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Monday, September 28, 2009

Loose Ends... Vol. LXII

Excuses... The whole family was sick this weekend. I plan to wrap up my health care series this week with ideas for practical solutions to the issue this week. Then, hopefully, I'll get back to a more regular posting schedule.

Sunday, September 20, 2009

Loose Ends... Vol. LXI

Earlier this week, the House convened and voted upon H. Res. 744:
Whereas on September 9, 2009, during the joint session of Congress convened pursuant to House Concurrent Resolution 179, the President of the United States, speaking at the invitation of the House and Senate, had his remarks interrupted by the Representative from South Carolina, Mr. Wilson; and

Whereas the conduct of the Representative from South Carolina was a breach of decorum and degraded the proceedings of the joint session, to the discredit of the House: Now, therefore, be it
Resolved, That the House of Representatives disapproves of the behavior of the Representative from South Carolina, Mr. Wilson, during the joint session of Congress held on September 9, 2009.
The resolution passed 240-179 (10 not voting and 5 Democrats voting "present"). I don't have a fundamental problem with this resolution. Wilson (R-SC) was clearly out-of-line with his now infamous "You lie!" outburst during Obama's speech before the joint session of Congress.

However, having now followed Congressional proceeding more carefully over the last year or so, I recognize how difficult it is to bring bills and resolutions before the House floor for a vote. I think the members of the House could have spent their time on far better things this week.

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Former President Jimmy Carter then took the "You Lie" sideshow to a new level when he declared, "an overwhelming portion of the intensely demonstrated animosity toward President Barack Obama is based on the fact that he is a black man."

There is no doubt that racism still exists. It will always exist. We can parse Carter's words or recognize his historical perspective, but this just heightens an already vitriolic level of discourse in today's political debate. Nancy Pelosi (D-CA) did not help the situation by suggesting a parallel between today's rhetoric and that in San Francisco in the time of the murders of San Francisco politicians Harvey Milk and George Moscone.

It's all really a shame. There is so much opportunity for healthy and intelligent debate on the issues we face. Unfortunately, our political system and the mediatainment business both encourage trivialities, name-calling, gotcha politics, and the perpetuation of the two-party duopoly.

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Early this week marked the one year anniversary of the collapse of Lehman Brothers. We've seen a lot of ups and downs in the markets, a deepening recession, and (potentially) a technical recovery since that time. I've spent a lot of time reading and learning more about finance and economics. My general thesis for some time is that we will experience both inflation and deflation simultaneously in the future. More on this in a future article, but in the meantime, I'd recommend reading Steve Keen at Debtwatch.

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One last piece of financial news... on August 3, the SEC charged Bank of America "for misleading investors about billions of dollars of bonuses that were being paid to Merrill Lynch & Co. executives" when the government helped engineer BoA's acquisition of ML. BoA immediately agreed to settle for $30M. The SEC's press release can be read here.

Noting that the shareholders who were allegedly misled by Bank of America ultimately share the pain of a $30M payout, Judge Jed Rakoff stated:
It is not fair, first and foremost, because it does not comport with the most elementary notions of justice and morality, in that it proposes that the shareholders who were the victims of the Bank's alleged misconduct now pay the penalty for that misconduct... the S.E.C. argues that this is justified because "[a] corporate penalty... sends a strong signal to shareholders that unsatisfactory corporate conduct has occurred and allows shareholders to better assess the quality and performance of management." ... [which] makes no sense when applied to the facts here... [it] is absurd.
The entire order can be read here. This is, in my opinion, an important ruling where the Judicial Branch is stepping in regarding the ridiculous Wall Street pandering of the Executive Branch. New York Attorney General Andrew Cuomo has been pursuing a suit against BoA executive on this and related matters of failures to disclose material information to shareholders. Cuomo's office sent a letter to BoA on September 8 - no new developments yet.

This could all lead to penalties against Ken Lewis and other BoA executives. It may also extend to Henry Paulson, Ben Bernanke and Tim Geithner as they were all involved in the acquisition of Merrill. Recall this article.

A More Ideal Health Care System

This will now be my fifth post on the issue of health care over the last several weeks. I will recap these posts as they establish key principles for a more ideal health care system.

In the first entry, I argued that the business of insurance should not be regulated as a public utility. While the insurance industry may exhibit "too big to fail" characteristics which must be managed, it is a fundamentally profitable business model which does not require a massive initial capital investment like other infrastructure such as roads or a power grid.

The second post then focused on the concept of rights. A government guarantee of health care provision constitutes a positive claim right against either the health care providers and/or those who are forced to fund the guarantee. The state should not support or guarantee positive claim rights as this creates a state without limitless power.

I then turned to the concepts of human needs and the social safety net in my third post. In this I concluded that a social safety net is important to meet the human need of security by protecting those who have from those who have not. This introduces the potential need for state funded health services.

In my most recent post, I presented data gathered from the World Health Organization for a comparative analysis of national health care finances (public and private) as well as services and outcomes. My conclusion is that the U.S. system is inefficient as the costs do not justify the level of service - nor are Americans more healthy as a result.

I now want to turn to the design of a more ideal health care system. I say "more ideal" because I do not want to be so arrogant to conclude that I present would be "the ideal" system. With that in mind, let's start by grouping health care services into three categories: prevention, maintenance, and emergency care. Prevention encompasses wellness and routine check-ups. Maintenance includes health services such as prescription drugs, surgeries, blood tests, and extends to things like extended hospital stays, rehabilitation and chemotherapy. I'll define emergency care as unexpected events which require immediate attention such as heart attacks and accidents - including ambulance services.

Except for the unlucky few who are born with or develop health issues or contract diseases in their youth, most of us go through life relatively healthy. A more ideal health care system would revolve around prevention and occasional maintenance services with access to emergency services. I fall into this category - most you reading this probably do too. Successful prevention should help minimize the need for maintenance and this is a two-way street. Both the patient/consumer and the doctor/provider have a role in prevention. Lifestyle choices such as diet and exercise have a clear impact on prevention; however, the advice and assistance of health care professionals can also aid in prevention. This relationship should serve as the basis of the health care industry.

The design of this relationship should ensure that the incentives for both the individual consumers and the health care professionals are aligned to provide the best care possible. It is thus in the consumer's best interest for the service provider to also want to minimize maintenance services. I would suggest that this can best be done by placing the majority of the cost burden due to maintenance upon the health care professionals. This will force an emphasis on prevention. Recall that this is a two-way street. Thus, the consumer must also have an incentive lead a health lifestyle which aids in prevention.

This structure of incentives leads me to believe that a health care subscription service might be the best fit. In this model, the individual would pay a monthly subscription to a health care provider such as a family doctor, local hospital, or possibly a new type of entity that could specialize in these services. In return for the subscription fees, the provider would offer wellness consultations, preventative services, check-ups, and basic maintenance services such as prescription drugs, blood screening, x-rays, etc. The consumer's subscription fees would be higher or lower based on lifestyle choices, the willingness to opt-in to wellness programs offered by or sanctioned by the provider, the level of service desired by the individual, and the general level of health of the individual.

In addition to providing the basic preventative and maintenance services, the provider would also be responsible for emergency costs and more expensive specialist costs when required. As these costs would be less consistent and more expensive, the provider may purchase insurance contracts which cover them in such events. This may lead to a disincentive for the provider to pay for more expensive, but often necessary, treatments. However, this would lead to a direct impact on customer satisfaction and health outcomes. In a model such as the one described, the consumer would have the ability to shop for the best plan which meets their needs. A third-party regulatory body and/or consumer advocacy groups could publish subscription levels, mortality rates, and other relevant statistics to help consumers find the best value for their money. Further, the doctor/patient relationship would have more meaning and specialization would develop where some doctors would focus more on nutrition or exercise and other may tout alternative medicines.

Another feature that I believe that consumers would demand out of such a system is a sort of price guarantee. Consumers would not want their subscription costs to fluctuate too much or be modified in the case where they develop a condition which requires a higher degree of treatment. The subscription contracts could establish a fixed price over the course of months or even years and allow for renewal at prices which do not exceed a specified price level.

In terms of affordability and emergency coverage, this system would still have gaps. Note that I do not believe that access or choice of a provider service should be linked to employment. The subscription fees should be paid out-of-pocket by the individual so that the consumer has as much control over choice as possible (while also making the costs of health care more top-of-mind). Some people will still not be able to afford such a plan. This needs to be addressed from two points: access to emergency services and provision of basic care. Emergency services can be provided via the same infrastructure as described above since, in times of emergency, service should be provided first before we understand who is paying for the services. Basic care is a bit different.

I truly and emphatically believe that basic care can be provided via non-for-profit organizations funded largely (if not completely) by charitable donations. I have no empirical evidence prepared to support such a claim; however, between private individual donations, corporate donations from health providers (sanctioned and supported by their subscribers), and, in the worst case scenario, a tax on the for-profit health care industry which directly funds not-for-profit basic care providers, I'm sure we could cover it.

There are still plenty of questions which must be asked to determine how such a system would address all the critical issues of a health care system. It would be futile to attempt a comprehensive analysis on this blog. But, I do believe that the system describes addresses misaligned incentives, affordability, and overall cost. I have not addressed senior care or those with chronic conditions. The same framework should extend to such circumstances. Two facts that we must all remember in the health care debate are that we will all die and that health care costs money (just like food, water, clothing and shelter). We cannot expect that there would ever be a system which grants everyone infinite access to all forms of health care nor one where nobody dies.

Friday, September 18, 2009

Acronyms, Acronyms and More Acronyms

I've come to realize that, for whatever reason, I'm particularly interested in minutiae as it relates to "politics." I like to study the charts that congresspersons use as props when making floor speeches and search through legislation archives looking for bills that pertain to what are, frankly, ridiculous things (like the duties on certain types of pasta products or, one of my personal favorites, improving the management of wild free-roaming horses and burros). I think perhaps I feel that so many other people out there are thinking and writing about the "bigger" political picture (not that this isn't a really good thing), that there have to be some others who are interested in the smaller things. In this vein, there is a particularly minutial issue (indeed, I don't think I should really call it an "issue" at all) that has continued to annoy me for quite a while now--the widespread practice of using rather ridiculous acronyms in the titles of official pieces of legislation.

Here are some examples of some of these acronyms (from the current Congress), but there are COUNTLESS others (I'd be curious actually to see the results of an analysis of legislation from, say, the last 5 Congresses as to the percentage of bills that use acronyms in the title):

H.R. 3379: LOPSIDED Oil Prices Act of 2009 (Lowering Oil Speculation for Infrastructure Dedicated to Economic Development)

S. 1588: STOP Act (Stop Tax-breaks for Oil Profiteering Act)

H.R. 3295: RISE Act of 2009 (Removing Impediments to Students Education)

H.R. 3168: U.S. OUTDOOR Act (United States Optimal Use of Trade to Develop Outerwear and Outdoor Recreation)

H.R. 3222: AWARE Act (Adolescent Web Awareness Requires Education)

H.R. 2932: Stop VULTURE Funds Act (Stop Very Unscrupulous Loan Transfers from Underprivileged countries to Rich, Exploitive Funds)

H.R. 2681: P.R.O.U.D. Act (People Resolved to Obtain an Understanding of Democracy)

H.R. 3583: ASPIRE Act (American Samoa Protection of Industry, Resources, and Employment)

H.R. 3577: EARNED Act of 2009 (Education Assistance to Realign New Eligibilities for Dependents)

I could keep going forever, but I'm sure you get the picture. It's quite likely that I'm just odd, but I honestly find this horribly annoying. It very nearly makes me shudder to think of how much taxpayer-funded work/time went into JUST coming up with these immensely clever (sarcasm) bill titles. I think this is the reason why I'm so interested in digging around to find such seemingly trivial political "issues" -- it annoys the hell out of me to think of all the time spent by our congresspeople (perhaps not directly but via their staffers for certain), and also taxpayer dollars, on such stupid things at a time when there are certainly many gravely significant problems facing our country. So, yeah, it really does bother me that surely a reasonably significant amount of time and effort was put into figuring out how to create a bill title that fit the purpose of the bill and, more importantly, fit to the acronym LOPSIDED (because it's obvious that the acronym came before the actual title). I can't help but think that the time, effort and even creativity spent coming up with these titles could be put to much, much better use...although, at the same time I think I'm probably giving these bill writers too much credit. If I were in Congress, I think I would introduce a bill called the STUPID Act or something like that...it really doesn't matter that I don't know now what it stands for; I'll just leave that to my staffers to figure out.

Sunday, September 13, 2009

Loose Ends... Vol. LX

It's late and the Bears lost, so I'm none too happy.

Here's a good read from the Huffington Post on the relationship between the Federal Reserve and the academic world of economics.

Health Care Statistics

This will be less thorough and analytical as I had initially hoped. There is so much information out there that could be researched and analyzed. However, I have gathered some key statistics from the World Health Organization which I believe shed some light on the state of health care in the U.S.

We are going to explore some data revolving around two broad categories: health care spending and general health care data. In the first table below, we take a look at government expenditures on health care as a percentage of GDP. The eighteen countries represented include the largest countries in the world as measured by GDP as well as a select few others based on either high per capita GDP and/or the Human Development Index.

Source: WHO Statistical Information System

A few things jump out in this first set of data. The so-called "BRIC" countries of Brazil, Russia, India and China have substantially lower volumes of government spending as compared to the other countries. The BRIC countries aside, the other countries range from 5.8% to 8.8% with a mean of about 7.0%. The U.S. is right in the middle at 7.0%. Incidentally, this places the U.S. at number two (behind Norway) in terms of per capita government spending on health care.

In this second table, we look at private (non-government) spending on health care as a percentage of GDP. This table tells a much different story with the U.S. leading the way at 8.3% and no other country coming even close. It does not take a view of the data to quickly recognize that the U.S. spends far more on health care than any other country in the world. We rank number one in per capita spending, spending as a percent of GDP, and, of course, in total nominal spending.

Source: WHO Statistical Information System

The key difference in the health care infrastructure between the U.S. and the other countries presented (the BRICs excluded) is that while the U.S. government appears to spend an ample amount on health care, there is also more than double the expense coming out of the private sector. This expense would only seem justified if there is either a structural need for higher health care expenses and/or the health care services are much better in the U.S.

This third table looks at some key health indicators for the same countries as above with the exclusion of the BRICs. As you can see, the U.S. has the highest adult mortality rate, mortality rate due to non-communicable diseases, and obesity rate. Our obesity rate is truly off the charts. The U.S. is below average in alcohol consumption and tobacco use. The obesity rate is the only factor of these which may suggest there is a systemic need for higher health care expenditures in the U.S. However, one may argue that the high obesity rate is an indicator of a problem with the system in general.

Source: WHO Statistical Information System; data definitions available upon request.

In the next table, we look at the number of hospital beds and physicians per 10,000 residents as a proxy of the level of service. This is clearly not the only way to measure service, but it does provide a reasonable snapshot of whether or not the higher spending in the U.S. actually results in more bed or physicians. It does not.

Source: WHO Statistical Information System

Health care outcomes are difficult to measure. Life expectancy at birth is lower in the U.S. when compared to the other top countries. If you consider the obesity problem a symptom of poor outcomes (or poor prevention) rather than some sort of disease or epidemic, than that would also point to a less effective system in the U.S. Infant and neonatal mortality rates are higher in the U.S., but so is the adolescent fertility rate which may explain the disparity.

All in all, it would appear that the public/private mix in the U.S. does not appear to provide the level of service or outcomes which would warrant the higher expenses that we have here. Reform is needed in this country as much of the inefficiency, in my opinion, is the result of regulation and legislation.

Monday, September 7, 2009

Loose Ends... Vol. LIX

Welcome to a holiday morning version of Loose Ends.

Posts were a little slow again this past week, but I am doing research behind the scenes. I also will be traveling this week, so the drought may continue.

I ranted against Glen Beck this past week a bit and want to elaborate on this point a bit. In response to a comment at United Liberty where my article was cross-posted, I further explained my disappointment that Beck has not continued his promising evolution to a true independent, liberty-minded member of the media. It should be noted that Rush Limbaugh has been a guest on his TV show a few times recently. That is no good.

Further, his rhetoric blasting the "radical Marxists" in the White House and the abundance of "czars" is also disturbing. While certain members (and "czars") of the administration very well may be Marxists, this alone does not make them radicals. In fact, basic Marxist principles are quite common. Also, if Marxists are de facto radicals, then what label should be applied to libertarians?

On a related note, Beck's week-long assault on Van Jones may have been a contributing factor to his resignation. Here is the story from Politico. The 9/11 Truth Statement of which Van Jones was the 46th signatory can be read here. Here is the full text of Jones's resignation statement.

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Congress will return to session this week.