Incoherency is not an Asset
Posted: September 18, 2009 Filed under: Health care reform, The Bonus Class, The Media SUCKS, U.S. Economy | Tags: Baucus Plan, Health Care Affordability, Health Care Availability, Paul Krugman Comments Off on Incoherency is not an Asset
Something inhuman has taken Paul Krugman from us, I'm afraid.
I’m not sure what happened to Dr. Paul Krugman that fateful night of dinner at the White House, but I’d like the shrill one back now. Was it something in the food? Was it something in the conversation? Who knows? But in as much a Buddhist can offer a Jewish guy a come to Jesus moment, I’d like to take the opportunity to ask him to step forward and confess lest the devil grab his soul (or in my case–no soul to lose–but more confused subtle conscious and an accumulation of some really bad karma). What exactly is this Dr. Milquetoast?
You see, it has been clear for months that whatever health-care bill finally emerges will fall far short of reformers’ hopes. Yet even a bad bill could be much better than nothing. The question is where to draw the line. How bad does a bill have to be to make it too bad to vote for?
Now, the moment of truth isn’t here quite yet: There’s enough wrong with the Baucus proposal as it stands to make it unworkable and unacceptable. But that said, Senator Baucus’s mark is better than many of us expected. If it serves as a basis for negotiation, and the result of those negotiations is a plan that’s stronger, not weaker, reformers are going to have to make some hard choices about the degree of disappointment they’re willing to live with.
So, the Baucus bill is “unworkable and unacceptable” but even a bad bill could be much better than nothing? What? You want to try that again? So, first he tells any of us that support single payer, that we’re being unreasonable by sticking by our convictions during the first real phase of negotiations. I know Krugman knows game theory, so I ask you, where is the sense in negotiating your potential end game position from the start of the first node?
Krugman does mention these three problems with the bill, so again he realizes it’s basically a very bad piece of policy. You gut these out of the bill, however, and you don’t have the Baucus bill at all. It’s a blank sheet of paper. So why not say, dump the thing and let’s start over?
First, it bungles the so-called “employer mandate.” Most reform plans include a provision requiring that large employers either provide their workers with health coverage or pay into a fund that would help workers who don’t get insurance through their job buy coverage on their own. Mr. Baucus, however, gets too clever, trying to tie each employer’s fees to the subsidies its own employees end up getting.
That’s a terrible idea. As the Center on Budget and Policy Priorities points out, it would make companies reluctant to hire workers from lower-income families — and it would also create a bureaucratic nightmare. This provision has to go and be replaced with a simple pay-or-play rule.
Second, the plan is too stingy when it comes to financial aid. Lower-middle-class families, in particular, would end up paying much more in premiums than they do under the Massachusetts plan, suggesting that for many people insurance would not, in fact, be affordable. Fixing this means spending more than Mr. Baucus proposes.
Third, the plan doesn’t create real competition in the insurance market. The right way to create competition is to offer a public option, a government-run insurance plan individuals can buy into as an alternative to private insurance. The Baucus plan instead proposes a fake alternative, nonprofit insurance cooperatives — and it places so many restrictions on these cooperatives that, according to the Congressional Budget Office, they “seem unlikely to establish a significant market presence in many areas of the country.”
The insurance industry, of course, loves the Baucus plan. Need we say more?
Yes, you do need to say more other than watch and see what happens as it evolves and becomes more complex. Krugman is hoping that it eventually passes some ‘threshhold of acceptability’. Since you’ve given up so much so soon, what the heck do you now consider the minimum threshold of acceptability? As far as I can see, Dr. Krugman, the entire thing would have to be gutted to come close to anything that looks like a subgame perfect, let alone a Nash Equilibrium from my standpoint. But then I really want universal and affordable health care. There are a lot of ways to go about that, but the Baucus bill does not even appear to contain ONE of them. That’s probably because it was written by a Well Point Lobbyist.
Borrowing a turn of Phrase …
Posted: August 23, 2009 Filed under: just because, president teleprompter jesus, Team Obama, Voter Ignorance | Tags: Marc Ambinder, Paul Krugman, Racist meme, trust Comments Off on Borrowing a turn of Phrase …Paul Krugman’s Saturday blog post takes a defensive tone with Marc Ambinder who once called Krugman and a group 
of other liberal thinkers “reflexively anti-Bush”. Krugman expected a better apology from Ambinder after it was confirmed by former Bush Homeland Security Secretary Tom Ridge that the White House did, in fact, play politics with the Code Orange terrorist warnings. Evidently, there was an email between the two and Krugman felt the exchange wanting. Here’s his rationale.
But I’d like to return to one point: even after retracting his statement about people who correctly surmised that terror warnings were political being motivated by “gut hatred” of Bush, he left in the bit about being “reflexively anti-Bush”. I continue to find it really sad that people still say things like this.
Bear in mind that by the time the terror alert controversy arose in 2004, we had already seen two tax cuts sold on massively, easily documented false pretenses; a war launched with constant innuendo about a Saddam-Osama link that was clearly false, and with claims about WMDs that were clearly shaky from the beginning and had proved to be entirely without foundation. We’d also seen vast, well-documented dishonesty and politicization on environmental policy. Oh, and Abu Ghraib was already public knowledge.
Given all that, it made complete sense to distrust anything the Bush administration said. That wasn’t reflexive, it was rational.
I’d like to borrow the example and phrase because some of us around here are perpetually called “reflexively anti-Obama” or, of course, called racist because it’s a much more pejorative and personally damaging label. This is simply because we see similar patterns of behavior in Barrack Obama and his administration. Notice that Krugman has a laundry list right there in that second paragraph of things that made him rationally distrust anything the Bush administration said. I personally have my own laundry list of things that makes me rationally distrust anything the Obama administration says. It starts (but does not end) with the pledge to vote against FISA.
I’m with him …
Posted: August 18, 2009 Filed under: Health care reform, president teleprompter jesus, Surreality, Team Obama, Voter Ignorance | Tags: James Carville, Paul Krugman, Politico, Public Option Comments Off on I’m with him …
I have to say, I’m with my neighbor James Carville on this one … put a decent health care reform out there and let the Republicans kill it. I’ve said over and over that without a vital public option, it’s neither about the health care or the reform. It’s about the lobbyists and an administration win and I don’t think we should go for it. Carville thinks it would send a good signal to the country about how little Republicans are willing to come to the table in the name of what’s good for American and bi-partisanship if they fight health care reform vehemently. Let them show themselves as obstructionists while we trot out people bankrupted by underinsurance, folks who lost relatives to insurance companies who ration health care, and people who can’t even access the basics enough to be treated for the most treatable of diseases. Let them all be seen on TV saying no well baby care and prenatal care to their fetus fetishists.
On CNN’s “State of the Union,” Democratic strategist James Carville became the first leading Democrat to suggest publicly that there might be political advantage in letting Republicans “kill” health care.
“Put a bill out there, make them filibuster it, make them be what they are, the party of no,” Carville said. “Let them kill it. Let them kill it with the interest group money, then run against them. That’s what we ought to do.”
This weekend’s comments by White House officials simply acknowledged the long-obvious reality that the idea of a government-run insurance plan was partly a bargaining chip.
Bargaining chip? WTF? What exactly do we get if the public option is off the table?
Krugman says the public option may be a signal on Obama’s trustworthiness that not every one is seeing. Okay, finance/economics lesson time again. Signaling theory is based on the idea that that market reacts rationally to publicly available information. So, for example, if I want to signal that my company is worth more than the average company, I want to find a way to signal that to the market I’m superior so they’ll run up my stock price to recognize me as a superior company. Then I can rake in bonuses and capital gains. I could borrow money in the commercial market, for example, that gives me a Aaa rating. This signals raters who are assumed to be in the know find my company to be a good bet compared to others that they rate lower. This signal should push up my stock price.
So what kind of signal do we have here? Well, Krugman argues that the public option is one of the ways Obama can ‘signal’ that he’s still a progressive democrat and he’s signaling that he’s a sell out without realizing it. He points out that the public option debate has turn into a signal on who should buy stock in what Obama says. Signals are based on the market knowing what actions can be trusted, however. You have to trust that some one who gives a company the Aaa rating really has some inside proprietary information and believe they are a reliable, trustworthy source of rating. Krugman says the Obama administration is sending out bad signals and doesn’t even realize it.
If progressives had real trust in Obama’s commitment to doing the right thing, the administration would have broad leeway to do deals. But the president doesn’t command that kind of trust.
Partly it’s a matter of style — as many people have noted, he has been weirdly reluctant to make the moral case for universal care, weirdly unable to show passion on the issue, weirdly diffident even about the blatant lies from the right. Partly it’s a spillover from his other policies: by appointing an economic team that’s Rubin redux, by taking such a kindly attitude to the banks, he has squandered a lot of progressive enthusiasm.
Add in the dealmaking as part of the health care process itself, and progressives can be forgiven for having the impression that Obama (a) takes them for granted (b) is way too easily rolled by the other side.
So progressives have their backs up over one provision in health care reform that’s easy to monitor. The public option has become not so much a symbol as a signal, a test of whether Obama is really the progressive activists thought they were backing.
And the bizarre thing is that the administration doesn’t seem to get that.
So, who’s signals should we trust? Carville? Krugman? Obama?
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Enough is Enough!
Posted: August 17, 2009 Filed under: A My Pet Goat Moment, Health care reform, Surreality, Team Obama, U.S. Economy, Voter Ignorance | Tags: Howard Dean, Kent Conrad, Paul Krugman, Rep. Eddie Bernice Johnson, The Hill Comments Off on Enough is Enough!Left Blogistan is alive with the sounds of open dissent. I can only say, it’s about time. Here’s a good example from TheHill.com aptly headed Obama picks fight with left on Health Reform. The news, however, is this fact. A public option is not a liberal option. It’s the option that every advanced economy in the world has chosen in some form. We already have a public option for seniors. We’re the majority, in every sense of the word, on this issue. This fight is not with the Left. This fight is with our babies who die in bigger numbers than most countries, our families bankrupted by inadequate insurance, and the many many ill people who are simply numbers on a spreadsheet that provide a mark-up of 30 percent or more for a industry based on always saying no!
Even in the real Socialized medicine haven of the. U.K., former Prime Minister Maggie Thatcher knew she had an unassailable object because it makes peoples lives much improved and they wouldn’t give it up once they had it. Here in the U.S., we’re not even talking socialized medicine despite the bleating of the right wing media machine. 
We’re talking about extending something we already have–Medicare– reformatting it so it benefits doctors, hospitals and patients rather than a superfluous, bonus paying, extraordinary profit making, third party payer. How can you lose the high ground on an issue that’s been so easily solved in nearly every other country that’s not an economic or political basket case? How can you lose momentum on an issue that polls showed people supported until you botched the policy so badly?
Liberal Democrats have insisted a public insurance option is necessary to ensure competition for private insurers. Just this week, former Democratic National Committee Chairman Howard Dean predicted there could be Democratic primary challenges if a healthcare bill without a public option is approved by Congress.
Dean also told liberal bloggers gathered last week at the “Netroots Nation” convention that the only piece of reform left in the House bill that is worth doing is the public option.
The left wing of the Democratic party already has been irritated by concessions its leaders have made on healthcare to centrists in the House and Senate.
Rep. Eddie Bernice Johnson (D-Texas) told CNN on Sunday it would be “very difficult” for her and other
liberals to support legislation that does not include a public option.
“The only way we can be sure that very low-income people and persons who work for companies that don’t offer insurance have access to it, is through an option that would give the private insurance companies a little competition,” she said.
The last word in the Sunday TV Spin Zone was given to North Dakota Senator DINO Kent Conrad. This man has fewer folks in his entire state than do most neighborhoods in any major city in America. Why does he get to frame the debate?
In an interview on Sunday, Mr. Obama’s senior adviser, David Axelrod, said the president remained convinced that a public plan was “the best way to go.” But Mr. Axelrod said the nuances of how to develop a nonprofit competitor to private industry had never been “carved in stone.”
On Capitol Hill, the Senate Finance Committee is expected to produce a bill that features a nonprofit co-op. The author of the idea, Senator Kent Conrad, Democrat of North Dakota and chairman of the Budget Committee, predicted Sunday that Mr. Obama would have no choice but to drop the public option.
“The fact of the matter is, there are not the votes in the United States Senate for the public option,” Mr. Conrad said on “Fox News Sunday.” “There never have been. So to continue to chase that rabbit, I think, is just a wasted effort.”
So, that’s it. The high rate of infant mortality we have here in the U.S. (worse than many developing nations), the appalling number of personal bankruptcies due to folks with either no insurance or underinsurance, and the number of people that have no access to even the most basic services other than the emergency rooms are simply Axelrovian ‘nuances’. TheHill.com continues to describe the back pedal, the sell-out, the cave-in, or what ever pejorative metaphor for the big Obama cop-out.
The Realities of Market Failure
Posted: July 26, 2009 Filed under: Health care reform | Tags: CBO, health insurance, HMOs, Kenneth Arrow, Paul Krugman, Peter Orzag, welfare economics Comments Off on The Realities of Market Failure
Paul Krugman jumped further in to the health care reform debate today just as the CBO announced that the Obama Plan, billed as a cost-saver, continues to be anything but cost saving. Krugman rightly points out that in a land of third party payers, you are not going to find a free market solution. This is simply true by definition so why is there so much confusion?
Krugman borrows heavily from an earlier treatise by Kenneth Arrow, one of the early pioneers of modern economics in a 1963 treatise called Uncertainty and the Welfare economics of health Care. (Note: The link on Krugman’s blog is bad so use mine.) Let me just mention here that Welfare in economics means you’re looking for allocative efficiency within an economy given that economy’s income distribution. Since so few folks in this country have the majority of income and resources, for example, the U.S. is a considered about average on allocative efficiency. Our resources are not distributed based on the aggregate welfare of society. We have a system where there are winners and losers because most of our goods are distributed by ability to pay and most of that ability to pay comes from accident of birth.
So, Krugman updates the Arrow treatise and argues that healthcare is not what you would refer to as a standard market that would thrive under free market conditions. He points to two very distinct characteristics that takes it out of contention for a completely free market solution which borrow heavily from Arrow.
There are two strongly distinctive aspects of health care. One is that you don’t know when or whether you’ll need care — but if you do, the care can be extremely expensive. The big bucks are in triple coronary bypass surgery, not routine visits to the doctor’s office; and very, very few people can afford to pay major medical costs out of pocket.
…
The second thing about health care is that it’s complicated, and you can’t rely on experience or comparison shopping. (”I hear they’ve got a real deal on stents over at St. Mary’s!”) That’s why doctors are supposed to follow an ethical code, why we expect more from them than from bakers or grocery store owners.
If you’ve followed any of my blogging carefully, you will recognize two underlying themes that we’ve frequently talked about throughout Krugman’s assessment. That would be that the health care market has the two nasty frictions of moral hazard and information asymmetry. Insurance companies, theoretically, should provide cost effective remedies to both. However, there are things unique to health insurance and the underlying risk of getting catastrophic illnesses that make huge risk pools the most cost effective. This is the primary economic argument for universal healthcare. Putting every one (the healthy and the unhealthy) into one HUGE risk pool, minimizes the cost to everyone, thereby maximizing allocative efficiency and economic welfare. Insurance companies that cherry pick, and healthy folks that self opt-out of risk pools, violate these principles and make it more expensive and less efficient for every one.
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