Economics, Like Gravity

What do you do when the price of gasoline rises?  Do you adjust your driving habits?  Do you consider purchasing a more fuel efficient vehicle?

If you are a normal person with a normal budget, then you do some combination of the above.

Why should we expect normal people running normal businesses to behave any differently?

If government regulations impose additional costs for people that work more than twenty nine hours a week, then normal people will limit employees to twenty nine hours.  If government regulations impose additional costs if you have fifty employees or more, then normal people will limit their number of employees to forty nine.

These are the normal, predictable consequences of poorly developed government policies.  Courtesy of Mr. Obama and the Democrats, a whole lot of people who are already struggling to survive will find themselves less able to find full time employment at wages that will allow them to live something close to a normal life.

Over The Falls In A Barrel

Daredevils have been going over the Niagara Falls for over a century.  Sometimes in a barrel.  Sometimes not.  Sometimes they survive.  Sometimes not.  Curiously, the results of the plunge rarely live up to expectations.

Despite the risks, and the known history of this stunt, people continue to try it to this day.

Which brings us to the fiscal waterfall that is Obamacare.

The Washington Post has a story on the impending massive rate hikes that young people are about to experience.

The result: Older, sicker people will pay lower premiums. Younger, healthier people will pay higher ones to make up the difference. The price of a policy for a young, healthy man in, for instance, Milwaukee, could triple from $58 per month to $175, according to a survey of insurers released by Douglas Holtz-Eakin, president of the American Action Forum, a center-right think tank, and a former director of the Congressional Budget Office.

Curiously, the above is not precisely news to those that were paying attention when Obamacare was first passed into law.  It has been clear from the beginning that the intent of this nationalized health care system was to take money from the young and the healthy only to give it to the poor and the less well.

But we were promised that we could keep our current doctor and current insurance plan if we were happy with them.  Of course that promise did not stop my physician from buckling under the new federal regulatory burdens to end up selling his practice to our local mega-hospital.  The story above is really focused on people that have to buy individual health insurance.  It doesn't really apply to those that obtain insurance via our employers.

Right?

It has become very clear to everyone involved who is analytical and not ideological that the rational strategy, for both large and small firms, is to cease providing health care insurance to employees.

No company wants to admit that they are considering eliminating health insurance as an option, or be the first one to drop their health insurance plan, but once a competitor does so, the preference cascade will begin. The clear sentiment is “We will not be the first one to drop our health insurance plan, but we would be a close second.”

The coming preference cascade for employer group health plans is what the Democrats fear the most, because Obamacare was sold to the masses as “if you like your health insurance plan, you can keep it.”

The people who really know the law, and who have been following the avalanche of regulations, have already figured this out. It will take a while for this specialized knowledge to seep downward, because right now only $800+ an hour ERISA attorneys and the most sophisticated HR people understand how Obamacare really works.

The fruits of government action have long been known by anyone with the least interest in history.  Those fruits inevitably cause costs to rise and access/quality to fall.  Government will...once again...break our rhetorical legs and then expect gratitude for the crutches it offers.

The result of socialism is as predictable as the seasons.  It is to create an equality of poverty by destroying the means of producing wealth.

When the current scheme fails...a result of which I have no doubt...will the government advocate a return to free(er) markets?  Or will they say that he problem is that we did not cede enough power over our private lives to the federal nanny?

Predictable Results From Obamacare

It seems that Walmart has decided that future new hires that do not work at least 30 hours a week will no longer be eligible for the company's health care plan.  Currently that is not the case.

Instead, those people will have to apply to the newly expanded Medicaid program.

Anyone that has watched the last 80+ years of American history should not be surprised.

We passed Social Security.  Employer pensions steadily declined.

We passed Medicare.  Employer paid health care for retirees is now nearly non-existent.

At each step of the way we have separated those with money from their moral obligation to assist others.  They figure that having paid their taxes, that they have have discharged their civic duties.

Why should anyone be surprised that CEO salaries have skyrocketed in the wake of the government assuming (illegitimately) the civic responsibilities of corporations?

None For You, You're....

Giving Birth!

At least, that is the desired outcome of a policy established by the UK's NHS.

Family doctors are being told to try to talk women out of having Caesareans and very strong painkillers during birth to save the NHS money.

...

Caesareans cost the NHS around £1,200 a time while epidurals - anaesthetic injections into the spine - are around £200.

The Blogfather had the best retort:

I don’t remember this from the dancing NHS tribute at the Olympics. 

Can't Read Or Won't Read

Those appear to the be the only options left for Paul Krugman. 

Newsweek recently published a piece by Niall Ferguson in which Mr. Ferguson makes the case that Mr. Obama has not earned consideration for re-election this November.  It is an interesting piece.

The NYTimes resident out-of-this-world economist cum opinionator, Paul Krugman took a few moments out of his day to suggest that Mr. Ferguson was factually challenged.  Mr. Krugman asserted that the ACA would provide a net reduction in the deficit.

Mr. Ferguson had the temerity to respond with facts and...gasp...math!  The bottom line for my valued readers is that the CBO report on the impact of the ACA indicates that the net effect of that law will be to increase the deficit by over $1 trillion over the next decade.

The only way that the ACA might have a less deleterious effect on the budget would be if it somehow managed to reduce the rate of inflation for Medicare expenditures from the 4% that is typical of the last 20 years to something much closer to 2%.  How it might do so at a time when the baby boomers are swelling the ranks of our nation's seasoned citizens is a bit of a mystery.

One option might include the use of magic wands.

Others include rationing of care or tax increases that are as fantastic as Mr. Krugman.  His fabulist inability to have an adult conversation using commonly known facts is one prime reason why I avoid Mr. Krugman's work.

Healthcare Denied

When you hear that people are concerned about government health care systems denying coverage to patients, understand that there is a rational basis for that concern.

When Kenneth Warden was diagnosed with terminal bladder cancer, his hospital consultant sent him home to die, ruling that at 78 he was too old to treat.

Even the palliative surgery or chemotherapy that could have eased his distressing symptoms were declared off-limits because of his age.

So we are just talking about one case, right?  It has to be an outlier, right?

This kind of ‘professional opinion’ appears to be costing more than 14,000 lives each year, thanks to routine discrimination by doctors who assume older patients are too frail for surgery, chemotherapy or radiotherapy. 

This is according to experts at Macmillan Cancer Support, who warned last week that every day up to 40 elderly cancer sufferers are dying needlessly because they are being denied the best treatments. This is particularly true, it says, for patients over the age of 70.

The charity estimates that if the treatment of older patients matched that on offer in the U.S., as many as 14,000 lives could be saved every year.

Nope.  There are rational reasons for not granting government any more power over our lives than it already has.

Even Sluts Deserve Healthcare

While religion has motivated progress in many areas, it has also exercised repressive and oppressive influence from time to time.  Which is why I question the wisdom of extending some sort of "religious exclusion" for health insurance.

I suppose that a church could elect to not cover abortions for preachers if church doctrine is opposed to such things.  However, they should be compelled to list all of the activities that violate their doctrine and adjust their coverage accordingly.  Opposition to alcohol use comes to mind.

But the line I would draw would be at clergy.  For those that go in for such things, staff and students ought to be considered sinners along with the everyone else.

For those that don't like it, I suppose that we could move to a national a la carte system that separates employment from health insurance.  There are lots of options to be considered.

But allowing religious exemptions?  Next thing you know some "church" will refuse to pay their minority staff as much as their white staff and cite Scripture to justify their actions.

Link for the strip below.  Thanks to my friends in RACS for the pointer.

And since incendiary language appears to be the only way to elicit traffic and comments, expect more in the future.  I respond to incentives!

Our Medical Future?

Consider Product X.  It costs a store owner $95 to get Product X into their store.  They sell Product X for for $100 and make $5 per sale; less the cost of their building, staff, electicity, etc.

What happens when they can only get $90 for Product X?  Most store owners would stop selling it.

What happens when someone needs Product X to survive?  Not a very nice question.

But this is precisely what is about to happen in California where the state has decided to cut Medicaid prescription reimbursements by 10%.  It isn't a 10% cut in the margin that the store owner earns.  It is a 10% cut in total reimbursements.


What does this bode for our nation's future?  Nothing good.

I hardly need to point out that we can expect a lot more stories like this one in the future.  Reimbursements currently have some give in them, which allows the highest-cost providers to operate, and the lowest-cost providers to make some profit.  The natural political tendency is to squeeze reimbursements to the level where the lowest-cost providers are pinched--or even beyond.  And the best-case result of this is that in the long-run, the lowest-cost providers get bigger, while in the short term, the disruptions among the higher-cost providers compromise at least some patients' access to care.

Are we willing to put up with that short term disruption?  Not so far, unless the service exclusively benefits the very poor.  Maybe we'll get more willing as the tax bite goes deeper.  But either way, with a dramatic Medicaid expansion on its way, and more and more of the rest of the health care system under the control of the government, the fights are going to get uglier.

A modest warning for language at the link.

Saving The Future - Saving The Past

We all have personal perspectives and interests that motivate our efforts.  One of my personal perspectives is Alzheimer's or old age dementia.  I watched my grandmother disappear before my eyes.  I watched the husk that remained live on for close to five years.

If you can call that living.

I see the early signs of the same thing happening in my dad.  I experience some early-early signs of the same thing in myself.

It is not possible to look forward to the day when long honed perception and perspective disappear in time's grey haze without experiencing an inexorably rising sense of terror.

We do not currently have a cure for dementia.  One of the reasons why I so urgently advocate for a free market for health care is that other health systems stymie research and innovation.  The first costs to be cut in every nationalized health care system are those associated with the research of new technology.  The cost of providing existing technology to existing patients naturally declines over time as patents expire and product efficiencies are identified.

Future patients needing future technologies?  Current patients being maintained by current technology but hoping for a cure?  Lives unborn in need of a cure that does not yet exist?  Nationalized health care systems have a one size fits all response.

Fuck 'em.

Yet I still have reason to hope that our recently enacted plethora of federal boards, committees, directors, chairpersons, and other august personnel of medical wizardry may yet move slowly enough that a cure for my small concern may arrive before the gates of innovation are closed.

Via Glenn Reynold's Instapundit comes word of a recent discovery of a new application for an old anti-cancer drug.  The WSJ has a decent write-up as well.

A widely available cancer drug has shown remarkable success in reversing Alzheimer's disease in mice, raising hope of a breakthrough against incurable dementia in humans, US researchers said Thursday.

Mice treated with the drug, known as bexarotene, became rapidly smarter and the plaque in their brains that was causing their Alzheimer's started to disappear within hours, said the research in the journal Science.

"We were shocked and amazed," lead author Gary Landreth of the Department of Neurosciences at Case Western Reserve University School of Medicine in Ohio told AFP.

"Things like this had never, ever been seen before," he said.

Faster, please.

"Health Care Reform Will Not Affect Your Coverage Or Your Choice Of Doctor"

Heh.

No surprise to those of us opposed to this monstrosity all along.

Mistrusting The Government - Classic Examples

There are good reasons why I do not trust the government when it comes to my health.  They have a demonstrably long track record of considering my health to be of secondary importance to their ability to do....something.

As this post demonstrates:

This is a dead end street.  The FDA does not recognize aging as a treatable condition and only approves treatment for "Disease."  Since Alzheimer's is not a Disease but a predictable variant of  aging, the only treatments allowed and currently being developed are those that slow down the progression of the "Disease."  Alzheimer's could quite likely be cured if the money now spent developing means to slow down the condition were devoted to finding ways to directly remove the toxic neurofibrillary tangles that form the Alzheimer's plaques.

It gets worse.  Because the FDA only evaluates treatments for Diseases, and its definition of disease versus aging is completely arbitrary (why is Type II Diabetes a disease while Sarcopenia, the loss of muscle mass and function that accompanies aging, is not?) we are forced to develop treatments that primarily address symptoms rather than either repairing damage or rejuvenating systems.  In such a bureaucratized environment we might well be better off as mice than men:

Gene Therapy Trains Immune Cells Against Cancer

Some day you'll be able to get your immune cells reprogrammed to go on hunter killer attack missions against tumors.

Researchers at UCLA’s Jonsson Comprehensive Cancer Center created a large, well armed battalion of tumor-seeking immune system cells and watched, in real time using Positron Emission Tomography (PET), as the special forces traveled throughout the body to locate and attack dangerous melanomas.

But for now this sort of thing only gets done for those tricky lab mice who have done such a great job of convincing researchers into developing medical treatments for them first.

If I had terminal cancer and a large sum of money I'd hire medical researchers to do this to my own immune system.

 I don't go all wishy-washy around here very much.  And not very much truly terrifies me beyond the occasional vampire dream.

But I am terrified of growing old.  I watched my Grandmother slowly drift away with Alzheimer's.  I'm seeing some of the same pre-behaviors in my dad.  I'm seeing them in me, too.

And the thought of drifting off into a darkness where thought and conviction and humor and spontaneity and inventiveness and everything else that makes my life worth having slips away quite simply terrifies me.  To have rational thought be uncatchable like smoke.  To have memories sought but never quite found.  To be a rat caught in a maze for which there is no end.

I can imagine few things more terrifying.

Except being in such a condition and having one's government deny the development or application of successful treatments in order that we not inconvenience regulators with the messy problem of occasionally being wrong.

Why Pick On The Little Guy?

This news story has been making the rounds.  It points out some of the flaws in Massachusetts health care reform that was put in place a few years ago while Mitt Romney was governor.  Many of the problems currently being experienced in the Bay State will also be problems under the health care "reform" law that Mr. Obama signed recently.  There are more than a few tidbits worth reading.

What has my dander up is this:

When state lawmakers overhauled the health care system in 2006, they combined into a single insurance pool consumers who buy coverage on their own with those who get insurance through their jobs at small businesses that employ 50 or fewer people. The aim was to make insurance more affordable for the individuals buying coverage on their own, who tended to be sicker and therefore had been paying very high premiums. And the hope was that having small businesses and their workers absorb some of the cost of covering this group would raise their premiums only modestly.

So they stuck small business owners with the problem.  Not big businesses with huge insurance pools like General Electric, a major employer in Massachusetts.  Not the state government with its huge pool of employees and retirees.  They screwed small business owners.

Small businesses are the backbone of the US economy.  Larger businesses are fine.  They certainly add quite a bit to the economy as well, but small businesses provide the largest pool of jobs to those of us that need them.

And the politicians decided to screw them over by dumping the irregularly insured into their insurance pool.

The number four reason not to trust politicians is because they haven't figured out that you shouldn't piss in the river upstream from where you get your drinking water.  This is just the latest illustration of that fact.

Rationing And Death Panels

David Leonhardt has an article in the NYTimes about the coming changes in health care.  He focuses on the purported savings to be realized by both the Medicare innovation center and a Medicare oversight board.  The former now has the legal teeth to determine which treatments are available for which patients/conditions.  The latter is supposed to have the authority to tell doctors how much they can charge for a given procedure.

Mr. Leonhardt advocates rationing health care and using the force of government to prevent patients from obtaining treatment.

From an economic perspective, health reform will fail if we can't sometimes push back against the try-anything instinct. The new agencies will be hounded by accusations of rationing, and Medicare’s long-term budget deficit will grow.

So figuring out how we can say no may be the single toughest and most important task facing the people who will be in charge of carrying out reform. "Being able to say no," Dr. Alan Garber of Stanford says, "is the heart of the issue."

Rationing.....although Mr. Leonhardt only uses that word once and then only to suggest that it is an inaccurate description.

Rationing.  A common and dominant feature where ever national health care is practiced.

For those that scoffed at the idea of "death panels", now you know their true name; Medicare innovation center.

But I suspect that these arguments won't be persuasive. They have the faint ring of an insurer’s rationale for denying a claim.

No, Mr. Leonhardt.  The insurer's rationale for denying a claim has the faint ring of one's government declaring by edict that you are not eligible to receive life saving treatment.  At least when an insurer says "no", patients can appeal, speak to regulatory agencies, or even hold a community fund raiser.  What do patients do when the government declares it illegal for them to receive treatment?

The most significant step may be when an insurer refuses to cover a procedure.  But it is not necessarily the last one.  People in a free country always have options.

At least, we used to.

Perhaps This Wasn't The Brightest Idea

In the wake of the Enron scandal, Congress passed new regulations that required public corporations to alter their methods of accounting and reporting their financial information.  One of those regulations requires corporations to immediately estimate costs associated with new taxes and/or regulations.

Those Congressional mandated reports of the costs associated with the recent health care "reform" bill have started rolling in. 

• AT&T, $1 billion
• Deere & Co., $150 million
• Caterpillar, $100 million
• AK Steel, $31 million
• 3M, $90 million
• Valero Energy, up to $20 million

Verizon has also warned its employees about its new higher health-care costs, and there will be many more in the coming days and weeks.

The response from Congress?  They want to haul those running these companies in for a Congressional inquiry as to why they are complying with a law passed by Congress to report that another law passed by Congress will have such a negative effect on their operations.

I suppose that in the land of the sugarplum faeries, new laws need not have any impact.  Simply wishing for things to different is enough to cause them to be different.

Here in the real world, gravity still attracts objects, and new government programs result in much thinner corporate bottom lines.

The Congressional response isn't surprising.  They don't understand why everyone doesn't think their latest bright idea isn't all that bright.

Well, this is par for the course: a complete disregard for the consequences of their own handiwork, the bullying of private enterprise, and the determination to politicize what were once economic and legal judgments. One can see in the Democrats’ fury the desperate attempt to conceal the implications of their monstrous legislation, to maintain as long as possible the fiction that ObamaCare is a great cost-saver, and boon to employers. It’s going to be hard to keep up the charade, for as the editors note, ObamaCare “was such a shoddy, jerry-rigged piece of work that the damage is coming sooner than even some critics expected.”

8 Predictions

Megan McArdle has offered 8 predictions about the future of health care outcomes in the United States under the just passed "reforms".  She then offers a defense of those predictions that is based not on "who is the better pundit", but instead "if things don't change, then why are we spending $2,000 per household on it"?

If you don't think that any of the effects of this bill will be large enough to measure and hopefully, large enough to justify the price tag of this bill, then I have to ask two questions:

1)  Why the hell are we spending $200 billion a year, plus the mandated spending by individuals and employers on premiums, plus the new money the states will have to spend on Medicaid?

2)  Why on earth did you bring up all these apparently irrelevant statistics?

 Not unlike Megan, perhaps I am wrong about these "reforms".  But if I am going to be wrong, it better be based on some objective standard and not on some "but I feel like we should just all have health care" nonsense.  If I am not wrong, then the solution will not to be to throw more government money at the problem.  The solution will be throw less government money at it.

A....lot....less....

Gaming The System

This op-ed in the NYTimes about the health care bill that just passed the House points out the many ways that the Democrats have gamed the system.  Essentially, they lied to the CBO just to get an "acceptable" budget score for the bill.

We were talking about a bill that would cost $1 trillion per year and now they have put in enough gimmicks to make it look like $1 trillion for 10 years.  Anyone care to bet on how many of those gimmicks will still be around in a decade?

Yet Another Reason To Oppose Health Care "Reform"

Because some animals are apparently more equal than others.

Although I do have to offer some kudos to Congress for apparently placing themselves at the mercy of this mess.  I say "apparently" as it wouldn't take much of a legislative bit of chicanery for Congress to carve out something better for themselves.  It isn't like their track record is exactly clean on such issues.

Solving Sustainability Now

From Megan McArdle comes the following about the pending health care bill, our many other social programs, and sustainability.

But there is one thing of which I am nearly perfectly certain: If we pass this thing, no American politician, left or right, is going to cut any of these programs, or raise the broad-based taxes necessary to pay for them, without any compensating goodies to offer the public . . . until the crisis is almost upon us. I can think of no situation, other than impending crisis, in which such a thing has been done--and usually, as with Social Security, they have done just little enough to kick the problem down the road.  The idea that you pass a program of dubious sustainability because you can always make it sustainable later, seems borderline insane.  I can't think of a single major entitlement that has become more sustainable over time.  Why is this one supposed to be different?

[emphasis mine]

Social Security is crashing.  Now.

Medicare has been crashing.  For years.

Entitlement spending has been driving deficits.  For decades.

The current health care "reforms" are arranged so that the taxes kick in early while the benefits kick in late.....if ever.

It is long past the time when we should have had a serious national conversation about exactly how much government spending we can live with.  It is long past the time when we should have had a serious conversation about spending priorities, and selecting which federal programs were going to be ended so that the ones we truly need can survive.

"None of the above" makes a lousy basis for a government budget.  Based on the current bunch of elected Congresscritters, that is the only option left after decades of "All of the above" legislation.

Who Cares....

From Megan McArdle comes this pointed and accurate summation regarding the proposed health care reforms:

I think this is a fiscal disaster waiting to happen.  But no one on the other side cares, so I'm not sure how much point there is in saying that any more.

Everything that leads up to her conclusion is also worth reading......if you care about whether or not the proposed "reforms" have any chance of achieving what proponents claim will be achieved.

Profit Is Still A Good Thing

A continual source of personal frustration in the health care debate is the repeated suggestion that health insurance companies are making bucket-loads of money.  That is the suggestion in this Ann Telnaes animation.  It was the suggestion on a recent edition of Fresh Air with Terry Gross when Ms. Gross questioned whether mandated mental health screenings for post partum depression would do nothing more than give health insurance companies another way to make more money. Yes, I screamed. [loudly, like a little girl -ed.]

The fact is that the health insurance industry profit margin is currently 4.4 percent.  They come in at number 86 in a list of industries ranked by profit margin.

A truly single payer or nationalized health care system will not realize much, if any, savings in comparison with health insurance companies.  The history of single payer systems has not been reduced costs but instead reduced access to care.

Health insurance companies....their many faults being duly acknowledged by your dashing and insightful interlocutor....are not the source of waste.  They are not siphoning off riches that will cover the 30 million or so uninsured that the current government proposals claim to cover [eventually].

Profit drives innovation.  Profit identifies and eliminates waste.  And 4.4% profit is small potatoes. 

The money to "extend coverage" is going to have to come from taxpayers.  And we are covering quite a bit at the moment.  If the proposed reforms are so important, then perhaps there are a few government agencies that we might close [or shrink] to cover the bill?  DEA? NEA? Ag? Education? ??

Hell, even DoD could stand to lose a few pounds!