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Blue Dog Compromises: A War On the Middle Class?

It's hard to analyze the compromises coming from Blue Dog Democrats without concluding that, intentionally or not, they add up to a financial assault on working families. Every concession rings with the sound of middle-class Americans being dinged financially.

Ding! That's the sound of lower-income working Americans losing what remained of their subsidy for purchasing health insurance. They've raised the bar¹ so that people making $31,200 will no longer get any help with their premiums. Neither will parents trying to raise a family of four on $63,000. That means families without employer-based coverage will have to come up with the money for health insurance (currently $12,000 per year) or face a government penalty.

But how many Americans will have employer-sponsored coverage? Ding! That's the sound of more people losing that chance, as Blue Dogs raise the minimum payroll requirement for employers from $500,000 to $750,000. 86% of small businesses will now be exempt from any mandate. Small businesses have been the engine of economic growth and recovery.

But wait. At least some of these uninsured folks will be able to buy into a public option, right? (That is, if the Blue Dogs' soul mates in the Senate don't kill it altogether.) Won't the public option be more affordable than those high-cost private insurance plans?

Ding! That's the sound of the Blue Dogs eviscerating the cost-cutting potential of the public plan by refusing to allow it to use Medicare rates with providers, even for the conservative three-year period contemplated by earlier drafts of the bill. What does that mean for uninsured working Americans? Their lowest-cost option is going to cost a lot more if the Blue Dogs get their way.

This particular initiative has a historical parallel. It's similar to the Republicans' refusal to let Medicare use its buying power to bargain on pharmaceutical costs.

What about the luckier middle class types, the ones that do get health insurance through their employers? Well, there's a lot of talk that they'll be facing a new financial burden when Congress starts taxing health benefits (although the income levels at which that will happen are still being debated). Why? Because supposedly some people are getting "Cadillac plans." Look a little closer, however, and you usually find that they're just priced like Cadillacs. It's not that they're generous (certainly not by Medicare or European standards). More often than not, those $40,000 plans you hear about are costly because they're covering sicker people.

Ding! Congress may begin taxing these benefits, if the Blue Dogs have their way. That's a regressive tax, one that's based on behavioral logic that seems questionable at best to me. Taxing the wealthiest Americans on truly luxuriouis plans (say, ones with concierge medicine features) would be reasonable ... if we could trust Congress to stop there. Sadly, we can't.

Where didn't the Blue Dogs and Rep. Waxman (my representative) compromise? Here's where: They didn't ease up on the mandate for individuals to obtain health insurance coverage. They made it easier for employers not to offer it, and they found several ways to make it more expensive, but they didn't give a break to the working people - mostly blue-collar working people - who will be hit the hardest by their much-vaunted compromises.

That would be the same blue-collar voters that proved so vital to the Democrats' electoral victories in 2008. You don't have to believe in the supernatural to believe that sometime soon Democrats could face some bad karma - the electoral kind - for their indifference to the needs of their constituents. In this debate, the progressives aren't just being idealistic. They're being pragmatic. Their plans have a greater likelihood of helping people who need it - and as a result, of helping their party in the years to come.

Ding! Ding! Ding! Hear that? It's the sound of the disaffected middle class in 2012 if the Blue Dogs have their way. Already alienated by big payouts to wealthy Wall Street bankers, they're counting up their new financial burdens ... and taking a second look at the Republican Party.
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¹ From 300% to 400% of the Federal poverty level.

Dealbreaker: Five Reasons Co-Ops Will Fail

Now we're being told that "health care cooperatives" are emerging as the "centrist alternative" to the public health plan in the Senate. Ezra Klein reminds us that a public plan option wasn't in any of the other plans Democrats championed. We're hearing that the idea is gaining in popularity - at least among a small group of U.S. Senators.

Well, why not? What's wrong with avoiding the stigma of 'government health care' by creating co-operatives instead? 'Co-op' has a warm, fuzzy, even socialistic sound to it, like the hippies who run the local health food store. Co-op plans like the Group Health Cooperative of Puget Sound deliver excellent care and get consistently high ratings from their members. If we can take some centrist Democrats off the hot seat and still have meaningful health reform, what's the problem?

Here's the problem: Co-ops will fail. They will be unable to deliver the kind of comprehensive and systemic reform that's needed to save the U.S. economy and ensure the health of its citizens. Here are five simple reasons why:

1. Previous plans, like the Massachusetts reform, haven't been 'game changers.'

Democrats and their Republican counterparts celebrated when the Massachusetts reform law was passed. There were a few of us who saw warning signs, but our concerns were not given much credence. Yet despite the fact that Massachusetts started out in better shape that much of the country, they haven't been able to provide systemic reform or insure all their citizens. The state has insured a lot of people, and we've learned from its experience. What's more, Massachusetts is looking at some new and creative ways to create meaningful change. Previous national reform plans didn't have the benefit of the Massachusetts experience - where it succeeded and where it did not.

A few of us had concerns about these proposals even then. Still, Ezra Klein and others point to earlier reform proposals without a public plan option and ask, why did you support these back then? My answer is this: We've learned from experience.

2. Co-ops will be a localized, haphazard solution to a nationwide problem.

When Sen. Kent Conrad first proposed co-ops as an alternative to a public plan option, the discussion centered around "regional cooperatives." But we've had state cooperatives before. They haven't been able to provide fundamental change in the financing and delivery of health care, because they lack sufficient resources to compete against the seven mega-corporations that now dominate private sector health insurance. They may make marginal improvement in one market or another, but that's as far as they've been able to go.

In response, Sen. Conrad is now making statements like this one: "If somebody came forward and wanted to put together a national entity, they could do that. If various states wanted to join together to have a regional option ... nothing would prohibit either of those."

Sen. Conrad's use of the passive voice is probably not accidental. If somebody wanted to create a national, not-for-profit cooperative, we wouldn't stop them. If somebody wanted to create a multi-state organization they would not be "prohibited." But people don't create national organizations simply because it's not explicitly prohibited. A massive undertaking of that kind - which would, incidentally, needlessly replicate the already-functioning infrastructure of Medicare - would require billions of dollars.

But, hey, says Sen. Conrad. If you've got a few billion to burn, who's stopping ya?

3. Co-ops can't identify national trends and react accordingly

Here's an example of what a public health plan can and does accomplish routinely: Health Leaders Media informs us that a government analysis showed "doctors in certain geographic areas order a lot more unnecessary tests." Investigators found "questionable ultrasound scans for Medicare patients in 20 counties where they are performed more often per beneficiary."

Those 20 counties were in the far-flung states of Florida, New York, New Jersey, Texas, and Alabama. Had we been talking about general health insurance under the Conrad plan, we'd be dealing with four or five regional cooperatives that don't share information and can't spot these costly and harmful trends. Fortunately, this data was provided by Medicare - that "socialized medicine" system everyone seems to hate like so much.

Large-scale data mining, study - and yes, advisory panels - will be a necessary part of our effort to modernize and innovate our health care system. A balkanized system of fragmented local organizations will not be able to contribute to that process in a meaningful way.

4. Co-ops can't fight monopolies.

Did you know that health insurance is typically exempt from Federal antitrust regulation? Good thing, too, because a recent study showed that 94% of US markets are "highly concentrated," according to Justice Department guidelines. Blue Cross dominates Arkansas, for example, with 75% of the market. This monopolization has led to skyrocketing premiums.

A cozy relationship between state politicians and mega-industry has fostered a system where most U.S. markets are dominated by a single health insurance player. On May 29, 2007, then-candidate Barack Obama said this in Iowa City, Iowa: ""We'll investigate and prosecute the monopolization of the insurance industry. And where we do find places where insurance companies aren't competitive, we will make them pay a reasonable share of their profits on the patients they should be caring for in the first place." That's a good idea.

How do monopolies - especially ones with a cozy relationship to local pols - respond to a new and idealistic intruder? They use the power of favorable contracting (with critical hospitals, for example) to drive the newcomer to their knees. Then they deal a death blow with artificially low premiums until the threat is gone. After that they go back to their old rapacious ways.

Remember: Federal antitrust laws do not necessarily apply when these hardball tactics start. "Forget it, Jake. It's Health Care Town."

5. Co-ops have no reason to keep living - as co-ops.

Once we had a nationwide system of nonprofit health organizations. While each was local, they were tied into a loose national confederation. Since they were nonprofit, the idea was that their primary goal was to have the interest of their members at heart. The name of this national nonprofit organization?

Blue Cross.

In the last several decades Blue Cross organizations privatized themselves in massive numbers, with the help of supportive state and national politicians. There is no reason to believe that any cooperative will remain nonprofit if it becomes successful. The continued benevolence of any cooperative will depend on the direction and guidance it receives from politicians like Sen. Conrad. But even now, in the courtship phase of this process, Sen. Conrad doesn't hesitate to discuss the establishment of effective cooperatives with passive and indifferent language (see above.)

What will happen ten years from now, when a few executives have the chance to get rich by converting your cooperative to for-profit status? Can we count on state and national politicians to take a brave stand and refuse them, even in the face of the massive campaign contributions they'll be able to offer?

I think we know the answer to that.
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Co-ops are not a bad idea - if they are offered alongside a public option. As a replacement for them, however, they're a dealbreaker. They won't create the comprehensive, systemic change we need.

UPDATE: Ezra K. clarified his position with a couple of posts, including one which emphasizes the need for a robust insurance exchange. He's right that current proposals exclude most of us from buying into the public plan option, even if it has been created and we want it. That bothers me. But we've tried an insurance exchange without a public plan before (Massachusetts) and it's not a model for systemic reform. I'd rather see an incrementalist approach - a robust public plan, followed by public demand that forces Congress to open it up to the public. But the exclusionary nature of current public plan proposals is a real problem and I hope it can be changed.

Elmendorf vs. Orszag: A "Teachable Moment"... for Geeks and Nerds

This week a bitter confrontation between individuals from two distinct social groups offered our nation a rare and precious "teachable moment," an opportunity to grow beyond those things which divide -- or unite -- us as a people.

Those individuals, of course, are OMB Director Peter Orszag -- a geek -- and the CBO Director, ubernerd Douglas Elmendorf. Their struggle is our struggle. Through it we can learn not only about ourselves, but about how to understand and talk about ... numbers.

That's right. I said we can talk about numbers. Wait! Don't go. This doesn't have to be boring! Numbers can be exciting!

First, the conflict. As NBC's First Read reported: "Peter Orszag accused Congressional Budget Office Director Doug Elmendorf of 'overstepping' in a Web post Saturday ... Orszag, a former CBO director, accused Elmendorf of playing into a stereotype that the CBO often overestimates cost and underestimates savings."

This is war ... between two analytical types whose names sound like characters in a Tolkien novel.

And they didn't just throw down. They did it on blogs. The conflict began when Elmendorf blogged that the new Medicare advisory panel charged with reforming payments was likely to generate a paltry $2 billion in savings over the next ten years. Orszag replied by saying, in effect, that short-term savings was never the point, adding for good measure that the CBO had "overstepped."

While it ain't exactly rival rap entourages exchanging gunfire outside a radio station, it's pretty badass stuff for number-cruncher types. Orszag's post also suggests that the CBO would be wise to restrict itself to "qualitative" and not quantitative projections over longer periods of time - a polite way of say "you can't touch - or quantify - this." (His "qualitative" comment even includes a hyperlink ... back to the very post it's embedded in. Is that kind of head trip? Some ultra-hip, self-referential "meta" critique of the blogging medium itself?)

"Playing into a stereotype"? Those are fighting words in any context. The stereotyping in this case is between Orszag as geek and Elmendorf as nerd. While people consider the two terms interchangeable, here's the difference: A 'nerd' is conservative, number-fixated, and highly rational. A 'geek,' while equally bookish and intellectual, is more given to flights of intellectual fancy and wild imagination.

A nerd can count. But a geek can dream.

Each of us can be a nerd or a geek at different times of our lives, of course, or even at different times of the day. But in this fracas, that's how the social divide breaks down. Why? Perhaps it's because Elmendorf's job is to calculate the bottom-line effect of any program on the government and its coffers, while Orszag (who once held Elmendorf's job) is allowed to project the long-term and systematic change that new ideas (like advisory panels) might have. There may be bigger savings in Orszag's vision (I think there are), but dreaming those sweet dreams isn't in Elmendorf's job description.

For those of us who love our policy by the numbers, it's heady stuff. It's hard dollars vs. soft. It's expenditures vs. imagination. Elmendorf is the stone-faced banker who won't lend the money, while Orszag's the inventor holding a prototype of the hula hoop. Elmendorf's the dour landlord who says "Sorry, kids - the theater's closed," while Orszag is Mickey Rooney and Judy Garland saying "Hey, kids! Let's put on the show right here!"

Orszag is the right brain and Elmendorf is the left. Orszag is the ... oh, you get the point.

Does any of this matter? Actually, it does. We need to apply both types of rigor, but policy analysis is no different from judicial analysis. Numerical impartiality can be a mask for ideological leanings and other assumptions. Both Elmendorf and Orszag have important roles to play, but I think Orszag is right to look at a larger and more quantitative picture. Real "healthcare reform" will come in ways we can't quantify yet.

I was also surprised by the ideology that seemed implicit in Elmendorf's recent testimony about health reform. It was striking that he noted simply the cost to the Federal government, and not the potential for overall savings. Even more noticeably, according to the Wall Street Journal, he commented on the support many health policy analysts have expressed for taxing health benefits (an idea I'm not crazy about). The vast majority of health analysts believe there are great savings to be had, along with improved health outcomes, from structural reforms of the very kind that the Medicare panel represents. Elmendorf's selective use of health analysts' thinking reflects either ideology, a mode of thought, or (to be fair) simply his necessary focus as the "expenditure and revenue guy" on Capitol Hill.

It's not up to me to adjudicate between these two analysts, whatever my biases. I do think Orszag has the cooler job, and perhaps as a result has a broader outlook. But that may only prove that I'm a geek. As for resolving this throwdown, maybe the President can invite the two of them over for a beer. Or an Ovaltine. They can watch sci-fi movies, chill out, and resolve their differences.

In the end, however, health care isn't about the numbers at all. It's about human lives. Numbers are only tools to help us achieve the right ends. If those of us who love numbers remember that, this will have been a true "teachable moment."

a coupla robot heads sitting around watching tv (or, i caught a bad meme this weekend)

(written for 3 Quarks Daily)

 When it comes to "memetics," which some say is the new science of studying "memes," consider me a skeptic.  Doesn't a science need to have a clearly defined subject and verifiable findings?  At this point the "meme" concept seems more or less to be where the "artificial intelligence" idea was twenty years ago:  That is, it's not so much a hypothesis as it is an analogy - a somewhat vague and fluid analogy - one that lets people think in some new and smart ways but leaves them subject to flights of excessive rhetoric.

Which means it's useful ... but not exactly real.

The uninitiated among you may be wondering what, exactly, is meant by the word "meme."  You're not alone.  Meme advocates are still arguing about that.  The word was first used by Richard Dawkins in his book The Selfish Gene, as a contract of "mimeme" (meaning imitated behavior.)  Dawkins was suggesting that cultural behaviors, reproduced as one person mimics the actions of another, could be considered analogous to genes.  

What are some examples of  memes?  Opinions vary.  But the word has caught on in the blogging and Internet world, where its definition seems to be indistinguishable from "fads" or "catchphrases."  Lolcats is described as a "meme" on the Web, for example, and so is "rickrolling" (where a seemingly legitimate link embedded in a post actually leads to a clip of Rick Astley singing his 80's-era hit, "Never Gonna Give You Up").  Expressions like "Jump the shark" and "FAIL" are memes in the online universe, too.  Outside the world of online fads, a more rigorous and universally agreed-upon definition appears to be lacking.

In addition to his scientific work, Dawkins is one of the finest science writers we have.  But it's not clear (at least to me) how seriously he expected the idea to be taken. It's being taken very seriously indeed, however.  Consider this sentence:  "In a given population of people, memes compete to be copied."  It was written by Dr. Susan Blackmore, a noted researcher in altered mind states and well-known debunker of paranormal phenomena.  The sentence reflects the mind-set of someone who is notably and eloquently skeptical about many phenomena, yet is somehow willing to impute agency - and something that sounds very much like volition - to cultural behaviors.

The Oxford English Dictionary's online definition of compete is "strive to gain or win something by defeating or establishing superiority over others."  So, by this theory, LOLcats and rickrolling strove to prevail over other websites and Internet pranks that have been less successful. A less successful website - like Men Who Look Like Old Lesbians, for example - apparently lacked either the proper attributes ... or maybe the will ... to succeed as its fellow memes have succeeded.  It is a loser in the cold Darwinian battle for our head space.

Look ... it's entirely possible I'm being unfair about all this.  I've caught a nasty virus and I feel lousy.  It feels like I'm typing this from inside a six-foot sphere made entirely of lint.  Dr. Blackmore's done some very interesting work.  Maybe there is something called a meme, and maybe it does have agency.  But the virus that has attacked my body can be seen on an electron microscope.  It can be defined.  It reproduces and competes for definable and limited resources.

Let's look at this "meme" thing a little further.  (And forget about Men Who Look Like Old Lesbians.  I know why that didn't succeed - because, judging from a quick scan, pretty much any man over fifty qualifies.  It's bound to annoy both older men and lesbians. You call that a meme?) 

Dr. Blackmore's paper on "consciousness in meme machines" points us to the exceedingly cool work being done by researchers such as Luc Steels, who has used computer science and robotics to experiment with creating and reproducing language.

In their paper "Bootstrapping Grounded Word Semantics," Steels and Frederic Kaplan describe their research on "robotic agents interacting with real world environments through a sensory apparatus."  (See illustration, above.) Specifically, they connected "Talking Head" robots via the Internet and gave them the ability to exchange "agents" that could move from one unit to the other.  Both robots had visual access to a series of colored shapes on a whiteboard, which they viewed via an electronically relayed imaging system.

In other words, the robots were watching TV ... and talking about it.

It should be noted that the Steels/Kaplan paper does not use the word "meme."  They are attempting to reproduce the genesis and evolution of linguistic forms using programmed software, combined with video technology and robotics.  The subjects of their experiment clearly do have identity and agency, even if it is programmed from an external source (and therefore could be said to be an expression of Steels' and Kaplan's actions, not the expression of their own volition.)

Are there really "selfish memes"?  Isn't that like saying the different pairs of pants in my closet "compete" to be worn by me every morning?  And that the plaid ones my mom bought me are being selected against on a regular basis?  Isn't that really just an analogy?

Well, analogies are alright.  Analogies are good and proper and useful - provided we remember that they are analogies.  I'm not on board the "meme" bandwagon as reality - at least not yet.  Apparently the "meme" meme's efforts to reproduce itself in my mind have been unsuccessful so far. But then, is there a "me," independent of the memes that have coagulated in my general direction? Dr. Blackmore suggests not, that the illusion of self is created by hordes of selfish memes:  "The illusion that we are a conscious self having a stream of experiences is constructed when memes compete for replication by human hosts."

It's a fascinating idea, one that owes much to Dr. Blackmore's past studies of Buddhism and which I can more easily grasp because of my own. But I'm not prepared to make the leap of faith required to consider it a reality.

Maybe it's just this virus slowing me down. I certainly feel lousy - that is, if there really is an "I" who feels anything.  Maybe the "feeling sick" meme just needed to replicate and I was an available host.  Which is to say, maybe I just came down with a bad meme.

you can't fool all the people all the time: arlo guthrie version

Some of my best friends are Republicans.  Or, more specifically, some of my favorite musicians are.  Merle Haggard's come around, but ZZ Top played the Republican National Convention last year.  Some of the guys in Aerosmith endorsed McCain.  So did John Rich, who made this great song and video about Detroit and the bailout.  Even James Brown wore the "R" designation.

But don't give people patently bogus reasons for registering Republican, as Arlo Guthrie did this week in the New York Times Magazine.  Said Arlo:

I became a registered Republican about five or six years ago because to have a successful democracy you have to have at least two parties, and one of them was failing miserably. We had enough good Democrats. We needed a few more good Republicans. We needed a loyal opposition.

Hippie, please!  Five of six years ago the Republicans dominated three branches of government and all channels of the media.  It looked like Karl Rove was about to engineer his thousand-year reign of conservatism.  When it comes to parties, "one of them was failing miserably," all right - but it wasn't the Republicans.

Now, I don't love Arlo's music the way I love ZZ Top's.  But I'll still think "Coming Into Los Angeles" is s a great song, no matter what his reasons are for registering Republican.  Maybe he liked their fiscal policies.  Maybe he agreed we should bend our devotion to civil rights in order to build a stronger national defense.  Maybe he believed we should bring democracy to Iraq by military means.  Maybe it's the ultimate act of rebellion against everything his father stood for.

Hell, maybe he just wanted the tax break.

But this reason is ... well, it just ain't true.  Arlo, most of your fans have straightened up.  They're not as pot-addled as they used to be.  They may not smell like patchouli oil anymore, but they can smell this statement for what it is.

If you're going to become a Republican, old son, be proud.  Stand up for what you believe in.  And for God's sake, tell the truth to your fans.  With the music industry in shambles, authenticity is all an artist has left.

calling all anthropologists

This document should be self-explanatory. The fact that for some people it's not is fascinating.

Sure, it could be a forgery.  So could the pink slip on your car.  When people choose to believe one document (or set of facts) is a hoax instead of all the others, the question must be asked:  Why is this set of evidence considered false and all others assumed to be true?

That's why the "birther" movement is a fascinating potential subject for anthropological study.  There seem to be a number of underlying forces at work:  racism, fear, rage, the need to connect with like-minded individuals.  Then there's the underlying sense of powerlessness in the face of overwhelming forces, a desire to make sense of a confusing world by creating simple conspiracies to explain complex events.

Did I mention racism?

And it occurs to me that I still haven't seen conclusive evidence that Lou Dobbs was born in this country.

i might be procrastinating now

Remembering a star: The Taco Bell chihuahua has died.  Her finest acting moment, the one that showed her range, was undoubtedly the "Put Down the Chalupa" ad -- the one with the SWAT team and all the other first responders trying to stop that guy from eating his delicious meal.  She achieved just the right blend of intensity and world-weariness.  We believed her.

"Just put it down, man."  Classic!

Gidget, we honor you.

Okay, okay.  I'm going back to work now.

The Moon and Health Reform

Yesterday we celebrated the 40th anniversary of the moon landing. What else? Oh, right. More pundits and politicians told us that meaningful health reform was impossible. In 1961 the President of the United States set the goal of landing astronauts on the moon and returning them home safely within 10 years.

We did it in eight years -- and while we were at it we created Medicare and implemented the Civil Rights Act. Just how tiny have we become in the last forty years?

The moon landing changed the way we thought about ourselves. It gave us pride, and a belief in our own abilities. It became a folk saying, common in everyday conversation and television commercials: "If they can land a man on the moon (it was always a man in these sayings; we've come a long way), why can't they make a cup of coffee I like without caffeine?" Forty years later, you can even get a decent cup of decaffeinated coffee at Starbucks or the Coffee Bean.

If the President were to set a goal like President Kennedy's today, we would probably see Republican Senators saying that the GOP should "slow him down" because it would "break him." And Republicans who thought it might be good for the country to meet such a goal would be confronted by pundits like Bill Kristol, who said this of health reform: "(T)here will be a temptation ... to try to appear constructive, or at least responsible ... Resist the temptation. This is no time to pull punches. Go for the kill." Meanwhile Blue Dog Democrats might be afraid that a bold stand on the issue could hurt them with swing voters.

And yet polls show that the public wants meaningful health reform with a robust public option. To paraphrase that line from Sunset Boulevard, the American people are still big. It's politics that got small.

It's true that the recent Washington Post/ABC Poll shows weakened support for deficit spending to stimulate the economy (the question is phrased somewhat differently in the recent poll, which could skew the results, but the decline is dramatic). Hence the new, poll-driven concern about ensuring that health reform doesn't "raise the cost curve." The first response on the Democratic side has been to propose the partial taxation of employer-provided health benefits (a proposal which may not make as much sense as it seems to make).

There's a bolder, smarter, better way to lower costs and improve health outcomes: Why not create a new national mission, on the scale of the mission to the Moon? Here's the outline for such a mission: To learn what medical techniques work best, for which people, so that we can have the most effective medicine in the world within ten years. That means we'll need to study, identify, and reduce the use of unneeded and harmful medical procedures, starting now.

One good place to start is with the McKinsey study on excessive use of costly services in the US (although we should make more comprehensive studies of this problem a national priority). McKinsey estimates that we spend $480 billion more per year than other industrialized nations on medical services, after adjusting for population and other factors. That figure isn't justified by either our level of health or the results we get from our care. We've been hearing a lot about the reputed $1 trillion cost of reform over a ten year period, but even a 25% dent in this excess spending would give us reform that saves money. Why not make it a goal to use our nation's imagination and ingenuity to make those savings a reality?

Some will say this is a form of rationing. That's not true. It's not 'rationing' to let people know that the painful and invasive operation they're about to undergo isn't necessary, and may even make them worse. You're not 'denying' them something. You're protecting them.

The nation that launched a manned moon mission in eight years can fix this problem - but only if we stop tinkering with the small stuff and start looking at the big picture.

In other moon-related news this week, the Indian state of Haryana announced that it would provide free travel insurance for a million religious pilgrims. Fear of ill fortune brought by this week's eclipse might made travekers reluctant to come to the state for their ritual bath in the waters of Brahmsarovar, the pond of Lord Brahma. That could deprive Haryana of much-needed tourist revenue at a critical time.

The lesson of Haryana's "eclipse coverage" is this: Insurance is too often a reflection of what we fear, rather than what we can prevent. Americans should make it a national goal to learn the difference in the next ten years, and then manage their care accordingly. If we can land a man on the moon - and make a decent cup of decaf - surely we can do that.

Why Tax Health Benefits? Unanswered Questions, Unspoken Assumptions

(cross-posted from The Sentinel Effect, my neglected-of-late blog for healthcare issues only)

In a guest post at Jon Cohn’s blog The Treatment, Professor Harold Pollack makes a heartfelt case for allowing some taxation of employer health benefits.  “Don’t take the (tax) exclusion off the table,” he tells Democrats.  As Prof. Pollack rightly says, there’s a heated debate among Dems about the possibility of taxing some health benefits in order to offset some costs (and some political resistance) to health reform.

“There’s no bad guy in this fight,” says Prof. Pollack.  “Democrats must raise more than $1 trillion over ten years to pay for health reform.”  The $1 trillion figure is debatable, especially since we don’t know the final shape of health reform, but the “no bad guys” comment is reasonable enough.  And as he points out, there is some discussion of limiting new taxes to higher earners (e.g. $100,000 for individuals and $200,000 for families).

Taxing health benefits got a big shout-out last week from Douglas Elmendorf at the CBO, too.  They may not be bad guys, but advocates for this form of taxation still haven’t answered a fundamental question:  Why use this form of taxation? Why – politics aside – does it make sense to start taxing health benefits?  Health benefits are a relatively small part of overall earnings in America, and the decision to exempt them from taxation was an acknowledgment that we – alone among industrialized nations – don’t provide government health coverage.

Taxation is used for two basic reasons:  To raise revenue,  and to change behavior in a socially productive way.  We tax liquor and cigarettes to discourage consumption, for example.  Early advocates of taxing health benefits used logic and assumptions that aren’t being discussed much these days, especially by liberal advocates.

Their reasoning went something like this:  Americans spend too much money on healthcare, but they’re insulated from the consequences of that expenditures by insurance.  We’ll remove some of that insulation by taxing health benefits.  That will lead to greater awareness of costs, which in turn will change behavior and force down overall costs (or “bend the cost curve,” in the new parlance).

There’s a reason why this logic isn’t getting much exposure these days:  It’s hard to defend. Typical wage earners have little influence over their health care costs.  Doctors make recommendations about care that patients are loathe to reject.  A generation of experimentation hasn’t changed that much, although I strongly support continued work in that area.  But the “facts on the ground” are these:  Doctors, not patients, control health demand.

What’s more, the choice of benefit plan and insurance provider rests with the employer, not the employee.  So the idea that taxing health benefits will “bend the curve” doesn’t seem like a persuasive one.

Perhaps I’m making unfair assumptions about the reasons why some analysts support taxing benefits rather than, for example, increasing taxes on the top 1% of earners.  But the fact remains that even a well-structured benefits tax is less progressive than other new taxes would be.  Liberal analysts like Prof. Pollack need to give their colleagues a persuasive rationale for imposing this form of taxation, rather than another.  And I haven’t heard one yet.

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PS:  As an aside, is it just me?  Sentences like this one from the Treatment post make me uncomfortable: “… (A)ny unions’ hallmark accomplishment was to win generous employer-provided health benefits for their members.”  Not to go all Michael Moore or anything, but in light of other developed nations our union benefits are no longer all that “generous.”  The days of first-dollar coverage for anything are long gone.  Am I missing something?

That said, I do appreciate Prof. Pollack’s call for comity.  The online battle royal gets wearisome sometimes, even for the feistiest among us, so the tone is much appreciated.

The House Health Reform Bill: How Good Is It?

First, the good stuff: The bill includes a public plan option, although initially its availability will be limited. There’s an insurance exchange to help the uninsured gain coverage. Some of the insurance industry’s egregious underwriting practices will be banned, and rates can only vary based on age, location, and family size.

Premium subsidies are fairly generous, with some level of assistance going up to 400% of the Federal poverty limit (though if I had to bet, I’d wager that will drop to 300% after all the horsetrading is done). The Medicare subsidies for private insurers are eliminated.

Potential problems:

It’s not universal. It’s probably not politically possible to pass truly universal coverage, but it should be noted: Despite the presence of both individual and employer mandates (more about that below), the CBO estimates that 9 million citizens (as well as a similar number of illegal immigrants) will remain uninsured. That’s very close to the figure of 8 million I came up with a year ago, using back-of-the-envelope calculations based on Massachusetts experience. It means that roughly 20% of the uninsured will stay that way under these proposed reforms – and it’s my suspicion is that this figure is, if anything, low.

Why does that matter? Incremental improvement is a good thing, and if I were in Congress I’d probably vote for this bill. But it will leave an ongoing humanitarian problem as well as a strain on the system.

The small employer provisions can be gamed. Tax penalties for failing to offer benefits kick in on a sliding scale for companies with payrolls of $250,000 and higher. How many small employers – small restaurant or retail chains, for example – will simply re-incorporate as mutiple businesses with common ownership in order to avoid this penalty?

The plan’s major provisions don’t begin until 2013. Granted, it will take time and effort to ramp up a a public plan and a national insurance exchange. But it shouldn’t necessarily take three years, and the roll-out could be phased. I collaborated with a multinational initiative to help formerly Communist countries set up national insurance programs, and that didn’t take this long to begin rolling out. That was without any previous infrastructure, and using technology that was nearly 20 years old.

We have Medicare’s platforms and other resources. We also have the experience gained in Massachusetts and elsewhere. I would have thought they’d be able to implement some of the bill’s features in stages, with slightly more aggressive timing. (On the other hand, the desire to do it right rather than quickly is understandable.)

Those individual mandates will be tricky. I understand the economic role of mandates, but here’s the problem: Many uninsured middle-income families will find it difficult to pay five-figure premiums. And the penalty for not obtaining insurance is 2.5% of adjusted gross income. That means most middle income families will find it much less expensive to take the penalty than to buy the insurance (which was one of my primary concerns with Massachusetts’ legislation). In fact, based on current premiums, you’d need to make upwards of $400,000 before premiums and penalties are in the same ballpark.

Of course, many or most families will realize that it’s prudent to purchase insurance – if you can afford it. But many hard-pressed families may choose (or be forced) to gamble if they don’t have enough cash on hand to pay premiums and meet their monthly obligations. That’s why I suspect compliance projections are overstated.

There’s a political red flag, too: While the Massachusetts health reform plan is generally popular, we reviewed the poll results here and found that those who were affected by it personally felt (by a 56% margin) that it had a negative impact on their lives. To those who choose the lower-cost penalty over the insurance premium, this bill will not provide coverage … and it will feel indistinguishable from a tax hike. That could create an immediate compliance problem, and a political problem for Democrats down the road.

Which gets us to the big problem …

It doesn’t do enough to control costs. The outline of an effective, information-driven cost reduction (and, more importantly, outcome improvement) program is there – but only if administrators follow through with intensive research and creative redesign of provider reimbursement programs. The intensity with which these initiatives will be followed depends on political will … and political will, in turn, depends on how effectively the Democrats make the case that true innovation is required to bring our cost problems under control.

I’m not as negative as Roger Collier on this score, but I do see reasons for concern. Since these outcomes-improvement and cost-management provisions are being underplayed in the political arena – perhaps wisely – they’ll need to be emphasized during implementation.
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The Senate HELP Committee has just passed its version of the bill. While the Senate is essentially following the same path as the House, they are also pursuing premium discounts for enrollees making “healthy lifestyle” choices. Employer mandates are gentler in the Senate version, and there are several other (relatively minor) differences.

The HELP Committee passed its bill with no Republican votes in favor. The Democrats are likely to own both the credit and the blame for whatever winds up being passed in Washington. And, while they’re likely to change in some ways, these bills may well provide the basic outline of health reform legislation. That means everybody tasked with finalizing and executing reform should concentrate on four areas:

1) Ensuring (and communicating) fairness in defining and enforcing mandates;
2) Creating the most sophisticated, effective, and user-friendly insurance exchange possible;
3) Defining robust benefit plans that protect enrollees from financial shock due to out-of-pocket medical costs;
4) Developing strategies for providing care to those who will be left out of this plan.

They’ve avoided my biggest fear: that the bill would contain individual mandates but no public plan option. We could tinker with the balance between the two, but at least the public option is there. Still, as complicated as it may be to pass a bill, it’s only the first step. Even if Congress meets the President’s August 1 deadline, the reform process is only beginning.

Other references:

- Maggie Mahar’s comparison of the House and Senate bills
- Full text of the House bill
- CBO’s initial analysis of the House bill
- Joe Paduda’s summary of the House bill
- Ezra kinda digs the bill, and gives a shout-out to its process