Wednesday, March 30, 2011

Health Policy Rant

One radom point that I would like to make is that I find health policy types never seem to question one of the underpinnings of the current system, namely that it is predicated on 3rd party payments, and its role in hampering innovation and cost control very frustrating. When you walk into your physicians office what should be immediately obvious to you is the substantial overhead costs involved with navigating this system. Even a simple practice will often have a billing department with several staff. This entails significant direct costs in the form of PC&B but indirect costs in the form of higher rent and the ability to see fewer patients as the doctor now also is managing a more complex operation. The conventional liberal response to that is "a-ha, single payer will make this go away". Well, not entirely, you would still have to chase reimbursements but now only from uncle sam. So you could let off some staff but you would you would still have a significant amount of overhead. There would be savings but not as much as one would think. Whereas if you simply paid when you received the service the avearge practice could probably make do with a support staff of one- a scheduler/bookkeeper. That is a small example but one that I think is accessible to most people as it is the extent of our normal interactions with the health care system and it is obviously inefficient.

Tuesday, March 29, 2011

Removing Qaddaffi

I oppose the war in Libya. I accept the conventional wisdom that our engagement in Libya is certainly no worse than Iraq (a war which I foolishly supported). I think the President has been much more responsible in leading our engagement in Libya than his predecessor. I just don't see much upside. Qaddaffi is unlikely to cave as he has pissed off nearly every world leader and probably doesn't have a safe haven outside of maybe Zimbabwe and Venezuela. So, if our stated goal is to remove Qaddaffi I think we will actually fail in this endeavor unless we commit ground troops. I can imagine a scenario where Libya effectively splits, or one where we maintain a no-fly zone for the better part of a decade. This is not to say that I think Qaddaffi is a good guy but I do think the zeal with which the international community is pursuing him will encourage some unintended consequences. Over the last decade Qaddaffi moderated his behavior significantly. He stopped sponsoring terrorism, it appears that he and his government provided significant insight into the financing of terrorism (after all, they had subject matter expertise), and stopped their WMD program. None these things make Qaddaffi a good citizen but they certainly demonstrate that our diplomacy was having an effect. With Qaddaffi as example in mind what should a modern day despot do? Clearly the Qaddaffi example shows that moderating your behavior will only lead to temporary gains (especially if you sitting on an ocean of oil). If I were a despot I would be musing about the counterfactual in which Qaddaffi got his nukes.

Secular Aethiest Islamists

They're all the rage these days don't you know. Here is Newt Gingrich: "I have two grandchildren: Maggie is 11; Robert is 9. I am convinced that if we do not decisively win the struggle over the nature of America, by the time they're my age they will be in a secular atheist country, potentially one dominated by radical Islamists and with no understanding of what it once meant to be an American." I thought the standard neoconservative nightmare was that we couldn't give way to secular aetheism because our secularly aetheistic society would be paralyzed in the face of the islamist threat and ultimately succumb. I didn't know that you could have a country which was simultaneously dominated by secular atheism and Islamism. I am sure Newt has some elaborate explanation of this phenomenon that he will share with us during the primaries.

Thursday, March 10, 2011


I think this from Ezra Klein is quite true:
"4. Lots of policy problems can be solved with clever policy solutions. But Washington isn’t very good at passing or implementing clever. Simple programs and rules are often better in practice, even if they’re worse in theory."

Wednesday, March 09, 2011

Another Very Good Ezra Klein Interview

This time with Grover Norquist. The highlight, this line:
"I think golf and cocaine would more constructive ways to spend one’s free time time than negotiating with Democrats on spending restraint."

Credit Where Credit is Due

This is a phenomenal interview by Ezra Klein with Secretary of Agriculture (former Governor of Iowa) Tom Vilsack.
"TV: I think we would have fewer people. There’s a value system there. Service is important for rural folks. Country is important, patriotism is important. And people grow up with that. I wish I could give you all the examples over the last two years as secretary of agriculture, where I hear people in rural America constantly being criticized, without any expression of appreciation for what they do do. When’s the last time we thanked a farmer for the fact that only 6 or 7 percent of our paycheck goes to food? We talk about innovation and these guys have been extraordinarily innovative. We talk about trade deficits and agriculture has a surplus.
EK: I feel like I hear a lot of paeans to the good people of rural America. I feel like politics is thick with tributes to farmers and to the heartland -- and that’s fine with me. Which isn’t to say I doubt what you’re telling me. But I guess I’d offer a hypothesis: Some of the frustration you hear is because of the subsidies that go to rural America. If rural America wasn’t getting these subsidies but was flourishing, they’d get more of the respect you’re saying they deserve. But as long as they’re heavily subsidized, people are going to feel that there’s something wrong.
extraordinarily innovative. We talk about trade deficits and agriculture has a surplus.
TV: I don’t know if it’s that. I think one of the reasons that there’s a safety net for American farmers is that we don’t really want to be so dependent on other countries for our food. How much more do we spend on the military in order to protect our ability to get oil? I make the same argument on immigration: One reason we need immigration reform is that 50 percent to 75 percent of our food is, at some point or another, touched by immigrant hands. Growing our own food is important. That’s where I come from in my attitude that there should at least be some acknowledgment of the role that farmers and ranchers play in our country. You may be right that politicians speak up for these folks, but I have a hard time finding journalists who will speak for them."

Monday, March 07, 2011

Problems with PPACA

Matt Yglesias has a post rightly pimping pricing transpency in healthcare but unwittingly illuminates a core problem with PPACA. Yglesias shares the following reader experience:
"I think you should do some posts on the lack of transparent pricing of medical services. My girlfriend just injured her knee. Her primary care physician referred her to a sports medicine doctor who said, it doesn’t appear to be major, but I think you should get an MRI. When she makes an appointment for an MRI she learns that it may cost at least $900 out of pocket because her health insurance has a $2,500 deductible. I tried to look online to see if there were any websites that provided comparative pricing for MRI services and could find nothing. She called her insurance company and they said they were unable to provide her with pricing information for the various providers in the area. When you call the providers themselves and ask, they say Ask your insurance company. I think one way we could improve health care in the US is to require providers to post the prices of their services so that you can compare. There are at least 15 providers in the immediate area (Chicago) so it is not for a lack of competition that prices are out of whack, it a result of opaque pricing that leaves the consumer of medical services powerless."
Yglesisas goes on to make the point the PPACA has provisions which are supposed to improve transparency in pricing. I agree that this is a good thing. It is fundamental to cost control. However, you also need to have the incentive to economize, not just the information that enables you to do so. In the shared scenario the person seemingly has a high deductible health plan and has an incentive to comparison shop because she actually has to pay for the care herself. She presently lacks the information to comparison shop but has the incentive to do so. PPACA will invert this problem by effectively getting rid of HDHPs so while people will have the information to comparison shop they will no longer have the incentive to do so.

Ezra Klein on State Pensions

He states: "it's hard to argue that defined benefit plans should be done away with for states, though it's not hard to argue that they should be funded honestly and based on realistic projections for eventual returns."

It's actually not hard to argue that defined benefit plans should be done away with; the second clause in the excerpted statement tacitly makes the argument. As politicians are irresponsible as evidenced by chronic underfunding of pension funds (and improving benefits in the future that they have no intention of funding) a better retirement policy would be to shift towards defined contribution plans where politicians cannot kick the can down the road. Not difficult. I think Ezra puts in a lot of good reasons why defined benefit plans are good, but the political economy considerations remain the same. If the media were more vigilant about accurately reporting on deficits (you have not posted a surplus of $x if you have skipped a pension payment of $x or $x+1) then I would probably be more amenable to defined benefit pensions because when they are run properly and when they are funded adequately they are a superior solution. But I think the incentive will always be for politicians to promise more benefits in the out years and skip funding in the present creating problems for future taxpayers and retirees alike.

Update: Andrew Samwick and Megan McArdle have great posts on defined benefit plans and retirement savings more generally. One of the the things both discuss in their posts is how people get screwed when they switch employers in a defined benefit context. I think this is an underappreciated aspect of pensions. Once upon a time it was more likely for folks to stay with a single employer for their whole career, that is less and less the case.

Difficult Datapoint for Progressives

Wednesday, March 02, 2011

A Breath of Fresh Air

Here is Chris Christie on why he doesn't think he should run for president:
"The issue is not me sitting here and saying, 'Geez, it might be too hard. I don’t think I can win.' I see the opportunity both at the primary level and at the general election level. I see the opportunity. But I’ve got to believe I’m ready to be president, and I don’t. And I think that that’s the basis you have to make that decision."
That type of self awareness and humility is not something that you find too often among politicians.

Update: I agree with his self-assessment on his electoral chances. I do believe that he would be the favorite in the Republican primary and if the economy continues to be weak just about anyone will have a fighting chance against Obama.

Tuesday, March 01, 2011

Wyden-Brown Amendment

Donald Taylor discusses the import of the Wyden-Brown amendment and the types of waiver requests that are likely to be granted (opening exchanges to everybody or a single payer). One of the limiting factors in the Wyden-Brown amendment is that the operates within the context of ACA which defines the minimum benefit at a fairly comprehensive level. I think to promote health we should be spending less money on health insurance and directing more money towards things like mass transit, pre-natal nutrion, and health school lunches. I would be interested to see if the Secretary of HHS would allow for a waiver with resources diverted away from health insurance subsidies towards broader wellness incentives.