Government Stimulates Itself

So this is what they mean by the stimulus "creating or saving jobs". The Nashua (NH) Telegraph reports this from Acting State Stimulus Office Director Orville "Bud'' Fitch:

The report also revealed that through the end of June that stimulus money created or saved 796 jobs, with 700 of those state workers who did not have to get laid off thanks to the federal grants, Fitch said.

If you work for a private firm, your company probably has laid people off, or will. But if you work for the government, they will take money from taxpayers and from the future earnings of those private firms, making it harder for them to keep their employees, so that you can keep your job.

Hat tip to Mark Steyn of the National Review (here), who commented:

The "stimulus" is great if you're thinking of a career in Stimulus Office Management, Stimulus Office Management Consulting, Stimulus Office Human Services, Stimulus Office Promotion, or perhaps becoming a professor in Stimulus Office Studies.

Clunker of a Program

The Cash for Clunkers program continues to be an administrative headache for dealers, according to a CNN article:

The National Automobile Dealers Association released a statement late Friday insisting problems with the government's computer application system could mean legitimate "clunker" deals can't be submitted on time.

Each application for reimbursement takes up to 7 hours, and involves scanning up to 20 documents, depending on the customer. Some dealers have not been able to access the government website during regular hours due to too much volume.

The hassles involved with processing claims have dealers wondering whether the program was worth it:

"We have definitely sold more cars than we would have," [Michelle Primm, managing partner at the Cascade Auto Group in Cuyahoga Falls, Ohio] told CNN, "but the administrative cost may have eaten up the additional profit."

I wonder if any of these dealers have ever processed Medicare claims?

Right-wing, wacko...Anesthesiologists?

Apparently the American Society of Anesthesiologists (ASA) is an "un-American" organization because they are encouraging their members to show up at town-hall meetings and protest, according to Nancy Pelosi and Steny Hoyer's NY Times editorial last Monday. A "Congressional Recess update and action alert" posted on the ASA website says "NOW IS NOT THE TIME FOR REST, BUT FOR ACTION" (caps are theirs).

What is the ASA's objection? They call it their "33 percent problem" - "GAO, the investigatory arm of Congress, has found that Medicare pays anesthesiologists 33 percent of what private insurers pay for anesthesia services." The public plan proposed in H.R. 3200 will continue to use this rate, which the ASA says doesn't even come close to covering their costs, which include very high malpractice premiums.

This "33 percent problem" prompted an editorial in today's WSJ by anesthesiologist Ronald Dworkin which points out:

Every medical student learns an old adage: You can skimp on some medicine, but you can't skimp on obstetrics or anesthesiology. An elderly surgeon explained it to me this way, "In surgery, people die in days and weeks—a doctor has time to fix a mistake. But in obstetrics and anesthesiology, they die in minutes and seconds."

Also:

In no medical specialty is the spread between the Medicare rates and private insurance rates greater. Progressives expect to pay anesthesiologists Medicare rates, which are 65% less than private insurance rates, without any change in the system. But there will be changes. Some anesthesiologists will leave the field. They are already faced with lawsuits at every turn.

There is already a shortage of anesthesiologists, and Dworkin gives his thoughts on the possible effects of losing more of them:

Quality of care will inevitably decline. That decline will come first in obstetrics. At the hospital where I work, two anesthesiologists work in obstetrics almost around the clock, so that a woman in labor need not wait more than five minutes for her epidural. Other hospitals are less fortunate, and have on staff at most one anesthesiologist in obstetrics. The economic crunch will eventually force these hospitals to cover obstetrics "when anesthesiology is available," meaning in between regular operating room cases.

During an obstetrical emergency, these short-staffed anesthesia departments will scramble to send someone to perform the C-section. Don't forget, a baby has only nine minutes of oxygen when the umbilical cord prolapses, so time is of the essence.

At the very least, pregnant women will be waiting a lot longer for epidurals.

After this, further shortages become a matter of life and death according to Dworkin:

More pain on the labor floor is only the beginning. If hospitals delay the administration of anesthesia because Congress skimped, needless deaths will certainly result.

On the other hand, this rules out the "death panels". There won't be enough anesthesiologists to perform the euthanasia.

Cash for Clunkers Shell Game

Since the government's delays in reimbursing dealers for cash for clunker deals has been causing dealers to drop out of the program, GM is offering to advance cash to the dealers in the meantime, according to this WSJ article.

Since GM is now owned by the government and the UAW, any money GM advances to the dealers is really the government's money. So - GM bleeds money because they can't profitably sell cars - then they declare bankruptcy and are bailed out by the government - then the government offers cash to people to buy more cars - then the government can't pay people fast enough - so, they offer to temporarily shift their money from GM.

Will GM have to create a separate group to handle these requests that does the same thing as the government group that processes reimbursements?

Your tax dollars at work (twice)!

"It's a Matter of Trust"

Daniel Henninger, on the opinion page of today's WSJ, explains the public's frustration with Obama on health care reform by quoting Billy Joel: "It's a matter of trust." The public just doesn't believe the government has any ability to cut cost, only to expand entitlements:

In his op-ed Sunday for the New York Times [Obama] said, "We'll cut hundreds of billions in waste and inefficiency in federal health programs like Medicare and Medicaid." Hundreds of billions? Just like that? This is nothing but an assertion by one man. It's close to Peter Pan telling the children that thinking lovely thoughts will make them fly.

When the AARP corrected the President's assertion that they had endorsed his plan, they said "AARP will not endorse a health care reform bill that would reduce Medicare benefits." They simply don't think this Congress and President are capable of reforming health care without killing it, and apparently a majority of Americans don't think so either.

Government You Can Believe In!

News from this week:

TARP
The Wall Street Journal reported that "A plan by Treasury Secretary Timothy Geithner to limit lobbyists' influence over the $700 billion bailout program has yet to get off the ground -- even as the program nears an end...Last January, Mr. Geithner promised to craft rules preventing external influence over bailout decisions. More than six months later -- and 100 days before the financial-industry bailout program is scheduled to stop taking applications for aid -- those rules have yet to be finalized."

This failure even got the attention of the Huffington Post (here).

Cash for Clunkers
The Associated Press reports that "Hundreds of auto dealers in the New York area have withdrawn from the government's Cash for Clunkers program, citing delays in getting reimbursed by the government." The program has only paid for about 2 percent of those dealers clunkers deals so far, according to this article. Other articles have pointed out that up to half of dealer applications for reimbursement from the program have been denied due to minor clerical errors.

Regarding the government program, a spokesman for the dealers said "it's in the hands of this enormous bureaucracy and regulatory agency...If they don't get out of their own way, this program is going to be a huge failure."

White House Spam Attack
After initially denying that hundreds or thousands of people had received unsolicited emails from the White House, they decided to blame "unnamed political groups" for the error. Seems a President with expertise in community organizing and grass-roots politics and his advisor, David Axelrod, who founded a media consulting firm, don't know how to keep a secure email list.

Yet Another Bad Post Office Analogy

Last night, Rep. Jesse Jackson, Jr. (D-Ill.) suggested on CNN (video here) that the Post Office keeps DHL, UPS and FedEx honest, and so a public health care option would keep insurers honest:

"Look at it this way: There's Federal Express, there's UPS, and there's DHL," Jackson told CNN host Larry King. "The public option is a stamp; it's email. And because of the email system, because of the post office, it keeps DHL from charging $100 for an overnight letter, or UPS from charging $100 for an overnight letter."

This is a flawed analogy on several points:

First, this "honesty" comes with a price, which he fails to acknowledge. The Post Office is projected to lose $7 billion dollars this year, in spite of raising the prices of stamps several times recently. Where is that $7 billion going to come from? It will be subsidized with tax dollars. Where do tax dollars come from? The profits of corporations and the wages of individuals.

However, it is a good analogy in the sense that Medicare is bleeding money, just like the Post Office. While many claim Medicare is "working" because it has (so far) been able to provide a reasonable level of care, the Trustees of the Medicare trust funds say Medicare payroll taxes would have to more than double ($3.88 more will be taken out of everyone's paycheck for each $100 earned), or services would have be immediately cut in half to cover Medicare's budget shortfall. Until either of these happen, the Medicare deficit is paid out of general funds, which is the money collected through income tax.

By suggesting that whenever a private business is making too much money, the solution is to create a massive, money-losing, taxpayer-funded competitor to keep everyone "honest", Jackson seems to think there is no limit to government revenue and what people are willing to pay for and tolerate. Should the Post Office, or a public health insurance option, exist merely as a mechanism for transferring money from successful businesses to failed ones, with the goal of keeping everyone "honest"? If we keep subsidizing money-losing government "businesses" for this purpose, we might end up running out of profitable businesses.

Second, the example shows a misunderstanding of microeconomics. Suppose UPS raised its rate to $100, far above current rates. They would lose all their business to others who charge less, assuming the service quality is similar. Therefore, UPS would have to reduce their rate to a level that allows them to provide the service without losing money.

So, the Post Office isn't keeping UPS from charging $100 - DHL, FedEx, and the Post Office together are competing. Also - $100 is just a ridiculous price for an overnight letter! If a business charges more than people are willing to pay for something, customers will keep you honest by finding another way, and with no government subsidy!

Third, Health care in America isn't expensive because everyone is charging consumers $100 for something that should cost $10. It's expensive because there has been an explosion in technological innovation that enables us to treat things that were recently untreatable. Waste, fraud, profits, and other factors have contributed, but according to the Congressional Budget Office, technological change accounts for 40 to 65% of the increase in health care costs from 1940 to 1990 based on their analysis of several studies (see table 2 on page 8, here).

On his blog "Happiness in this World", Dr. Alex Lickerman says:

Heart attacks used to be treated with aspirin and prayer. Now they’re treated with drugs to control shock, pulmonary edema, and arrhythmias as well as thrombolytic therapy, cardiac catheterization with angioplasty or stenting, and coronary artery bypass grafting. You don’t have to be an economist to figure out which scenario ends up being more expensive.

Will Reducing Health Care Profits "Bend the Curve"?

I keep seeing comments on how outrageous it is that health care companies make profits, and how those profits are adding so much to the cost of American's health care. President Obama has said a public option is needed to "keep the insurance companies honest". "Right now, at the time when everybody's getting hammered, they're making record profits," he said in his July 22nd prime-time press conference. Can the high cost of health care in the U.S. be attributed to the profits of the insurance companies?

Based on all the rhetoric about how horrible these profits are, one might think reducing these profits would have a big impact on the overall cost of health care. So, for the sake of argument, let's assume that a public option, or some other reform, is enacted and is so effective that it eliminates all the profits of publicly traded health insurance companies. What would the impact be?

I pulled the net income (aka profit) for the last 8 quarters of all publicly traded companies that are part of the Russell 3000 Index, which includes nearly all stocks. Insurance companies are part of the Health Care Providers & Services industry, according to S&P. Although not all companies in this industry are insurers, I include them all anyway, which makes a list of 95 companies, which includes Aetna, Wellpoint, Cigna, and many others.

To level out changes over time, I averaged the last 8 quarters, then multiplied this by 4 to get an estimate for a year. Then I added them all up.

By this method, I estimate that all publicly-traded health insurance companies made $18.8 billion in profit, on average, over the last two years.

Big number, right?

However, consider that total health care expenditures for 2008 are estimated to be $2.394 trillion. (See table 1, page 3, here)

Therefore, if all profits of the health insurance industry were somehow eliminated, the U.S. would save 0.8% of its total health care costs. Not what I would call "bending the curve."

What if we include all health care companies - biotech, pharma, medical device companies, etc?

This results in a list of the largest 404 health care companies, which, using the methods above, make an estimated $73.5 billion of profit. Removing this profit from the system would save us 3.1% of our total health care costs. Again, not a major impact. Instead of health care costing us 15.3% of GDP, it would cost 14.8%.

Although blaming our health care problems on the profits of companies might make some people feel better, even getting rid of them entirely will barely dent the cost problem, and would almost certainly result in other problems.

Note: This analysis was inspired by similar work in Alex Lickerman's "A Prescription for the Health Care Crisis" (here). I strongly recommend you read his thoughtful analysis of why our health care is so costly. (Hint: it's not because of profits.)

A Monopoly on Crazy?

In today's Washington Post, columnist and author Rick Perlstein has an opinion article that tries to make two points: 1) the "crazy tree blossoms" "when liberals are in power" (and this does not happen when conservatives are in power), and 2) the media is complicit in drawing too much attention to the crazies.

Perlstein thinks the political right has a monopoly on crazies and, apparently, people on the left are all calm, rational, law-abiding citizens. However, either he has a very short memory, simply isn't paying attention, or intentionally wrote a one-sided partisan article to rally the troops.

While I agree that many of the town hall protests have been out of line, especially the person who was carrying a gun (perfectly legal, but totally unnecessary and unwise), and, yes there are crazies in the right wing, it's absolutely ridiculous to claim one party or the other has monopoly on crazies.

First, his claim that the recent protests are all coming from the right is unproven. Has anyone checked the party affiliation of everyone speaking up at these town hall meetings?

In addition, there has been some craziness from the left at the meetings. Does he remember the SEIU members who physically assaulted a black conservative? It's one thing to speak your mind, and another to assault someone (One is legal and the other is not. Guess which.)

Perlstein is making an intentionally partisan ad hominem attack. Instead of dealing with specific arguments in the health-care debate, he pre-emptively categorizes claims about health care from the right as false, and paranoid, while categorically validating claims from the left. Note his selective use of quotes below, when saying that Walter Cronkite would have treated this situation differently:

The media didn't adjudicate the ever-present underbrush of American paranoia as a set of "conservative claims" to weigh, horse-race-style, against liberal claims.

My guess is that both sides have some valid ideas, and both sides have some bad ones.

In spite of Perlstein's "thoughts", "crazy" is not a partisan problem, but a people problem. From any perspective, you could find people "on the other side" to call crazy.

The "crazy tree" blossomed just fine when Bush was in power: How about those who claim President Bush caused 9/11? Have you ever Googled "kill Bush"? Try that, then try "Bush Nazi". Perhaps you've seen the "Kill Bush" computer game?

Remember the violent protesters during the Republican National Convention? Watch this, this, and this, but not in work or with children in the room. There was physical violence, explosions, attacks on police officers and journalists, protesters resisting arrest, and protesters recording the events to post online.

This last point seems similar to one of Perlstein's objections to the town hall events:

The BBC...quoted liberal Illinois Sen. Dick Durbin's explanation: "They want to get a little clip on YouTube of an effort to disrupt a town meeting and to send the congressman running for his car.

Is Perlstein arguing that YouTube makes a protest illegitimate?

The crazy tree also blossomed among the left while President Bill Clinton was in power. In 2000, Alec Baldwin screamed on Late Night with Conan O'Brien about Henry Hyde, whose supposed crime was advocating the impeachment of Clinton:

“I’m thinking to myself if we were in other countries, we would all, right now, all of us together, . . . would go down to Washington and we would stone [Republican U.S. Representative] Henry Hyde to death! We would stone him to death! Wait! . . . Shut up! No, shut up! I’m not finished. We would stone Henry Hyde to death, and we would go to their homes and we’d kill their wives and their children. We would kill their families.”

Instead of disapproving, the crowd cheered as this man (who has since considered running for public office) seemed to be advocating the murder of innocent children.

To this day, some defend Alec Baldwin's ranting on TV, saying it was just an act and he was using a public forum to show how upset people were about the ongoing investigation into President Clinton's infidelity and repeated lies while under oath.

By that same logic, if the town-hall protesters are "acting" on behalf of some organization to show how passionate people are, does that not make them legitimate as well?

In the end, the craziness from all sides helps explain why U.S. government was designed with so many checks and balances, and why polls often show that Americans prefer divided government, where one party controls the White House and a different one controls Congress. Very few want our government to stray too far one way or the other.

Perhaps the crazies on one side serve an important purpose in calling out the crazies on the other? Perhaps the fact that one party currently controls two branches of government and the other has only a slight hold on the third explains the behavior Perlstein is complaining about? Maybe they feel like they have no other representation.

Sausage Making and the Health Care Bill

An August 1 Washington Post article quotes Rep. John B. Lawson (Conn.), head of the House Democratic Caucus saying: "Two things that shouldn't be observed: the sausage being made and a bill becoming law." The article described the messy process involved, but didn't quite live up to the old School House Rock "I'm Just a Bill" video.

Here are some excerpts from the article, with my comments:

Although everyone talks about "the bill", or the "Obama plan", there is no such thing yet. Right now, there are several versions being worked on by several different groups within Congress:

"Both chambers have, between them, three health-care reform bills -- one in the House and two in the Senate. Only one of the Senate bills has won committee approval...The huge cut-and-paste job now goes to the House Rules Committee, to be smoothed out into a final product to send to the House floor...Almost every major provision of health reform remains very much in play."

Each member of Congress fights to get their pieces of legislation in. They need to make sure the bill reflects their personal convictions and/or those of their constituents, resulting in many amendments:

"The bill, a work in progress called H.R. 3200, is already phone-book thick...Some 250 amendments had appeared by Wednesday night, and the number jumped to 350 by Thursday afternoon. The amendments filled 39 file boxes on chairs, under desks and in the aisles."

There is a great picture on the Washington Post website of a legislative aide surrounded by boxes and boxes of paper containing just the amendments.

In spite of President Obama's promises of a more accountable and transparent administration that would broadcast all of the health care debate on TV:

"All week, there were closed-door meetings among disparate ideological factions. The negotiations are invisible not only to the media and the public, but also to most other members of Congress."

Much of the fighting is between Democrats, who are struggling to craft a final bill, in spite of controlling the White House, and both houses of Congress:

"Democrats have large majorities in both chambers, but they have discovered the perils of being a party that yokes together Northern California liberals and Deep South good ol' boys."

But, even if there was only one version, and all members of Congress read it, they still wouldn't necessarily understand it:

"the bills are not exactly beach reading. They are legal documents crammed with legislative coding, sentence fragments and assorted gibberish that modifies laws already on the books somewhere. To really understand what a bill says, you'd need to have the existing laws memorized.

Here's a fairly typical passage from H.R. 3200:

Section 1834(a)(7)(A)(iii) of the Social Security Act (42 U.S.C. 1395m(a)(7)(A)(iii)) is amended

(1) in the heading, by inserting 'CERTAIN COMPLEX REHABILITATIVE' after 'OPTION FOR'; and

(2) by striking 'power-driven wheelchair' and inserting 'complex rehabilitative power-driven wheelchair recognized by the Secretary as classified within group 3 or higher.'

And that goes on for a thousand pages."

Is it really a surprise that there is so much confusion over what is in "the bill"? When Americans claim they trust Congressmen only slightly more than used car salesmen, should we trust them when they say something is, or isn't in there, especially when it's constantly changing and so complex?

At the end of the article, they describe the truly scary part. After all the potential amendments and versions are considered, after all the town halls and all the "read the bill!" rhetoric, congressional leaders (i.e. a small number of Democrats) get to re-write the bill and make a version that everyone will vote on - possibly within a few hours. As happened with the carbon cap-and-trade bill, someone could add on a massive amendment at this point in the process.

"Before either chamber can vote on a bill, the committee chairmen, along with congressional leaders, will have to merge the disparate versions into a single bill to bring to the floor. Whatever is passed by the two chambers must then be reconciled again in "conference."

The conference committee would then produce a final bill that would have to be voted on by each chamber. If passed, the bill would go to the president. If he found it acceptable, he would sign it.

And, simple as that, it would be the law of the land."

No wonder the legislative process is compared to the making of sausage. With all these things in mind, consider:

1) Obama is not keeping his promises of transparency and pushed very hard to rush this through before the August recess, making people think he has something to hide. It seems he doesn't want everyone to know the ingredients of the sausage,
2) Obama, Barney Frank and others are on record as being in favor of things they currently claim to be against, such as a single-payer system, reducing their credibility,
3) The 24-hour news cycle and the internet have made more people aware of how the legislative sausage is made,
4) Pelosi and other leaders in Congress have a recent history of rushing things through and making last minute changes, so people don't trust Congress not to change the bill.

Ronald Reagan said "A government bureaucracy is the closest thing to eternal life we'll ever see on this Earth." If this passes, there will be absolutely no way to reverse it, whether it works or not. This is a big part of why so many people are scared of this bill.

Obama Makes "Fishy" Statement About AARP Support

President Obama said: “We have the AARP on board because they know this is a good deal for our seniors.”

The AARP said: "While the President was correct that AARP will not endorse a health care reform bill that would reduce Medicare benefits, indications that we have endorsed any of the major health care reform bills currently under consideration in Congress are inaccurate."

The remainder of the AARP's statement explains that, while they agree with the need for health care reform, they are "working with leaders of both parties, including the President, to build a final package we could endorse." (Which means they are lobbying, an activity the President is endorsing by trying to cite their support.)

They seem as unsure as the rest of us that the final bill will look like the versions currently being discussed. In other words, they don't trust this President or this Congress.

"Fishy" statements from the CBO

Keith Hennessey, formerly a senior White House economic advisor to President George W. Bush, posted an email he sent to flag@whitehouse.gov on his blog, reporting "fishy" staements about health care reform "made by a gentleman named Dr. Douglas Elmendorf. He claims to be Director of the “Congressional Budget Office” and has posted frequently about health care reform on his website, cbo.gov. This information takes the form of personal posts on his Director’s Blog, as well as in-depth reports that have the veneer of competent, thorough, impartial professional analysis. The IP address of his site is 206.106.246.254, and his organization has named their hideout the “Ford House Office Building.”"

Read his post here to see a list of fishy statements made by Mr. Elmendorf and the CBO.

Obama's Failed FedEx Analogy

In their coverage of Obama's town hall meeting on health insurance reform today, CNN.com says:

Obama defended his call for a government-funded public health insurance option to compete against private insurers. He said such an option would hold down rates, rejecting accusations that it amounted to a government takeover of health care because private companies can't compete with a government-funded plan.

"UPS and FedEx are doing just fine," Obama said, referring to private courier services that compete with the U.S. Postal Service. "It's the Post Office that's always having problems."

However, UPS and FedEx do not compete with the Post Office in their main business of regular mail. In fact, UPS and FedEx are prohibited by law from competing in non-overnight mail. The reason nobody is allowed to compete with the Post Office is that the government is worried UPS and FedEx would do a much better job. In contrast, the health insurance reform proposes a public option for the specific purpose of competing with private insurers.

Either Obama is not aware of this fact, or he is intentionally distorting the facts. Perhaps I should send an email to the White House?

All Obama is really doing here is reminding everyone of government incompetence, and that the government cannot capably handle your mail without losing tons of money. In fact, in July, "The Government Accountability Office...added the Postal Service to its list of high-risk federal agencies in need of change," according to this AP story. The agency expects to lose $7 billion this year.

Oops.

Checking the Health Reform "Reality Check"

The White House has published a FAQ to give people "the facts about the stability and security you get from health insurance reform," so I decided to check it out. Go read the FAQ, then come back here.

So, has the White house convinced you? It's all benefits and no costs, right?

Not really - first consider that there is currently no single bill being considered, so how does the White House know the "facts", when they haven't been decided yet? A 309-page amendment was added to the carbon cap-and-trade bill just a few hours before the vote - will the same thing happen to this bill? Will anyone have time to read the final health care bill, when there actually is one? Will the President post the bill for public review for 5 days as he promised, or should we judge this future, hypothetical bill based on the "facts" posted here? Keep in mind that this President also promised to have a bipartisan bill, and to have the entire debate over health care reform televised so we could hold Congress and the White House accountable.

Second, much of what is presented here as "fact" are statements about the future. Note the present tense used when they describe the FAQ - this is what "you get" from reform. Yes, before it's even written or passed, all of these things will come true! President Obama is a very gifted speaker, but I didn't realise he was a seer as well. Anyway, all legislation has unintended consequences, and people and businesses change their behavior under new laws, making many predictions look foolish in hindsight. So, this FAQ not only makes statements about a bill that doesn't exist yet, but it makes statements about the future effects of these future laws.

Also, consider that some of the statements in the FAQ contradict each other, contradict available evidence, or present idealistic benefits while distorting the associated costs. Here are some examples, in no particular order.

#1 -- Under the question: "Why should people with insurance pay to cover those who don’t have it? They are already paying for the uninsured," the FAQ says some of the uninsured are "younger, healthier people" and that bringing them "into the system will spread the risk."

However, spreading risk is not the same as reducing cost. If these "younger, healthier people" are working, they are already paying for Medicare through the FICA payroll tax. Under the current system, if they elect not to have insurance for whatever reason, they still pay this tax, but get no benefit. If the new system requires them to have insurance, they will still pay the tax, but the government or a private insurer will be giving them benefits. So, more people will have benefits, and the same money will be coming in. How does this lower the overall cost of health care when they are getting benefits they didn't get before? Even though these people are healthier, the cost of their health care benefits is not $0.

#2 -- In one part of the FAQ they say "With health insurance reform, we will also put treatment decisions back into the hands of doctors in consultation with their patients." In another part, they say "Health insurance reform must also encourage the kinds of reforms we know will save money in the long run: preventive care; computerized record-keeping; and comparative effectiveness studies to expose wasteful procedures and hospitalizations and give doctors the tools to make the right treatments for you." (emphasis mine)

The stated purpose of the comparative effectiveness studies is to determine which treatments are better and/or cheaper than comparable available treatments, then to tell doctors which ones to use. This is not putting treatment decisions in the hands of doctors - it is second-guessing the judgement of individual doctors dealing with individual patients, using a system that studies what works generally.

#3 -- In that same section, they mention preventive care as a cost-saving measure. I'm in favor of preventive medicine where it makes sense, but let's not pretend it's free. The CBO recently said that "although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall." In other words, an ounce of prevention is not always worth a pound of cure. You can read the CBO release, or other studies, but the main argument is that, in order to prevent one illness, you have to test many, many people that will not have the illness. Some counter this saying that testing will be "targeted", but how do you know who to target, prior to testing them? In addition, the mere act of testing often has negative side effects.

#4 -- The FAQ also says that "our incentives are perverse: Doctors are paid by the procedure, rather than for quality. We want reform that rewards quality of care not quantity of procedures. Having dozens of procedures doesn’t necessarily make you better."

Preventive care means that doctors will need to preform more tests in an attempt to identify future diseases. This will require that the doctors are "paid by the procedure, rather than for quality" because most of these preventive tests and screens will result in no improvement in care, and sometimes will result in harmful side effects. Talk about perverse incentives.

Also, Obama has ruled out malpractice reform, although the current malpractice status quo contains several "perverse" incentives. Our medical malpractice system encourages many of these "extra" procedures for the purpose of avoiding lawsuits. Charles Krauthammer of the Washington Post puts it this way: "An authoritative Massachusetts Medical Society study found that five out of six doctors admitted they order tests, procedures and referrals -- amounting to about 25 percent of the total -- solely as protection from lawsuits. Defensive medicine, estimates the libertarian/conservative Pacific Research Institute, wastes more than $200 billion a year."

The FAQ acknowledges that "right now roughly 100,000 Americans die every year from medical errors, which, in many cases, were the result of treatments that were wrong for them." Without malpractice reform the number of unneccesary procedures might go up, not down, as doctors continue to practice defensive medicine, in addition to newly-required preventive measures.

The astronomical costs of malpractice insurance is also forcing many doctors out of practice altogether leading to doctor shortages in some fields, including obstetrics. See my other post on "Malpractice Nonsense" here.

#6 -- "We are also committed to creating a pathway for the approval of generic biologic drugs...It is important to make generic versions of these drugs available as soon as possible. " However, "A U.S. House committee, voting 47-11, approved an amendment that would give brand-name makers of biologic drugs 12 years of exclusivity, dealing a setback to efforts by President Barack Obama and consumer groups to open the market to generic drug makers sooner," according to a WSJ article.

Is this just because the pharmaceutical companies are greedy and evil? No - why would they invest billions of dollars in developing a drug if the government will not allow them to recover that cost? "Amgen said in a recent statement that "without a fair and sustainable cycle of investment and returns in innovative R&D, biotech discovery will be stifled." Either someone will pay for ongoing innovation, or innovation will decrease. No matter how clever the legislation might be, Congress can't write the massive cost of developing a new drug out of existence.

#7 -- "The savings being proposed from Medicare won’t harm patient care. In fact it will improve it." The FAQ follows this with a non sequitor - nearly the entire section has to do with fraud, waste and financial issues, rather than ways patient care will be improved. Reducing fraud may reduce the cost of care, but it doesn't make the care better. The points in this section that are related to increasing quality of care - biologic drug availability and preventive care - are dubious (see my points #3 and #6).

#8 -- "Health Insurance Reform will prevent insurance companies from denying coverage because you have a pre-existing condition; prevent them for canceling coverage because you get sick; ban annual and lifetime limits on coverage..."

While I can't disagree that this is a good idea, and that, ideally, reform should include some of these items, everyone must recognize that the reason these practices exist is to cut cost - which is a major goal of health care reform. How can eliminating these same practices also cut cost?

#9 -- "Resources that are devoted to health care cannot be used to provide the other goods and services that Americans want, including education, investment, and infrastructure."
Following this logic, perhaps our government should have reformed health care before pushing through the massive $787 billion stimulus package, which includes many "education, investment, and infrastructure" projects, in addition to many pieces of health reform that were piled in?

#10 -- "The majority of the initiatives that would pay for reform will come from cutting waste, fraud, and abuse within existing government health programs."

Advocates of a broader public health plan have argued that Medicare's adminstrative costs are far lower than those of private insurers. If this is true, then there would not be much "waste, fraud and abuse" to cut out.

On the other hand, those against a private plan argue this is fuzzy math, or that these costs are lower because Medicare doesn't do enough to combat fraud and abuse. Estimates of fraud and abuse costs vary, but a 2005 study by the GAO indicated that the government doesn't even allocate enough people and resources to detecting fraud and abuse to come up with a reasonable estimate. However, "even a rate as low as 3 percent would mean a loss of almost $4.6 billion in federal funds in fiscal year 2003...roughly the amount that the federal government spent in fiscal year 2003 on the State Children’s Health Insurance Program."

So, if the government really wants to combat this, it will not be free, and it will require increased coordination with states. It will take several years for the "savings" to materialize.

Also, this type of reform is very difficult politically. For example, in some states, once a person qualifies for Medicaid under "means testing", they can continue on the program until they notify the state that they no longer want it. So, people can, and do, stay on Medicaid indefinitely. One way to "reform" this would be to make everyone undergo "means testing" again and re-enroll. Now pretend you are a politician trying to sell that idea in a town-hall meeting.

#11 -- "Adding more people to a broken system will only cost us more in the long run." Agreed - so fix the system, then work on expanding coverage to the uninsured. Don't try to cram it all through in one massive bill that nobody understands and that is full of hope and promise.

Obama's decision to do it all at once reveals his cynicism that the U.S. Congress can only get such difficult legislation done by not letting "a crisis go to waste". But, I thought Obama's brand of politics was supposed to be above petty things like cynicism?

U.S. Gov't to spend another 1/2 billion telling you how efficient they are!

A week ago, our frugal government discovered two-sided copying and other wonders, saving taxpayers $102 million after President Obama ordered his cabinet secretaries to look for ways to save money. In addition to two-sided copying, these savings included more efficient use of military planes: "By increasing the number of soldiers traveling on each airplane chartered for rest-and-relaxation leave, the Army will save $18 million in the next few months." The White House said these savings were "just the beginning".

Two weeks ago, the Wall Street Journal ran a story about how government agencies were moving their meetings from places like "Reno, Orlando and Las Vegas" to places like "St. Louis, Milwaukee or Denver." Even though Vegas and other places "have tens of thousands of hotel rooms and millions of square feet of conference space, [and] often offer the best deals on meetings and conferences." All to avoid the "appearance of being lavish," even though meetings in less-lavish places sometimes cost more. Local economies like Vegas are built around travel and are suffering in this recession. As of this May, home values in Vegas were down 45.3% from last year! To avoid "being lavish", the government is essentially taking money away from these locations and moving it to Detroit through bailouts and Cash for Clunkers.

This morning, "Congress Gets an Upgrade" is the top story on page 1 of the WSJ. "Congress plans to spend $550 million to buy eight jets, a substantial upgrade to the fleet used by federal officials at a time when lawmakers have criticized the use of corporate jets by companies receiving taxpayer funds." $550 million is five times the (projected) savings the government announced recently, and half as much as the $1.1 billion put aside in the stimulus "for the federal government to compare the effectiveness of different treatments for the same illness" Are these planes half as important as figuring out whether the blue pill or the red pill is more effective?

These plans include the purchase of two Boeing 737s that were being leased, plus the purchase of two more. I am not an expert, but these planes sound fairly "lavish" to me:

The 737s, known as C-40s by the military, are designed to be an "office in the sky" for government leaders, according to Air Force documents describing the plane. The plane is configured with all first-class leather seats, worktables, two large galleys for cooking and a "distinguished visitor compartment with sleep accommodations."

And what is Congress going to use these planes for? Many of them will fly around the country convincing taxpayers to fund a massive expansion of our government. The rest will fly around the country to argue against it.

I suppose if the expansion side wins the argument, $550 million will be just another drop in the bucket. And that's "just the beginning".

Obama's foreign policy should be more like Bush's

The man who brought you the "Bushism of the Day", Jacob Weisberg of Slate, argues that many of Obama's failings are the result of trying too hard not to be like past Presidents.

A few paragraphs in, Weisberg argues that Obama's foreign policy failures are the result of trying to be the anti-Bush:

You can see a similar pendulum effect in foreign policy, where the object lesson is not Bill Clinton but George W. Bush. Obama, who did not have much global expertise before coming to office, molded his approach around his predecessor's errors. Bush's naive idealism and unilateralism encouraged Obama's realism and multilateralism. Bush's boycott of North Korea, Cuba, and Iran fed Obama's eagerness to engage pragmatically with those tyrannies. Bush's neglect of the Mideast peace process fed Obama's urge to plunge into it. The new president has reversed the old one's prioritization of Iraq over Afghanistan and, in what has become the political cliche of 2009, tried "hitting the reset button" on relations with Russia.

In so doing, Obama now faces an inverted set of hazards: getting overcommitted in Afghanistan, putting too much faith in the United Nations, accommodating dictators instead of standing up to them. Most alarmingly, given all that his predecessor did to discredit them, Obama has failed to stand up for the broader ideas of democracy promotion and humanitarian intervention. Surely if not for Bush, Obama's instinct after the Iranian election would have been to identify with those risking their lives to free their country, not to get back to his attempt at dialogue with Ahmadinejad"

So, let's get this straight -- Obama is facing "hazards" by being the anti-Bush, but he can't pursue Bush's policies because Bush discredited them? Certainly sounds like he is saying Obama's policies have been different than Bush's, but not any better, but that it's somehow all Bush's fault? Also sounds like he is saying Obama should learn from Bush's policy, but written in a way poorly contrived to give Obama the benefit of the doubt and maintain the storyline of Bush as an idiot.

(Thanks to the WSJ.com opinion page)