Problems with Obama's Criticisms of Insurance Rates

The New York Times reports that the President "will propose on Monday giving the federal government new power to block excessive rate increases by health insurance companies." The policy is intended "to frame his debate with Republicans over health policy at a televised meeting on Thursday" by "seizing on outrage over recent premium increases of up to 39 percent announced by Anthem Blue Cross of California."

I have at least 4 problems with all of this: one about the uncritical media coverage, one about the political games being played, one about unintended consequences, and the last about the role of government.

1) news story after news story is reporting Anthem's rate hikes as "up to 39 percent". I have yet to find one news story that digs into this number. Out of the 700,000 affected customers, how many will see 39% increases? One? All of them? What's the average increase? Is anyone seeing a rate decrease? With all the coverage this is getting, you think someone would look into this instead of just repeating the number, which has the effect of supporting Obama.  This statistic is becoming the new "47 million Americans are uninsured."

2) The article says "the legislation unveiled on Monday will actually be the first comprehensive proposal put forward by the White House." The President keeps criticizing the Republicans for not having good ideas, but he comes out with new proposals, immediately before a televised meeting with them? I hope voters see that "seizing on outrage" = "pandering"; it does not equal good policy based on a long-term strategy. Senate Republican leader, Mitch McConnell said “If they are going to lay out the plan they want to pass four days in advance, what are we discussing on Thursday?”

3) The House and Senate health insurance proposals will require insurers to cover more high-risk patients, and will regulate how much more insurers can charge high-risk patients, compared with low-risk ones. To comply, insurers will have to raise rates overall, and particularly to low-risk patients because the new regulations are an explicit subsidy from the healthy to the sick. Part of these rate hikes are certainly due to the bad economy, but how much is a result of the oncoming Obamacare train? Is Obama criticizing something here that is actually the direct result of what he is proposing?  This WSJ editorial thinks so.

4) Who decides what is an "excessive rate increase"? If customers are not getting value for their money, they should be able to choose a different insurance plan. The government should take steps to increase competition so that consumers can make these choices, instead of waiting for a government panel to decide what is appropriate.

Obama Aide says Government Not Good at Finding New Ways to Treat Social Problems

In a recent speech, Sonal Shah, head of the White House's Office of Social Innovation and Civic Participation, said "It's hard to take risks when you have 535 board members," and "that resistance to cultural changes and legal constraints made it hard for government to be agile and try new approaches to finding and financing the most effective and innovative nonprofit groups."  So, she "urged foundations to take greater risks...to figure out what ideas were worth government investing in," according to a column at Philanthropy.com.

In review, Obama created a new "Office of Social Innovation."  The first lesson that the head of this new office learns is that government is a terrible way to achieve social innovation - they are not good at identifying good ideas, and not good at generating new ideas.

Instead of creating a new office that apparently has no function but to provide a few more government jobs, why didn't Obama just give some speeches about Americans donating more to their favorite charities, or volunteering?  Does the government really need to be more involved in channeling tax money into charities of their choice?

An Attack Ad Tailored for the True Tea Partier

Douthat on Keeping "Culture Wars" Local

Columnist Ross Douthat chimes in on abstinence-only versus contraceptive-oriented sex education in today's New York Times. He argues "we should understand it more as a battle over community values than as an argument about public policy," and "What is taught in the classroom is vastly less important than the matrix of family, culture and economics: the values parents impart and the example that they set, the friends teenagers make and the activities they join, and the cross-cutting effects of wealth, health and self-esteem." "The abstinence-based courses that social conservatives champion produce unimpressive results — but so do the contraceptive-oriented programs that liberals tend to favor."

I hate to wonder how much effort and money is being put into debating these things at the Federal level, for little effect.

Ayn Rand's Ellsworth Toohey, Media, and Politics

I am finally reading Ayn Rand's Fountainhead, over a decade since a friend strongly recommended Rand to me. She has been getting some attention post-bank bailout and as government seems to keep growing, so I wanted to see what people are talking about. I'm about 3/4 through the book's 694 pages. I'm finding a lot to strongly agree with, and some to strongly disagree with.

The book is about Howard Roark, a genius architect who says "Every building is like a person. Single and unrepeatable", and the forces that try to drag him down. A chief adversary is Ellsworth Toohey, a widely-followed and respected newspaper columnist. There is a saying that "The job of the newspaper is to comfort the afflicted and afflict the comfortable." As a "humanitarian", in his sense of the word, Toohey's mission in life is to use his prominence to promote untalented architects and writers, while tearing down the truly talented ones, so they don't achieve total dominence of their professions.

In Toohey's eyes, the power of a critic is best expressed when they take a play that is total crap on the merits and make it a commercial success; the impact of social norms and the desire for acceptance is a big theme in the book. This reminded me of my recent comments about the State of the Union address, and how political pundits (and, sadly journalists) beg their readers to judge the President not strictly on the merits, but on merits, plus a lens of their political parties' priorities and biases.

Years ago when I was studying journalism, I learned that in some cases, journalism students were being explicitly taught methods for positioning the facts to achieve an effect. It doesn't require outright lying. Make more effort to get a quote from one side, while leaving a voice mail for someone on the opposing side ("Calls to the office of Person X were not returned"). Write 10 paragraphs in support up top, with 1 or 2 paragraphs in opposition at the end (Editors know most people don't read the whole article). Put some stories on page 1, and others on page 26.

I learned to consider newspapers and TV news as secondary sources of information, not primary. Thus, I make an effort to watch the State of the Union live, before the press gets a hold of it and applies their lens (I have enough biases of my own). It's a meager attempt to prevent the press from making me see total crap as genius, or vice versa.

The average journalist today is more like Ellsworth Toohey than the average journalist of 5 or 10 years ago, and entire news networks are perceived as having been Tooheyed toward an agenda. Voters assume Fox has a conservative bias, and that MSNBC has a liberal bias, regardless of the actual content on the channel at the moment. They comfort their party and afflict the opposite party. People seek out shows that confirm their own biases and avoid ones that challenge them - which moves them further from the center. This is a large part of why Washington is so dysfunctional.

Many are hoping a new political party will rise and start to take seats in Congress (an example here). I think it would only be a matter of time before the new party becomes like the old. Instead, I hope the growing population of independents remain independent, ignore the Tooheys of the world, and impose discipline on both parties based on their merits. The message of the Scott Brown victory in Massachusetts is "there are a lot of independents in this country, and if you spend too much of their money on things you are not good at doing, we will vote against you." If a large part of the electorate is voting on ideas and not party loyalty, it will force the Federal government to focus only on what they are good at, which isn't very much. Then, please reduce my Federal tax burden and let the States compete for my labor and tax dollars!

Hedge Fund Manager Asness Responds to Obama's War on Banks

Hedge fund manager Cliff Asness is "Appalled in Greenwich Connecticut" (the title of his post outlining the problems he sees with Obama singling out "banks" for punishment). His main point is that many, many parties were responsible for the economic crisis, and the solution is less government interaction, not more. "Punish failure. Don’t institutionalize too-big-to-fail by accepting it and then try to regulate away large failures with telephone books of rules and coercive government interference."

Here's his recap, but the entire post is well worth reading:

The bankers are far from without sin, and there are things in the system that need fixing. But the bankers have largely paid back what they borrowed and should not be penalized versus those who cannot repay, simply because the bankers performed well post bailout (wasn’t that the hope and intention?). Bankers didn’t cause this crisis any more than individuals did, and probably less than government. But those last two are inconvenient villains.

Asness, a libertarian, occasionally posts such enlightening and amusing rants at his website http://www.stumblingontruth.com/

Insurance Doesn't Always Have to be a Government Program

The story of Vic Chesnutt, a singer-songwriter who died in December, has been circulating on the internet. He had been in a coma for some time, the cause of which is uncertain, but is rumored to be the result of a suicide attempt. He struggled with depression much of his life, partly due to a car accident that made him a paraplegic at a young age.

Chesnutt was also facing $70,000 in medical bills, and some groups have picked him up as a poster child for Americans who die because of a lack of health insurance.

"Insurance" is simply a mechanism for sharing costs and risks across a group of people - it doesn't require a complicated corporation or government program. Chesnutt was a minor celebrity - was he really unable (or unwilling) to raise $70,000 from other, willing Americans? Americans are proving themselves to be generous - look at all the millions flowing into Haiti every day.

In his acceptance speech in Grant Park last year, President Obama said "we know that government cant solve every problem" and "let us summon a new spirit of patriotism; of service and responsibility where each of us resolves to pitch in and work harder and look after not only ourselves, but each other."

Wouldn't it be wonderful if Obama used his State of the Union address to tell Americans not to wait for government to solve their problems...to tell Americans that sometimes people don't die from lack of health insurance - they sometimes die from lack of a community where people reach out and help each other - directly, with no government program telling them they must.

I'm sure Obama can find other words, but "my fellow Americans: ask not what your country can do for you - ask what you can do for your country" would be a good sentiment right now.

Common Sense from Senator Coburn

Senator Tom Coburn, M.D. has an editorial in the Washington Examiner today stating the Massachusetts election was "not a referendum on President Obama, health care, or any single issue per se, but on the size and scope of government." The Senate is going to vote soon to raise the limit on U.S. debt by $1.9 Trillion. He is offering an amendment to the bill "to give my colleagues a chance to change their behavior by forcing the Senate to choose between raising the debt limit and cutting spending. The logic of the choice is simple: Millions of families in America have to make hard choices. So should Congress." What a contrast to others who say Americans are hurting in this recession, so the government should pull out all the stops, spend more, and worry about it later.

Coburn wants to eliminate duplicate government programs: The government has "105 federal programs to encourage students to enter the fields of math and science. Thirteen different federal agencies spend more $3 billion each year to fund these programs...why not have one outstanding program instead of 105 overlapping and mediocre programs?"

Some Senators are proposing a commission to investigate how to reduce the federal debt, but Coburn says "we already have a commission to set budget priorities. It’s called the United States Congress. If Congress lacks the political will to set priorities, we don’t need a new commission, we need a new Congress." (emphasis mine) In Coburn's eyes, creating a commission is just another way to duck responsibility.

I wish Coburn luck with his amendment, but I suspect Congress wants to keep all the duplicate programs. There is more to take credit for that way.

Martha Coakley, Single-Party Rule, and Scary Secularism

Martha Coakley, who is running for a Senate seat in Massachusetts as I write, said in a radio interview that "You can have religious freedom but you shouldn't work in an emergency room." That is, that Catholics should be prevented from working there, because this is a "church and state" issue. Well, most hospital jobs are not government jobs, and forbidding Catholics from working there would be a violation of the liberties of Catholics. Imagine if a right-winger said atheists should be banned from becoming EMTs.

There is already a shortage of health care workers, and Coakley wants to exclude Catholics, which make up 53% of Massachusetts according to exit polls from 2008? Catholic organizations provide a huge portion of the health care in the US. If Coakley loses this election, voters are sending a message that they are tired of single-party rule where politicians can spout partisan ideologies and claim they are right because "they won". I think voters want a reasonable, working government and are tired of the culture wars from both sides.

However, what really scares me is thinking about how Coakley's views could be implemented by government. Suppose the US had universal, government-run health care and Catholics were banned by law from working in emergancy rooms. How would this be enforced? If a hospital hired a Catholic, would they be fined? If they fought the fine, would someone be convicted and thrown in prison?

Here's hoping that voters have learned to ignore Obama's promises of bipartisanship and decide to take their grievances to the ballot box.

Update on the Homebuyer Tax Credit

Because of the rampant scamming of the system, Congress changed the rules when they extended and expanded the homebuyer tax credit. Now, according to this CNNMoney article, "buyers must now file documentation with their taxes -- including proof of residency, a signed mortgage statement and drivers license -- which the e-file system is not equipped to handle."

However, now taxpayers claiming the credit cannot e-file, and they can expect delays of a few months before receiving the credit. Seems like a reasonable request for the government to actually require documentation, and a reasonable burden for a taxpayer to bear in order to get $8,000.

Most Under-reported Story of the Recession?

CNBC reports "Many Firms Reluctant to Hire Because of New Taxes, Rules".

According to this article:

The prospect of increased federal and state regulation and taxes has been particularly disruptive to the hiring plans of small- and medium-sized businesses, which have historically generated about two-thirds of the nation’s jobs...

In a recent interview with CNBC.com, the [American Chamber of Commerce]’s chief economist, Martin Regalia, described a paralyzing uncertainty over policy issues, saying that many members “had adopted an attitude of survival” and "few talked about net new hiring.”

Businesses don't like to hire in an uncertain environment, and while Congress has spent much of 2009 and early 2010 debating health care "reform", employers have little guidance on taxes, energy policy, financial sector reform, and other areas Obama promises to address. Meanwhile, the administration claims they're doing everything they can to create jobs.

If only the government would take advice from the medical profession: "first, do no harm." Instead, they seem to be complicit in keeping this crisis alive longer than necessary to make sure they don't "waste" it.

How much do votes cost?

This recent Washington Post column by Dana Milbank summarizes the "many backroom deals that were made to buy, er, secure the 60 votes needed to "invoke cloture" -- the legislative term for cutting off debate and holding a final vote." The bill itself has acquired the nickname "Cash for Cloture", while several of the provisions in the bill have their own nicknames:

Louisiana Purchase
Cornhusker Kickback
U Con
Bayh Off
Gator Aid
Handout Montana

So, how does one calculate the cost of buying these votes to the taxpayer? Is it merely the sum of these provisions, or is it the cost of the entire bill, which likely would not pass without them?

Interesting Statistic on Party Affiliation

According to this Rasmussen article, "while Republican voters overwhelmingly consider themselves conservative, only 56% of conservative voters consider themselves to be Republicans. In other words, nearly half of all conservatives nationwide reject the Republican Party label."

NPR on Homebuyer Tax Credit Fraud

According to this NPR story, "Thousands of people have gotten first-time homebuyer tax credits they don't deserve ... Some of these suspicious claims come from people who are writing off interest payments on another house." The IRS "highlighted nearly $500 million in homebuyer tax credits claimed by people who don't appear to qualify."

The Wall Street Journal reports:

Among those claiming bogus credits, at least some of them were definitely first-timers. The credit has already been claimed by 500 people under the age of 18, including a four-year-old. This pre-K housing whiz likely bought because mom and dad make too much to qualify for the full credit, which starts to phase out at $150,000 of income for couples, $75,000 for singles.

The NPR article points out that "the IRS doesn't require people applying for the credit to prove they've purchased a house." Frank Keith, a spokesman for the IRS, says "the IRS doesn't have the authority to reject a claim for the tax credit without doing a full audit first." So, "the IRS is reportedly trying to audit almost everyone who claims it this year."

Someday, the government should consider opening offices where you can show up, choose from a menu of government handouts, present ID, and walk out with your check. At least that would be efficient. Oh wait, I forgot about my last trip to the DMV.