Monday, March 29, 2010

Gary Becker gets to the biggest aspect of our cost growth in my view- insulation from out of pocket spending-
"Here in the United States," Mr. Becker says, "we spend about 17% of our GDP on health care, but out-of-pocket expenses make up only about 12% of total health-care spending. In Switzerland, where they spend only 11% of GDP on health care, their out-of-pocket expenses equal about 31% of total spending. The difference between 12% and 31% is huge. Once people begin spending substantial sums from their own pockets, they become willing to shop around. Ordinary market incentives begin to operate. A good bill would have encouraged that."

Sunday, March 21, 2010

Health Care Passes

Republicans lost, I would argue so did our nation's finances. Things Republicans should focus on in the next congress on improving health care and making it affordable long term:
1. Change the definition of the minimum benefit to HDHP
2. As part of tax reform cap the employer exclusion
3. Enable the purchase of insurance across state lines

Monday, March 15, 2010

Student Loan Reform and Health Care bundled Together

I find this ironic because the methods of financing both higher education and health care are in a general sense quite similar (3rd party payment) and both have exhibited higher than average cost growth without delivering superior outcomes. And the legislation being proposed for both appear to do little to arrest the current trend but at best will reset the baseline a little lower.

Note: The student loan reform proposes to make the government a direct lender to students. This will reduce the interest rates of the loans as they will have to cover for the rate of default but not profit. However, if the interest rates are lower then students can borrow more thus enabling Universities to charge higher tuition thus necessitating greater indebtedness yet from their students. Rinse and repeat so the cycle goes. The only thing that has changed is there isn't a middle man getting a take and for the purposes of reducing public corruption alone that is all to the good (though, during the Clinton years banks had to bid in order to provide lending services which made it a much more transparent and efficient operation). On a positive note the bill does propose plowing some of those savings (a meager amount as most of the savings are used to offset the health care bill) into Pell Grants.

Monday, March 08, 2010

Worst Bio for A Senator

Risk Modeler for AIG? CEO of Lehman Brothers? How about Chief Economist for Bear Stearns? Yes, the former Chief Economist of Bear Stearns, David Malpass, major housing bubble Pollyanna is gearing up for a Senate run. In New York, this background may be overcome but in every other state in the union I would think his background would be an insurmountable obstacle.

Tuesday, March 02, 2010

Orrin Hatch Has a Very Misleading Op-Ed

Orrin Hatch argues that using reconciliation for health care would be a travesty for democracy. I think the end result of passing health care would be disastrous but not for procedural reasons. The op-ed is misleading as he conveys that broader health care reform would be enacted using reconciliation. This is false. Reconciliation would be used to change a bill that has already been voted on by the Senate and got a supermajority. Reconciliation would only affect those measures that directly impact the budget, such as subsidy levels and revenue provisions. Reconciliation is used to this effect regularly. Republicans used it regrettably with the Medicare Plan D. Again, I am no fan of the health care reform bill but this op-ed is plainly disingenious.

Postal Service

It looks like they are going to cut their Saturday deliveries. I know it is a popular past time to complain about the US Postal Service but I have always been impressed with their service. That said, the only time I am reliant on the post office is for netflix. I am guessing at this point the Post Office's relevance is similarly diminished for most people. Couldn't we shut it down?