Robert Waldmann

wonders why ROBERT PEAR and DAVID M.HERSZENHORN of the New York Times broke the main rule of fair and ballanced journalism -- one must never question the honesty of a Republican. Out of some residual respect for journalistic standards, they put their gasp reporting after their jump.

On the Senate side of the Capitol, where efforts to produce a bipartisan health care measure continued in the Finance Committee, top Republicans seemed eager to avoid early compromises that would let Democrats head to their home states for the August recess boasting of any progress.

[snip]

Mr. Grassley and Mr. Enzi clearly face a tough balancing act, as their party’s leadership maneuvers to torpedo any emerging compromise and force Democrats to start over.

[snip]

Mr. Grassley angrily dismissed suggestions that he and Mr. Enzi were being pressured by party leaders.

“What you are observing is a continuation of where we have been for a doggone long time,” he said. “The trouble is you all are looking for news and there ain’t no news.”

Some Republicans have begun to warn that Mr. Grassley should tread carefully on the health care bill if he wants to become the senior Republican on the Judiciary Committee, a post that he is in line to take in the next Congress, when his term on the Finance Committee will be up.

And there have even been suggestions that Mr. Grassley, who is up for re-election next year, could face a primary challenge ...

Then they close with a sentence whose clear meaning is, I think, not changed in the slightest by my edit in [brackets]

"Earlier in the day, Mr. Enzi said the legislation was simply not finished. 'The bill is not ready for prime time, so I don’t know any way that it could be completed today or next week and then we are at the August break,' he [lied].

Before the jump, their article notes that Waxman, top blue dogs and progressives have reached so, Sen Grassley, you aint got an excuse left with support from the top blue doggone.

by reader Sammy

“Are Per Capita Spending and Life Expectancy Statistics an accurate measure of US Health Care Efficiency?”

Proponents of some degree of nationalization of health care generally cite some variation of the following "The US spends more per capita on health care than any other country, and yet has one of the lowest life expectancies of any developed country" as proof of the need for government intervention. But is that statement meaningful?

This University of Iowa study provides some data that casts some serious doubt.

Let's break the statement into it's two parts.

1) "The US spends more per capita…

Yes, but the US makes more per capita. They spend more per capita on LOTS of things as GDP increases.

So the question is, does the US spend more than “expected” given higher GDP. The study conclusion: “Not Obvious” as seen by the graph below.


(rdan...graph corrected)
2) “….. and yet has one of the lowest life expectancies of any developed country.”

(Rdan...My impression is in comments)


This is even more interesting. The US has far higher fatalities from homicide and traffic accidents than other countries which impact the life expectancy statistics.



While this might have some implications regarding crime or traffic legislation, it does not on Health Care, unless one were to assert that US trauma care is dramatically inferior.

So the authors controlled for the differing non-health care related deaths to develop a life expectancy table that could more accurately reflect the relationship between health care quality and life expectancy:



The US jumps from 15th on the list with a life expectancy of 75.3 to 1st with a life expectancy of 76.9.

So one of the central and oft-quoted motivations for government control of health care "The US spends more per capita on health care than any other country, and yet has one of the lowest life expectancies of any developed country" is quite misleading.

rdan

A reader complained of lack of coverage of the ME at AB now compared to a few years ago, and charged it was a 'pass' on President Obama because he was our darling messiah. And of course ignoring the build up in Afganistan. Now this memo could be used to declare victory of the Bush planning and eventual response to realities of Iraq via General Patreaus and his policies. So here we go again.

Colonel Reese is reported by the NYT to have issued a memo recommending withdrawal from Iraq within 15 months, assuming all things remaining the same.

For all of these problems, however, Colonel Reese argues that Iraqi forces are competent enough to hold off Sunni insurgents, Shiite militias and other internal threats to the Iraqi government. Extending the American military presence in Iraq beyond 2010, he argues, will do little to improve the Iraqis’ military performance while fueling a growing resentment.

“As the old saying goes, ‘Guests, like fish, begin to smell after three days.’ ” Colonel Reese wrote. “Since the signing of the 2009 Security Agreement, we are guests in Iraq, and after six years in Iraq, we now smell bad to the Iraqi nose.”

The memo continued, referring to the Iraq Security Forces: “The massive partnering efforts of U.S. combat forces with I.S.F. isn’t yielding benefits commensurate with the effort and is now generating its own opposition. We should declare our intentions to withdraw all U.S. military forces from Iraq by August 2010. This would not be a strategic paradigm shift, but an acceleration of existing U.S. plans by some 15 months.”

Before deploying to Iraq, Colonel Reese served as the director of the Combat Studies Institute at Fort Leavenworth, the Army’s premier intellectual center. He was an author of an official Army history of the Iraq war — “On Point II” (warning...pdf) — that was sharply critical of the lapses in postwar planning.

The book is a usefull read too. See this announcement 7/31 by Defense Sec. Gates.

rdan

Wendall Potter in his new position at the Center for Media and Democracy will hopefully provide insights into the inner workings of his former employer, health insurance company CIGNA corporation. Bill Moyers has a series of interviews scheduled where Wendall Potter lays out his case.

As a consumer, if predictions come true that premiums double in the next ten years if we leave the current system in place, (?$30,000 a year? for a family plan), and my wages increase about 15%, rationing and lack of coverage are guaranteed, including the predictions of reducing treatment for old people....except it would be done privately by companies like BC/BS, by a faceless employee. Intelligent cost control anyone???!!

Update: A national average is about 12,800, so a doubling would be less at $25,600/year.

Update 2: Reader Wasaa says: "Your rate of doubling from $12,800 to $25,600 a year assumes that the same percentager of businesses will offer health insurance benefits to their employees. What we have seen over the past 10 years is the % of small businesses providing health insurance to their employees has plummeted to around 30%. Small businesses get whacked very hard because there is no adequate pool in which to be a member that will drive costs down. My insurance is $18,000/yr for the family (with a pre-existing condition clause and a $5K individual/ $10K family deductable). As insurance becomes more expensive, less businesses will provide it causing even higher costs to be born by the individuals who still have insurance."

BLS offers these stats on who pays: BLS

rdan

SIGTARP's Niel Barofsky and his staff have issued a first try at a cohesive description of funds expended for the fifty or so programs handing out money, but also a description of the potential expenditure (unlikely to happen). The link is to the site, which contains the report and the data in two separate, large pdf documents.

OMB has a good starting description of the attempt at transparency. The Inspector General's office might be put under direct Dept. of Treasury control...I understand the impulse, given the trash talk flying around the medias in healthcare, tax policy, citizenship, and other advertizing endeavors, but best to keep the data flowing. I am sure the sheer volume of docs will keep people from actually reading it...most of us will rely on trusted sources to interpret the data. Please avoid simply repeating slogans if you comment.

by Bruce Webb

I haven't posted on Social Security for a while for a pretty simple reason. Nothing has been going on. Until today when Social Security released the following Policy Brief: Distributional Effects of Raising the Social Security Taxable Maximum.

This policy brief analyzes the effects on taxpayers and Social Security beneficiaries of either eliminating the taxable maximum (tax max) for Social Security or raising it to a level so that 90 percent of all Old-Age, Survivors, and Disability Insurance (OASDI)–covered earnings would be subject to the payroll tax. Under both scenarios it is possible to either calculate benefits based on the current-law tax max (no max and max 90) or to credit the new taxable amounts toward benefits (no max plus benefits and max 90 plus benefits).

Historically Social Security had tapped the top 90% of income. Due to the skewing of income we have seen over the last couple of decades that percentage is down to about 84%. Various plans including LMS and the Obama preliminary plan have suggested adjusting the cap upwards, with or without a donut hole, either to the traditional 90% level or following Medicare with no limit at all. Additionally there has been debate whether this cap increase should be accompanied by additional benefits. This study finally, thankfully puts some numbers in play. Those interested should read the whole thing. The current projected payroll gap is 2.00%. An increase to a 90% level with no increase in benefits, which is in the range of what both LMS and the Obama cap increases propose, fills only about half of the gap. On the other hand extending FICA to all income with no increase in benefits backfills the whole thing. Personally I still favor the Northwest Plan that would leave the capp unchanged, but for those who would like to play mix and match here is your opportunity. (The tables are easier to read in the HTML version, these are copied from the PDF).

by Bruce Webb

Max Baucus of Montana (pop 935,670- 89.2% white)
Kent Conrad of North Dakota (pop 636,677- 90.1% white)
Jeff Bingaman of New Mexico (pop 1,928,384- 42.8% white)
Michael B. Enzi of Wyoming (pop 509,294- 88.8% white)
Charles E. Grassley of Iowa (pop 2,966,334- 91.5% white)
Olympia Snowe of Maine (pop 1,321,505 - 96% white).

Most people following the Health Care debate are aware that progress is now under the effective control of six senators who in aggregate are clearly center-right, and from small mostly rural states as seen here (table lifted from Nathan Newman at TPM Cafe). And most of us are equally aware that the party split of what is being called the Baucus Committee is 3 Dem to 3 Repub while the overall makeup of the Senate would suggest a ratio of 3 to 2. All of which has implications of their own, it is a funny kind of democracy that freezes out the representatives of the vast majority of Americans and the whole political spectrum from the center leftward (though I don't know a lot about Bingaman, I hardly think he is a Russ Feingold type, please comment.)

So please lets talk about all of this. I just want to throw in one last morsel. Last week it was widely reported that Republican Hatch Leaves Bipartisan Health-Care Talks, which as a supporter of health care reform with a public option I regarded at least as a small positive sign that the balance might have swung a little. But given what we are being told now about the makeup of the Baucus Committee this seems to mean that the original 'Bi-Partisan Committee' was made up of FOUR REPUBLICANS and three democrats, and those latter three including a chairman hostile to progressive solutions and the author of the Social Security/Medicare gutting Conrad-Gregg legislation. What the hell is up with that?

I understand that it is hard to avoid people taking a least a little bow towards the Pete G. Peterson crowd, but given a 60-40 split turning over negotiations to a group split on paper 4-3 the other way, and given ideological predilections even farther than that is to turn the term 'bi-partisan' from an inside joke to an outright laugh riot.

Am I missing something here? Was it somehow not a Republican majority Gang of Seven that appointed itself to be the mediators on this issue? And if so why is Harry Reid even listening? What kind of a Majority Leader just abdicates leadership to the other side on what might be the defining piece of legislation of the decade?

by Bruce Webb

On Sunday the CBO released a letter addressed to Rep. Dave Camp, the Ranking Member on Ways and Means, which among other things measured the impact of HR3200 (the House Tri-Committee Health Care Affordability bill) and a public option on employer covered insurance. On net it turns out that they project more people on employer paid insurance than current law. Additional Information Regarding the Effects of Specifications in the America’s Affordable Health Choices Act Pertaining to Health Insurance Coverage

I provide the link for anyone who wants to explore some of those issues. But in this post I want to explore one provision that seems to have contributed to this outcome. Now there has been much wailing and gnashing of teeth among the Single Payer Now! contingent that HR3200 with or without a public option just is a huge windfall to the private insurance companies by providing them with a individual mandate that delivers millions of new customers without cost controls with the end result that insurance companies will just cherry pick their way to billions in profits. Now if they would have paused for a second to wonder why people like Kennedy and Waxman would just sell them out this way they might have been tempted to examine the bill language. But since there was no such pause I guess I will have to step in. So in re-examining the bill yesterday I came across this section whose import I had kind of missed before.
http://edlabor.house.gov/documents/111/pdf/publications/AAHCA-BillText-071409.pdf pg. 24-25

SEC. 116. ENSURING VALUE AND LOWER PREMIUMS.

(a) IN GENERAL.—A qualified health benefits plan shall meet a medical loss ratio as defined by the Commissioner. For any plan year in which the qualified health benefits plan does not meet such medical loss ratio, QHBP offering entity shall provide in a manner specified by the Commissioner for rebates to enrollees of payment sufficient to meet such loss ratio.

(b) BUILDING ON INTERIM RULES.—In implementing subsection (a), the Commissioner shall build on the definition and methodology developed by the Secretary of Health and Human Services under the amendments made by section 161 for determining how to calculate the medical loss ratio. Such methodology shall be set at the highest level medical loss ratio possible that is designed to ensure adequate participation by QHBP offering entities, competition in the health insurance market in and out of the Health Insurance Exchange, and value for consumers so that their premiums are used for services.

Why is this the Golden Bullet for those of us pushing the Public Option? And why contrawise is it reason for the insurance companies to go ballistic? Well a little discussion of that under the fold.


This provision, if implemented correctly, almost totally strips the ability of insurance companies to combine cherry picking and premium increases to continue the huge profits they garner today. What it does is to establish a minimum 'medical loss ratio' which in simpler terms means a set ratio of care actually paid for to premiums collected. If by whatever means whether that be gaming the risk pool so an to only insure people unlikely to make claims or by denying coverage to insurees on a case by case basis your medical loss ratio drops below an established level the insurance company has to rebate the difference. In practice this prevents insurance companies from just arbitrarily jacking up rates and simultaneously takes the profit out of cherry-picking the risk pool. In a word this Sec automatically limits profits by establishing indirect price controls. Which is not going to make the insurance industry happy.

To see how this works. Under HR3200 Sec 111 bans limitations based on pre-existing conditions, Sec 114 mandates equal coverage for mental health and substance abuse treatment (p. 23), Sec 113 establishes strict limits on varying premiums across the risk pool (p.21), while section 112 guarantees enrollment and renewal, i.e. no more canceling people who actually dare to claim coverage for getting seriously ill. Now cynics can and do argue that insurance companies are extraordinarily skilled in working their way around these kind of restrictions and this is true enough. On the other hand the better they are at ducking the requirements of Secs 111-114 the more exposed they are to our Sec 116.

Lets say you have a company that against all law and regulation manages to have a plan that only in practice enrolls healthy adults aged 25-35 who rarely if ever use much health care. Under the current system this result yields ideal profits with collections but no payouts. Under Sec 116 your profits would be limited to the medical loss ratio. The answer for the insurance companies is to make up the difference with volume, the incentives are there to provide insurance as opposed to denying it.

Sec 116 would not eliminate all gaming as companies would still have an advantage if they shift their very high cost insurees over to the public option. But from the perspective of the government these are exactly the pool of people likely to end up on medicaid or qualifying for Medicare under Social Security disability anyway, for them the Public Option may just be a way station while they wait to qualify for DI.

What does this have to do with the CBO Report cited? Well Sec 116 prevents the Public Option from drawing too much of the overall pool away from the private plans not because it doesn't have the ability to undercut them on cost, but because it forces them to compete for their share of the overall pool or risk seeing their gross profits squeezed.

I am still trying to work out in my head where the limits are here, and where the sweet spot for balancing the size of your coverage pool vs level of care the company ends up having to pay, but on a top down look it seems like insurance companies under something close to HR3200 end up making money by insuring people and not by denying coverage in whole or in part. It transforms the industry into a straight service industry from its current predatory model.

Sec 116: Golden Bullet for coverage, Smoking Gun for profits. It just depends which side of the divide you come down on.

rdan
Birth and Hawaii at TPM.

The House resolution to celebrate the 50th anniversary of Hawaiian statehood -- which included language recognizing the state as President Obama's birthplace, in a none-too-subtle jab at the Birthers -- passed this evening by a 378-0 vote.

Among the Yes votes: Rep. Bill Posey (R-FL), the lead sponsor of the infamous "Birther Bill" to require presidential candidates to present their birth certificates, and who had previously said he wouldn't "swear on a stack of Bibles" that Obama is a natural-born American citizen. Several other co-sponsors of the Birther Bill also voted yes: Marsha Blackburn (R-TN), Dan Burton (R-IN), John Culberson (R-TX), Bob Goodlatte (R-VA), Randy Neugebauer (R-TX), and Ted Poe (R-TX).

Robret Waldmann

Gang of 6 senators who correspond to 6.5 representatives.

The US senate has an extreme rural bias. It has outdone itself by allowing Max Baucus to empower a bipartisan group of 6 senators to redesign health care reform. The states represented by the 6 senators (Iowa, Maine, Montana, New Mexico, North Dakota and Wyoming) have a total of 13 representatives so the committee consists of half of the senators from states with 13 representatives and corresponds to 6.5 representatives, that is, less than 1.5% of the house and roughly 1.5% of the population.

The 6 are a tad embarrassed by this and say they have tried to take urban concerns into account (that's Democracy at its best -- people counting on the consideration of people they didn't elect). According to Washington rules it is much more important that the bill have bipartisan support than that it have input from people elected by a significant fraction of the population.

Given that priority, it's not all that surprising that they have come up with the worst financing idea ever.

Robert Waldmann

The AP writes on the current state of negotiations in the 6 member Baucus Bipartisan ad hoc committee. Their plan includes an idea that is worse than I imagined possible. I mean that literally.

Officials also said a bipartisan compromise would not subject companies to a penalty if they declined to offer coverage to their workers. Instead, these businesses would be required to reimburse the government for part or all of any federal subsidies designed to help lower-income employees obtain insurance on their own.

This would be the most regressive tax ever. If I am an employer and I don't provide health insurance then my tax liability is higher if the family income of my employee is lower. More regressive than a poll tax (Baroness Thatcher must be put out that she didn't think of it). What's worse it depends on family income.

Let's say I don't provide insurance and have two job applicants, one who is a single mother and the other a man with a low salary but a high income wife (say Bill Clinton when he was working as governor of Arkansas for $30,000 per year). I hire the guy, because he can't get subsidized health insurance, so I don't have to give him insurance or pay him a dime.

This is the Baucus Grassley jobs only for people who don't need jobs preliminary draft bill of 2009.

I swear even if I tried, I couldn't come up with an policy proposal that bad.

Oh gracious conference committee save us from the idiocy of these Northmen (and Snowe).

I have generally decided that the NYT's attempt at becoming the WSJ on its editorial page is not worth the trouble of discussing. An editorial staph that replaces the despicable but somewhat coherent Bill Kristol with the execrable incoherence of Ross Douthat is clearly suffering a fatal infection, and therefore not deserving of support.

But then the Lovely and Talented Susan of Texas gets loose. And, while there is still no reason to bother with the original, the interpretation is a standard against which all others should be judged:

Shorter Ross Douthat: I tried to have some sort of intercourse about Iraq but the Left was like a chunky Reese Witherspoon, masticating on Colin Powell's UN presentation and spilling its breasts out of its protests. I wanted to surge into Iraq but the Left wanted a premature withdrawal. If we withdraw, Iraq will swell into violence and give birth to a Middle Eastern abomination, one that even the Left can't abort.

If you can't do that, folks—and most of us cannot—don't bother with the backlinks. It will only delude the NYT that they have some reason to exist that is not named Bob Herbert or Paul Krugman.

Robert Waldmann

A courageously anonymous blue dog explains to Shailagh Murray and Paul Kanewhy they are blocking health care reform

several dozen anxious House Democrats who are wary of the more liberal course their leaders have taken on health care. Feeling burned by a tough vote on climate-change legislation that is languishing in the Senate,

What a pile of Bulldog Sh*t. Most blue dogs voted against H.R.2454, that is, Cap and Trade. Only 17 of 52 voted yes, 34 voted no and one didn't vote at all.

Diatribe and documentation after the jump




The vote enabled them to reassure their constituents that they are on the side of global warming. If they let the bill reach the floor, they can reassure their constituents that they support keeping the uninsured uninsured too.

What they mean is that they could have blocked Waxman Markey in committee (it was marked up by the energy and commerce committee) and only demanded that it be 80% giveaway in exchange for graciously allowing a floor vote.

This tells us three things. First US legislators are acting as if it is a gesture of support to allow an up or down vote, and as if it is normal to use parliamentary tricks to thwart the majority in their house. Second it shows they mean "special interest contributors" when they say "constituents;" It is obvious that ordinary voters do not even check the roll call (as I did) let alone keep track of parliamentary tactics. Third it means they don't want any compromise at all in energy and commerce. They had a huge impact on Cap and trade and are still complaining.

Of course the fact that they haven't presented an alternative plan (and couldn't) and make contradictory demands, makes it clear that they want the issue to just go away. For sure they don't just want to keep their hands untainted by reform, because they were outraged at the possibility of a vote on the bill already reported out with no input from energy and commerce.

This means that most of them could just vote no again (they can take turns voting yes or they can wait until there are 218 yes votes before they vote no as they did on Waxman Markey). They don't want cover. They want attention. They aren't even hacks they are immature egocentric egomaniacs.

Here is the annotated blue dog caucus. The caucus is from Melancon's site. The votes are from the official roll call.

By the way, Rep Melancon (???-LA) might want to brush up on his arithmetic as his site says "Currently there are 51 members of the Blue Dog Coalition." and provides a link to a list of 52 names.

Also he wants to be a senator, so he is vulnerable to pressure. It's important that at least some of the pressure comes from the left. Obviously no angrybears are going to support diaper Dave Vitter (now Sotrmy Daniels is another matter hmmm) but a contest on the Democratic side is possible.

We have Erick LeFleur whose main accomplishment is a shoot to kill to defend your homestead bill supported by the NRA (NO).
Chris John, lost to Vitter six years ago. Currently top lobbyist for The Louisiana Mid-Continent Oil and Gas Association (NO)
J.M "Jim" Bernhard Jr who appears to be CEO of the Shaw Group construction company which appears to be under investigation by the SEC (Definitely no)

Rats. Looks like the only way I can put pressure on Rep[rehensible] Melancon is to send money to Stormy Daniels without even getting a DVD in return (I have never watched a Stormy Daniels DVD and would watch them only to learn about her policy positions).

Blue dogs

Blue Dog Members votes on H.R. 2454 = American Clean Energy and Security Act = Waxman-Markey = Cap and Trade
"n" means no "y" means yes "a" means did not vote

17 y 1 a 34 n

Altmire, Jason (PA-04) n = voted no on hr2454
Arcuri, Mike (NY-24) n
Baca, Joe (CA-43) not n
Barrow, John (GA-12) n
Berry, Marion (AR-01) n
Bishop, Sanford (GA-02) y = voted yes on hr2454
Boren, Dan (OK-02) n
Boswell, Leonard (IA-03) y
Boyd, Allen (FL-02) y
Bright, Bobby (AL-02) n
Cardoza, Dennis (CA-18) y
Carney, Christopher (PA-10) n
Chandler, Ben (KY-06) y
Childers, Travis (MS-01) n
Cooper, Jim (TN-05) y
Costa, Jim (CA-20) n
Cuellar, Henry (TX-28) a means no vote on hr2454
Dahlkemper, Kathy (PA-03) n
Davis, Lincoln (TN-04) n
Donnelly, Joe (IN-02) n
Ellsworth, Brad (IN-08) n
Giffords, Gabrielle (AZ-08) y
Gordon, Bart (TN-06) y
Griffith, Parker (AL-05) n
Harman, Jane (CA-36) y
Herseth Sandlin, Stephanie (SD) n
Hill, Baron (IN-09) n
Holden, Tim (PA-17) n
Kratovil, Jr., Frank (MD-01) y
McIntyre, Mike (NC-07) n
Marshall, Jim (GA-03) n
Matheson, Jim (UT-02) n
Melancon, Charlie (LA-03) n
Michaud, Mike (ME-02) n
Minnick, Walt (ID-01) n
Mitchell, Harry (AZ-05) n
Moore, Dennis (KS-03) y
Murphy, Patrick (PA-08) n
Nye, Glenn (VA-02) n
Peterson, Collin (MN-07) y
Pomeroy, Earl (ND) n
Ross, Mike (AR-04) n
Salazar, John (CO-03) n
Sanchez, Loretta (CA-47) y
Schiff, Adam (CA-29) y
Scott, David (GA-13) y
Shuler, Heath (NC-11) n
Space, Zack (OH-18) y
Tanner, John (TN-08) n
Taylor, Gene (MS-04) n
Thompson, Mike (CA-01) y
Wilson, Charles (OH-06) n

by divorced one like Bush

Via Glenn Greenwald and his article The war being waged on the TARP watchdog's independence comes an interview with Neil Barofsky the man charged with over seeing TARP. It appears the White House is not keeping true to the President's campaign of a more transparent government.

...the Obama administration is now attempting to induce the Justice Department to issue a ruling that Barofsky's office is not independent at all -- but rather, is subject to, and under the supervision of, the authority of Treasury Secretary Tim Geithner.

Seems Mr. Barofsky's latest report states that the grand total of all money currently paid out and pledged totals $23.7 trillion.

This is the original article to go along with the interview.
Click here to download and listen.

Via Naked Capitalism comes Rep. Alan Grayson asking Ben Bernanke who got the 1/2 trillion in US dollars as part of a swap. He notes $24 billion in 2007 is now $553 billion yr end 2008. Who got the money? "I don't know...the loans go to the centeral banks and they then put them out...We are lending to all US financial institutions in exactly the same way." That is, the fed is making no distinction between our nation and the rest of the world. Bernanke notes the law gives them the right to do this. (Sec 14 of the Federal Reseve Act.) Rep. Grayson issue is; at what point is using this "power" to move 1/2 a trillion dollars is infringing on Congresses control of the Treasury.

(Rep. Grayson has further comment at the link regarding this video.)

Transparency. The Federal Reserve and the Treasury say this money can't be traced after it passes to the first receiver. Mr. Barofsky has shown that it can be by simple sending out a questionnaire. Bernanke is treating the lending, regardless of recipient as all the same and thus none of it can be traced and that they have a right and authority to use the Peoples Money as they see fit. Rep. Grayson thinks they are overstepping Congress.

Who was it here that noted we had not bailed out the banks, but instead the banks just bought the Treasury?

Robert Waldmann

Looks like there are still people interested in Marx.

I guessed Brad would be interested (OK so I link begged but just a little) but I wouldn't have guessed that James Wimberley would be.

Mainly this post is about an e-mail from Ben Ross which I print (with permission) after the jump


Ben Ross to me
show details 11:15 PM (2 hours ago) Reply



I was very taken by your post on Marx's "to each according to his needs."
It sounded plausible - I'm nowhere near enough of an expert on this stuff
to say for sure whether you're right - but if you're correct about the
direction that Marx was pointing, I'd like to suggest that he was
pointing there in a somewhat different way than you indicate.

I went back to the Critique of the Gotha Program which I read, of course,
a very long time ago. I couldn't make sense of Marx's arguments against
the "Iron Law" then and I didn't have the time to try now. My history
books suggest that maybe nobody else can figure them out either - Michael
Harrington says Engels later conceded that Lassalle had gotten the Iron
Law from the Communist Manifesto.

If you're right that Marx is arguing here *against* utopianism, here's
what I think is going on. Marx is not explicitly saying that "to
each..." will not come until a year after never. What he's doing is
critiquing Lassalleanism from the right - pointing out how Lassalle's
slogan of equal division is impractical - and dressing it up as a left-
wing argument. He's saying that Lassalle falls short because his version
of the ideal future is still contaminated with the left-overs of
capitalism. But he's twisting that argument into a condemnation of
Lassalle's immediate program, by concealing the even less utopian nature
of his own immediate program.

Helga Grebing's History of the German Labour Movement has a somewhat
similar read on the Critique. She doesn't discuss "from each..." at all,
but points us to the last section where Marx conceded that "we have not
the courage - and wisely since the circumstances demand caution - to
demand a democratic republic..." and then criticized the Gotha Program
for making demands that are tantamount to a democratic republic. Surely
that's not a utopian critique! Grebing goes on to observe that "These
contradictions cannot be resolved; at best, we may try to explain them."

The left-wing debate tactic of dressing up a critique from the right
as if it came from the left is not rare. Readers familiar with French
history may recall Leon Blum's use of the concept of "occupation du
pouvoir" during the popular front. He fended off calls for more left
policies with the argument that his opponents are satisfied with
a mere "occupation du pouvoir" and are abandoning the ultimate goal of
"conquete du pouvoir."

There are many other examples. I'm personally sensitive to it from
long-ago arguments with proto-neoconservatives who made Marxist
arguments in favor of the Vietnam War. I imagine one could find some
astonishing intellectual gymnastics used to justify China's post-1980
economic policies.

Ben Ross

All I can say is that Marx had it easy. Marx had to deal with social democrats who thought they could compromise with Bismarck, but Ross tried to reason with Social Democrats who supported the US involvement in the war in Vietnam. Lassalle would never have done that. Hell Bismarck would never have done that, he was ruthless and cynical but he was not stupid.

rdan

The term small business is bandied about a lot, and often includes employers with 10 employees as in here and similar with Republicans.

Yet it appears these little companies are not represented by SBA, nor Manufacturers of America, yet account for a large portion of our economy. Is that accurate??

A small business is

A small business is an concern that is organized for profit, with a place of business in the United States, and which operates primarily within the United States or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor. Further, the concern cannot be dominant in its field, on a national basis. Finally, the concern must meet the numerical small business size standard for its industry. SBA has established a size standard for most industries in the U.S. economy. The most common size standards are as follow:

500 employees for most manufacturing and mining industries
100 employees for all wholesale trade industries
$6.5 million for most retail and service industries
$31 million for most general & heavy construction industries
$13 million for all special trade contractors
$0.75 million for most agricultural industries
About one-fourth of industries have a size standard that is different from these levels. They vary from $0.75 million to $32.5 million for size standards based on average annual revenues and from 100 to 1500 employees for size standards based on number of employees.

Stats about small business include more below the fold:

The estimated 27.2 million small businesses in the United States:

Employ about half of the country’s private sector workforce

Hire 40 percent of high tech workers, such as scientists, engineers and computer workers

Include 52 percent home-based businesses and two percent franchises

Represent 97.3 percent of all the exporters of goods

Represent 99.7 percent of all employer firms

Generate a majority of the innovations that come from United States companies

Source: U.S. Small Business Administration Office of Advocacy, September 2008

by Tom aka Rusty Rustbelt

Useful Models for Reform?

President Obama often cites the Mayo Clinic and the Cleveland Clinic as models for providers in a new era of health care reform.

Question: Can these two models be replicated throughout the country?

Answer: Not likely.

The Mayo Clinic is unique but has replicated itself a few times, and the Cleveland Clinic is unique and to the best of our knowledge has not been replicated.

Even if these models could be replicated, it is unlikely they could be replicated in any but some urban areas. And if they could, the transition cost in most markets would be immense, and who would pay for that? (the new Mayo Clinics are in high growth and very prosperous areas, Florida and Arizona) The cost of merging tens of thousands of physician groups into hospital entities would be gi-normous.

Can we learn anything from these organizations. Yes. Can we duplicate these models in other areas? Not likely, and certainly not in the near term.
___________________________________________
Tom aka Rusty Rustbelt

rdan

Health care in Canada from 1983, hat tip Mark Thoma at Economist View, is worth reading.

by divorced one like Bush

As we are talking about taxes and health care this is The Real News Network article regarding raising taxes on the wealthy to pay for health care. (The Real News Network is a global online video news network that listens to and is dependent on its audience. No ads. No government subsidies, no corporate sponsorship. Check out our site.)

Make sure you catch Presidents Obama's response to the obligatory question framed as "punishing the rich". The article interviews Professor Richard Wolff, economist, U of Massachusetts.


If President Obama and Professor Wolff have piked your interest, or you would like to understand why they talked about taxing the rich as they did, you can read my series on taxation starting here, moving to the second one, moving to the final post.
Then you can go here and read Linda Beale's appeal for support of eduction regarding tax literacy.

by Bruce Webb

Waxman: Blue Dogs must relent on health reform"
(UPDATE: the linked article has subsequently been rewritten and expanded. What follows is the version from earlier this morning)

House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) says there is "no alternative" to having healthcare legislation bypass his committee if Blue Dog Democrats don't agree to legislation.

Waxman said if the seven Blue Dogs on his panel do not relent, they could join with the committee's Republicans to "eviscerate" healthcare reform.

"I won't allow them to hand over control of our committee to Republicans," Waxman told reporters.

"I dont see what other alternative we have, because we're not going to let them empower Republicans on the committee."

I have been wondering about this for a while now. Do you actually need the approval of every committee with jurisdiction over the matter to move a particular piece of legislation to the floor? I don't mean practically, you don't want to bigfoot some other committee chairman, I mean legally. I don't see why and this seems to prove it. We have a bill that passed out of Ways and Means where the tax experts had a look at it and out of Education and Labor where the policy people had their whack plus the committee staff and the Chairman of Energy and Commerce are on board, why would we just concede veto power to a small group of Blue Dogs who have disproportionate representations on that particular committee. And it would appear that the answer is "we don't have to".

This is a very promising development for those of us who want to have the whole House pass a bill and so put pressure onto Senate Finance to respond.

rdan

A reader commented that market share statistics do not reflect whether competition occurs in a health insurance market. To stress a point he stated competition occurs when companies >1, and many states have competition of >2 major players, which makes for a more competitive market than a monopoly allows.

Competition to me means that at the least there is/are 'forces' in the market that somehow impact prices and quality of product or service, and in common usage implies lowering prices overall with some attention to quality. Many of us have cars in mind as a mental picture, and electronics.

Health Care for America Now has put together information compiled by the American Medical Association on market share enjoyed by insurers by state, and on the DOJ interest in the increasing concentration of ownership, again using AMA figures going from 33% highly concentrated in year 2000 to 51% in year 2007 as median % of market share nationally (Blue Cross/Blue Shield mainly). The trend for increasing consolidation within each state is clear.

The Department of Justice disagrees that anything less than a monopoly makes for effective competition in the health insurance market, as does economic theory in the form of an Herfindahl index. In fact, since 1982 anti trust law has used this measure along with a concentration ratio of an industry as an indicator of the relative size of firms in relation to the industry as a whole in evaluating 'competition'.

DOJ states that in the state-based system of health insurance currently practiced:

If one company holds more than a 42 percent share of a market the U.S. Justice Department would consider that market “highly concentrated.” This means that an insurer, with impunity, could raise premiums and/or reduce the variety of plans or quality of services offered to customers.7

(7. US Department of Justice, “The Herfindahl-Hirschman Index.” Accessed here; American Hospital Association, “The Case for Reinvigorating Antitrust Enforcement for Health Plan Mergers and Anticompetitive Conduct to Protect Consumers and Providers and Support Meaningful Reform,” May 11, 2009. Accessed here.
This report makes use of data published by the American Medical Association (AMA), which is not a member of the Health Care for America Now coalition. The AMA did not collaborate with HCAN on this report.)

Without necessarily getting into health insurance competition only, since the competition meme is invoked often in many places, what are market rules that demonstrate whether competition is working or not?

Several thoughts occur, to fit the meme:

1. Competition is defined as the way to lower prices and better product by many. Does this occur naturally, freely, when two companies share 75% of a market? Or if one company has 50% market share, with more players (as in MA)?

2. When prices double for a product in 8 years, how is competition working to control costs? How is this claim for competition proved?

I have in mind a different post on market share for health insurance companies, and the nature of health care for another. This could be a post to come to terms with readers notions of competition.

Chart below the fold.

Robert Waldmann
dares to debate Nate Silver

Nate Silver argues that health care reform might be in more danger in the House than the Senate. He notes that there are, by the standard DW-NOMINATE rating system, many conservative Democrats in the House and none (zero) in the Senate (Ben Nelson rates marginally marginally left of center). More importantly, there are many centrist Democratic Representatives and very few (arguably exactly one) centrist Democratic Senator[s].

This means that the 60th percentile of DW-NOMINATE scores in the Senate is about the same as the 50th percentile of DW-NOMINATE in the House (coincidentally 0 that is exactly centrist). Mechanical application of this calculation suggests that the vote in the House is about as tough as a cloture vote in the Senate.

So far so good. Then Silver argues that the vote in the House is, in fact tougher. I find this argument totally unconvincing. More after the jump.





1. Silver argues that the bill on the House floor will be to the left of the Senate bill. He assumed that the bill will be the Appropriations/education and labor bill. This makes no sense. Republicans plus blue dogs have a majority (of one vote) in the House energy and commerce committee. The bill that gets to the floor from that committee will be acceptable to blue dogs. Now the leadership can force a vote on the other bill, but only a gross failure at nose counting would cause them to force such a vote and lose (plus then they could go to the energy and commerce bill no ?).

2. He notes correctly that a vote for cloture is not identical to a yes vote. This is true and important and I agree with his second argument.

My real quarrel is with the third -- where can arms most easily be twisted. Silver argues that it is harder to whip 40 representatives than one or two senators. I think he is totally totally wrong and has it backwards. He writes

But while you might be able to muscle one or two or three hedging members into a yea vote on health care (or a vote against a filibuster in the Senate's case), it's much harder to do that 40 or so legislators, where there is less individual accountability.

This is crazy. Pelosi can singe out individuals and say she will hold them responsible and punish them if they vote no. Nothing forces her to threaten all blue dogs equally. Selection can be based on who is likely to need money from the DCCC, who has constituents who support the house bill (I'd guess they all do and they are simply ignorant or lying when they say their constituents oppose soaking the rich).

But the key point is that Reid can't threaten Nelson et al with much. They are immensely powerful and they know it. He's going to have to beg Nelson for votes on cloture for the whole 111th congress. To eliminate Nelson's power one would have to change the rules of the Senate -- that takes 60 votes and Nelson and the Republicans will vote no.

In contrast, Pelosi can uhm fix ten blue dogs chosen at random any time she wants. Legislation is really written in conference committees. The House leadership decides who is on a conference committee. "Vote no and you will not be on a conference committee while I am speaker" should work. Also how many Representatives are eager to serve only on the Indian Affairs committee.

Recall that DeLay forced unanimity on the Republican caucus including the very few moderate Republican representatives. In the House, the whip really stings.

More broadly, can anyone remember a time when a Presidents initiative was blocked in the House and not the Senate ? Ever in US history ? I can't and ask for information.

Robert Waldmann

In an even with some possible relevance to the ongoing health care reform debate

Bayonne Hospital Center just sued Horizon Blue Cross Blue Shield accusing it of "Life-Threatening Business Practices"

via John Aravosis

Any thoughts ?

This graphic offers perspective

edited 072909 to correct link for giving online, by Linda Beale

One of my big gripes (in case you haven't noticed) is the ease with which ordinary Americans can be fooled about tax issues by organizations, often ones with greedy purposes of furthering their own interests in lower taxes for themselves, that publish misleading or downright untruthful information and just keep repeating it. This has been a special problem with estate taxes, which hit only the very wealthiest amongst us and for a relatively small amount even for the large estates. It is also true of income taxes in general, the way flat taxes would work, the rationales for the corporate tax and many other key tax policies. Lobbyists frame the issues with inflammatory language, and most are too unknowing about the way tax really works to recognize the ruse for what it is.

Here are two of my pet peeves. (Many tax practitioners--and lots of tax academics--disagree with me on these.) Some of the worst phrases that have furthered the cause of cutting taxes for the wealthy so that the majority of Americans can either pay higher taxes themselves or do without the kinds of things that governments, not private enterprises, do best are "death taxes" and "double taxation" .

Much of the estate that is taxed when a decendent passes it along to his heirs as an unearned windfall has never been taxed at all during the decedent's lifetime, in the case of wealthy people with mostly financial assets. If there is not a good-sized bite out of the estate upon the transfer to beneficiaries, there'll be very little contribution to taxes from an agglomeration of wealth that has benefited enormously from the US legal system. And the heirs won't have any taxes to pay either--they'll just keep holding or will have a stepped up basis when they sell. All that is is a system for perpetuating or creating oligarchy--letting the wealthy become a ruling class with all the money and all the power without contributing anything much to help pay for the system that made all the wealth possible in the first place.

Similarly, the phrase "double taxation" is used to make people think that taxing corporations is unfair. But the decision about whether we tax entities or not is a reasonable one for societies to make. We made it a long time ago--deciding that we should treat corporations as taxpayers and thst we should tax capitalist owners of corporations on the income they are paid out of their corporate ownership as well. It is one of the most progressive parts of the federal income tax when it works, and it makes a lot of sense from a democratic egalitarianism perspective. Corporations can horde money and have enormous power because of their ability to lobby for their own benefit. Look at the way Big Pharm and Big Insurance has gotten Max Baucus in their pocket--putting money in his, and getting out of that a watered down health bill that doesn't do half of what we should be doing to move towards a single payer, single provider system like the most advanced countries already have. The presupposition behind the term "double tax" is that you are overtaxing and that you are taxing somebody that shouldn't be taxed. Yet corporations get to deduct salaries and purchases paid for with their own stock, which doesn't cost them a thing to issue. Corporations get basis in property transferred to them by shareholders in exchange for issues of corporate stock, even though that stock does not represent an after-tax investment by the corporation. So the taxable income of a typical corporation is generally much less than the corporation's actual economic income, and in addition to these provisions that are basic to the way the corporate tax is set up there are lots of provisions for reducing corporate tax--too fast depreciation, deferral of income through matching rules coming from court opinions where judges have been unduly influenced by financial accounting (the seventh circuit, in particular), depletion allowances and myriad other tax expenditure items favoring corporations, etc. Since Reagan, there has been a huge push by the same economic thinkers that brought us our current Great Recession to undo the US classical corporate tax system. It's really a push for giving more money back to the wealthy and cutting the size of government. (Of course, the push for lower corporate taxes, more uneconomic credits like the R&D credit, etc., and the push for zero taxation of corporate dividends have been coordinated and have the same effect of huge reductions in taxes on the wealthy.) But it's all argued in the name of economic efficiency--a theory without basis in reality that is probably more to blame for the greed that dominates today's society and the consolidation of huge megafirms--Big Pharm, Big Oil, Big Banks, Big multinationals in general--than anything else. And strangely, no one makes the same "horrid double tax" arguments about the maid being taxed on her salary paid out of already-taxed compensation income of her lawyer-employer...

Of course, even for those who don't pay much attention to the various organizations that are peddling particular views of tax issues and haven't been particularly swayed by the push for repeal of the"death tax" or repeal of "double taxation", there is a huge gap in information that isn't filled in by the media. Most schools, for example, don't teach much of anything about the tax system in the basic civics course. Most students don't take a finance course in college, much less a course that teaches the basics of tax law. In fact, most law schools don't even require that their graduates have a basic course in federal income tax law before graduating. (That is a major problem, I think, since almost every legal issue has tax consequences, one way or another, that a competent attorney should be aware of.) As a result, we are frighteningly ignorant, as a society, about how tax works, why it works that way, and what other possibilities there are. And as a consequence of that ignorance, it is all too easy for citizens to be in the dark about the consequences of tax legislation under discussions, for lobbyists to influence members of Congress to vote in their favor on bills (the public won't know the difference), and for members of Congress to fail to fully inform their constituents about the tax issues they are voting on (or even, in far too many cases, for the members of Congress to understand, as when a certain person from Colorado supported windfalls in the agricultural bill based on his apparent failure to understand the difference between gross income (revenues without business or other deductions) and adjusted gross income (revenues with business deductions taken into account)).

So I'm glad to see Marjorie Kornhauser's project take off. Maybe others won't agree with me on these pet peeves, but if we have better educated citizens who have more basic knowledge about taxes and how they work, it won't be so easy to bamboozle them into voting against their interest to support tax cuts for the wealthy and service cuts for everybody else while the boondoggles for the big corporations just keep pouring out (like an agreement that the government can't use its bargaining power to get cheaper drugs, or that Big Pharm can prevent generics being sold for 12 years and other crap that is getting put into the "health reform" bill that is becoming, like so much else these days, a corporate giveaway).

What's her project? It's called The Tax Literacy Project--"a non-partisan effort to informally educate the public about taxes through popular methods such as web-based games and other internet activities.

Want to help? Donations are being accepted. What follows is the appeal, direct from Kornhauser and the ASU Foundation.

Money from Taxes Helps Every Person Every Day!

But polls show most of us do not understand anything about our taxes.

Why should we bother learning about taxes? Because:

Tax ignorance costs each of us money. Many of us pay more tax than we actually owe.

Because tax ignorance makes it hard to discuss and enact sound tax policies, we are not able to raise money in the fairest and most efficient manner possible.

Why do we need taxes?

Taxes support democracy. They fund government services and goods such as court systems and national defense that protect your life, your property, and your constitutional rights.

Taxes support economic growth. Governments use taxes to encourage economic growth in numerous ways such as maintaining a stable currency, enacting and enforcing laws that protect both workers and employers (their lives and proeprty), and helping to build and maintain large and dependable energy, transportation and communication systems.

Taxes support your daily quality of life. They help you and your family buy a house, breathe clean air, have safe food and drugs, travel safely and efficiently on highways, trains and planes. Taxes help pay for your health care (in the form of tax benefits or direct care) and they pay to educate you and your family. Taxes help you at work (e.g., enforce contracts, provide a safe workplace) and help you at play (e.g., national parks).

Become a part of a solution to the problem of tax ignorance by contributing to the Tax Literacy Project.

What is the Tax Literacy Project?

It is a non-partisan effort to informally educate the public about taxes through popular methods such as web-based games and other internet activities.

Can you support the Tax Literacy Project regardless of your political outlook?

Yes, the Project's only pupose is to help provide information about tax, not to support any particular type or amount of taxes. No matter what kind of government people want, that government will cost money. Americans must understand how that money can be fairly and efficiently raised.

How can you make a charitable contribution?

Make your donation payable to the Tax Literacy Fund at https://secure.asufoundation.org/giving/online-gift.asp?fid=418 (no appeal code necessary) or Make your check payable to the ASU Foundation and mail to the Sandra Day O'Connor College of Law, Arizona State University, PO Box 877906, Tempe, AZ 85287-7906. Please write Tax Literacy Fund (3000 4788) in the memo line of your check. Thank you in advance for your support.

For more information or to become involved--

Please contact the project director: Marjorie E. Kornhauser, Professor of Law, Sandra Day O'Connor College of Law, Arizona State University, Marjorie.kornhauser@asu.edu, 480.965.0396.

All funds will be deposited with the ASU Foundation, a separate non-profit organization that exists to support ASU. YOur payment may be considered a charitable contribution. Please consult your tax advisor regarding the deductibility of charitable contributions.

by Bruce Webb

Last week was kind of a busy time for CBO scoring with the result that some stories got over-reported and others not reported at all. So lets back up a little.

Tuesday July 14. CBO scores the coverage costs of HR3200, the House Tri-Committee Bill. The CBO Director's Blog puts this announcement out House Democrats’ Health Reform Proposal: Preliminary Analysis of Major Provisions Related to Insurance Coverage Bottom line: increasing coverage to 97% of legal non-elderly residents will cost $1.048 trillion over ten years. Spending and revenue provisions of the bill not yet scored.

Thursday July 16. CBO director testifies to Senate and House Committees. The Director's Blog describes this here: The Long Term Budget Outlook. And from the graphs included this seems to be mostly just another presentation of the LTBO released on June 25th and announced on the Director's Blog under the same title as that on the Senate testimony Long Term Budget Outlook. The rest of this post will be exploring what Director Elmendorf actually said here as compared to how it was reported.

Friday July 17. CBO releases a new score for HR3200 which now includes the spending and revenue provisions not scored on Tuesday. PRELIMINARY ESTIMATE OF THE EFFECTS ON THE DEFICIT OF H.R. 3200, THE AMERICA’S HEALTH CHOICES ACT OF 2009 . New bottom line? $239 billion over 10 years.

Saturday July 18th. The CBO Director's Blog announces the release of the above report released the night before. The delay between the release Friday night and CBO and Ways and Means Committee public announcements creates a major kerfluffle on dKos with accusations of hoaxing. The dust settled a little after the Director's Blog put out this: Preliminary Analysis of the House Democrats’ Health Reform Proposal confirming the numbers above.

Saturday July 18th to Monday July 20th, the Speaker and various Chairmen release Press Releases saying that the CBO confirmed that the House Bill in combination with an additional piece of legislation actually would produce a $6 billion surplus over those same ten years. This created a lot of confusion over the weekend, did CBO report $239 billion deficit? Or confirm a $6 billion surplus? Well both and for those who wish please revisit some of the past posts here at AB from last weekend.

But I want to focus on the reporting, in particular how sound bites from the Thursday testimony seem to have overwhelmed anything else. That coming below the fold.
(UPDATE: There is some weirdness in the HTML at this point that I can't find. The page is supposed to break, and a link from CNN display. Neither happens. The title of the CNN article is "Health Reform Bill Won't Reduce costs, and it is datelined on Friday. I give up. It works fine in Preview).

Health reform bills won't reduce costs and summarized with this opening:

The health reform bills released so far would increase government spending on health care without sufficiently reining in health care costs.
And at least initially they aren't likely to significantly lower premiums for the majority of Americans with employer-sponsored health insurance.
That's the sobering takeaway from testimony Thursday by Congressional Budget Office Director Douglas Elmendorf.
Elmendorf's preliminary conclusions were based on a bill jointly released by three committees in the House this week and another bill passed by the Senate health committee on Wednesday.

The WaPo reported on it in much the same tone: Lawmakers Warned About Health Costs: CBO Chief Says Democrats' Proposals Lack Necessary Controls on Spending

Congress's chief budget analyst delivered a devastating assessment yesterday of the health-care proposals drafted by congressional Democrats, fueling an insurrection among fiscal conservatives in the House and pushing negotiators in the Senate to redouble efforts to draw up a new plan that more effectively restrains federal spending.
Under questioning by members of the Senate Budget Committee, Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, said bills crafted by House leaders and the Senate health committee do not propose "the sort of fundamental changes" necessary to rein in the skyrocketing cost of government health programs, particularly Medicare. On the contrary, Elmendorf said, the measures would pile on an expensive new program to cover the uninsured.

. (Before going on we could note that it really isn't the business of news reporters to insert editorial comment like "devastating", but then again that is characteristic of much of Lori Montgomery's reporting.) At this point lets take a little stock. The Director's Blog informs us that the topic of the testimony Thursday was on the Long Term Budget Outlook and not explicitly on the Health Care bills themselves. Moreover we know now, as Director Elmendorf knew then his staff was still working up the numbers on the full cost of the Tri-Committee Bill and wouldn't release them for a full day plus after his testimony. Yet the WaPo story immediately drops any substance of the testimony and launches right into process questions and reactions by the political players with Elmendorf's actually testimony reduced to out of context snippets.

The CNN reporting has a little more substance and focuses on testimony by Elmendorf that claims the current bills do not do enough to reduce the bend points in the CBO trendlines, trendlines themselves the product of the Long Term Budget Outlook. Well fair enough, on the other hand it is not at all clear that that end was the particular focus of these bills to start with, that is I don't know where anyone promised that simply providing a public option would solve long-term health care cost trends, only that they would produce a bill that was paid for under CBO scoring criteria. Plus the reporting was spun in a way that confused 'doesn't subtract from' future deficits transforms to 'adds trillion to' without acknowledgement of scoring from Friday and announcements from Saturday end up with a House Bill at least that is fully paid for.

I guess my real point is that you have to parse the claims you see closely. Not slowing the growth rate of health care is not the same as adding to the deficit. Nor are the goals of bringing coverage to the uninsured and controlling overall costs the same. To the extent we could achieve both goals great, and in the current political climate maybe we can't get the first without some claims to be addressing the second. But that is a political calculation and not a policy consideration per se.Instead the question should be moving forward is as the President said in somewhat different words, how does it measure against the status quo, and our we measuring that as a percentage of national health care costs or as a percentage of the federal budget?

In my opinion Director Elmendorf blurred the line between two roles: one as the scorer of the impact of legislation over the next ten-years, in which case the House Bill does very well, and two as the evaluator of the long-term economic outlook. Credulous reporters and cynical politicians (or perhaps the other way around) seem to have seized on Elmendorf's conclusion on the latter to implicitly judge the former.

So yes the Tri-Committee Bill adds a trillion dollars to federal health care spending to achieve coverage, on the other hand it has direct spending savings, proposed revenues, and a change to Pay-Go rules to make it officially budget neutral over the official scoring period. We should not let those concepts get fatally confused.

by divorced one like Bush

Responding to a couple of comments to my post yesterday, I want to present some history. PARCA. Patient Access to Responsible Care Act. 1997 by Alfonse D'Amato (R-N.Y.) and Rep. Charlie Norwood, a Georgia Republican and licensed dentist who argues: "If we can protect trees and animals, why can't we protect patients?" (Well there is a long extinct animal!)

PARCA had this in it: PARCA states, "No insurance issuer may discriminate...in any activity that has the effect of discriminating against an individual on the basis of race, national origin, gender, language, socioeconomic status, age, disability, health status or anticipated need for health services."

The bill was defeated. The bill was part of a response by consumers and providers to what managed care was doing in the late 90's. People were not happy at all.

From the Frontline article:

According to a recent survey by Robert Blendon at the Harvard School of Public Health, some 48% of Americans say they personally have experienced problems with HMOs' care, or have close friends or relatives who have run into such difficulties. Complaints include difficulty getting access to medical specialists, problems with emergency care, and excessive red tape when trying to file grievances or appeals.

From: A report from Families USA, April 1998:

...almost three out of five Americans say that managed care plans make it harder for sick people to see medical specialists. Over half say managed care has decreased the quality of care for people who are sick. More than three out of five say managed care has reduced the amount of time doctors spend with patients. And 55 percent say they are at least "somewhat worried" that if they are sick their "health plan would be more concerned about saving money than about what is the best medical treatment."

Yet, with nothing really changed other than consolidation of the health insurance industry, we hear arguments that people are happy? Bull! Come on people, don't you remember?

From Duke University, Marc A. Rodwin: Backlash as Prelude to Managing Managed Care, is this summary of the then accepted pro managed care thoughts:

Managed care organizations (MCOs) and the private sector, so the story goes, are not perfect, but the alternative--having legislatures manage health resources and bureaucracies make health care decisions--is even worse. Experts in the private sector should manage health care... Over the long run, however, the market will ensure that MCOs deliver high quality health care. Consumers will leave poorly performing MCOs for ones that respond to their concerns (Enthoven 1993).

A summary of the potential defeat of PARCA presents the arguments against it as this:

Insurers and employers also are lining up to defeat the bill, claiming that its provisions could drive up the cost of insurance by 23 percent to 39 percent. The naysayers argue that if this bill became law, it would cause “thousands” of employers to stop offering insurance. They also maintain that the higher cost of premiums will force millions of lower-income workers to drop their insurance... The insurance companies are obviously concerned because PARCA will hold them liable.

Same story today. Government bad, regulation not needed, don't worry the market will fix it. Mr. Rodwin's closing statement:

Backlash is unlikely to disappear until the industry matures and thoughtful regulatory authority protects the public, and the industry from itself.

Prophetic?

We even were concerned in 1998 about CEO compensation for the insurers. From the Families USA 1998 report:

In keeping with the industry's accentuated focus on costs, this report analyzes a very different facet of managed care costs--namely, the costs associated with compensation for high-level HMO executives. The report examines 1996 executive compensation for the 20 for-profit, publicly traded companies that owned HMOs with enrollments over 100,000.7 These 20 companies owned 64 of the nation's largest HMOs in 1996.
The 25 highest paid executives in the 20 companies studied made $153.8 million in annual compensation, excluding unexercised stock options, in 1996. The average compensation for these 25 executives was over $6.2 million per executive. The median compensation for these 25 executives was over $4.8 million.
The 25 executives with the largest unexercised stock option packages in 1996 had stock options valued at$337.4 million. The average value of unexercised stock options for these 25 executives was $13.5 million. The median unexercised stock option package for these executives was over $7.2 million.
(Go here to see what it's worth today.)

In fact, we are so having the same debate again, yet, still that, I found this regarding the 1998 congressional timing for the health care issue:

All sides in the Senate debate have used the August recess to push their managed care proposals...

We are soooooooo doing it again that we are right down to the same time of the year! AHHHHHHHHHHHH!

Which brings me to Save the Rustbelt's comment "...but it is not some conspiracy to drive up administrative costs." My point was not that there is a conspiracy regarding administrative costs, certainly not by Massachusetts. It is that in order to fix what was fixed they are reaching for more of the same reasoning: Control the cost via administration of the costs. It is the very reasoning that has allowed the insurance industry (just look at the sub corps that UHC owns) to develop an entirely new business that is only expending but is not delivering the product results as advertised as it adds costs. And now, we will shift the cost by shifting the administrative model to the providers via a model that is questionable.

This Massachusetts model of capitation via "accountable care organizations" (ACO) is really just a new twist on the staff model HMO. Only now the insurer will collect the money and just pass it on according to the state fee schedule (yes it is still a fee schedule whether fee for service or fee for head count), and keep the difference. If there is not state setting of premiums, then where is the cost savings to the purchaser of insurance. If there is state setting of premiums, then why go through all this when we could just have a single payer system and cut out the profit and reduce the duplication of claims management to obtain our savings?

Also, to make this work, a patient will have to remain with the same "accountable care organization" at least through to the conclusion of their health problem. Being that the new fix is just a rehash of some old models, it is reasonable to assume that there will be some limiting of the consumer of health insurance to change ACO's. Bet it will be like the Medicare drug program; one year, which I believe is already part of the Massachusetts insurance program. I doubt that locking a consumer into a program for 1 year is long enough for an ACO to have affected a change in the consumption of health care services by the consumer. In fact, you will not know unless that consumer gets sick in such a way that there are lifetime residuals and then starts ACO shopping. Will the consumer put up with having to be locked into the ACO for more than a year? Consider that health care outcomes are looked at over 3 and 5 year periods to determine success. Can you say "administration of cost"? How will the consumer know which ACO is actually getting the product of health and healing correct for the least price without more administration? How will the consumer come to appreciate value before actually having to purchase?

Which leads me to Vtcodger's comment: "About the best I can say for this idea is that it is new." I hope I am making clear that this is not new. Nothing about the current discussion of the health care problem is new. It is just the game of hot potato. It is just a shifting of the costs down the line. (An approach we seem to have been using since "trickle down" theory was created.) I do agree and it is why I believe capitation did not catch on and staff model HMO's declined, when Vtcodger states: " I don't think that your average primary care physician wants to be an insurer...".

But, let me correct one assumption that like the myth of Reagan lives on regarding managed care. Again Vtcodge: Actually, HMO/PPOs etc did and do seem to work to some extent. When they were first introduced, increases in health care costs did moderate for a while.

Yes, cost did seem to moderate. But there were very specific reasons and it had little to do with manage care actually reducing the "unneeded tests and procedures". From the Frontline article:

In the mid-1990s, HMOs made some people think that they had vanquished medical inflation -- as rates to big employers increased just 0.5% to 2% a year. But the managed care plans "paid dearly for competitive pricing in 1997," says John Erb, a benefits consultant at William M. Mercer Inc. "Many lost money and margins were slim for most of the rest.

It was the old business model to market share, cut your pricing and hope your competition folds first. It's the big box store model. It worked. In RI land we were reduced to BC and UHC. Two years ago, UHC undercut BC to win the state contract. Prices are up.

There was a report put out by Muse & Associates for the pro PARCA coalition. In it they noted two other reports when making a conclusion about costs. Quoting from an article from my national association's journal 4/98 (I have no link):

"Private sector average premium costs, for HMOs, the most tightly controlled form of managed care, are 18.4 percent lower than traditional indemnity plans.
Other researchers have come up with estimates reassuringly similar to the Towers Perrin figure. For example, the Lewin Group, in a 1997 report, estimated direct savings from managed care at 19 percent.
So, Muse & Associates are on sound footing in concluding: "Clearly, overall managed care savings could not exceed 20 percent. The best evidence strongly suggests that 15 percent of the 20 percent savings comes from managed care organizations reducing provider prices..."

We're talking the same old approach to what really is a problem with the product. At least in the bad socialist health care programs they recognize that a for profit third party only adds cost and thus do not have to account for that part of our problem (it's called savings). They just need to resolve the product quality issue. It is the only common issue to all nations.

I'm taking bets on the date of the new fix of the newly fixed, fixed system.

by cactus

Since I just had a post on Bailout Nation, the book Barry Ritholtz co-wrote with Aaron Task, I figured, why not have another post about Ritholtz. See, something I read on his blog has been botheirng me for a few weeks now.

Ritholtz has done a great job pointing out over and over that the Community Reinvestment Act (CRA) had just about nothing to do with the economic meltdown. Finally, he got pissed and issued a challenge:

Well, its time to put up or shut up: I hereby challenge any of those who believe the CRA is at prime fault in the housing boom and collapse, and economic morass we are in to a debate. The question for debate: “Is the CRA significantly to blame for the credit crisis?”
A mutually agreed upon time and place, outcome determined by a fair jury, for any dollar amount between $10,000 up to $100,000 dollars (i.e., for more than just bragging rights).

I don't think that was a good idea. Here's my reasoning...

1. There's no such thing as a fair jury. And even if there was, being fair doesn't mean the jury can't be bamboozled. Presentation matters a lot. If that wasn't the case, there'd be no need for attorneys. Most people would present their own case and save the expense of having an attorney.

2. That means a jury could get it wrong.

3. While Ritholtz' challenge may have a commendable outcome in this instance, it has a deleterious effect in the long run, putting the debate out of reach of most people who cannot afford to take the risk of losing the same amount of money that Ritholtz can. And what if Steve Forbes puts up a similar challenge for a few tens of millions? Even if Forbes' position is buffoonish - and in my opinion, if Forbes has a position on whatever subject, it probably is buffoonish - very, very few people could afford to have that debate on the offchance that the jury got the wrong conclusion. Probably even Ritholz would be priced out. The end result is that realistically, only folks like Bill Gates would be entitled to an opinion.

I'm all for holding people responsible for the consequences of their inanity, including whatever silly notions they propagate, but I think Ritholtz has the wrong target here. As bad as the clowns who just won't get the facts right after the fact are, they pale in comparison to the schmucks who perpetrated the fraud. Its the fraudsters who should be held liable for all this mess.

To close in Barry Ritholz fashion, what say ye?
______________________________________________
by cactus

The first item on Charlie Stross's World Science Fiction Convention schedule:

Thursday August 6th, 5pm (Location: P-511CF)
Title: In Conversation: Paul Krugman and Charles Stross
Description: 90 minutes of Charles Stross discussing SF, economics, and other topics with Paul Krugman. [link in original]

Those who might wonder why Krugman would be an appropriate guest at Anticipation (this year's WorldCon, being held in Montreal starting six yearsdays [h/t Loyal Reader] after we move back to NJ*) are referred to this paper [PDF], which I previously discussed at Tom's place.

*Which is why Shira doesn't want to do the eight panels on which she was scheduled.

but it doesn't do that much for the rest of us. Via The Ambrosini Critique, Scott Sumner discovers there was no housing crash:

The BLS claims that housing prices are up 2.1% in the last 12 months....According to the BLS, housing makes up nearly 40% of the core basket of goods and services.

Further reading gets us to the base of the claim: Owner-Equivalent Rents went up 2.7% in the past year. CR was all over this in April and May. Take a gander at this chart--from the CR posting in May:


So while the ratio has gone from 1.4 to 1.1 (which would be more than a 21% decline), almost a whole 10% of that change has been because the base (rent) has gone up. The other 19% of decline doesn't matter for BLS in(de)flation calculation purposes.

No one better tell David Malpass or his investors at Encima Global (motto: "Failing Up is Always an Option"; see the Forbes article link at the left side of the Encima page).

from Baseline Scenario


Three myths about the consumer financial product agency by Elizabeth Warren is well written and timely at Baseline Scenario.

I’ve written a lot about the creation of a new Consumer Protection Financial Agency (CFPA), starting with an article I wrote in the Democracy Journal in the summer of 2007. My writing has helped me work through the idea and has advanced a conversation about what kind of changes in financial products would be most effective. A couple of weeks ago, I testified before the House Financial Services Committee about why I think a new consumer agency is so important, and I’ve argued the case many times.

Today, though, I’d like to post specifically about some of the push back that has developed on this issue. In particular, I’d like to focus on three big myths – myths designed to protect the same status quo that triggered the economic crisis.

MYTH #1: CFPA Will Limit Consumer Choice and Hinder Innovation

At a recent hearing on the CFPA, Rep. Brad Miller challenged an industry representative to identify one consumer who chose double-cycle billing to be included within the terms and conditions of his or her credit card contract. It was a great moment. If the status quo is about choice, then explain why half of those with subprime mortgages chose high-risk, high-cost loans when they qualified for prime mortgages. If the status quo is about choice, then explain why Citibank declared itself consumer friendly, dropped universal default, then quietly picked it up again the following year because they said consumers couldn’t tell whether they had the term or not.

The truth, of course, is that no consumer “chooses” to accept the tricks and traps buried within the legalese of financial products. Rather, consumers must choose among various products with one feature in common: dozens of pages of incomprehensible fine print.

The CFPA will not limit consumer choice. Instead, it will focus on putting consumers in a position to make choices for themselves by streamlining regulations, making disclosures smarter, and making financial products easier to understand and compare. The Agency will promote plain vanilla contracts—short, easy to read mortgages and credit card agreements. The key principle behind the new agency is that disclosure that runs on for pages is not real disclosure—it’s just a way to hide more tricks. Real disclosure means that a lender has to be able to explain what it is selling so that the customer can read it and understand it. Once consumers can understand the risk and costs of various products – and can compare those products quickly and cheaply – the market will innovate around their preferences.

Daniel Carpenter, a Professor of Government at Harvard University, has written a great deal about the modern pharmaceutical industry. While anyone with a bathtub and some chemicals could be a drug manufacturer a century ago, Carpenter points out that drug companies were willing to invest far more in research and development to bring good drugs to the market once FDA regulations drove out bad drugs and useless drugs. Good regulations support product innovation.

MYTH #2: The CFPA Will Add Another Layer of Regulation and Increase Regulatory Burden

Current regulations in the consumer financial area are layered on like pancakes—see a problem and fry up a regulation, but don’t integrate it with the earlier regulation. Today, seven different federal agencies have some form of regulations dealing with consumer credit. The result is a complicated, fragmented, expensive, and ineffective system. With consolidated and coherent authority, the CFPA can harmonize and streamline the regulatory system—while making it more effective.

But the real regulatory break-through for the CFPA would be the promotion of “plain vanilla” contracts that would likely meet the needs of about 95% of consumers. These contracts would have a regulatory safe harbor. By using an off-the-shelf template for a plain vanilla contracts and filling in the blanks for interest rates, penalty rates and a few other key terms, a financial institution can legally satisfy all its federal regulatory requirements—no need to do more.

Of course, some banks would want to offer more complicated products. For many, they could file-and-use, so long as they met the same regulatory standards of adequately disclosing risks and explaining costs—briefly enough and clearly enough for people to understand them.

A streamlined new regulatory regime would have a serious impact on the credit industry. Today’s complicated disclosure system favors big lenders that can hire a legion of lawyers to navigate the rules—and spread the costs among millions of customers. Those complex rules fall much harder on a smaller institution that must navigate the same regulatory twists and turns, but with far smaller administrative staffs. Plain vanilla contracts will be particularly beneficial for community banks and credit unions that will be able to divert fewer resources toward regulatory compliance and more toward customer service and innovation.

MYTH #3: Prudential and Consumer Regulation Cannot Be Separated

Make no mistake: This is a fancy claim for the status quo. If the CFPA can be left with the current bank regulators, then it can be smothered in the crib. For decades, the Federal Reserve and the bank regulators (the OCC and the OTS) have had the legal authority to protect consumers. They have brought us to this crisis by consistently refusing to exercise that authority.

The agencies’ well-documented failures – discussed in detail by Travis Plunkett and Ed Mierzwinski here and by Professor Patricia McCoy here — are largely the result of two structural flaws. The first is that financial institutions can now choose their own regulators. By changing from a bank charter to a thrift charter, for example, a financial institution can change from one regulator to another. The regulators’ budget comes in large part from the institutions they regulate. If a big financial institution leaves one regulator, the agency will face a budget shortfall and the agency will likely shrink. Knowing this, financial institutions can shop around for the regulator that provides the most lax oversight, and regulators can compete by offering to regulate less. Regulatory arbitrage triggered a race to the bottom among prudential regulators and blocked any hope of real consumer protection.

The second structural reason that prudential regulators failed to exercise their authority to protect consumers is a cultural one: consumer protection staff at existing agencies find themselves at the bottom of the pecking order because these agencies are designed to focus on other matters. At the Federal Reserve, senior officers and staff wake up every morning thinking about monetary policy. At the OCC and OTS, agency heads wake up thinking about capital adequacy requirements and safety and soundness. Consumer protection issues are—at best—an afterthought. The CFPA would create a home in Washington for people who wake up each morning thinking about whether American families are playing on a level field when they buy financial products. By bringing economic experts who care about consumer financial issues under one roof, CFPA can develop as a smart agency that develops real expertise.

A single consumer agency would also be able to make sure that the same products face the same regulations. Today, mortgages are regulated differently depending on whether they are issued by a bank, a nationally-chartered thrift, a nationally-chartered credit union, and so on. Imagine for a moment if toasters or toys had different safety standards depending on who manufactured them. Or, even worse, imagine if some manufacturers could bypass safety standards almost in entirety – as is now the case for non-depository financial institutions. It is time for one Agency to regulate financial products in a consistent manner across the board.

In 2001, Canada created an independent agency much like the proposed CFPA. I recently spoke with some Canadian economists, and they not only said the system works, they also expressed bewilderment about the idea that prudential and consumer regulation would be combined. As one said, they “have different ways of thinking about the world.”

At the end of the day, industry lobbyists try hard to invent myths and make things sound confusing to intimidate the public and to keep policymakers from acting. But this issue is simple: keeping safety and soundness and consumer protection together has not ensured safety and soundness, has not protected consumers, has not fostered choice and innovation, and has not minimized regulatory burden. In fact, the current regulatory structure that combines consumer protection with other bank oversight responsibilities has led to the kind of bad regulatory oversight that has led us to this crisis. The CFPA would put someone in Washington—someone with real power—who cares about customers. That’s good for families, good for market competition, and good for our economy.

Update: Fixed link to Democracy article in first paragraph. Thanks to Uncle Billy vs. Mont Pelerin.

By Elizabeth Warren