Monthly Archive for March, 2010

Quote Of The Day

“Massachusetts offers a snapshot of how giving more people insurance naturally drives demand. The Massachusetts Medical Society last fall reported just over half of internists and 40 percent of family and general practitioners weren’t accepting new patients, an increase in recent years as the state implemented nearly universal coverage.”  — Associated Press Link via John Goodman

Quote Of The Day

“Ever since the early eighties, when the Greenspan commission kicked the can down the road with a combination of tax increases and later retirement ages, analysts have been awaiting the day when the system would finally go into deficit.  That date has been sliding around between 2016 and 2020 for some years now, but the suspense is finally over: the system is going into deficit this year….According to the CBO report from which that article is drawn, the deficit will persist until around 2014, at which point it will go temporarily back into surplus before returning permanently to the red in 2018.  This is a small but permanent deterioration of the program’s finances–the people who have retired early will pay no more FICA taxes, and they’ll have less in the way of taxable Social Security benefits.” — Megan McArdle, on Social Security going into deficit

The Path To Single-Payer

How does ObamaCare lead to Single-Payer? The steps are explained in a conversation overheard between Dennis Kucinich and Obama:

Obama: Dennis, I know you want single-payer and so do I. I’ve made that clear on numerous occasions. We both see the public option as a step to single-payer, but that’s a step too far. I can’t get it in this bill and still win.
Kucinich: Now you see why I won’t vote for it.
Obama: But, Dennis, have you actually read the bill? Don’t you see how it will lead to single payer but will just take a little longer?
Kucinich: Er, what do you mean Mr. President?
Obama: Have you heard of adverse selection?
Kucinich: Yeah, but I don’t really know what it is.
Obama: Well, here’s what Larry Summers explained to me. When insurance companies can’t distinguish between healthy and sick people, they have to price to some average of the two. But those high prices discourage the healthy from buying so and the insurance companies know this and so they have to price even higher than otherwise. That’s called adverse selection.
Kucinich: And?
Obama: Don’t you see, Dennis? The way the insurance companies handle this problem is to get information on people’s health and price accordingly. That reduces adverse selection.
Kucinich: And this is supposed to make me feel good about your bill that keeps private health insurance?
Obama: Yes, because our bill doesn’t allow the insurance companies to price higher for pre-existing conditions. So lots of people who are relatively healthy will actually game the system–not buy insurance and pay our piddling fines–and then, when they’re sick, get insurance then. The insurance companies will know this and will have to price high to account for it. Lots of people’s health insurance premiums will rise. I know I said that 32 million more people will get health insurance but I can’t know that. No one can. My bill might even cause fewer people to get health insurance as they game the system.
Kucinich: Still waiting for the good news.
Obama: What happens when insurance companies start to raise premiums through the roof? Do you really think people will blame us? Some will, but many will blame insurance companies. How many people blamed Nixon’s price controls on gasoline when they had to line up at the pump? Most of them blamed the oil companies. Then I, or my successor, will say, “Much as we’ve tried to reform health insurance, these titans of industry are unreformable. We must get costs under control. So we need a public option priced at reasonable rates.”
Kucinich: Yes, Mr. President.(bold added)

[/sarcasm] The full link can be found here. More can be found here, here and here.

The Tax Side To ObamaCare

See here.

The Other Side To ObamaCare

The part Democrats don’t want you to know about…see here.

Quote Of The Day

“But there is one thing of which I am nearly perfectly certain:  If we pass this thing, no American politician, left or right, is going to cut any of these programs, or raise the broad-based taxes necessary to pay for them, without any compensating goodies to offer the public . . .  until the crisis is almost upon us. I can think of no situation, other than impending crisis, in which such a thing has been done–and usually, as with Social Security, they have done just little enough to punt the problem down the road.  The idea that you pass a program of dubious sustainability because you can always make it sustainable later, seems borderline insane.  I can’t think of a single major entitlement that has become more sustainable over time.  Why is this one supposed to be different?” — Megan McArdle, on the impending ObamaCare

Quote Of The Day

“We’ve been arguing about the health care bill, in all its many iterations, for more than a year. Along the way, liberals have made a lot of predictions about what its passage will mean for America — for our health care system and our health, our economy and our long-term solvency. It will be interesting, to put it mildly, to see if they end up coming true.” — Ross Douthat, on the recent passage of the healthcare bill

Quote Of The Day

“The proposed changes increase spending dramatically, most heavily concentrated in the out-years.  The gross cost of the bill has risen from $875 billion to $940 billion over ten years–but almost $40 billion of that comes in 2019.  The net cost has increased even more dramatically, from $624 billion to $794 billion.  That’s because the excise tax has been so badly weakened.  This is of dual concern: it’s a financing risk, but it also means that the one provision which had a genuine shot at “bending the cost curve” in the broader health care market has at this point, basically been gutted.  Moreover, it’s hard not to believe that the reason it has been moved to 2018 is that no one really thinks it’s ever going to take effect. It’s one thing to have a period of adjustment.  But a tax that takes effect in eight years is a tax so unpopular that it has little realistic chance of being allowed to stand.” — Megan McArdle, on her first thoughts on the CBO Score of ObamaCare

Democrats of 2010 Are The Republicans of 2006

National Journal writes:

Embattled incumbents with ethics problems. Allegations of sexual harassment leading to a competitive open seat. Dems have seen this movie before — only last time, it happened to the other guys.

Now, a beleaguered Dem majority has to hope their party can withstand a building wave that favors the GOP, and that effort isn’t made any easier by countless, and mounting, self-inflicted errors.

4 years ago, it was GOPers who found themselves on the receiving end of jolt after jolt of bad news. This time around, Dem strategists are beginning to accept the inevitability of big losses, and a sort of morbid gallows humor has settled over Congressional and political aides.

Read the full story for the strong parallels.

Democrats And Vouchers

Jay P. Greene, professor of education reform at the University of Arkansas, writes on the recent vote to end DC Vouchers:

It was perfectly predictable but still sad to watch. The U.S. Senate voted 55-42 yesterday against continuing the DC voucher program. Among Republicans only Olympia Snowe voted against the program. Among Democrats (or Independents), Feinstein, Lieberman, Nelson, and Warner voted for the program.

What was the reason Democrats gave for voting against the D.C. Voucher program that primarily helps minorities? He explains:

the quality of the opponents’ scientific reasoning was exemplified by Sen. Byron Dorgan of South Dakota. As you can see in this link to CSPAN coverage (starting around minute 21), he argues that there is no need for vouchers because our public school system is doing a great job. And we know this because graduates of American public schools were the people who put a man on the moon. I’m not sure what public school Wernher von Braun attended.

But it sure wasn’t a public school like those in DC…or any public school in the ghetto, schools that minorities are forced to attend. Like I’ve said a thousand times on this blog, Democrats first and foremost priority is to the teachers union and public school, Republicans, atleast on Education Vouchers, are on the side of the students – especially minority students.

The Effects Of Unemployment Insurance

Each unemployed person has a “reservation wage”–the minimum wage he or she insists on getting before accepting a job. Unemployment insurance and other social assistance programs increase that reservation wage, causing an unemployed person to remain unemployed longer.

Consider, for example, an unemployed person who is accustomed to making $15.00 an hour. On unemployment insurance this person receives about 55 percent of normal earnings, or $8.25 per lost work hour. If that person is in a 15 percent federal tax bracket and a 3 percent state tax bracket, he or she pays $1.49 in taxes per hour not worked and nets $6.76 per hour after taxes as compensation for not working. If that person took a job that paid $15.00 per hour, governments would take 18 percent for income taxes and 7.65 percent for Social Security taxes [DRH note: this should be Social Security plus Medicare], netting him or her $11.15 per hour of work. Comparing the two payments, this person may decide that an hour of leisure is worth more than the extra $4.39 the job would pay. If so, this means that the unemployment insurance raises the person’s reservation wage to above $15.00 per hour.

That was from Larry Summers, the Director of the White House’s National Economic Council for President Barack Obama. Full post here.

British HealthCare Rationing

One of the strongest argument against single payer is that government rationing is the worst kind. The British healthcare system is an example:

DAMNING reports on the state of the National Health Service, suppressed by the government, reveal how patients’ needs have been neglected.

They diagnose a blind pursuit of political and managerial targets as the root cause of a string of hospital scandals that have cost thousands of lives.

The harsh verdict on the state of the NHS, after a spending splurge under Labour between 2000 and 2008, raises worrying questions about the future quality of the health service as budgets are squeezed.

One report, based on the advice of almost 200 top managers and doctors, says hospitals ignored basic hygiene to cram in patients to meet waiting-time targets.

The full article from the Times is here.

Quote Of The Day

“Last week, I briefly discussed the geographic distribution of Recovery Act funds. The figure shows the relationship between per capita Recovery Act grants awarded and unemployment across states, which shows that stimulus aid was not particularly well matched with need…On average, for every extra percentage point of the labor force that is unemployed, a state got $25 less per capita.” — Edward L. Glaeser, economics professor at Harvard writing in the New York Times Economics blog

Universal Kindergarten

Before we embark on universal preschool, we should look at the results from universal kindergarten. According to Elizabeth U. Cascio, assistant professor of economics at Dartmouth College, the gains were far short of expectations:

My results indicate that state funding of universal kindergarten had no discernible impact on many of the long-term outcomes desired by policymakers, including grade retention, public assistance receipt, employment, and earnings. White children were 2.5 percent less likely to be high school dropouts and 22 percent less likely to be incarcerated or otherwise institutionalized as adults following state funding initiatives, but no other effects could be discerned. Also, I find no positive effects for African Americans, despite comparable increases in their enrollment in public kindergartens after implementation of the initiatives. These findings suggest that even large investments in universal early-childhood education programs do not necessarily yield clear benefits, especially for more disadvantaged students.

The full post can be found here.

What studies like this ignore is that it isn’t rigorous data politicians base their decisions on: its the next election. And programs like universal kindergarten and today’s universal preschool efforts, while they do little to actually improve education, do improve the wallets of a very powerful lobbyists group – the teachers union. And when it comes to policy, that is what matters most.

Quote Of The Day

“The news is now out that Government Motors is recalling 1.3 million compact cars in the US, Canada and Mexico to fix power steering motors that can fail.  Does this sound familiar? Well the big difference with Toyota is that GM has not made the media  headlines anywhere, and certainly is not attracting the attention of House and Senate oversight committees.” – Charles Rowley, Professor of Economics at George Mason University

Quote Of The Day

“I spent the morning writing about the Bush administration’s failure to anticipate the long-term costs of the Iraq occupation, which have reached $1 trillion and counting over the last eight years. With health care reform, there are no such illusions: We have good-faith estimates, sometimes downplayed but never hidden or dismissed, of how much this legislation will cost across the next two decades and beyond. And the Obama administration, to its credit, has done what the Bush administration never did, and proposed ways to offset every dollar (and then some) of new spending. But even acknowledged and potentially offset, the cost matters. The health care bills would lock us into trillions in required spending (private as well as public), required taxes, and necessary spending cuts at a time when our economy is stagnant, our fiscal situation parlous, and our need for flexibility immense. The supporters of this reform have convinced themselves that there’s no other way — that it’s go big, or go home. But I wish there weren’t quite so many  dollars riding on their bet.” — Ross Douthat, writing in the NY Times in favor of a smaller healthcare bill