Wednesday, January 19, 2011

SAR #11019

Hoping for the best is not a reliable economic policy.

Dreamland:  Camden, NJ is becoming what the Republicans desire - a place where government intrusion into the life of the citizenry is disappearing. In order to balance its budget, the city is laying off 25% of its workers, including 50% of the police, 30% of the firemen. Plan a visit soon!

Half Time:  The current European plan is to shift the PIIGS liabilities to China and to Europe's dwindling base of taxpayers in the hope that an economic recovery will occur sooner or later and bail them all out. What will they do when the Chinese do whatever it is they are up to and the European taxpayers turn Tunisian? This will not end well.

The Elephant:  The real health care problem is the cost of health care services for the elderly – which is almost entirely paid by the government – that is, by the taxpayers. Seniors have, in fact, a single payer system, thanks to the taxpayers. Too bad the Republicans won't let the taxpayers have a single payer system for themselves. But the Republicans are opposed to such a reform for fear that the poor will not suffer sufficiently and that it would be immoral for the taxpayer to ease that suffering.

One Step Over the Line:  The Tunisian disease has spread to Oman, where government employees are protesting low wages and soaring food prices.

Omerta:  Giving the lie to the Vatican's claims that the church had never told bishops to hide priestly pedophilia, a 1997 letter has surfaced that instructs Ireland's Catholic bishopst to do precisely that. Now the Pope will have to cover up the cover-up.

Asked and Answered:  Will the financial crisis lead to America's decline? Yes. What will the American Dark Ages be like? Not pretty. Or so says Niall Ferguson, who blames it all on economist's inability to realize that the economic system is really, really complex and constantly adapting. If it sounds familiar, it is. Check your bookshelf under Animal Spirits, Sandpiles, and Swans.

Infinity:  Last week, insiders sold $163 million in stock and bought none. Zero. Bupkis. This is the first time in memory, and perhaps the first time ever, than not one business insider thought enough of his company to buy stock in it.

The Prestige:  “The economy remains on government-assisted life support, and the government has been very successful in creating the illusion of economic prosperity. It is doing this to buy time and help preserve social stability as the adjustment towards housing deflation, consumer deleveraging, and chronic unemployment takes its toll.” Preserve social stability? Is that one of the Fed's new jobs, along with puffing up the stock market?

Growth Industry:  The CEO of Unilever says the global crisis in food production is reaching "dangerous territory" with prices soaring and demand outstripping supply. He points out that EU and US “market distortions” work against the needs of the developing world, cites bio-fuel subsidies as harmful, and feels we must adopt sustainable models of agriculture. Unilever is one of the world's largest food producers.

Speed Kills:  If we continue burning fossil fuels at our ever increasing rate, atmospheric CO2 will jump from the current 390 ppm to over 1000 by 2100. This will – over time – increase the global temperature by some 29ºF, which will make large parts of the earth uninhabitable by humans for thousands of years. The temperature rise will be much faster than many (most?) species will be able to adapt to.

Shocked:  Paul Krugman, reprising the role of Captain Renault, is shocked to discover the GOP's political programs are illogical, and that they say things just to get elected and then do whatever their masters tell them to do. Wait until he finds out about a guy named Obama and the Democrats.

7 comments:

Anonymous said...

Speed Kills:

If only they could model next month's weather I'd feel much more confident in their century long predictions.

RBM

lineside said...

CK, those of us who pay through the nose (mine is up to $26k this year) for private health insurance are subsidizing Medicare/Medicaid in two ways: first, though taxes, and second, through the higher rates that we pay for medical services (i.e., Medicare reimbursements to providers for most services are substantially lower than are private insurance reimbursements).

If you take away the indirect subsidy that privately insured patients pay into the system, then the cost is going to have to be covered some other way...or you'll have many fewer doctors out there (ask your GP how long he/she'd last if all his/her patients paid at Medicare rates). There's no free lunch out there in moving everyone to single payor.

The problem we have today is that we don't actually have medical insurance at all. What we actually have is forced prepaid medical spending. Medical insurance is what we used to have, which meant people took care of their everyday medical expenses on their own and bought ("major medical", as it was called) insurance to cover disasters. Since people had to cover most of their mundane expenses themselves, they were very cost conscious. And people saved their money as a cushion against unexpected expenses instead of blowing it on trips to Vegas like folks do today.

What we have today, forced prepayment, isn't really insurance at all. It is the equivalent of forcing people to prepay for the cost of gas and oil changes in their auto insurance payments, or for the cost of electricity and dishwasher repair in their home insurance payments.

In a health care prepayment system, under which almost everything under the sun is covered by state mandate, whether one needs it or not (e.g.,fertility treatments, mental health & alcoholism treatment...all things I would not pay for if I had the choice), once you have made your forced prepayment, both you and your doctor have a huge incentive for you to consume as much health care as possible. Why run a 1% chance of getting flagitoliosis? So what if the flagitoliosis test costs $[x] thousand if my incremental out-of-pocket cost is nothing or negligible.

Supporters of Gov't run health care would respond to the above by saying that the Gov't would wisely limit the extent to which $[x]k gets spent on flagitoliosis tests in my example above; voila, the cost problem is solved.

Well, maybe. But for some reason I doubt some bureaucrat in D.C. will be better suited than me to make those decisions for myself and my family. So instead i suggest getting rid of state-mandated prepaid medical; stop forcing people to buy coverage they don't want; make people take responsibility for their own behavior (e.g., you have an alcohol problem, your problem) get rid of state coverage boundaries which create inefficiencies and lessen competition. Let's get back to concept of insurance as it was meant to be and as it applies everywhere else except health care!

Regards

CKMichaelson said...

lineside - as it says at the top of today's blog: Hoping for the best... is not a good way to approach health care nor health care insurance.

First, if you can pay $26,000 a year for health insurance and have any money left over for food, you are in the 'very lucky' category.

I asked my Family Practioner ( The Daughter) and she said that about 70% of her patients were Medicare/Medicaid. I didn't ask her, but I know that her 3/4 time practice nets her just over $180,000 a year. She's doing fine, thank you.

Second, you are going to get the flagitoliosis screening test not because you want it, but because your doctor is afraid that if he misses even one case of flagitoliosis he will be sued for malpractice. That's also why she prescribes about half the pills you take.

And incremental out-of-pocket costs may be “nothing or negligible” to you, but to the unemployed and the underemployed and the $7.25 an hour clerk at the Grab and Run they are much more than “negligible”.

“Let's get back to concept of insurance as it was meant to be.” Where is the gospel that will tell me exactly what “insurance was meant to be”? You mean like car insurance, which I am mandated to buy?

Is it, perhaps, that you fear that some of your tax money might go to help someone who – by your lights – doesn't (or at least shouldn't) need the help or doesn't qualify for it (under whatever your personal definition of that might be)?

The real problems with health care costs (not with the health care itself, which no one has addressed) are two-fold: (1) The capitalist private insurance model is based on profits which are based on providing as little actual services as possible at the absolute lowest cost. And (2) The ridiculous expenditures and efforts that go into keeping the dying alive another day or two, or week or two. (And I've had to make these decisions three times so far and I know all too well the emotional struggle it is to let go.)

ckm

Anonymous said...

Dreamland: ...

To see the decay, sleaze and rottenness of New Joisey and the United States, see the 2008 flick, THE WRESTLER starring bummed out, washed up and dying Mickey Rourke.
One priceless scene has Rourke, a min wage shitty jobholder, serving up poisonous industrial food to New Jersey's finest citizens in a not-so-super-market deli. Just think of the WRESTLER as the US. The future is here now. Priceless.

http://www.film.com/movies/the-wrestler/19744444

OkieLawyer said...

Let me get my two cents in on this health care discussion. The issue that is not being addressed is "loss mitigation."

lineside said...

Since people had to cover most of their mundane expenses themselves, they were very cost conscious.

Or not, and leave the externality to someone else (family, community, taxpayers, etc.). Health care needs are very often totally unexpected: from accidents, to criminal acts, to heart attacks, to cancer diagnoses. As I read your Libertarian idealistic "nothing ever goes wrong" approach that assumes everyone can afford such externalities (or the insurance to prepare for it) on the wages paid to American workers at this point in history, it smacks me of a naivete unexpected of someone of your presented intelligence.

...mental health & alcoholism treatment...all things I would not pay for if I had the choice... It is almost shocking to hear someone says this in light of the VERY recent victimization of several people -- including a congresswoman, federal judge and nine-year-old girl at the hands of someone who probably would have benefited from getting mental health -- and perhaps even alcoholism -- treatment. It is highly likely such health coverage (paid by you through a National Health Care Plan) would have prevented such a tragedy.

We used to provide such treatments -- even to presumably undeserving people -- precisely because the costs were lower then the alternative (unexpected deaths or catastrophic injuries at their hands). This concept is known as "loss mitigation." Something those of the Libertarian mindset don't seem to grasp.

OkieLawyer said...

errata:

precisely because the costs were lower than the alternative

I sure wish there were a way to edit these posts.

mistah charley, ph.d. said...

The ridiculous expenditures and efforts that go into keeping the dying alive another day or two, or week or two

This happened to my father a little over a year ago. He had two weeks of operations and agony before they let him die at the age of 96. He was retired career military, so it was paid for by the taxpayers, not the family - but really, all that torture did nobody any good.