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But Life is Experience not Logic: More on Mandates

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The error of the pro-mandate faction of the Democratic Party (no Republican candidates are in favor of universal anything in the health sector, except universally disappointing experiences, even for the rich) is this: they see the future and know exactly what regulations must be passed, how they will affect behavior, and what outcomes will result.

Speaking as a former regulator, this is an easy error to make. I certainly made this mistake back in my FCC days. It is the inevitable pitfall and trap for the unwary in any system of centralized government. It was the self-inflicted error of the Clinton Administration’s failed health care reform effort of 1993-4.

The starting point for effecting change in markets through government action is a statement of goals, and a clear recognition that tactics are not goals. As I understand it, Obama has four goals in terms of health care: (1) everyone, from birth to death, should have health care insurance; (2) everyone should have affordable health care, as well as affordable insurance; (3) everyone should enjoy the benefits of rising quality in health care; (4) Moore’s Law – ever increasing cost-benefit results – should be enshrined in the health care industry, through investment in r & d, new entry by new competitors, and wise government purchasing actions, inter alia.

If Edwards insists that the primary goal is a federal statute ordering all citizens, or residents, or inhabitants legal or illegal, to buy insurance, then that is not a wise strategic goal, nor a statement of a goal. It is a selection of a tactic, and elevating it to the status of a strategic goal. When Edwards proposes garnishment or IRS enforcement, he delves even more deeply into the tactics of implementation, and moves even farther away from the critical focus on goals.

If Edwards insists that tactical choices define who is the better Presidential candidate, he is not always wrong, but on the topic of health care he is most definitely wrong. In a reform of a system so complex, and so inevitably different in its impact on different individuals at different times, flexibility in tactical choices is the only wise way to govern. Committing in advance to tactics that are never to be altered as facts are learned is a sign that the candidate lacks the experience of government or life or, certainly, regulation that should provide the humility necessary before trying to reform such an important part of the economy and society as the health care system.

As to Clinton, she has supported mandates, but as far as I can determine her definition resembles Obama’s automatic enrollment, with the possibility of opting out. This method of achieving the goal of universal insurance is more sensitive to individual variation and the need to reflect the importance of personal choice. But on occasion, Clinton has seemed to endorse Edwards’ more legalistic and more command-and-control approach. I’m not sure where she is precisely on this question, or even whether mandates is, under her approach, clearly merely a means to an end, as it ought to be.

The most respected economist in America, for me, is Paul Krugman. But having spent a lifetime learning from, hiring, following the instructions of, cross-examining, preparing the testimony of, reading, and very rarely disagreeing with economists, I can only say this: they are better in diagnosis and far better in design of models than in predicting precisely how individuals, person by person, will react to changes in law, or even price. In particular, where value is acutely a function of not only price but also quality, as in the case of cable television or health care, economists reach limits on the efficacy of their art. This is not to criticize Paul Krugman. I think he should get the Nobel Prize for economics and literature too, and I’m not kidding. But I don’t agree with his vehement insistence that mandates vel non define the difference between a good and bad candidacy for the Presidency. Instead, I think the insistence on a legal mandate as the sine qua non of any approach to a problem as multifaceted and changeable as health care is a counter-indicator of fitness for that office, where it is certain that as things change one’s tactics should change, while one’s goals probably should be as close to immutable as possible.

If one of Obama's rivals, or even Krugman, questions Obama's commitment to changing our health care system because he won't commit in advance to one single tactical choice, they have no facts to support their claim. Moreover, anyone who is rigidly fixed to a single tactic thereby suggests that he or she is not adroit, adaptable, and persistent in achieving the stated goals. In a similar vein, it is a goal to catch Osama, and not to be committed in advance to a tactical decision about whether to put troops into Pakistan. It is a goal to achieve peaceful and productive relations with Iran, and it is important not to choose in advance such tactics as promising never to talk to its leaders or voting for military action against Iran without knowing all relevant facts. Candidates that make much of tactics, while not necessarily focussing with unrelenting commitment on specific (as opposed to overly general) goals, are not necessarily wise enough, reliable enough, or even experienced enough to be President. Obama, it seems to me, shows passion and clarity of thought about goals and the flexibility and humility necessary to choose tactics that work efficiently and effectively not only in the area of health care reform, but in all the other major discussions of the time. In other words, Dr. Krugman, please go back to focussing on the Republicans!


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Candidates that make much of tactics, while not necessarily focussing with unrelenting commitment on specific (as opposed to overly general) goals, are not necessarily wise enough, reliable enough, or even experienced enough to be President
Now we have an easy choice. Obviously Edwards makes too much of mandate tactics, while Obama makes too much of Social Security tactics, by offering a specific tactic of fixing SS. Therefore they are not necessarily wise enough, reliable enough, or even experienced enough to be President. So I guess we left with Clinton and the rest of the field.

I am not sure where you were going with this. But let me make one point. Obama's plan would not fix anything before the date of trust fundshortfall (now projected for 2017, on average though that date is moving out). It literally does nothing for Social Security before then and after that point penalizes one subset of workers (by and large professionals) for the sole purpose of bailing out the investment class of their obligation to repay Social Security what they borrowed.

Obama could be absolved of not understanding the mechanics of Social Security, but one of his top three economic advisors is Jeffrey Liebman of Harvard who most certainly does understand those mechanics, being as he is lead author of the Leibman-MacGuineas-Samwick Nonpartisan Reform Plan. LMS has as one component a seemingly progressive cap increase, but the rest of the plan is profoundly anti-worker and pro-capital.

That Obama is taking advice from a Social Security privatizer speaks volumes (and none of it good) about either his judgement, his knowledge of the policy issues, or his commitment to progressive political policy. That the lead economist on his team (Goolsbee of Chicago) draws the praise of George Will tells you all you need to know. Obama's plan is flawed, and his economic team is flawed, and perhaps broken to the point of losing progressives altogether.

I was trying to show that Reed Hundt spin is ridiculous. Reed Hundt is Obama supporter. He blames Edwards for providing too many details
about his health care proposal, in the same time as Obama blames Clinton for not providing enough details about "fixing" SS.

In term of SS, the right proposal is to increase retirement age over time. However this only can be done after universal health care is achieved.

The "right proposal" is not to propose anything.  Social Security is fine as it is.

Exactly.  And when it is really to the point where income is going to exceed outflow, simply raise the level of wages that Social Security deductions apply.  (Actually I think they should already do this; it is proportionately so much higher for lower income people.

Social Security is a math problem that any student who has a decent SAT score can figure out.  Why is it so hard for people to understand?

Jan

simply raise the level of wages that Social Security deductions apply
Then you have to raise the benefits for the people who contribute more, so you don't really get savings. I think that improving health of the American people so that they can lead longer productive life and retire later is much better and more popular alternative to raising taxes.

Re: Re: simply raise the level of wages that Social Security deductions apply

Then you have to raise the benefits for the people who contribute more, so you don't really get savings.


Huh? How do you figure that? There's no law that requires this. And past experuence (with Medicare for example) suggests that there's no political pressure to do the above either.

What?  Then you have to raise the benefits for the people who contribute more,

No you don't.  You are raising the income cap to make the system solvent.  The entire system runs on the "common good" theme; thus you may put in more than you ever take out (if you die young) or you may take out more than you put in (for a variety of reasons). 

Contributions have never been tied to benefits with Social Security.  Where did you get that idea? 

Jan

Of course, benefits depend on the contribution.
http://www.ssa.gov/OACT/quickcalc/index.html

Benefits depend on contributions only up to a point, (for example, once your pre-retirement income goes above $200,000* your benefits max out) but even those benefits are based on the premise that some will die before they receive all they have paid in. 

If there is more money in the pool to start with, and benefits are regulated, how can that possibly hurt Social Security?

_______________

*Monthly estimate in 2007 dollars for a 68 year-old whose last year of working's income was $200,000 : $2,635

Monthly estimate in 2007 dollars for a 68 year-old whose last year of working's income was $1,000,000:  $2,635

PS, Thanks for the link; it helps proove my point!

Jan

But people with $200,000 and with $1,000,000 income pay the same contrubution to SS(only on first 100K or so)
Take people with 40K income and 100K income and see the difference.

.  .  .  date of trust fund shortfall  .  .  .  .  Bruce Webb

What's a "trust fund shortfall"?  Sounds like an oxymoron to me. 

Ellen it is a term of art. In Social Security lingo 'shortfall' is the date that Social Security 'Income excluding interest' falls behind 'Cost'. Which means that the General Fund has to start supplying real cash to pay benefits, offsetting that by the portion of the amount of interest credited to the Trust Fund. After a certain period of time (under Intermediate Cost assumptions) 'Income (including interest)' falls behind 'Cost' at which time the General Fund has to start supplying real cash in the amount of the total interest then owing plus start redeeming the principal. As far as I know there is no generally accepted term for this, I call it 'peak', the Trust Fund being at its maximum value. As the principal shrinks so does the interest owed, in relatively rapid fashion the Trust Fund balance goes to zero, which point is called 'depletion'. Whether this constitutes crisis or not depends on your evaluation of the equation 75% of 160% = 120%. Under Intermediate Cost assumptions 'Shortfall' is projected for 2017, 'Peak' for 2023, and 'Depletion' for 2041. Under the alternative Low Cost 'Shortfall is projected for 2023 and 'Peak' and 'Depletion' projected for Never.

My snark-o-meter is malfunctioning this morning. Either your comment was a request for information which hopefully I have supplied or a right hook that missed its mark. Because if that was supposed to hurt somebody whiffed badly.

The real answer: If we make some rather pessimistic assumptions about the American economy and if Congress takes no action whatsoever for the next 75 years, Social Security will be able to pay 100% of its currently-planned benefits until after 2085. After that, benefits would have to be cut to 70% of current, again if the next 35 or so Congresses sit on their hands.

By reducing the Bush giveaways to the rich by 33% -- not eliminate them, just cut them somewhat and still allow those who have most benefited from the American economy to pay less in taxes than they did 10 years ago -- the "problem" could be made to go away completely.

This issue is rather thoroughly discussed here.

The right-wing's canard about Social Security, well financed and designed to privatized the system, thus funneling still more cash though Wall Street brokers and cronies of the Bush Administration, simply distracts attention from the real problems we have in this country, Medicare and Bush's enormous war debts being excellent examples.

Is there any evidence ANYWHERE that the tax windfall that the uber rich have received has been plowed back into our system?  Any new industries?  Better health insurance or pension plans for employees?

Anything other than lavish livestyles, expensive toys, and buy-outs of existing companies after which people are laid off?  At least the rail-road and coal barons  created an industry that provided jobs for people and raised their standard of living.

How exactly have the tax cuts helped our country's citizens as a whole?

Jan

In particular, where value is acutely a function of not only price but also quality, as in the case of cable television or health care, economists reach limits on the efficacy of their art.

I have a hunch Krugman can tell the difference between cable TV and health care.  Let me have a crack at it.

A 22 year old man will buy cable TV instead of health insurance.  He'll then have a few brewskys watching the big game, get in his car and crash into a tree.  Don't ask him to buy health insurance now.  He just suffered a massive TBI and can no longer understand the policy.

Very cogent

And Krugman went even further to term Obama's position "mudslinging". I think that underlying this whole discussion is whether an emphasis on the supposed essentialness of a tactic like mandates is an error of sentimentalism -- investing emotional energy in a misplaced venue.

I would add that those of us who favor single payer (I would like to see a broad statement pass Congress including goals of a health system AND SINGLE PAYER (which is I suppose a 'tactic' or 'strategy') charging some sort of blue ribbon commission to come up with single payer plans that meet the stated goal.

I prefer Obama the candidate over the other leading Democrats myself, though don't know enough of the fine points to really assess the different NON SINGLE PAYER Democratic plans.

I think that in the blogosphere, now and especially if a Democrat wins the White House, is to seriously consider policies whether the big timers are willing to embrace single payer or not, and try to compare that alternative to each of these others.

I'm sorry, but this is a straw man to the point of just plain silly. Krugman, Mahar, etc. aren't claiming infinite wisdom about the future, and the straw man is doubly unnerving after the previous post, which associated them with a police state they never advocated. They're simply pointing out that if you don't enroll everyone in a plan, then fewer people will be in a plan. Doh. And given who'll most wish to or be able to make that decision, the economic consequences are obvious.

The whole point is not to micromanage people and policy for perceived or imagined maximum efficiency. It's to macromanage so that the policy has even half a chance of succeeding. Can't we learn from Katrina and the whole Bush administration the debilitating cynicism about government that failure brings and the cost that brings to human being?

You know, in the industry I work in, we make costing decisions all the time. You'd be an idiot to think that those would ensure success of your next, perhaps lousy product (a textbook). But how do you extrapolate that without evidence to the idea that decisions about supply and demand don't matter?  Maybe Reed learned a little too much about business as usual in his term in government.

John

http://www.haberarts.com/

Corvid
.
"The whole point is not to micromanage people and policy for perceived or imagined maximum efficiency. It's to macromanage so that the policy has even half a chance of succeeding."

Excellent point well stated. Why is it so hard to understand that you need to pay into a health-care system over the broad timespan of a lifetime when you mostly don't need it so that it's there in that totally unpredictable narrow but very costly timespan within a lifetime when you do need it?
.
A system without a mandate for coverage is obviously set up to fail.
.
And one question: Is it really true that Obama is being advised on Social Security by some jerk who wants to privatize it? That would be quite telling.
.
In fact, if you add it all together, Mr. Obama is beginning to look a bit like Tony Blair.

So everyone on the D side wants all covered. I wrote that. I agree with that. And if we have to discuss tactics to the point of exhaustion, I will just say I doubt that a mandate will bring in, say, a five year old orphan, or someone who drives but doesn't have automobile insurance (since there's a mandate that isn't being followed), or many other examples. A mandate, as everyone in Mass is finding out, is not necessarily the only or best way to cover everyone. And the elevation of tactics over strategic goal is a classic D recipe for failure, in elections and in governing.

Well, I agree with you there! And elevating tactics over strategic goals has been a major if not the major failure of the Democratic Party for the past 25 years or more.

That's why we'll have another $500B Christmas present for the warmongers and no SCHIP program for Tiny Tim.

So, why the mandates is a tactic but mandated for children or raising SS cap is not a tactic?


I agree with Paul Krugman because if you want to use your system there has to be an immediate feedback mechanism to alert others who make choices about subscribing to coverage.

If there is no feedback system how can the market work when choices are available.

To this end I would suggest a "modest proposal." I suggest those who chose to not have government provided affordable coverage for their income and thus are not treated and die, their corpses need to be piled in the state capitals or in Washington as a feedback mechanism to both regulators and the public.

What feedback mechanism would you suggest for feedback so that individuals and regulators could understand the consequences of their choices and actions?

-----------------------------------------------
Today, are we searching for I deals or Ideals?
-Thinking

Let's cut through Reed's spin here.

If Edwards insists that the primary goal is a federal statute ordering all citizens, or residents, or inhabitants legal or illegal, to buy insurance, then that is not a wise strategic goal, nor a statement of a goal.

Edwards' goal is that everyone have access to healthcare without the fear that what they need will bankrupt them or get them evicted. No more Americans waiting 50 years until an operation gives them speech. No more women emptying out their savings to get therapy for their breast cancer. Get everyone insured and get them insured fast.

Obama challenged Edwards and Clinton to say how they would get people insured fast, and Edwards responded with a mechanism. But then Obama criticized the mechanisms to achieve universality. A free market may be a good thing for selling entertainment, but it is never going give everyone health insurance because rational insurers will attempt to dump expensive sick people, and rational healthy individuals won't buy insurance.

Krugman's discussion of mandates is a much more direct, more convincing argument. He actually looks at other countries who've used something similar to mandates, Switzerland and the Netherlands. The Swiss are very conservative--they even make single moms on welfare pay back the welfare money later on. And the Netherlands have long been avid capitalists. America can learn from these two countries.

Get everyone health-insured soon- period.

Obama and Hunt are wrong.

As far as what the payers,whomever they may be, ultimately pay for? Diagnostic and therapeutic efficacy (does it work?) and individual (health behaviors) and instituional (public health) prevention.

Dr. Rick Lippin
http://medicalcrises.blogspot.com

One should also reiterate the obvious, that the uninsured come with huge costs. That includes the cost to them (the most obvious and a stark and simple matter of justice), the cost to others purchasing insurance at higher rates (Krugman's carefully made point), and, as it happens as well, the cost to health care providers who end up treating them, with further consequences for the rest of us, in tax dollars and in the quality of our care.

Want an example? This struck me in a lovely article about something else entirely. In this week's New Yorker, Atul Gawande is writing about how standardized procedures, mere checklists really, can reduce medical error, save lives, and control costs. But do not miss this either (my italics):

This past summer, I visited Sinai-Grace Hospital, in inner-city Detroit, and saw what Pronovost was up against. Occupying a campus of red brick buildings amid abandoned houses, check-cashing stores, and wig shops on the city’s West Side, just south of 8 Mile Road, Sinai-Grace is a classic urban hospital. It has eight hundred physicians, seven hundred nurses, and two thousand other medical personnel to care for a population with the lowest median income of any city in the country. More than a quarter of a million residents are uninsured; three hundred thousand are on state assistance. That has meant chronic financial problems. Sinai-Grace is not the most cash-strapped hospital in the city—that would be Detroit Receiving Hospital, where a fifth of the patients have no means of payment. But between 2000 and 2003 Sinai-Grace and eight other Detroit hospitals were forced to cut a third of their staff, and the state had to come forward with a fifty-million-dollar bailout to avert their bankruptcy.

After accusing us of advocating a police state, he moved on to accusing us of another hallmark of Soviet Communism, the omnipotent planned economy. Will show trials be next? All the while, we are facing up to mainstream economics or to human suffering. I hope anyone with hopes for a job in the next administration might learn a little about both.

John

http://www.haberarts.com/

OK, now it is time to get serious.  I humbly suggest that I get the nomination and (of course) get elected to be the next president.  Hey, guys, I would really do us proud!

I just haven't seen one person with better solutions than mine. 

Actually, I am thinking too small.  I want to be Queen of the World.  Talk about a Benevolent Dictator!  First of all I need a rather large island to send a bunch of people who deserve to be isolated from the rest of us.  Then it's all down-hill from there.

Thank you for your support (that lack of sound you hear is me NOT doing the Hillary Clinton hand clap, clap, clap)!

Jan

First of all I need a rather large island to send a bunch of people who deserve to be isolated from the rest of us.

I think Cuba has already been designated for this purpose, but you got my vote.

Cuba is not big enough, and I don't want these weasles incarcerated.  I want them to have to grow their own food and take care of themselves, and I want them to be far away that they can't leave.  Australia is about the right size, but I like that country too much.

I know!  Antarctica!  It's okay that it's getting smaller, since I expect the population of my exiles will drop of precipitously when they have to fend for themselves. 

Thanks for your vote!  That makes 2 including mine!

Jan

"I want to be Queen of the World."You already wrote that in your third-grade paper. That invalidates you already. 

John 

http://www.haberarts.com/

Curses!  Foiled again!

Jan

"Curses!  Foiled again!" Who knows what evil lurks in the hearts of men? Only Mark Penn knows.

John 

http://www.haberarts.com/

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