Thursday, January 31, 2013

Richard Cohen's Squishy Moral Relativism

"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety."

- Benjamin Franklin
"I am torn between my desire for absolute security and my abhorrence of torture."

- Richard Cohen
Alas, poor Richard Cohen, having spent many years thinking (to the best of his ability) about torture, and writing columns about torture, he just can't figure out where he stands:
As with the famous ink blots developed by Swiss psychoanalyst Hermann Rorschach, some people look at the film and conclude that torture works, others conclude that it doesn’t, still others think the movie advocates torture, while some — and now we have gotten to me — don’t know what to think. I am implacably opposed to torture... unless it can save lives.
I oppose taxes, unless they're necessary to fund the government. I oppose vaccinations, unless they're necessary to prevent disease. Can you get more squishy?

Cohen is grateful that the film, Zero Dark Thirty, has started a debate over torture. This isn't like during the Bush Administration, when people were debating the definitions and use of torture in response to the actions of our own government. Our government has, after all, determined that torture is not a sufficiently effective tool for gathering actionable intelligence, and thus has abandoned the use of torture in favor of what it has determined to be better methods of intelligence gathering. No, that silly old debate didn't resolve anything, but now there's a movie!

Cohen speaks of "three senators [with] access to highly classified information... [who as] a group [] are a somber lot" taking the position that torture does not work. He elaborates,
Still, others have taken the same position. Journalists with no access to classified information but with access to people who possess that information insist that (1) torture doesn’t work and (2) it did not lead to the killing of bin Laden. Okay, point taken.
Apparently, to Richard Cohen, there is no difference between asserting, "point taken" versus "point not taken", because to him the important question is no longer whether torture "works", but whether torture is "moral". The concept of the lesser of two evils? Apparently that's not a concept that Cohen has ever encountered.
Is it immoral to waterboard someone who knows of an imminent Sept. 11-type attack? Wouldn’t it instead be immoral not to do everything in your power to avoid the loss of thousands of lives? Torture in that case might be hideous, repugnant and in some rarefied way still immoral, but I could certainly justify it.
In other words, who cares about the "real world" - Cohen has seen movies and TV shows in which bad guys are tortured into confessing their secrets seconds before nuclear bombs explode, with the good guys defusing the bomb just before the countdown timer reaches "zero", and if good guys do it on TV it can't be immoral!
The phrase "it depends" has been chased from our political life — a sign of feared wishy-washiness, which is, crucially, bad for TV ratings.
And yet it's TV shows and action movies, built to get those ratings, structured around simplistic plot lines and countdown timers, that inform Cohen's views. Does it matter that he can't find anybody "in the know" to tell him that torture "works"? Not in the slightest. He just wants somebody to admit that if we assume that torture can work in a fanciful, action movie scenario, there's moral ambiguity when the hero uses torture to elicit crucial information from a cartoon villain.

Cohen wants to engage in a dangerous form of moral relativism, the type that naturally extends to "If they do it, it's wrong, but if we do exectly the same thing it's an act of good because our motives are pure." He doesn't understand the difference between when something is morally justifiable and when it is moral. "If it saves a lot of lives" isn't sufficient - resorting to what appears to be Cohen's greatest source of moral influence, the motion picture, let's borrow from Batman and imagine The Joker is threatening to blow up Manhattan unless somebody shoots Richard Cohen in the head. Would it become moral to shoot Richard Cohen in the head? ("Ah, but I'm an innocent," Richard Cohen might protest, which under his theory of morality is beside the point. If it's "in your power to avoid the loss of thousands of lives" then it's "immoral not to do everything in your power to avoid the loss of thousands of lives", right?)

Cohen is also concerned that if the government bans torture, then people detained by the government won't be afraid of being tortured:
But it would be all right with me if the government were silent on torture so that no detainee could be confident of civilized treatment or if, in a crisis, an understandable looking away was permitted. Life ain’t neat.
I'm not sure where he thinks he's going with this. (Actually, I am, but only because I've read beyond this column.) Cohen imagines a nation in which torture is legal, and can be used on any detainee, but in which it is not actually used? Because then detainees will believe that it might be used and will volunteer information rather than risking being legally tortured?

Really, what Cohen is doing is alluding back to an argument he's made in the past, based upon his misunderstanding of the detention and torture of a single individual:
I refer you to the 1995 interrogation by Philippine authorities of Abdul Hakim Murad, an al-Qaeda terrorist who served up extremely useful information about a plot to blow up airliners when he was told that he was about to be turned over to Israel's Mossad.
As Cohen is no longer referring us to Murad, it seems reasonable to infer that somebody has clued him into the fact that the plot was revealed not through the use of torture, but because Murad's computer was overflowing with files detailing every element of the plot. And they may also have clued him into the fact that Murad was subsequently tortured, and that the torture produced no useful information while sending authorities on myriad wild goose chases. What do you do if the one anecdote you use to support your argument turns out not to support your argument? If you're Richard Cohen, it would appear that you continue to make the same argument but stop mentioning the anecdote. Cohen concludes his column by telling us that, thanks to the release of an action movie, "We are getting a robust debate over torture that we should have had years ago". Which is false. We had the same debate years ago and, but for a few details, he wrote the same column years ago. Several times. He also writes, "we are finding out a bit more about it — whether it works and whether it can ever be justified." Those are questions Cohen also asked and answered years ago. For example, on April 28, 2009,
Yet the debate over torture has been infected with silly arguments about utility: whether it works or not. Of course it works -- sometimes or rarely, but if a proverbial bomb is ticking, that may just be the one time it works.
And on May 12, 2009:
I know how upsetting this will be to some Cheney critics, and I count myself as one, who think -- in respectful paraphrase of what Mary McCarthy said about Lillian Hellman -- that everything he says is a lie, including the ands and the thes. Yet I have to wonder whether what he is saying now is the truth -- i.e., torture works.
By September 1, 2009, it was all squish:
The questions of what constitutes torture and what to do with those who, maybe innocently, applied what we now define as torture have to be removed from the political sphere. They cannot be the subject of an ideological tug of war, both sides taking extreme and illogical positions -- torture never works, torture always works, torture is always immoral, torture is moral if it saves lives.
So even back in 2009 Cohen was lecturing us that we should never speak in absolutes, whatever the facts may be. Except back then it was "extreme and illogical" to argue that "torture is moral if it saves lives" whereas now that's his central thesis.

Thursday, January 24, 2013

American Grandstand, Feauring Rand Paul

Had Rand Paul been President on September 11, 2001, he would have fired somebody... other than himself.
We spent trillions of dollars, but there were a lot of human errors, these are judgment errors, and the people who make judgment errors need to be replaced, fired, and no longer in a position of making these judgment calls."
He's apparently in a tizzy that the Secretary of State doesn't personally review and evaluate each and every one of the 1.4 million or so cables received by the State Department.

I don't believe for a second that, had he been a Senator back in 2001, Rand Paul would not have fallen right into line, circling the wagons around Bush and Rice just like every other Republican. In start contrast with Condoleezza Rice's dismissal of responsibility by her and Bush, the "historic document" excuse, Clinton has been receptive of criticism of the State Department and of how security issues might be improved. Rand Paul-style grandstanding, basically trying to score cheap political points by attacking somebody whose last name is "Clinton", obscures the actual work to be done and makes even valid criticism look partisan.

Tuesday, January 22, 2013

American Grandstand, With Orrin Hatch and Lamar Alexander

It's never too soon for ridiculous political posturing:
Today, Senate Finance Committee Ranking Member Orrin Hatch (R-Utah) and Senate Health, Education, Labor and Pensions (HELP) Committee Ranking Member Lamar Alexander (R-Tenn.) introduced legislation, the American Liberty Restoration Act, repealing the individual insurance mandate that is a central tenet of the President’s health care law.
The insurance industry, of course, requires the mandate in order to provide coverage without regard for preexisting conditions. If it appeared that the entire bill were going to be left in place as is, except for the mandate, that industry would quite obviously be displeased.

I wonder, if Harry Reid allows the bill to come to vote will we see yet another example of a Republican filibustering his own bill?

Sunday, January 20, 2013

As Long as the Health Insurance Industry Stands to Profit....

George Will has passed along the notion that, as the penalty for not buying insurance under the PPACA has been declared a tax, it will inevitably fail to inspire people to buy insurance. I'm not sure if he's still up to doing cartwheels down the halls of the Washington Post building, but you can sense a certain smugness, pleasure at the idea that legislation intended to help uninsured, underinsured and sick people obtain health insurance - and thus health care - at an affordable cost might fail. Will's argument appears to be the latest iteration of the position Michael Gerson was pushing some months back, that if the mandate is called a "penalty" people will pay it but if it's called a "tax" they will not. Gerson's idea was that if you call something a tax, people will apply a cost-benefit analysis and decide "I'm better off paying the tax as compared to buying insurance". Will proposes,
The point of the penalty to enforce the mandate was to prevent healthy people — particularly healthy young people — from declining to purchase insurance, or dropping their insurance, which would leave an insured pool of mostly old and infirm people. This would cause the cost of insurance premiums to soar, making it more and more sensible for the healthy to pay the ACA tax, which is much less than the price of insurance.

[Chief Justice] Roberts noted that a person earning $35,000 a year would pay a $60 monthly tax and someone earning $100,000 would pay $200. But the cost of a qualifying insurance policy is projected to be $400 a month. Clearly, it would be sensible to pay $60 or $200 rather than $400, because if one becomes ill, “guaranteed issue” assures coverage and “community rating” means that one’s illness will not result in higher insurance rates.
Dean Baker responds,
There are two problems with Will's logic. First, the insurance will likely pay for many non-serious illnesses that even healthy people would otherwise have to cover out of pocket. in other words, it is not a question of paying $400 for nothing as opposed to paying $200 for nothing. It is a question of paying $400 for insurance or $200 for nothing. It is not clear that many people will make the choice that Will wants them to make.
Baker also suggests that an economic consequence could be imposed upon people who don't buy insurance:
The more important problem with Will's thinking is that there are an endless number of ways to slice and dice the restrictions so that the option of not buying insurance is less attractive. For example, the cost of buying insurance can be made higher for those who had previously opted not to buy into the system. Suppose the cost of later buying into the system rose 25 percent for each year that a person opted not to buy in. (Medicare Part B works this way and the vast majority of beneficiaries do chose to buy in when they first become eligible.) This would make the arithmetic of opting out much less favorable.

The rules can also be changed to make pre-existing conditions uncovered for the first 2 years after buying insurance for those who opted to pay the penalty rather than buy into the system. Neither of these measures would in any obvious way run afoul of Justice Roberts' argument for the constitutionality of the ACA.
I agree that such consequences could be created, but I'm not sure that they would work or that they wouldn't be self-defeating - at least the ones proposed by Baker. When applying for Medicare, most people recognize that they will eventually need Medicare Part D, and the penalties are such that it makes little to no sense to put off enrollment. I'm not sure that the populations who are being targeted by the penalty view significant health costs as that inevitable.

Similarly, one of the goals of universal health insurance is to help society avoid the increased cost of care for a manageable or preventable medical condition. If you deny somebody care for a chronic condition for a couple of years, most likely the period of years after it becomes sufficiently severe that the person wants insurance, you create the risk that excluding the condition from insurance will increase the applicant's long-term healthcare costs, and you risk their condition worsening to the point of disability, perhaps taking them out of the workforce or shortening their careers.

It may be possible to work out penalty provisions that could work, and I don't want to treat a couple of "off the top of my head" ideas as the end of the discussion, but we would have to take care not to create a penalty that would undermine the goals of universality and perhaps even increase the overall cost of care.

Baker correctly points out that if a problem develops and the Republicans in Congress refuse to address it, "that route would have nothing to do with the constitutional restrictions put in place by Roberts". History tells us that Will's belief that "Republicans will ferociously resist exacerbating the nation’s financial crisis in order to rescue the ACA" is nothing more than a fantasy - when it comes to budgeting, Republicans are good at three things: Spending money, cutting taxes and thereby reducing revenues, and then whining about the fact that due to their policies we "can't afford" to pay the bills they ran up. Will confuses their "talking the talk", insisting that we must cut Social Security and Medicare in order to balance the budget, with "walking the walk", proposing actual, concrete cuts. When you look at their actions, you have... Medicare Part D, the unfunded prescription drug benefits that the Republican's leading fiscal scolds endorsed.

I continue to believe what I said in response to Gerson's column: That if the insurance industry finds that not enough people are responding to the penalty, such that their profits are at risk, the Republicans will adjust the mandate to increase participation. I find it exceptionally unlikely that they will tell insurers, "Be patient and take the losses, because in a few years we may be able to repeal the entire law." Let's not forget, there's a reason the Republicans favored this approach back in the 1980's, and why the insurance company agreed to get out of the way of the PPACA when it was proceeding through Congress: They believe that they will profit from the reform. Going back to the status quo ante may sound good to Will, but it takes away the anticipated profit. Losing money for years, in the hope of getting back to the status quo ante? Get real. Insurance companies didn't go to Congress and say, "We can't make money with Medicare Advantage", they said, "Give us a subsidy!" And they got it.

Will argues that by virtue of the penalty's having been declared a tax, "the penalty for refusing to purchase insurance counts as a tax only if it remains so small as to be largely ineffective". That's the argument that Baker was addressing when pointing out that Congress has more options than simply making the penalty larger. But I disagree with Will's conceit that the penalty tax can't be onerous - if it's reasonably related to the actual cost of providing care to the uninsured. Also, it's not a binary issue - if the tax is increased, it will not go from "too low" to "onerous", but will be ratcheted up until it becomes sufficiently effective.

The Roberts Court pointed out that by statute the penalty can never be more than the cost of insurance - but at that point, surely even Will can understand that most people will opt to acquire the insurance they're effectively already paying for, and the tax revenues from those who do not will be more than sufficient to ensure the continuation of the program. If everybody pays a premium sufficient to pay for health insurance, but some aren't receiving benefits, the result is that there's some extra money in the system. Also, as Baker points out, the threshold at which it makes more sense to buy insurance, as opposed to paying a penalty and paying for your own care, comes well before the amount of the penalty matches the cost of insurance.

The fact remains, if the penalty proves ineffective the insurance industry will come to Congress not to argue, "Repeal this program," but to say, "Fix things so that we're profitable." And just as the Republicans were happy to subsidize private competitors in the Medicare Advantage program, they will oblige the insurance industry by increasing the penalty - whether directly or through other measures along the lines of what Baker described - or by providing a subsidy.

Rantin' and Ravin' With O'Reilly

It seems that a few years ago, Bill O'Reilly got into a heated "chat" with Geraldo Rivera, over a drunk driver who had not been deported prior to causing a tragic accident. Now, O'Reilly is purporting that their shouting match was about "illegal alien crime, violent crime." So... to the transcript:
O'REILLY: When you enter this country illegally, number one, you have no right to be here, no right. That's the truth.

RIVERA: That's true.

O'REILLY: And, number two, when you're caught committing a crime, as this man was, four times.

RIVERA: He was drunk in public twice.

O'REILLY: Hold it. Four times.


RIVERA: And, one time, he was a drunk driver with no victims.

O'REILLY: He should have been deported the first time. And he was not. And the reason he wasn't deported...

RIVERA: Because he didn't commit a felony.

O'REILLY: It doesn't make any difference.

RIVERA: And he didn't commit a misdemeanor...

O'REILLY: He committed a crime.

RIVERA: He didn't commit a misdemeanor having to do with moral turpitude either.

O'REILLY: All right.
O'Reilly is correct when he says that it was a discussion about crime, but he has either forgotten the discussion or is misrepresenting it when he purports that it was about "violent crime".

O'Reilly's complaint is about the statement,
For a host who once got into an on-air screaming match with Geraldo Rivera over whether to blame drunk driving deaths on illegal immigration, it was a pretty significant shift in tone.
That statement can be interpreted one of two ways: First, that O'Reilly is relating drunk driving deaths in general to illegal immigration. That would not be a fair characterization of O'Reilly's statement. Second, that O'Reilly is relating specific drunk driving deaths, the two teenagers killed in the incident he was specifically discussing, to illegal immigration. That would be true.

O'Reilly didn't do himself any favors with his confabulation that the argument was about "violent crime", when it was not. He didn't do himself any favors with his narcissistic claim that the Talking Points Memo website "stole" that name from him. And he didn't do himself any favors by closing with a silly attack on the Internet and the TPM reporter's name. When you're accusing somebody else of playing fast and loose with the facts, it generally makes sense to try to stick to the facts, yourself.

You know what they used to say before they warned people, "Just because you read it on the Internet doesn't mean that it's true"? They warned you about television. Or the radio. Or the newspaper. Or books.

I hadn't watched the O'Reilly-Rivera face-off before. I came away with the impression that it was staged - a set-up for the epilogue in which O'Reilly and Rivera talk up their network:
RIVERA: You know, seriously, I think that one of the wonderful things about our network is that we are fair and balanced, that impassioned common peers...

O'REILLY: Yes. People can decide whether you're right or I'm right.

RIVERA: Right. And they can.


O'REILLY: And they will decide that I'm right.


RIVERA: Well...

O'REILLY: All right.

RIVERA: Maybe your viewers will, and my viewers will judge it the other way.

So, will — I think that there is — there is that — what that does is, you often talk about political correctness and left-wing media. And I think that they do think portray our network unfairly, because they fail to represent that we are on different sides of the fence, in this issue most passionately, but many others as well.

O'REILLY: That's why we have you on every week.

RIVERA: So, I — and I appreciate the chance.
It was interesting to see how quickly they shifted from red-faced bellicosity to collegiality, with both men gushing over the glories of Fox News.

Friday, January 18, 2013

Bar Admission After Two Years of Law School - A Partial Solution or a Huge Mistake?

I am skeptical that anything will come of the proposal, not because of an evaluation of its merits but because it could undermine the system of law reviews - student-edited law journals published by law schools - at all but the upper tier schools, but I think this proposal to allow students to take the bar after completing two years of law school would be a mistake.
The proposal would amend the rules of the New York State Court of Appeals to allow students to take the state bar exam after two years of law school instead of the three now required. Law schools would no doubt continue to provide a third year of legal instruction — and most should (more on that in a bit) — but students would have the option to forgo that third year, save the high cost of tuition and, ideally, find a job right away that puts their legal training to work.
Let's skip ahead to the end:
Some will argue that the two-year option would only create unequal classes of lawyers and glut the marketplace with attorneys who don’t have the skills and training that generations of law school graduates before them have had.

We doubt this will occur.
You doubt that will occur because... Unfortunately they appear to have run out of space before getting to that part.

Seriously, our system already produces unequal classes of lawyers. If you don't have the Harvard or Yale brand attached to you, what are the odds of being appointed to the Supreme Court? The nation's largest law firms focus their recruiting efforts on top tier law schools, and even within those law schools on law review members, and even then they tend to focus on the most elite law journal published by the institution. If you don't have the right job out of law school, the odds of later joining a "BigLaw" firm plummet. If you don't get the right judicial clerkship, the odds of becoming a law professor at a top law school plummet. The difference in employment and career prospects for graduates of top tier law schools are markedly different (and better) than those of graduates from the bottom tier of law schools.

How can you argue with a straight face that a student who drops out of law school after two years will be viewed as an equally qualified candidate as compared to students who graduate? Treated equally, except by law schools looking for professors, judges looking for clerks, law firms looking for lawyers....

The fantasy is that none of that matters:
While this wouldn’t increase the number of available jobs, a two-year option would allow many newly minted lawyers to pursue careers in the public interest or to work at smaller firms that serve lower- or average-income Americans, thereby fulfilling a largely unmet need. As it is now, many young lawyers say they would love to follow this path but cannot afford to because of their onerous debts....

And in any case, the risk ought to be balanced with the varied needs of the American people for legal services.
So... the idea is that although we already have far more law school graduates than available jobs, and although the proposal won't create even one additional job, and even though every single job - including some that can only be described as exploitative - gets flooded with applicants, creating a pool of less qualified applicants will... what? Allow the 2L with a law degree to apply for the public service job he "could not afford" if he completed another year of law school? Why would the public service entity find the drop-out preferable to the many law school graduates who will continue to apply for their jobs? Here's a wild idea: How about expanding the programs that offer loan forgiveness or similar subsidies to students who enter public interest careers?

The suggestion that the drop-outs could "work at smaller firms that serve lower- or average-income Americans" betrays both that they don't believe their own argument about creating "unequal classes of lawyers". They imagine the dropouts would work in low-paying public interest jobs, and for small law firms that offer discount legal services, again at low pay. You know what would be better than telling somebody that you're doing them a favor by letting them drop out of law school after two years, yet still take the bar and then go into a low-paying job? Steering them into a different degree program before they enter law school.

This isn't the first time I've heard the fantasy that if only we could glut the market with lawyers, suddenly quality legal services would be available to the masses. The authors' conceit is that this does not presently occur because the burden of law school debt prevents graduates from taking jobs that "serve lower- or average-income Americans", but those jobs are already being filled.

Is the idea, then, that small law firms serving those populations will pay the drop-outs even less then pass along the savings to their clients? Is the idea that it's so easy to handle divorces, criminal defense, consumer bankruptcies, and the like that the drop-outs will hang out shingles and compete for clients at rock bottom rates - and that the only thing preventing recent law graduates from going solo is the cost of their third year of law school? Having actually started my own solo practice in a past life, I'm having a difficult time relating the argument to the realities of starting a law firm. It's expensive to run a law firm, it's difficult to build and sustain a client base, and you can't make a living representing people who can't afford to pay you. Frankly, if the argument boils down to "You can make maybe $30K a year practicing law out of your apartment," we're back to it's being better to steer students into more suitable graduate programs or encouraging them to seek jobs based upon their undergraduate degrees.

What do the authors believe law schools would do to maintain their revenue stream, were this proposal to go through? You know what I think that they would do? Admit even larger numbers of students. After all, if you reduce the number of students who complete the third year of law school, you reduce your need for law professors, you have a harder time justifying the glorious new law school building, you offer fewer teaching opportunities to your professors outside of the 1L curriculum. I have a difficult time believing law schools would tighten their belts. Law schools aren't as expensive as they are because they need state-of-the-art science labs, medical facilities, computer technology.... The typical law school class involves a professor lecturing a class, or leading a seminar. Law schools charge high tuition because they can, and their administrators and professors enjoy their high salaries.

An alternative approach that would be less likely to create unequal classes of lawyers, and also address the author's valid criticism of the third year of law school, would be to simply shorten law school to a two year program. Law schools could turn the third year into an assortment of certification or LLM programs, allowing students who chose to choose a professorial path, working as law review editors and focusing on scholarship, or to pursue a range of other programs focused on different areas of law or different types of legal practice. That alternative would also put the onus on law schools to prove the value of the third year, rather than creating an illusion of an option - "You can drop out and take the bar" - knowing full well (or, extending the benefit of the doubt, applying a "knew or should have known" standard) that in a competitive job market the vast majority of law students won't take that chance, and that most who did would suffer for it.

Thursday, January 10, 2013

"How Are You Going to Pay for This?"

Once the current "debt ceiling" pseudo-crisis has passed, assuming he is not able to achieve a resolution that takes the debt ceiling out of the picture indefinitely, why wouldn't the President be able to ask, in response to any new spending or budget, "How are you going to pay for this?" If the answer is "spending cuts", the President can ask that they be included in the bill. If there is no answer, the President can reply, "Then as part of this bill you need to either find a way to pay for your spending, or you need to increase the debt ceiling to cover the debt that the nation will incur as a result of this spending."

The Republicans could attempt some blackmail or brinksmanship, "We absolutely refuse to fund this bill, that is essential to our national defense", but I'm not seeing how they would be helped by taking such a position. If the President agrees that the matter is so essential that the spending must be approved despite its creating a debt ceiling issue, the President can make a clear statement about what's happening (call it "public shaming") and the Republicans will should pretty foolish if they later refuse to increase the debt ceiling to pay for the spending they deemed essential.

Jennifer Rubin's 'Best' Isn't Good Enough

In what some might see as an attempt to defy a popular definition of insanity, I saw a link to Jennifer Rubin's comment, "How to Win the Debt Ceiling Fight" and decided to see if she actually had something useful to say.
Republicans are struggling to devise a formula that simultaneously holds the president’s feet to the fire and yet escapes the charge that the GOP is playing Russian roulette with the country’s credit rating. As a practical matter I simply don’t think Republicans have the fortitude to hit the debt ceiling. To avoid the inevitable march-up-the-hill-down-the-hill routine there are two strategies (probably more) readily available.
That is to say, without actually explaining what a victory would look like, Rubin perceives two potential "winning strategies" for the Republicans. The first?
First, following the lead of Sen. Pat Toomey (R-Pa.) in 2011, Republicans could pass legislation explicitly prohibiting default on our obligations and spelling out a sequence for paying our bills so that we don’t default on bond holders, stop Social Security checks or stiff the troops. However, this still might require shutting down other parts of the government, which the GOP has shown no stomach to do.
Should somebody point out to Ms. Rubin that if she admits, at the outset, that the Republicans have "no stomach" to implement her first idea, there's no point in pretending it's serious? Note, Rubin's objection is that the Republicans have no follow-through. She ignores the logistical issues: if she knows of a way the House of Representatives can "pass legislation" that becomes law despite being rejected by the Senate and President, I would love to hear about it....

At the heart of Leahy's proposal is, I suspect, a recognition of how much power Congress delegates to the President when it forces a government shut-down. The idea would presumably be to structure the shut-down to damage Democratic interests while protecting Republican interests over a period of months while the government is unable to pay its bills. The problem thus goes well beyond "stomach", and into the territory of naked partisanship. The Republican Party would have to show its hand - to let the public know exactly what the price would be for its brinksmanship, and how much worse things would get over the ensuing weeks and months until default became inevitable. And... then what?

When the blackmail is explicit, the President will be able to point directly at the blackmail - "They say that if I don't agree to budget cuts that they won't identify, they're going to keep me from paying your Social Security retirement benefits>". What would be the Republican response to that? Would they develop the "stomach" to identify the cuts that they want? Rubin doesn't think so. So the President's response can be, "You control the purse strings - pass a bill enumerating the cuts you want in order to get us out of this catastrophe you've created," and the Republicans have to choose between looking like (malicious) fools, identifying the cuts, or folding. Even Rubin can see the folly of that approach.

What's Rubin's other idea?
The other approach, the smartest I have seen so far, comes from Keith Hennessey, who explains that Republican leaders begin by “assuring [the president] that we will not allow the government to default on its obligations. The debt limit will be increased. The questions we must resolve are first, whether we will simultaneously cut government spending and second, who will cast the votes for the debt increase.” The Democrats then have a choice: either agree to significant entitlement reform in conjunction with a debt increase to get Obama through at least 2014 or the House Republicans will ”deliver 50 Republican votes for a three-month clean extension.
Basically, the Republicans will say, "We're up against the debt ceiling and we want you to make cuts." The President will reply, "What cuts would you like to make?" The Republicans will once again come up with nothing (as Rubin says, "no stomach"). The President will reply, "If you don't want to cut the budget, then you are going to need to approve the spending you've already authorized." The Republicans will then pass a debt ceiling increase approving that spending.

That is the smartest Republican strategy Rubin has seen? She provide's Hennessey's rationale,
[T]his strategy would tell the President, “Hey, if you want your terrible policy, you’re going to have to deliver House Democratic votes for it. Good luck with that.” Either the President accepts and Republicans pound on the “Democratic debt limit increase” message every three months, or he agrees to cut spending. Either way, default risk is eliminated. Republicans will look responsible because they will be acting responsibly, and the markets couldn’t care less about which Members take political heat for casting these unpopular votes.
So every three months the Republicans will say, "Cut spending or we'll raise the debt ceiling," the President will reply, "If you're going to raise the debt ceiling anyway... but, okay, I'll humor you, what cuts do you want me to consider?" The Republicans will reply, as usual, with "We got nothing." Then the public will get mad at the Democrats because the debt ceiling goes up? And it's "lather, rinse, repeat every three months for the next four years"?


Not content to simply look foolish, Rubin has to embellish Hennessey's proposal with some terrible advice for her party:
I would add that under no circumstances should the negotiations (if the president chooses to entertain real entitlement reform) be in secret and/or between Republican leaders and the president. It’s time for regular business, with all lawmakers forced to cast votes. Shifting the focus away from the White House is hugely important in avoiding a (losing ) PR battle with the president and might actually deliver results.
Except this Republican grandstanding only works when they pretend it's the Republican Congress against an all-powerful President. If you reduce the role of the President, you make it obvious that Congress controls the proverbial purse strings - that the debt ceiling sideshow is irrelevant, and that the fundamental problem is that the Republicans in Congress keep authorizing the spending that necessitates government debt. You allow the President to point to the public, bipartisan negotiations and say, "When they come up with solutions, I'll be happy to review their budget reform bill, but for now they are running up the bills and it's my job to pay them." And then, per Rubin's proposal, the Republicans will raise the debt ceiling without condition. It's as if she wants her party to appear toothless.
A final word of advice: The Republicans should turn the president’s favorite class warfare game against him. He is the one defending Warren Buffett’s right to receive Social Security and free ride on Medicare; Republicans want to force rich people to pay more and get less so middle- and lower-income people have their benefits. Republicans may shy away from such arguments but unless the GOP captures the “fairness” argument and becomes the champion of the little guy, it will keep losing support and forever be outfoxed by the White House.
I am not sure that Rubin is going to convince more than a tiny handful of dimwitted people that somebody who pays FICA at the maximum rate for most of his career, and continues to do so well past retirement age, is getting a "free ride". If it needs to be explained, if you pay for insurance you are entitled to receive the coverage that you have paid for, even if you're rich - and Buffett, at age 82, is still paying into the system. Further, despite Rubin's eagerness to engage in what her party decries as "class warfare", even if you disqualify the top 1% from eligibility for Social Security and Medicare you will not materially affect the balance sheet.

Rubin apparently hopes that this form of Republican class warfare will confuse people. "We could cut Medicare spending by 1% if the richest 1% of the population were declared ineligible for Medicare. We, the Republican Party, don't think that's fair and to show that we stand for 'the little guy' we propose cutting everybody's Social Security and Medicare benefits."

Rubin's good at pouring out the snake oil, but if she wants people to actually buy it the trick is to confuse people into thinking they're getting something other than snake oil.

George "Grandpa Simpson" Will Wants a Balanced Budget Amendment

Mind you, he doesn't actually try to make a case for a balanced budget amendment, but he does display a fascinating disconnect between his political views and the facts. First up, an angry rant about how the Democrats did not raise taxes enough:
Liberals could have had a revenue increase of $3.7 trillion over 10 years. Instead, they surrendered nearly $3.1 trillion of that. They cannot have repeated bites at this apple.... And because tax reform is dead for the foreseeable future, so are hopes for a revenue surge produced by vigorous economic growth....

By rescuing almost everyone from the restoration of Clinton-era rates, liberals abandoned any pretense of paying for their program of ever- expanding entitlements. Instead, they made trillion-dollar deficits their program.
Were Will interested in facts, he might note that the Republican Party opposed the tax increases that the Democrats proposed, which is to say that if Will is going to complain that Congress hasn't raised enough taxes on enough people he's directing his temper tantrum at the wrong party. As for the conceit that we might have had some sort of larger discussion of "tax reform" but now we can't, due to a modest tax increase on the wealthy, perhaps he can direct us to where that negotiation was occurring - or where we can find anything approximating a serious Republican "tax reform" proposal - and explain why the odds of progress on these confabulated tax reform negotiations and proposals are less likely to bear fruit today than they were two weeks ago.
Because 82 percent of American earners pay more in payroll taxes than income taxes, no politically conceivable or economically feasible middle-class tax rate can fund the entitlement state.
So... because we fund Social Security retirement, SSDI and Medicare through FICA, the fact that pretty much every working person pays FICA taxes.... Um, non sequitur, much? When programs are funded through dedicated taxes, one might think that the proper approach to addressing funding issues would be to examine the dedicated taxes, not go off on a rant about how other taxes should be higher.
People who choose to live in places vulnerable to flooding believe it would be unfair that the cost of their property insurance fully reflect this risk. So government subsidizes their insurance, and hence their decision to live where there is increased risk of property damage that, when it happens, the government helps pay to rebuild.
Stop me if you've heard this one before: What do you call a wealthy person who carries government subsidized flood insurance on his waterfront mansion, one of several homes he owns, and then after a hurricane sues his insurance company because despite the subsidy he chose not to carry adequate subsidized flood insurance to replace his home and contends that the damage was caused by the wind? No peeking.

Will also carries on about one of his pet fixations, Amtrak, complaining that it loses money on food service. Alrighty....

Absent from Will's rant is any argument that a balanced budget amendment would be good policy for the nation, how it might be structured, or even whether his party would support it. If Will had a bit more perspective, he should realize that his own rant effectively answered that question - When they are in control, Republicans are the party of "Deficits don't matter". They're the party that implemented the temporary tax cuts that Will apparently wishes would have expired in toto, and they are the party that prevented the expiration from reaching a slightly larger number of taxpayers.

Wednesday, January 09, 2013

AIG Suing the Government... Have Pity On the Orphan

Even if willing to excuse the incompetents, those who didn't want the criminals who helped take down the economy to avoid any consequence have been reminding us for years that the statute of limitations was running:
In the meantime, the statute of limitations, generally five years for securities fraud and most other federal offenses, is running out, precluding the possibility of bringing many new suits dating from the bubble years.

The result is a public perception that the big banks and their leaders will never have to answer fully for the crisis. The shameless pursuit of Wall Street campaign donations by both political parties strengthens this perception, and further undermines confidence in the rule of law. There may be more civil fraud suits related to the financial crisis, producing settlements and fines. But to date, those cases have rarely named top executives and the banks have rarely admitted wrongdoing. And the fines, even those in the hundreds of millions of dollars, have been small compared with bank profits and banker bonuses.

After all these years, what is still needed are cases with convictions and settlements severe enough to deter future bad behavior. If institutions operating at the heart of the economy really cannot be held to account, the solution should be to break them up, not give them and their leaders a pass.
In an editorial that reminds me of the joke about the lawyer defending his client, accused of murdering his parents, "How can you say such awful things about this poor orphan," David Boies makes the case for AIG's suing the federal government for having the audacity to bail it out:
Objections to AIG shareholders having their day in court to contest the terms of the government's takeover of their company are based on ignorance of the law and the facts.
Opening your argument by pounding the table? Not a good sign.
David Boies is the lead attorney representing Starr International in a shareholder lawsuit against the government. Starr's chairman is Maurice "Hank" Greenberg, AIG's former chief executive.
One statement I do not expect to be hearing from Boies,
This suit was not commenced at an earlier date because it was complex, not because my client has done anything wrong or has anything to hide, and my client happily waives the statute of limitations for any criminal charges or civil claims arising from his own conduct. Pure as the driven snow, he is.
Most of Boies' arguments, no offense to the man, strike me as the leavings of a ruminant. I am to believe that private investors were lining up to bail out AIG with sweetheart deals, but that the U.S. government scared them off? Care to name one, or should we refer to them for now as "Hank Greenberg's invisible friends"?

Remember all that nonsense about "the sanctity of contracts" from back in the day, when insurance executives were insisting that gargantuan bonuses be paid to the idiots who took down the economy, and that payouts be made in full with taxpayer cash, because insurance companies cannot survive unless their word is gold? (Ever make an accident claim only to be lowballed by the insurance company, or fight to get a medical procedure covered? Then odds are you weren't fooled.) Remember how we were instructed that it could even be illegal for AIG to try to negotiate reduced payouts to counterparties? Now Boies complains that AIG actually had to live up to its word, the so-called "back door bailout", because the government used taxpayer money to fully fund AIG's liabilities.

If Darrell Issa has a spine hidden somewhere beneath his suit coat, perhaps he'll stop peering unsuccessfully under the skirts of Obama Administration officials, in search of fake scandals, and turn his attention full bore on AIG. And perhaps he can rally his fellow Republicans to authorize a blank check for the defense of the lawsuit - enough of the excuse for failing to prosecute of, "It's just too complicated". You didn't want to take the war to AIG, fine, but now AIG has brought the war to you. If Hank Greenberg has a case to make, let him make it - but turn the heat way up.

Tuesday, January 08, 2013

David Brooks and the Missing Link

A few days ago, I suggested that when David Brooks fails to link to something that he is referencing and is easily available online, he's probably hiding something. Here we go again:
Spending on domestic programs — for education, science, infrastructure and poverty relief — has already faced the squeeze and will take a huge hit in the years ahead. President Obama excoriated Paul Ryan for offering a budget that would cut spending on domestic programs from its historical norm of 3 or 4 percent of G.D.P. all the way back to 1.8 percent. But the Obama budget is the Ryan budget. According to the Office of Management and Budget, Obama will cut domestic discretionary spending back to 1.8 percent of G.D.P. in six years.
No link to that 1.8 percent figure? You'll find it here, on page 30, with the explanation,
Discretionary spending levels other than overseas contingency operations reflect the budget authority caps under the Budget Control Act of 2011. The split of discretionary spending between security and nonsecurity after 2013 is based on increasing budget authority in each category by the growth rate in the aggregate discretionary cap.
Perhaps Brooks somehow missed it, but right now neither party is keen on implementing the automatic tax cuts that are scheduled to occur under the deficit reduction sequestration provisions of that Act.

Brooks also describes CBO projections,
The current budget calls for a steep but possibly appropriate decline in defense spending, from 4.3 percent of G.D.P. to 3 percent, according to the Congressional Budget Office.
The 3% number apparently comes from here, page 74, for the year 2022:
Most discretionary appropriations for 2013 through 2021 are constrained by the caps and automatic enforcement procedures put in place by the Budget Control Act; for 2022, CBO assumed that such appropriations would equal the 2021 amount grown at the rate of inflation. Given those appropriations, discretionary spending would decline from 8.4 percent of GDP in 2012—which is already below the 2011 level of 9.0 percent—to 5.6 percent in 2022 (see Table 5-1).
In reciting the 3% figure as "possibly appropriate", Brooks is expressing some level of indifference to a cut to that level. His professed fear is that "defense planners are notoriously bad at estimating how fast postwar military cuts actually come", whereas his ability to project future Medicare cost increases verges on perfection (never mind that he appears to be unaware that Medicare spending growth has been lower than projected for the past three years) - and thus at some point in the future the military budget might be cut below the 3% (that results from the sequester, and that both parties appear intent on raising) in the CBO projection. Also, there's an inherent tension between arguing that the 3% figure is "possibly appropriate" and Brooks' overall thesis that the President's purpose in appointing Chuck Hagel is to have him "supervise the beginning of America’s military decline".

First it's the OMB, then the CBO, and then over to the GAO. David Brooks writes,
Keep in mind how brutal the budget pressure is going to be. According to the Government Accountability Office, if we act on entitlements today, we will still have to cut federal spending by 32 percent and raise taxes by 46 percent over the next 75 years to meet current obligations. If we postpone action for another decade, then we have to cut all non-interest federal spending by 37 percent and raise all taxes by 54 percent.
The GAO writes,
One measure of the challenge over the long term is the “fiscal gap.” The fiscal gap represents the difference, or gap, between revenue and noninterest spending over a certain period, such as 75 years, that would need to be closed in order to achieve a specified debt level at the end of the period. From the fiscal gap, one can calculate the size of action needed—in terms of tax increases, spending reductions, or, more likely, some combination of the two—to close the gap.

For example, to keep debt held by the public as a share of GDP in 2086 from exceeding its level at the beginning of 2012 (roughly 68 percent of GDP) in our Alternative simulation, the fiscal gap is 8.3 percent of GDP (see table 1). This means that revenue would have to increase by 46 percent or noninterest spending would have to be reduced by about 32 percent (or some combination of the two) on average over the 75-year period. Even more significant changes would be needed to reduce debt to lower levels.
Brooks says "and", the GAO says "or"... which means Brooks is doubling the size of the problem. Were Brooks to resort to the obscure news source known as the "New York Times", he would find an explanation by Bruce Bartlett of the GAO's projection:
As the table shows, spending is not out of control. Entitlement programs like Social Security and Medicare are rising gently as the baby-boom generation retires. All other spending, including that for the military and domestic discretionary programs, falls – with the notable exception of interest on the debt. Interest rises sharply as the deficit rises, principally because the G.A.O. assumes that revenue will not be permitted to rise above its historical average – as Republicans continually insist....

That leaves interest on the debt as the principal driver of long-term spending and deficits. As the G.A.O. projections show, net interest rises from 1.4 percent of gross domestic product this year to 3 percent in 2020, 4.9 percent in 2030 and continues rising astronomically thereafter as interest accrues on the bonds previously sold to pay interest on the debt.

Interest rises from 6.1 percent of the federal budget in 2012 to 12.9 percent in 2020, 21 percent in 2030 and eventually reaches 59 percent if current projections are maintained through 2082, the last year in the G.A.O. analysis. As a share of the deficit, interest would rise from 19.2 percent this year to 62 percent in 2020. In the long run, virtually all of the deficit is accounted for by interest on the debt.
Bartlett asserts that the way to avoid that enormous increase in the cost of interest is for the present generation of Republicans to stop preventing government from paying for itself. Simply put, the GAO report does not support Brooks' "out of control Medicare" position, but is the result of out-of-control borrowing forced by Republican insistence that government not be adequately funded. If you don't want the national debt to grow and you're not willing to make the cuts to government expenditure necessary to avoid growing the debt, you have to increase revenues.

On the positive side, Brooks seems to have given up on his peer group's historic insistence that the problem is a single program called "medicareandsocialsecurity", and is now focused on Medicare. On the negative side, he's not being honest about what his sources actually say, and he's making what is fundamentally an appeal to fear. The OMB and CBO reports are only relevant if the Republicans refuse to work out a different deal, such that the automatic cuts are not changed. The GAO projection, which is half as dire as Brooks purports, indicates that the growth of Medicare costs remains a significant concern but that the larger concern is that continued, long-term deficit spending will cause the amount the U.S. has to pay to service the debt to snowball. This?
Chuck Hagel has been nominated to supervise the beginning of this generation-long process of defense cutbacks. If a Democratic president is going to slash defense, he probably wants a Republican at the Pentagon to give him political cover, and he probably wants a decorated war hero to boot.

All the charges about Hagel’s views on Israel or Iran are secondary. The real question is, how will he begin this long cutting process? How will he balance modernizing the military and paying current personnel? How will he recalibrate American defense strategy with, say, 455,000 fewer service members?
Fear-based nonsense. First (granting that he's younger than he looks), if Brooks recalls his history, back in 2000 candidate Al Gore was proposing greater military spending than candidate George W. Bush, and Donald Rumsfeld was predicted to have been chosen to oversee a reinvention of the military into a smaller, more nimble force. How did that turn out, again? Second, even Brooks knows that Hagel will not be overseeing a reduction in the active duty armed forces from 1.4 million down to @1 million. Brooks doesn't explain his number, but I expect he's extrapolating from the financial figures from the CBO - a reduction "from 4.3 percent of G.D.P. to 3 percent" over eight years, or 30% over eight years, with 30% of 1.4 million being 4.2 million... that's in the same ballpark.

Never mind that Hagel is unlikley to be Defense Secretary in eight years, that the scheduled defense cuts underlying that projection are not going to happen, that a 30% cut does not prevent prioritization (it would not be 30% of each line item, across the board), that Congress controls the purse strings, that neither this Congress or the President can bind the hands of their successors, or that Brooks himself has suggested that the net result (of the cuts that won't actually occur) may be an appropriate level of defense spending. "The sky is falling - we're turning into Europe and it's going to happen this month."

A still theoretical 30% cut in military spending is not going to "turn us into Europe."

What's missing from Brooks' column? A solution. Brooks implicitly rules out means testing when he argues that a tax increase on the wealthy is "barely a wiggle on the revenue line and does nothing to change the overall fiscal picture". Does he endorse the Democratic initiative to attempt to identify the most effective treatments for medical conditions, why trying also to identify and eliminate costly treatments that are either no more effective than less costly counterparts or that don't work at all? If so, he should write a column criticizing his own political party for its demagoguery about "rationing" and "death panels". Does he want to arbitrarily cap Medicare expenditures and replace the program with vouchers? If so, he's afraid to say so. Does he simply want to reduce compensation levels for doctors, hospitals, and medical equipment suppliers? What's left?

Friday, January 04, 2013

The High Personal Cost of End of Life Care

According to Ezekiel J. Emanuel,
IT is conventional wisdom that end-of-life care is an increasingly huge proportion of health care spending. I’ve often heard it said that people spend more on health care in the year before they die than they do in the entire rest of their lives. If we don’t address these costs, the story goes, we can never control health care inflation.

Wrong. Here are the real numbers. The roughly 6 percent of Medicare patients who die each year do make up a large proportion of Medicare costs: 27 to 30 percent. But this figure has not changed significantly in decades.
It seems reasonable to infer that by "figure" Emanual means "percentage", as it is implausible that the dollar figure expended on care during the last year of life has not changed significantly "in decades". So what does that percentage figure mean in terms of dollars?
The Medicare program provides subsidized medical insurance for the elderly and for some disabled people. Spending for Medicare totaled about $555 billion in 2012, providing coverage for about 50 million people.
Let's use the low-end figure, 27%. Emanuel is instructing us that 6% of Medicare recipients consumed 27% of $555 billion - let's round that off to $150 billion for 3 million Medicare recipients, an average of $50,000 per person. That, in contrast to $8,617 on average for everybody else. Let's not forget, also, that many of those patients will be in long-term care facilities for much of the year, subsidized by their savings and, once those are depleted, by Medicaid. While the proportion may not be rising, the dollar amount is rising - faster than inflation - and while the numbers bear out the position that people don't, on average, spend "spend more on health care in the year before they die than they do in the entire rest of their lives" the numbers do suggest an enormous expenditure on medical care for patients who receive little benefit from that care - and perhaps pay an enormous personal price on top of the financial cost.

And the total number of Americans, not just older people, who die every year — less than 1 percent of the population — account for much less of total health care spending, just 10 to 12 percent.
Given that younger Americans are much more likely to die from traumatic injury, it's not really a surprise that when they're included in the picture the percentage declines. But as Emanuel surely knows, although care for traumatic injury can be phenomenally expensive, people are not actually talking about car crashes when they are talking about the high cost of end-of-life care.

Emanuel makes a better point about cost reduction,
The more important issue is that just because we spend a lot on end-of-life care does not mean we can save a lot. We do know that costs for dying patients vary widely among hospitals, which suggests that we can do better. And yet no one can reliably say what specific changes would significantly lower costs. There is no body of well-conducted research studies that has proved how to save 5, 10, much less 20 percent.
That's true in part. There are patients who are clearly terminal, but whose families insist upon additional treatment (sometimes overruling the wishes of their loved one) at significant cost. Also, if you think through the logical implications of a typical voucher plan, there appears to be a significant population of people who would "save" money simply by cutting off payment for treatment. While it remains correct that there's no good way to define, in advance, when the last year of life begins and what approaches to treating a specific medical condition will save money without compromising care, if you're willing to be sufficiently mercenary to ration care and make that $50K figure impossible for the average elderly person to reach, you'll "save" money.

If you want to try to identify means of saving money - approaches to end-of-life care that avoid the cost of hospitals, skilled nursing facilities, and the like - it's necessary to engage in the analysis of available data on approaches to patient care, costs and outcomes. If you want patients to be informed of their options, including the fact that by foregoing the aggressive treatment of what is likely to be a fatal disease they may both live longer and have a better quality of life, you have to actually educate the patient - and as Emanuel notes the last effort to introduce that sort of education on a widespread basis collapsed under Republican hysterics about "death panels".

Emanuel is correct that doing nothing to improve the quality of care for the dying is not an acceptable approach to end-of-lie care, but at the same time he suggests that we're doing very little. Emanuel supports end-of-life counseling for patients (the so-called "death panels"), increased availability and use of palliative care, and revised criteria for admission to hospice care. But we can also do some comparative outcome research, which might help us create better criteria for who truly is approaching the end of life, and what treatments that might represent top notch quality of care for a younger patient may undermine quality of life and perhaps even shorten the remaining lifespan of an elderly patient.

Thursday, January 03, 2013

The Elderly Cannot Be Informed Consumers of their Most Expensive Care

I am not sure how I came to the page, but in going through the proliferation of articles I had opened in my browser with the intention of "getting to this later", I found "Saving Medicare from Itself" written in mid-2011 by Avik Roy of the Manhattan Institute. For the most part the article simply rehashes the conventional wisdom about Medicare - if costs continue to significantly outstrip inflation, the program cannot be sustained.

Given that Roy started out by, in effect, preaching to the choir, he had what should have been a relatively simple task. Use the available facts and data to point to possible solutions to the problem of healthcare inflation. I know that some argue that the problem of healthcare inflation is going to cure itself - that the changes that led to the rise in costs reflect the significant evolution of the industry and, as we exit the era of new blockbuster drugs and improvements in medical technology become more incremental, inflation will tame itself. But history is a better teacher than wishful thinking - or as Burgess Meredith put it... - we have to plan as if healthcare inflation will continue to rise. And you know what? If we find ways to make healthcare significantly more affordable without compromising quality, even if the cost curve cures itself we'll be much better off as a society.

If Roy believes his own thesis, then one of his arguments should be, "We should look at how other industrialized nations are able to offer a comparable quality of care, with comparable outcomes, at a much lower cost, and at least think about doing what they're doing." Alas, Roy is not so much interested in advancing good policy as he is in advancing the agenda of reducing the scope of Medicare.

Roy argues,
The largest driver of Medicare cost inflation is the fact that retirees bear little of the expense for their own care. As a result, seniors have no incentive to avoid unnecessary or overpriced treatments. Rettenmaier and Saving have shown that, between 1960 and 1985, growth in health expenditures was highest in those categories of spending in which consumer cost-sharing was lowest (such as hospital care), and lowest where consumers were most responsible for their own expenses (like prescription drugs, which were not covered by Medicare during that period).
If that actually were the cost, you should see a different rate of medical inflation for non-elderly populations. You should see yet another, much lower rate of medical inflation for procedures that normally fall outside of insurance coverage. And you should see a much higher rate of inflation in industrialized nations that offer universal or near-universal healthcare coverage. But... you don't.

Roy overlooks the fact that people are inevitably going to be poor consumers of healthcare services. They like their doctor, so they keep going back to their doctor - and while the relationship will benefit many patients, others will keep going back to a doctor who is providing substandard care or who is opportunistically ordering unnecessary tests and procedures, perhaps through self-referral, in order to maximize his revenues. How does Roy suggest that the average elderly person determine whether the doctor she trusts is providing sufficient care, or if a different doctor might offer equivalent care at a lower price or better care at a higher price that nonetheless results in a net savings?

But more than that, where does Roy imagine that the savings will come from? If we're talking about seniors with chronic health conditions, they are going to need diabetes supplies, oxygen, catheters and the like. No way around it. Does Roy believe that individuals can get better pricing on care, supplies and services than an insurance company or government agency that can negotiate a discount? If so, I would like to see him connect that theory to the reality in this country, where the uninsured pay the highest prices for their medical care. If I were to be less charitable, I might ask whether Roy's intention is that the elderly have to choose the care, medication and equipment they need, versus paying their bills, buying food....

One has to ask if Roy's goal is to bend the cost curve, or if it's simply to shift medical costs from Medicare onto elderly individuals. If we presuppose that the elderly can afford the care that they require, it remains fair to observe that a cost shift does not actually address either the cost of the healthcare system or healthcare inflation. It simply means that instead of the money coming from Medicare, it will come from a senior's savings. Or their children's savings. Because unless the goal is deprivation, the money has to come from somewhere.

The problem with Roy's argument actually goes much deeper, when you consider the times when the elderly can easily run up five and six figure medical bills. A senior falls and fractures her hip. A senior has a heart attack or stroke. A senior collapses and is diagnosed with acute kidney failure. They can be in a hospital with a five figure medical bill before they're even able to consider whether they're in the most appropriate care center with the most appropriate doctor and most appropriate treatment plan. When you suffer a catastrophic health issue, odds are you are going to have to rely upon some combination of serendipity and the good intentions of others to get you to a point of medical stability - Roy's conceit that it is possible to address this type of issue by giving seniors an incentive to shop around for the best deal isn't realistic.

Roy complains that the same general problem holds true across the board:
The same holds true for all consumers of health care — not just the elderly. Medicaid and the system of employer-based health insurance both provide a great deal of first-dollar insurance coverage, meaning that consumers do not pay directly for services they receive and therefore have no clear sense of relative costs and values. In 1960, individuals paid directly for 52% of national health expenditures, but by 2008 that share had declined to just 12%. Americans are shielded from the real costs of their health care; as a result, it costs too much.
Except here's the thing: Insurance companies have been experimenting with copayments and deductibles to try to save money. And that cost-shifting has been relatively successful. However, on the whole, the net cost to the consumer has gone up. Why? Because when you have comprehensive insurance and your doctor says, "You need a CT scan", somebody from the medical center calls up your insurance company to see if it's covered. If the answer is "No," the patient is likely to receive a less expensive test that is covered by insurance. On the other hand, if the patient does not have that invisible intermediary, there's nobody to come back with, "Why not start with an ultrasound (or other test that might either confirm or refute a potential diagnosis) and we can see if the CT remains necessary once we have the results." They simply hear their doctor saying, "You need this," and so they pay for it.

Which brings to mind another contributing factor: the doctor may not have any idea what the tests, procedures, and medications he orders cost. In fact, there's a large, lucrative industry built around trying to convince doctors to prescribe expensive, patented medications, or to use new medical technologies, implants and devices. Perhaps that would be mitigated in part if more patients were overtly cost conscious, but I doubt it - it's not realistic for doctors to keep track of the relative cost of myriad treatment options, and to try to guide patients through their choices - particularly at those times when the most expensive care decisions are being made. Even if we assume that the information is available, accurate and that the patient is capable of understanding the financial information. It's simply not realistic.

Note that Roy also assumes that the fact that "In 1960, individuals paid directly for 52% of national health expenditures" while now "but by 2008 that share had declined to just 12%" means that people are choosing to obtain care that the don't actually require. A big part of the difference comes directly from Medicare - a program that was created in no small part because the elderly were being underserved by the health insurance market. We also now diagnose and treat a wide range of chronic health issues that were barely on the radar screen, or even unknown to medicine, back in 1960. We also offer a wide range of medical treatments that significantly improve the quality of life that were in their infancy or largely unavailable in 1960. A big part of the difference comes from the fact that, as a society, we have decided that certain medical care should be provided to people even when they cannot afford to pay a cent toward that care - hence programs like Medicaid and laws like EMTALA.

Roy makes little effort to advance his position that healthcare costs would decline if consumers were required to pay for a greater percentage of their care, and as I noted the data suggests that costs could actually increase. Roy does not attempt to document that the care is unnecessary, or the mercenary argument that if we apply a cost-benefit analysis we as a society will be better off even if we deny people access to necessary medical care.

At the end of his article, Roy reveals himself to be little but a foot soldier for the Romney/Ryan "reform" plan - not a policy analyst, but a political advocate. His first recommendation is right out of the political coward's playbook - "Don't change anything for anybody aged 55 or older." That's not about making good policy or protecting people - it's about votes. If in fact his second proposal, cost sharing (i.e., increasing what people have to pay for the care they receive) leads people to "make sensible decisions about whether to pursue treatment", it will do so for somebody who is presently 55 or older. If in fact his third proposal, means testing, is a reasonable measure, there's no reason to exempt the present generation of wealthy Medicare recipients from that standard. Worse, cost-sharing is unlikely to work, and means testing is not likely to produce appreciable savings.

Roy's next proposal is to "index the Medicare retirement age to life expectancy", that is, to make people wait longer to qualify for Medicare. Never mind that a significant population of seniors already postpone medical treatment until they qualify for Medicare. Never mind that the cost of postponed treatment can mean that the overall cost of Medicare goes up, or that more people will end up either on Medicaid, or become eligible for Medicare through SSDI instead of through reaching the retirement age. If there is a valid argument that actual savings could be realized, Roy hasn't tried to make it, relying instead upon supposition.

Roy's first meaningful proposal is to work harder to eliminate fraud from Medicare. Except everybody wants to eliminate fraud. Doctors and clinics get sued and prosecuted for Medicare fraud. Roy's solution? To privatize administration of Medicare. He may as well argue that we should wave a magic wand. There is no reason to believe that privatized administration will reduce fraud, and every reason to anticipate that it will increase costs.

Roy's ultimate proposal is that we implement a Ryan-style voucher plan for Medicare, while allowing seniors to buy insurance through a health insurance exchange. You know, the sort of exchange that's "the end of the world" as part of the PPACA, but for some reason is the height of market efficiency for a post-Medicare voucher program for the elderly.

Roy closes by attempting to put Medicare "in context":
Addressing this problem would require reforming and integrating Medicare, Medicaid, the employer-sponsored system, and the individual market (and would therefore require replacing Obamacare with a very different set of health-care reforms well beyond Medicare). It would involve addressing the runaway costs of defensive medicine and medical-malpractice litigation. Such changes would of course be extremely difficult to undertake, as the heated ongoing health-care debate amply demonstrates.
Roy wants to "integrat[e] Medicare, Medicaid, the employer-sponsored system, and the individual market"? That sounds a lot like what would be accomplished through "single payer". So no, that's actually not what Roy wants. Were Roy and his brand of analyst serious about reform they would be looking around the world at how other industrialized nations have responded to the same issues and proposing that we emulate their success. Instead they urge us to ignore our lying eyes, drink the Kool-Aid, and double down on our history of failed market-based (non-)solutions.

Note also Roy's introduction of the canards that "defensive medicine" and medical malpractice play a significant role in the current problem, and his prevarication that they are "runaway costs". They weren't important enough to address in his plan to save Medicare, but how can you close out a political argument like this without dropping them in for good measure? A serious analyst would put the prevention of malpractice and maloccurrence on the agenda, while recognizing that any effort to push the "runaway malpractice costs" like would reveal him as a dilettante. The current system compensated a very small percentage of malpractice victims, and is very accurate at weeding out unsupported claims. There's no indication that so-called "defensive medicine" could be eliminated even if doctors enjoyed absolute immunity - and if you look at the facts even the most sweeping "tort reform" measures, such as the laws in Texas that come close to giving doctors immunity, do not affect the manner in which doctors order tests and procedures. What changes things? The sort of salaried arrangement used by facilities like the Mayo Clinic and the Cleveland Clinic. Go figure.

Strip away the window dressing and the argument boils down to, "Medical care costs too much and costs are rising too quickly. I have no solutions, so I propose eliminating any form of group health insurance, giving poor people vouchers that they can use to pay for individual insurance policies, and calling it a day."

A Better Approach to Balancing the Budget

The biggest problem we face in trying to balance the budget is that neither political party actually puts a high value on balancing the budget. The Republicans like to talk about deficits until they are in power, at which point the Dick Cheney "deficits don't matter" philosophy takes hold and deficits explode. The Democrats want to preserve "social safety net" programs to a much greater degree than the Republicans, but left to their own devices the Republicans are more apt to expand those programs than to shrink them. When it comes to the major expenditures of the government, neither party is willing to propose cuts that have any chance of balancing the budget.

Our nation's deficits are primarily driven by health care costs. Once the recovery is complete, tax revenues will rise to historic levels and much of the annual deficit will go away "all by itself". If we could reduce our nation's healthcare expenditures to those typical of other nations, the deficit issue would largely vanish. But a Congress that chooses to tie Medicare's hands in negotiating bulk discounts in order to keep drug costs (and profits) high is not likely to address health costs in a meaningful way.

Let's approach the deficit from a different angle. Rather than talking about hypothetical (and sometimes imaginary) spending cuts or loophole closures, lets look solely at revenues. That is, let's have a discussion about what taxes we might create and raise in order to balance the budget with the least possible disruption to the economy. Such tax increases can be postponed until the economy is in a normal state - and perhaps avoided at that time - but if the spending cuts and tax loophole closures aren't there or if Congress isn't willing to implement them, the solution must come from new revenue.

Once the sources of additional revenue have been identified we can have the discussion: Do we in fact want the budget to be in perfect balance and, if not, how much new debt can we reasonably accrue and sustain? Are the new taxes and tax increases the best, most cost-effective, least painful and most efficient means of balancing the budget? If not, what spending cuts or loophole closures might be substituted?

If John Boehner believes a word of his statement,
The American Dream is in peril so long as its namesake is weighed down by this anchor of debt. Break its hold, and we begin to set our economy free. Jobs will come home. Confidence will come back.

We do this not just to boost GDP or reduce unemployment, but to secure for our children a future of freedom and opportunity. Nothing is more important.
He will be willing to live up to those words by putting aside his lesser concerns - including his party's pledges to special interest groups, his enforcement of the Hastert Rule and contempt for passing budget legislation on a bipartisan basis, his lust for special interest money, and the like, and get the job done by any means necessary. Personally, I don't think he believes a word of it, but I would love for him to prove me wrong.

Nothing should make the budget picture more clear to the average American than, "This is what your taxes will look like if we maintain current expenditures while balancing the budget." If the public says, "Then that's what we'll have to live with," then that's the answer. If the public says, "We prefer the cuts you propose as an alternative," then that's the answer. If the public says, "We prefer to run massive deficits," then its up to Congress to determine the extent to which they're willing to balance the budget despite those popular sentiments, and to take responsibility for the decisions it makes.

Should Social Security Retirement Be Subsidized?

One of the central features of Social Security, and one that has helped insulate it from decades of effort to scale it back, is that it is designed to be self-funding, and to pay out an amount that is roughly consistent with what a retired worker paid into the program. The history of Social Security stands as a strong argument against turning it into a means-tested program, requiring higher-earning workers to contribute an even greater share of the cost of the program, or making benefits more contingent upon a retiree's assets and other sources of income than on his past contributions.

A few days ago, David Brooks argued that Medicare is too good of a deal for retirees - that, according to the Urban Institute, a couple of average income receive far more in Medicare benefits than they paid for over the course of their careers. Brooks did not offer a link to the Urban Institute's data and, in this era, the absence of a link makes me suspicious... so I searched until I found the source. Sure enough, the authors found that for a married couple earning an average wage and retiring in 2011 at age 65, under the author's formula the cost of Medicare to the couple was $119,000 and the benefit was $357,000.

Why wouldn't Brooks have linked to that? Because the figure for Social Security was contributions of $598,000, benefits of only $556,000. That is, if Brooks wants to argue that the couple is getting a great deal on Medicare, he has to admit that under the exact same analysis they're getting a raw deal on Social Security, and he apparently decided that rather than trying to reconcile his argument with the facts it would be better to play "hide the ball" with the numbers.

As it turns out, Social Security isn't a good deal for a single person earning an average wage - $299,000 in, and $290,000 out for a female recipient vs. $266,000 for a male. At average wage (or higher) the couple that sees a tremendous return on their investment is the one-earner couple, paying in the same $299,000 but receiving $448,000 in benefits. Looking at other data from the same authors, the subsidy to a couple with one low-earning partner and one partner with average earnings is modest, and everybody else earning an average or higher wage is providing a modest subsidy to other recipients.

There are plenty of reasons why we, as a society, would want to ensure that stay-at-home spouses will not be impoverished in their retirement in the event of divorce or the death of the spouse who was employed outside of the home.1 The very fact that the phrase, "worked outside of the home" is preferred by many over "had a job" reflects a cultural value. If in fact we, as a society, choose to value and privilege the role of homemaker, that's fine - but taking that position raises the reasonable argument that it should be society, not other working adults, who subsidize that cultural value. We fund SSI benefits out of the general fund due to the disconnect between those benefits and an employment history; why not do the same for retirement benefits extended to people who lack a sufficient work history of their own to otherwise qualify?

To look at it another way, if a Member of Congress were to propose eliminating or substantially reducing the subsidy to retirees in households in which only one spouse worked outside the home, what sort of firestorm would be unleashed? If our societal feelings are so strong that we can't even discuss the economic side of the picture, then we should be willing to address the cultural issue and the benefit we receive as a society by providing a very large subsidy to those households in retirement.

If the program is largely in balance other than for our determination as a society that stay-at-home partners of wage earners should receive most of the benefits that they would obtain had they also been employed outside of the home, it's reasonable to argue that the subsidy should come from the general fund and not by increasing the Social Security taxes upon or decreasing the retirement benefits that would otherwise flow to other retirees.