(By Stuart Zechman and Jay Ackroyd) Last Thursday, the New York Times ran a story about Democratic support for restructuring Medicare as a premium support plan, as part of the austerity negotiations:

Members of both parties told the panel that Medicare should offer a fixed amount of money to each beneficiary to buy coverage from competing private plans, whose costs and benefits would be tightly regulated by the government. [snip] The idea faces opposition from many Democrats, who say it would shift costs to beneficiaries and eliminate the guarantee of affordable health insurance for older Americans. But some Democrats say that — if carefully designed, with enough protections for beneficiaries — it might work. The idea is sometimes known as premium support, because Medicare would subsidize premiums charged by private insurers that care for beneficiaries under contract with the government.

Of course, the Democrats all remain nameless, as do most of the "health policy experts." These same people have been trying to drum up support for premium support as a means of cutting Medicare benefits controlling Medicare costs for years, mostly from Democrats predictably wary of how unpopular this would be. That's why any policy discussion takes place in an atmosphere of anonymity, dishonesty and misdirection, using unrepresentative processes like the creation of unelected commissions or the establishment of a specially empowered SuperCommittee.

Centrist Democrats --the New Democrat Coalition, Democratic Leadership Council, Third Way, Progressive Policy Institute and the Brookings Institute-- have been trying to get "Premium Support" legislation in front of Congress for at least a dozen years. It's the other half of what the PPACA is designed to accomplish, to restructure what they regard as obsolete New Deal social insurance policy. The policy recommendations focus on “private/public partnerships” supplanting public sector programs, while messaging focuses on selling ideologically centrist, “market-based reform" to liberal Democrats.   They reassure movement liberals by reciting platitudes that seem to affirm Medicare's sanctity with promises to “strengthen" the program for the 21st century. This has been going on since the mid to late 90s.

For instance, New Democrat John Breaux, chairing President' Clinton's Bipartisan Commission of the Future of Medicare,  introduced a premium support plan in 1999. In an Op-Ed in The Hill (pulled from the memory hole by Republican Congressman Tim Griffin), Breaux wrote:

With any restructuring approach, we must preserve Medicare's entitlement and ensure that Medicare does not become a program just for the poor. I would like Medicare, in fact, to become a model for expanding health care coverage to all uninsured Americans. I believe a Medicare premium support system is the best way to achieve that end.

What exactly is a premium support model and what does my particular version do? Premium support means the government would literally support or pay part of the premium for a defined core package of Medicare benefits. This is not a voucher program but an alternative to the current system. Today, Congress micromanages Medicare and the government uses fee schedules and thousands of pages of regulations to set prices for specific services. My plan combines the best that the private sector has to offer with the government protections we need to maintain the social safety net.

I have proposed a premium support Medicare plan modeled after the health care plan serving nearly 10 million federal workers, retirees and their families. Like that plan, my reform plan would also guarantee that the government's contribution keeps pace with health care costs.

This history makes it clear why it was so important for national Democrats, and especially Third Way partisans to differentiate their "premium support" from Paul Ryan's "premium support,” as with Ezra Klein's  interview with Henry Aaron, the Brookings'  Fellow who originally developed the premium support idea in 1995. It was crucial to centrist talking points to make the case that the GOP "Path To Prosperity" involved a voucher program, totally different from Aaron's "premium support" plan. But, as this story from the Times makes clear, there are core elements among the centrists who dominate the Democratic party leadership committed to premium support under Medicare, core elements who are well aware that reducing Medicare benefits will be extremely unpopular.


Another day, another letter to the NYT Public Editor. I refer to:

I had gone down to Zuccotti Park to see the activist movement firsthand after getting a call from the chief executive of a major bank last week, before nearly 700 people were arrested over the weekend during a demonstration on the Brooklyn Bridge.

“Is this Occupy Wall Street thing a big deal?” the C.E.O. asked me. I didn’t have an answer. “We’re trying to figure out how much we should be worried about all of this,” he continued, clearly concerned. “Is this going to turn into a personal safety problem?”

from this Deal Book column:


Andrew Ross Sorkin has his way with NYTimes policies on anonymous sourcing in this column.

First, he demonstrates his complete disregard for NY Times rules. He grants anonymity to an incoming call. A bank CEO calls him up, and is apparently completely secure that he is (quoting Tim Russert's testimony in the Libby trial) "presumptively off the record." Here's the official NYTimes policy regarding interviewing sources and anonymity:

In routine interviewing – that is, most of the interviewing we do – anonymity must not be automatic or an assumed condition. In that kind of reporting, anonymity should not be offered to a source.

It's hard to think of a way to more completely flout this policy. That he can be a prominent NYT columnist, on one of the most important beats in the country at this time, and considers the anonymity rules as something he need pay no attention to, is really something David Carr might want to report on, if he worked somewhere else.

Consider this:

we who have sought out a source who may face legal jeopardy or loss of livelihood for speaking with us.

It's hard not to laugh out loud. "We who have sought out a source" couldn't be more directly opposite to how sourcing works here. Glenn Greenwald doesn't exaggerate when he calls the anonymous CEO Sorkin's assignment editor. The Times policy makes anonymous sourcing an extraordinary event. Sorkin's (presumably passing through two or more editors) column makes it an absolutely routine part of his daily intercourse with sources.

And you know what's really newsworthy here? The identity of the source. What bank CEO calls up the New York Times and dispatches a major columnist off to write a story? Shouldn't the Times get someone on that? Isn't it in the public interest to know which money center bank (which is how I read "major") has this kind of influence over Times reporting?

It's not like the official policy doesn't reflect this concern:

In any situation when we cite anonymous sources, at least some readers may suspect that the newspaper is being used to convey tainted information or special pleading. If the impetus for anonymity has originated with the source, further reporting is essential to satisfy the reporter and the reader that the paper has sought the whole story.

Can you please ask Sorkin's editors how the story passed that bar? How else can you characterize the quoted conversation--other than "special pleading"? Isn't the real story here the level of concern among "CEO(s) of major banks" about the demonstration? Wouldn't the proper journalistic response be to call up the other CEOs and ask them about their level of concern? And get them on the record?

The hilarity continues:

Confidential sources must have direct knowledge of the information they are giving us — or they must be the authorized representatives of an authority, known to us, who has such knowledge. We do not grant anonymity to people who are engaged in speculation, unless the very act of speculating is newsworthy and can be clearly labeled for what it is.

In this case, the source is engaging in information-free speculation--is he in danger from those people? He needs to know, and sends Sorkin off to engage in his own speculation, based on what information he can gather on the source's behalf.

At the very least, could you please ask Sorkin's editors why this source is anonymous, and to ask Sorkin to stop embarrassing the paper by flouting its anonymity rules? I really do think there is a story here as well--just as there was a Jayson Blair story and a Judith Miller story. Maybe one of your more journalistic business reporters, like Gretchen Morgenson, could take a crack at it.


I write letters.  To the public editor, regarding Michael Cooper's he said/she said article today on Republican voter suppression: Michael Cooper's article on new state voting laws (filed in the "politics" sub-section of the US section of the website, and IIRC on the front page of my subscription edition of the TImes) is a pretty stunning example of really bad "he said, she said" journalism. Consider the fifth paragraph:

Republicans, who have passed almost all of the new election laws, say they are necessary to prevent voter fraud, and question why photo identification should be routinely required at airports but not at polling sites. Democrats counter that the new laws are a solution in search of a problem, since voter fraud is rare. They worry that the laws will discourage, or even block, eligible voters — especially poor voters, young voters and African-American voters, who tend to vote for Democrats.

And also consider the lede:

Since Republicans won control of many statehouses last November, more than a dozen states have passed laws requiring voters to show photo identification at polls, cutting back early voting periods or imposing new restrictions on voter registration drives.

There isn't a question of opinion or ideology here. These are questions of fact. Is it true that voter fraud can be prevented by requiring photo IDs at the time of voting, reducing the length of time balloting is open or making it harder for people to register? Is there any evidence, at all, that what the Republicans are saying to justify suppressing turnout is actually true? The rest of the article goes on to point out that the effect, the intended effect, of these measures is to suppress voter turnout among groups that tend to vote for Democrats. How can Michael Cooper, or his editors, write this up as "GOP says fraud" while "Dems say there is no fraud" and then leave it there?

The one actual quotation from someone who favors suppressing Democratic votes concedes there is no fraud taking place that is within 4 orders of magnitude of the planned suppression:

“The left always says that people who are in favor of this claim there is massive fraud,” said Mr. von Spakovsky, of the Heritage Foundation. “No, I don’t say that. I don’t think anybody else says that there is massive fraud in American elections. But there are enough proven cases in the past, throughout our history and recently, that show that you’ve got to take basic steps to prevent people from taking advantage of an election if they want to. Particularly close elections.”

In the first place, the suppression effort IS massive.  According to the article, it is meant to reduce turnout in the high hundreds of thousands to millions. If there is no massive fraud, then why does von Spakovsky support a massive effort to prevent citizens from exercising their right to franchise. Moreover, where is Michael Cooper here? Where are the questions: "What history? What recent events? How many instances of fraud, and of what magnitude? Can you document even a dozen cases of fraud caused by early voting, registration drives, or the absence of ID?"

The republicans are engaging in blatant attempts to suppress Democratic voters. This is newsworthy! It needs to be reported accurately, using actual facts, instead of presenting obviously disprovable lies as possibly valid.


I hate the corporate income tax.  I hate it for a number of reasons, which I hope to post here over the next week or two. The first reason I hate the tax is because it is hard to determine who, in the end, pays the tax. Economists call the distribution of the burden of a tax its incidence. Economists prefer taxes with a clear burden; public policy objectives can be inadvertently distorted if the distribution of a tax is not well understood.  The incidence is not necessarily apparent. Many economists believe, for instance, that the division of the payroll tax into an employee and an employer share doesn't accomplish its end--of putting half the burden on the employer.  The employer doesn't calculate his pay offer based on the base number. He or she calculates total compensation, including benefits and the payroll tax, and makes the pay offer accordingly.

In comparison, the corporate income tax represents a nightmarish problem of determining incidence.  The tax is aimed at the shareholders of the corporation, but depending on the price elasticities in both the product and the labor markets, the tax may be shifted to either workers or consumers.  The corporation's goal is maximizing after tax profits.  Doing so may involve both evading/avoiding the tax, and attempting to shift the burden onto either consumers of their products (through price increases) or their employees (through wage cuts).

If a product is highly price inelastic--that is, if consumers are not sensitive to price increases--and the industry concentrated, tacit pricing agreements shift the burden of the tax to consumers. Tobacco is an obvious example. Likewise, if labor markets are slack, the corporate income tax burden can be shifted onto workers, in the form of lower wages or reduced benefits.

If the intention is to tax capital holders, then it makes sense to use a tax that does so more directly.  For instance, a stock transaction tax would be very difficult to shift onto any group other than stockholders.

In the end, though, Mitt Romney was right. Corporations may not actually be people, but in the end, corporations don't pay taxes, people pay taxes. The trouble with the corporate income tax is that it's hard to figure out who those people are.


September 22nd brings cosmologist Lee Smolin to Virtually Speaking.  His current work involves questioning the widely held view among cosmologists that our universe is one of many, many universes--that it is part of a mulitverse.

Three decades ago, talk of other universes was not seen by most physicists to be part of science. Most research in theoretical physics and cosmology concerned observable features in our universe and most papers and seminars referred to experimental results. However, since then there has been a gradual shift, during which it first became acceptable to work on theories that described not only our universe, but other possible universes, universes with less or more dimensions, or universes with different kinds of particles and forces. In the last few years, we have moved further away from theories of our one universe, as these other worlds went from being logically possible to hypothetically actual. It is now common to hear about the multiverse – a quantum cosmology that takes for granted that the visible universe at we see around us is just one of a vast or infinitenumber of universes.

Lee has come to believe that this view (that he shared) is mistaken, and the linked article explains why.  One of the more interesting problems with the multiverse point of view is that it implies (in the formal, logical sense of the word) that the multiverse is time-less, that time is an emergent property of a particular universe, and is not a fundamental property. In Lee's view, this is a serious problem, nearly as serious as the difficulties the multiverse paradigm has in generating testable hypotheses.

We get better results, he says, if we operate with a model of one universe that includes real time as a fundamental property. The difficulty with this paradigm is it violates a fundamental assumption of experimental physics, that the universe's laws are uniform everywhere, and throughout time.

You can read a summary at the link above, or watch a video of Lee and his co-author presenting their position.


Bill Keller lists them:

It was a large and estimable group of writers and affiliations, including, among others, Thomas Friedman of The Times; Fareed Zakaria, of Newsweek; George Packer and Jeffrey Goldberg of The New Yorker; Richard Cohen of The Washington Post; the blogger Andrew Sullivan; Paul Berman of Dissent; Christopher Hitchens of just about everywhere; and Kenneth Pollack, the former C.I.A. analyst whose book, “The Threatening Storm,” became the liberal manual on the Iraqi threat.

Worth noting they all have jobs, now.


Dahlia Lithwick (@DahliaLithwick) joins regular VS Sundays panelist Culture of Truth (@Bobblespeak) get together tonight at Virtually Speaking Sundays. The Supreme Court's composition, recent opinions and policy related to rulings by the Court will probably dominate the discussion.

The oddly open question of whether the Administration's health care plan, PPACA is constitutional will come up. Dahlia wrote about it earlier this week

The first case was a suit brought byLiberty University, a religious college in Lynchburg, Va., challenging the individual mandate as a violation of both the Commerce Clause and religious freedom (it claims that the ACA forces taxpayers to finance abortions). Last fall, federal District Judge Norman Moon dismissed that suit, finding the mandate a permissible exercise of congressional power under the Commerce Clause, which allows Congress to regulate economic activity.* The second suit was brought by Virginia Attorney Gen. Ken Cuccinelli, claiming that the ACA violates a hastily enacted state law that sought to exempt everyone in the state from the insurance mandate. Federal Judge Henry Hudson agreed, and struck down the individual mandate last winter.

Nationwide, five federal judges have ruled on the constitutionality of the ACA. Three have upheld it, while two have struck it down. More federal appeals courts are teed up to hear yet more cases this summer.

In some ways, this is a test of the Republicans systematic construction of a judicial firewall, in the lower courts, to preclude Democratic policies'  implementation.  More importantly, this case is a test of how far the Roberts Court will go in overturning precedent, and redefining Constitutional interpretation.  Of course, what that really means is whether Justice Kennedy will find a tortuous way to overturn precedent without actually admitting to doing so, as with Casey v Planned Parenthood.

As Dahlia said last month Casey is shepherding in The Death of Roe v Wade

There's one other (often forgotten) player in this elaborate game of chicken over reproductive rights, and that's the Supreme Court. Given that public opinion has changed virtually not at all since Roe v. Wade, my guess is still that the Roberts court is as uninterested in overturning the law as its challengers are in forcing the issue. It does not want to be the court that makes abortion illegal, or all-but-illegal, in America. The backlash would be staggering. The conservatives on the court are much happier with the status quo, allowing abortion as a matter of federal law while the states effectively outlaw it as a matter of fact. If the states continue to hollow out Roe from the core, there will be no reason for the court to hear an abortion case ever again.

Just to be clear then: If Terry O'Neill is right, and fear of Samuel Alito is preventing anyone from challenging the host of increasingly invasive, paternalistic, and degrading state abortion regulations, it's not just abortion foes who are getting what they want. The court is, too. Abortion will have become all but impossible in America—for poor, minority, and rural women in particular—in direct contradiction to a Supreme Court decision, and the court itself will have done nothing to stand in the way. Is that what supporters of the right to abortion, not to mention the rule of law, really want? At the very least, let's put it to the test.

Amanda Marcotte on how South Dakota is eliminating legal abortion using Casey loopholes:

How did South Dakota do it?  The new law requires women seeking abortion to speak to the doctor, then wait 72 hours, then get counseled at an anti-choice propaganda station called a “crisis pregnancy center,” only after which would she be allowed to obtain an abortion. This law received quite a bit of attention for overt misogyny inherent in the implication that women are too stupid to be aware of what they’re asking for when they seek abortion, or that women are so ignorant and incurious that they can’t be expected to have considered anti-choice arguments unless forced.  But it’s looking like this law may do more than that, and may actually make abortion impossible to get in South Dakota.

This works in two ways.  Right away, it was clear that the 72-hour waiting period was an attempt to force the sole abortion provider in the state, a Planned Parenthood in Sioux Falls, to drop the service.  The doctor that performs abortions flies in to provide the service, and this requirement is obviously intended to push out any doctor who doesn’t work full time at the clinic by making the travel requirements onerous.

The “counseling” requirement seemed more condescending than truly burdensome at first, though it is true that many women seeking abortion really don’t have the flexible schedule to work in a few hours to be hectored by anti-choicers before obtaining their abortion, which pushes this requirement from being irritating and sexist to being truly an obstacle.  But recent news indicates that something more devious is likely going on. As Robin Marty reported last week, not a single crisis pregnancy center has agreed to counsel patients seeking abortion so that those patients can fill their requirements to get their abortions.  Not even the centers that lobbied to get the requirement pushed through.  Without centers willing to say they saw the patients seeking abortion, patients could be caught in a red tape nightmare that makes getting abortions impossible.\

Jon us tonight, 9pm EDT.


What do Republicans want? On health care, Ezra observes:

 A capsule history of health-care reform is that Democrats began with single-payer and Republicans, led by Richard Nixon, countered with an employer-based system. Then, in the 1990s, Democrats proposed an employer-based system and Republicans countered with an individual mandate — which Romney actually passed in Massachusetts in 2005. Then, in 2009, Democrats proposed a system based around an individual mandate and Republicans countered with a vague promise to “repeal-and-replace.”

Pretty much every 2012 Republican presidential hopeful supported a cap and trade approach to environmental control:

Cap and trade, like the health care mandate, was an acceptable free market position for quite a long while. There were always critics, but it wasn't really until 2009, when environmental skeptics and groups like Americans for Prosperity went to war against it, that conservative and national opinion really turned. (The essential poll on this: In May 2009, only a quarter of voters knew that "cap and trade" had something to do with energy.) And so most of the people considered frontrunners for 2012 have been on the record, at some point, talking up greenhouse gas caps.

On the Republican strategy on the debt ceiling, Mitch McConnell echoes Atrios:

Discussing what Republicans needed in order to raise the debt ceiling today, Mitch McConnell went a little further than John Boehner. Like Boehner, he said that the party wanted entitlement reform as part of a deal. He didn't get too specific, other than saying the deal would have to be reform, not studying reform.

"Not to be argumentative, but the things I'm talking about have been studied to death," said McConnell. "We don't need more hearings. All the options are on the table, thanks to the president's deficit reduction commission. It's a question of what you want to pick up and really do."

The main argument: If the president met Republicans and agreed to entitlement reform -- with no tax increases -- then both parties would be inured from political damage.

And, of course, on Big Government, and Deficit Spending and the Public Debt, Republicans have always been rhetorically opposed, but, in the event in favor of larger governments, funded by large deficits, massively increasing the Public Debt.

It's hard to figure out exactly what the GOP objectives are.  I've always believed in the Big Lie theory--that they paid lip service to these ideals, but only as political rhetoric--that they maintained a transparently false position on these issues because the current media's operational model would never call them on it. So out of power, they decried spending, while in power they spent like drunken sailors. Something different is going on now, and I've been wondering whether the more recent crop of freshman Members of Congress have grown up with the Big Lie, and, to them, it's not political rhetoric--that they would never channel Vice President Cheney and say "Deficits don't matter."

Stuart Zechman and I talk about these and other issues tonight at Virtually Speaking A-Z. 8PM EDT.


Back in an earlier life, I worked with state and local governments to improve their property valuation systems, for the purpose of tax assessment.  Our main goal in working with our customers was to avoid the situation that faces many New York counties right now:

Local governments here in well-to-do Westchester County are being overwhelmed by property tax appeals, driven by a growing industry of companies seeking reductions in homeowners’ bills in exchange for a share of their savings.

The record-setting number of tax grievances, which nearly quintupled from 2008 to 2010, are adding fiscal pressure to communities already throttled by economic losses and cuts in state aid.

Towns are being forced to refund millions of dollars to homeowners who show they have been overcharged. Some, like New Rochelle, have been forced to increase tax rates to make up for the erosion of assessed property values. Others, like Greenburgh, are also exploring costly townwide revaluations — a move that many towns have not made in a half-century or more.

This kind of crisis is easy to prevent. But it requires transparency in the operation of the Tax Assessor's office.  There are two elements required. First, property needs to be revalued annually. Second, the assessed value should be as close as possible to 100 percent of market value.

In most counties, neither of these elements are in place. Revaluations are done infrequently, and assessed values are expressed as a fraction of the current market value.

 Towns here do not regularly reassess individual homes; instead they establish an aggregate valuation increase each year that is imposed on all properties.

As a result, assessments of older, more stately homes had not kept pace with their soaring market values, while middle-class residents and those owning expensive homes built more recently were paying considerably more than their fair share of taxes, and could argue persuasively for a reduction.

The article notes that revaluations are expensive, which they are when done infrequently.  The expense of a "full reval" mostly stems from the data collection effort required, with a visit to every house to gather the characteristics of the property.  Once all the data is collected for all the properties, a computerized model is created, associating recent sale prices with sets of property characteristics, giving a price per square foot of living area, adjusted by other property features, including, of course, location.  The data collection effort invariably requires more workers than are on permanent staff, and is usually handled by outsourcing the data collection and model creation to an outside vendor.

A program of annual revaluations relies on just collecting information on properties that have changed in the past year, using building permit filings as a source for determining what properties have changed structurally, and on collecting data on the properties that have sold in the last year or two, updating the valuation model.  The updated valuation model is applied to all properties, and taxpayers receive an annual valuation notice, at 100 percent of market value.

This makes it easy for the taxpayer to determine whether the model is doing an accurate job of estimating her property's market value--the assessed value should be the market value. Relative changes in property value are also picked up automatically by the model; the problem the Times notes in Westchester doesn't arise, because location and style adjustments to market value are incorporated annually by the inclusion of recent sales information. And the workload is such that the data collection and modeling work can be handled in-house.

Johnson County, KS is an example of a jurisdiction that follows this property valuation methodology.  You'll note they also include recent sales information relevant to the taxpayer's property.

So why do so many jurisdictions use opaque processes that create situations like the one facing many New York counties?

County (municipal in some states) elected officials do this to hide tax increases.  Property taxes are assessed by multiply a rate times the dollar value, a rate that usually values by land use.  This rate is called a millage.  Most of the time the tax base, the total value of the jurisdiction's property, is rising in value, because of both new construction and  of historically rising property values.  What should happen is that an increase of 5 percent in the tax base should be reflected in a 5 percent reduction in the millage, with some individual properties rising in value more than 5 percent and some less.

Instead what happens is the jurisdictions "establish an aggregate valuation increase each year that is imposed on all properties."  When they impose that blanket increase in value, of say 5 percent, they reduce the millage at the same time, but generally by less than 5 percent. The elected officials proclaim a property tax cut of, say, 3 percent, when they have actually increased it by 2 percent.

This gets masked by the fractional assessment--if your million dollar house goes from a valuation of 250,000 to a valuation of 262,500, you're pretty hard pressed to determine whether that new number is correct or not.

But when there is a precipitous drop in values overall, there is an incentive for private organizations to introduce transparency, explain how this works to taxpayers, and get them reductions in value to reflect current market conditions. Because this is done piecemeal, and helps people with highly valued homes more than low-valued homes, this process actually increases the inequity of an already generally inequitable system of property taxation.

It also wreaks havoc with jurisdictional budgets, and exposes a decade or two of  flim-flammery by local elected officials.  This is actually something a small number of taxpayers can do something about. Attending county commissioner meetings, using open records laws and other forms of citizen oversight can in fact be practiced at the local level.


Introduction This post is background material for the discussion tonight on Virtually Speaking A-Z, which will be live at 8pm Eastern, and available as a standalone podcast shortly after midnight.  Stuart Zechman and I will be talking about the policy and politics of Medicare reform.  The following material draws heavily (to the point of some copying and pasting) on email written by Stuart.

Source material for this discussion includes the following:

Ezra Klein's Health of Nation's post for The American Prospect

OECD Health data

J Oberlander's  Is Premium Support the Right Medicine for Medicare?

The  Heritage Foundation's How to Transform Medicare into a Modern Premium Support System

Ezra Klein's Washington Post interview with Henry Aaron

Henry Aaron's and R D Reischauer's The Medicare Reform Debate: What is the Next Step?

The House GOP Budget: The Path to Prosperity

Bowles-Simpson Report: The Moment of Truth Health Care Systems

There are three components to any health care policy: patients, providers and payments.  How providers are paid for the delivery of services to patients is what we mean by a health care system. There are four such systems in place  in the US today:

Fee for Service

People who do not have health insurance pay for medical services as they go.  When a young couple decide to commit to monogamy, and, in doing so, stop using a condom for birth control, they go together to a Planned Parenthood clinic,  get tested for STDs and receive a prescription for contraception.  They pay cash for the services they receive for the provider, Planned Parenthood.

Fee for service systems are obviously universal--if only because there are some treatments that are not considered efficacious and will not be covered by any form of private or government insurance, and some providers that insist on operating only on a fee-for-service basis.

Private Health Insurance

People who have health insurance through the private sector pay, often in conjunction with their employer, a monthly premium that covers their receiving health care services from providers. These plans are complex--there are rules about which providers the patient can visit and have the services received during the visit be covered by this insurance. "Insurance" is also something of a misnomer. Insurance usually is something that protects an individual or firm from high-cost, low-probability events (floods, car theft, death).  In the case of health insurance, the premiums are more like pre-payments for services to be rendered than they are like  insurance in normal parlance. Of course, there is such a component to most private health insurance plan, although in the US that catastrophic coverage is frequently limited by the insurer to some maximum amount.

Germany and Switzerland have a private insurance health care system.

Public Insurance

In this case, the provider is paid directly by the government for services delivered to a patient. The patient may or may not pay premiums to the government, but, in any case, the provider bills the government, and gets paid directly by the government. This is how Medicare and Medicaid work. The providers are private entities, and bill for their services.  Public insurance can also be called a single payer system.

Canada has this kind of system.

Socialized Medicine

In this system, the providers work directly for the government, receiving a salary, regardless of what services they deliver. The Veterans Administration works this way.

The UK and Cuba have socialized medicine systems.

There is nothing inherently ineffective in any of the last three methods.  There is a big problem with patients, in rich countries like the OECD, who operate on a fee for service basis.  Some predictable number of them are going to have something catastrophic happen, and it is not considered good public policy to simply let them die because they were unlucky.  In effect, in the US, Medicaid becomes the insurer of last resort.  The individual mandate, in place in Massachusetts and due to be implemented in the Administration's PPACA program, addresses this problem by requiring all patients to acquire private insurance through regulated insurance exchanges.

But the other three systems operate in other parts of the OECD each work much better than the US, delivering better mortality and morbidity performance at roughly half the cost:


USA, health care price per person, per year, 2008:             $7,538

UK, health care price per person, per year, 2008:                $3,129

Germany, health care price per person, per year,  2008:     $3,737

Percent of GDP Spent

USA, health care as a percent of GDP, 2008:                         16.0%

UK, health care as a percent of GDP, 2008:                            8.7%

Germany, health care as a percent of GDP, 2008:                 10.5%

As the population of the US ages, these costs are expected to grow at an annual rate in the high single digits, about 8 or 9 percent a year. So although it is obvious from these numbers that the real problem is that the US health care system sucks--that there is a major failure of system design--the focus has been on the Medicare program, using the aging population as a justification for changing how Medicare works.

"Reforming" Medicare

In 1995, Henry Aaron and R. D. Reischauer proposed a basic reform to Medicare designed to stop the runaway growth in costs.

Five central facts will shape the debate on the future of Medicare. First, Medicare enjoys overwhelming support among the American electorate, a popularity that is well deserved because the program has achieved all of its designers’ major objectives. Second, the cost of providing Medicare benefits is projected to rise very rapidly and will exceed projected revenues by ever larger amounts. Third, legislative reform of the entire health care system is now off the political agenda and likely will remain so for years to come. Fourth, there exists a strong and broad consensus against raising taxes. Fifth, dramatic changes are taking place in the way health care is financed and delivered for the non-Medicare population

Their way of addressing this problem was a policy change they called "premium support."

We propose converting Medicare from a “service reimbursement” system into a “premium support” system. Rather than paying for all services on a stipulated menu, Medicare would pay a defined sum toward the purchase of an insurance policy that provided a defined set of services. As with private insurance for the working population, plans could reimburse any provider the patient chooses on a fee-forservice basis (the current method Medicare uses for most beneficiaries), contract with a PPO, or operate through an HMO. Plans could manage care in any of the ways now in use or that might arise in the future. All Medicare beneficiaries ultimately would receive a predetermined amount to be applied to the purchase of a health plan providing defined services

How would this lower costs? That's pretty simple. By setting the "defined sum" low enough to reduce government expenditures. But does that really lower costs? Or does it just divide them up differently, so that the patients are paying more of the bills themselves, either through direct payment for uncovered services or through the purchase of insurance that is greater than the "defined sum"?

In fact, the idea is that by making the patients pay more for provider services, they will buy less. They will stop "over-utilizing" health care services.  Any proposal that intends to reduce costs by limiting "utilization" is a bad proposal. For instance, Bowles-Simpson, like Aaron's 1995 proposal makes MediGap insurance illegal, so that participants will have to pay more out of pocket on every encounter; MediGap insurance covers copayments and deductibles.  Likewise, the GOP budget proposal, and Aaron's premium support plan also are designed to shift more of the cost of care onto the Medicare participants.

And it's not unreasonable, given the history of  the administration's deep concern for "stakeholders" like pharmaceutical companies and managed care providers, that we should be concerned that, sometime in 2013, the Obama administration reluctantly concludes that a premium support program is the only way to save the US from the horrors of budget deficits.


Chelsea Green author Bob Cavnar and DailyKos diarist Fishgrease join us to discuss the British Petroleum oil disaster that took place a year ago yesterday.  Bob also wrote an op-ed for the Houston Chronicle that ran yesterday.

There were several other painful realities that became apparent during the disaster of last summer. First, the industry did not know how to contain a deep-water blowout. Second, it is still using 40-year-old oil cleanup technology. And third, blowout preventers have a high failure rate. Unfortunately, having witnessed the results of these hard lessons, we still haven't done much to correct these failures. To be sure, there are companies now being formed to do deep-water containment. In typical fashion, though, the effort is diluted, with smaller companies utilizing Helix Energy Services, a private, for-profit operation, and the majors forming a co-op called the Marine Well Containment Company. It's unclear what will happen in the next accident, such as who pays if a small operator goes bankrupt after a large spill, not a trivial matter. Some advances will come eventually in spill cleanup, but will be slow unless the government takes a leading role, which, so far it is wont to do.

Which leaves us with the blowout preventer. Everyone in the industry has known for years that blowout preventers have a high failure rate, but no one really focused on that failure rate until the BP blowout. The recent forensics report from Det Norske Veritas on the Deepwater Horizon blowout preventer probably raised more questions than it answered, especially after managers for the study admitted to flaws in its own computer models that led to its conclusions and recommendations. The solution from the industry and the federal government? Let's go back to work with no fundamental changes or redesign, depending completely on the subsea well containment companies when the next failure occurs.

The last year has been an odyssey where the disaster in the Gulf led many to hope that finally we were going to focus on a comprehensive energy policy, improve safety and protect the environment. To the disappointment of many, including me, none of these objectives was reached; indeed, they are not even being contemplated as all of our politicians, having just finished a re-election cycle a few months ago, are gearing up for the next one that comes a little over a year from now. We don't want to let trivial things like protecting human life and the environment interfere with the game of politics, do we? It seems that, even in the face of catastrophe, we really haven't learned any of the important lessons we desperately need to learn.

This failure to face up to the inevitability of a recurrence of a serious deepwater oil spill is systemic.

Of course, spills happen on land, too. I've spent a lot of time in Bradford County, Pennsylvania--where there was a fracking spill on the Horizon disaster anniversary.


The starting point for the A-Z discussion is Jay Newton-Small's transcription (Yay!) of her interview of Paul Ryan regarding the (mind you) official GOP 2012 Budget proposal.  The interview is a treasure trove, in itself , and in the meta-analysis of what journalists in Beltway do.   Stuart and I will be referring to a number of  resources as we discuss the document.

My discussion with Brad DeLong a couple of weeks ago is one such resource (transcript (pdf)).

Paul Krugman has a wealth of material on the proposal:

Memory Hole, Tax Cuts Not Deficit Cuts, Unicorns, Housing Unicorns, Gullibility?, Heritage Follies, When I'm 55,  Really?

The arguments Ryan uses to support his budget, and to reject Keynesian economics as discredited "outliers" in the economics profession are demolished by Brad Delong and by Krugman, calling into question even the intellectual honesty of the New Classicist/Real Business Cycle theorists.

Matt Yglesias notes the plan is expressly designed  to reduce income transfers from rich to poor.

And Robert Kuttner asks the question that's been plaguing me: Is Obama in?

Stuart's answer? Pretty much on board, actually. Do click through to read the report he refers to. Ryan's plan for Medicare is the New Democrat plan.

Here's  DeLong at Virtually Speaking on the economics underlying Ryan's plan:

The issues that actually had been settled at least among the working consensus of mainstream economist since 1829 now appear to be completely up for grabs. And the most puzzling thing is I at least can't figure out what the coherent argument on the other side is. That it's very clear that some like say, Nobel prize winner, Robert Lucas at the University of Chicago believe that special interventions into the banking sector or government fiscal expansion can't help reduce unemployment in a situation like we have today. That the only thing that can work is normal monetary policy. And it's also very clear that Lucas believes that the economists in power who say otherwise whether they're Christry Romer or Larry Summers or whoever, are kind of corrupt people.


Brad DeLong:

Someone like Lucas not only believes not only that the fiscal multiplier is zero, that he doesn't believe that anyone else he regards as reasonably smart, and he does regard Christy [Romer] and Larry [Summers] as smart could possibly believe that the fiscal multiplier is anything other than zero.

Jay Ackroyd

But as you say in that post, there's evidence that says they're simply wrong.

Brad DeLong:

There's a bunch of evidence suggesting that it's wrong, and there's also no theoretical argument for why it should be zero.

Jay Ackroyd

And there's also

Brad DeLong:

There is a theoretical argument that the tax cut multiplier should be zero, which hinges on the identity of consumers and taxpayers and requires things like not immigration, no childless people, the distribution of benefits from the distribution of taxes levied in the future be the same of tax cuts given in the present, etc. etc.

Jay Ackroyd

But they literally say

Brad DeLong:

There's no argument on the spending side.

Jay Ackroyd

They literally say that the government employing people to build bridges will not raise the employment level.

Brad DeLong: Yeah. That's what Eugene Fama said explicitly, on his weblog at the start of 2009.

That's what Lucas said. He said that there is nothing to apply the multiplier to. Indeed, that's what Friedrich Hayek said when he gave a seminar back in 1932 in Cambridge, England at the end of which according to Robert Skidelsky Richard Kahn raised his hand and said “Are you telling me that if I went out and bought a new overcoat it would have no effect on unemployment?” and Hayek supposedly said “Yes.”


I've been thinking a lot about what we'll be discussing tonight at both Virtually Speaking A-Z and at Virtually Speaking with Jay Ackroyd. Source material is here. Comments on audio tonight. Posts to come later. Brad DeLong:

Is Economics a Discipline?

What Have We Unlearned from the Great Recession?

Paul Krugman

Asymmetrical Ignorance

Nobodies of Macroeconomics

Err.. Me.

at Eschaton


There's more. But if you want to read before the discussion, or shortly after, the key issues are here.


Just wanted to document this. Millions of dead anchovies, sardines and mackerel

Redondo Beach officials said initial assessments suggest oxygen depletion in the King Harbor basins caused the massive fish die-off.

City Manager Bill Workman said city officials with the help of marine experts would help determine if there was any environmental issue involved. Tests are now being performed on the water as officials begin removing the dead fish, which city officials estimated to be in the millions.

“There are no visible signs of any toxins that might have caused [the die-off] and our early assessment is that this was oxygen depletion,” Workman said. “This is similar to what we experienced five years ago but that was distinctly a red tide event but there’s no discoloration of the water, no associated foaming in the waves, Workman said. “There are no oil slicks or leaking of substances into the water.”

Workman noted that the harbor had been teeming in recent weeks with bait fish that even after their deaths “had no signs of degradation.”]


Prostitution crackdown leads to 25 arrests

Jewlery store says Lohan took necklace without permission


During the gestation of the unholy offspring of Tom Daschle, Bob Dole and the Obama administration Liberals expressed dismay, saying the proposals did nothing to repair the fundamental problems of for-profit oligopolies serving as middlemen that added costs and reduced the value of patient-doctor relationships. In the event the program was born with a birth certificate that read Patient Protection and Affordable Care Act, but now, unsurprisingly, goes by the nickname ACA. Nothing in the legislation provided either effective regulatory reform or introduced any real competition in a medical care marketplace in order to control costs. So Liberals predicted that in states with low populations, and therefore only one or two insurance companies controlling prices and services, premiums would skyrocket.

And, lo, it came to pass:

Workers at a circuit-board factory here just saw their health insurance premiums rise 20 percent. At Buddy Zaremba’s print shop nearby, the increase was 37 percent. And for engineers at the Woodland Design Group, they rose 43 percent.

The new federal health care law may eventually “bend the cost curve” downward, as proponents argue. But for now, at many workplaces here, the rising cost of health care is prompting insurance premiums to skyrocket while coverage is shrinking.

As Congress continues to debate the new health care law, health insurance costs are still rising, particularly for small businesses. Republicans are seizing on the trend as evidence that the new law includes expensive features that are driving up premiums. But the insurance industry says premiums are rising primarily because of the underlying cost of care and a growing demand for it.

Across the country, premiums have more than doubled in the last decade, with smaller companies particularly hard hit in recent years, federal officials say.

In New Hampshire, where the population is among the healthiest in the nation, according to various surveys, the insurance market for individuals, families and small businesses is extremely fragile. More than 90 percent of private employers in New Hampshire have fewer than 50 employees. Small and medium-size employers try to shop around for health insurance, but have few alternatives from which to choose.

This year, groups of more than 20 workers have been experiencing premium increases of around 20 percent, insurance agents say, while smaller groups are seeing increases of 40 percent to 60 percent or more.

“The rate of increase is phenomenal,” said Jean Pierre La Tourette, owner of Flora Ventures, a florist with 11 employees in Newmarket, N.H., near Portsmouth. When he was recently notified that the monthly premium for single employees at his firm was going up by $229, or 40 percent, to $789, Mr. La Tourette said, he felt “a combination of anger and frustration.”

As I said then, Americans are not going to like being forced to buy crappy, expensive health insurance.

We'll talk about this tonight with Eve Gittelson and Marcy Wheeler.


[youtube http://www.youtube.com/watch?v=IjuWw0Kdt7I&w=320&h=255] Lenore Skenazy joins us tonight, March 3rd.  While she had been a journalist, and a columnist for the Daily News--I was a fan at the time--she went national, because she let her 9-year-old take the MTA home by himself.

Anyway, for weeks my boy had been begging for me to please leave him somewhere, anywhere, and let him try to figure out how to get home on his own. So on that sunny Sunday I gave him a subway map, a MetroCard, a $20 bill, and several quarters, just in case he had to make a call.

No, I did not give him a cell phone. Didn't want to lose it. And no, I didn't trail him, like a mommy private eye. I trusted him to figure out that he should take the Lexington Avenue subway down, and the 34th Street crosstown bus home. If he couldn't do that, I trusted him to ask a stranger. And then I even trusted that stranger not to think, "Gee, I was about to catch my train home, but now I think I'll abduct this adorable child instead."

Long story short: My son got home, ecstatic with independence.

Good story. Told funny. If you don't remember this--it went national--do read the whole thing.  The reason it went national, of course, is many, many people thought Lenore had demonstrated irresponsible, even criminally irresponsible, parenting by allowing her kid onto the MTA.

Lenore is making the same point here that Bruce Schneier makes in the video excerpt above (entire interview with Bruce and James Fallows.) My way of making that point is asking why kids don't wear helmets all the time, instead of just when they are on their bikes.

The answer is the same as Bruce's remark about so few people wearing bullet-proof vests--the improvement in security is not worth the trouble.  But there are kids who do wear helmets all the time. I knew one--she had severe epilepsy, and was at serious risk of hurting herself in a fall.

What's interesting is how this has changed, in relation to how kids are raised in this country. I recall quite clearly being summoned by my mother to bike the couple of miles to a convenience store (Moran's, no 7-11s in the area) to pick her up a desperately needed pack of Benson-Hedges.  Helmetless. Along two heavily traveled roads.

So what has changed? It's probably true this was unwise on my mother's part, but her asking me to do this was unexceptional, as, I expect, it was unexceptional for a kid in New York to ride public transportation by herself in Lenore's youth. And it was more dangerous then!

That's where we start tonight. What's changed? Why?


Muslim Killings Continue

Nigeria is an extraordinary place.  With over 150 million people, it is the most populous member of OPEC.  The country includes an incredible diversity of ethnic groups, with three--Hausa, Igbo and Yoruba--making up the majority of the population.  A religious country, the population is divided approximately evenly between Islam and Christianity.  The Muslims include traditionalists, as well as a Mahdist influence, while the Christians include a wide variety of sects, from Roman Catholic to Pentacostal. The Anglican primate claims to have ten times the US Episcopalian population of two million people.

It's also a country with an extraordinary history of violent conflict.  As Libyan atrocities mount, the violence in Nigeria continues.

Ralph Bunche Senior Fellow for Africa Policy Studies John Campbell, former US Ambassador to Nigeria will discuss his book, Dancing on the Brink when he joins us at Virtually Speaking.


You can find more background material at his CFR blog.



[youtube=http://www.youtube.com/watch?v=IWcui3ORWug&w=320&h=255] AdNags reaches up to the February Narratives Binder, flips open the tab marked "Wave Election" and selects the first page, and goes to the  Savvy Analysis graf:

But in the view of officials from both major political parties, Republicans may be risking the same kind of electoral backlash Democrats suffered after they were perceived as overreaching.

As often happens with articles built from a Narrative Binder template, this one doesn' t happen to be true, unless you add in a word or three:

But in the view of officials from both major political parties, Republicans may be risking the same kind of electoral backlash Democrats suffered after they were perceived [by the Beltway]  as overreaching.

The reason the Democrats lost control of the House in the last election was not because they went way too far:  delivering way too much health care reform; sticking it to the fraudulent banksters who wrecked the American Dream; and using whatever means necessary to get the economy back to 5 percent unemployment.  Instead the Democrats did just what the Beltway perceivers told them to do. They listened to the overreach narrative.

Obama and the Senate worked to minimize both the scope, and effective date of health care reform.  Politically, they managed this so badly that people who still get health insurance were just getting their enrollment packages, complete with increased premiums, reduced coverage and higher co-pays on the week of the election. Not only was there, at that point, no relief for the uninsured, but the people who were insured discovered that all this talk of "Obamacare" meant they were gonna be out of pocket still more money in 2011.

They let fraud go unpunished, and left $50 billion in HAMP money on the table that could have ameliorated a still growing foreclosure crisis.  And they decided that there was really no pressing need for an aggressive jobs program, despite idle capacity, work force involuntarily idled and a bond market screaming to be used for long term infrastructure projects.*

This was not "overreach."  As Marcy says in the clip above, the reason the Democrats lost so badly is they failed to deliver. They particularly failed to deliver to precisely those whom had voted for the first time, expressly  for Obama's message of change. They were thirsting for something new, something better,  after eight years of shrinking take home pay, terrifying insecurity about health care and collapsing values of both homes and investments.

What they did not get was "overreaching."  What they got was "not nearly enough." So they stayed home.

AdNags would prefer to feed the overarching narrative of the need for Beltway centrists to tame the animal spirits of the willful base. So now the GOP is not being extreme--they are just engaging in the behavior typical in a party following a major electoral shift.

Underlying this commitment to the narrative template  is AdNags' role as the self-anointing priest in the Church of the Savvy--from his lofty, objective distance he can see historical patterns invisible to the players caught up in the sweep of their movement.  His sneering is not, of course, limited to the politicians--he is also talking about the little people swept up in these pointless attempts to change anything.  It is, after all, just something of a game.


*What you do when financial capital is cheap is take advantage of low interest rates to convert borrowed dollars into income generating physical capital--repairing bridges, building new rail systems, creating a  more efficient electric grid, pulling fiber to post offices and libraries.  This investment in physical capital raises economic growth--and the time to create those public sector job opportunities to improve the US physical plant is precisely when interest rates are low and unemployment is high.