Make sure you see the guy at 3:45

Below is a bunch of quotes and links to stories they came from that I compiled for some friends of mine.  We had begun discussing health care over lunch and they started disputing some of my assertions.  Most dishearteningly is that the conversation ended when one of them just declared it too complicated and kind of ended the debate with that.

One of the major points they did NOT believe me on was my assertion that the bill would lead to HIGHER insurance premiums for most people, thus the lead article:

“On Nov. 2, the Congressional Budget Office estimated what the plans will likely cost. An individual earning $44,000 before taxes who purchases his own insurance will have to pay a $5,300 premium and an estimated $2,000 in out-of-pocket expenses, for a total of $7,300 a year, which is 17% of his pre-tax income. A family earning $102,100 a year before taxes will have to pay a $15,000 premium plus an estimated $5,300 out-of-pocket, for a $20,300 total, or 20% of its pre-tax income. Individuals and families earning less than these amounts will be eligible for subsidies paid directly to their insurer.”

“Sec. 59b (pp. 297-299) says that when you file your taxes, you must include proof that you are in a qualified plan. If not, you will be fined thousands of dollars. Illegal immigrants are exempt from this requirement.”

“Sec. 202 (p. 91-92) of the bill requires you to enroll in a “qualified plan.” If you get your insurance at work, your employer will have a “grace period” to switch you to a “qualified plan,” meaning a plan designed by the Secretary of Health and Human Services. If you buy your own insurance, there’s no grace period. You’ll have to enroll in a qualified plan as soon as any term in your contract changes, such as the co-pay, deductible or benefit.”

http://online.wsj.com/article/SB10001424052748704795604574519671055918380.html
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Mandated Health Insurance Squeezes Those in the Middle [in Massachusetts]

http://online.wsj.com/article/SB125304790936413347.html#mod=article-outset-box

“In Massachusetts, rising health-care costs, already among the highest in the country, threaten the insurance mandate’s long-term viability. The state’s costs to expand coverage have swelled nearly 70% to an expected $1.75 billion in fiscal 2010 from a base of $1.04 billion in 2006, about half of which is supported by federal funds, according to the Massachusetts Taxpayers Foundation, a nonprofit policy research group.”

”

They bought their own insurance in 2006, after Mr. MacDonald, a 39-year-old computer consultant, lost his job and began to work as an independent contractor. Insuring the couple and their four children then cost $650 a month, or $7,800 a year, and didn’t include prescription-drug coverage. It was “a lot, but something we could afford,” Mr. MacDonald says.

The next year, premiums rose to $750 a month and to about $900 a month in 2008. The MacDonalds say their actual medical costs hadn’t come close to the premiums they were paying. “What are we getting for it?” Ms. MacDonald says they asked themselves before canceling.”

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Maine Finds Health Care Fix Elusive

http://www.nytimes.com/2009/11/11/health/policy/11maine.html?_r=1&th=&emc=th&pagewanted=all
[The tone of this article is generally sympathetic to the Nat. Health Care Reform, though given the facts of the story; I don’t see how.]

“The state’s legislators have tried for decades to fix its system, but their efforts have always fallen short: health insurance premiums are still among the least affordable in the nation, health care spending per person is among the highest and hospital emergency rooms are among the most crowded. Indeed, many overhauls to the system have done little more than squeeze a balloon — solving one problem while worsening another.”

“To help people like Mr. Sargent, the state is one of 17 that limit how much insurers can charge people for being older, and it does not allow exclusions for previous illnesses — both policies that are part of national reform proposals. But one result is that premiums for younger people are relatively high. Although national proposals would require that nearly everyone get coverage or pay a penalty, Maine’s Legislature rejected such a mandate so many young people do not or cannot buy insurance — further skewing the insured pool to sicker and older people and making premiums that much higher.”

“To compensate for such expensive care, the state pays doctors and hospitals relatively skimpy fees for treating Medicaid patients. As a result, doctors are closing solo practices and joining hospitals, which then have the market power to jack up rates to private insurers in a common problem called cost-shifting.”

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Health Care Speech Writers for Edwards, Clinton & Obama now without Insurance.

http://www.politicsdaily.com/2009/10/08/health-care-speechwriter-for-edwards-obama-and-clinton-doesnt/

“While the state has the lowest rate of uninsured, a report by the Commonwealth Fund states that Massachusetts has the highest premiums in the country. The state’s budget is a mess and lawmakers had to make deep cuts in services and increase the sales tax to close gaps. The number of people needing assistance has at times overwhelmed the state. The mandate means that some people who can’t afford insurance are now being slapped with a fine they also can’t afford. There is no “public option” in the way the president describes it, no inter-state competition, no pool for small businesses and self-employed individuals like me to buy into groups that negotiate cheaper rates. So far I haven’t found any “death panels,” but if I get sick and need a hospital, I sure hope I can find one and a feisty granny to pull my plug.

What makes this a double blow is that my experience contradicts so much of what I wrote for political leaders over the last decade. That’s a terrible feeling, too. I typed line after line that said everything Massachusetts did would make health insurance more affordable. If I had a dollar for every time I typed, “universal coverage will lower premiums,” I could pay for my own health care at Massachusetts’s rates.”

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The Whole Foods Alternative to ObamaCare
[Whole Foods CEO’s ideas for reform]

http://online.wsj.com/article/SB10001424052970204251404574342170072865070.html

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

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

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

• Repeal government mandates regarding what insurance companies must cover.

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

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

• Enact Medicare reform.

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

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

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

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

Although Canada has a population smaller than California, 830,000 Canadians are currently waiting to be admitted to a hospital or to get treatment, according to a report last month in Investor’s Business Daily. In England, the waiting list is 1.8 million.
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http://www.aei.org/docLib/20061017_OhsfeldtSchneiderPresentation.pdf

Once fatal injuries are taken into account, U.S. “natural” life expectancy from birth ranks first among the richest nations of the world. (Page 19, Table 1-5)

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http://www.nytimes.com/2009/11/04/health/04infant.html?_r=1&scp=1&sq=premature%20births%20&st=cse

“Premature infants in the United States are more likely to survive than those elsewhere.”

“High rates of premature birth are the main reason the United States has higher infant mortality than do many other rich countries, government researchers reported Tuesday in their first detailed analysis of a longstanding problem. ”

“The high levels of prematurity in the United States have various causes. Dr. Fleischman said the smallest, earliest and most fragile babies were often born to poor and minority women who lacked health care and social support. The highest rates of infant mortality occur in non-Hispanic black, American Indian, Alaska Native and Puerto Rican women. But other minorities have some of the lowest infant mortality rates in the United States: Asian and Pacific Islanders, Central and South Americans, Mexicans and Cubans. ”

“Dr. MacDorman said prematurity was not the only factor behind infant mortality in the United States. She said full-term babies in this country also had higher death rates than those in Europe from sudden infant death syndrome, accidents, assaults and homicides.” [i.e. NOT due to health care]

I randomly found this post which has a pretty good rundown of the bill on a supply and demand basis:

The problem with US health care is cost. It costs too much relative to what it costs in other OECD countries and it costs too much relative to income. A cost problem is in essence a price problem. Prices serve as signals. Since HC is a marketplace- quite distorted, but a marketplace- the price is telling us that there is a supply-demand imbalance. There is either too much demand, too little supply, or both.

Like good market fundamentalists, let’s look at both sides:

Supply

(1) Doctors: the medical mafia has made it very difficult and expensive to become a doctor in the US, all in the name of patient safety, of course. I am not saying that it should be easy, BTW, but compared to other OECD countries, where doctors are more or less a middle class-level occupation, here, in most locations, doctors are not. Part of the supply constraint is the number of years of schooling required (upwards of 10 years post high school; often 15 with fellowships for certain specialties) and another part is the cost of education. When software engineers make too much in the US, somehow the H-1B quotas get adjusted and the supply of engineers in increased. Doctors, obviously, are luckier and smarter in restricting entry into their fields.

Does the Pelosi bill address doctor shortage? No. In part, they “promise” to cut reimbursements. Like that’s going to happen.

(2) Coverage availability: A huge problem now is the incredibly high cost of individual policies. There are a number of reasons for this, such as negative selection, state-level insurance market regulation, monopoly law exemptions, absolute lack of transparency in pricing and others. There really isn’t a functioning market for individual policies, as far as I can judge. We recently changed car insurance policies. It took minutes. While the parallel is far from perfect, there is something to learn there.

Does the Pelosi bill address the dysfunctions of the individual policy market? Only partially, and will create more problems than it solves. At least, they recognize that it is a problem and they are attempting to take steps towards a more transparent marketplace.

(3) Employer-link: I mentioned “unintended consequences” above. A big part of the problem is that most employed get coverage via employers, and this started as an unintended consequence back in the 1940’s when the government started limiting compensation to control war-time inflation. This is a very, very perverse aspect of the existing HC system. It forces employers to get in the business of buying healthcare, medicines, flexible spending accounts, dental, fitness programs and other what I would call “non-essential” business activities. In addition, employers pay for a part or all of the insurance, on top of payroll taxes. This makes American businesses waste resources on non-business activities, and makes hiring in the US expensive.

Does the Pelosi bill try to move away from employer mandates? No, it makes them worse by taxing businesses that do not offer it. I am going to make the prediction that within 3-5 years employers will be choosing to pay the 8% payroll tax penalty and not bother with the whole thing. If an employer can fire 60% of their benefits department, save on insurance costs and get away with an 8% payroll tax, I think the decision will be a no-brainer. Either that, or a wholesale move to hiring “contractors” in lieu of “employees”: why even bother with payroll taxes at all? Or some other “who could have known” side effect.

I should also point out that the worst side effect of the employer-linked coverage is that it makes it difficult for start-ups to attract people. We all lose in aggregate when this happens but too few people care about what “might” have been. If Sergey Brin needed kidney dialysis, do you think he could have dedicated all his time to starting Google?

Demand

(1) Users of free HC goods and services: “poor”, illegals, elderly
Most of our representatives are both innumerate and economically illiterate. Some even have troubles filing tax returns. They fail to understand that the demand for free goods is near unlimited.

As a result, here in the city hospitals, you have a huge population that pays nothing for their hospital stays, and as a result, they treat it like a full-service hotel: non-stop demands, frequent visits, you name it. Homeless people simulating sickness to stay in for a couple of days, eat and take a shower. Nursing homes refusing to pick up patients if they have another test in two days. Families collecting the social security check from grandma refusing to let her die. Caribbean tourists visiting family trying to get in for a kidney transplant. Illegal aliens giving birth to their “anchor” babies. Drug addicts faking illness to get morphine and a good night’s sleep. “Poor” trying to get themselves checked in so that they get 2 week supply of meds without a copay. These are all actual cases. ALL PAID FOR BY THE TAXPAYERS/FUTURE TAXPAYERS AT $5,000/DAY.

Does the Pelosi bill address these huge generators of losses for the system? Absolutely not. Even the simplest thing, such as mandatory minimum copays, are not in. Never mind some other solutions, like, gasp, rationing. The bill even bans illegals from buying insurance, even if they want to, thus guaranteeing that the taxpayers get the tab.

(2) Heavy users of HC goods and services: the obese, the smokers, the drug users, people with genetic conditions

Another way to reduce demand would be to discourage behaviors that are likely to result in increased health care demand. The way I would approach it, the government will not pay for anyone’s care if they are obese (based on BMI or body fat %), smokers or drug users. And, on top, the system should assume that one does not qualify, unless proven otherwise, with annual eligibility checks.

Does the Pelosi bill do anything to reduce future demand by discriminating against the obese, the smokers and the drug users? No.

One exception to this group are people born unlucky with genetic disorders. I would have no problem with a portion of my healthcare dollar going to those truly, genetically unlucky people. However, smoking, obesity and drug use are a matter of choice by and large (with the exception of metabolic disorders affecting obesity), and have to be actively discouraged, something the bill does not do at all.

(3) Federal programs matching state spending
Another large factor in the “demand” side of the equation is that for many of the state-level run programs, the Federal government provides matching funding. Obviously, this creates huge incentives for states to maximize spending on everything, and, as a result, costs skyrocket.

Does the Pelosi bill change these incentives to reduce demand? No.

Again, unlike most HC problems, the solution here is relatively simple. Move away from matching, and go to zero-based budgeting: every year the budget resets at 0, and every dollar has to be rejustified.

(4) Tort reform
Talk to any doctor, particularly anyone doing invasive procedures of any kind, and you are likely to hear horror stories about malpractice lawsuits. The lottery-ticket tort system (the cesspool home of slime like John Edwards, and a major donor to the DNC and the President) encourages frivolous lawsuits and outsized jury awards. Since most jury verdicts are unpredictable, doctors and their insurance companies often choose to settle, thus feeding the scum.
The current system has two perverse consequences, one is an increase in insurance costs (which can run tens of thousands of dollars or more per year). The second, and much more costly but difficult to quantify, is that doctors overorder medical tests for unlikely conditions both in in-patient and out-patient setting, and have patients overstay in hospitals while waiting for all of those to come through. This is a huge money drain in the entire system.

Does the Pelosi bill address tort reform as means to reduce demand? No.

The solution is relatively simple: limit the maximum award in any malpractice suit to $50-100k, and refer all alleged cases to the State medical boards for review. As a result, in a true malpractice case (which is something a jury in my view absolutely cannot decide as most Americans in my view lack basic science skills), the doctor would lose his license.

(5) Prescription drugs
There are a few problems here. On one side, drugs are incredibly expensive to develop, and the people who develop them must earn a proper risk-adjusted return on capital for doing so.
Then there is the other side. The US taxpayer and paying HC consumers have been paying for the development of drugs that the rest of the world gets at much lower prices. This is not a system that can last for too long as the free riders have to be cut off. Second, the US is the only OECD country, to my knowledge, that allows direct-to-consumer (DTC) drug ads. This generates demand for certain brands even when generics are available. “Ask your doctor if the purple pill is right for you” has a cost and it is coming out of your pocket.

Does the Pelosi bill address the problems with prescription drug costs? No.

There are a few things that can be done: ban consumer advertising, ensure flat or reasonable pricing across regions, and so on. Obviously, it would take too much thinking on Congress’s side.

(6) Demographics
There isn’t anything the bill can do per se, but it would have been the perfect occasion to start with future cost reductions via various mechanisms as it is clear that the problems we have now are only going to get worse in the future. To paraphrase a famous management thinker, demographics is the future that has already happened. And it is not pretty, in my view. Ideally, this would be a wider national discussion on aging, and how what was promised simply will not be there. There will be substantial reductions in benefits in the future, whether you like it or not, and these reductions will be in healthcare, pensions and social security, again whether you like it or not.

Does the Pelosi bill address the coming demographic upheavals in the healthcare system? No.

(7) Fraud
Finally, it is not a secret that there are substantial fraud operations going on with the various programs. Every major bust there is simply staggering in scope, but what is also staggering are the incentives for people not to work and to hide assets to qualify for the “free” programs, a small-time “beat the system” operators.

Does the Pelosi bill address fraud at the large and individual levels? No.

This is my market-based look on the bill. I am sure there are a lot more aspects of it, but I have given up thinking any more about it as there is no way I can change anything. I rate this bill at FAIL as it fails to address the underlying problems with the current system. It simply raises taxes while doing nothing for a “true” reform even though the bill is marketed to the clueless populace as “reform.” It is not.

 

h/t Ace

Mish points us to a CNN Money article highlighting the many states in serious financial trouble.  The current state of residency for the family, Illinois, makes it to #2; just below California!

 

What is particularly troubling about Illinois is the size of the its budget gap, 47.3%.  If you notice, most of the states in the ‘top’ 10 have had revenue drops over 10% with many as high as 15%.  Yet, Illinois, with a revenue drop of 10.9% the second lowest revenue fall on the list has the second highest budget gap of the group.  What is going to happen when the trend continues and revenues continue to fall in Illinois?

What this really indicates is that Illinois has a structural budget problem, based upon overly generous pension programs, public worker contracts and of course, this being Illinois, patronage.

Unfortunately, the suggested proposals for the problem are the same that California tried and failed at.  Governor Quinn has proposed creating new taxes at the higher end of the tax bracket much like California.  However, California has found that this kind of extremely progressive taxation leaves the state subject to the good fortunes of just a few and is extremely vulnerable to bad years and money flight. He has also proposed raising the corporate tax.  When he first made these proposals in the spring the political pressure was against them.  However, he has said that he wants to readdress them.

 

No one has made a serious stab at the real problem in the state, overspending.  Until the costs of the system due to over-promised benefits is addressed.  In fact, the Governor wants to spend MORE money, proposing to borrow $900 Million to fund tuition grants.  This is on top of $2 billion the state already borrowed to make it through this fiscal year.

I’m not sure how this addressed the states budget problem.

Awesome revenge on a smug English Grad student.

The Washington Post describes how the old way of growing beef in Argentina using large estates and gauchos is passing to the use of large cattle lots as we do here in North America.

A lot of it is just catch-up with the rest of the world:

Indeed, all over the pampa, ranchland that was home to Angus and Hereford cows has in recent years been replaced by fields of soybeans, corn and wheat as commodity prices skyrocketed by more than 300 percent. This year, a third of the 15 million animals expected to go to slaughter will fatten up in the now-ubiquitous feedlots, three times as many as in 2001.

…

“I’m not a romantic,” he said, referring to those who pine for the old days in cattle country. “Argentina sold this image to the world to position itself — that was the ’40s, ’50s, ’60s, ’70s and ’80s. But the reality is all the rest of the world went the other way.”

Not mentioned in the story is the fact that at one time a significant number of the Gauchos were Jews, stemming from a large emigration from Russia (after the pogroms) in the 1890s.  At that time, help was needed out on the pampas

Until today, I did not know that Berlin had a wild boar problem. As happens in many situations, city folk find wild animals to be cute (until they kill a child or more favored animal). Even when a cougar found itself in Chicago, a block from an elementary school, many decried the police’s decision to kill it.

The final paragraphs of the Berlin story are the best:

Some Berliners are defying the law every night, bringing boars food out of affection for the beasts. Unemployed truck driver Michael Gericke opened the trunk of his white Mercedes and tossed corn onto a parking lot. A score of hogs scrimmaged over the spoils. One tried to climb into the trunk.

Mr. Gericke says he has been feeding boars here every night for 12 years, making him the doyen of Berlin’s boar-loving underground. Every two weeks he spends €15, or about $20, of his jobless benefits on a 110-pound sack of corn. “Feeding them corn diversifies their diet,” he says.

Only a handful of people have come out to feed the foragers on this December night. In summertime, says Mr. Gericke, hundreds of Berliners show up.

Berlin’s forestry officials say they’re filing charges against Mr. Gericke that could lead to a hefty fine. Mr. Gericke says that won’t stop him, because he can’t pay anyway. “Even if they send me to prison instead, I won’t stop.”

His loyalty to boars stems from an epiphany he had years ago, when he opened his car door and a large tusker he’d been feeding hopped in. “I thought he was going to bite my leg off,” says Mr. Gericke.

Instead, the boar put his head in Mr. Gericke’s lap. “It was as if he was saying, ‘Thank you,'” Mr. Gericke says.

Mr. Eggert, the hunter, thinks it’s time Berlin’s authorities got tough. He says: “We should just gather hunters at the these feeding sites, make the civilians stand aside, and feed the swine with lead.”

A nice Teutonic statement.

Greece is in bad shape.   It is a very small country, with only 11 Million, at most with a very fractured political and civil society.  It is next to a much larger, richer and more dynamic country (Turkey) that happens to be occupying a history Greek homeland and is veiwed by Greeks as it’s nemesis.  It is a country ripe with conspiracy theories and suspicion of what it calls “the West.”  In many ways it has more in common with its neighbors on the southeastern shores of the Med.   It’s political culture is completely corrupt.

As one conservative newspaper put it:

“This is a country with a state that is in a shambles, a police force in disarray, mediocre universities that serve as hotbeds of rage instead of knowledge and a shattered health care system. It is also on the brink of financial ruin.”

I highly doubt that Greece will still be part of the EMU by 2013.  It’s best hope would be to tie its fate with its dynamic neighbor, but alas, I don’t see that happening.  Down the road, though, don’t be surprised if Turkey has a growing sphere of influence in the Eastern Med.