, I should note that there's little doubt he'd have serious problems with using budget reconciliation to pass health care reform--the rule that creates so many difficulties for this course of action is Byrd's rule and he's a staunch defender of only using the reconciliation process for its intended purpose of shepherding through budget-related matters that reduce the deficit. Other Senators like Lincoln and Lieberman have indicated publicly they don't support a public option. Many Senators who swing a bit more conservative seem unlikely to support a public option: Kent Conrad, Ben Nelson, Evan Bayh, Mary Landrieu, and Mark Pryor are all likely no votes.
If all these Senators voted against a public option, it would pass with 52 votes, though it wouldn't even reach that point if they refused to vote for cloture. If there are others I haven't named who also oppose a public option and the public option can't reach the 50-vote threshold, then it doesn't matter--it won't pass, no matter what tricks are employed (e.g. reconciliation). That brings us to the trigger. As I explained in previous posts, the trigger is an idea that seems to appeal to moderate Maine Republican Senator Olympia Snowe. The trigger sets up a sort of conditional time-released public option: if certain conditions aren't being met by some date, then the public option is "triggered" and goes into effect.
The statements of the Senators who have publicly opposed the public option seem to allow a little latitude in accepting a trigger.
Here's Blanche Lincoln:
And Joe Lieberman:
Lincoln incorrectly describes the public option as an entitlement program that is "government-funded." Both statements are false and one has to wonder why she set up a straw man to rail against. A cynic might suggest she did it for the same reason Republicans do it: it's easier to vote against the bill if you lie about what it's likely to be. On the other hand, this leaves a backdoor open for Lincoln. She can still vote for it--or a trigger--and save face by claiming what she voted for is not what she said she'd vote against. Bit of a tightrope there, though. Lieberman's statement, on the other hand, seems tailor-made for a trigger.
Much of the left seems dismayed by the possibility of a public option trigger. For example, read this: Why The Trigger Is So Dangerous. All valid points. Make no mistake, I'm under no illusions: this is dangerous. But it may be the only option.
Ideally, a trigger would take the public option set out in the original draft of H.R. 3200 and, if premiums have risen too quickly in the first three years or so after the bill's provisions go into effect, automatically create it. But there are some interesting (to me, anyway) points to consider about what's already happened in committee markups of H.R. 3200.
Let's step back a few weeks. H.R. 3200 had passed out of two of the three committees it was referred to but became tied up in the Energy and Commerce Committee. Conservative Blue Dog Democrats, eager to burnish their fiscal conservative credentials, wanted to make the bill slightly cheaper so eventually Chairman Waxman sat down to negotiate with them. Some great theatrics ensued--shouting matches!--but the Blue Dogs ended up getting some cost-cutting measures through. This, in turn, alarmed progressives who then threatened to withdraw their support from the bill. So they all got together and rolled out three amendments: a Blue Dog amendment and two "unity" amendments. Or, officially, the Ross amendment, the Baldwin amendment, and the Schakowsky amendment.
Among other things, the Blue Dog amendment changed the way the public option pays for services. Originally, the bill said that for the first three years the public option would reimburse at Medicare rates (Medicare sets fee schedules that determine how much it pays for different services) with practitioners being reimbursed at Medicare rates plus five percent. The Blue Dog amendment requires the HHS Secretary to negotiate payment rates with health care providers independent of Medicare's rates. So that's not quite as good (its intent is to put the public option on a more "level playing field" with private insurers). The two unity amendments try to find cost savings to avoid cuts in the subsidies paid out to lower-income families but, notably, the Schakowsky amendment contains this:
The (b) and (c) mentioned there make exceptions in cases where insurers are required to provide additional benefits or where compliance will destroy the insurance company.
The important thing to note here is that with this amendment the bill is already limiting the allowed growth in health insurance premiums.
Which brings me to my main point: the public option isn't about the public option. It's about the private insurance companies. Certain folks on the left don't like to admit this because they actually do think the public option will eventually evolve into a single-payer system (a very unlikely prospect). The Congressional Budget Office--unlike the industry-owned Lewin group--projects that about 11 million people or so will be choosing the public option. So clearly the point here isn't to get everyone to drop their private insurance and join the public option. Rather, as President Obama himself is fond of saying, the public option would keep the insurance companies honest. The threat of angry consumers voting with their feet and heading over to an inexpensive, well-run alternative to the private insurance companies is supposed to encourage those insurance companies to control costs and focus on quality. The influence of an alternative thus extends far beyond the relatively-few customers who actually choose that alternative--its mere existence reshapes the landscape in which the health insurance industry operates.
Now, there are alternatives. We've chosen the incremental approach--preserving and encouraging private, mostly employer-based health insurance coverage--that much is clear. But supporters of dropping the public option from these health reform efforts sometimes point to the Swiss health care system: "They don't have a public option and it works fine," they point out. And they have a point. The Swiss regulate their private insurers to such an extent that a public option is unnecessary. They do through regulatory coercion what we meeker Americans hope to accomplish through altering incentive structures with the introduction of the public option. But H.R. 3200 is all about increasing regulations on insurers (though not quite to the extent that the Swiss do it) and it's not completely absurd to suggest that the bill, coupled with a trigger, could accomplish the same things we expect from a public option.
H.R. 3200 creates a Health Insurance Exchange where insurers compete side-by-side in a transparent marketplace. It calls for a committee of health care experts to design a comprehensive "essential benefits package" that every insurer has to offer as its minimum level of coverage. It forbids the essential benefits package from imposing "any annual or lifetime limit on the coverage of covered health care items and services." It structures the affordability credits that subsidize lower-income families in such a way that their holders are encouraged to shop for the least expensive plans in their area; this in turn encourages private insurers to be the company that offers the cheapest premiums if they want a piece of that government money. It prevents insurers from discriminating against people on the basis of pre-existing conditions--they can't turn you down or charge you different premiums from everybody else. As we saw above, the Schakowsky amendment limits the annual increase in premiums.
In other words, H.R. 3200 puts a lot of new limits on the practices of health insurance companies. If political forces won't allow a public option to go forth right now but they will allow a trigger, we shouldn't despair. A trigger could still put the fear of God into insurers. If they prove unwilling or unable to meet the standards laid out by Schakowsky, hit the trigger. If they are skimping on their responsibilities as laid out by the new law, hit the trigger. Is the threat of creating a public option as good as the threat of privately insured customers migrating over to an already-existing public option? Probably not. But, in the unlikely event that a public option were as poorly-run and low quality as opponents like to pretend that it would be, a trigger would actually be a more effective device. Unfortunately for that prospect, reports of the incompetence of the government have been greatly exaggerated.
Policy doesn't exist in a vacuum from politics. A good policy that's bad politics isn't a policy at all; it's a piece of paper. If a public option isn't going to come out of the Senate then we need to take stock of where we are and figure out how to get equivalent or almost equivalent results without a public option. If at least one Republican and the conservative Democrats could get on board with a well-designed (i.e. not impotent) trigger, then that may well be the way to go. The idea certainly has potential pitfalls but if it becomes clear that preferable alternatives are off the table then you've got to get what you can get. Remember, when he found out about Orr's ruse, Yossarian escaped his Catch-22 by heading for Sweden; we might have to settle for Switzerland-lite in our bid to escape the Catch-22 of the Senate filibuster.
So where are we? All eyes remain on the Senate. While you only need 50 votes for final passage of a bill in the Senate, you need 60 to bust a filibuster and actually get to that final vote. On one hand, we should be grateful--the threshold for cloture was actually higher when Medicare passed in 1965 and prior to 1917 there was no rule allowing a cloture vote. On the other hand, perhaps we should be outraged that a Catch-22 lies at the heart of national policy-making: Senate Rule V declares that, unless changed, Senate rules exist in perpetuity (by contrast, the House votes on rules at the beginning of every Congress) but changing the rules to eliminate filibusters is itself subject to a filibuster.
Regardless, the filibuster is a reality. The assumption seems to be that everyone who would vote against a health care bill containing a public option would also vote against cloture (i.e. vote against actually voting on the bill); I haven't seen it explained to my satisfaction why that's necessarily the case but all the recent talk of using filibuster-proof budget reconciliation rules to pass the bill indicates that Senate leadership seems to have reached the conclusion that this is indeed the case. So, leaving aside talk of reconciliation, Democrats need 60 votes. Let's assume for a moment no Republican will vote with the Democrats. Okay, then they've already lost.
A few weeks ago, on paper there were 60 Democrats in the Senate. Well, not really--there were 58 Democrats and two Independents who vote with the Democrats. Now Senator Kennedy has passed away. Senator Byrd's vote isn't a slam dunk because he has numerous health problems, though we can assume he'll make it into the chamber to vote. However, I should note that there's little doubt he'd have serious problems with using budget reconciliation to pass health care reform--the rule that creates so many difficulties for this course of action is Byrd's rule and he's a staunch defender of only using the reconciliation process for its intended purpose of shepherding through budget-related matters that reduce the deficit. Other Senators like Lincoln and Lieberman have indicated publicly they don't support a public option. Many Senators who swing a bit more conservative seem unlikely to support a public option: Kent Conrad, Ben Nelson, Evan Bayh, Mary Landrieu, and Mark Pryor are all likely no votes.
If all these Senators voted against a public option, it would pass with 52 votes, though it wouldn't even reach that point if they refused to vote for cloture. If there are others I haven't named who also oppose a public option and the public option can't reach the 50-vote threshold, then it doesn't matter--it won't pass, no matter what tricks are employed (e.g. reconciliation). That brings us to the trigger. As I explained in previous posts, the trigger is an idea that seems to appeal to moderate Maine Republican Senator Olympia Snowe. The trigger sets up a sort of conditional time-released public option: if certain conditions aren't being met by some date, then the public option is "triggered" and goes into effect.
The statements of the Senators who have publicly opposed the public option seem to allow a little latitude in accepting a trigger.
Here's Blanche Lincoln:
For some in my caucus, when they talk about a public option they're talking about another entitlement program, and we can't afford that right now as a nation ... I would not support a solely government-funded public option. We can't afford that."
And Joe Lieberman:
If we start this out and three years from now a case can be made that the private market is not working effectively, I would support the public option.
Lincoln incorrectly describes the public option as an entitlement program that is "government-funded." Both statements are false and one has to wonder why she set up a straw man to rail against. A cynic might suggest she did it for the same reason Republicans do it: it's easier to vote against the bill if you lie about what it's likely to be. On the other hand, this leaves a backdoor open for Lincoln. She can still vote for it--or a trigger--and save face by claiming what she voted for is not what she said she'd vote against. Bit of a tightrope there, though. Lieberman's statement, on the other hand, seems tailor-made for a trigger.
Much of the left seems dismayed by the possibility of a public option trigger. For example, read this: Why The Trigger Is So Dangerous. All valid points. Make no mistake, I'm under no illusions: this is dangerous. But it may be the only option.
Ideally, a trigger would take the public option set out in the original draft of H.R. 3200 and, if premiums have risen too quickly in the first three years or so after the bill's provisions go into effect, automatically create it. But there are some interesting (to me, anyway) points to consider about what's already happened in committee markups of H.R. 3200.
Let's step back a few weeks. H.R. 3200 had passed out of two of the three committees it was referred to but became tied up in the Energy and Commerce Committee. Conservative Blue Dog Democrats, eager to burnish their fiscal conservative credentials, wanted to make the bill slightly cheaper so eventually Chairman Waxman sat down to negotiate with them. Some great theatrics ensued--shouting matches!--but the Blue Dogs ended up getting some cost-cutting measures through. This, in turn, alarmed progressives who then threatened to withdraw their support from the bill. So they all got together and rolled out three amendments: a Blue Dog amendment and two "unity" amendments. Or, officially, the Ross amendment, the Baldwin amendment, and the Schakowsky amendment.
Among other things, the Blue Dog amendment changed the way the public option pays for services. Originally, the bill said that for the first three years the public option would reimburse at Medicare rates (Medicare sets fee schedules that determine how much it pays for different services) with practitioners being reimbursed at Medicare rates plus five percent. The Blue Dog amendment requires the HHS Secretary to negotiate payment rates with health care providers independent of Medicare's rates. So that's not quite as good (its intent is to put the public option on a more "level playing field" with private insurers). The two unity amendments try to find cost savings to avoid cuts in the subsidies paid out to lower-income families but, notably, the Schakowsky amendment contains this:
(a) IN GENERAL.--The annual increase in the premiums charged under any Exchange-participating health benefits plan may not exceed 150 percent of the annual percentage increase in medical inflation for the 12-month period ending in June of the prior year, unless the plan receives approval for a higher rate increase in accordance with subsection (b) or (c).
The (b) and (c) mentioned there make exceptions in cases where insurers are required to provide additional benefits or where compliance will destroy the insurance company.
The important thing to note here is that with this amendment the bill is already limiting the allowed growth in health insurance premiums.
Which brings me to my main point: the public option isn't about the public option. It's about the private insurance companies. Certain folks on the left don't like to admit this because they actually do think the public option will eventually evolve into a single-payer system (a very unlikely prospect). The Congressional Budget Office--unlike the industry-owned Lewin group--projects that about 11 million people or so will be choosing the public option. So clearly the point here isn't to get everyone to drop their private insurance and join the public option. Rather, as President Obama himself is fond of saying, the public option would keep the insurance companies honest. The threat of angry consumers voting with their feet and heading over to an inexpensive, well-run alternative to the private insurance companies is supposed to encourage those insurance companies to control costs and focus on quality. The influence of an alternative thus extends far beyond the relatively-few customers who actually choose that alternative--its mere existence reshapes the landscape in which the health insurance industry operates.
Now, there are alternatives. We've chosen the incremental approach--preserving and encouraging private, mostly employer-based health insurance coverage--that much is clear. But supporters of dropping the public option from these health reform efforts sometimes point to the Swiss health care system: "They don't have a public option and it works fine," they point out. And they have a point. The Swiss regulate their private insurers to such an extent that a public option is unnecessary. They do through regulatory coercion what we meeker Americans hope to accomplish through altering incentive structures with the introduction of the public option. But H.R. 3200 is all about increasing regulations on insurers (though not quite to the extent that the Swiss do it) and it's not completely absurd to suggest that the bill, coupled with a trigger, could accomplish the same things we expect from a public option.
H.R. 3200 creates a Health Insurance Exchange where insurers compete side-by-side in a transparent marketplace. It calls for a committee of health care experts to design a comprehensive "essential benefits package" that every insurer has to offer as its minimum level of coverage. It forbids the essential benefits package from imposing "any annual or lifetime limit on the coverage of covered health care items and services." It structures the affordability credits that subsidize lower-income families in such a way that their holders are encouraged to shop for the least expensive plans in their area; this in turn encourages private insurers to be the company that offers the cheapest premiums if they want a piece of that government money. It prevents insurers from discriminating against people on the basis of pre-existing conditions--they can't turn you down or charge you different premiums from everybody else. As we saw above, the Schakowsky amendment limits the annual increase in premiums.
In other words, H.R. 3200 puts a lot of new limits on the practices of health insurance companies. If political forces won't allow a public option to go forth right now but they will allow a trigger, we shouldn't despair. A trigger could still put the fear of God into insurers. If they prove unwilling or unable to meet the standards laid out by Schakowsky, hit the trigger. If they are skimping on their responsibilities as laid out by the new law, hit the trigger. Is the threat of creating a public option as good as the threat of privately insured customers migrating over to an already-existing public option? Probably not. But, in the unlikely event that a public option were as poorly-run and low quality as opponents like to pretend that it would be, a trigger would actually be a more effective device. Unfortunately for that prospect, reports of the incompetence of the government have been greatly exaggerated.
Policy doesn't exist in a vacuum from politics. A good policy that's bad politics isn't a policy at all; it's a piece of paper. If a public option isn't going to come out of the Senate then we need to take stock of where we are and figure out how to get equivalent or almost equivalent results without a public option. If at least one Republican and the conservative Democrats could get on board with a well-designed (i.e. not impotent) trigger, then that may well be the way to go. The idea certainly has potential pitfalls but if it becomes clear that preferable alternatives are off the table then you've got to get what you can get. Remember, when he found out about Orr's ruse, Yossarian escaped his Catch-22 by heading for Sweden; we might have to settle for Switzerland-lite in our bid to escape the Catch-22 of the Senate filibuster.
Sunday, September 6, 2009
Blogs I Follow
A friend recently asked me for a list of blogs I read regularly. I think the easiest way to provide that is by posting the links from my GoogleReader on here (recognizing that we don't have a blogroll here). This list isn't exhaustive, it's just what I have in my Reader. For example, I read Daily Kos everyday but it's not in my reader because I enjoy browsing the user-added diaries. I also read FiveThirtyEight once in a while because Nate Silver is pretty good. And so on. So here are the blogs/feeds I have in Reader (note that all the links are to the feeds--I don't feel like altering all of them to take you to the blog proper) and, if the title isn't self-explanatory, a brief note:
AAS Public Policy Blog
Science policy.
Amitai Etzioni Notes
Sociologist and communitarian. I originally knew of him through his contributions to organizational theory (specifically his work on systems of compliance) from the '60s--turns out he blogs.
Climate Change
Congress Matters
Daily Kos spin-off offering news and commentary on parliamentary procedure and sausage-making.
Cosmic Variance
Physicists, astrophysicists, and cosmologists talk shop.
Daily Digest
The daily Congressional Record. Should heat up starting Tuesday.
DCCC: The Stakeholder
House Dems try to build their numbers.
Democratic Legislative Campaign Committee - Policy News
State legislatures are important, too.
Director's Blog
It started under Peter Orszag's tenure at the CBO but he went off to run Obama's OMB. Now written by the new CBO director, Doug Elmendorf.
DSCC
Senate Dems try to build their numbers.
Education Policy Blog
Election Law
Eschaton
Duncan Black's an economist, now working at Media Matters.
Everyday Sociology Blog
Ezra Klein
Foreign Policy
Free exchange
The Economist.
Google Public Policy Blog
Technology-related policy.
Healthcare Economist
House Floor Today
Iraq
Law Library of Congress: Research Reports
Legal Theory Blog
Legislative Analysis Community Blog at GovTrack
Medicare / Medicaid / SCHIP News From Medical News Today
News Items from the House Committee on Rules
Not Even Wrong
Mathematician (sort of physicist). Not fond of string theory.
Ohio Democratic Party Blog
OhioDaily
Open Congress : Congress Gossip Blog
Open Congress : Top 20 Most Viewed Bills
OPENERS - Ohio Politics Blog by The Plain Dealer
Paul Krugman
Physical Review Focus -
Policy Matters Ohio News
Poverty & Public Policy
Poverty Law
Public Knowledge - Blogging, Events, and Action Alerts
More tech policy.
RealClimate
Climate change addressed by actual climatologists. I once took a climate class with one of those guys.
Robert Reich's Blog
Former labor secretary. Loser of the Rubin-Reich wars in the early years of the Clinton administration.
Roll Call
The newspaper of Capitol Hill.
ScienceBlogs : Combined Feed
SCOTUSblog
Sen. Brown's Voting Record -- Tracked by GovTrack.us
Senate Floor Today
Soul Physics
History and philosophy of physics.
Stateline.org RSS - State by State Roundup
State policy and politics.
Swing State Project
Political races.
The Becker-Posner Blog
The Capitol Fax Blog
Politics and government in Illinois.
The Caucus
Politics and government from the New York Times.
The Freedom Speakeasy
Us.
The Gavel
Speaker Pelosi's blog.
The Law and Neuroscience Blog
THE ORWELL PRIZE
Orwell's personal diaries, each one published 70 years to the day after being written. The war began this week.
the physics arXiv blog
Choice picks from the arXiv pre-print server.
The Stanek-Teshale Blog
With Salom.
Wonk Room
ThinkProgress.
AAS Public Policy Blog
Science policy.
Amitai Etzioni Notes
Sociologist and communitarian. I originally knew of him through his contributions to organizational theory (specifically his work on systems of compliance) from the '60s--turns out he blogs.
Climate Change
Congress Matters
Daily Kos spin-off offering news and commentary on parliamentary procedure and sausage-making.
Cosmic Variance
Physicists, astrophysicists, and cosmologists talk shop.
Daily Digest
The daily Congressional Record. Should heat up starting Tuesday.
DCCC: The Stakeholder
House Dems try to build their numbers.
Democratic Legislative Campaign Committee - Policy News
State legislatures are important, too.
Director's Blog
It started under Peter Orszag's tenure at the CBO but he went off to run Obama's OMB. Now written by the new CBO director, Doug Elmendorf.
DSCC
Senate Dems try to build their numbers.
Education Policy Blog
Election Law
Eschaton
Duncan Black's an economist, now working at Media Matters.
Everyday Sociology Blog
Ezra Klein
Foreign Policy
Free exchange
The Economist.
Google Public Policy Blog
Technology-related policy.
Healthcare Economist
House Floor Today
Iraq
Law Library of Congress: Research Reports
Legal Theory Blog
Legislative Analysis Community Blog at GovTrack
Medicare / Medicaid / SCHIP News From Medical News Today
News Items from the House Committee on Rules
Not Even Wrong
Mathematician (sort of physicist). Not fond of string theory.
Ohio Democratic Party Blog
OhioDaily
Open Congress : Congress Gossip Blog
Open Congress : Top 20 Most Viewed Bills
OPENERS - Ohio Politics Blog by The Plain Dealer
Paul Krugman
Physical Review Focus -
Policy Matters Ohio News
Poverty & Public Policy
Poverty Law
Public Knowledge - Blogging, Events, and Action Alerts
More tech policy.
RealClimate
Climate change addressed by actual climatologists. I once took a climate class with one of those guys.
Robert Reich's Blog
Former labor secretary. Loser of the Rubin-Reich wars in the early years of the Clinton administration.
Roll Call
The newspaper of Capitol Hill.
ScienceBlogs : Combined Feed
SCOTUSblog
Sen. Brown's Voting Record -- Tracked by GovTrack.us
Senate Floor Today
Soul Physics
History and philosophy of physics.
Stateline.org RSS - State by State Roundup
State policy and politics.
Swing State Project
Political races.
The Becker-Posner Blog
The Capitol Fax Blog
Politics and government in Illinois.
The Caucus
Politics and government from the New York Times.
The Freedom Speakeasy
Us.
The Gavel
Speaker Pelosi's blog.
The Law and Neuroscience Blog
THE ORWELL PRIZE
Orwell's personal diaries, each one published 70 years to the day after being written. The war began this week.
the physics arXiv blog
Choice picks from the arXiv pre-print server.
The Stanek-Teshale Blog
With Salom.
Wonk Room
ThinkProgress.
Wednesday, September 2, 2009
A Compromise They Could Live With
Remember four days ago when I shared A Compromise I Could Live With?
Via Wonk Room, CNN's political reporters are confirming that I'm not the only one who could live with it: "White House Negotiating With Snowe Over A ‘Trigger Public Option’ "
Via Wonk Room, CNN's political reporters are confirming that I'm not the only one who could live with it: "White House Negotiating With Snowe Over A ‘Trigger Public Option’ "
CNN’s Ed Henry: What we’re hearing that she’s talking about with White House staff is sort of a scaled-back bill that would focus on insurance reforms that both sides could agree to, but would not have a full public option, instead, would have a so-called trigger. What that means in layman’s terms is basically that the insurance companies would have a couple of years to make some dramatic changes. If they do not make those changes, then a public option would be triggered.
Fun with numbers
Here we have GM vs Toyota: By the Numbers, as presented by NPR. One set of numbers in particular has been bandied about, particularly by anti-union folks:
This, we are told, is evidence that the unionized workforce at GM is extracting far too many concessions that they don't deserve and dragging down the company with their outrageous demands. The largely nonunionized (only a quarter of Toyota's North American plants are unionized, while all of GM's plants are) workforce at Toyota plants are much cheaper.
However, that NPR link also contains this statistic:
What's the deal here? If the average worker at GM isn't making all that much more per hour than his counterpart at Toyota, why is the average labor cost per hourly worker so high? Well, that larger number factors in benefits like health care and, importantly, retiree (pension) benefits being paid out to retired employees (spreading out the costs of retiree benefits over currently active workers). Now take a look at this statistic from the NPR link on the North American workforce of each company:
The ratio of retirees to active workers is substantially different between the two companies. Indeed, GM has more retirees than it does active workers. Thus projecting the costs each company is incurring through its responsibilities to retirees onto the active work force makes it look like active workers at GM are getting much, much more than their Toyota counterparts. The reality is that it isn't clear--at least from these numbers--that the differential is as large as that "Average Labor Cost per U.S. Hourly Worker" figure makes it appear.
Average Labor Cost per U.S. Hourly Worker
GM: $73.73
Toyota: $48
This, we are told, is evidence that the unionized workforce at GM is extracting far too many concessions that they don't deserve and dragging down the company with their outrageous demands. The largely nonunionized (only a quarter of Toyota's North American plants are unionized, while all of GM's plants are) workforce at Toyota plants are much cheaper.
However, that NPR link also contains this statistic:
Average Hourly Salary for Non-Skilled, Assembly Line Worker
GM: $31.35/hour
Toyota: $27/hour
What's the deal here? If the average worker at GM isn't making all that much more per hour than his counterpart at Toyota, why is the average labor cost per hourly worker so high? Well, that larger number factors in benefits like health care and, importantly, retiree (pension) benefits being paid out to retired employees (spreading out the costs of retiree benefits over currently active workers). Now take a look at this statistic from the NPR link on the North American workforce of each company:
GM:
White collar: 36,000
Production: 106,000.
Retirees: 460,000
Toyota:
White collar: 17,000
Production: 21,000
Retirees: 1,600
The ratio of retirees to active workers is substantially different between the two companies. Indeed, GM has more retirees than it does active workers. Thus projecting the costs each company is incurring through its responsibilities to retirees onto the active work force makes it look like active workers at GM are getting much, much more than their Toyota counterparts. The reality is that it isn't clear--at least from these numbers--that the differential is as large as that "Average Labor Cost per U.S. Hourly Worker" figure makes it appear.
Tuesday, September 1, 2009
Remember when men were free?
A Hollywood political activist type explaining the dangers of government intrusion in the health care system:
He concludes by warning us that, if this government program is adopted, "you and I are going to spend our sunset years telling our children and our children's children what it once was like in America when men were free."
Chilling stuff. If only we could fast forward about 50 years and see if he's right. We're in luck! This warning was issued in 1961 by celebrated actor Ronald Reagan and he was talking about the looming prospect of Medicare. You can listen to it on this LP sent out by the AMA at the time: Ronald Reagan Speaks Out Against Socialized Medicine.
Sadly, we were all born too late to know what America was like when men were free: those golden years before Medicare was implemented. And now, comrades, all we have left is this totalitarian hellhole.
Beware conservative alarmism.
The doctor begins to lose freedom. . . . First you decide that the doctor can have so many patients. They are equally divided among the various doctors by the government. But then doctors aren’t equally divided geographically. So a doctor decides he wants to practice in one town and the government has to say to him, you can't live in that town. They already have enough doctors. You have to go someplace else. And from here it's only a short step to dictating where he will go. . . . All of us can see what happens once you establish the precedent that the government can determine a man's working place and his working methods, determine his employment. From here it's a short step to all the rest of socialism, to determining his pay. And pretty soon your son won't decide, when he's in school, where he will go or what he will do for a living. He will wait for the government to tell him where he will go to work and what he will do.
He concludes by warning us that, if this government program is adopted, "you and I are going to spend our sunset years telling our children and our children's children what it once was like in America when men were free."
Chilling stuff. If only we could fast forward about 50 years and see if he's right. We're in luck! This warning was issued in 1961 by celebrated actor Ronald Reagan and he was talking about the looming prospect of Medicare. You can listen to it on this LP sent out by the AMA at the time: Ronald Reagan Speaks Out Against Socialized Medicine.
Sadly, we were all born too late to know what America was like when men were free: those golden years before Medicare was implemented. And now, comrades, all we have left is this totalitarian hellhole.
Beware conservative alarmism.
Subscribe to:
Posts (Atom)