Thursday, February 17, 2011

Increasing Blog Traffic: Matthew Yglesias Edition

Apparently criticizing Matthew Yglesias posts is a great way of driving traffic to your site. However, it does appear there is an inverse relationship between the Matthew Yglesias blog (excellent) and the commenters it has driven my way. Nonetheless, thanks for the traffic.

A Test for Obamacare

One bellwether for PPACA will be whether Mitch Daniels request of HHS to extend the Healthy Indiana Plan to Medicare eligible patients is approved. If approved this will indicate the administration's willingness to enable states to experiment with different health care approaches.

Question for Progressives

Why is it that with health care, the presumption is that we need an intermediary for routine predictable transactions? Or even non-routine care but that isn't necessarily of the urgent life threatening variety (an MRI, a colonoscopy, etc.)? Why is that a more efficient process than giving people either cash or something akin to an in-kind benefit along the lines of food stamps where people would have a debit card that has restricted purchasing abilities*?

If you insist that there is an intermediary to each transaction, then there will be a considerable amount of overhead costs to facilitate transactions that in other industries don't exist. On its face this is an inefficient set up. Why should someone that practices family medicine need anything more than one staff member who functions effectively as his bookkeeper and scheduler. That additional overhead gets passed on to you in the form of premiums to pay for more staff at the providers office to chase reimbursements and more staff at the insurer to process claims. But additionally, the only possible avenue for cost control is top down as opposed to a bottom up manner that we find in most industries. If I am spending my money directly then I have an incentive to minimize my expenses. For instance, if I have to get a colonoscopy, something that does constitute a significant and expensive procedure, but not urgent, I can research prices and reputation and make a more informed decision. If we make price information available I think initially we will find a wild variance in pricing but that will come down, resulting in significant savings to the average consumer. None of this I think is terribly controversial but it seems that we view health care in such a manner that all rules that apply to other goods and services don't to health care.

* I think the non-paternalistic alternative to providing lower income folks with free or massively subsidized insurance is to just give them cash. The obvious criticism here is that lower income folks having many needs and wants and very little cash will forgo care for other things both wise or unwise. I think there is a middle ground to providing cash and a strictly in kind benefit and that would be something along the lines of a medical debit or credit card that has strict restrictions on purchasing. To a doctor this would be as good as cash but to a grocer it would be worthless thus it would seem to address the fear with someone forgoing necessary care but still retain the efficiency of reducing the parties to a routine transaction.

Matt Yglesias Makes a Stupid Point

He postulates a scenario where a pill is invented that enables us to live till our 100th birthday without any illness and then suddenly die. In such a world there would be no health care sector and thus those incomes go away and his view would cause "a catastrophic economic collapse". I guess I think of it differently, I would have $15k of discretionary income that I don't currently have and that money I could spend on my child's education and development, my wife and my leisure, or towards investments. I think there is a mindset that looks at technology as displacing labor, which it often does, and draws the conclusion that it is bad. Such would be the case if human wants were finite, but they are in fact infinite.

Wednesday, February 16, 2011

No Defense Cuts

It amazes me (and heartens me) that Republicans are proposing $15 billion in Defense cuts. I find it ironic if not suprising that President Obama is citing the proposed cuts as one of the reasons he is threatening to wield his veto pen.

I think there is a good argument to be had that now is not the optimal time to start budget cuts. And I don't think budget cuts where the discretionary non-defense to defense ration is 85-15 is appropriate either. I would be content with a smaller cut this year where the non-defense to defense ration was 25-25 for a total of $50 billion and scaled up to $100 billion the following year and the year after that the ratio would change to 50-100 with a total cut of $150 billion. The reason I think you want to start with modest cuts now is that you don't know that the economy will start roaring back due to deficit spending. So while revenues will probably continue to rise the deficit is likely to be a problem for a while and the longer we fail to address it the more likely it is that we will be present with harsher choices when we are forced to deal with it.

Thursday, February 03, 2011

When Will RIM Go Out of Business

I have a blackberry through work and I have an android based phone. Even before I got my blackberry from work I never seriously considered using it as my personal phone (at the time I had a dumbphone). Even without ever fiddling around with an iPhone or Android phone the blackberry's limitations were pretty pronounced. My work throttles the use of it so this may not be entirely fair (the camera is disabled and the app store is disabled- no sexting on the work phone). The functionality that I do have is crap. The browser sucks. The UI is really clunky. I like physical keys but I have actually been surprised how the touchscreen keyboard is surprisingly tolerable (and if physical keys are a must you can get android based phones with them, though not an iPhone). My intuition is that RIM has business side pretty much locked down but is probably losing individual and family subscriptions at a steady clip (and to the extent they are maintaing those subscriptions they are probably subsidizing the phones at near cost or even a loss to keep a place in the market). At some point I would imagine that either Apple or Google will at least make a foray into getting some of the corporate or government market. When that happens I don't see how RIM survives.

Wednesday, February 02, 2011

Public Lockin Effects Creat Bad Policy Outcomes

One such example that always annoys me is the consequence of the following views that are widely shared by voters: 1. Roads should be free; 2. Transit should be able to pay for itself. The end result is a ridiculous amounts of congestion and everyone is worse off because we fail to price roads and invest in transit.

In Health Care we see something similar. The employer exclusion is the original sin in healthcare. Most of my coworkers can tell you how frequently they can get prescription glasses for "free", if their plan reimburses a gym membership or not, if the copay on a doctor's visit is low. They won't be able to tell you what the coinsurance is in the event they have a major medical event. Even a low coinsurance rate, say 20% can add up quickly if you have an extended hospital stay. They can't tell you how much they are foregoing in wages as a result of the employer contribution to their health care plan, because of course, don't you know, the employer pays it. One of the policy constraints politicians operated under was this lockin effect of people's expectations of continuing this form of first dollar coverage with somebody else's money. The problem with first dollar coverage is it is expensive and paying for it with somebody else's money is ultimately gonna cost you in wages. But alas, that is where we have ended up in health care reform, building on and further reinforcing a broken model.