Coyote Blog

Kevin Drum writes:

...for the first time that I can remember, this means that I have a personal stake in the election. It's not just that I find one side's policies more congenial in the abstract, but that one policy in particular could have a substantial impact on my life.

You see, I've never really intended to keep blogging until I'm 65. I might, of course. Blogging is a pretty nice job. But I'd really like to have a choice, and without Obamacare I probably won't. That's because I'm normal: I'm in my mid-50s, I have high blood pressure and high cholesterol, a family history of heart trouble, and a variety of other smallish ailments. Nothing serious, but serious enough that it's unlikely any insurance company would ever take me on. So if I decided to quit blogging when I turned 60, I'd be out of luck. I couldn't afford to be entirely without health insurance (the 4x multiplier that hospitals charge the uninsured would doom me all by itself), and no one would sell me an individual policy. I could try navigating the high-risk pool labyrinth, but that's a crapshoot. Maybe it would work, maybe it wouldn't.

But if Obamacare stays on the books, I have all the flexibility in the world. If I want to keep working, I keep working. If I don't, I head off to the exchange and buy a policy that suits me. No muss, no fuss.

So yes, this election matters, and it matters in a very personal way. It does to me, anyway. It's not just about gridlock as far as the eye can see.

I usually have a pretty thick skin for this type of stuff, but this got to me.  I wrote:

Great.  Those of us who are comfortable actually, you know, working to support ourselves look forward to subsidizing your future indolence.
Sorry, I am not usually that much of a snarky jerk, but really, that is what you are celebrating.  You are not celebrating some medical or scientific breakthrough that allows you to stay healthy at a lower cost.  You are celebrating a system to force other people to pay for your body's maintenance.  All so you don't have to support yourself for over a quarter of your life.

If you were to say that, "wow the health dice really rolled against me and I need help," few would begrudge you the help.  But this notion of an indolent retirement is radically new.  It is a product of our century's and our country's great wealth.  Retirement is a luxury good.  I have no problem with anyone consuming this luxury good out of their savings, but consuming it out of mine, and then crowing about it to my face, is highly irritating.

If I were a Republican, or if I had one iota of trust in them, I might write that this is what the election is about.  Since I don't have such trust, I will instead merely highlight Drum's thoughts as a good representation of modern entitled thinking.  For God sakes this guy is not even trying to use my money to escape, say, a coal mine early.  He wants my cash to escape blogging early, perhaps the cushiest job there is (as indicated by the fact that many of us do it for no compensation what-so-ever).

Over the last 50 years, real per capital health care spending has increased substantially.   Certainly there are multiple reasons for this, but the most obvious one is seldom ever mentioned -- that the US has seen huge increases in personal wealth over this period, and unsurprisingly people choose to spend a lot of this extra wealth on their own health and life expectancy.  In an age where consumerism is often derided as shallow and trivial, what could be more sensible than spending money on more and better life?

Many have pointed to the increased technological intensity of health care to explain rising costs.  I suppose this could be true, though in almost every other industry in modern times, increased technological intensity has reduced rather than increased costs.

One issue that does not get enough attention is the prosaic act of shopping.   I spend my own money, and I care about price.  I spend someone else's money, I don't give a rip.  Josh Cothran did a visualization of who is spending health care money.  Just look at the 1960 and 2012 charts, and pay particular attention to the orange "out-of-pocket" number.  Another way to rewrite these charts is to say consumers care about prices for spending in the orange band only.

Update:  Health care cost inflation.  Note cosmetic surgery, a field with significant increases in technological intensity over the last few decades, but for which almost all costs are out-of-pocket

source

From CNN via Carpe Diem

A 24-year scandal was quietly acknowledged last week. On July 3 the U.S. Food and Drug Administration approved the first "rapid home" test for HIV—a test that people can take in the privacy of their own homes to determine whether they have the virus that causes AIDS.

The approval is an unambiguously good thing—or so you would think. The saliva test in question, made by OraSure Technologies and known as OraQuick, costs less than $60 and takes just 20 minutes to self-administer. According to statistics an FDA advisory committee presented at a hearing in May, it holds the potential to prevent the transmission of more than 4,000 new HIV infections in its first year of use alone. That would be about 8 percent of the roughly 50,000 new infections we currently see annually in the United States. (About 1.2 million people in the U.S. are now living with HIV, according to the Centers for Disease Control and Prevention, of whom about 20 percent don't realize they have it. Since the epidemic began in the early 1980s, about 1.1 million people have been diagnosed with AIDS, and more than 619,000 have died from it.)

The scandal is that the approval of a rapid home test for HIV did not occur until last week—about 24 years after the FDA received its first application seeking permission to market one.

Apparently, for years, even decades, only tests of clinical options were allowed to proceed, basically because the government considers Americans to be infants:

There was great concern that the patient receive proper counseling, both before and after the test. The patient needed to appreciate the possibility of false positives, so he wouldn't panic unnecessarily if he got one. He needed to appreciate the danger of false negatives, so he wouldn't become reckless, endangering sexual partners. And he needed to understand the options and support groups available in the event he received a true positive. (On top of all these concerns, many AIDS activists at the time were opposed to almost any form of HIV testing out of fear that results could be used to ostracize and persecute HIV-positive people—though one hopes that public health concerns were paramount to the FDA, rather than political pressure and hysteria.)

My column is up at Forbes.com, and has a few quick thoughts on the decision.  A brief excerpt:

Second, though, I am really confused how financial penalties on states can be read as an effective mandate, and therefore un-Constitutional, but financial penalties on individuals do not constitute an effective mandate (if they did, this very ruling says that such a mandate would be illegal).   Using financial penalties to coerce action is either the equivalent of a mandate or it is not, but the decision seems to take two opposite stances on this question.

So this is how I read the PPACA/Obamacare decision today

• The mandate is not allowed under the commerce clause powers
• However, Congress is allowed to use its taxing power to issue financial threats to coerce individual activity it can't mandate
• However, Congress is not allowed to use financial threats to coerce state government activity that it can't mandate

The Wall Street Journal editorial page had a piece on the "smearing" of small business.  Apparently, in the political battle over Obamacare, the NFIB has become the new target of the left.

I have not seen these attacks on the NFIB, but after the bizarre joint attacks on ALEC, I certainly believe they exist.  The WSJ summarizes these attacks this way:

According to the smear campaign against the National Federation of Independent Business, or NFIB, small businesses are thrilled with the Affordable Care Act and the trade group betrayed the 300,000 companies it represents. Among the dozens of media outlets publishing anti-NFIB op-eds disguised as reporting, Reuters recently asked in a headline, "Who truly speaks for small businesses?" The question mark was superfluous.

The chairmen of the House Progressive Caucus, Democrats Raul Grijalva and Keith Ellison, chimed in with a letter accusing the NFIB of acting against "the best interest of small business owners" and "the popular opinion of the American small business community." They suggest Karl Rove is behind the suit, as he is everything else.

As a member of the NFIB  (I joined several years ago specifically due to their work on health care) I believe the NFIB addresses issues that really concern our company better than any other group I have found.  Certainly they are far better than the Chamber of Commerce, which tends to be a group of large companies more interested in crony handouts than free competition.  Members get polled constantly to see what issues we care about and to see what positions we would like the NFIB to take.

This latter process makes the NFIB among the most virtuous of the organizations to which I have belonged.  Certainly the Sierra Club, way back when I was a member, never polled me on whether I preferred them to focus their efforts, say, on political activism or true conservation efforts.

I am exhausted by journalists and politicians on the Left who have barely even worked in a profit-making venture, much less run one, who speak with great authority on what small business owners should or should not want.  Our company is in the business of making long-term operations bids.  For the last three years, we have had to bid two numbers for our expenses, one with Obamacare and (a much lower one) without.  Never in 25 years of our history has any external factor, government-drive or not, made this much contingent difference to our bids.  So it is simply insulting to be told that it should not make any difference to me, or that its effects will be universally cost-reducing.

Further, it is really, really hard for a small business to parse the impact of Obamacare because it is #$&*#$ hard to figure out just what its provisions are.  McDonalds can afford to hire a team of experts to figure it out, and to start gaming it by using its political clout to seek special exemptions and treatment from the Obama Administration.  We cannot.  The NFIB is the only organization, public or private, in the country that has actually helped us understand the law's requirements.  For several years running, they have sent an expert, at their expense, to our industry gatherings to help educate companies on the law.

Don't say I have not been warning you.  For years.  Philip Klein via Peter Suderman:

...Bloomberg highlighted a comment from a supporter of the [soda] ban, who wrote, "Anyone who pays taxes and thus bears the health care costs of obesity should support this."

In a free society, individuals are able to take risks and make decisions detrimental to their own well-being -- be it smoking, drinking, excessive eating or anything else -- because they'll bear the ultimate costs of their decisions. But when government assumes a greater role in the health care system, suddenly there's a societal cost to individual risks. This provides an opening for those who believe in a paternalistic role for government to make their regulations seem pragmatic. Bloomberg used the "health care costs to taxpayers" argument during his previous drives to ban smoking in bars and restaurants and to outlaw the use of trans fats.

I have written a lot about government-provided health care as a Trojan Horse for government micro-management of individual behaviors.  The logic is that once the government is paying for your health care, your decisions that once only affected yourself now affect public costs.  Here is a great example:

Touting new recommendations from an Institute of Medicine panel on obesity on Tuesday's NBC Nightly News, science correspondent Robert Bazell proclaimed to viewers: "...a sea change in how we perceive obesity. No longer a question of individual responsibility, but a need to change what's called an 'obesity-promoting environment.' Calling on corporations, government and individuals to act."...

Bazell further pushed the findings: "With the cost of treating obesity-related illnesses approaching $200 billion a year, many on the panel say the nation is ready to act."

I wonder how many feminists who were pretended to be libertarian rather than just pro-abortion by arguing "keep government policy out of my body" are all-in on this type of food consumption regulation?  I would bet a lot.

Update:  Here is an idea -- let's deal with the perceived issue of people eating poorly by ... licensing nutritionists to make their advice scarcer and more expensive.  And here too.

The PPACA instituted a cap on health insurance spending such that at least 80% of health insurance premiums must be spent on care. Academics like Elizabeth Warren love this idea.  So here is my modest proposal -- let's require that public universities spend at least 80% of tuition on classroom instruction.  If they spend more than 20% on administration and overhead, it gets rebated back to students.  Having nearly universally supported such a provision in the PPACA, academics surely can't oppose this, can they?

I am exhausted with folks who have never tried to shop for health care telling me that it can't be done, despite the fact that I do it all the time and achieve substantial savings.  This is a meme developped and maintained solely to support government power by declaring that there is a market failure in the pricing mechanics in the health care industry that can only  be solved through regulation and price controls.  I wrote in response

I agree that the pricing in health care is often arbitrary and capricious.  Of course some suppliers are going to try to soak third party payers.  But I don't think simply changing the payer (from private to public) or having a government bureaucracy set prices for  millions of line items is the solution.  My diagnosis is that health care lacks the one thing we have for most every other product or service:  shopping.

Now, you try to head off this argument with a few folks who claim shopping is impossible in health care.  But that is absurd.  There is a large and growing community of us who have real health insurance, rather than pre-paid medical plans, which means we have high deductibles.  We pay all of our regular expenses out of pocket, and maintain health insurance for large, unpredictable, potentially bankrupting expenses.

I must admit that shopping for health care seemed odd and a bit intimidating at first, having lived for years in the world of gold-plated, pay-for-everything corporate health care accounts.  But it really is not that hard.  I have consistently knocked down the cost of everything from x-rays for my kids' fractures to colonoscopies by a half to two-thirds.  I am now used to doctors and providers having that second price book under the counter they go to if they know you don't have a third-party payer they can soak.  We always research and ask for generics.  We think twice before accepting the need for an expensive test, like a MRI, and price shop it if we have to have one.  I push back on my dentist who tries to x-ray my teeth every few months.  I have many friends that saved a ton of money on oncology treatments by just doing a little shopping.

I am exhausted with academics and writers who have never tried to shop for health care telling me it is impossible.  Many of us do it, and there are more and more resources out there for us.  Sure, there are certain things I am not going to have the time or ability to price shop -- if I am lying on my back having a heart attack, my wife (hopefully) is not going to check rates at the hospitals.  But it is a fraud to extrapolate from this minority of health care situations to all health care expenditures.

The other argument is used is that at the beginning of a health care interaction we may not know exactly what care is needed.  So what?  The same is true of auto repair, but I don't blithely allow the repairs to proceed at any cost just because I didn't know up front what the diagnosis would be.  I get an estimate when each new problem is found, and I have on several occasions interrupted a car repair, told them their price was too high on certain repairs, and went elsewhere for the repair or deferred it entirely.

Let's suppose there is some sort of market failure for 10-20% of health care charges where price shopping is impossible.  Then let's discuss government regulatory approaches for those situations.  But for the other 80-90%, we should be structuring a health care system where consumers provide the price regulation, as they do in nearly every other industry, by shopping.

As a note, some people are exhausted by the idea of shopping.  My first response is, so what?  Get over it.  We are not going to take over a whole industry just to free you from a bit of hassle.  The second response is that research shows that only a small percentage of buyers need to be price shoppers to enforce price discipline.  I generally trust that Amazon has low prices and don't always check them, because I know there are much, much more rabid people who do care and do check.

Over time, I have found physicians who are both sympathetic and cooperative with this approach and actively help us minimize the cost of our care.  Its just amazing -- somehow we accept this image as a doctor being above all this cost stuff, in fact with considerations of price and cost being corrupting to their mission of keeping us healthy.  Imagine a car mechanic that took that attitude -- "I'm the expert here and you will pay whatever it costs to do what I say you need to do."  Would you fire the mechanic and find a better and cheaper one, or would you suggest that what we really need is a massive new government bureaucracy to set prices for every imaginable repair a car might need.

Sometimes I suspect much of the support for government health care is from people who see shopping and taking responsibility for their own care as too much of a hassle.

The administration claims that the country really loves the new health care law and will be even more thrilled with it once it fully takes effect.  If this is the case, why are they twisting the law to the breaking point trying to avoid implementation of the PPACA this year?  If the administration truly believed the PPACA would be well received by the majority of Americans, they would be bending over backwards to see it put into effect before the election.  Instead, they are doing the opposite.

Clearly, Obama would consider the PPACA his largest legislative accomplishment.  I am trying to remember a President who was so reluctant to run on his largest legislative achievement.  Maybe Adams with the Alien and Sedition acts?

Kevin Drum quotes favorably from Chad Terhune at the LA Times

Some insurers are chasing after much smaller customers with new plans designed to limit employer payouts for big claims using what's called stop-loss policies. This guarantees that businesses won't be responsible for anything over a certain amount per employee, perhaps as low as $10,000 or $20,000, with the rest paid by an insurer. Regulators and health-policy experts say this arrangement undercuts the notion of self-insurance since employers aren't bearing much of the risk, and it allows companies to circumvent some state insurance rules.

"This is not real self-insurance. This is clearly a sham," said Mark Hall, a professor of law and public health at Wake Forest University who has studied the small-business insurance market. "Regulators have good reason to be concerned about the potential harm to the market."

Self-insurance is attractive for many reasons, particularly the prospect of lower costs. It's exempt from state insurance regulations such as mandated benefits, granting employers the flexibility to design their own benefit package and the opportunity to reap some of the savings from employee wellness programs. A federal law, the Employee Retirement Income Security Act, or ERISA, governs self-funded plans. Some aspects of the Affordable Care Act do apply to self-insurance, such as the elimination of caps on lifetime benefits and some preventive care at no cost.

Drum agrees

Yeah, it's a scam.

In a reasonably sane world, and in all other contexts outside of health care, insurance is obtained at relatively low prices to cover only catastrophic events that would be potentially bankrupting.  Car insurance does not cover oil changes and home insurance does not cover oven repairs.  So why is it that Drum is arguing that we should ban insurance policies that only cover catastrophic losses and not routine costs?   After all, the second sentence in the first paragraph from the LA Times sure seems to define exactly what insurance should be (and is similar to my personal policy, which has a high deductible attached to a health savings account).

The problem is that when Drum and the Left use the word "health insurance" they are actually referring to a bundle of four items

• Traditional catastrophic insurance against large, unexpected, bankrupting charges
• Third party payment / capitation for entirely routine and expected health expenditures, from physicals to contraception
• Crony payoffs for favored constituencies, mainly via mandated benefits rules.  This payoff may be to consumers, e.g. young women like Sandra Fluke who have the rest of us pay to maintain her sex life; or it may be to corporate cronies, who are able to get their particular device or procedure or service included in the mandated benefits, guaranteeing a large stream of customers who don't care a bit what the product or service costs because it is now paid for by a third party.
• Social engineering, in the form of embedded incentives to promote certain favored behaviors like seeking preventative care or eating better.  And when the government is paying the bill, the policy becomes a Trojon horse for government micro-management of our lives in the name of health cost reduction.

The second item seems to be a paradigm embedded in the mind of everyone in the US today, that health plans somehow need to cover every imaginable health-related expense.  Outside of an HMO model where these expenses are managed, this is a recipe for a cost explosion.  If we all had pre-paid car policies that bought our cars for us with low deductibles, no one would be driving a seven-year-old Nova.  The third and fourth items are Trojan horses for state control and cronyism that politicians are desperate to preserve.   So it is not surprising that efforts to roll back insurance to just be, well, insurance is met with anger by would-be authoritarians.  The question is, why do we listen to them?

After some noodling with 30 year term policies for 50-year olds fitting my wife and my descriptions, the Coyote think tank has unearthed this devastating chart:

This is based on quotes for $1,000,000 in term insurance on a 30-year policy as quoted at Quickquote.com for a fifty-year-old man and woman  (male: $2990, female $2020 or 48% more expensive for men).

What is your reaction to this?  If it is something like, "no sh*t, women live longer so their insurance is going to be cheaper," then you are a normal rational human being that understands that more expensive risks require higher premiums.

But the Obama administration does not see things this way at all.  More expensive premiums for more expensive risks are used by the administration to demagogue to favored constituency groups that they are somehow being hosed and only Obama can protect them.  I mean, why else would the Administration release this chart:

Just a few weeks ago a grad student from Georgetown became famous for talking about all the expensive and special needs that women have that need to be covered in health insurance.  So of course their insurance is more expensive.

Here is a perfectly accurate way to re-label this chart

So here is the Obama algorithm.  If men are more expensive to insure, men should pay the difference.  If women are more expensive to insure, men should pay the difference.

The game the Left is playing with the Supreme Court is interesting.  Their argument going into last week's Supreme Court frackas boiled down either to, "this is really needed so it must be Constitutional" or something like "we thought the Federal government could do anything."  By the way, while I find the latter depressing and it should be wrong, I can understand after decisions like Raich why one might come to that conclusion.

After getting pummeled in court this week, the Left has a couple of new takes.  The first is that while their side's lawyers did not offer any good arguments, particularly vis a vis limiting principles, it's the Court's obligation to do it for them.  The second is an interesting sort of brinksmanship.  It says that this is so big, so massive, so important a legislation, that the Supreme Court basically does not have the cojones to overturn it on a 5-4.  The extreme example of this argument, which I am seeing more and more, is that its so big a piece of legislation that it is wrong for the Supreme Court to overturn it whatever the vote, the implication being that Constitutional muster can be passed merely by making legislation comprehensive enough.

Kevin Drum has been taking both these tacks, and included this gem in one post:

So what will the court do? If they don't want a rerun of the 1930s, which did a lot of damage to the court's prestige, but they do want to put firmer limits on Congress's interstate commerce power, the answer is: find a limiting principle of their own. But find one that puts Obamacare just barely on the constitutional side of their new principle. This would avoid a firestorm of criticism about the court's legitimacy — that they're acting as legislators instead of judges — but it would satisfy their urge to hand down a landmark decision that puts firm limits on further expansion of congressional power. Liberals would be so relieved that Obamacare survived that they'd probably accept the new rules without too much fuss, and conservatives, though disappointed, would be thrilled at the idea that the court had finally set down clear limits on Congress's interstate commerce power.

You can see both arguments here - the proposition that the Court owes it to the defense attorney to make up a better argument for him, as well as the notion that the stakes are too high to overturn the legislation.

By the way, maybe I just went to some right-wing fascist school, but I sure don't remember any discussion of a loss of prestige by the Court as they overruled large swaths of the New Deal, particularly since their decisions were pretty consistent with past precedent.  I always considered it was FDR who lost prestige with this authoritarian impulse to pack the Court to get the Constitutional answer he wanted.  And taking the 1930's as an example, it sure seems both Left and Right are wildly hypocritical and inconsistent on when they are in favor and against Court activism.

The most frequent justification I see from the Left for increasing government involvement and control of the health care system is that the US spends more per capita on health care than any other country but apparently gets little extra benefit from the spending in terms of health outcomes**.

Intriguingly, the exact same statement can be made of the American education system, which is already nearly fully nationalized.  We spend more per capita than any other country and get only middling results.  I wonder why those who use high spending with modest results as a justification for rethinking the health care system do not come to the same conclusion for the public education system?

To some extent, the US spends more on education and health care because we think are critical and because we are wealthier.  We spend on items way down the Pareto chart where we get less bang for the buck because we can.   And to my mind, it's no coincidence that both health care and education are dominated by third part expenditures.  Take the price value decision making out of the ultimate consumers hands, and, well, the whole price-value equation is bound to get screwed up.

** There are several reasons US often looks bad in these health comparisons.  The first is that we have a lot of life-shortening habits (eating, smoking, driving, crime) completely out of control of the health care industry.  So our lifespans are shorter, but control for those exogenous factors and our health care system looks among the best.  Check out this data, which shows that correcting for crime and accidents, US has the highest life expectancy in the world.

The other problem is the data is often cherry-picked by academics sympathetic to the state health care model.  As seen in the link above, we have the highest cancer survival rates in the world, and the highest life expectancy for people who reach 65.   Even our supposed out-groups, such as black males, have higher cancer survival rates in the US than the average in most European countries.  But you seldom see these metrics included in comparisons.

I also refer you to an oldie but goodie, showing how a study failed to correct for differences in lifestyles between countries.

1.  It is insane that "insurance" covers routine birth control in the first place.  It makes as much sense as your home insurance covering air filter replacements

2.  This is what one should expect when the government engages in coercion to force everyone to a single standard.  We have seen arguments like this for decades in public schools over what should and should not be taught.

3.  Expect a lot more of this  -- the benefits you will be forced to pay for in your health insurance will increasingly be determined by the political power of lobbying groups, as interest groups fight to have their members subsidized by everyone else and businesses work to get their product or procedure on the coverage list.   Economic and medical rationality will have nothing to do with what's actually covered.  And you can be damn sure that your personal preferences will be considered irrelevant.

I have said for quite a while that despite all the hand-waving about  efficiency and electronic records and other BS  (efficiency from owner of the Post Office?) the only two cost reduction tools that state-run health care have are 1) Price Controls and 2) Rationing.  This has become clear yet again in California.  Allocation of scarce resource by bureaucratic fiat has NEVER worked, not only leading to mis-allocations but generally reducing the size of the pie to be allocated in the process.  The only solution is returning health care to a world (that most every other product and service is in) where consumers have the incentive to shop and make price-value tradeoffs for themselves using prices set by the free operations of supply and demand.

From my column today at Forbes.  An excerpt:

A number of smart folks on the Left, who have never and would likely never do something so crass as actually participate in a productive enterprise, have argued that complaints about regime uncertainty by business people is all so much whining.  The problem, they argue (not without some truth) is with demand -- if business people were being presented with profitable market growth, they would invest to capture it, irregardless of the President's personal disdain for business people.

And yes, given that scenario, they would likely invest.  But would they hire?

Already, the true cost of an employee dwarfs what is on his or her paycheck.  Bad employees are increasingly difficult to hire, as employees immediately run to the eager, waiting arms of an attorney when they are fired for cause.  But if one doesn't fire a bad employee quickly, he or she is a walking liability time bomb, with my company liable for any boneheaded action an employee might engage in.    With rising minimum wages, family and medical leave laws, an increasing number of protected groups who will sue over any bad outcome -- is it any wonder we have jobless recoveries?

I have been warning you, its coming.  When government pays the health care bills, they can then use that as an excuse to micro-regulate our every behavior.  Because its no longer an individual choice, it affects public costs.

“Denmark finds every sort of way to increase our taxes,” said Alisa Clausen, a South Jutland resident. “Why should the government decide how much fat we eat? They also want to increase the tobacco price very significantly. In theory this is good — it makes unhealthy items expensive so that we do not consume as much or any and that way the health system doesn’t use a lot of money on patients who become sick from overuse of fat and tobacco.  However, these taxes take on a big brother feeling.  We should not be punished by taxes on items the government decides we should not use.”

As an aside, given that Scandinavians tend to have among the world's highest tolerances for taxes, when they get fed up, it must be getting bad.

I have no particular opinion on Texas tort reform.  Certainly something in that state was very broken in terms of crazy, stupid unfair malpractice jury verdicts, but I am not a big fan of setting damage caps as a solution.

Anyway, as part of the great Leftish dogpile on all things Texas, Kevin Drum argues it failed because ... the total percentage of people in Texas with health insurance did not change.

Huh???  First, only the Left believes that the statistic on percentage of people with health insurance means anything when evaluating the health care system.  Percentage insured is more a proxy for the type of jobs in the state and the number of illegal aliens as it is a measure of anything meaningful about health care access or quality.

But second, the whole point of malpractice reform was to bring down insurance rates for doctors and try to keep doctors from leaving the state.  Further, it was a basic fairness issue of trying to deal with large settlements no reasonable person thought were really the fault of the doctor.  So how about stats on malpractice rates, or doctor retention, or doctor satisfaction, or queue times?  He's got nothing.

On July 8 I showed a series of job growth charts showing that the recovery in private employment virtually ceased almost on the exact same day Obamacare passed.

Via Q&O, Heritage has done a similar analysis, and come to a similar observation, though with much nicer and more professional graphics than I had.

Correlation is not causation, but in fact we have a lot of independent evidence (including my own experience) that many small and middle sized companies have changed their hiring plans based on costs and uncertainties of Obamacare.

Via Carpe Diem

Almost all discussions about Medicare reform ignore one key factor: Medicare utilization is roughly 50% higher than private health-insurance utilization, even after adjusting for age and medical conditions. In other words, given two patients with similar health-care needs—one a Medicare beneficiary over age 65, the other an individual under 65 who has private health insurance—the senior will use nearly 50% more care.

Several factors help cause this substantial disparity. First and foremost is the lack of effective cost sharing. When people are insulated from the cost of a desirable product or service, they use more. Thus people who have comprehensive health coverage tend to use more care, and more expensive care—with no noticeable improvement in health outcomes—than those who have basic coverage or high deductibles.

Its amazing that we still have serious public debates about which way demand curves slope.

I am certain that I have made this mistake myself, but Kevin Drum is careless about using data just because it 1) is labeled in a way he thinks he understands and 2) it supports his pre-conceived notions.

He tries to use the above chart to make the point that Medicare is superior to private insurers because it is more "accurate."  Accuracy in claims seems like a good thing, but I started to wonder how it was defined in this study.

So I spent like 30 whole seconds clicking through to the study.  It turns out the data is based on surveys of doctors.  This chart is explained this way:

Description:  On what percentage of claim lines does the payer's allowed amount equal the physician practice's expected allowed amount?

So really, this chart is not a measure of insurance company accuracy, it is really a measure of doctor accuracy in estimating insurance company claims payment behavior, or perhaps of insurance company claims transparency.  Because Medicare pays fixed, published, below-market rates, and because they are so large, it is not at all surprising doctors are better at predicting what Medicare will pay on a claim.

In other words, doctors disagree with Aetna on claims more frequently than they disagree with Medicare?  Is this bad or good.  I have no idea.

But one could go further and say that another way of heading this chart, rather than "accuracy," would be "willingness of insurer to roll over and pay whatever the doctor asks for."

In the past, Drum and others on the Left have also bragged that Medicare's overhead is lower than private insurers.  These are all related issues.  Private insurers put more scrutiny on claims, which costs more in overhead and causes claims to get paid slower, but presumably results in lower claims payments and less fraud.

Medicare's approach may be net better (ie overhead savings could be larger than claims and fraud savings) or it could be worse, but this chart in isolation tells us nothing.

PS - this is not the first time I have found Drum running health care numbers that do not mean what he thinks they mean.

I am really sorry I read George Will's column this morning.  It is to depressing for words.   He discusses how Congress has, to my eye, un-Constitutionally delegated legislative power to the IPAB, an unaccountable organization that can basically write any law it wants regarding health care as long as it nominally can be justified as affecting costs (the only power Congress has is to vote such laws down, and it can only do so if it substitutes laws with equivalent cost savings).

Just to give one a flavor of just how undemocratic the folks were who crafted Obamacare, check this provision out:

Any resolution to abolish the IPAB must pass both houses of Congress. And no such resolution can be introduced before 2017 or after Feb. 1, 2017, and must be enacted by Aug. 15 of that year. And if passed, it cannot take effect until 2020. Defenders of all this audaciously call it a “fast track” process for considering termination of IPAB. It is, however, transparently designed to permanently entrench IPAB — never mind the principle that one Congress cannot by statute bind another Congress from altering that statute.

So, for the rest of eternity, there is theoretically only a single 31-day window six years hence when this board can be abolished.  Of course, I am not sure future Congresses can be bound in this way, but it shows you the heart of a dictator possessed by the folks who wrote this law.

By the way, not always a big fan of Justice Scalia, but there is little doubt he is smart and this dissent written 12 years ago certainly was prescient

“I anticipate that Congress will find delegation of its lawmaking powers much more attractive in the future. . . . I foresee all manner of ‘expert’ bodies, insulated from the political process, to which Congress will delegate various portions of its lawmaking responsibility. How tempting to create an expert Medical Commission . . . to dispose of such thorny, ‘no-win’ political issues as the withholding of life-support systems in federally funded hospitals.”

Postscript: Could the IPAB pass nanny-type rules under the justification they could reduce health care expenditures?  For example, what if the IPAB said that mandatory motorcycle helmets would reduce doctor spending, would that automatically become law?  How about limits on salt or fatty foods?  Many current dystopic novels begin with growth in government power, sometimes of one agency, due to security fears over terrorism (e.g, the movie V).  I bet I could write a good one with the core being the IPAB.

Here is some analysis of these reports. A few things I found interesting

• I have always understood the "trust funds" for these programs were a crock, that we had spent the money in these funds years ago.  But the accounting fiction is important for a reason I did not know - when the trust fund is used up from an accounting standpoint  (vs. a cash standpoint, where it is not only already used up but never existed) in 2036 or whenever, statutory authority for spending is capped at annual tax collections, which at that point will be way, way below programmed spending levels.
• Medicare alone is projected to grow to 6% of GDP.  wow.
• The reality of Obamacare's promises of cost reductions is starting to appear, as already these supposed cost reductions are being discounted by folks who have accountability for getting the numbers right.

One thing to note -- Social Security actually has some shot at being repaired, because benefits are a fixed, predictable amount (as long as your actuarial tables are right).  Medicare and Medicaid are far harder, because the benefits are open ended, and every recent "fix" has tended to shift incentives to encourage rather than discourage more spending.  Note, for an example, the political pressure to eliminate the part D donut hole that actually is there to provide incentives to camp drug spending and prices.