New School Politics

From one of my favorite thinkers, Yaron Brook:

Today, what we have is not a system grounded in American individualism, but a collectivist system that aims to relieve the individual of the “burden” of paying for his own health care by coercively imposing its costs on his neighbors. For every dollar’s worth of hospital care a patient consumes, that patient pays only about 3 cents out-of-pocket; the rest is paid by third-party coverage. And for the health care system as a whole, patients pay only about 14%.

The result of shifting the responsibility for health care costs away from the individuals who accrue them was an explosion in spending.

I get the impression that American healthcare is generally seen as a market system by the electorate and the only alternative as more government control. Of course, factually this is untrue as the government is responsible from between 45 and 50% of healthcare spending in the US, making it the single largest ensurer of Americans. On top of this, an endless array of regulations make the American system not only tapped by government, but dominated by it.

Additionally, of the insurance that is (essentially) private, third parties (i.e. employers) pay for six times as much as individuals. And the obvious reason for that the way the tax structure is convoluted to subsidize employee based insurance by not taxing it as income. According to Paul Krugman and Robin Wells, “the value of the tax subsidy for employer-based insurance is estimated at around $150 billion a year.”

I surmise the basic fallacy behind this system is the desire for a free lunch–voters want heathcare, especially if they can get it at someone else’s expense.

But the wasteful incentives this way of thinking creates not only is inefficient, but eventually passes even higher costs on to consumers. Remember that when people bear less cost for a maneuver, they have no encouragement to try and control its costs. The consequence is that spending goes nuts.

For the sake of achieving greater frugality and more efficiently rewarding good and bad providers, it would be wise to give the individual a greater place in healthcare. This would not happen by government mandate or subsidy, but rather an equalizing of the playing field between individual and employer healthcare, as well as a downsizing of government’s roll in the industry.

For that reason, the medical reforms of Ron Paul, John McCain, and Rudy Giuliani tend to be superior to that of other candidates.

Popularity: 35% [?]

George Soros is convinced that the world is about to enter a serious recession.  Unfortunately, it seems as if most of the financial world is similarly convinced. The latest trend in stock markets seems to be, “Sell!  Sell!” as traders don’t know what’s going to happen in trading today in the United States, which just opened at 10AM.  The Federal Reserve, in an attempt to head off the recession, cut interest rates last night in a rare between-meetings announcement.   News from the Asian markets isn’t good, with Forbes saying that the environment is rather negative.  One Japanese trader seems to have summed up the mood.

“It’s like a funeral in here,” said Ken Masuda, senior equities dealer at Shinko Securities in Tokyo.  ”No one knows what’s going to happen tonight in New York.  It’s like we’ve gone blind, you don’t know what’s coming.

“Until we see New York, all we can do is sell.” 

We can hope that the United States can stave off recession with an economic stimulus package and without pushing the stock market lower.  Unfortunately, the stimulus package seems far off, as Democrats and Republicans cannot agree on how to reinvigorate the economy.  Sen. Charles Schumer [D-NY] predicts that the stimulus package will be passed some time in March.  If the market drops today as it has been predicted, this may be too late.  Europe, meanwhile, is convinced they won’t be affected by the US’ possible recession.  We’ll be covering the financial situation all day, and we hope that our next post comes with good news instead of bad.  In the meantime, as Eftychis suggested, stick to Forbes, The Financial Times, The Wall Street Journal, Bloomberg News, and financial aggregators like Google Finance & Yahoo Financefor up to the minute reports on the stock market’s position.  As of this writing, the NASDAQ was down approximately 117.68 points, or 5.03%, while the DJIA has seen a drop of 59.91 points [or .49%].

Popularity: 58% [?]

Why do we have a entitlement program for the wealthiest of Americans?

Think I am sounding like a liberal? Well, actually I am talking about social security, which I don’t see reason for, especially considering that the elderly are far wealthier than the average American.

Popularity: 13% [?]

Its nice to see a battle over spending for once in Washington. Surprisingly enough its the Bush White House who is trying to check Congress’ urge to spend. Block grants are the main area over which this disagreement is occurring:

…differences over how much federal aid should be provided to cities and states is only one part of the $22-billion chasm that divides congressional Democratic leaders and the White House.

Despite the fact that $22 billion is a large amount of purchasing power, in the context of our whole economy it does not make a dent in government spending. Additionally, cutting federal aid expenditures will do little to the Federal budget on the whole. If a real initiative to reduce the size of government existed it would aim at reforming entitlement spending which account for about 2/3 of total spending.

Moreover Social Security and Medicare especially are growing at a rate that make them grotesque liabilities in the near future.

[According to] Congressional Budget Office that Social Security and Medicare outlays will rise from 8.5 percent of annual economic output to 10.5 percent in 2015 and 15 percent in 2030.

These costs, in turn, would force the United States to keep borrowing, pushing the ratio of publicly held federal debt from its current level of 37 percent of the economy to about 100 percent in 2030, a level reached in the past only during World War II.

A wise first step would be to curb the growth of entitlements by tying it closer to an inflation index instead of a GDP index. Second would be to cut entitlements in general. Lastly it would be most wise, although most unlikely, to move towards ending these absurdly large bureaucracies.

Nevertheless, courage and reason are in short supply among politicians and I surmise that very few would sacrifice their political lives to initiate such wise reforms.

Popularity: 42% [?]

Arnold Kling of EconLog writes:

From my point of view, the first-best world is one with (i) open borders and (ii) limited government. One argument against (i) is that it would eventually undermine (ii)…

However, I can think of a number of reasons that the correlation between (i) and (ii) could be positive rather than negative. For tyrants, open borders would offer a powerful check on power. Robert Mugabe would have a harder time exploiting his people if they all just got up and left. Our own government would be smaller if we said that its job did not include interfering with peaceful transactions between American employers and non-American-born employees…

Kling offers a stance on immigration that both parties in America are currently sidestepping. On one hand the GOP would never think of providing (illegal) immigrants with entitlements, but they also want to retard immigration and criminalize all undocumented immigrants. On the other hand the Democrats want liberalized immigration but they are also more than willing to give social services to all kinds of immigrants at the same time. At the same time neither party offers a true free market solution.

The free market solution to immigration should encompass (a) liberalized immigration restrictions and (b) no welfare benefits for undocumented immigrants. I have no problem with “illegals”. Their added labor puts more muscle power as well as mind power into the system, while–as long as (b) holds true, and they do not receive vast amounts of social welfare–they drain nothing from it.

Open borders are a pure sign of freedom, so it is troubling that there is currently such ill-will in America towards it. As Kling implies, it is indicative of a dictator to close borders to keep people in (i.e. Soviet Union), but it is also authoritarian to close borders to keep them out. In a free country people should be able to move freely not just within its borders but across them too.

Some may warn, that if we allow too many of a certain demographic (in our case Hispanics) to come, they could eventually sway the policies of our country in the direction of their native governments (i.e. bigger). There are two ways of preventing that–and it certainly must be prevented. (A) Don’t give many of them citizenship. Just because they should be able to come here freely doesn’t mean that we should sacrifice to accommodate them. They can stay here but they need not be citizens; this way they can neither vote nor collect public welfare benefits. (B) There should be provisions written into the law to prevent the government from becoming to big. Perhaps the founders would have been upset with how far their successors have stretched the elastic clause, but the fact of the matter is that there could be greater specifications limiting the size of our government. (For instance: “The Federal Budget may not grow above 15% of GDP…” etc.)

Additionally, open borders provide capital mobility, which is of great benefit to the market. If we can have mobility of inanimate capital (in the form of imports, exports, outsourcing, insourcing, etc.), we should have mobile human capital. Free trade and free markets should include freer immigration, shouldn’t it? As I see it, it would only make our economy stronger.

Popularity: 27% [?]

This is John Edwards’ Universal Healthcare Plan. I have added some comments about each of his solutions (they appear italicized).
• Promote Evidence-Based Medicine: Effective new treatments can take years to be widely adopted. For example, many patients do not receive beta blockers after heart attacks even though they are cheap and highly effective. Similarly, doctors sometimes prescribe name-brand drugs despite the availability of equally effective, less expensive generic drugs.

~Has it occurred that maybe, just maybe, there’s a reason for this? If I was a biotech company, and I had discovered a cure after spending millions on research, how would generic drugs created by some other organization/the government encourage me to do so, by siphoning my research to further their profits? I would have no incentive to find no cures if I can’t make money doing so. That’s why we’re losing out on anti-biotic research.

•  Disseminate Objective Information on Medical Advances: Edwards will establish a non-profit or public organization – possibly within the Institute of Medicine – to research the best methods of providing care, drawing upon data from Medicare and the Health Care Markets and medical experts from across the nation. ~This is such a bad idea, because it will have more bureaucrats involved whom have no idea what medicine is. We don’t have an infinite amount of doctors for this kind of low-paying, low-IQ, desk jockey work.

•  Help Doctors Implement New Advances: Edwards will support new technologies, such as handheld devices and electronic medical records, to give doctors the latest information at their fingertips.

~My local hospital already has these “new, latest technologies,” because it’s a privately run, not government baesd, hospital. Get with the program please.

•  Improve the Health Care Delivery System: Edwards will develop partnerships among academic medical centers, Medicare, and other federal agencies to make sure high-quality medicine is practiced everywhere. Improving quality is an important key to making universal health care affordable in the long run.

~As a to-be medical student, I ask you this: Why would I want to attend medical school for an extra 4 years, only to get paid the equivalent of, say, a DMV worker? I could just as easily use my skills, get an MBA in one year, and go to wall street, and make much more money. As such, why would our best students want to become doctors without any future realistic gain?

• Pioneer New Ways to Pay for Health Care: Our health care system is predominantly fee-for-service: providers are paid for each treatment, regardless of its necessity or quality. For example, a hospital that botches a surgery is often paid for the error and then paid again to fix it. Our system should pay doctors for results, encouraging better, more efficient care. Under Edwards’ plan, Medicare and the Health Care Markets will lead the way, paying higher rates to plans and providers that provide the very best care, lowering premiums for high-quality plans, and penalizing plans that fail to meet critical, easily quantifiable goals such as childhood immunization rates.
~Instead of having a federal bureaucracy ruin things by putting excess paperwork and waste time, why not just stop subsidizing the health insurance industry and let competition take its course? If an insurance agency is going to be stupid, the customers can get another insurer easily.

• Prevent Medical Errors: At least 100,000 patients die each year due to medical errors, according to the Institute of Medicine. Many other errors seriously injure patients and add to health care costs. Edwards will support public-private collaborations to reorganize patient care, improve internal communications, reduce errors through electronic prescribing, and establish basic quality benchmarks.

~Great, so now it’ll be easier for Mr. Edwards (a lawyer) to be ambulance chasing for malpractice lawsuits. And these are coming from generally our better doctors. What happens if they leave for China or Russia?

• Promote Preventive Care: Health Care Markets will offer primary and preventive services at little or no cost. Incentives like lower premiums will reward individuals who schedule free physicals and enroll in healthy living programs. Edwards will also support community efforts to improve health, such as safe streets, walking and biking trails, safe and well-equipped parks, and physical education programs for children.

~So not only are physicals free (hurting doctors and nurses), but maybe we should just give people free everything. After all, doctors would be willing to work without pay. Right?

• Improve the Treatment of Chronic Diseases: When chronic diseases are not routinely treated, they can cause emergencies that threaten patients’ health while raising costs. Health Care Markets will encourage plans to monitor patients’ health to keep them out of the emergency room. For example, plans can pay for nutritional counseling for diabetic patients to help them make healthy choices and control their blood sugar levels.

~More incursion into peoples’ lives. You can’t eat this, you can’t eat that, you need to take your pills. Give me a break. If I want to die from MDR-TB cause I hate needles, I have the right to do so. You have the right to prevent me from getting you sick. But they can’t tell people how to live their lives. That’s Soviet.

•  Empower Patients through Transparency: Finding reliable information comparing doctors and hospitals on price and performance is harder than finding it for a new car. Edwards will create a “Consumer Reports” for health care, a universal and easy-to-use report card to help Americans evaluate hospitals’ effectiveness in treating injuries and diseases. Informed patients will make better choices and drive health care providers to offer better services for lower costs.

~ Consumer Reports for doctors are like U.S. News Reports for Colleges. They use random statistics that are easily inflatable and will obviously favor those doctors whom have more connections, regardless of their capabilities. This is plainly “No Child Left Behind” for hospitals.

•  Reduce Health Disparities: People of color are more likely to be diagnosed with cancer and less likely to receive timely and effective treatment. Children of African-American mothers are twice as likely to die within their first year. In California, low-income minority neighborhoods have one-third as many doctors, as a share of their population, than other neighborhoods do. Edwards will support medical research into disparities, reduce the pollutions and toxins that disproportionately harm communities of colors, and support translation services to address language barriers. By helping all Americans get insurance, Edwards will also address disparities in health caused by disparities in insurance. [ACS, 2003; KFF, 2003; Kormaromy et. al. 1996; KFF, 2007]

~ Maybe it’s because doctors are afraid that they’ll get sued by ambulance chasers like Mr. Edwards here. Has it occurred that religion, among other things, may be affecting what doctors can do? Has it occurred that doctors, having spent thousands of dollars and years in medical school, not to mention hell via the pre-med process, might influence where they want to work? Why do you think hedge fund managers live in suburbs?

•  Improve Productivity with Information Technology: Health care administration costs more than $1,000 per American. It may be the fastest growing part of health care costs. [Woolhandler et. al., 2003]

~Exactly! Let’s exacerbate the costs even more by adding a bureaucracy.

• Adopt Electronic Medical Records: Many insurers and hospitals still rely on cumbersome paper systems and incompatible computer systems. The outdated “paper chase” causes tragic errors when doctors don’t have access to patient information or misread handwritten charts. It creates needless administrative waste recreating and transporting medical papers, performing duplicative testing, and claiming insurance benefits. Edwards will support the implementation of health information technology while ensuring that patients’ privacy rights are protected. Savings from electronic records could be as great as $160 billion a year, according to a RAND study. [RAND, 2005]

~This is of course all going to be paid by who?

• Support Local Infrastructure: Edwards will provide the resources hospitals need to implement information systems that improve patient safety and hospital efficiency. Steps include:

~Except, at this rate, we won’t have any hospitals left. In my region, three hospitals have closed down due to expensive malpractice lawsuits, leaving the hospital I attend very busy and crowded.

• New Methods of Distribution:  Adopting automated medication dispensers that can quickly and accurately fill prescriptions, freeing pharmacists to work more with patients and reducing the risk of prescription errors.
~Who’s going to pay for this?

•  Improve Communication:  Developing systems to promote patient-doctor communication, such as email and group consultations and support groups for individuals suffering from the same disorder.

~It’s called “alcoholics anonymous.”

• Creating computerized physician order entry to eliminate lost paperwork and illegible writing.

~Who’s going to pay for this?

o Developing computerized patient reminder systems to improve compliance with treatments, such as automatic phone calls home to remind patients to take needed medication to help keep them healthy and out of the hospital.
~Who’s going to pay for this?

o Using handheld devices to allow hospital staff to communicate results directly to physicians, instead of wasting time trying to find a doctor with urgent information.

~Who’s going to pay for this?

•  Protect Patients against Dangerous Medicines. Recent drug recalls such as Vioxx have raised concerns about drug safety. Edwards will restrict direct-to-consumer advertising for new drugs to ensure that consumers are not misled about the potential dangers of newly marketed drugs and strengthen the Food and Drug Administration’s ability to monitor new drugs after they reach the marketplace. He will also ensure that researchers evaluating medical devices and drugs are truly independent.

~Likewise, evolution is a “theory,” not a fact, and we need “independent, non-atheist devil-worshippers” to analyze this theory with evidence. Das Kommisar, anybody?

Popularity: 37% [?]

Its encouraging, once again, to see the GOP’s front runner pushing for market based reforms. In today’s Boston Globe, Mayor Giuliani wrote an op-ed outlining what he calls the “free-market US cure for healthcare”.

His plan, as outlined in his article, is four-pronged:

-”Bring fairness to the tax treatment of healthcare”

-”Expand tax-free Health Savings Accounts”

-”Encourage Medicaid reform through block grants”

-”End lawsuit abuse by unscrupulous trial lawyers”

While my healthcare plan is much more simple than the Mayor’s (get the government out of healthcare), I am once again refreshed by Mr. Giuliani’s free market policy push, especially considering the giant step to the left the Democrats have made on economic issues, led by John Edwards who already has a plan for universal, government mandated healthcare.

There is a lot to be said about the economic rationality of Giuliani’s plan. Point-by-point,

-By cutting taxes on health insurance not provided by the employer, it will mollify the significant market distortion that has been caused by the fetish that many politicians have with attaching health service with employment. In this way, by subjecting the commodity to equal treatment incentive will be driven by natural supply and demand rather than by government manipulation of the market. By distancing ourselves from a system that forces the employer to provide healthcare, to one that lets the market decide, individuals and businesses will be driven to make healthcare decisions based on the value of the care itself rather than by circumstances set by the government.  

-Lifting the government burden on health savings provides a more practical solution for individuals on healthcare. For one, it is a realistic option which accepts the fact that not everyone can, wants, or needs to be purchasing health insurance on a large scale and, additionally, enhances their ability to purchase healthcare in the future. Additionally by encouraging savings (rather than mass-consumption) we can increase the available supply of healthcare at present–thereby lowering the price–as well as accumulate wealth and thus incentive for investment and innovation in healthcare for the future.

-By decreasing the federal governments roll in Medicaid and giving the states more leverage, we will be applying the simple and effective concept of competition to government–which is almost inherently devoid of it. Federalism, which–as Giuliani correctly points out–is useful in creating political competition, can allow different sovereignties to attempt different initiatives. The value of this is (a) that different constituencies which have different needs can be tended to in different ways and (b) that different states can comparatively learn from each other’s trials, what systems work and what do not. Block grants, rather than categorical grants, allow this competition to thrive in the same way as it did under welfare reform.

-Finally, by placing caps on malpractice lawsuits we can do two things. The first would be that by decreasing the amount that doctors can be hit by lawsuits, we can reduce the costs that the industry has to undertake from such cases and thus decrease the cost of health insurance on the whole and increase the earnings available to be reinvested. Second, by reducing the potential penalties for doctors we can accentuate the incentive for doctors to innovate the type of healthcare they give thereby increasing the amount of good doctors can do while simultaneously welcoming more doctors into the profession.

Giuliani’s ideas are generally sound, and should cause excitement among free market advocates. The Mayor’s remarks on healthcare are a bright spot in a zeitgeist that is moving ever so ominously in the direction of socialized healthcare. 

Popularity: 23% [?]

Although best known for his leadership on 9/11, Rudy Giuliani’s best attribute is probably how well he ran New York City where he lowered taxes, reversed the budget deficit, cracked down on crime, etc. Now he is trying to position himself as the small government candidate among the Republican Party’s contenders for the presidential nomination.

On issues from taxation to healthcare he is pushing for free market reforms in order to ensure the nation’s prosperity while he accuses the Democrats of advocating a “nanny state”. From the AP: 

Republican presidential hopeful Rudy Giuliani on Monday accused Democrats of favoring a controlling “nanny government” as he continued his bashing of the rival party.

…

Giuliani argued that he favors less government and lower taxes.

“That’s what makes America great, not this nanny government that Democrats want to give us, where government controls your entire life,” he said.

…

On Tuesday, Giuliani intends to outline his health care plan. Giuliani’s goal is to give individuals more control over health care decisions and to encourage state officials to come up with innovative solutions.

Key to his plan is a $15,000 tax deduction for families to buy private health insurance, instead of getting insurance through employers. Any leftover funds could be rolled over year-to-year for medical expenses, under Giuliani’s plan.

Even on social issues, which tend to be very polarizing in American politics, Giuliani offers a unique, constitutional alternative:

Giuliani argues that the best way to reduce tension about social issues is to allow states, rather than the federal government, to take the lead in responding to them. That would allow socially conservative and liberal states to each set rules that reflect the prevailing values inside their borders. Rather than perpetual combat in Washington, he insists, the nation could reach a new equilibrium as different states gravitated to different solutions.

In an interview last week, Giuliani said the key to resolving cultural arguments “where our society on a national level ends up being very divided” is to apply the “principle of federalism.” Questions on topics such as gun control, gay rights or aspects of abortion, he continued, “are issues that I think the founding fathers would say should be consigned to state and local governments, experimenting, deciding, having different views, and the federal government having a more limited role.”

The fact their top primary candidate is arguing for free market and federalist reforms in Washington should give comfort to Republicans who have witnessed the GOP descend from the modern party of small government, pioneered by Reagan and Goldwater, to become the other party of big government in the past 12 years. So much is put on the fact that Giuliani isn’t pro-life, nor pro marriage amendment, nor religious that no one has even bothered to look at his positions which would have a far greater impact.

Although I am supporting Ron Paul–who is the truest advocate of limited domestic government–I concede that I would support Rudy Giuliani out of the top four GOP contenders (Giuliani, Thompson, McCain, and Romney). And furthermore I urge those Republicans who long to stop the advance of the nanny state to support Giuliani in the face of the most popular alternatives.

Popularity: 31% [?]

In the excellent John Stossel’s 20/20 interview with the maker of the new (and surely exciting) healthcare documentary, Sicko, Michael Moore seems stunned to find out that the government uses force to get its way:

Stossel: But government is force

Moore: Why do you see it as force?

Stossel: Because government takes money with force from people and gives it to others.

Moore: No, it doesn’t, actually. The government is of, by and for the people. The people elect the government, and the people determine whether or not they’ll allow the government to collect taxes from them.

I wonder if I really need to take my time to explain why government is force. I figure those who are rational already know, and those who don’t–like Moore–have no chance. Keep in mind the implications of Moore not recognizing government’s fundamental nature: he wants the government to completely take over healthcare, but he never even took the time to find out how the Feds might go about doing that.

But observe the biggest difference in how Stossel and Moore approach government force. When Stossel–a libertarian–refers to those who are subject to government force, he refers to them as “people”–as in a plurality of individuals. When Moore refers to the subjects of a government, he refers to them repeatedly as “the people”–as in one amorphous entity. The dichotomy demonstrates how any person’s moral code goes hand in hand with their political one: when one permits altruism and sacrificing one man to the whims of many, he will always choose collectivism; but when one recognizes that every individual is sacred and an end in himself, he will always fight for individual freedom.

Here is the rest of Stossel’s article on the topic, including his reaction to Moore’s statement. Its very good, I strongly recommend reading it.

Popularity: 16% [?]

Especially from the Democratic presidential candidates there appears to be a significant push for “universal” (i.e. socialist) healthcare. Out of the top three in the running Obama has come out for implementing it in six years, Hillary is infamous for her push to do so back in ‘93 as first lady, and Edwards has already outlined as specific plan for it. And, at the same time, outside of Rep. Ron Paul (R-TX), no republican candidate appears as they will come out principled against the idea. Lire le reste de cet article »

Popularity: 19% [?]