A Radical Obamacare Solution

Regardless of how the faltering Republican effort fares, no one is going to be satisfied with what is done with Obamacare. The current law has obvious flaws. It may not collapse as Republicans predict and probably hope, but it is far from the solution originally planned by its supporters. Moreover it is in a financially precarious situation. So, what to do?

The two sides in this debate are irreconcilable. One reason is pure politics. Each side has deeply held and fundamentally different ideas of the proper relationship between government and the governed. Another reason arises from differing projections for how each of their prescriptions will work in practice. Yet neither side is being given a fair opportunity to test its ideas in the real world. We just get half measures and flawed compromises.

The first reason can’t be addressed via any specific issue, and most definitely not by the emotionally charged case of health care. But the second one could be evaluated by a scientific experiment!

How about this idea? We let Congressional Democrats design their “optimum Obamacare”, i.e. with any changes they believe would make it work better, including just making it a true single-payer, uniform system like they have in the U.K. Congress then passes this bill intact, with Republicans holding their noses as they vote. However – and this is the key provision – this plan would be completely optional on a state-by-state basis. States could accept Improved Obamacare or they could reject it entirely. They couldn’t equivocate; it would be all or nothing. I think the default should be rejection, to account for miscreants who simply can’t make up their own minds, but that is open for debate. I am also assuming that Trump doesn’t interfere with this experiment.

No doubt many red states would reject this plan, probably including a majority of the states. Meanwhile big states like California, New York and Massachusetts, plus several others, would gladly accept it, and they may actually comprise a majority of the population.

That would set up the experiment. This shouldn’t be too difficult for insurance companies to handle from an actuarial perspective. There would be very large population groups under each of the two circumstances, and there would be only the two to consider.

After a few years the results should be clear. Democrats believe that those states accepting Improved Obamacare would flourish, with abundant, affordable and high-quality health care. Health care providers would accept their new reality and easily adjust to it. Meanwhile, Republican states would rejoice that the federal meddlers were finally leaving health care decisions to the people, with a free-market proliferation of products that meet individual needs and pocketbooks. I suppose it is conceivable that both circumstances would be successful, since people truly do have different perceptions of what is good, but I strongly doubt it.

One side is going to look longingly over the fence at a neighboring state. Voters will importune or force their legislators to reverse their initial choice. Meanwhile, people will vote with their feet and move to where the grass is greener. The same is true for individual providers. Doctors and insurance companies will gravitate to the environment that suits them best. Over time, one side or the other will give up and the country will finally have what it actually wants from border to border, and not just something which some Congressional ideologues think they want. There might be some irreconcilable holdouts. For example, I could conceive of the entire country rejecting Improved Obamacare while California stubbornly goes its own way. But what is wrong with that?

Of course such an experiment would be a bit cruel. That is the nature of scientific experiments on human subjects. Those in the political minority in a state would suffer the choice of the majority. But isn’t that how our system mostly works anyway? In any case, if I am right, the experiment will naturally terminate in at most a few years as one approach proves its case in practice and the other fails. And if unexpectedly both are actually successful in their own ways, meeting the differing desires of their states, that would be a success too.

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Yet Another Belief Shattered

I used to believe that the non-partisan Congressional Budget Office (CBO) is a good authority on the consequences of future laws. Actually, their projections are not always on the mark – see Obamacare for example – but what they are attempting is hard so one can’t expect perfection.

But just now they submitted a projection for the future after Obamacare repeal that is breathtaking in its irrelevance. The Democrats in Congress have pounced on it like a starving lion on red meat. It shows many millions losing insurance entirely and costs doubling for those lucky enough to remain insured. Senate Minority Leader Charles Schumer positively waxed poetic in his wrath and disdain.

What are they actually projecting? It turns out that they are dutifully but mindlessly using as their basis the repeal of Obamacare with no replacement – ever, period. This is like your surgeon telling you your life expectancy after heart removal but with no replacement in prospect. How useful is that?

I haven’t heard a single Republican say that there will be a repeal before a replacement is available. In fact, both Trump and the Congressional Republicans have stated exactly the opposite. Of course, the devil is in the details. Their replacement might be terrible and have dreadful consequences. No one yet knows, and certainly not the CBO.

The one genuine fact from this CBO estimate that Democrats could crow about is that it seems to show that Obamacare must be lowering overall healthcare costs to consumers, not the opposite as Republicans usually say.

chuck-getting-itOne possibility occurred to me that might redeem the CBO a bit. Perhaps they are simply responding to a query by Senator Schumer, who obviously would like the bleakest possible outcome. I don’t think they have the authority to respond, “Screw you, Chuck. We aren’t about to put out such misleading garbage.”

And there is always the possibility that the situation envisioned by this estimate is precisely what Senator Schumer plans for our future. When asked in an interview whether Democrats will help Republicans pass a replacement that is less generous and comprehensive than Obamacare, he answered with a resounding “No!” He added, “If Republicans destroy our health system [Obamacare?], we won’t throw them a lifeline.”  That seems a bit cruel to the American public, but it certainly gives Democrats a weighty cudgel for 2018. Crafty?

The Future of Obamacare

changeahead1-copyTrump’s cabinet choices make it clear that he really does mean to drive a stake through Obamacare. In particular, his choice of Rep. Tom Price to head Health and Human Services puts one of the foremost critics of Obamacare at the helm of its management. But – cliché alert – the devil is in the details. Republicans in Congress can effectively repeal it through a reconciliation process, which requires only a bare majority in each house. (See the postscript below for details.) They have only a two seat margin in the Senate, so caucus discipline must prevail if this is to work. But it seems unlikely that they would wound their new President by resisting. However there is a nuance. This cannot be done quickly. A reconciliation process can only be associated with a budget bill, so this stratagem must await development of a suitable budget. That will take months in the new Congress.

Replacing Obamacare with a plan more to conservative tastes is an entirely different story. This must go through the normal legislative process and would be subject to a likely filibuster in the Senate. However Trump has pledged that there will be no interim period where 20 million people have no alternative for medical insurance. The Senate could of course invoke the nuclear option and change their rules to forbid a filibuster. But that is a slippery slope that Senators would be loathe to risk. So what’s the plan?

Here’s what I hear. When they repeal Obamacare, they will delay its demise for enough time – they hope – to produce a replacement. This will probably push actual termination well into the future. The Republicans believe that given the choice of no plan or one that they don’t much like, Democrats in Congress will cave. But Chuck Schumer, the new Senate Minority Leader, begs to differ. He says he won’t budge on anything that Democrats consider to be minimum health coverage. Sticking points will likely be contraceptive coverage, federal subsidies, expanded Medicaid and the issue of pre-existing conditions, at the very least. And he evidently believes that Republicans will flinch before tossing all those millions over the cliff.

So, we are heading toward a colossal climax that will make our periodic budget battles look like child’s play. I hesitate to predict the outcome given my prognostication record during the election but, never daunted, here I bravely go.

Trump can’t give in on his first big policy fight or else his Presidency is toast. But Democrats desperately need a banner to wave in 2020 so they could be willing to sacrifice some people now for what they see as the greater long-term good. I predict that there will be no replacement at all and we will simply return to the situation before Obamacare was created. Eventually, of course, we will come up with some sort of solution to our nation’s healthcare crisis, but not now and not soon.

obamacare-cartoon-5I am not predicting this because that is my wish, but I am not so sure that it is actually a bad outcome. Obamacare is actuarially unsound and it is headed toward a catastrophic collapse in any case. Moreover, the number cited of those at risk, 20 million, is basically a lie. Many of those “benefiting” from Obamacare essentially have fake policies. If you have a massive deductible, as much as $14,300 for a family under the Bronze plan in 2017 for example, what use is this other than as disaster insurance? It should reduce the number of medically-induced bankruptcies, but for customary medical insurance it is close to useless. For the vast majority their premiums simply lower their standard of living. True, there are subsidies available under certain conditions that mitigate this problem, but they don’t eliminate it. If you live paycheck-to-paycheck, as even many relatively well-off families do, paying thousands of dollars out-of-pocket before insurance kicks in is out of the question.

The bottom line is that we will eventually, and for many conservatives reluctantly, acknowledge that a public, single-payer plan is the only workable solution. Most advanced societies have already reached that conclusion and predicted disasters have not occurred. So I finish my foolhardy prediction by saying that the eventual resolution will be something like Medicare for all. In the meantime, expect some pain and conflict.

[POSTSCRIPT] One of my smart followers has pointed out that the reconciliation process cannot achieve full repeal of Obamacare. That is correct. All that is possible is to delete those sections of the law related to taxes and spending. This would include subsidies to buy health insurance, tax credits, the full expansion of Medicaid and penalties for not having insurance (considered taxes by the Roberts Court). This guts the law and makes it even more obviously a financial disaster. True, provisions that allow children to remain on their parents’ plan until age 26 and the popular protection against refusal due to pre-existing conditions remain intact. Actually, Trump has already said he likes those provisions. But this will remove even the currently flimsy financial props of Obamacare, leaving at best a zombie law. Costs would be prohibitive and few insurance companies would even bother to participate.

Hunger in America

Like you probably, I just received a plea for support from an organization that provides food for the needy. The occasion of course is the coming Thanksgiving Holiday. In their e-mail, they say that 1 in 6 Americans struggle with hunger while we, the relatively affluent, dine on lavish turkey feasts. That statistic brought me up short. Could it really be true that 50 million Americans lack even the minimum adequate food? If so, that is an atrocity that should shame us all. Why are we fussing over climate change or rotting infrastructure, for example, when the most basic needs of so many of our fellow citizens are unmet? Why wasn’t this the principal issue in our recent election?

hunger_header-2

But, ever the skeptic, I did a little research into the provenance of that statistic. It is widely quoted. Such knowledgeable and renowned experts as Nobelist Paul Krugman has mentioned it. It can be found in several government publications. So it clearly isn’t just nonsense. But, on closer examination, I find that data are being misinterpreted. There is certainly a need, but this statistic is vastly overstated. Sometimes this is simply through carelessness and sometimes, as in the case of Dr. Krugman, it appears to be a deliberate attempt to misinform in order to make a point.

I don’t know what the real number is, and any widespread and curable hunger in our wealthy nation is offensive. However, fudging the figures is the wrong way to awaken America to a problem that urgently needs fixing.

So, why is this figure wrong? First, the government data actually refer to cases of occasional or periodic “food insecurity”, not actual and continuing hunger. Some seniors relying on Social Security can run short toward the end of the month. That hardly implies that they are starving, particularly since additional food sources can often be found. Second, the statistic applies to families not individuals. In other words, if any family member sometimes has inadequate food, the family as a whole is considered to have food insecurity and every member swells the statistic. But that isn’t how things work in most families. Often parents will forgo meals in order to feed their children. Not every family member inherits the family deficiency. Third, the poorest among us are eligible for food stamps. This program doesn’t in itself cure the problem but it is a significant mitigation. Yet, for obvious reasons, the statistic in question doesn’t consider such support in assessing the need. All the many millions eligible for food stamps are quite logically considered to have food insecurity. Thus they comprise a major portion of the inflated 50 million estimate of hungry Americans.

It should also be noted that some causes of inadequate nutrition are not simply due to lack of resources. Examples are drug addiction and mental disease. They are quite properly included in the statistic, but this a bit misleading because resolving this component of need isn’t amenable to simply food donations.

The bottom line is that the deliberate image of Dickensian food scarcity is overblown. There is a problem and we should address it. But wild misstatements are a disservice to this need.

Our Galaxy Note7 of Health Plans

obamacare-cartoon-july-15-4During a speech at Miami Dade College last Thursday, President Obama drew an analogy between Obamacare and Samsung’s unfortunate Galaxy Note7 smartphone. You know, the one that bursts into flames in your pocket?  I imagine in retrospect he might wish he wasn’t so inadvertently revealing.

When one of these companies comes out with a new smartphone,” he said, “and it had a few bugs, what do they do? They fix it. They upgrade – unless it catches fire, and they just – [laughter] – then they pull it off the market. But you don’t go back to using a rotary phone. [Laughter.] You don’t say, well, we’re repealing smartphones.

Samsung was smarter than that, although they did initially try the “fix and retain” ploy. Then they quickly recognized that its design was fundamentally and dangerously flawed. So they pulled it completely off the market and reimbursed all of its customers. Putting lipstick on a pig rarely makes it a beauty pageant winner. Samsung isn’t transitioning to making rotary phones; they will continue to make excellent smartphones that do what they are advertised to do without exploding.

Republicans have long argued that Obamacare is hopelessly flawed and that it must be repealed and replaced with something workable. They are right, but they can’t be trusted to follow through. They basically still support the public healthcare system that has been failing us for decades. Hillary should make this a priority, but do you think she is smart and brave enough to take it on after seeing what happened last time?

Obamacare was always a jerry-built structure based on faulty assumptions and vain hopes. It took the essence of a public plan, with all of its advantages, and packaged it into a public/private patchwork that is actuarially unsound. They did this with the best of intentions because they desperately wanted something and this was all they could get.

What this shows to me is that our Democratic politicians have really big hearts and really tiny brains. They seem to be a living counter-example to Darwin’s Theory of Evolution. Of course Republican politicians, with their tiny hearts and tiny brains, are evolutionarily recognizable throwbacks to our early Triassic forebears.

The Sugar Bomb

We have an obesity epidemic in the U.S. The evidence is overwhelming and the health and financial consequences are vast and threatening. There have been numerous efforts to fight this problem, but one being tried in many locales is to use the persuasive power of almighty dollar to wean people off high sugar foods that have been indicted as a major factor.

The idea is to tax unhealthy foods. The increased cost, if sufficient, would presumably push consumption toward more healthy but cheaper alternatives. At the same time the revenue can assist in dealing with the current impacts of obesity on social services. This makes sense. It is hardly a new concept. We have long used the tax code to promote desired results, either persuasively or punitively.

Now the Mayor of Philadelphia is proposing a 3 cent tax on sugary soft drinks. The only difference is that he is targeting the proceeds on preschool support. This is a bit disconnected but it still achieves a worthwhile social goal.

Sugar-in-Soft-Drinks

Why do I mention this? It isn’t because I oppose it, but rather as a consequence of what one of the affected Philadelphia retailers said. Why just sugary drinks? Why not candy, cakes, and all the myriad of sugar bombs in our diets? Obviously he was making that argument from self interest, since he noted that 40% of his profit derived from soft drink sales. (That’s a bit scary, isn’t it?) But still, doesn’t he have a good point? If there is no way to substitute an alternative sugar fix, at least not without added cost, perhaps we can truly begin to wean ourselves off this drug.

But, as with many such usages of the taxing power, the devil is in the details. The sales price of most items is roughly proportional to the amount of product provided; larger containers cost more. However, a tax based on sales price might have the perverse effect of motivating producers to raise the sweetness level of their products so that a sugar fix can be satisfied with a smaller drink. With most soft drinks, the cost of ingredients is a small fraction of the retail price.

One other counterargument relates to fairness. The added costs will differentially burden the poor. But political correctness shouldn’t prevent us from recognizing that they represent a major part of the obesity problem. Obesity exists at all social levels, but the affluent tend on average to be thinner and healthier. So focusing the effort on the poor makes sense, at least from a health perspective. Nevertheless, I am uneasy about using the power of government to coerce those who carry so many other burdens, even if there are good intentions.

 

A “Twofer” or a Mistake?

A little while ago the government issued its updated food consumption guidelines for 2015. This caused quite a stir because it changed some longstanding recommendations. Some oversimplifications appeared in the popular media. Perhaps you read them in the normally reliable NY Times? For example, butter is not so bad after all and neither is saturated fat, whole milk is fine, eggs are a great food, and so on. I’ll bet many readers heaved a sigh of relief and restored these delicious items into their diet.

Unfortunately, these reports partially misread the guidelines. But more importantly, no one seemed to have noticed another critical change. The guidelines, which have always been solely based on protecting consumer health, added a second basis with equal weight. This is to protect the environment!

Figure-D51

I don’t know who thought this twofer was a good idea, but they retreated rapidly when angry consumer groups came after them with pitchforks and burning oil. The environment will henceforth have to stand on its own merits. I believe they are currently revising the guidelines for 2016, so we shall see if this makes a difference.

This is speculation, but I can conjure one case in point. Apart from mercury and other contaminants, fish are generally a very healthy food source. Consumption of fish has always been promoted in the guidelines. However most popular food fish stocks are in sharp decline, and it would be best to limit the take to let them recover. Thus we have competing goals. Should we eat a less healthy diet to aid this environmental goal? I think there is a better way, like enhancing fish farming and reducing current waste in the catch methods. In other words, let’s not hold our health hostage to desirable environmental goals. Rather attack the real problem head on. That’s just my take, of course.