Why a Market Based Health Care System Will Not Work

If RedStateVT reads this he might have a different angle, but today's musing comes from the NYT Business pages where I found a really good summary of why Health Care Policy is complicated and why a public option is necessary for a well functioning individual market for health insurance.

I am backing off a Universal Single Payer Plan for the moment, not because I don't believe that to be a worthy objective, but because I think we need an intermediate step from HeritageFoundation/Romney/ObamaCare, which is for better or worse our starting point.  You have to recognize that most Americans are insured through their employers with insurance policies issued by shareholder owned companies.  These companies employ a lot of people.

But what is the key complaint about ObamaCare?  It is the high deductibles and high policy premiums.  One path to controlling that would be to get the high cost patients into a public option, but would that cause Medicare costs and premiums to rise significantly?  That would be a major problem for many elderly.

So the short answer is I don't know for sure but what I do know is the Ronald Reagan era government with a GOP majority in Congress passed a law mandating that hospitals care for anyone who shows up at their doors.  This is also what the Hippocratic Oath calls for and so we have a 2000+ year old societal agreement that Dr's care for anyone who needs help.  Now the only real question/issue is how do we as a society pay for it.

The GOP likes to believe that market based systems will control this expense, so at it's core, there is a segment of the GOP that acknowledges that Health Care is right and we do not want people dying in the streets because of a lack of access to health care.

The article today lays out why Externalities, a lack of knowledge by consumers, the necessity for health insurance to protect against catastrophic loss, the fact that the presence of insurance leads to overconsumption of medical care, and the risk of adverse selection in a pure market based system make reform a very complicated proposition and one that needs a lot of thought.  Something in short supply in Congress and the White House these days.

Link to "Why Health Care Policy Is So Hard"

This is really worth reading.  I hope Congresspeople do because they have to come up with something better.

Wow, Thursday 7/27 has my Head Shaking

There is much to write about, and I hope I can be succinct.

1st, the skinny repeal plan will probably be my health insurance nightmare for 7 months if it passes.  Why, because if you remove the requirement that everybody get health insurance, you have what NY had before Obamacare.  Insurance companies must cover anybody who applies for health insurance.  And if people wait until they are sick to sign up for health insurance, insurance companies get screwed.  So they raise premiums to cover that risk.  I was paying $1500 a month for health insurance in 2012 for 1 person.  Now I pay roughly $700 a month on an equivalent basis including deductibles. So if the Senate passes the Skinny Repeal, they will be raising the costs for everybody in the individual market by probably at least 100%.  But we cannot be sure because all the GOP Senate Leadership wants is to pass something so they can negotiate with the House, and who knows what will happen in that process.  The House bill maintained an incentive for the uninsured to not be uninsured.  I am stunned by the lack of normal process in both the House and the Senate as they attempt to repeal and replace Obamacare and effects 18% of the economy.

2nd Ross Douthat is responsible for the Wow.  He lays out a comprehensive logic for the impeachment of President Trump, all revolving around his "management" of Attorney General Sessions.  "If it were any other President suddenly behaving this erratically and irrationally, we'd be talking about mental incapacity, speculating about strokes, considering 25th Amendment remedies"  You have to read the column.

Link to Douthat column

I'll stop there.

This weeks's most outrageous Trump act:  Politicizing the Boy Scouts as purveyor of Trump Values.

P.S. 7/28  Charles Krauthammer also wants to impeach Trump (almost, he'd go there if the House started a process)

Link to Krauthammer column

Why Russia Matters - Follow the Money

I always enjoy finding I have written something before a pundit columnist writes about it.  It is not that I think they read this blog, it is just enough encouragement that I do have some original value when I write.  So thank you Ruth Marcus for discussing the concept of outrage overload.

The New Republic came earlier this week and one article was a very long cataloging of how Trump's Manhattan properties have been used by Russian mobsters to launder money, conduct other nefarious activities and in general help to enrich Donald Trump.  Trump was on the proverbial financial ropes in the early 1990's when individual wealthy Russians started buying his condominiums.  These sales helped make his condominium business succeed and that success, along with the Russian mob's continued buying of these condominiums, morphed into Trump licensing his name so that the Real Estate business provided an annuity income to him.  It doesn't take too much extrapolation to see the possibility that the Russian mob through their condominium ownership in the U.S. is responsible for much of Donald Trump's income.

So without the benefit of Trump's Tax Returns which might reveal a path to unraveling this relationship, we are left only with the possibility that the Special Prosecutor will unravel this mess with the powers that they have.  I saw something that suggested they can get the IRS to give them the tax returns.  And of course, Trump always signals the path to follow because he is compelled to be a bully.  This week he tweeted, and his lawyers went on TV stating, telling Bob Mueller, that Trump's finances are out-of-bounds, and not part of Mueller's charge of what to investigate.  Go Bob Go.  At least key members of the GOP spoke publicly saying Trump is wrong about the mandate of the Special Prosecutor and Bob Mueller can go wherever he wants to with his investigation.

As I have stated from the get-go, I believe Donald Trump is using the office of the Presidency to enrich himself in a manner that is certainly unethical and almost certainly in violation of the Emoluments Clause, so I believe all this will be the path to impeaching this poor example of humanity.  I just don't know what it will take to get the House GOP to allow this to come to a vote and get 30 to 40 members of the House GOP to agree with the Democrats that Impeachment is warranted.  Perhaps a Trump firing of Bob Mueller will get them moving.

So why do the Russians like Donald Trump?  At this point, I believe it is one of two possibilities.

1.  Trump is in financial cahoots explicitly with certain Russian individuals through the Condominium Business and the Russians think they can influence him in important ways.  As an example, we have cut off supplying arms to Syrian Rebels who have been fighting both Assad and Al Qaeda and ISIS.  These are obviously the good rebels and you wonder why Trump would agree to stop supplying them with arms.  The only possible answer is Russia wanted this.

2.  Trump is a naive simpleton who thinks anybody who is rich and buys his properties is an OK person.  He cannot contemplate that money laundering is bad, the sources of such money bad, or that free wheeling criminal activity based within property he developed is bad.  He loves being rich so badly that he is blind to how anybody else got rich and sees no evil in their wealth.   In this case, the Russians are well aware of his simpleness and know how to manipulate him.  The result is the same as the 1st path, it is just that this alone is probably not a criminal activity by Trump or his company, it simply shows unethical the collective enterprise is.

Either path can explain why Trump's people took so many meetings with the Russians during the campaign.  What I cannot explain is why Jeff Sessions had so many meetings with the Russians.  I thought he was a believer in Ronald Reagan's view of Russia that you have to Trust, but Verify everything with them.

And now to the overload this week.  Politically D.C. is in a chaotic place because Trump is a terrible manager.  He has no concept of political process.  The examples this week are too numerous for me to go into.  So I will provide a link to a column that goes through the White House portion of this chaos.  For the Congressional chaos you will have to read past issues of newspapers, if you didn't already.

Link to Column about chaos in Trump Administration


Meanwhile, what is wrong with Poland?  Why are they ending the Independent Judiciary?  Is Poland going to return to a Dictatorship?  I have enough trouble keeping up with things in the U.S.  Poland was my favorite investment when I was an Emerging Market Portfolio Manager and at one time, I was so comfortable with their direction, that my portfolio was the single largest holder of their US $ bonds.

Sunday Musing July 9 2017

Whoa, there was a lot to think about in today's NYT op-ed section.  I will have to email RedStateVT one of them because I don't think he reads this blog anymore and I know he is not blogging anymore. It is a piece on what has become of conservatism written by a Conservative.  I found it fascinating for its insight into what is necessary to win elections and have sufficient support to enact policies.  Trump won the election but didn't campaign on the GOP policies that they want to enact and now they cannot implement them because democracy does work, albeit in a very messy manner.  In this author's mind one problem the GOP has is that they won the tax issue in the 1980's and cutting services further undercuts this issue for the GOP today.  So he thinks Conservatives need to find a positive message to unify around.

I don't take a great deal of comfort in that so I will go to my Indivisible Meeting today.

Link to "Can Conservatives Find Their Way"

I would like to point out that Democrat's need to find that positive message as well.  Donald Trump won the election because he gave a sufficient number of voters in a sufficient number of states hope.

This is exacerbated by the rise of Consumerism which has a distasteful side effect of something I know RedStateVT and I agree on.  The rise of the Kardashian culture.  A fashion columnist  highlights the similarity between consumerism and politics today.  Trump mastered that.

Link to Politics as a Consumer Decision

And finally a writer discusses the interaction of class and racial identity when it comes to personal decisions and certain realities that are confused in the political discussion as well as in the lowest personal level of navigating society.

Link to "Who Do We Think of as Poor"

This author has some fascinating facts that the GOP needs to ponder as they develop policies for their rural voters

"It’s tempting to say I thought anyone who worked couldn’t be poor. That’s naïve. Real wages for the two-thirds of Americans without a four-year degree have dropped since 1979, according to the Economic Policy Institute. Meanwhile the cost of a degree has roughly doubled over the past three decades. Today, half of American jobs pay about $37,000 or less each year, a quarter pay about $23,000 or less, and a family of four qualifies for SNAP at $32,000 or less. No wonder just over half of all SNAP families work, according to the United States Department of Agriculture. In America, “real” poverty is not about a lack of work, but a lack of compensation."

"It’s also tempting to say I balked at food stamps because of the culture in which I was raised: rural, white and working class, in a state that went to Donald Trump. Most poor families I knew as a kid avoided food stamps; they believed in bootstraps, not getting help. But to say this was only about independence is to claim an innocence I didn’t entirely possess."

"The truth is there was a shameful idea woven into my conceit of self-reliance, something so ingrained in American culture I’d never thought to say it out loud: I didn’t really think I was supposed to get food stamps because I was white."

"Having an implicit belief that poverty didn’t really happen to white people did me more harm than good, and nearly prevented me from seeking help I needed. It also ignored reality. While it’s true that blacks and latinos disproportionately live in poverty, if you analyze who gets food stamps, they are most likely to be white."

The author goes on to highlight "that urban poverty is dominated by people of color while rural poverty is dominated by white people."  But most people in the media who cover poverty are urban and college educated.  This skews their coverage in certain ways that focus the poverty issue as a problem of color and while I know the Democrats don't see it that way, it has an effect on voters.

"Covering poverty as if it is predominantly a black issue is a problem. It’s a problem because it can suggest that black suffering is a natural fact rather than a manufactured problem we should correct. It’s a problem because it fosters resentment against communities of color from economically struggling whites, who have some reason to feel their hardship is played down. And this all creates a political problem: the obliteration of the common ground that being poor can help illuminate across racial lines."

Politics is a bloody complicated process as every voter has a different mix of issues that will drive their voting decision.  It is the politician's and political parties task to discern which mix of issues will gain them sufficient support to govern and implement policies.  I believe this is something that both the Democrats and Republicans have lost sight of and that is why we have a President Trump.  The Electoral College matters and Congress matters.  

As much as I hate to say it because the Electoral College gave us both Bush II and Trump, the founder father's of this country really believed in the power of collective majorities made up of individuals and that is what they empowered in the Electoral College and Congress.

Lots to think about in today's paper.

P.S.  Somewhere in the last few days I read an article on Legislative District Reform.  It basically promoted the idea that a certain number of Legislators be elected on a wider basis than the gerrymandered districts that promote partisanship.  In many states that would force certain politicians to focus on the middle of the political spectrum more than they do now.  The article has a path to create this process, but I don't recall it.  Since what I am really feeling sorry about in all these articles today is the decline in the class of professional politicians who focus on the middle, I think this idea might have merit.

Who Knew, US Gun Laws Fuel Illegal Immigration

I just finished reading a book about the flood of undocumented children that presented themselves to Border Police in the summer of 2014.  These children would still be coming except the U.S.A. under Presidents of both parties have convinced Mexico to prevent them from transversing Mexico to arrive at the U.S. border.

There is much to be heartfelt about the story of these teenagers who really just want a safe place to live, grow up and be useful citizens to the country in which they reside.  But the really awful thing is how U.S. policies promoted by Conservatives have a direct link to creating the environment that forces these children to have to make a life or death decisions and both paths are high risk.

For the most part, illicit drugs are illegal in the U.S.  Many of these drugs are produced in South America.  While the Mexican cartels have been leading traffickers of these drugs, this activity has now been muscled into by gangs further south in Guatemala, Honduras and El Salvador.  So it is U.S. demand for illegal drugs that fuels criminal activity in these countries.

These gangs are violent and they have ready access to weapons sold in the U.S.  The U.S. has no effective controls on gun purchases thanks to the N.R.A. convincing any number of states to allow unlimited purchases of these weapons by a single individual.  And the N.R.A. also has killed any effective control of automatic weapons.  If these gangs can smuggle drugs into the U.S., they can smuggle guns the other way.  And boy do they ever.  They are violent and unafraid of any police in their country because they have more money and guns than the police do.

Because there are rival gangs, the gangs suffer losses and need new recruits.  They try to force children to join them and if the children don't agree to, they are intimidated and frequently killed for daring to say No.  So the children have a stark choice: (i) stay and be killed or (ii) flee to the U.S.,  be potentially harmed or turned around along the way in Mexico, and if they make it to the U.S., face a hostile government that wants to send them home to be killed or become a gang member.

And these gangs have an impact on life in the U.S.  The gangs from those countries have outposts in the U.S.  Barrio18 &MS-13 have been shooting up certain towns in Long Island the same way they do in their native countries.  Trying to intimidate kids into joining them or killing them if they say no.

Now I will admit that is the U.S. demand for these drugs that provide the money that causes all this.  But the War on Drugs was started by Richard Nixon and is now almost 50 years old.  Might it be time to start discussing legalization and treatment for addictions?  I think so, but not with Jeff Sessions as the Attorney General.  He thinks all drug users should be thrown in jail.  Even Chris Christie thinks that is nuts.

But the U.S. has to do something about the availability of guns in bulk purchases.  There are reasonable regulations that would do nothing to harm the average American's ability to buy another weapon while protecting society from madmen and criminals.

The Potential For A Real Health Insurance Debate

This might be a bit dense for some readers.  If I had anything to say about my concerns about President Trump on the world stage, I would.  But literally what can you possibly say about this incompetent individual.  He is incapable of developing policies or of having a vision for an end goal and how to get there in a political process.  Yes, he won the election, but he didn't have a real set of policies or buy-in from his governing support to implement them.  The import tax was the only real thing that would have helped him help his supporters eventually, but Walmart has killed it before it even got to the point of being debated.

Anyway, after reading this morning's paper, I have a vision of what a real health insurance debate between the Democrats and Republicans would look like if the GOP would leave tax cuts out of the equation and simply focus on trying to build a consensus that the people could vote on through the 2018 and 2020 election.

What the Democrats are moving towards is Universal coverage through a Single Payer Plan.  It might require some increase in taxes, but most of that would be netted against what is currently being paid by employers and individuals in their group insurance plans so the net increase would potentially not be very much.  The Democrats need to do some work with the people who really know this type of  data and figure out just what this math would really look like.

One key to the Democrat's argument is the need to separate in the voter's minds what the cost of Medicaid is to cover people under 65 from the cost of Medicaid for people over 65, who for the most part are people with dementia in long term care.  I think most voters want Medicaid to pay for that long term care since most voters do not want death panels and know they cannot take care of demented granny in their home.

I paid $130,000 to cover long term care for my wife and myself.  The issuing company is so unsure that that was sufficient that they stopped issuing further policies even with that steep upfront cost.  I don't believe that 98% of Americans can afford long term care policies, so something needs to be done about insuring this catastrophic cost and yes, it needs to be means tested somehow; perhaps as it is currently through the spend down process to meet Medicaid requirements.

Now what would a real GOP plan look like.  Well, we know ObamaCare was originally designed by the Heritage Foundation to be the GOP alternative to a Single Payer Plan and keep the private insurance industry involved in controlling costs. But the private insurance industry was not successful at controlling costs before ObamaCare nor is it within ObamaCare.  Now interestingly, somehow Medicare Advantage Plans which are basically privately insurance HMO's within Medicare have seemingly been able to perhaps control costs somehow for the elderly.  But these HMO's are subsidized by Medicare directly so we don't have a clear picture of the real effectiveness in controlling costs.  But Medicare Advantage Plans are supported by the GOP as the fix for Medicare and are basically ObamaCare for the elderly.  So Paul Ryan supports ObamaCare's design for people over 65, but not for people under 65.  No wonder the GOP is having an internal fight to repeal Obamacare, their only preferred replacement is the ObamaCare construct.

What prompted this blog was an op-ed by the Features Editor at Reason Magazine.  This is a libertarian magazine.  I have never heard of it, but the Chicago Tribune named it as one of the 50 best magazines about 10 years ago.

The writer offers a set of principles that the GOP needs to use as guidance for their solution to the fact that the Heritage Foundation design for ObamaCare has certain aspects that are unworkable in the minds of the GOP.

For starters, he says no universal coverage.  Otherwise, the GOP would end up negotiating on the Democrat's terms.  That is a non-starter for him.  It also offers up a very stark political campaign between the GOP and the Democrat's if they go down this path.  I would like to see an election campaign on that issue, as a supporter of Universal Coverage.

The 2nd principle is unification, not fragmentation.  But what is unification, if not a single payer plan.  He didn't touch upon that point.  Our current system is fragmented between Medicare, Medicaid, the private employer paid market, and the private individual paid market.  The result is that people view health insurance as a means of prepaying for health care, not as insurance from catastrophic risk.  And the primary cause of this view by people is the reliance upon employer paid health insurance which is promoted by the tax deductibility for employers and zero taxable income for employees for the value of health insurance.  No politician, be they Ted Cruz or Elizabeth Warren, wants to change that tax subsidy because it is an entitlement enjoyed by a huge percent of the working age electorate.  That can be changed only as part of a huge overhaul of the entire health insurance scheme.

The 3rd principle is separate heath insurance from health care.  Insurance is a financial product to protect against catastrophic risk.  People need insurance because they do not want to worry about financial ruin from a catastrophic medical condition.  What the GOP needs to focus on is making routine health care affordable through supply side innovations as well as demand side reforms.  He is a little vague exactly what needs to be done here and whether it would be effective, but this is after all exactly where Obama/Romney/HeritageFoundation Care has failed.

His 4th and final principle is that government assistance always be focused on the poorest and the sickest.  Now it is focused on "subsidizing workers with six-figure salaries and wealthy retirees, while sidelining the poor and sick in Medicaid, a system in which many doctors will not participate in because of low reimbursement rates.

So, what would his system look like:  Expanded Health Savings Accounts, a broad comprehensive system for catastrophic health insurance, cessation of the tax subsidy for employer paid health insurance (making it income to the employees), means testing Medicare, and other things that no one has thought of yet.

It is the last point that convinces me that a Universal Single Payer Plan is the answer.  Hospitals and Doctors will not be government employees.  Leaving capitalism at work.  No doubt, the wealthy will get concierge service, but everybody else will be fine too.  After all, if people need to think of things that no one has thought of yet, when health care is a basic human need and there are literally millions of people thinking about this issue, what great insight can be found?  That is not to say someone could not think of something new, but since many countries have moved in the direction of a Single Payer Plan, a case can be made that somewhere within that construct, there is the best design to minimize the % of GDP that is spent on health care.

And I would separate long term care from that cost calculation.  That is not health care, it is resident care for people who cannot take care of themselves. I would call it specialized subsidized housing for the elderly.

Sunday July 2 Musings

Gun Violence = Terrorism = Anarchy

Why do the police exist?  Well from the very beginning of time, certain humans have decided to, or lost emotional control or perhaps both, to kill or abuse another human.  Eventually society decided to give certain individuals the authority to protect everybody else from those humans intent on wrecking havoc.  That is why we have the legend of Wyatt Erpe, Doc Holliday and any number of other famous policemen.  Anyone remember Serprico?

I make that point to wonder why we get so hysterical about Islamic Terrorism, but not other acts of random violence including police shooting unarmed or even legally armed African Americans for various car violations.  What motivated this thought was the Congressional baseball shooting was quickly labeled not a terrorist act.  The shooting at the Bronx hospital was quickly labeled not a terrorist act.  The shooting at the Little Rock night club was quickly labeled not a terrorist act.

Who did this labeling?  The police and the Media.  Who are they kidding?  These are acts of gun violence are terrorism, a form of anarchy and criminal.  They are just not committed by people of the Islamic faith.

So what I propose is the police and media either simply call Islamic Anarchy Islamic terrorism or call everything that is a criminal act terrorism or simply a criminal act.  And if there is a lot of criminal acts then what we have is anarchy.

It all the same sh*t.

Caution in Leadership

There was a book review about President Kennedy's caution in helping Dr. Martin Luther King.  This was an epiphany for me about both President Obama and President Trump.  Good leaders are cautious.  They want to make progress but only with consensus behind them so there is adequate support for what they are trying to accomplish.  That is how progress acquires support and acceptance from the masses.  As much as I supported President Obama's policies, he and the Democrats got lost in their Congressional majority in 2009/10 and abandoned caution in the face of Republican obstruction.  Now I don't have a clue what type of Health Insurance Reform the GOP would have supported in 2009/10?  or what type of environmental actions that GOP would have supported?  But we would certainly be in a better place if the GOP and a good slice of their voters supported a better health insurance structure than what we previously had and we would be in a better place with similar action on the environment.  And as for President Trump and the Congressional GOP, they don't have a clue about this concept of Leadership should be cautious.  They are pursuing a radical agenda with zero support from anyone other than the GOP core.

Now I read Trump EPA is busy undoing Obama Environmental Regulations.  But they are not doing it through Congress either so the next Democratic President can undo the Trump damage and we can go back and forth on this for any number of 4 year periods.  I'm not sure how business will react but I don't think this would be a net positive.  And this highlights my point about Leadership = Caution.

Rural Jails

Fact.  Most long term jail facilities are in rural areas.  Fact, except for 4 states, these criminals are counted in the population where the jail resides.  But felons do not have the right to vote.  So while the voting districts are designed to divide the population up evenly, these rural voters have more than one vote in the overall scheme because their vote is part of a smaller total of number of voters.  This enhances the rural voting power in Legislative Districts and leads to a GOP advantage.  I believe this is why the GOP supports filling up the jails as much as possible.  It enhances the gerrymandering.